Exhibit 1
CONVERTIBLE NOTE PURCHASE AGREEMENT
AMONG
GILAT COMMUNICATIONS LTD.
AND
SHAMROCK HOLDINGS OF CALIFORNIA, INC.
Dated as of June 30, 2000
THIS CONVERTIBLE NOTE PURCHASE AGREEMENT, dated as of June 30,
2000 (this "Agreement"), is made among Gilat Communications Ltd., an
Israeli public company with its Ordinary Shares listed on Nasdaq (the
"Company") and Shamrock Holdings of California, Inc., a California
corporation ("SHI", and, together with its permitted transferees and
assigns, collectively referred to as the "Purchasers").
WHEREAS, upon the terms and subject to the conditions set forth
in this Agreement, the Purchasers wish to purchase from the Company, and
the Company wishes to issue and sell to the Purchasers, 7% Convertible
Notes due 2004 (together with any additional notes issued pursuant to the
terms thereof, the "Notes") in the aggregate principal Face Amount of $25
million;
WHEREAS, the Notes shall be convertible (under the circumstances
described herein) into of the Company's Ordinary Shares NIS 0.01 par value
per share (the "Ordinary Shares"); and
WHEREAS, the Purchasers and the Company desire to provide for
such purchase and sale and to establish various rights and obligations in
connection therewith.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements herein set forth, the parties
hereto agree as follows:
1. Issuance and Sale of Notes.
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1.1. Definitions. Certain capitalized terms used in the Agreement
are defined in Section 6.1 hereof; references to a "Schedule" or an
"Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit
attached to this Agreement.
1.2. Issuance, Purchase and Sale. Upon the terms and subject to
the conditions set forth herein, the Company is issuing and selling to the
Purchasers, and the Purchasers are purchasing from the Company, the Notes
for an aggregate cash purchase price of $25 million (the "Purchase Price").
The Notes shall be in the form of Exhibit 1.2.
1.3. Closing. The closing of the transactions contemplated hereby
(the "Closing") will take place simultaneously with the execution hereof at
the offices of Fried, Frank, Harris, Xxxxxxx and Xxxxxxxx, New York, New
York.
1.4. Deliveries by the Company. At the Closing, the Company is
delivering to each Purchaser (and to such other parties as otherwise set
forth below) the following:
(i) duly executed Notes in the principal amount in the
Purchaser's name;
(ii) an opinion of Xxxxxx & Xxxxxx, the Company's U.S. legal
counsel; an opinion of Kleinhendler & Halevy, the Company's
Israeli legal counsel, and addressed to the Purchaser, in the
forms of Exhibit 1.4ii(a) and 1.4ii(b);
(iii) an Officers' Certificate in the form attached herewith
as Exhibit 1.4iii, dated as of the date hereof, certifying that
(A) the representations and warranties contained in Section 2
hereof are true and correct in all respects (B) all necessary
waivers, consents and approvals to or of the transactions
contemplated by this Agreement shall have been obtained,
including, without limitation, approval from the Israeli
Investment Center; and (C) the transactions contemplated hereby
have been approved and adopted by the requisite vote of board of
directors of the Company in accordance with applicable Law, the
applicable rules of NASDAQ and the Company's Articles of
Association and Memorandum of Association,
(iv) a copy of the minutes or resolutions of the Board of
Directors in the form attached herewith as Exhibit 1.4iv (i)
adopting the execution of each of the Transaction Documents and
the performance of the transactions contemplated by the
Transaction Documents, and (ii) the appointment of an individual
designated by the Purchasers to the Board of Directors, if so
requested by the Purchasers prior to the date hereof, which
minutes or resolutions shall be certified by the Company's
Chairman of the Board of Directors or the Company's Secretary as
true, correct and effective as of the date hereof;
(v) a duly executed copy of the Registration Rights
Agreement attached as Exhibit 1.4v;
(vi) payment of a funding fee of $325,000 to an account
designated by Shamrock Capital Advisors, Inc., financial adviser
to the Purchaser; and
(vii) such other instruments and documents as reasonably
requested by the Purchaser.
1.5. Deliveries by the Purchaser. At the Closing, the Purchaser
is delivering the Purchase Price to an account designated by the Company.
2. Representations and Warranties of the Company.
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The Company represents and warrants to each Holder as follows:
2.1. Organization; Subsidiaries. (a) Each of the Company and its
Subsidiaries (as listed on Schedule 2.1, which indicates their respective
jurisdictions of organization), is a corporation or other entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization with all requisite corporate
power and authority to lease its properties and to carry on its business as
it is now being conducted, and is qualified or licensed to do business and
is in good standing in each jurisdiction in which it currently carries on
business, except where the failure to be so qualified or licensed or be in
good standing would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on the Company and its
Subsidiaries considered as a whole. True and complete copies of the
Articles of Association and the Memorandum of Association of the Company,
each as amended to date, have been delivered to the Purchasers.
(b) Except as set forth on Schedule 2.1(b), the Company does not
own, directly or indirectly, or have the right or obligation to acquire,
any interest in any business association or other Person. Except as set
forth in Schedule 2.1(b), the Company has no direct or indirect obligation
to make any future capital contribution or other investment in any Person.
2.2. Due Authorization. The Company has all right, power and
authority to enter into, deliver and perform the Transaction Documents and
to consummate the transactions contemplated thereby. The execution and
delivery of each Transaction Document by the Company and the performance by
it of the transactions contemplated thereby (including, without limitation,
the issuance and sale of the Notes, and issuance of Ordinary Shares upon
conversion of the Notes) and compliance by the Company with all the
provisions of each Transaction Document (as applicable) have been duly
authorized by all requisite corporate proceedings on the part of the
Company and no other proceedings on the part of the Company in connection
with the Company's issuance of the Notes to be issued pursuant to this
Agreement and to the Company's entering into the Transaction Documents are
necessary to authorize the execution and delivery of the Agreements by the
Company or the performance by the Company of its obligations thereunder.
Each of the Transaction Documents has been duly executed and delivered on
behalf of the Company, and each such Transaction Document constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its respective terms, except to the extent that
such enforceability (i) may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors'
rights generally or (ii) is subject to general principles of equity. The
Ordinary Shares issuable upon conversion of the Notes have been validly
reserved for issuance and, upon issuance, will be validly issued and
outstanding, fully paid and nonassessable.
2.3. Capitalization. The authorized capital stock of the Company
consists of (i) 1,000,000,000 Ordinary Shares, of which, as of the date
hereof, 11,792,238 shares are issued and outstanding, and 643,660 shares
are reserved for issuance upon the exercise of outstanding stock options
pursuant to the Company's share and option plans, 46,420 shares are
reserved for issuance upon the exercise of an outstanding warrant and
400,340 shares are reserved for issuance upon the allotment and exercise of
stock options pursuant to the Company's share and option plans. All of the
outstanding Ordinary Shares are validly issued and are fully paid and
nonassessable. No class of Capital Stock of the Company is entitled to
preemptive rights. Except as set forth on Schedule 2.3(a), there are no
outstanding options, warrants, subscription rights, calls or commitments of
any character whatsoever relating to, or securities or rights convertible
into, shares of any class of Capital Stock of the Company, or Contracts, by
which the Company is or may become bound to issue additional shares of its
Capital Stock or options, warrants or other rights to purchase or acquire
any shares of its Capital Stock. Except as set forth on Schedule 2.3(b), no
warrants, bonds, debentures, notes or other Indebtedness or other security
having the right to vote (or convertible into or exercisable for securities
having the right to vote) on any matters on which stockholders of the
Company may vote were issued or outstanding. Except as set forth on
Schedule 2.3(c) or as contemplated by the Transaction Documents, the
Company is not a party to, and, to the Company's best knowledge, there is,
and immediately after the Closing, there will be, no agreement, restriction
or encumbrance (such as a preemptive or similar right of first refusal,
right of first offer, proxy, voting agreement, voting trust, registration
rights agreement, shareholders' agreement, etc., whether or not the Company
is a party thereto) with respect to the purchase, sale or voting of any
shares of Capital Stock of the Company (whether outstanding or issuable
upon conversion, exchange or exercise of outstanding securities) or other
securities of the Company pursuant to any provision of Law, the Articles of
Association or Memorandum of Association, any agreement or otherwise.
Except as set forth on Schedule 2.3(d) or as contemplated by the
Transaction Documents, no Person has the right to nominate or elect one or
more directors of the Company. Immediately (i) prior to the transactions
contemplated hereby, the Company's capitalization on a fully-diluted basis
will be as set forth in Schedule 2.3(e), and (ii) following the
transactions contemplated hereby, the Company's capitalization on a
fully-diluted basis will be as set forth in Schedule 2.3(f). The Company
has not declared or paid any dividend or made any other distribution of
cash, stock or other property to its stockholders since December 31, 1999.
