<PAGE>
EXHIBIT 10.8
BRIDGE LOAN AGREEMENT
THIS BRIDGE LOAN AGREEMENT, dated as of January 18, 2006, is
entered
into by and between AMBIENT CORPORATION, a Delaware corporation
with
headquarters located at 79 Chapel Street, Newton, Massachusetts
02458 (the
"Company"), and each individual or entity named on an executed
counterpart of
the signature page hereto (each such signatory is referred to as a
"Buyer")
(each agreement with a Buyer being deemed a separate and
independent agreement
between the Company and such Buyer, except that each Buyer
acknowledges and
consents to the rights granted to each other Buyer [each, an "Other
Buyer"]
under such agreement and the Transaction Agreements, as defined
below, referred
to therein).
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and delivering
this
Agreement in accordance with and in reliance upon the exemption
from securities
registration for offers and sales to accredited investors afforded,
INTER ALIA,
by Rule 506 under Regulation D ("Regulation D") as promulgated by
the United
States Securities and Exchange Commission (the "SEC") under the
Securities Act
of 1933, as amended (the "1933 Act"), and/or Section 4(2) of the
1933 Act; and
WHEREAS, each Buyer wishes to lend funds in the amount of the
Purchase
Price (as defined below) to the Company, subject to and upon the
terms and
conditions of this Agreement and acceptance of this Agreement by
the Company,
the repayment of which will be represented by a Secured Promissory
Note of the
Company (the "Note"), on the terms and conditions referred to
herein; and
WHEREAS, in connection with the loan to be made by the Buyer,
the
Company has agreed to issue the Note and the Warrant (as defined
below) to the
Buyer;
NOW THEREFORE, in consideration of the premises and the mutual
covenants
contained herein and other good and valuable consideration, the
receipt and
sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. AGREEMENT
TO PURCHASE; PURCHASE PRICE.
A.
PURCHASE.
(i)
Subject to the terms and conditions of this Agreement and the
other Transaction Agreements (as defined below), the Buyer hereby
agrees to loan
to the Company the principal amount specified on the Buyer's
signature page of
this Agreement (the "Purchase Price"), out of the aggregate amount
being loaned
by all Buyers of US $1,500,000 (the "Aggregate Purchase
Price").
(ii) The
obligation to repay the loan of the relevant Purchase Price
from the Buyer shall be evidenced by the Company's issuance of one
or more Notes
to the Buyer in the principal amount of one hundred eight percent
(108%) of the
Purchase Price paid by the Buyer on or in connection with the
Closing Date. Each
Note shall be payable on the date (the "Stated Maturity Date")
which is one
hundred fifty (150) days after the Closing Date or the date on
which the New
Transaction Threshold (as defined in the Note) occurs. Each Note
shall be in the
form of ANNEX I annexed hereto. Repayment of the Note shall be
secured under the
terms of a Security Interest Agreement between the Company, as
debtor, and the
Buyer, as secured party (the "Security Interest Agreement"),
substantially in
the form annexed hereto as ANNEX V.
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(iii) In
consideration of the loan to be made by the Buyer, the
Company will issue to such Buyer the Warrant to purchase the number
of shares of
the Company's Common Stock as provided in Section 4 hereof.
(iv) The
loan to be made by the Buyer and the issuance of the Note
and the Warrant to the Buyer and the other transactions
contemplated hereby are
sometimes referred to herein and in the other Transaction
Agreements as the
purchase and sale of the Securities (as defined below), and are
referred to
collectively as the "Transactions."
B. CERTAIN
DEFINITIONS. As used herein, each of the following terms
has the meaning set forth below, unless the context otherwise
requires:
"Affiliate" means, with respect to a specific Person referred to in
the
relevant provision, another Person who or which controls or is
controlled by or
is under common control with such specified Person.
"Buyer Control Person" means each director, executive officer,
promoter,
and such other Persons as may be deemed in control of the Buyer
pursuant to Rule
405 under the 1933 Act or Section 20 of the 1934 Act.
"Buyer's Allocable Share" means the fraction, of which the
numerator is
the Buyer's Purchase Price and the denominator is the Aggregate
Purchase Price.
"Certificates" means the ink-signed Note and the Warrant, each
duly
executed by the Company and issued on the Closing Date in the name
of the Buyer.
"Closing Date" means the date of the closing of the Transactions,
as
provided herein.
"Company Control Person" means each director, executive
officer,
promoter, and such other Persons as may be deemed in control of the
Company
pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934
Act (as
defined below).
