EXHIBIT 10(O)
LOAN AND REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated December 5, 1995, among PC ETCETERA, INC., a Delaware
corporation (the "Company"), GIBRALTAR TRUST ("Gibraltar"), JUSTY LTD.
("Justy"), YOZMA VENTURE CAPITAL LTD. ("Yozma"), SVE STAR ENTERPRISES NO. II
GBR. ("SVE II"), SVE STAR VENTURES ENTERPRISES NO. III GBR. ("SVE III"), SVE
STAR VENTURES ENTERPRISES NO. IIIA GBR. ("SVE IIIA"), ELRON ELECTRONIC
INDUSTRIES LTD. ("Elron") and XXXXXXX X. XXXXXXXXX ("Xxxxxxxxx" and collectively
with Gibraltar, Justy, Yozma, SVE II, SVE III, SVE IIIA and Elron, the
"Lenders").
_________________
WHEREAS, the Company desires to obtain debt financing in the aggregate
amount of five hundred thousand dollars ($500,000);
WHEREAS, each Lender is willing to lend to the Company the amount set
forth by its name on Schedule A attached hereto (collectively, the "Loans");
WHEREAS, the Loans are to be evidenced by Promissory Notes of the
Company in the aggregate principal amount of five hundred thousand dollars
($500,000) (collectively, the "Notes");
WHEREAS, contemporaneously with the issuance of the Notes, the Lenders
are to receive Warrants (the "Initial Warrants") for the purchase of an
aggregate of 75,000 shares of Common Stock of the Company (the "Initial Warrant
Shares");
WHEREAS, six months from the date hereof, the Lenders may be entitled
to receive additional Warrants (the "Additional Warrants" and collectively with
the Initial Warrants, the "Warrants") for the purchase of up to an aggregate of
37,500 additional shares of Common Stock of the Company (the "Additional Warrant
Shares" and collectively with the Initial Warrant Shares, the "Warrant Shares");
and
WHEREAS, subject to the terms of this Agreement, the Company has
agreed to grant to the Lenders certain rights to cause the registration under
the Securities Act (as hereinafter defined) of the Warrant Shares.
NOW, THEREFORE, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS. As used herein, the following terms have
the meanings indicated:
(a) "Securities Act" means the Securities Act of 1933, as
amended; and
(b) "Rule 144 Holding Period" means the period of time that the
Warrant Shares must be held by the Lenders before they can resell them, or any
portion thereof, pursuant to Rule 144, promulgated under the Securities Act.
2. LOANS; WARRANTS.
(a) LOANS; NOTES. Simultaneously herewith, upon fulfilment of the
conditions set forth in Section 3 hereof, each Lender is loaning to the Company
the amount set forth on Schedule A attached hereto, and, in consideration
thereof, the Company is issuing to the Lender a Note in the principal amount
thereof.
(b) INITIAL WARRANTS. Simultaneously herewith, in consideration
of the Loans, each Lender is being issued by the Company Initial Warrants for
the purchase of such number of shares of Common Stock of the Company as shall
equal twenty-two and one-half percent (22.5%) of the principal amount of the
Lender's Note divided by one dollar fifty cents ($1.50). Accordingly, the
aggregate number of Initial Warrant Shares shall equal seventy-five thousand
(75,000). The Initial Warrants shall be exercisable at a price of one dollar
fifty cents ($1.50) per share until five (5) years from the date hereof and
shall contain certain antidilution provisions as set forth therein.
(c) ADDITIONAL WARRANTS. In consideration of the receipt of the
Loans, the Company agrees to issue to each Lender on the six month anniversary
of the date hereof (the "Six Month Anniversary") Additional Warrants for the
purchase of such number of shares of Common Stock of the Company as shall equal
eleven and one-quarter percent (11.25%) of the outstanding principal balance of
the Lender's Note as of the Six Month Anniversary divided by one dollar fifty
cents ($1.50). Accordingly, in the event the outstanding aggregate principal
balance of the Lenders' Notes as of the Six Month Anniversary remains at five
hundred thousand dollars ($500,000), the number of Additional Warrant Shares
shall be thirty-seven thousand five hundred (37,500). The Additional Warrants
shall be in the same form as the Initial Warrants.
3. CONDITIONS PRECEDENT. The Lenders' obligations to make the Loans
under this Agreement shall be subject to their receipt of the following
documents simultaneously herewith in form and substance reasonably satisfactory
to the Lenders:
(a) A Security Agreement, duly executed and delivered by the
Company;
(b) Financing statements in form for filing in the relevant
jurisdictions where such filing would be required in order to perfect any
security interest granted under the Security Agreement; and
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(c) A copy of the resolutions of the Board of Directors of the
Company authorizing the execution, delivery and performance by the Company of
this Agreement and the Notes.