All registers required to be kept by the Company under the provisions of
the Companies Ordinance (New Version) 5743-1983 or the Companies Law, 1999
(the "Company Laws") are true and accurate in all respects. All returns,
particulars, resolutions and other documents required to be filed with or
delivered to the Registrar of Companies in respect of the Company have been
properly filed or delivered in a timely manner.
2.4. No Violation. The execution and delivery by the Company of
the Transaction Documents, the performance by the Company of its
obligations thereunder and the consummation by it of the transactions
contemplated thereby will not (a) violate any provision of Law applicable
to the Company or any of its Subsidiaries, or (b) require the consent,
waiver, approval, license or authorization of or any filing by the Company
with any person or Governmental Entity, or (c) violate, result (with or
without notice or the passage of time, or both) in a breach of or give rise
to the right to accelerate, terminate or cancel any obligation under or
constitute (with or without notice or the passage of time, or both) a
default under, any of the terms or provisions of any charter, articles of
association, memorandum of association or bylaw, partnership agreement,
indenture, mortgage, agreement, contract, order, judgment, ordinance,
regulation or decree to which the Company or any of its Subsidiaries is
subject or by which the Company or any of its Subsidiaries is bound.
2.5. Brokers. Except as set forth in Section 1.4(vi) hereof, the
Company has not paid or become obligated to pay any fee or commission to
any broker, finder, investment banker or other intermediary in connection
with this Agreement.
2.6. Foreign Private Issuer. The Company is a "foreign private
issuer," as defined in Rule 3b-4 of the Exchange Act.
2.7. SEC Reports. Since its initial public offering in December
1997, the Company has timely filed with the SEC all reports, filings and
registration statements required to be filed by it as a foreign private
issuer listed on the Nasdaq National Market pursuant to the federal
securities laws and has made all other filings with the SEC required to be
made therewith (collectively and together with (i) the Company's
Registration Statement on Form F-1, (ii) the Company's Registration
Statement on Form F-3 (SEC File No. 333-11684), submitted to the XXX xx
Xxxxx 00, 0000, (xxx) the Company's draft registration statement on Form
F-3, confidentially submitted to the SEC on April 19, 2000 and (iv) the
Company's Form 20-F, submitted to the SEC on June 26, 2000, the "SEC
Filings"). Each of the SEC Filings did not (as of their respective
effective dates, or in the case of the draft Form F-3 submitted to the SEC
on April 19, 2000 and the Form 20-F, as of its filing date) contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading, was in compliance in all material respects with the
requirements of its respective report form and as of the date hereof there
is no fact or facts not disclosed in the SEC Filings that relate
specifically to the Company and its Subsidiaries and that could,
individually or in the aggregate, have a Material Adverse Effect. The
Company has fully complied with the Israeli Securities Law of 1968 and with
the applicable term of any exemption granted thereunder, including the
timely filing of all reports, filings, proxy materials and registration
statements required to be filed by it under Israeli Law. The Company
acknowledges that the Purchasers are relying in part on the SEC Filings
with respect to their purchase of the Notes pursuant to this Agreement.
2.8. Financial Statements. Attached hereto as Schedule 2.8(a) are
(i) balance sheets of the Company and its Subsidiaries as at December 31,
1999 and December 31, 1998, and statements of operations, cash flow and
stockholders' equity for each of the fiscal years then ended, audited by
the Company's independent public accountants, each including the
accompanying notes and (ii) an unaudited balance sheet and statement of
operations, cash flow and stockholders' equity for the three months ended
March 31, 2000 (the "Financial Statements"). Such balance sheets of the
Company and its Subsidiaries and the notes thereto present fairly the
financial position of the Company and its Subsidiaries as at the respective
dates thereof, and such statements of operations, cash flow and
stockholders' equity of the Company and the notes thereto present fairly
the results of operations, cash flow and stockholders' equity of the
Company for the periods therein referred to, all in accordance with GAAP,
except as set forth on Schedule 2.8(a) which lists the material differences
between Israeli GAAP and GAAP applicable to such Financial Statements.
Except as set forth on Schedule 2.8(b), the Company is not subject to any
Liabilities, except (i) Liabilities in the respective amounts specifically
reflected or specifically reserved against in the Company's balance sheets
specified in this Section 2.8 or (ii) Liabilities incurred in the ordinary
course of business since March 31, 2000 and immaterial in amount and
consistent with past practice.
2.9. Listing of Ordinary Shares. The outstanding Ordinary Shares
are listed on the Nasdaq National Market, and the Company's listing
agreement with respect thereto is in full force and effect. No action has
been taken or threatened by Nasdaq with respect to the delisting or
suspension from trading of the Ordinary Shares. The Ordinary Shares
issuable upon conversion of any of the Notes will be listed on the Nasdaq
National Market, and upon the registration of such Ordinary Shares or in
reliance upon an exemption from applicable registration requirements, such
Ordinary Shares will be freely transferable and tradeable by the holders
thereof on the Nasdaq National Market.
2.10. Litigation. (a) Except as set forth on Schedule 2.10, there
is no Litigation pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries or any of its or their
properties or assets by or before any court, arbitrator or other
Governmental Entity. Except as disclosed in Schedule 2.10, to the knowledge
of the Company, there is no basis for a claim or potential claim affecting
the Company or any of its Subsidiaries which could have a Material Adverse
Effect.
(b) The Company is not in default under or in breach of any Order
of any court, arbitrator or other Governmental Entity, and the Company is
not subject to or a party to any Order of any court, arbitrator or other
Governmental Entity arising out of any claim, demand, notice, action, suit
or proceeding under any Law.
2.11. Title to Properties; Insurance. (a) Except as set forth on
Schedule 2.11(a) or in the SEC Filings, the Company has good and valid
title to, or, in the case of property leased by it as lessee, a valid and
subsisting leasehold interest in, its properties and assets, free of all
Liens.
(b) All of the material assets of the Company are covered by
insurance with insurers against risks of liability, casualty and fire and
other losses and liabilities customarily obtained to cover comparable
businesses and assets in amounts, scope and coverage that are consistent
with prudent industry practice. The Company is not in default with respect
to its obligations under any such insurance policy maintained by it. All
such policies and other instruments are in full force and effect. The
Company has not failed to give any notice or present any claim under any
such insurance policy in due and timely fashion or as required by any of
such insurance policies. The Company has not otherwise, through any act,
omission or non-disclosure, jeopardized or impaired full recovery of any
claim under such policies, and there are no claims by the Company under any
of such policies to which any insurance company is denying liability or
defending under a reservation of rights or similar clause. The Company has
not received notice of any pending or threatened termination of any of such
policies or any premium increases for the current policy period with
respect to any of such policies and the consummation of the transactions
contemplated by the Transaction Documents will not result in any such
termination or premium increase.
2.12. Consents, etc. Except as set forth on Schedule 2.12, the
Company is not required to obtain any consent, approval or authorization
of, or to make any registration, declaration or filing with, any
Governmental Entity or third party as a condition to or in connection with
the valid execution and delivery of any of the Transaction Documents
(including, without limitation, the issuance and sale of the Notes, or the
issuance of any of the Ordinary Shares upon conversion of the Notes) or the
performance by the Company of its obligations in respect of any thereof,
except for (i) filings required pursuant to U.S. state and federal
securities laws to effect any registration of Securities pursuant to this
Agreement and the Registration Rights Agreement and (ii) the filing on Form
6-K under the Exchange Act to report the consummation of the transactions
contemplated hereby.
2.13. No Material Adverse Change. Since December 31, 1999, no
event has occurred or failed to occur that could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
2.14. Taxes. Except as set for on Schedule 2.14:
(a) The Company and each of its Subsidiaries (i) has timely
filed (or has timely and properly obtained an extension for filing and made
all deposits or payments required therewith) all Tax Returns (including,
but not limited to, those filed on a consolidated, combined or unitary
basis) required to have been filed by the Company, all of which Tax Returns
are true, correct and complete in all material respects (including, without
limitation, all Tax Returns required under the laws of the State of
Israel), (ii) has within the time and manner prescribed by Law paid all
Taxes required to be paid in respect of the periods covered by such Tax
Returns or otherwise due to any Governmental Entity, (iii) has established
and maintained on its books and records, accruals and reserves that are
adequate for the payment of all Taxes not yet due and payable and
attributable to any period preceding the date hereof, and (iv) has not
received notice of any deficiencies for any Tax from any Governmental
Entity against the Company or its Subsidiaries, which deficiency has not
been satisfied. Neither Company nor any Subsidiary is the subject of any
currently ongoing audit or judicial or administrative proceeding relating
to Taxes, nor is any such audit pending or, to the Company's knowledge,
threatened. The accruals and reserves for Taxes on the Company's
consolidated balance sheet as of December 31, 1999 and as of December 31,
1998 included in the SEC Filings are complete and adequate in all respects
to cover any and all Liabilities of the Company and its Subsidiaries for
Taxes through such date. The Company has no knowledge, or any reasonable
grounds to know, of any tax deficiencies which might be assessed against
the Company or any of its Subsidiaries. There are no Liens with respect to
Taxes upon any of the properties or assets, real or personal, tangible or
intangible, of the Company or its Subsidiaries (other than Liens for Taxes
not yet due). No claim has been made or threatened by any Governmental
Entity in a jurisdiction where the Company or any of its Subsidiaries does
not file Tax Returns that the Company or any of its Subsidiaries is or may
be subject to taxation by such jurisdiction. Neither the Company nor any of
its Subsidiaries is or has been a party to any Tax sharing agreement.