"Disclosure Letter" means a letter and any modifications thereof,
the
latest of which is dated at least one Trading Day prior to the
Closing Date,
from the Company to the Buyer; provided, however, that the
Disclosure Letter
shall be arranged in sections corresponding to the identified
Sections of this
Agreement, but the disclosure in any such section of the Disclosure
Letter shall
qualify other provisions in this Agreement to the extent that it
would be
readily apparent to an informed reader from a reading of such
section of the
Disclosure Letter that it is also relevant to other provisions of
this
Agreement.
"Escrow Agent" means Krieger & Prager LLP, the escrow agent
identified
in the Joint Escrow Instructions attached hereto as ANNEX II (the
"Joint Escrow
Instructions").
"Escrow Funds" means the Purchase Price delivered to the Escrow
Agent as
contemplated by Sections 1(c) and (d) hereof.
"Escrow Property" means the Escrow Funds and the Certificates
delivered
to the Escrow Agent as contemplated by Section 1(c) hereof.
"Holder" means the Person holding the relevant Securities at
the
relevant time.
"Last Audited Date" means December 31, 2004.
"Material Adverse Effect" means an event or combination of events,
which
individually or in the aggregate, would reasonably be expected to
(x) materially
adversely affect the legality, validity or enforceability of the
Purchased
Securities or any of the Transaction Agreements, (y) have or result
in a
material adverse effect on the results of operations, assets, or
financial
condition of the Company and its subsidiaries, taken as a whole, or
(z)
<PAGE>
materially adversely impair the Company's ability to perform fully
on a timely
basis its material obligations under any of the Transaction
Agreements or the
transactions contemplated thereby.
"New Common Stock" means shares of Common Stock and/or
securities
convertible into, and/or other rights exercisable for, Common
Stock, which are
offered or sold in a New Transaction.
"New Investor" means the third party investor, purchaser or
lender
(howsoever denominated) in a New Transaction.
"New Transaction" means
(i)
the offer or sale of New Common Stock by or on behalf of the
Company to a New Investor and/or
(ii) the
grant of a security interest in or pledge of (x) any or all
of the Company's assets by the Company and/or (y) shares of the
Company's Common
Stock or securities convertible into or exercisable for the
Company's Common
Stock by any other party in connection with a transaction in which
the Company
borrows or is otherwise obligated to pay funds to a third party, in
a
transaction offered or consummated after the date hereof; provided,
however,
that it is specifically understood that the term "New Transaction"
(1) includes,
but is not limited to, a sale of Common Stock or of a security
convertible into
Common Stock or an equity or credit line transaction, but (2) does
not include
(a) the issuance of Common Stock upon the exercise or conversion of
options,
warrants or convertible securities outstanding on the date hereof,
or in respect
of any other financing agreements as in effect on the date hereof
and identified
in the Disclosure Letter (provided the same is not amended after
the date of the
Disclosure Letter) or the Company SEC Documents (provided the same
is not
amended after the date hereof), (b) the issuance of Common Stock
pursuant to an
Employee Stock Option Plan (an "ESOP") of the Company, such ESOP
having been
properly approved by the shareholders of the Company, (c) the
issuance of Common
Stock pursuant to a non-employee director or consultants' stock
option plan of
the Company, (d) the issuance of Common Stock upon the exercise of
any options
or warrants referred to in the preceding clauses of this paragraph
(provided the
same is not amended after the date hereof), or (e) the issuance of
shares to a
Strategic Partner.
"Person" means any living person or any entity, such as, but
not
necessarily limited to, a corporation, partnership or trust.
"Principal Trading Market" means the Over the Counter Bulletin
Board or
such other market on which the Common Stock is principally traded
at the
relevant time, but shall not included the "pink sheets."
"Purchased Securities" means the Note and the Warrant.
"Registrable Securities" means the Warrant Shares, unless such
shares
can then be sold by the Holder under Rule 144(k) promulgated under
the 1933 Act.
"Registration Rights Provisions" means the piggy-back
registration
rights contemplated by the terms of this Agreement, including, but
not
necessarily limited to, Section 4(h) hereof, and of the other
Transaction
Agreements.
"Registration Statement" means an effective registration
statement
covering the Registrable Securities.
"Securities" means the Note, the Warrant and the Shares.
"Shares" means the shares of Common Stock representing any of
the
Warrant Shares.
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"State of Incorporation" means Delaware.
"Strategic Partner" means a third party, whether or not
currently
affiliated with the Company, which party (i) is engaged in a
business which is
the business in which the Company is engaged or a similar or
related business,
and (ii) either (a) subsequently purchases equity securities of the
Company (or
securities convertible into equity securities of the Company), or
(b) enters
into an agreement for one or more of the following: the licensing
by the Company
of all or any portion of its technology to such third party, the
licensing by
such third party of all or any portion of its technology to the
Company, or any
other coordination of all or a portion of their respective business
activities
or operations by the Company and such third party.
