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EXHIBIT
10.2
BRIDGE LOAN
AGREEMENT
THIS BRIDGE LOAN AGREEMENT, dated
as of October 10, 2006, is entered
into by and between AMEDIA NETWORKS, INC., a Delaware corporation with
headquarters located at 2 Corbett Way, Eatontown, New Jersey 07724 (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 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 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 Purchase Price
(as
defined below).
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(ii) The actual total Purchase
Price of all Buyers (including Other
Buyers), which shall not be less than the Minimum Aggregate Purchase Price and
not more than the Maximum Aggregate Purchase Price (as those terms are defined
below), is referred to as the "Aggregate Purchase Price."
(iii) 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 aggregate principal amount of the Note Principal (as define
below). Each Note shall be payable on the earlier of (x) the date (the
"Stated
Maturity Date") which is one hundred twenty (120) days after the Initial
Closing
Date (as defined below) or (y) the date on which the New Transaction Threshold
(as defined in the Note) occurs. The "Note Principal" is the amount
equal to (x)
the Buyer's Purchase Price, multiplied by (y) the Applicable Percentage (as
defined below). The "Applicable Percentage" is the percentage which
is equal to
(x) one hundred percent (100%), plus (y) (1) the percent equal to twenty-four
percent (24%), multiplied by (2) the fraction, of which the numerator is the
number of days from the relevant Buyer's Closing Date (as defined below) until
the Stated Maturity Date and the denominator is 360. Each Note shall be shall
be
in the form of ANNEX I annexed hereto.
(iv) The loan to be made by the
Buyer and the issuance of the Note 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 Note, 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:
"Additional Closing
Date" means, if there is more than one Closing Date,
the relevant Closing Date after the Initial Closing Date.
"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.
"Aggregate Note
Principal" means, as of any relevant date, the aggregate
Note Principal of all Notes issued to the Buyer and all Other Buyers.
"Business Day" means a
weekday (Monday through Friday, inclusive) on
which commercial banks in New York City are open for business.
"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 Securities and Exchange Act of
1934,
as amended.
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"Buyer's Closing Date"
means, for each Buyer, the Closing Date for the
Note purchased by and sold to such Buyer.
"Certificates" means
the ink-signed Note, duly executed by the Company
and issued on the Buyer's Closing Date in the name of the Buyer.
"Closing Date" means
the date of the closing of the Transactions, as
provided herein, and includes the Initial Closing Date and, if any, each
Additional Closing Date; provided, however, that, no Closing Date shall be
later
than the Latest Closing Date.
"Disclosure Letter"
means a letter and any modifications thereof, the
latest of which is dated at least one Trading Day prior to the relevant 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.
"Document Escrow Agent"
means Krieger & Prager LLP, the escrow agent
identified in the Joint Document Escrow Instructions attached hereto as ANNEX
II
(the "Joint Escrow Instructions").
"Escrow Funds" means
the Purchase Price delivered to the Funds Escrow
Agent as contemplated by Section 1(c) hereof.
"Escrow Property" means
the Escrow Funds and the Certificates delivered
to the Funds Escrow Agent and the Document Escrow Agent, respectively, as
contemplated by Section 1(c) hereof.
"Funds Escrow Agent"
means American Stock Transfer & Trust Company, the
escrow agent identified in the Wire Instructions.
"Holder" means a holder
of a Note.
"Initial Closing Date" means the
Closing Date or, if there is more than
one Closing Date for the transactions contemplated by this Agreement, the
Closing Date for the first of such closings (which shall be for at least the
Minimum Aggregate Purchase Price).
"Last Audited Date"
means December 31, 2005.
"Latest Closing Date"
means October 31, 2006, except that with the
written agreement of the Company and the Placement Agent such date can be
extended for up to two successive calendar months.
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"Majority in Interest of the
Holders" means, as of the relevant date,
one or more Holders whose respective outstanding principal amounts of the Notes
held by each of them aggregate at least sixty-six and 67/100 percent (66.67%)
of
the Aggregate Note Principal.
"Material Adverse
Effect" means an event or combination of events, which
individually or in the aggregate, would reasonably be expected to (x) adversely
affect the legality, validity or enforceability of the Notes 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) 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.
"Maximum Aggregate Purchase
Price" means Two Million Dollars
($2,000,000.00).
"Minimum Aggregate Purchase
Price" means Five Hundred Thousand Dollars
($500,000.00).
"Person" means any
living person or any entity, such as, but not
necessarily limited to, a corporation, partnership or trust.
"Placement Agent" means
Pond Equities, a registered broker-dealer.
"State of
Incorporation" means Delaware.
"Transaction
Agreements" means this Bridge Loan Agreement, the Note, and
the Joint Escrow Instructions, and includes all ancillary documents referred to
in those agreements.