(b) The Company and its Subsidiaries have duly withheld or
collected all Taxes required by Law to have been withheld or collected
(including Taxes required by Law to be withheld or collected in connection
with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party) and any such amounts required
to be remitted to a Governmental Entity have been timely remitted. The
Company is an Israeli Approved Enterprise. Schedule 2.14 sets forth (i) the
effective income Tax rate applicable to the Company for its last completed
fiscal year and (ii) the portions of the Company which are Israeli Approved
Enterprises and their respective effective income Tax rates for the current
fiscal year.
2.15. Labor Relations. Except as set forth in Schedule 2.15, no
unfair labor practice complaint or any complaint alleging sexual harassment
or sex, age, race or other employment discrimination has been brought
during the last three years against the Company or any of its Subsidiaries
before any Governmental Entity, nor is there any charge, investigation
(formal or informal) or complaint pending, or to the knowledge of the
Company, threatened, against the Company or any of its Subsidiaries
regarding any labor or employment matter. There have been no governmental
audits of the equal employment opportunity practices of the Company or any
of its Subsidiaries and, to the knowledge of the Company, no reasonable
basis for any such audit exists. The Company and its Subsidiaries (i) are
in compliance with all applicable material Laws respecting employment,
employment practices, labor, terms and conditions of employment, collective
bargaining and wages and hours and (ii) have withheld all amounts required
by Law or by agreement to be withheld from the wages, salaries and other
payments to its employees.
2.16. Intellectual Property Rights. (a) The Company and its
Subsidiaries (i) own or have the right to use, free and clear of all Liens,
claims and restrictions, all Intellectual Property used and held for use in
the conduct of its business as now conducted without infringing upon or
violating, any right, Lien, or claim of others, including without
limitation former employees and former employers of its past and present
employees, and, (ii) except as described in Schedule 2.16, which lists by
payee the amount of royalties or fees in excess of $100,000 per year that
the Company or any of its Subsidiaries is obligated to pay, are not
obligated or under any liability whatsoever to make any payments by way of
royalties, fees or otherwise to any owner or licensee of, or other claimant
to, any patent, trademark, service xxxx, trade name, copyright or other
intangible asset, with respect to the use thereof or in connection with the
conduct of its business or otherwise.
(b) Any and all Intellectual Property of any kind, relating to
the business of the Company or any of its Subsidiaries, currently being
developed by any employee of the Company or any Subsidiary while in the
employ of the Company or such Subsidiary, shall be the property solely of
the Company or such Subsidiary. The Company and its Subsidiaries have taken
security measures to protect the secrecy, confidentiality and value of all
the Intellectual Property, which measures are reasonable and customary in
the industry in which the Company operates. Each of the Company's and its
Subsidiaries' employees and other persons who, either alone or in concert
with others, developed, invented, discovered, derived, programmed or
designed the Intellectual Property, or who has a knowledge of or access to
information about the Intellectual Property, have entered into a written
agreement with the Company or such Subsidiary, in form and substance
satisfactory to the Company's management and reasonable and customary in
the industry in which the Company operates (the "Proprietary Information
Agreement") regarding the Company's or its Subsidiaries' ownership and
treatment of the Intellectual Property.
(c) Neither the Company nor any Subsidiary has received any
communications alleging that the Company or any Subsidiary has violated or
by conducting its business as proposed, would violate, any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other person or entity. None of the
Company's or any of its Subsidiary's employees is obligated under any
contract (including licenses, covenants or commitments of any nature) or
other agreement, or subject to any judgment, decree or order of any court
or administrative agency, that would interfere with the use of such
employee's best efforts to promote the interests of the Company or that
would conflict with the Company's or any of its Subsidiaries' business as
conducted and proposed to be conducted. Neither the execution nor delivery
of the Transaction Documents, nor the carrying on of the Company or such
Subsidiary, nor the conduct of the Company's or any of its Subsidiaries'
business, will conflict with or result in a breach of the terms, conditions
or provisions of, or constitute a default under any contract, covenant or
instrument under which any of such employees is now obligated. It is not,
and will not become, necessary to utilize any inventions of any of the
Company's or any of its Subsidiary's employees (or people the Company or
any Subsidiary of the Company currently intends to hire) made prior to
their employment by the Company or such Subsidiary other than those that
have been assigned to the Company pursuant to the Proprietary Information
Agreement signed by such employee.
2.17. Compliance with Laws. Each of the Company and its
Subsidiaries is in compliance in all material respects with all applicable
Laws and Orders, including without limitation, the provisions of the Law
for Encouragement of Capital Investments, 1959, applicable to the Company
and the terms of any "Approval Letter" issued to the Company thereunder and
its extensions, amendments and supplements, if any. No Order has been
issued nor any Law enacted which prevents, nor does any Law prohibit the
consummation of, the transactions contemplated by any of the Transaction
Documents. Except as set forth on Schedule 2.17(a), the Company and its
Subsidiaries have such licenses, franchises, permits and other approvals or
authorizations from governmental regulatory authorities ("Permits") as are
necessary under applicable law to own their respective properties and to
conduct their respective businesses in the manner now being conducted and
as described in (i) the Company's Form 20-F, filed with the SEC on June 26,
2000 and as updated from time to time thereafter on Form 6-K and (ii) the
Company's draft Registration Statement on Form F-3 confidentially submitted
to the SEC on April 19, 2000 including, without limitation licenses
required to be issued by the Israeli Ministry of Communications or under
the Israeli Telecommunications Law; and the Company and its Subsidiaries
have fulfilled and performed all of their respective obligations with
respect to such Permits, except where the failure to hold such Permits or
perform such obligations would not have a Material Adverse Effect. Except
as set forth on Schedule 2.17(b) or otherwise in this Agreement, (a) there
are no citations, fines or penalties heretofore asserted against the
Company or its Subsidiaries under any Law individually in excess of $2,000
(including any expected remediation costs) which remain unpaid or which
otherwise bind any assets material to the Company and its Subsidiaries, and
(b) the Company or any of its Subsidiaries has not received any notice from
any Governmental Entity with respect to any violation of any Law.
2.18. Conflicting Agreements and Articles of Association
Provisions. Neither the Company nor any of its Subsidiaries have entered
into any Contract and neither the Company nor any of its Subsidiaries is
subject to any Articles of Association or Memorandum of Association
provision or any Order that in any case could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. None
of the execution and delivery of any of the Transaction Documents, the
issuance, sale and delivery of the Notes, the issuance of Ordinary Shares
upon conversion of the Notes and the fulfillment of or compliance with the
terms and provisions hereof or thereof will conflict with or result in a
breach of the terms, conditions, or provisions of, or give rise to a right
of termination under, or constitute a default under, or result in the
creation of any Lien, or result in any violation of, the Articles of
Association or Memorandum of Association or other organizational documents
of the Company or any of its Subsidiaries or any Contract of the Company or
any of its Subsidiaries. Neither the Company nor any Subsidiary is in
breach or default under any material provision of its Contracts, to the
knowledge of the Company, no breaches or defaults under such Contracts are
threatened and, to the knowledge of the Company, no other party to such
Contracts is in breach or default under such Contracts. No event has arisen
that, with or without notice or the passage of time or both, is likely to
result in a breach or default by any party under any material provision of
any Contract of the Company or any of its Subsidiaries.
2.19. Offering of the Securities. In connection with this
offering, neither the Company nor any Person acting on its behalf has
offered the Securities or any similar securities of the Company for sale
to, solicited any offers to buy the Securities or any similar securities of
the Company from or otherwise approached or negotiated with respect to the
Company with any Person other than the Purchasers and other "accredited
investors" (as defined in Rule 501(a) under the Securities Act). Neither
the Company nor any Person acting on its behalf has taken, or, except as
contemplated hereby, will take, any action (including, without limitation,
any offering of any securities of the Company under circumstances that
would require the integration of such offering with the offering of the
Securities under the Securities Act) that could reasonably be expected to
subject the offering, issuance or sale of the Securities to the
registration requirements of Section 5 of the Securities Act or violate the
provisions of any securities, "blue sky", or similar law of any applicable
jurisdiction.
2.20. Existing Indebtedness; Future Liens. (a) Schedule 2.20 sets
forth a complete and correct list of all outstanding Indebtedness of the
Company and its Subsidiaries as of the date hereof. Neither the Company nor
any of its Subsidiaries has breached any material provisions of, and is not
in default under, any such Indebtedness, no waiver of default under any
such Indebtedness is currently in effect, and no event or condition exists
with respect to any such Indebtedness that would permit (or that with
notice or the lapse of time, or both, would permit) one or more Persons to
cause such Indebtedness to become due and payable before its stated
maturity or before its regularly scheduled dates of payment. Neither the
Company nor any of its Subsidiaries has received any notice from any Person
declaring or threatening to declare any Indebtedness owed by the Company or
any of its Subsidiaries to such Person due and payable prior to the stated
maturity of such Indebtedness or before its regularly scheduled dates of
payment.