"Trading Day" means any day during which the Principal Trading
Market
shall be open for business.
"Transfer Agent" means, at any time, the transfer agent for the
Company's Common Stock.
"Transaction Agreements" means this Bridge Loan Agreement, the
Note, the
Security Interest Agreement, the Joint Escrow Instructions, and the
Warrant, and
includes all ancillary documents referred to in those
agreements.
"Warrant" means the warrant issued to the Buyer as contemplated
by
Section 4 of this Agreement.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise
of the Warrant.
C. FORM OF
PAYMENT; DELIVERY OF CERTIFICATES.
(i)
The Buyer shall pay the Purchase Price by delivering
immediately
available good funds in United States Dollars to the Escrow Agent
no later than
the date prior to the Closing Date.
(ii) No
later than the Closing Date, but in any event promptly
following payment by the Buyer to the Escrow Agent of the Purchase
Price, the
Company shall deliver the Certificates, each duly executed on
behalf of the
Company and issued in the name of the Buyer, to the Escrow
Agent.
(iii) By signing
this Agreement, each of the Buyer and the Company,
subject to acceptance by the Escrow Agent, agrees to all of the
terms and
conditions of, and becomes a party to, the Joint Escrow
Instructions, all of the
provisions of which are incorporated herein by this reference as if
set forth in
full.
D. METHOD OF
PAYMENT. Payment into escrow of the Purchase Price
shall be made by wire transfer of funds to:
Bank of New York
350 Fifth Avenue
New York, New York 10001
ABA# 021000018
For credit to the account of Krieger & Prager LLP
Account No.: [To be provided to the Buyer by Krieger & Prager
LLP]
Re: Ambient 1/06
Bridge Transaction
For: [Name of
Buyer]
2. LENDER
REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and agrees
with, the
Company as follows:
<PAGE>
A. Without
limiting Buyer's right to sell the Securities pursuant
to an effective registration statement or otherwise in compliance
with the 1933
Act, the Buyer is purchasing the Securities for its own account for
investment
only and not with a view towards the public sale or distribution
thereof and not
with a view to or for sale in connection with any distribution
thereof.
B. The Buyer
is (i) an "accredited investor" as that term is
defined in Rule 501 of the General Rules and Regulations under the
1933 Act by
reason of Rule 501(a)(3), (ii) experienced in making investments of
the kind
described in this Agreement and the related documents, (iii) able,
by reason of
the business and financial experience of its officers (if an
entity) and
professional advisors (who are not affiliated with or compensated
in any way by
the Company or any of its Affiliates or selling agents), to protect
its own
interests in connection with the transactions described in this
Agreement, and
the related documents, and to evaluate the merits and risks of an
investment in
the Securities, and (iv) able to afford the entire loss of its
investment in the
Securities.
C. All
subsequent offers and sales of the Securities by the Buyer
shall be made pursuant to registration of the relevant Securities
under the 1933
Act or pursuant to an exemption from registration.
D. The Buyer
understands that the Securities are being offered and
sold to it in reliance on specific exemptions from the registration
requirements
of the 1933 Act and state securities laws and that the Company is
relying upon
the truth and accuracy of, and the Buyer's compliance with, the
representations,
warranties, agreements, acknowledgments and understandings of the
Buyer set
forth herein in order to determine the availability of such
exemptions and the
eligibility of the Buyer to acquire the Securities.
E. The Buyer
and its advisors, if any, have been furnished with or
have been given access to all materials relating to the business,
finances and
operations of the Company and materials relating to the offer and
sale of the
Securities which have been requested by the Buyer, including those
set forth on
any annex attached hereto. The Buyer and its advisors, if any, have
been
afforded the opportunity to ask questions of the Company and its
management and
have received complete and satisfactory answers to any such
inquiries. Without
limiting the generality of the foregoing, the Buyer has also had
the opportunity
to obtain and to review the Company's filings on EDGAR listed on
ANNEX VI hereto
(the documents listed on such Annex VI, to the extent available on
EDGAR or
otherwise provided to the Buyer as indicated on said Annex VI,
collectively, the
"Company's SEC Documents").
F. The Buyer
understands that its investment in the Securities
involves a high degree of risk.
G. The Buyer
hereby represents that, in connection with its
purchase of the Securities, it has not relied on any statement or
representation
by the Company or any of its officers, directors and employees or
any of its
attorneys or agents, except as specifically set forth herein.