4. REGISTRATION RIGHTS.
(a) DEMAND RIGHTS. Upon the written request of the holders of a
majority of the Warrant Shares (the "Demand Registration Request"), received on
or after the Six Month Anniversary and prior to the expiration of the Rule 144
Holding Period, that the Company register such Warrant Shares for resale under
the Securities Act, the Company shall advise in writing all other holders of the
Warrant Shares of the Demand Registration Request and of its intention to file a
registration statement under the Securities Act covering such resale (the
"Registration Notice"). The Company thereafter shall, as expeditiously as
reasonably practicable, file a registration statement under the Securities Act
for the sale of the number of Warrant Shares owned by the Lenders specified in
the Demand Registration Request, as well as the number of Warrant Shares owned
by the Lenders who advise the Company in writing within twenty (20) days of the
date of, and in response to, the Registration Notice that they desire to have
their Warrant Shares included in such registration statement, and shall
thereafter file such amendment or amendments to such registration statement, in
the use of its best efforts, to cause the same to become effective. The Company
shall not be obligated to file or use its best efforts to cause to become
effective a registration statement under this paragraph (i) during any period
(A) commencing with the date the Company files a registration statement relating
to the sale or exchange by it of its securities in either an underwritten
offering or in an offering involving a merger, acquisition, combination or
reorganization, and (B) ending on the ninetieth (90th) day following the
consummation of any such underwritten offering or other such transaction, or
(ii) if, in its judgment, such filing or registration may be materially
disruptive or detrimental to its business or any pending or prospective
transaction. Following the conclusion of such period or commencing upon such
time as the filing or registration would not be so materially disruptive or
detrimental, the Company's obligation to file or use its best efforts to cause
to become effective a registration statement shall recommence. The Company
shall not be obligated to use its best efforts to effect more than one (1)
registration pursuant to the terms of this paragraph (a).
(b) PIGGYBACK RIGHTS. The Company agrees that, if it shall
propose to file, at any time on or after the Six Month Anniversary and prior to
the expiration of the Rule 144 Holding Period, for the sale by the Company of
shares of its Common Stock for cash, a registration statement under the
Securities Act on Form SB-1, XX-0, X-0, X-0 or S-3 (or a comparable successor
form) (but excluding registration statements for employee benefit plans or
transactions of the nature contemplated by Rule 145, promulgated
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under the Securities Act), the Company shall give written notice to the Lenders
of such intention at least twenty (20) days prior to the proposed filing date
and shall include the Warrant Shares in such registration statement at the
written request of the Lenders, provided that the Company receives a request
therefor at least ten (10) days prior to the proposed filing date; provided,
however, that if, in the opinion of the managing underwriter or underwriters of
the offering of the Company's securities for which such registration statement
is being filed, such inclusion is likely to affect adversely the success of the
offering or the price that would be received, at the option of such managing
underwriter or underwriters, (i) the number of Warrant Shares to be added to the
registration statement shall be reduced (to zero if necessary), and/or (ii) the
Lenders shall delay the sale of the Warrant Shares included in the registration
statement until the expiration of the ninety (90) day period commencing with the
effective date of the registration statement.
(c) OBLIGATIONS OF THE COMPANY.
(i) As to each registration statement referred to in this
Section 4, the Company shall:
(A) use its best efforts to have such registration
statement declared effective as promptly as reasonably practicable and shall
promptly notify the Lenders and the underwriters, if any, for the Lenders, and
confirm such advice in writing, (I) when such registration statement becomes
effective, (II) when any post-effective amendment to any such registration
statement becomes effective, and (III) of any request by the Securities and
Exchange Commission (the "SEC") for any amendment or supplement to such
registration statement or any prospectus relating thereto or for additional
information;
(B) furnish to the Lenders or the underwriters for the
Lenders, if any, or other securities firms designated by the Lenders, if any,
such reasonable number of copies of any prospectus (including any supplemental
or preliminary prospectus) as may be reasonably necessary in order to effect the
offering and sale of the Warrant Shares being offered and sold by the Lenders,
but only while the Company is required under the provisions hereof to cause the
registration statement to remain current;
(C) qualify, not later than the effective date of such
registration statement, the Warrant Shares registered thereunder under the "blue
sky" laws of such states as the Lenders may reasonably request; provided,
however, that in no event shall the Company be obligated to qualify as a foreign
corporation or as a dealer in securities or to execute or file any general
consent to service of process under the laws of any such state where it is not
at such time so qualified or subject;
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(D) until the earlier of (I) the sale of all the
Warrant Shares or (II) seven (7) months following the expiration date for the
exercise of the Warrants, from time to time amend or supplement the registration
statement and the prospectus in connection therewith to the extent necessary to
permit the completion of the sale of the Warrant Shares for which such
registration statement shall have become effective within said period in
compliance with the Securities Act and the rules and regulations promulgated
thereunder.
