ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Amedia Networks, Inc. (the "Company") and Motorola Wireline Networks, Inc.
("Motorola"), a subsidiary of Motorola, Inc., have entered in a Strategic
Alliance Agreement on April 5, 2006 (the "Strategic Alliance Agreement")
pursuant to which the Company and Motorola will jointly develop a family of
three IP Home Gateways (the "Gateway Products") that will enable customers using
Motorola's existing Multi-Service Access Platform to access IP-based services.
The Gateway Products will be exclusively distributed by Motorola under the
Motorola brand. Under the Strategic Alliance Agreement, the Company has also
granted Motorola certain rights with respect to the resale of the Company's
products as described below.
The Strategic Alliance Agreement provides that Motorola will pay to the Company
$1.9 million for engineering costs associated with the development of the
Gateway Products, approximately 32% of which is payable within 30 days of the
effective date of the agreement and the remainder of which is payable in
installments on the achievement of certain agreed upon project milestones.
Motorola is entitled to terminate the development program at any time prior to
the completion of the development of the Gateway Products and, in the event that
it does so, the Company will be entitled to retain any of the engineering costs
paid or due and owing by Motorola as of the date of termination. Upon successful
completion of all necessary testing, the Gateway Products will be manufactured
by the Company for exclusive sale to Motorola.
Under the Strategic Alliance Agreement, the Company has granted Motorola the
exclusive right to resell the Company's PG1000 and the HG-V100 gateway products,
and all derivative or substantially similar products (the "Exclusive Products")
to certain specified leading telecommunications carriers and their affiliates
(the "Exclusive Customers") for a period of 24 months from the effective date of
the agreement as part of Motorola's portfolio of broadband wireline solutions.
The exclusivity may be terminated by the Company unless, among other things, at
least one of the Exclusive Customers shall have accepted
one of the Exclusive Products for lab testing within one year of the effective
date of the Strategic Alliance Agreement and signed a contract to purchase
Exclusive Products (which is reasonably expected to result in revenue to the
Company in a specified minimum amount) within 18 months of the effective date of
the agreement; provided, however, that if these conditions are satisfied with
respect to an Exclusive Customer, then Motorola's exclusivity period for such
Exclusive Customer will be extended for an additional 24 months. At all times
the Company retains the right to sell the Exclusive Products to customers other
than the Exclusive Customers. In addition, the Company also granted Motorola the
non-exclusive right to resell all of the Company's other existing products
worldwide.
The Strategic Alliance Agreement also provides that the Company will not, during
the term of the agreement and for a period of two years thereafter, directly or
indirectly sell to or solicit or accept any order for any of its products from
any customer to which Motorola has resold a Company product during the term of
the agreement. These provisions will not apply to customers to whom the Company
made sales of products in the twelve months preceding the effective date of the
Strategic Alliance Agreement or in the event of termination of the agreement by
the Company for cause or by Motorola for convenience.
Notwithstanding the foregoing, if Motorola sources, manufactures or resells a
gateway which has substantially the same functionality as the Company's PG1000
or HG-V100 products, the exclusivity and the non-solicitation provisions
contained in the Strategic Alliance Agreement shall immediately terminate. The
Company has also agreed that the prices for its products that it charges
Motorola will be no higher than the prices that the Company charges any other
reseller, customer or entity.
8k deal w/Motorola
The Strategic Alliance Agreement has an initial term of three years which will
automatically extend for successive additional one-year terms unless either
party gives notice of termination no less than 30 days prior to the expiration
date of the then-current term. The agreement may be terminated by Motorola at
any time on 30 days notice and by either party if the other ceases to do
business in the ordinary course or defaults on its material obligations,
representations or warranties under or otherwise materially breaches the
Agreement subject, except in the case of payment failures, to a 30-day cure
period.