H. The Buyer
understands that no United States federal or state
agency or any other government or governmental agency has passed on
or made any
recommendation or endorsement of the Securities.
I. This
Agreement and the other Transaction Agreements to which the
Buyer is a party, and the transactions contemplated thereby, have
been duly and
validly authorized, executed and delivered on behalf of the Buyer
and are valid
and binding agreements of the Buyer enforceable in accordance with
their
respective terms, subject as to enforceability to general
principles of equity
and to bankruptcy, insolvency, moratorium and other similar laws
affecting the
enforcement of creditors' rights generally.
3. COMPANY
REPRESENTATIONS, ETC. The Company represents and
warrants to the Buyer as of the date hereof and as of the Closing
Date that,
except as otherwise provided in the Disclosure Letter or in the
Company's SEC
Documents:
A. RIGHTS OF
OTHERS AFFECTING THE TRANSACTIONS. There are no
preemptive rights of any shareholder of the Company, as such, to
acquire the
Note, the Warrant or the Shares. No party has a currently
<PAGE>
exercisable right of first refusal which would be applicable to any
or all of
the transactions contemplated by the Transaction Agreements.
B. STATUS.
The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Incorporation and
has the requisite corporate power to own its properties and to
carry on its
business as now being conducted. The Company is duly qualified as a
foreign
corporation to do business and is in good standing in each
jurisdiction where
the nature of the business conducted or property owned by it makes
such
qualification necessary, other than those jurisdictions in which
the failure to
so qualify would not have or result in a Material Adverse Effect.
The Company
has registered its stock and is obligated to file reports pursuant
to Section 12
or Section 15(d) of the Securities and Exchange Act of 1934, as
amended (the
"1934 Act"). The Common Stock is quoted on the Principal Trading
Market. The
Company has received no notice, either oral or written, with
respect to the
continued eligibility of the Common Stock for such quotation on the
Principal
Trading Market, and the Company has maintained all requirements on
its part for
the continuation of such quotation.
C. AUTHORIZED
SHARES.
(i)
The authorized capital stock of the Company consists of
300,000,000 shares of Common Stock, $.001 par value per share, of
which
approximately 66,554,381 are outstanding as of January 18,
2006.
(ii) There
are no outstanding securities which are convertible into
shares of Common Stock, whether such conversion is currently
exercisable or
exercisable only upon some future date or the occurrence of some
event in the
future. If any such securities are listed on the Disclosure Letter,
the number
or amount of each such outstanding convertible security and the
conversion terms
are set forth in said Disclosure Letter.
(iii) All issued
and outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and
non-assessable. The Company
has sufficient authorized and unissued shares of Common Stock as
would be
necessary to effect the issuance of the Shares on the Closing Date,
were the
Warrant fully exercised on that date.
(iv) As of
the Closing Date, the Shares shall have been duly
authorized by all necessary corporate action on the part of the
Company, and,
when issued upon exercise of the Warrant, in accordance with its
terms, will
have been duly and validly issued, fully paid and non-assessable
and will not
subject the Holder thereof to personal liability by reason of being
such Holder.
D.
TRANSACTION AGREEMENTS AND STOCK. This Agreement and each of
the
other Transaction Agreements, and the transactions contemplated
thereby, have
been duly and validly authorized by the Company, this Agreement has
been duly
executed and delivered by the Company and this Agreement is, and
the Note, the
Warrant and each of the other Transaction Agreements, when executed
and
delivered by the Company, will be, valid and binding agreements of
the Company
enforceable in accordance with their respective terms, subject as
to
enforceability to general principles of equity and to bankruptcy,
insolvency,
moratorium, and other similar laws affecting the enforcement of
creditors'
rights generally.
E.
NON-CONTRAVENTION. The execution and delivery of this Agreement
and each of the other Transaction Agreements by the Company, the
issuance of the
Securities, and the consummation by the Company of the other
transactions
contemplated by this Agreement, the Note, the Warrant and the other
Transaction
Agreements do not and will not conflict with or result in a breach
by the
Company of any of the terms or provisions of, or constitute a
default under (i)
the certificate of incorporation or by-laws of the Company, each as
currently in
effect, (ii) any indenture, mortgage, deed of trust, or other
material agreement
or instrument to which the Company is a party or by which it or any
of its
properties or assets are bound, including any listing agreement for
the Common
Stock except as herein set forth, or (iii) to its knowledge, any
existing
applicable law, rule, or regulation or any applicable decree,
judgment, or order
of any court, United States federal or state regulatory body,
administrative
agency, or other governmental body having jurisdiction over the
Company or any
of its properties or assets, except such conflict, breach or
default which would
not have or result in a Material Adverse Effect.
