UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 13, 2006
AMEDIA NETWORKS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-22055 11-3223672
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
2 CORBETT WAY, EATONTOWN, NEW JERSEY 07724
(Address of principal executive offices, including Zip Code)
(732) 440-1992
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
The information set forth under Item 2.03 of this Current Report on Form
8-K is hereby incorporated by reference into this Item 1.01.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT
Amedia Networks, Inc. (the "Company") has entered into a Bridge Loan
Agreement dated as of March 13, 2006 (the "Loan Agreement") with Double U Master
Fund L.P, an institutional investor (the "Investor"), pursuant to which, on
March 14, 2006, the Investor loaned the Company $500,000 (before the payment of
offering related fees and expenses). Since December 23, 2005, the Investor has
loaned the Company the aggregate principal amount of $2.0 million (including the
loan being reported hereunder). The terms and conditions of the $1.5 million in
principal amount that were previously advanced by the Investor under bridge loan
agreements entered into prior to the Loan Agreement that is the subject of this
Current Report were disclosed in the Company's Current Reports on Form 8-K that
were filed on December 23, 2005 and March 7, 2006. During this period the
Company also borrowed $1.0 million in principal amount from other investors (the
"Other Prior Investors") under bridge loan agreements, the terms of which were
disclosed in the Company's Current Reports on Form 8-K that were filed on
December 23, 2005 and January 26, 2006. The bridge loan agreements referred to
in the Company's Current Reports on Form 8-K that were filed December 23, 2005,
January 26, 2006 and March 7, 2006 are referred to collectively as the "Previous
Bridge Loan Agreements." In total, the Company has borrowed $2.5 million in
aggregate principal amount under the Previous Bridge Loan Agreements.
To secure the Company's obligations under the Loan Agreement, the
Company granted the Investor a security interest in substantially all of its
assets, including without limitation its intellectual property, on the terms and
conditions of a Security Interest Agreement (the "Security Agreement") dated as
of March 13, 2006. The security interest granted under the Security Agreement is
junior and subordinated to the security interest the Company granted to the
Investor and Other Prior Investors to secure the Company's obligations under the
Previous Bridge Loan Agreements. The security interest granted under the
Security Agreement terminates upon payment or satisfaction of all of the
Company's obligations under the Loan Agreement.
Pursuant to the Loan Agreement, on March 14, 2006 the Company issued to
the Investor a secured promissory note in the principal amount of $526,335 (the
"Note"), representing an original issue discount of 5.267% through June 1, 2006.
The Note is scheduled to mature on the date (the "Maturity Date") that is the
earlier of (i) the date on which the Company completes a subsequent financing
that generates, on a cumulative basis together with any other interim
financings, gross proceeds to the Company of at least $3.5 million or (ii) June
1, 2006. Prior to the Maturity Date, the Company may, at its option, prepay the
Note in whole or in part at any time without premium or penalty. If not paid at
maturity, interest on the Note will accrue at 14% per annum from the Maturity
Date until the actual date of payment.
Under the terms of the Note, the holder may declare the Note immediately
due and payable upon the occurrence of any of the following events of default:
(i) the Company's failure to pay principal and interest when due on this Note or
any other note issued pursuant to Previous Bridge Loan Agreements, (ii) the
Company's material breach of any of the representations or warranties made in
the Loan Agreement, the Note or the other transaction documents, (iii) the
Company's failure to observe any undertaking contained in the Note or the other
transaction documents in a material respect if such failure continues for 30
calendar days after notice thereof, (iv) the Company's insolvency or liquidation
or a bankruptcy event, or (v) the entry of money judgment or similar process in
excess of $750,000 if such judgment remains unvacated for 60 days.
In connection with the closing under the Loan Agreement, the Company
issued to the Investor a five-year warrant to purchase in the aggregate up to
250,000 shares of the Company's common stock, par value $0.001 per share
("Common Stock"), at a per share exercise price of $1.50 (the "Bridge Loan
Warrant"). The exercise price of the Bridge Loan Warrant is subject to
adjustment in the event of certain capital adjustments or similar transactions,
such as a stock split or merger or, under certain circumstances (including
obtaining appropriate consent of certain other parties), if prior to the
expiration of exercise period, the Company issues warrants having a lower
exercise price to investors in a subsequent financing transaction. The holder of
the Bridge Loan Warrant is entitled to exercise the warrant on a cashless basis
at any time following the first anniversary of its issuance if, at the time of
exercise, there is no effective registration statement covering the resale of
the shares of Common Stock issuable upon exercise of the Bridge Loan Warrant.
Under the Loan Agreement, the Company granted to the Investor piggy-back
registration rights with respect to the shares of Common Stock issuable upon
exercise of the Bridge Loan Warrant.
The securities sold in this transaction have not been registered under
the Securities Act of 1933, as amended (the "Act") and may not be offered or
sold in the United States in the absence of an effective registration statement
or exemption from the registration requirements under the Act. The Company
believes that the issuance of the foregoing securities was exempt from
registration under Section 4(2) of the Act as transactions not involving a
public offering.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
The information set forth under Item 1.01 and Item 2.03 of this Current
Report on Form 8-K is hereby incorporated by reference into this Item 3.02.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DATED: MARCH 16, 2006 /s/ Frank Galuppo
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FRANK GALUPPO
PRESIDENT AND CHIEF EXECUTIVE OFFICER