Series D Bridge Note
Purchase Agreement
THIS SERIES D Bridge Note Purchase
Agreement (the “ Agreement ”) is made
as of the n day of n by and among Pantel Systems, Inc., a Nevada
corporation (the “ Company ”), and the
undersigned Purchaser (individually the “
Purchaser ” and together the “
Purchasers ”) .
The Parties hereby agree to the
following:
1.
Purchase and Sale of Series D
Bridge Note with 12% interest per annum (the Note).
1.1.
Sale and Issuance of the
Note ;
Warrants
(a) Subject to the terms and conditions of this
Agreement, each Purchaser agrees to purchase at the Closing, as
hereinafter defined, and the Company agrees to sell and issue to
each Purchaser at the Closing that number of dollars of The Note
set forth opposite each Purchaser’s name.
(b) The Note shall bear interest at the rate of 12%
per annum, payable semi-annually.
(c) The Company shall issue 10,000 common stock
purchase warrants per each $1,000 invested. The Warrants shall be
exercisable over a five year period at an exercise price of one
cent ($.01).
At the time of acceptance by the Company of each
subscription (the “Closing”), the Company shall deliver
to each Purchaser a certificate representing The Notes being
purchased by such Purchaser at such Closing against payment of the
purchase price therefor by check payable to the Company, by wire
transfer to a bank account designated by the Company, or by any
combination of such methods.
The Company
will use the proceeds from the sale of the Shares for product
development and other general corporate purposes.
1.4.
Defined Terms Used in this
Agreement.
In addition to the terms defined above, the
following terms used in this Agreement shall be construed to have
the meanings set forth or referenced below.
“ Affiliate ”
means, with respect to any specified Person, any other Person who
or which, directly or indirectly, controls, is controlled by, or is
under common control with such specified Person, including, without
limitation, any general partner, officer, director or manager of
such Person and any venture capital fund now or hereafter existing
that is controlled by one or more general partners or managing
members of, or shares the same management company with, such
Person.
“ Code ” means the
Internal Revenue Code of 1986, as amended.
“ Company Intellectual
Property ” means all patents, patent applications,
trademarks, trademark applications, service marks, tradenames,
copyrights, trade secrets, licenses, domain names, mask works,
information and proprietary rights and processes as are necessary
to the conduct of the Company’s business as now conducted and
as presently proposed to be conducted..
“ Key Employee ”
means any executive-level employee (including division director and
vice president-level positions) as well as any employee or
consultant who either alone or in concert with others develops,
invents, programs or designs any Company Intellectual
Property.
“Knowledge,”
including the phrase
“to the Company’s knowledge,”
shall mean the actual knowledge [after reasonable investigation] of
the following officers: [specify names].
“ Material Adverse Effect
” means a material adverse effect on the business, assets
(including intangible assets), liabilities, financial condition,
property, prospects or results of operations of
the Company.
“Person”
means any individual, corporation,
partnership, trust, limited liability company, association or other
entity.
“ Purchaser ” means
each of the Purchasers who is initially a party to this Agreement
and any Additional Purchaser who becomes a party to this
Agreement.
“ Securities Act ”
means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
1.5 Organization, Good Standing, Corporate
Power and Qualification .
The Company is
a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada and has all requisite
corporate power and authority to carry on its business as presently
conducted and as proposed to be conducted. The Company is duly
qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a
Material Adverse Effect.
1.6 Authorization. All
corporate action required to be taken by the Company’s Board
of Directors and stockholders in order to authorize the Company to
enter into the Transaction Agreements, and to issue The Notes at
the Closing and the Stock Warrants issuable with the Note, has been
taken or will be taken prior to the Closing. All action on the part
of the officers of the Company necessary for the execution and
delivery of the Transaction Agreements, the performance of all
obligations of the Company under the Transaction Agreements to be
performed as of the Closing, and the issuance and delivery of The
Note has been taken or will be taken prior to the Closing. The
Transaction Agreements, when executed and delivered by the Company,
shall constitute valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their
respective terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, or other laws of general application relating to or
affecting the enforcement of creditors’ rights generally,
(ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, or
(iii) to the extent the indemnification provisions contained
in the Investors’ Rights Agreement and the Indemnification
Agreement may be limited by applicable federal or state securities
laws.
1.7
Valid Issuance
The Notes and Warrants, when issued,
sold and delivered in accordance with the terms and for the
consideration set forth in this Agreement, will be validly issued,
fully paid and nonassessable, and free of liens, encumbrances and
restrictions other than restrictions applicable state and federal
securities laws. The Notes and Warrants will be issued in
compliance with all applicable federal and state securities laws.
The Notes and Warrants shall bear a restrictive legend that they
cannot be sold or transferred without registration under the
Securities Act or exemption thereunder.
1.8 Governmental Consents and
Filings. Assuming the accuracy of the representations made by
the Purchasers, no consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing
with, any federal, state or local governmental authority is
required on the part of the Company in connection with the
consummation of the transactions contemplated by this Agreement,
except for (i) the filing of the Restated Certificate, which will
have been filed as of the Initial Closing, and (ii) filings
pursuant to Regulation D of the Securities Act, and applicable
state securities laws, which have been made or will be made in a
timely manner.
1.9 Litigation. The Company
is currently in litigation with several parties. One of these
parties, Ignition Media made a asset sale to The Company in 2006.
Ignition Media’s suit will be contested by The Company, who
is seeking dismissal. If Ignition Media prevails in its suit, it
could have a material adverse effect to The Company.
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1.9.1
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The Company has
not (i) declared or paid any dividends, or authorized or made
any distribution upon or with respect to any class or series of its
capital stock.