(b) Neither the Company nor any of its Subsidiaries has agreed or
consented to cause or permit in the future (upon the happening of a
contingency or otherwise) any of its property, whether now owned or
hereafter acquired, to be subject to any Lien (other than Permitted Liens).
2.21. Environmental Matters. The Company has no knowledge of any
claim and has not received any notice of any claim, and no proceeding has
been instituted raising any claim against the Company or any of its
Subsidiaries or any of their real properties now or formerly owned, leased
or operated by it or other assets, alleging any damage to the environment
or violation of any Environmental Laws. The Company has no knowledge of any
facts that would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring
on or affecting real properties now or formerly owned, leased or operated
by the Company or any of its Subsidiaries or to other assets or their use.
Neither the Company nor any of its Subsidiaries has stored any Hazardous
Materials on real properties now or formerly owned, leased or operated by
it and has not disposed of any Hazardous Materials in a manner contrary to
any Environmental Laws. All buildings on all real properties now owned,
leased or operated by the Company are in compliance with applicable
Environmental Laws.
2.22. Absence of Certain Developments. Except as set forth on
Schedule 2.22 or except as expressly contemplated by this Agreement, since
December 31, 1999, neither the Company nor any of its Subsidiaries has:
(a) issued any bonds or other debt securities or any equity
securities;
(b) borrowed any amount or incurred or become subject to any
liabilities, except current liabilities incurred in the ordinary course of
business and liabilities under contracts entered into in the ordinary
course of business;
(c) discharged or satisfied any Lien or paid any obligation or
liability, other than current liabilities paid in the ordinary course of
business, or other obligation or liability in an amount in excess of
$100,000 in the aggregate;
(d) declared or made any payment or distribution of cash or other
property to its stockholders with respect to its Ordinary Shares or
purchased or redeemed any shares of its capital stock;
(e) mortgaged or pledged any of its properties or assets or
subjected them to any Lien, except Liens for current property taxes not yet
due and payable;
(f) sold, assigned or transferred any of its tangible assets,
except in the ordinary course of business, or cancelled any debts or
claims;
(g) sold, assigned or transferred any Intellectual Property;
(h) suffered any extraordinary losses or waived any rights of
Material value, whether or not in the ordinary course of business or
consistent with past practice;
(i) made capital expenditures or commitments other than those
capital expenditures and commitments set forth in the Company's operating
budget for fiscal year 2000, previously provided in writing to the
Purchaser;
(j) entered into any other transaction other than in the ordinary
course of business or entered into any other material transaction, whether
or not in the ordinary course of business;
(k) made any loans or advances to, guarantees for the benefit of,
or any investments in, any executive officer, director, Affiliate or
stockholder of the Company or its Subsidiaries in excess of $100,000 in the
aggregate;
(l) suffered any damage, destruction or casualty loss exceeding
in the aggregate US $250,000, whether or not covered by insurance.
2.23. Assets. The Company and its Subsidiaries have good and
marketable title to, or a valid and subsisting leasehold interest in, the
properties and assets used by them, located on their premises or reflected
on the latest consolidated balance sheet of the Company included in the
Financial Statements (the "Latest Balance Sheet"), free and clear of all
Liens, except as disclosed on the Latest Balance Sheet. The Company's and
its Subsidiaries' buildings, equipment and other tangible assets are in
good operating condition and are fit for use in the ordinary course of
business.
2.24. Employees. (a) Particulars of all the officers, employees
and consultants of the Company and its Subsidiaries including all benefits
payable or which the Company or its Subsidiaries are bound to provide
(whether now or in the future) to each officer, employee and consultant of
the Company have been properly disclosed (i) in the SEC Filings to the
extent required and (ii) in any filings required under applicable Israeli
securities laws to the extent required, and are true and correct in all
Material respects as disclosed in such SEC Filings and Israeli securities
law filings.
(b) No key employee of the Company or any of its Subsidiaries has
been dismissed in the last twelve (12) months or has given notice of
termination of employment.
(c) It is the policy of the Company and its Subsidiaries to enter
into agreements with each of their respective officers, employees and
consultants containing provisions relating to non-disclosure,
non-competition and assignment of proprietary rights. The Company and its
Subsidiaries use their best efforts to ensure that this policy is enforced.
(d) The Company has made adequate provision in accordance with
Israeli GAAP for its employees on account of wages, severance pay, pension
funds, redemption of annual leave or otherwise, whether required by Law or
pursuant to an agreement, with respect to the period up to and including
the date hereof, and such obligations are accurately reflected in the
Financial Statements.
2.25. Solvency. The Company is not, and, after giving effect to
the issuance of the Notes and the application of the proceeds therefrom,
will not be, insolvent within the meaning of Title 11 of the United States
Code or any comparable provision of Israeli law.
2.26. Foreign Corrupt Practices Act and Similar Laws. The
activities of each of the Company and its Subsidiaries and its officers,
directors and employees have complied, and the operations of each of the
Company and its Subsidiaries and the activities of the officers, directors
and employees of each of the Company and its Subsidiaries have complied
with all applicable Laws governing corrupt or illicit business practices,
including, without limitation, laws dealing with improper or illegal
payments, gifts or gratuities and/or the payment of money or anything of
value directly or indirectly to any person (whether a government official
or private individual) for the purpose of illegally or improperly inducing
any person or government official, or political party or official thereof,
or any candidate for any such position, in making any decision or
improperly assisting any person in obtaining or retaining business or
taking any other action favorable to such person, and/or dealing with
business practices in relation to foreign investments.
2.27. Certain Relationships. Except as set forth on Schedule
2.27, no material relationship, direct or indirect, exists between or among
the Company or its Subsidiaries on the one hand and the directors,
officers, or shareholders of the Company, on the other hand, other than in
the ordinary course of the Company's business (but excluding any
contractual commitments in excess of $10,000 between or among such
Persons), nor any relationship exists between or among the Company or its
Subsidiaries on the one hand and any of its customers or suppliers on the
other hand, in value exceeding, with respect to any customer or supplier,
10% of the revenues or profits of the Company, on a consolidated basis, all
except those described in the SEC Filings, including without limitation
items required to be disclosed under Item 13 of Form 20-F of the rules and
regulations of the Securities and Exchange Commission under the Securities
Act if the Company were to file a Form 20-F as of the date hereof. Except
as set forth on Schedule 2.27, no officer or management employee of the
Company or any of its Subsidiaries has any interest in any Person that is
engaged in a business which is in competition with that of the Company or
any of its Subsidiaries (other than holding less than 2% of the outstanding
shares in publicly traded competing company), or is a party to any contract
which may interfere with the use of his or her best efforts to carry on his
or her duties for the Company or any of its Subsidiaries, to promote the
best interests of the Company and its Subsidiaries or which may conflict
with the Company's business as conducted and as proposed to be conducted.
Notwithstanding anything to the contrary in this Section 2.27, Schedule
2.27 sets forth a true and correct description of all material current and
proposed transactions and agreements between and among the Company and
Gilat Satellite Networks Ltd. ("Gilat Satellite"). All such transactions
and agreements with Gilat Satellite were entered into in good faith and on
an arm's-length basis.
2.28. HSR Act. As of the date hereof, the transactions
contemplated by this Agreement are exempt from the requirements of the HSR
Act because, for each of the fiscal years ended December 31, 1998 and
December 31, 1999, (i) the aggregate book value of the Company's
consolidated assets located in the U.S. (other than investment assets,
voting or nonvoting securities of another person, and assets included
pursuant to ss.801.40(c)(2) of the HSR Act) was less than $15 million, and
(ii) the Company's aggregate consolidated sales in or into the U.S. were
less than $25 million. For purposes of this Section 2.29, the "Company"
shall include all entities "controlled" by the Company, directly or
indirectly, within the meaning of such term as defined in ss.801.1(b) of
the HSR Act.
2.29. Disclosure. The Transaction Documents and schedules thereto
and certificates and any other document furnished or to be furnished to any
Purchaser by or on behalf of the Company in connection with the
transactions contemplated hereby is, and shall be, true, correct and
complete and do not and will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
contained therein not misleading. There is no fact or information relating
to the Company or its Subsidiaries that could reasonably be expected to be
material to the Company or on the ability of the Company to perform the
Transaction Documents or which might have materially adversely affected the
terms of the transactions contemplated hereby that has not been disclosed
to the Purchasers in writing or in the SEC Filings.
