Exhibit 10.17
BRIDGE LOAN
AGREEMENT
This Bridge Loan Agreement (this “
Agreement ”) is entered into as of January 26,
2006 by and among Fortissimo Capital Fund GP, L.P., on behalf of
the several parallel partnerships in which it serves as the General
Partner (the “ Lender ”), whose principal
offices are located at 14 Hamelacha Street, Park Afek, Rosh Haayin
48091, Israel, and Radview Software Ltd., an Israeli corporation,
corporate registration number 511627952, with its principal offices
in Israel located at 2 Habarzel Street, Tel Aviv 69710, Israel and
its principal offices in the U.S.A. located at 7 New England
Executive Park, Burlington, MA 01803 (the “ Company
”, or the “ Borrower ”).
RECITALS
WHEREAS , Lender and Borrower have entered into a term
sheet dated January 12, 2006, with respect to several
transactions with the Company including an equity investment,
convertible loan and bridge loan (the “ Term Sheet
”); and
WHEREAS , pursuant to the Term Sheet, the Lender shall,
(i) in the framework of the equity transaction invest up to
US$3,000,000 in the Company (the “ Equity Investment
”); and (ii) in the framework of the convertible loan,
lend the Company US$ 250 ,000
by April 17, 2006, which loan shall bear interest at the
annual rate of 8% and be convertible together with all interest
accrued thereon into Preferred Shares of the Company on the terms
and conditions set forth therein (the “ Convertible
Loan ” and “ Convertible Loan Agreement
”, respectively); and (iii) in the framework of this
Agreement, make available to the Company a bridge loan of up to
US$500,000, all under the terms and conditions set forth in this
Agreement (the “ Bridge Financing ”);
and
WHEREAS , the parties agree that upon the Closing of the
Share Purchase Agreement to be entered into between Lenders and
Borrower to give effect to the Equity Investment (the “
SPA Closing ”, and the “ SPA ”,
respectively), the Principal Amount (as defined herein) together
with any interest accrued thereon, shall become subject to the
terms and conditions of the Convertible Loan Agreement, as if it
has been borrowed pursuant to such agreement; and
WHEREAS , it is the parties intention that the SPA be
executed within thirty (30) days following the execution of the
Term Sheet (the “ SPA Target Date ”);
and
WHEREAS , the Lender is conducting its due diligence
with respect to the Equity Investment and Convertible Loan
transactions; and
WHEREAS , the Company is in need of immediate funds in
order to continue to conduct its business; and
WHEREAS , the Lender has agreed to provide to the
Company the Bridge Financing upon the terms and conditions set
forth in this Agreement.
NOW, THEREFORE , in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree as
follows:
1
ARTICLE 1 - THE BRIDGE
LOAN
1.1
The Bridge Loan
.
(a)
Subject to the terms and conditions
of this Agreement, the Lender agrees to provide to the Borrower a
loan in the aggregate amount of up to $500,000 (the “
Principal Amount ”) in several installments as
described herein.
(b)
The Company shall use the Principal
Amount in accordance with a budget, pre approved by the Lender (the
“ Budget ”) a copy of which has been previously
provided to Lender and which is included in the Schedule of
Exceptions and Disclosures referred to in the preamble to
Article 2 below.
(c)
Lender shall transfer the first
installment, in the aggregate amount of US$200,000 to the Borrower
on Sunday, January 29 th , 2006 (the “
First Installment ”).
(d)
Additional installments shall be
loaned to the Borrower on an as-needed basis, as determined between
the Lender and Borrower, provided that the Borrower is in
compliance with the Budget and further provided that Lender and
Borrower have executed, an Advancement of Installment Form, in the
form attached hereto as
Schedule 1.1(d) (each, an “
Additional Installment ”, and collectively the “
Additional Installments ”).
(e)
Each of the First Installment and
any Additional Installment of the Principal Amount shall accrue and
bear interest at the annual rate of eight percent (8%) (“
Interest ”). The Principal Amount together with the
Interest shall be referred to herein as the “ Loan
”. Each of the First Installment and any Additional
Installment of the Principal Amount shall begin to accrue Interest
on the date on which it was actually advanced by the Lender to the
Borrower (each, a “ Loan Date ”) and until the
earlier of conversion in accordance with the terms and conditions
of the Convertible Loan Agreement or the repayment of the Loan on
the Maturity Date of the Convertible Loan (as such term is defined
in the Convertible Loan Agreement) or on the Early Repayment
Date.