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1.9.2
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[The Company
has not engaged in the past [three (3) months] in any discussion
with any representative of any Person regarding (i) a sale or
exclusive license of all or substantially all of the
Company’s assets, or (ii) any merger, consolidation or other
business combination transaction of the Company with or into
another Person.]
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1.10.1
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Other than (i)
standard employee benefits generally made available to all
employees, (ii) standard director and officer indemnification
agreements approved by the Board of Directors, and (iii) the
purchase of shares of the Company’s capital stock and the
issuance of options to purchase shares of the Company’s
Common Stock, in each instance, approved in the written minutes of
the Board of Directors (previously provided to the Purchasers or
their counsel), there are no agreements, understandings or proposed
transactions between the Company and any of its officers,
directors, consultants or Key Employees, or any Affiliate
thereof.
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1.10.2
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The Company is
not indebted, directly or indirectly, to any of its directors,
officers or employees or to their respective spouses or children or
to any Affiliate of any of the foregoing, other than in connection
with expenses or advances of expenses incurred in the ordinary
course of business or employee relocation expenses and for other
customary employee benefits made generally available to all
employees. None of the Company’s directors, officers or
employees, or any members of their immediate families, or any
Affiliate of the foregoing (i) are, directly or indirectly,
indebted to the Company or, (ii) to the Company’s knowledge,
have any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the
Company has a business relationship, or any firm or corporation
which competes with the Company except that directors, officers or
employees or stockholders of the Company may own stock in (but not
exceeding two percent (2%) of the outstanding capital stock of)
publicly traded companies that may compete with the Company. [To
the Company’s knowledge,] none of the Company’s Key
Employees or directors or any members of their immediate families
or any Affiliate of any of the foregoing are, directly or
indirectly, interested in any [material] contract with the Company.
None of the directors or officers, or any members of their
immediate families, has any material commercial, industrial,
banking, consulting, legal, accounting, charitable or familial
relationship with any of the Company’s customers, suppliers,
service providers, joint venture partners, licensees and
competitors.
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1.11 Rights of Registration and Voting
Rights. The Company is not under any obligation to register
under the Securities Act any of its currently outstanding
securities or any securities issuable upon exercise or conversion
of its currently outstanding securities. To the Company’s
knowledge, no stockholder of the Company has entered into any
agreements with respect to the voting of capital shares of the
Company.
1.12 Changes. Since the last equity
offering in October 2006 The Company has experienced:
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1.12.1
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No damage,
destruction or loss, whether or not covered by insurance, that
would have a Material Adverse Effect;
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1.12.2
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No waiver or
compromise by the Company of a valuable right or of a material debt
owed to it;
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1.12.3
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Two
resignations of employment by the former Chief Executive Officer
and The former Chairman of the Board; Both occurred in January of
2007.
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1.12.4
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No loans or
guarantees made by the Company to or for the benefit of its
employees, officers or directors, or any members of their immediate
families, other than travel advances and other advances made in the
ordinary course of its business;
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1.12.5
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No declaration,
setting aside or payment or other distribution in respect of any of
the Company’s capital stock, or any direct or indirect
redemption, purchase, or other acquisition of any of such stock by
the Company;
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1.12.6
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No sale,
assignment or transfer of any Company Intellectual Property that
could reasonably be expected to result in a Material Adverse
Effect;
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1.12.7
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No receipt of
notice that there has been a loss of, or material order
cancellation by, any major customer of the Company;
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1.12.8
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to the
Company’s knowledge, that other than in its accrued
liabilities and The Ignition Media Lawsuit any other event or
condition of any character, other than events affecting the economy
or the Company’s industry generally,
that could reasonably be expected to result in a Material Adverse
Effect; or
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1.12.9
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To the
Company’s knowledge, none of its employees is obligated under
any contract (including licenses, covenants or commitments of any
nature) or other agreement, or subject to any judgment, decree or
order of any court or administrative agency, that would materially
interfere with such employee’s ability to promote the
interest of the Company or that would conflict with the
Company’s business. Neither the execution or delivery of the
Transaction Agreements, nor the carrying on of the Company’s
business by the employees of the Company, nor the conduct of the
Company’s business as now conducted and as presently proposed
to be conducted, will, to the Company’s knowledge, conflict
with or result in a breach of the terms, conditions, or provisions
of, or constitute a default under, any contract, covenant or
instrument under which any such employee is now
obligated.
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1.12.10
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The Company has
been delinquent in payments to any of its employees, consultants,
or independent contractors for any wages, salaries, commissions,
bonuses, or other direct compensation for any service performed for
it to the date hereof or amounts required to be reimbursed to such
employees, consultants, or independent contractors. The Company has
not complied in all material respects with all applicable state and
federal equal employment opportunity laws and with other laws
related to employment, including those related to wages, hours,
worker classification, and collective bargaining. The Company has
withheld and not paid to the appropriate governmental entity
approximately $90,000 in monies due the IRS. To the Company’s
knowledge, no Key Employee intends to terminate employment with the
Company or is otherwise likely to become unavailable to continue as
a Key Employee, nor does the Company have a present intention to
terminate the employment of any of the foregoing. The Company has
not made any representations regarding equity incentives to any
officer, employees, director or consultant that are inconsistent
with the share amounts and terms set forth in the minutes of
meetings of the Company’s board of directors. .
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1.12.11
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[The Company is
not bound by or subject to (and none of its assets or properties is
bound by or subject to) any written or oral, express or implied,
contract, commitment or arrangement with any labor union, and no
labor union has requested or, to the knowledge of the Company, has
sought to represent any of the employees, representatives or agents
of the Company. There is no strike or other labor dispute involving
the Company pending, or to the Company’s knowledge,
threatened, which could have a Material Adverse Effect, nor is the
Company aware of any labor organization activity involving its
employees.]
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