2.30. Jurisdiction. Under the laws of the State of Israel, the
submission by the Company to the exclusive jurisdiction of any federal or
state court located in the Southern District of New York and the
designation of the law of the State of New York to apply to the Transaction
Documents will be binding upon the Company and, if properly brought to the
attention of the court or administrative body in accordance with the laws
of the State of Israel, will be enforceable in any judicial or
administrative proceeding in Israel.
2.31. Operation of Business. The Company currently has valid and
enforceable contractual commitments for the use of VSAT equipment and the
lease of time access with satellite operators, including, without
limitation, Intelsat, XXXX 1 and Eutelsat, in sufficient capacity to meet
its present and contemplated business requirements and strategic objectives
as disclosed in its SEC Filings, including, without limitation, the
Company's planned expansion of its interactive distant learning product
offerings and distribution channels.
2.32. Seniority of Notes. The Notes shall rank senior to all
other existing Indebtedness of the Company and its Subsidiaries (including
Intercompany Indebtedness) existing as of the date hereof, other than
Senior Debt incurred under the Credit Agreements.
2.33. Gilat DBS, Inc. The rights to purchase an equity interest
in Gilat DBS, Inc. distributed to the Company's shareholders prior to the
date hereof permit the holders of the rights to acquire an equity interest
in Gilat DBS, Inc. at a price not less than the fair market value of such
equity interest at the time of distribution.
2.34. Material Customers. For the fiscal year ended December 31,
1999, no one customer of the Company or its Subsidiaries accounted for more
than 5% of the net sales of the Company and its Subsidiaries. None of the
top 15 customers of the Company and its Subsidiaries (based on percentage
of net sales over the last twelve months) (each, a "Material Customer") has
during the last twelve months decreased materially or, to the knowledge of
the Company, threatened to decrease or limit materially its purchase of
products and services from the Company and its Subsidiaries. There has not
been, and to the knowledge of the Company, there has not been threatened,
any termination, cancellation or limitation of, or any material
modification or change in, the business relationships of the Company with
any Material Customer. To the knowledge of the Company, there will not be
any such change in relations with Material Customers of the Company or
triggering of any right of termination, cancellation or penalty or other
payment in connection with or as a result of transactions contemplated by
this Agreement.
2.35. Authorized Training Center. The Company (either directly or
through one of its Subsidiaries) is an authorized training center for
Compaq, Microsoft, Oracle, Sun Authorized Java Center, Novell and Cisco
Systems. There has not been and, to the knowledge of the Company, there has
not been threatened, any termination, cancellation or limitation of, or any
material modification or change in, the designation of the Company or any
of its Subsidiaries as an authorized training center or any notification
(written or oral) that such designation as an authorized training center
will not, or is likely not to be, renewed.
3. Representations and Warranties of the Purchasers. Each Purchaser,
severally and not jointly, represents and warrants to the Company with
respect to such Purchaser as follows:
3.1. Organization and Qualification. Such Purchaser is duly
organized, validly existing and in good standing under the laws of the
state of its formation and has the power to own its respective property and
to carry on its respective business as now being conducted. Such Purchaser
is duly qualified to do business and in good standing in every jurisdiction
in which the nature of the respective business conducted or property owned
by it makes such qualification necessary, except where the failure to so
qualify would not prevent consummation of the transactions contemplated
hereby or reasonably be expected to have a material adverse effect on such
Purchaser's ability to perform its obligations hereunder.
3.2. Due Authorization. Such Purchaser has all right, power and
authority to enter into, deliver and perform the Transaction Documents to
which it is a party and to consummate the transactions contemplated
thereby. Such Purchaser's execution and delivery of each Transaction
Document to which it is a party and the performance by such Purchaser of
the transactions contemplated thereby and compliance by such Purchaser with
all the provisions of each Transaction Document to which it is a party (as
applicable) have been duly authorized by all requisite proceedings on the
part of such Purchaser. Each of the Transaction Documents to which it is a
party has been duly executed and delivered on behalf of such Purchaser, and
each such Transaction Document constitutes the legal, valid and binding
obligation of such Purchaser, enforceable against such Purchaser in
accordance with its respective terms, except to the extent that such
enforceability (i) may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors'
rights generally or (ii) is subject to general principles of equity.
3.3. Acquisition for Investment. Such Purchaser is acquiring the
Notes being purchased by it for its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof except in compliance with all applicable securities
Laws.
3.4. Offering of Securities. Such Purchaser has not offered the
Securities for sale by any means of general solicitation or general
advertising including, but not limited to, any advertisements, articles,
notices or other communications published in any newspaper, magazine or
similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees were invited by any general solicitation or general
advertising.
3.5. Accredited Investor. Such Purchaser is an "accredited
investor" within the meaning of Rule 501 promulgated under the Securities
Act.
4. Registration, Exchange and Transfer of Notes.
--------------------------------------------
4.1. The Note Register; Persons Deemed Owners. The Company shall
maintain, at its office designated for notices in accordance with Section
7.6, a register for the Notes (the "Note Register"), in which the Company
shall record the name and address of the Person in whose name each Note has
been issued and the name and address of each transferee and prior owner of
each Note. The Company shall deem and treat the Person in whose name a Note
is so registered as the Holder and owner thereof for all purposes and shall
not be affected by any notice to the contrary, until due presentment of
such Note for registration of transfer as provided in this Section 4.
4.2. Issuance of New Notes Upon Exchange or Transfer. Upon
surrender for exchange or registration of transfer of any Note at the
office of the Company designated for notices in accordance with Section
7.6, the Company shall execute and deliver, at its expense, one or more new
Notes as requested by the Holder of the surrendered Note, each dated the
date so surrendered, but in the same aggregate Face Amount as such
surrendered Note, and registered in the name of such Person or Persons as
shall be designated in writing by such Holder. Every Note surrendered for
registration of transfer shall be duly endorsed, or be accompanied by a
written instrument of transfer duly executed, by the Holder of such Note or
by his attorney-in-fact duly authorized in writing.
5. Payment of Notes.
----------------
5.1. Home Office Payment. The Company will pay to each Holder or
any transferee thereof all sums becoming due on the Notes (including all
sums that become due on the Notes at the maturity thereof), at the
account/address to be specified by such Holder or transferee for such
purpose by notice to the Company, by wire transfer of immediately available
funds, or at such other address or by such other method as such Holder or
transferee shall have designated by notice to the Company. Before selling
or otherwise transferring any Note, such Holder or transferee will make a
notation thereon of the aggregate amount of all payments, if any, of the
Face Amount thereof, theretofore made.
5.2. Interest and Principal. Unless otherwise provided herein,
payment of interest on and the Face Amount of each Note shall be due and
payable as provided in the Notes.
5.3. Seniority of Notes. (a) The Notes shall rank senior to all
Indebtedness of the Company and its Subsidiaries (including Intercompany
Indebtedness) existing as of the date hereof or hereafter incurred other
than Senior Debt. The Notes may be subordinated only to Senior Debt. The
Notes may rank pari passu with the New Notes that may be issued by the
Company in compliance with Section 5(u) of the Notes.
(b) Except to the extent provided in Section 5.3(a) above,
neither the Company nor any of its Subsidiaries shall assume or incur any
Indebtedness senior in rank to, or pari passu with, any of the Notes;
provided, however, that the Company may incur Indebtedness (in addition to
the New Notes) senior in rank to, or pari passu with, any of the Notes if
the proceeds of such additional Indebtedness are sufficient to, and are
used to, redeem in full all of the outstanding Notes in accordance with the
terms of the Notes.
(c) So long as 35% of the aggregate principal Face Amount of the
Notes (excluding any additional Notes issued pursuant to the terms thereof)
remain outstanding and the Purchasers or their Permitted Transferees hold
not less than 50% of the aggregate principal Face Amount of the Notes
(excluding any additional Notes issued pursuant to the terms thereof), the
Company shall not Guarantee any Indebtedness of its Subsidiaries if the
incurrence of any such Guarantee would result in there being outstanding at
any time more than $2.5 million in Guarantees of Indebtedness of the
Company's Subsidiaries.
5.4. Conversion of Notes. Unless otherwise provided herein, the
Notes shall be convertible into Ordinary Shares as provided in the Notes.
6. Interpretation.
--------------
6.1. Definitions.
-----------
"Action" shall have the meaning set forth in Section 7.1(b)(i).
"Affiliate" shall mean, as to any specified Person, any other
Person directly or indirectly controlling or controlled by or under the
direct or indirect common control with such specified Person, provided,
however, that none of the Purchasers shall be deemed an Affiliate of the
Company for purposes hereof. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities or by agreement or otherwise. For the
purposes of this Agreement, Affiliates of Shamrock Holdings of California,
Inc. shall include (i) any entity which 50% or more of its voting or equity
securities are owned, directly or indirectly, by Shamrock Holdings, Inc. or
Shamrock Holdings of California, Inc., any executive officers of Shamrock
Holdings, Inc. or Shamrock Holdings of California, Inc. and/or any member
of the Xxx X. Xxxxxx family (or any trust for his/her benefit) and (ii) any
entity in which Shamrock Holdings Inc. or Shamrock Holdings of California
or any of the foregoing referenced in (i) serves as a general partner or
manager.