(ii) If at any time the SEC should institute or threaten to
institute any proceedings for the purpose of issuing, or should issue, a stop
order suspending the effectiveness of any registration statement referred to in
this Section 4, the Company shall notify the Lenders and shall use its best
efforts to prevent the issuance of any such stop order or to obtain the
withdrawal thereof as soon as possible. The Company shall advise the Lenders of
any order or communication of any public board or body addressed to the Company
suspending or threatening to suspend the qualification of any of the Warrant
Shares for sale in any jurisdiction. In the event that the effectiveness of
such registration statement shall be suspended, the Company shall extend the
period during which such registration statement shall be maintained effective,
pursuant to Section 4(c)(i)(D) hereof, by the number of days during the period
from and including the date of such suspension to the date when such suspension
shall be removed or terminated.
(iii) The Company shall, if requested, prior to filing a
registration statement referred to in this Section 4 or prospectus or any
amendment or supplement thereof, furnish to each Lender and each underwriter, if
any, of the Warrant Shares covered by such registration statement, prospectus,
amendment or supplement, copies of such registration statement, prospectus,
amendment or supplement as proposed to be filed by the Company.
(d) EXPENSES. Except as provided below, the expenses of the
registration statements pursuant to this Section 4, and the state qualifications
related thereto pursuant to Section 4(c)(i)(C), shall be borne by the Company.
The expenses of any such registration and qualifications shall include, but not
be limited to (A) the fees and expenses of the Company's counsel and its
accountants; (B) all other out-of-pocket costs and expenses of the Company
incident to the preparation, printing and filing under the Securities Act of the
registration statement and all amendments and supplements thereto; (C) the cost
of furnishing copies of each preliminary prospectus, each final prospectus and
each amendment or supplement thereto to the Lenders and each underwriter, if
any; and (D) the costs and expenses incurred in connection with the
qualification of such securities so registered under the "blue sky"
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laws of various jurisdictions. However, under no circumstances shall the
Company be liable or responsible for the fees and expenses of the Lenders, or of
any of their counsel, incurred in connection with any registration or for
underwriting or brokerage discounts and commissions or transfer taxes payable in
connection with any sale of the Warrant Shares included in a registration
statement.
(e) INDEMNIFICATION.
(i) The Company hereby agrees to indemnify, hold harmless
and defend the Lenders, and each of them, any underwriter (as such term is
defined in the Securities Act) for the Lenders, any broker or dealer to or
through whom the Lenders sell Warrant Shares that may be deemed to be an
underwriter and each person, if any, that controls (within the meaning of the
Securities Act) any of the Lenders or any such underwriter, broker or dealer
against any and all losses, claims, damages, liabilities and expenses (including
reasonable counsel fees and expenses) to which any such persons may be subject
under the Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities and expenses (including reasonable counsel fees and expenses) arise
out of or are based upon any untrue statement of a material fact contained in
any registration statement under which the Warrant Shares were registered under
the Securities Act pursuant to this Section 4, any prospectus contained therein,
or any amendment or supplement thereto, or arise out of or are based upon the
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of or are based upon
information furnished in writing to the Company by any Lender or any underwriter
or representative for a Lender, which writing specifies that the information be
included in the registration statement. Each Lender hereby agrees to indemnify,
hold harmless and defend the Company, its directors, officers, agents and
representatives, and each person, if any, that controls (within the meaning of
the Securities Act) the Company against any losses, claims, damages, liabilities
and expenses (including reasonable counsel fees and expenses) to which any of
such persons may be subject under the Securities Act or otherwise, but only to
the extent caused by an untrue statement or omission of a material fact in any
registration statement under which the Warrant Shares were registered under the
Securities Act, any prospectus contained therein, or any amendment or supplement
thereto, which was based solely upon information furnished in writing to the
Company by such Lender or any underwriter or representative for such Lender,
which writing specifies that the information be included in the registration
statement.