"Wire Instructions"
means the Purchase Price Wire Instructions as
provided in ANNEX V annexed hereto.
c. FORM OF PAYMENT; DELIVERY OF
CERTIFICATES.
(i) The Buyer shall pay the
relevant Purchase Price by delivering, by
wire transfer of funds as provided in the Wire Instructions, immediately
available good funds in United States Dollars to the Funds Escrow Agent no
later
than the date prior to the relevant Closing Date, to be held in escrow pending
the closing of the transactions contemplated hereby.
(ii) Within two (2) Trading Days
after the Company is notified that the
Funds Escrow Agent has on deposit cleared funds from or on behalf of one or
more
Buyers and aggregate amount equal to the Purchase Price, the Company shall
deliver the relevant Certificates, each duly executed on behalf of the Company
and issued in the name of the Buyer, to the Document Escrow Agent. Such
Certificates shall be held in escrow by the Document Escrow Agent as provided
in
the Joint Escrow Instructions.
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(iii) By signing this Agreement,
each of the Buyer and the Company,
subject to acceptance by the Document 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.
2. BUYER REPRESENTATIONS,
WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
The Buyer represents and warrants
to, and covenants and agrees with, the
Company as follows:
a. Without limiting Buyer's right
to sell the Note pursuant to an
effective registration statement or otherwise in compliance with the 1933 Act,
the Buyer is purchasing the Note 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
Company,
and (iv) able to afford the entire loss of its investment in the Note.
c. All subsequent offers and
sales of the Note by the Buyer shall be
made pursuant to registration of the Note under the 1933 Act or pursuant to an
exemption from registration.
d. The Buyer understands that the
Notes 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 Note.
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
Note which have been requested by the Buyer, including those set forth on in
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 IV
hereto
(the documents listed on such Annex
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IV, to the extent available on EDGAR or otherwise provided to the Buyer as
indicated on said Annex IV, collectively, the "Company's SEC
Documents").
f. The Buyer understands that its
investment in the Note involves a high
degree of risk.
g. The Buyer hereby represents
that, in connection with its purchase of
the Note, it has not relied on any statement or representation by the Company
or
the Placement Agent or any of their respective controlling Persons, officers,
directors, partners, agents and employees or any of their respective attorneys,
except as specifically set forth herein. Each of the Placement Agent and its
controlling Persons, officers, directors, partners, agents and employees and
each of their respective attorneys is a third party beneficiary of this
provision.
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 Note.
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 relevant 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. No
party
has a currently 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.
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c. TRANSACTION AGREEMENTS. 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 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.
d. NON-CONTRAVENTION. The
execution and delivery of this Agreement and
each of the other Transaction Agreements by the Company, the issuance of the
Note, and the consummation by the Company of the other transactions
contemplated
by this Agreement, the Note 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.
e. 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 Note to the Buyer as
contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained.
f. 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.
g. ABSENCE OF CERTAIN CHANGES.
Since the Last Audited Date, there has
been no material adverse change and 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
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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 1 practices; or (vii)
experienced any material problems with labor or management in connection with
the terms and conditions of their employment.
h. 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. No event or circumstances has occurred
or exists with respect to the Company or its properties, business, operations,
condition (financial or otherwise), or results of operations, which, under
applicable law, rule or regulation, requires public disclosure or announcement
prior to the date hereof by the Company but which has not been so publicly
announced or disclosed. There are no proposals currently under consideration or
currently anticipated to be under consideration by the Board of Directors or
the
executive officers of the Company which proposal would (x) change the articles
or certificate of incorporation or other charter document or by-laws of the
Company, each as currently in effect, with or without shareholder approval,
which change would reduce or otherwise adversely affect the rights and powers
of
the holders of the Notes or (y) materially or substantially change the
business,
assets or capital of the Company, including its interests in subsidiaries.
i. NO INTEGRATED OFFERING.
Neither the Company nor any of its Affiliates
nor any Person acting on its or their behalf has, directly or indirectly, at
any
time since March 1, 2006, made any offer or sales of any security or solicited
any offers to buy any security under circumstances that would eliminate the
availability of the exemption from registration under Regulation D in
connection
with the offer and sale of the Note as contemplated hereby.
j. FEES TO BROKERS, FINDERS AND
OTHERS. The Company has taken no action
which would give rise to any claim by any Person for brokerage commission,
finder's fees or similar payments by Buyer relating to this Agreement or the
transactions contemplated hereby. Notwithstanding the foregoing, the Company
acknowledges that it has agreed to pay the Placement Agent's Compensation (as
defined below) to the Placement Agent in connection with the transactions
contemplated hereby. Buyer shall have no obligation with respect