"Agreement" shall have the meaning ascribed thereto in the
Preamble.
"Articles of Association" shall mean the Articles of Association
of the Company as currently in effect.
"Board of Directors" shall mean the Board of Directors of the
Company.
"Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Capital Expenditures" shall mean expenditures made or
liabilities incurred for the acquisition of any fixed assets or
improvements, replacements, substitutions or additions thereto which have a
useful life of more than one year, including the total principal portion of
Capitalized Lease Obligations.
"Capital Stock" shall mean, in the case of the Company, any and
all shares (however designated) of the capital stock of the Company now or
hereafter outstanding.
"Capitalized Lease" shall mean, with respect to any Person, any
lease or any other agreement for the use of property which, in accordance
with GAAP, should be capitalized on the lessee's or user's balance sheet.
"Capitalized Lease Obligation" of any Person shall mean and
include, as of any date as of which the amount thereof is to be determined,
the amount of the liability capitalized or disclosed (or which should be
disclosed) in a balance sheet of such Person in respect of a Capitalized
Lease of such Person.
"Closing" shall have the meaning ascribed thereto in Section 1.3.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning ascribed thereto in the
Preamble.
"Consolidated" or "consolidated", when used with reference to any
financial term in this Agreement (but not when used with respect to any Tax
Return or Tax Liability), shall mean the aggregate for two or more Persons
of the amounts signified by such term for all such Persons, with
inter-company items eliminated and, with respect to earnings, after
eliminating the portion of earnings properly attributable to minority
interests, if any, in the capital stock of any such Person or attributable
to shares of preferred stock of any such Person not owned by any other such
Person.
"Contracts" shall mean all agreements, contracts, leases,
purchase orders, arrangements, commitments and licenses to which the
Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries is bound.
"Credit Agreements" shall mean the bank credit facilities of the
Company or its Subsidiaries with an affiliate of First International Bank
of Israel Ltd., Bank Leumi Le Israel B.M., Bank Ha'xxxxxxxx X.X., Bank
Discount Le'israel B.M. or Bank Hapoalim B.M., as existing on the date
hereof, which are either fully secured or which prohibit the Company and
its Subsidiaries from pledging all of their assets (or all of their assets
other than those assets secured under any other Credit Agreement) to secure
any obligations of the Company or its Subsidiaries.
"Dollars" or "$" shall mean the lawful currency of the United
States of America.
"Environmental Laws" shall mean any and all Laws, permits,
concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or
the release of any materials into the environment, including but not
limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"Equity Interests" shall mean any capital stock, partnership
interest, joint venture interest or other equity interest or warrants,
options or other rights to acquire any capital stock, partnership interest,
joint venture interest or other equity interest.
"Equity Securities" shall mean, with respect to any Person,
shares of capital stock or other equity interest of such Person, and any
rights, options or warrants to purchase stock or other securities
exchangeable for or convertible into capital stock of or other equity
interest in such Person.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Exchange Act of 1934,
as amended, shall include reference to the comparable section, if any, of
any such successor federal statute.
"Face Amount" for each Note shall mean the principal amount at
Stated Maturity of such Note as indicated on the face of such Note.
"GAAP" shall mean U.S. generally accepted accounting principles,
consistently applied.
"Governmental Entity" shall mean any supernational, national,
foreign, federal, state or local judicial, legislative, executive,
administrative or regulatory body or authority.
"Guaranty" or "Guarantee" by any Person shall mean all
obligations (other than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of any Person
guaranteeing, or in effect guaranteeing, any Indebtedness, dividend or
other obligation of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, all
obligations incurred through an agreement, contingent or otherwise, by such
Person: (i) to purchase such Indebtedness or obligation or any property or
assets constituting security therefor, (ii) to advance or supply funds (x)
for the purchase or payment of such Indebtedness or obligation, (y) to
maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such
Indebtedness or obligation, (iii) to lease property or to purchase
securities or other property or services primarily for the purpose of
assuring the owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of such Indebtedness or obligation, or (iv)
otherwise to assure the owner of the Indebtedness or obligation of the
primary obligor against loss in respect thereof. For the purposes of any
computations made under this Agreement, a Guarantee in respect of any
Indebtedness for borrowed money shall be deemed to be Indebtedness equal to
the outstanding amount of the Indebtedness for borrowed money that has been
guaranteed, and a Guarantee in respect of any other Liability or any
dividend shall be deemed to be Indebtedness equal to the maximum aggregate
amount of such Liability or dividend.
"Hazardous Material" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health
or safety, the removal of which may be required or the generation,
manufacture, refining, production, processing, treatment, storage,
handling, transportation, transfer, use, disposal, release, discharge,
spillage, seepage, or filtration of which is or shall be restricted,
prohibited or penalized by any applicable law (including, without
limitation, asbestos, urea formaldehyde foam insulation and polychlorinated
biphenyls).
"Holder" shall mean, at any time of reference, a Person in whose
name a Note is registered in the Note Register at such time.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"Indebtedness" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money, or with respect to deposits
or advances of any kind, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (iii) all obligations of
such Person under conditional sale or other title retention agreements
relating to property purchased by such Person, (iv) all obligations of such
Person issued or assumed as the deferred purchase price of property or
services (other than accounts payable to suppliers and similar accrued
liabilities incurred in the ordinary course of business and paid in a
manner consistent with industry practice), (v) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien or security
interest on property owned or acquired by such Person whether or not the
obligations secured thereby have been assumed, (vi) all Capitalized Lease
Obligations of such Person, (vii) all Guarantees of such Person, (viii) all
obligations (including, but not limited to, reimbursement obligations)
relating to the issuance of letters of credit for the account of such
Person, (ix) all obligations arising out of foreign exchange contracts, and
(x) all obligations arising out of interest rate and currency swap
agreements, cap, floor and collar agreements, interest rate insurance,
currency spot and forward contracts and other agreements or arrangements
designed to provide protection against fluctuations in interest or currency
exchange rates.
"Indemnified Person" shall have the meaning ascribed thereto in
Section 7.1(b).
"Intellectual Property" shall mean (a) Patents, (b) all
trademarks, service marks, trade dress, logos, trade names, domain names
and corporate names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill associated
therewith, and all applications, registrations and renewals in connection
therewith, (c) all copyrightable works, all copyrights and all
applications, registrations and renewals in connection therewith, (d) all
mask works and all applications, registrations and renewals in connection
therewith, (e) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier
lists, pricing and cost information and business and marketing plans and
proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, (h) all copies and
tangible embodiments of the foregoing (in whatever form or medium) and (i)
all licenses, sublicenses, permissions or agreements in connection with the
foregoing.
"Intercompany Indebtedness " shall mean any Indebtedness owed by
the Company to any of its Subsidiaries or by any of the Company's
Subsidiaries to the Company.
"Israeli GAAP" shall mean Israeli generally accepted accounting
principles, consistently applied.
"Law" shall include any foreign, federal, state, or local law,
statute, rule, regulation, Order or other restriction of any court or other
Governmental Entity.
"Liability" shall mean any debt, liability or obligation, whether
known or unknown, asserted or unasserted, accrued, absolute, contingent or
otherwise, whether due or to become due.
"Lien" shall mean, with respect to any Person, any mortgage,
lien, pledge, charge, security interest or other encumbrance, or any
interest or title of any vendor, lessor, lender or other secured party to
or of such Person under any conditional sale or other title retention
agreement or Capital Lease, upon or with respect to any property or asset
of such Person (including in the case of stock, stockholder agreements,
voting trust agreements and all similar arrangements).
"Litigation" shall mean any claim, demand, notice, action, suit,
proceeding, arbitration, investigation, civil, criminal or administrative
action, audit, inquiry or hearing by or before any Governmental Entity or
private arbitration tribunal.
"Majority Holders" means the Holders of a majority of the then
outstanding principal Face Amount of the Notes or a majority of the then
outstanding Ordinary Shares issued upon conversion of all or any portion of
the Notes.
"Material" shall mean material in relation to the properties,
business, prospects, operations, earnings, assets, Liabilities, condition
(financial or otherwise) of the Company and its Subsidiaries taken as a
whole, whether or not in the ordinary course of business.
"Material Adverse Effect" shall mean a material adverse effect on
(a) the properties, business, operations, earnings, assets, Liabilities or
the condition (financial or otherwise) of the Company and its Subsidiaries
taken as a whole, whether or not in the ordinary course of business, (b)
the ability of the Company or any of its Subsidiaries to perform its
obligations under any of the Transaction Documents to which it is a party,
(c) the validity or enforceability of any of the Transaction Documents, (d)
the rights, remedies, powers and privileges of the Holders under any of the
Transaction Documents or (e) the timely payment or performance of the
Obligations.
