Document:

Term Sheet

 
Exhibit 10.42

 
April 2, 2002 
 
An Investment 
In 
PATH 1
NETWORK TECHNOLOGIES Inc. 
[OTC:BB PNWK] 
 

	
	 Amount:
	  	 minimum $500,000—maximum $1M US Dollars.

	
	 Securities:
	  	 Secured Convertible Debentures of 1-year term (the Debentures).

	
	 Closing Date:
	  	 April 12, 2002 and April 19, 2002

	
	 Funding:
	  	 $500,000 will be funded immediately at initial closing date, Investor has up to April 19, 2002 to tender
an additional $500,000 amount.

	
	 Conversion Price:
	  	 $1.20

	
	 Coupon:
	  	 4% per annum, paid quarterly in cash or in stock, at the Company’s option.

	
	 Warrants:
	  	 100% Warrant Coverage. Warrants shall have a five-year life and a strike price equal to $1.60. The
Warrants shall have a cashless exercise provision.

	
	 Registration Rights:
	  	 The Investor, representing at least 75% of the total investment hereunder, has demand Registration rights
60 days after conversion.

	
	 Anti-Dillution:
	  	 The Investor will have a right to share, pro rata, in any follow on offering other than a public offering
or funding by a strategic partner.

	
	 Escrow:
	  	 Company agrees to set aside 30% of its revenues, up to the amount of the underlying Note, in order to
secure the Debentures hereunder. The Escrow may be drawn down, from time to time, to the extent that it represents an amount greater than the total amount remaining due under the Debentures.

	
	 Depository:
	  	 All sums to be deposited hereunder shall be wired, after confirmation to Path 1, to the
following:

	
	 	  	 Beneficiary Acct. #
 Beneficiary:
 Beneficiary Bank:
 PO Box 7585, 1118ZH,
 Swift Code:
	  	 58.41.66.311 Path 1 Network Tech CV. ABN AMRO Bank NV.
Schiphol Airport, The Netherlands ABNANL2A

	
	 Board Approval:
	  	 The above terms are subject to the Company’s Board approval.

 
The parties hereby
acknowledge, by their signatures below, their mutual agreement to the above terms and conditions. The parties agree that this term sheet, together with the underlying Subscription Agreement and debenture document to be supplied, is a binding
instrument and shall be supplemented only to such extent as the Parties may require to assure compliance with U.S. securities regulations. The Investors represent that they are current investors in Path 1, that they are accredited individuals or
entities as contemplated under the Securities Act 
 

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of 1933, as amended, and that the investment is made on the basis of an unsolicited offer. Each investor
making an investment hereunder shall execute this document. 
 

	 Investor(s)
	 	 	 	 Path 1 Network Technologies

	
	 By:
	 	 /S/    JOCHEN
DABELSTEIN        

	 	 	 	 By:
	 	 /S/    RICHARD B.
SLANSKY        

	 	 	 Name: Blutenweg 15
 Title: 68789 St. Leon-Rot
	 	 	 	 	 	 Name: Richard B. Slansky
 Title: CFO

 
Amount of Investment:
U.S.$10,000 
 

2Additional Funding Agreement

EXHIBIT 10.67 
 
ADDITIONAL FUNDING AGREEMENT 
 
This Agreement (this “Agreement”) is dated as of May 12, 2003, by and among Path 1 Network
Technologies, Inc. (the “Company”) and Palisades Master Fund L.P., Crescent International Ltd., Alpha Capital AG and Barucha LTD, as defined on the signature page hereto (collectively referred to as the
“Purchasers”). 
 
WHEREAS, the
Company, Palisades Master Fund L.P. and Crescent International Ltd. are parties to that certain Securities Purchase Agreement dated as of March 28, 2003 (the “Purchase Agreement”); 
 
WHEREAS, defined terms not otherwise defined herein shall have
the meanings ascribed to such terms in the Purchase Agreement; 
 
WHEREAS, Alpha Capital AG and Barucha LTD wishes to be party to, and Path 1 Network Technologies, Inc., Palisades Master Fund L.P. and Crescent International Ltd wish to make such investors party to, the Purchase Agreement and all of
the exhibits thereto; and 
 
WHEREAS, subject to
the terms and conditions set forth in this Agreement and the Purchase Agreement, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, up to, but not to exceed,
in the aggregate and in addition to the securities purchased at the Closing of the Purchase Agreement, $500,000 principal amount of Debentures and Warrants to purchase up to, in the aggregate, 192,308 shares of Common Stock, as more fully described
in this Agreement. 
 
NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Purchasers hereto agree as follows: 
 
1.    Investment.    Within two (2) Trading Days from the date hereof, each Purchaser shall deliver to the Company via wire transfer the amount set forth on the signature pages hereto
and labeled as the subscription amount, and the Company shall deliver to such Purchaser Debentures with a principal amount equal to the subscription amount, otherwise in accordance with Section 2.2(a)(i) of the Purchase Agreement, and Warrants in
accordance with Section 2.2(a)(ii) of the Purchase Agreement. 
 
2.    Documents.    The rights and obligations of the Purchasers and of the Company with respect to the Debentures, the Warrants and the shares of Common Stock issuable thereunder (the
“Underlying Shares”) shall be identical in all respects to the rights and obligations of the purchasers and of the Company with respect to the Debentures, the Warrants and the Underlying Shares issued pursuant to the Purchase
Agreement. For purposes of determining any rights or obligations of either party, March 28, 2003 shall be deemed the Closing Date of this transaction. Any rights of a Purchaser or covenants of the Company which are dependant on a Purchaser holding
securities of the Company or which are determined in magnitude by such Purchaser’s purchase of securities pursuant to the Purchase Agreement shall be deemed to include any securities purchased or issuable hereunder. The Purchase Agreement and
Debentures are hereby amended to the extent that the term “Debentures” includes the Debentures issued hereunder, “Warrants” includes the warrants issued hereunder and “Underlying Shares” includes the Underlying Shares.
Additionally, the Registration Rights Agreement is hereby amended to the extent that the term “Registrable Securities” includes in the calculation thereof the Underlying Shares and “Warrants” includes the warrants issued
hereunder. 
 
The Company and HPC Capital
Management (“HPC”) hereby agree to amend that certain engagement letter, dated December 26, 2001, between the Company and HPC to increase HPC’s 
 

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placement fee to 10% of the gross proceeds raised hereunder. Except as specifically amended by the terms
of this Agreement, the engagement letter between HPC and the Company shall remain unmodified and in full force and effect, and shall not be in any way changed, modified or superseded by the terms set forth herein, including HPC’s right to
receive a warrant to purchase up to 10,000 shares of Common stock per $500,000 invested, otherwise with terms identical to that of the Warrants. Additionally, the Company shall pay, out of the gross proceeds raised hereunder, $2,000 to Feldman
Weinstein LLP for the benefit of HPC for the legal fees and expenses incurred by HPC in connection herewith. 
 
3.    Representations and Warranties of the Company.    Except as set forth under the
corresponding section of the disclosure schedules attached to the Purchase Agreement, if any, all representations and warranties of the Company contained in Section 3.1 of the Purchase Agreement were true and correct as of March 28, 2003, and remain
true and correct as of the date hereof, as though made at and as of the date hereof. The Company has performed all of the covenants of the Company contained in the Purchase Agreement to be performed by the Company through the date hereof. The
Company shall, by the business day following the date of this Agreement, issue a press release reasonably acceptable to the Purchasers disclosing all material terms of the transactions contemplated hereby otherwise in compliance with Section 4.8 of
the Purchase Agreement. 
 
4.    Representations and Warranties of the Purchasers.    Each Purchaser hereby represents and warrants to the Company, severally and not jointly, that its representations and
warranties listed in Section 3.2 of the Purchase Agreement are true and correct with respect to such Purchaser as of the date hereof. 
 
