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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 h