<PAGE>
F. APPROVALS.
No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization,
or stock
exchange or market or the shareholders of the Company is required
to be obtained
by the Company for the issuance and sale of the Securities to the
Buyer as
contemplated by this Agreement, except such authorizations,
approvals and
consents that have been obtained.
G. FILINGS.
None of the Company's SEC Documents contained, at the
time they were filed, any untrue statement of a material fact or
omitted to
state any material fact required to be stated therein or necessary
to make the
statements made therein in light of the circumstances under which
they were
made, not misleading. Since November 1, 2004, the Company has
timely filed all
requisite forms, reports and exhibits thereto required to be filed
by the
Company with the SEC.
H. ABSENCE OF
CERTAIN CHANGES. Since the Last Audited Date, there
has been no Material Adverse Effect, except as disclosed in the
Company's SEC
Documents. Since the Last Audited Date, except as provided in the
Company's SEC
Documents, the Company has not (i) incurred or become subject to
any material
liabilities (absolute or contingent) except liabilities incurred in
the ordinary
course of business consistent with past practices; (ii) discharged
or satisfied
any material lien or encumbrance or paid any material obligation or
liability
(absolute or contingent), other than current liabilities paid in
the ordinary
course of business consistent with past practices; (iii) declared
or made any
payment or distribution of cash or other property to shareholders
with respect
to its capital stock, or purchased or redeemed, or made any
agreements to
purchase or redeem, any shares of its capital stock; (iv) sold,
assigned or
transferred any other tangible assets, or canceled any debts owed
to the Company
by any third party or claims of the Company against any third
party, except in
the ordinary course of business consistent with past practices; (v)
waived any
rights of material value, whether or not in the ordinary course of
business, or
suffered the loss of any material amount of existing business; (vi)
made any
increases in employee compensation, except in the ordinary course
of business
consistent with past practices; or (vii) experienced any material
problems with
labor or management in connection with the terms and conditions of
their
employment.
I. FULL
DISCLOSURE. To the best of the Company's knowledge, there
is no fact known to the Company (other than general economic
conditions known to
the public generally or as disclosed in the Company's SEC
Documents) that has
not been disclosed in writing to the Buyer that would reasonably be
expected to
have or result in a Material Adverse Effect.
J. ABSENCE OF
LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board or
body pending
or, to the knowledge of the Company, threatened against or
affecting the Company
before or by any governmental authority or nongovernmental
department,
commission, board, bureau, agency or instrumentality or any other
person,
wherein an unfavorable decision, ruling or finding would have a
Material Adverse
Effect or which would adversely affect the validity or
enforceability of, or the
authority or ability of the Company to perform its obligations
under, any of the
Transaction Agreements. The Company is not aware of any valid basis
for any such
claim that (either individually or in the aggregate with all other
such events
and circumstances) could reasonably be expected to have a Material
Adverse
Effect. There are no outstanding or unsatisfied judgments, orders,
decrees,
writs, injunctions or stipulations to which the Company is a party
or by which
it or any of its properties is bound, that involve the transaction
contemplated
herein or that, alone or in the aggregate, could reasonably be
expect to have a
Material Adverse Effect.
K. ABSENCE OF
EVENTS OF DEFAULT. Except as set forth in Section
3(e) hereof, (i) neither the Company nor any of its subsidiaries is
in default
in the performance or observance of any material obligation,
agreement, covenant
or condition contained in any material indenture, mortgage, deed of
trust or
other material agreement to which it is a party or by which its
property is
bound, and (ii) no Event of Default (or its equivalent term), as
defined in the
respective agreement to which the Company or its subsidiary is a
party, and no
event which, with the giving of notice or the passage of time or
both, would
become an Event of Default (or its equivalent term) (as so defined
in such
agreement), has occurred and is continuing, which would have a
Material Adverse
Effect.
<PAGE>
L. ABSENCE OF
CERTAIN COMPANY CONTROL PERSON ACTIONS OR EVENTS. To
the Company's knowledge, none of the following has occurred during
the past five
(5) years with respect to a Company Control Person:
(1)
A petition under the federal bankruptcy laws or any state
insolvency law was filed by or against, or a receiver, fiscal agent
or similar
officer was appointed by a court for the business or property of
such Company
Control Person, or any partnership in which he was a general
partner at or
within two years before the time of such filing, or any corporation
or business
association of which he was an executive officer at or within two
years before
the time of such filing;
(2)
Such Company Control Person was convicted in a criminal
procee