5.    Incorporation by Reference.    Except as set forth in this Agreement, each of the
Purchase Agreement and the Registration Rights Agreement (with all exhibits attached thereto) are hereby incorporated by reference and made a part hereof. Execution of the signature page to this Agreement shall constitute the execution of each of
the Purchase Agreement and the Registration Rights Agreement, and each Purchaser and the Company shall be bound to their terms and conditions as set forth in this Agreement. Except as specifically amended by the terms of this Agreement, the Purchase
Agreement and all exhibits attached thereto shall remain unmodified and in full force and effect, and shall not be in any way changed, modified or superseded by the terms set forth herein. Unless waived by all of the Purchasers, the Company shall
deliver to the Purchasers an opinion of Company counsel substantially in the form of opinion delivered pursuant to the Purchaser Agreement to the purchaser signatory thereto. 
 
6.    Consent to Agreement and Amendment with Respect to Other
Registrations.    To the extent required pursuant to Section 4.7 of the Purchase Agreement, each Purchaser for itself, consents to the issuance of the Common Stock and Warrants pursuant to this Agreement and to the extent
required pursuant to the Registration Rights Agreement, consents to the inclusion of any and all Underlying Shares of Alpha Capital and Barucha LTD on the Registration Statement. Notwithstanding anything to the contrary in the Purchase Agreement or
Registration Rights Agreement, including Section 1 or Section 6(b) of the Registration Rights Agreement, the Company shall not file any other registration statement or include for registration any other securities on the Registration Statement other
than the Registrable Securities until after the Effective Date. 
 
7.    Successors and Assigns.    Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties hereto. 
 
8.    Amendment and Waiver.    Except as specifically amended by the terms of this Agreement, the Purchase Agreement and its exhibits shall remain unmodified and in full force and
effect, and shall not be in any way changed, modified or superseded by the terms set forth herein. Neither this 
 

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Agreement nor any term hereof
may be amended, waived, discharged or terminated, except by a written instrument signed by all the parties hereto. 
 
9.    Counterparts.    This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument and shall become effective when counterparts have been signed by each party and delivered to the other parties hereto, it being understood that all parties need not sign the same
counterpart. Execution of this amendment may be made by delivery by facsimile. 
 
10.    Notices.    Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set
forth in the Purchase Agreement, except as set forth on the signature pages hereto. 
 
************************** 
 

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

	 PATH 1 NETWORK TECHNOLOGIES, INC. 

	
	 By:
	 	 /s/    JOHN
ZAVOLI        

	 Name: John Zavoli

	 Title: CFO

 
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGE FOR PURCHASERS FOLLOWS] 
 
 

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[PURCHASER
FUNDING SIGNATURE PAGE] 
 
PALISADES MASTER FUND L.P.

 
 

	
	 By:
	 	 /s/    PAUL T. MANNION,
Jr.        

	           Name: Paul T. Mannion, Jr.

	           Title: General Partner

 
Subscription Amount:
$200,000 
Warrant Shares: 76,922 
 
CRESCENT INTERNATIONAL LTD. 
 

	
	 By:
	 	 /s/    M. CRAW M.
BREZZI        

	           Name: M. Craw M. Brezzi

	           Title: Authorized
Signatories

 
Subscription Amount:
$100,000 
Warrant Shares: 38,462 
 
 

	 ALPHA CAPITAL AG
  
  
  
 By:    /s/    [ILLEGIBLE]

         Name: [illegible name]
         Title: Director
	 	 	 	 Address for Notice:
 Lettstrasse 32
 Furstentum 9490
 Vaduz, Liechtenstein
 Fax: 011-423 232 3196
 Attn: Director

 
Subscription Amount:
$100,000 
Warrant Shares: 38,462 
 

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	 BARUCHA LTD
  
  
 By:    
/s/    CAROLINE BIRNBAUM     

         Name: Caroline Birnbaum
         Title: Trustee
	 	 	 	 Address for Notice:
 515 Ave I
 Brooklyn, NY 11219
 Attn: Caroline Birnbaum
 Tel: 917-748-3501

 
Subscription Amount:
$100,000 
Warrant Shares: 38,462 
 

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[PLACEMENT
AGENT SIGNATURE PAGE] 
 
HPC CAPITAL MANAGEMENT

 

	
	 By:
	 	 /s/    PAUL T. MANNION,
JR.         

	 	 	 Name: Paul T. Mannion, Jr.
 Title: General Partner

 

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