"New Notes" shall mean Indebtedness of the Company in the form of
unsecured notes convertible into Ordinary Shares that are issued or
incurred on or prior to the date which is 30 days after the Closing
hereunder in a maximum aggregate amount of $25 million in compliance with
Section 5(u) of the Notes, which New Notes may rank pari passu with the
Notes and which notes do not contain, and are not issued with, terms more
favorable to the purchasers thereof than the terms of the Notes issued
under this Agreement, the determination of which shall be made by the
Purchasers following the delivery to the Purchasers of the final proposed
terms of such notes and the Purchasers' approval thereof.
"Note Register" shall have the meaning ascribed thereto in
Section 4.1.
"Notes" shall have the meaning ascribed thereto in the Recitals.
"Obligations" shall mean any and all obligations of the Company
or any of its Subsidiaries at any time and from time to time for the
performance of its agreements, covenants and undertakings under or in
respect of the Transaction Documents to which the Company or such
Subsidiary is a party.
"Officers' Certificate" shall mean a certificate signed by any
two officers of the Company, one of whom must be the Chairman of the Board
of Directors, the President, or the Chief Financial Officer, of the
Company.
"Order" shall mean any judgment, order, writ, injunction, ruling,
decree, stipulation or award of any Governmental Entity or private
arbitration tribunal.
"Outstanding" or "outstanding" shall mean, when used with
reference to the Notes at a particular time, all Notes theretofore issued
as provided in this Agreement, except (i) Notes theretofore reported as
lost, stolen, damaged or destroyed, or surrendered for transfer, exchange
or replacement, in respect to which replacement Notes have been issued,
(ii) Notes theretofore paid in full, and (iii) Notes theretofore canceled
by the Company following their repayment in full or purchase by the
Company.
"Patents" shall mean, collectively, (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice) and all
improvements thereon, (b) all patents, patent applications and patent
disclosures, (c) all reissues, divisions, continuations, revisions
reexaminations, renewals, extensions and continuations-in-part thereof) and
(d) all rights, now existing or hereafter coming into existence, (i) to all
income, royalties, damages, and other payments (including in respect of all
past, present and future infringements) now or hereafter due or payable
under or with respect to any of the foregoing, (ii) to xxx for all past,
present and future infringements with respect to any of the foregoing and
(iii) otherwise accruing under or pertaining to any of the foregoing
throughout the world, including all inventions and improvements described
or discussed in all such patents and patent applications.
"Permitted Liens" means (i) Liens existing on the date hereof and
set forth on Schedule 6.1(b) (ii) Liens (other than any Lien imposed under
ERISA or any Environmental Laws) for Taxes, assessments or charges of any
Governmental Entity for claims not yet due or that are being contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted, and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with the provisions of
Israeli GAAP and enforcement thereof is stayed; (iii) Liens of landlords,
carriers, warehousemen, mechanics, materialmen and other Liens (other than
any Lien imposed under ERISA) not voluntarily granted for amounts not yet
due or which are being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted, and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with the provisions of Israeli GAAP, and enforcement thereof is
stayed; (iv) Liens (other than any Lien imposed under ERISA), incurred or
deposited made in the ordinary course of business including, without
limitation, surety bonds and appeal bonds, in connection with workers'
compensation, unemployment insurance and other types of social security
benefits or to secure the performance of tenders, bids, leases, contracts
(other than for the repayment of Indebtedness), statutory obligations and
other similar obligations or arising as a result of progress payments under
government contracts; (v) easements (including without limitation
reciprocal easement agreements and utility agreements), rights-of-way,
covenants, consents, reservations, encroachments, variations and other
similar restrictions, charges or encumbrances (whether or not recorded) and
other Liens incurred in the ordinary course of business, that do not secure
Indebtedness or the deferred purchase price of any asset and that do not
interfere materially with the ordinary conduct of the business of the
Company or any Subsidiary of the Company and that do not materially detract
from the value of the property to which they attach or materially impair
the use thereof to the Company or any Subsidiary of the Company; and (vi)
building restrictions, zoning laws and other statutes, laws, rules,
regulations, ordinances and restrictions, and any amendments thereto, now
or at any time hereafter adopted by any governmental authority having
jurisdiction.
"Permitted Transferees" means (i) any Affiliate of Shamrock
Holdings of California, Inc., and (ii) Private Equity Holding, A.G. ("PEH")
and any entity which controls, is controlled by or under common control
with, PEH.
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company or other entity, and shall include
any successor (by merger or otherwise) of such entity.
"Purchase Price" shall have the meaning ascribed thereto in
Section 1.2.
"Purchaser" and "Purchasers" shall have the meaning ascribed
thereto in the Preamble.
"Registration Rights Agreement" shall mean the Registration
Rights Agreement dated the date hereof between the Purchasers and the
Company with respect to the Notes.
"Related Parties" shall mean Affiliates of the Company or any of
its Subsidiaries and directors or officers of the Company or any of its
Subsidiaries (including any family members of such directors and officers).
"Replacement Facility" shall mean any credit agreement with a
banking institution evidencing any amendment, extension, renewal, refunding
or refinancing of the Credit Agreements.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Securities" shall mean the Notes and the Ordinary Shares
issuable upon the conversion of the Notes.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Act shall include
reference to the comparable section, if any, of such successor federal
statute.
"Senior Debt" means the following, whether outstanding on the
date hereof or hereafter created, incurred or assumed by the Company:
(a) the principal of, the premium and interest on, all loans,
letters of credit, bankers' acceptances and other extensions of credit
under the Credit Agreement, all commitment, facility and other fees payable
under the Credit Agreement, and all expenses, reimbursements, indemnities
and other amounts payable by the Company under the Credit Agreement;
(b) any Replacement Facility, provided that such indebtedness was
(i) incurred in compliance with the terms hereof, (ii) is secured or
prohibits the Company and its Subsidiaries from pledging all of their
assets to secure any obligations of the Company or its Subsidiaries, (iii)
is in one tranche (which can have both a revolving component and a term
component) and (iv) all lenders under such Replacement Facility shall be
equally and ratably secured or the negative pledge covenant shall be for
the benefit of all such lenders; and
(c) all interest accrued or accruing on any obligation described
in clauses (a) or (b) above after the commencement of any insolvency,
bankruptcy, or receivership case or proceeding in accordance with and at
the contract rate (including, without limitation, any rate applicable upon
default) specified in the agreement or instrument creating, evidencing or
governing any such indebtedness, whether or not, pursuant to applicable law
or otherwise, the claim for such interest is allowed as a claim in such
case or proceeding.
Notwithstanding the foregoing, "Senior Debt" shall not include any
indebtedness which is not secured in whole or which allows the Company and
its Subsidiaries to pledge any of their assets to secure any obligations of
the Company or its Subsidiaries.
"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, shall mean the date specified in such
Security as the fixed date on which the principal of such Security or such
installment of interest is due and payable.
"Subsidiary" means, with respect to any Person, (i) a corporation
a majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly,
owned by such Person, by one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries thereof, (ii) any other Person (other
than a corporation), including, without limitation, a joint venture, in
which such Person, one or more Subsidiaries thereof or such Person and one
or more Subsidiaries thereof, directly or indirectly, at the date of
determination thereof, has at least majority ownership interest entitled to
vote in the election of directors, managers or trustees thereof (or other
Persons performing similar functions), (iii) the management of which is
otherwise controlled, directly or indirectly, by such Person or (iv) any
other Person required to be consolidated with such Person in accordance
with generally accepted accounting principles. For purposes of this
definition (and for the determination of whether or not a Subsidiary is a
wholly owned Subsidiary of a Person), any directors' qualifying shares or
investment by foreign nationals mandated by applicable law shall be
disregarded in determining the ownership of a Subsidiary.
"Tax" and "Taxes" shall mean any federal, state, local or foreign
income, gross receipts, property, sales, use, value added, license, excise,
franchise, capital, net worth, estimated, withholding, employment, payroll,
premium, withholding, alternative or added minimum, ad valorem, inventory,
asset, gains, transfer or excise tax, or any other tax, levy, custom, duty,
impost, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalty or additions to tax,
imposed by any Governmental Entity and, including, without limitation, any
Taxes of another Person owing under a contract, as transferee or successor,
under Treas. Reg. ss. 1.1502-6 or analogous state, local or foreign law, or
otherwise.
"Tax Return" shall mean any return, report or similar statement
required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim
for refund, amended return or declaration of estimated Tax.
"Transaction Documents" shall mean this Agreement, the Notes and
the Registration Rights Agreement.
6.2. Accounting Principles. The character or amount of any asset,
liability, capital account or reserve and of any item of income or expense
required to be determined pursuant to this Agreement, and any consolidation
or other accounting computation required to be made pursuant to this
Agreement, and the construction of any definition in this Agreement
containing a financial term shall be determined or made, as the case may
be, in accordance with GAAP, to the extent applicable, unless such
principles are inconsistent with the express requirements of this
Agreement.
7. Miscellaneous.
-------------
7.1. Payments; Indemnity. (a) The Company agrees that, so long as
any Holder shall hold any Notes, it will make all payments hereunder and
under the Notes in immediately available funds by wire transfer on the date
due in such manner as each Holder may reasonably request in writing.