(ii) In the event that any claim, demand, investigation or
action for which an indemnifying party would be liable to an indemnified party
hereunder is asserted against or
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sought to be collected from an indemnified party by a third party, the
indemnified party shall promptly notify the indemnifying party of such claim,
demand, investigation or action specifying the nature thereof and the amount or
the estimated amount thereof to the extent then feasible. The indemnifying
party shall thereupon, at its sole cost and expense, defend the indemnified
party against such claim, demand, investigation or action with counsel
reasonably satisfactory to the indemnified party.
(iii) The indemnifying party shall not, without the
prior written consent of the indemnified party, consent to the entry of any
judgment against the indemnified party or enter into any settlement or
compromise with regard to any such claim, demand or action unless such judgment,
settlement or compromise includes, as an unconditional term thereof (i.e., there
being no requirement that the indemnified party pay any amount of money or give
any other consideration), the giving by the claimant or plaintiff to the
indemnified party of a release, in form and substance satisfactory to the
indemnified party, from all liability in respect of such claim, demand or
action. If the indemnified party desires to participate in, but not control,
any such defense or settlement, it may do so at its sole cost and expense;
PROVIDED, HOWEVER, that the indemnifying party shall pay the reasonable fees and
expenses of counsel for the indemnified party if the named parties to any action
(included impleaded parties) include both the indemnifying party and indemnified
parties and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them.
(f) OBLIGATIONS OF THE LENDERS. As to each registration
statement referred to in this Section 4, each of the Lenders shall provide the
Company with a written description of the proposed method or methods of
distribution of the Warrant Shares contemplated by that Lender and such other
information as may be required by the Company, and the Company shall include
such description and other information in the registration statement and file
any and all amendments and supplements necessary in connection therewith.
5. ACQUISITION OF SECURITIES. Each Lender makes the following
representations and warranties to the Company with respect to itself (and, in
the case of a trust Lender, with respect to any grantors for which it may be
considered a nominee):
(a) INVESTMENT REPRESENTATIONS.
(i) Each Lender is acquiring the Note and the Warrants and,
in the event of an exercise of the Warrants, will be acquiring the Warrant
Shares for its own account, and not as a nominee or agent (except in the case of
a trust Lender to the extent the trust may be considered a nominee for its
grantors, which, in number, do not exceed five (5)), and will not resell or
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otherwise distribute any of such securities except in compliance with the
Securities Act,
(ii) Each Lender understands that neither the Notes nor the
Warrants nor the Warrant Shares (collectively, the "Securities") have been
registered under the Securities Act or any state securities laws and, except as
provided for in Section 4 hereof, there is no agreement on the part of the
Company to register any of the Securities thereunder.
(iii) Each Lender acknowledges and agrees that none of the
Securities may be sold, pledged, transferred, assigned, or otherwise disposed of
unless they are registered under the Securities Act and applicable state
securities laws or unless an exemption from such registration is available.
Each Lender further acknowledges and agrees that, as a condition to the transfer
or other disposition of any of the Securities, the Company may require that the
request for transfer be accompanied by an opinion of counsel, in form and
substance reasonably satisfactory to the Company and its counsel, to the effect
that the proposed transfer does not result in a violation of the Securities Act
and any applicable state securities laws. Each Lender understands that each
certificate representing any of the Securities will bear the following legend:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state. The securities may not be sold,
pledged, transferred, assigned or otherwise disposed of in the absence
of an effective registration statement under such Act and any
applicable state securities laws covering such securities, or an
opinion of counsel reasonably satisfactory to the Company that such
registration is not required."
(b) ADDITIONAL REPRESENTATIONS.
(i) Each Lender is able to bear the economic risks of an
investment in each of the Securities, including, without limitation, the risk of
the loss of part or all of its investment and the inability to sell or transfer
the Securities until such Securities are registered under the Securities Act or
an exemption from registration is available; SUBJECT, HOWEVER, to the Company's
obligation to use its best effort to effect any registration of the Warrant
Shares under the Securities Act in accordance with Section 4 hereof.
(ii) Each Lender is an "accredited investor", as such term
is defined in Rule 501(a), promulgated under the Securities Act, or it, alone or
with its purchaser representative, if any, has such knowledge and experience in
financial and business
8
matters that it is capable of evaluating the merits and risks of an investment
in each of the Securities. Each Lender will execute and deliver to the Company
such documents as the Company may reasonably request in order to confirm the
accuracy of the foregoing.
(iii) Each Lender and its purchaser representative, if
any, have reviewed the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1994, as amended, Quarterly Report on Form 10-QSB for the period
ended June 30, 1995 and Current Reports on Form 8-K for events dated August 12,
1994, as amended, and December 16, 1994 and have been afforded the opportunity
to obtain such other information as such Lender requested from the Company in
order to evaluate the merits and risks of an investment in each of the
Securities.