1.2
Repayment or
Conversion .
(a)
Unless earlier converted in
accordance with the terms of the Convertible Loan Agreement, the
Loan shall become immediately repayable in full upon the earlier to
occur of: (a) the date due for the repayment of the
Convertible Loan; (b) if by the SPA Target Date the SPA has
not been executed, then - sixty (60) days following the date on
which either the Lender or the Borrower gives notice of termination
of negotiations of the Equity Investment (the “ Early
Repayment Date ”), subject to Section 1.4(b); or
(c) at the option of the Lender, upon the occurrence of an
Event of Default (as defined herein).
(b)
At the SPA Closing, the Loan shall
automatically, with no need for any further action by the parties
hereto, become subject to all of the terms and conditions of the
Convertible Loan Agreement, as if it has been borrowed pursuant to
such agreement.
(c)
At any time after the SPA Closing,
the Loan shall be convertible, at the option of the Lender, on the
terms and conditions, and at such time or times as set forth for
conversion of the Convertible Loan, subject to the terms and
conditions of the Convertible Loan Agreement.
1.3
Default
Interest .
Without derogating from any rights or remedies
afforded by law, any delay of more than ten (10) days in the
payment of any amount due to the Lender from Borrower on account of
the Loan or otherwise due pursuant to this Agreement shall subject
such overdue amounts to additional interest which shall accrue at
an annual rate of four percent (4%) from the date such payment has
become due and payable and until actual payment thereof. Such
default interest shall be compounded daily. The default interest
described in this Section 1.3 shall be referred to as the
“ Default Interest ”.
1.4
Payments
.
All payments by Borrower to Lender made under
this Agreement shall be:
2
(a)
Free and clear of and without
deduction for all taxes, levies, imposts, deductions, assessments,
charges or withholdings, and all liabilities with respect thereto
of any nature whatsoever, provided the Lender has provided to
Borrower in advance all documented exemptions and approvals
required to implement the foregoing, to Borrower’s reasonable
satisfaction, including an Israeli Tax Authority exemption from tax
withholding at the source.
(b)
Made on a Business Day. For the
purposes of this Agreement, the term “ Business Day
” means any day on which banks in Israel are open and execute
foreign exchange transactions. For the avoidance of doubt, in the
event any payment due to Lender hereunder is to occur on a non
Business Day, the obligation of Borrower to make such payment shall
be deferred to the very next Business Day occurring
thereafter.
(c)
Made to the Lender’s bank
account the details of which will be provided by separate written
notice by the Lender to Borrower at least seven (7) days prior
to any required payment by Borrower hereunder.
1.5
Deliverables at First Loan
Date .
On or prior to the first Loan Date,
Borrower shall deliver to the Lender the following:
(a)
A copy of a resolution of
Borrower’s Board of Directors (the “ Board
”), pursuant to which Borrower approves the execution and
performance by Borrower of this Agreement and its annexes and the
Charge Debentures (all, as defined below); and
(b)
Duly executed Advancement of
Installment Form evidencing the borrowing of the First
Installment.
(c)
Duly executed Charge Debentures (as
defined below) with respect to the Charged Assets (as defined
below) together with duly executed notices of Charges ready for
filings with the applicable Israeli authorities in the forms
provided for such purpose by applicable law.
1.6
Deliverables at Additional
Loan Dates .
At each additional Loan Date on which the Lender
advances an Additional Installment to Borrower pursuant to the
terms of this Agreement, Borrower shall deliver to Lender a duly
executed Advancement of Installment Form evidencing the
borrowing of the amount of such Additional Installment.
1.7
Lender’s
Records .
Any amounts owed under this Agreement and any
ancillary documents hereunder, including but not limited to
Advancement of Installment Form/s the Charge Debentures and all
other contracts, instruments, addenda and documents executed in
connection with this Agreement or the extensions of credit which
are the subject of this Agreement (collectively, the “
Loan Documents ”), shall be evidenced by the
respective entries in records maintained by the Lender for such
purpose. Each payment on and any other credits with respect to the
Loan and all other sums outstanding under any Loan Document shall
be evidenced by the respective entries in such records. Absent
manifest error, Lender’s records shall be prima-facie
evidence thereof.
1.8
Security
.
