EXHIBIT 10.1
AMEDIA NETWORKS, INC.
▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
October 17, 2006
BY FACSIMILE & E-MAIL
To: The Purchasers of the Series A 7% Convertible
Preferred Stock Issued by Amedia Networks Inc.
In August 2004
The Purchasers of the Series B 8% Convertible
Preferred Stock Issued by Amedia Networks Inc.
In April-May 2005
Reference is made to (i) the Securities Purchase Agreement, dated as of August
9, 2004 (the "Series A Purchase Agreement"), by and between Amedia Networks,
Inc. (the "Company") and the Buyers named therein who purchased the Company's
Series A 7% Convertible Preferred Stock (the "Series A Stock") in August 2004
and (ii) the Securities Purchase Agreement, dated as of April 26, 2005 (the
"Series B Purchase Agreement"; together with the Series A Purchase Agreement,
the "Purchase Agreements"), by and between the Company and the Buyers named
therein who purchased the Company's Series B 8% Convertible Preferred Stock (the
"Series B Stock") in April-May 2005. Unless otherwise defined, all capitalized
terms used herein shall have the meanings ascribed to such terms in the
respective Purchase Agreements.
In furtherance of the Company's efforts to raise working capital, subject to
your making an Investment Commitment (as defined below) by the Latest Closing
Date (as defined in the Bridge Loan Agreement referred to below; as of the date
of this letter, the Latest Closing Date is currently set at October 31, 2006),
and further subject to the Minimum Threshold Aggregate Investment Commitment
being met and the transactions contemplated by the Loan Documents (as defined
below) being consummated, the following provisions shall apply:
(i) Solely for Buyers who make the Investment Commitment (each
hereinafter referred as a "Qualified Buyer"), the protective provisions
contained in Section 4(g) of each of the relevant Purchase Agreements
with respect to "Lower Price Transaction" (as defined in the relevant
Purchase Agreement) shall be deemed to be in full force and effect for
the period (the "Extended Protection Period") commencing on the date on
which the Investment Commitment is made and continuing through August
31, 2007, solely with respect to the Protected Amount (as defined
below), notwithstanding anything to the contrary contained in such
provisions. For the sake of clarity and to avoid any confusion, the
protection being granted hereunder shall be operative solely with
respect to the provisions directly
relating to occurrence of a Lower Price Transaction during the Extended
Protection Period and not to any other protective provision that may be
contained in such Section 4(g) of the relevant Purchase Agreement.
(ii) With respect to the Warrants held by a Qualified Buyer, the
Protected Amount shall be deemed to refer to such number of Warrants as
would have been issued to a Qualified Buyer under the relevant Purchase
Agreement had such Qualified Buyer's Protected Amount been applied to
the Purchase of the Convertible Preferred Stock under the relevant
Purchase Agreement.
Accordingly, solely for Qualified Buyers, the term "Final Lock-up Date"
contained in Section 4(g) of each of the Agreements shall be deemed to have been
amended accordingly to coincide with the Extended Protection Period.
PLEASE NOTE THAT BUYERS WHO DO NOT MAKE THE INVESTMENT COMMITMENT WILL NOT
RECEIVE THE EXTENDED PROTECTION PERIOD.
As used herein, the following terms shall have the meanings ascribed to them
below:
(i) "INVESTMENT COMMITMENT" shall mean your legally binding
agreement to lend to the Company immediately available funds equal to
the amount of the Purchase Price on your signature page to the Bridge
Loan Agreement (as defined below), on the terms and conditions contained
in the Loan Documents, as reflected by your execution and delivery to
the Documents Escrow Agent (as defined below) of the Loan Documents
which you need to execute.
(ii) "MINIMUM THRESHOLD AGGREGATE INVESTMENT COMMITMENT" shall
mean Investment Commitments from one or more Qualified Buyers in an
aggregate principal amount of $500,000.
(iii) "LOAN DOCUMENTS" shall mean and refer to the Bridge Loan
Agreement (the "Bridge Loan Agreement") and each of the annexes to the
Bridge Loan Agreement and the Note (the "Bridge Note").
(iv) "Document ESCROW AGENT" shall mean ▇▇▇▇▇▇▇ & Prager.
(v) "PROTECTED AMOUNT" shall mean an amount for a Qualified
Buyer equal to three times the Investment Commitment of such Qualified
Buyer actually paid in by such Qualified Buyer in connection with the
consummation of the transactions contemplated by the Loan Documents.
Please review carefully the terms and conditions set forth in the Loan
Documents, including, without limitation, the Disclosure Letter referred to in
Bridge Loan Agreement. You should also carefully review the Company's filings
with the Securities and Exchange Commission available on ▇▇▇▇▇ that are listed
on Annex IV to the Bridge Loan Agreement as these contain important information
concerning the Company, including without limitation, its fiscal condition. If
you elect to make
2
an Investment Commitment, you should carefully follow the wiring and related
instructions contained in the Loan Documents (Annex V thereto).
The proceeds of the Investment Commitment will be used by the Company in
accordance with Section 4(c) of the Bridge Loan Agreement and the Joint Escrow
Instructions (Annex II to the Bridge Loan Agreement). It is contemplated that
there may be one or more closings of proceeds of the Investment Commitments.
The Company has retained the services of Pond Equities to act as Placement Agent
for this offering. In consideration for its services, Pond will receive from the
proceeds of the Investment Commitment a cash fee in the amount equal to 10% of
the Investment Commitment.
You should note that the Company currently has approximately 1.5 million shares
from its authorized Common Stock that are available for issuance. Any increase
in the number of authorized Common Stock of the Company will require the
approval of a majority of the Company's issued and outstanding voting equity
securities. The Company cannot provide assurance that it will be able to obtain
the requisite stockholder consent and, even if the Company were to attempt to
obtain such consent, it could not reasonably expect to do so before at least 60
days after it filed a definitive proxy statement under the relevant securities
laws. Accordingly, unless the Company is able to obtain waivers of the Common
Stock reservation requirements currently in effect for the benefit of certain of
its stockholders and other rights holders, its ability to consummate a larger
funding within the time frame contemplated by the Loan Documents for the
repayment of the Investment Commitment is limited.
[REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
3
Your past and continued support of the Company is greatly appreciated.
AMEDIA NETWORKS, INC.
By:__________________
▇.▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
4