(iv) No board of directors of any corporate Lender, no
general partner of any partnership Lender and no trustee of any trust Lender has
adopted any resolutions or made any determination relative to the distribution
of any of the Securities to its stockholders, partners, grantors or
beneficiaries and has no present intention to do so.
6 MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of New York, excluding choice of law
principles thereof.
(b) ENTIRE AGREEMENT. This Agreement constitutes the full and
entire understanding and agreement among the parties with regard to the subject
matter hereof and may be amended only by a writing executed by the Company and
the relevant Lender.
(c) NOTICES, ETC. All notices and other communications required
or permitted hereunder shall be in writing and shall be mailed by first-class
mail, postage prepaid, or delivered either by hand or by messenger or sent by
overnight mail or courier or by facsimile transmission, addressed as follows:
If to the Company:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Telecopier: (000) 000-0000
9
with a copy to:
Certilman Balin Xxxxx & Xxxxx, LLP
00 Xxxxxxx Xxxxxx
Xxxx Xxxxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxx, Esq.
Telecopier: (000) 000-0000
If to Gibraltar:
c/o Rho Management Company, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx X. X. Xxxx, Esq.
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopier: (000) 000-0000
If to Justy or Yozma:
c/o SVM STAR Venture Capital Management
00 Xxxxx Xxxxxx
Xxxx-Xxxx 00000
Xxxxxx
Telecopier: 000-0-0000000
If to SVE II, SVE III or SVE IIIA:
28A Xxxxxxxxxxxxxx
00000 Xxxxxxx
Xxxxxxx
Telecopier: 00-00-00000000
with a copy of all notices and other communications
to Justy, Yozma, SVE II, SVE III and SVE IIIA to:
Goldfarb, Levy, Eran & Co.
Eliahu Xxxxx
0 Xxx Xxxxxx
Xxx Xxxx, Xxxxxx
Attention: Xxxx Xxxx, Adv.
Telecopier: 972-3-695-4344
10
If to Elron:
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Telecopier: (000) 000-0000
with a copy to:
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
If to Xxxxxxxxx:
0 Xxxxxx Xxxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
or at such other address as the Company or the respective Lender shall have
furnished in writing as aforesaid.
(d) HEADINGS. The headings of the paragraphs and subparagraphs
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
(e) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original, and all of which together
shall constitute one instrument.
(f) FACSIMILE. This Agreement may be executed and thereafter
transmitted by facsimile and the facsimile receipt shall constitute an original.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the successors, permitted assigns, and legal
representatives of the parties hereto; provided, however, that the rights under
this Agreement may not be assigned by any Lender, in whole or in part, without
the prior written consent of the Company.
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IN WITNESS WHEREOF, we have set our hands as of the date first above
written.
PC ETCETERA, INC.
By: /s/
-----------------------------
GIBRALTAR TRUST
By: /s/
------------------------------
JUSTY LTD.
By: /s/
------------------------------
By: /s/
------------------------------
YOZMA VENTURE CAPITAL LTD.
By: /s/
------------------------------
By: /s/
------------------------------
SVE STAR VENTURES ENTERPRISES NO. II GBR.
By: SVM STAR Ventures Management GmbH Nr. 3
By: /s/
------------------------------
By: /s/
------------------------------
SVE STAR VENTURES ENTERPRISES NO. III GBR.
By: SVM STAR Ventures Management GmbH Nr. 3
By: /s/
-----------------------------
By: /s/
-----------------------------
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SVE STAR VENTURES ENTERPRISES NO. IIIA GBR.
By: SVM STAR Ventures Management GmbH Nr. 3
By: /s/
----------------------------
By: /s/
----------------------------
ELRON ELECTRONIC INDUSTRIES LTD.
By: /s/
---------------------------------
/s/
-------------------------------------
Xxxxxxx X. Xxxxxxxxx
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SCHEDULE A
LENDER AMOUNT OF LOAN
------ --------------
Gibraltar Trust $125,000
Justy Ltd. $ 37,500
Yozma Venture Capital Ltd. $ 25,000
SVE STAR Ventures Enterprises $ 16,000
No. II GbR.
SVE STAR Ventures Enterprises $ 42,900
No. III GbR.
SVE STAR Ventures Enterprises $ 3,600
No. IIIA GbR.
Elron Electronic Industries $125,000
Ltd.
Xxxxxxx X. Xxxxxxxxx $125,000
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