Borrower shall secure the repayment of all
amounts due or which may become due to the Lender from
Borrower in accordance with the provisions of the Loan Documents
and the Convertible Loan Agreement by creating the following
charges:
(a)
A floating charge on all of
Borrower’s present and future tangible and intangible assets
and rights of any kind, whether contingent or absolute as more
fully set forth in the Floating Charge Debenture attached hereto as
Schedule 1.8(a) (the “ Floating
Charge ” and “ Floating Charge Debenture
”, respectively); and
(b)
A fixed charge on the
Company’s (i) intellectual property rights, and
(ii) accounts receivable, all as more fully set forth in the
Fixed Charge Debenture attached hereto as
Schedule 1.8(b) (the “ Fixed
Charge ” and “ Fixed Charge Debenture
”, respectively).
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In this Agreement, (1) the Floating Charge
and Fixed Charge shall collectively be referred to as the “
Charges ”, (2) the assets forming the subject
matter of the Charges shall be referred to as the “
Charged Assets ”; and (3) the Floating Charge
Debenture and Fixed Charge Debenture shall collectively be referred
to as the “ Charge Debentures ”.
As soon as practicable following the First Loan
Date, Borrower shall file with the applicable foreign governmental
agencies the documents necessary to reflect the Charges with
respect to Borrower’s Intellectual Property, more
specifically referred to in the Charge Debentures as
‘Pledgor’s IP’. Borrower shall bear all costs and
expenses in connection with such filings.
1.9
Priority
.
Without derogating from the provisions contained
herein, all amounts borrowed hereunder as well as all other amounts
due to the Lender pursuant to the provisions of this Agreement,
shall rank senior to any other Security Interest (as defined below)
on the assets and rights of the Borrower and to any other
indebtedness to banks, financial and lending institutions,
creditors, shareholders or others.
For the purposes of this Agreement a “
Security Interest ” shall mean any lien, pledge,
encumbrance, security interests, charge or transfer, assignment
over or in any person’s or entity’s
property.
ARTICLE 2
- REPRESENTATIONS AND WARRANTIES
OF BORROWER
Borrower hereby represents and warrants to the
Lender, that except as set forth in this Article 2 or in the
corresponding section of the Schedule of Exceptions and
Disclosures delivered by Borrower Lender’s counsel prior to
the execution and delivery of this Agreement (the “
Schedule of Exceptions and Disclosures ”), as of
the date hereof:
2.1
Due
Organization .
The Company is a corporation duly incorporated
and validly existing under the laws of the State of Israel and has
the legal capacity and authority to conduct business in each
jurisdiction in which its business is conducted or its properties
are located, except where the failure to be so would not reasonably
be expected to constitute: (a) a material adverse change in,
or have a material adverse effect upon, the operations, business,
properties, or condition (financial or otherwise) of Borrower;
(b) a material impairment of the ability of Borrower to
perform under any Loan Document; or (c) a material
adverse effect upon the legality, validity, binding effect or
enforceability against Borrower of any Loan Document (the
occurrence of either of (a), (b), or (c) would constitute a
“ Material Adverse Effect ”).
2.2
Authorization, Validity,
Conflict and Enforceability .
The Borrower has all franchises, permits and
licenses necessary for the conduct of its business as now being
conducted, and, to the best of Borrower’s knowledge, as
proposed to be conducted by it, the lack of which would reasonably
be expected to have a Material Adverse Effect. The Borrower has not
received any notices of default relating to any such franchises,
permits and licenses. Neither the execution, delivery and
performance of all Loan Documents nor compliance by the Borrower
with the terms thereof, will conflict with or result in a breach or
violation of, any of the terms, conditions and provisions of:
(i) Borrower’s articles of association or other charter
or organizational document of Borrower, as amended from time to
time; (ii) any judgment, order, injunction, decree, or ruling
of any court or governmental authority (except as set forth in
Section 2.8), domestic or foreign; (iii) any agreement,
contract, lease, license or commitment to which the Borrower is a
party or to which it is subject; (iv) any applicable law the
incompliance therewith shall constitute a Material Adverse
Effect. Except as set forth in the Schedule of Exception and
Disclosures, such execution, delivery and compliance will not
(a) give to others any rights, including rights of
termination, cancellation or acceleration, in or with respect to
any agreement, contract, or commitment referred to in this
Section 2.2, or to any of the properties of the Borrower, or
(b) except as set forth in Section 2.8, otherwise require
the consent or approval of any person, which consent or approval
has not heretofore been obtained. The Loan