Anything in this Agreement or the Notes to the contrary notwithstanding,
any payment of any Note that is due on a date other than a Business Day
shall be made on the next succeeding Business Day. If the date for payment
is extended to the next succeeding Business Day by reason of the preceding
sentence, the period of such extension will be included in the computation
of the interest payable on such next succeeding Business Day.
(b) (i) The Company and its Subsidiaries shall jointly and
severally indemnify and hold harmless each Purchaser, each Holder and each
of their respective Affiliates, and each such Person's respective officers,
directors, partners, members, employees, attorneys, agents and
representatives (each, an "Indemnified Person") from and against any and
all suits, actions, proceedings, claims (collectively, "Actions"), damages,
losses, Liabilities and out-of-pocket expenses (including reasonable
attorneys' fees and disbursements incurred in enforcing this indemnity and
other costs of investigation or defense, including those incurred upon any
appeal) which may be instituted or asserted against or incurred by any such
Indemnified Person as the result of credit having been extended, suspended
or terminated under this Agreement and the other Transaction Documents and
the administration of such credit, and in connection with or arising out of
the transactions contemplated hereunder and thereunder and any actions or
failures to act in connection therewith.
(ii) The Company and its Subsidiaries shall jointly and
severally indemnify and hold harmless each Indemnified Person from and
against any and all Actions, damages, losses, Liabilities and out-of-pocket
expenses (including reasonable attorneys' fees and disbursements incurred
in connection with enforcing this indemnity and other costs of
investigation or defense, including those incurred upon any appeal) based
upon, arising out of, or in connection with any breach of any
representation, warranty or covenant of the Company contained in this
Agreement or any Transaction Document.
(iii) Upon receipt by any Indemnified Person of any Action
against such Indemnified Person with respect to which indemnity may be
sought under this Agreement or any other Transaction Document, such
Indemnified Person shall promptly notify the Company in writing, provided
that failure so to notify the Company shall not relieve the Company from
any Liability that the Company may have on account of this indemnity or
otherwise, except to the extent the Company shall have been materially
prejudiced by such failure. The Company shall, at its option, assume the
defense of any Action including the employment of counsel reasonably
satisfactory to such Indemnified Person. Any Indemnified Person shall have
the right to employ separate counsel in any such Action and participate in
the defense thereof but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person, unless: (i) the Company has failed
promptly to assume the defense and employ counsel or (ii) the named parties
to such Action (including any impleaded parties) include such Indemnified
Person and the Company, and such Indemnified Person and the Company shall
have been advised by counsel that there may be one or more legal defenses
available to such Indemnified Person that are different from or in addition
to those available to the Company or there is or may be a conflict between
the Company and any Indemnified Person (in which case the Company may not
assume the defense). In the event that any Indemnified Person shall become
entitled to separate counsel under this Agreement or any other Transaction
Document, the Company shall not in such event be responsible hereunder for
the fees and expenses of more than one firm of separate counsel in
connection with any Action in the same jurisdiction, in addition to any
local counsel. In addition, the Company will not, without prior written
consent of such Indemnified Person, settle, compromise or consent to the
entry of any judgment in or otherwise seek to terminate any pending or
threatened Action in which indemnification may be sought hereunder (whether
or not any Indemnified Person is a party thereto) unless such settlement,
compromise, consent or termination includes an unconditional release of
such Indemnified Person from all liabilities and expenses arising out of
such Action.
(c) The Company shall bear all sales, documentary, transfer,
stamp or other similar Taxes and all filing fees and expenses incurred in
connection with the transactions contemplated by this Agreement and shall
indemnify and hold harmless each Indemnified Purchaser from and against any
such Taxes.
7.2. Severability. If any term, provision, covenant or
restriction of this Agreement or any Exhibit or Schedule hereto is held by
a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement and such Exhibits and Schedules shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and
restrictions without including any of such which may be hereafter declared
invalid, void or unenforceable.
7.3. Specific Enforcement. The Holders, on the one hand, and the
Company, on the other, acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the Holders shall be entitled to an
injunction to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the
United States or any state thereof having jurisdiction, this being in
addition to any other remedy to which they may be entitled at Law or
equity.
7.4. Entire Agreement. The Transaction Documents (including the
Schedules and Exhibits hereto and thereto) contain the entire understanding
of the parties with respect to the transactions contemplated hereby and
thereby.
7.5. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been
signed by each party and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
7.6. Notices and other Communications. All notices, consents,
requests, instructions, approvals, financial statements, proxy statements,
reports and other communications provided for herein shall be deemed given,
if in writing and delivered personally, by telecopy or sent by registered
mail, postage prepaid, if to:
The Company, to:
Gilat Communications Ltd.
00/X Xxxx Xxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxx-Xxxxx, Xxxxxx
Telephone: (000-0) 000-0000
Facsimile: (000-0) 000-0000
Attention: Chief Financial Officer
With a copy to:
Kleinhendler & Halevy, Law Offices
00 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxxxxx 00000
Telephone: (000-0) 000-0000
Facsimile: (000-0) 000-0000
Attention: Xxxx Xxxxxxxxxxxx, Adv.
and to:
Xxxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
The Purchasers,
Shamrock Holdings, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx
With a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
or to such other address as any party may, from time to time, designate in
a written notice given in a like manner.
7.7. Amendments. This Agreement may be amended as to the
Purchasers, any Holder and their respective successors and assigns, and the
Company may take any action herein prohibited, or omit to perform any act
required to be performed by it, if the Company shall obtain the written
consent of the Majority Holders. This Agreement may not be waived, changed,
modified, or discharged orally, but only by an agreement in writing signed
by the party or parties against whom enforcement of any waiver, change,
modification or discharge is sought or by parties with the right to consent
to such waiver, change, modification or discharge on behalf of such party.
7.8. Successors and Assigns. All covenants and agreements
contained herein shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns (including, without limitation,
any subsequent Holder of a Note).
7.9. Expenses. The Company agrees to pay to each Holder all
reasonable costs and expenses incurred by such Holder relating to any
future amendment or supplement to any of the Transaction Documents or any
of the Notes (or any proposal by the Company for such amendment or
supplement) whether or not consummated or any waiver or consent with
respect thereto (or any proposal for such waiver or consent) whether or not
consummated, and all costs and expenses of such Holder relating to the
enforcement of any of the Transaction Documents.
7.10. Future HSR Act Filings. The Company covenants and agrees to
notify the Purchasers promptly following the close of each fiscal year
following the date of this Agreement if the representations made in Section
2.28 no longer continue to be true and correct in all respects with respect
to the aggregate book value of the Company's assets in the United States or
the aggregate amount of the Company's sales in or into the United States,
or if either of such book value or sales exceeds the thresholds set forth
in such Section 2.28. If any filing under the HSR Act with respect to the
transactions contemplated by this Agreement becomes necessary on the advice
of counsel to the Purchasers, including, without limitation, as a result of
the issuance of Ordinary Shares upon conversion of the Notes, the Company
covenants and agrees to use, and to cause its Subsidiaries and Affiliates
to use, its best efforts to take or cause to be taken all actions
necessary, including to promptly and fully comply with any requests for
information from regulatory authorities, to obtain any consent, waiver,
approval or authorization relating to the HSR Act that is required in
connection with the transactions contemplated hereby. The Company agrees to
pay all filing fees and expenses required in connection with any such
filing required to be made under the HSR Act.
7.11. Nasdaq Listing. The Company will at all times take or cause
to be taken all actions necessary or advisable to maintain in full force
and effect the listing of its Ordinary Shares on the Nasdaq National
Market, including with respect to the listing thereon of all Ordinary
Shares issuable upon conversion of any of the Notes.
7.12. Reservation of Shares. The Company shall at all times
reserve and keep available for issuance upon the conversion of any of the
Notes, free from any preemptive rights, such number of its authorized but
unissued Ordinary Shares as will from time to time be sufficient to permit
the conversion of all outstanding Notes, and shall take all action required
to increase the authorized number of Ordinary Shares if necessary to permit
the conversion of all outstanding Notes.
7.13. Directors. (a) Upon the Closing, the Majority Holders shall
be entitled to designate a non-voting observer to attend and participate in
(but not to vote at) all meetings of the Board of Directors (the
"Non-Voting Observer"). The Non-Voting Observer shall have the same access
to information concerning the business and operations of the Company and at
the same time as directors of the Company and shall be entitled to
participate in discussions and to consult with the Board of Directors
without voting, and the Board of Directors shall give due consideration to
the advice and recommendations of such Non-Voting Observer. The Non-Voting
Observer shall hold office until the terms and conditions stated in section
(b) below are satisfied.
(b) Promptly after the Closing, the Company shall use its best
efforts to convene a meeting of the shareholders of the Company and
recommend to the stockholders an increase in the size of the Board of
Directors up to 10 (the "Board Increase"). In the event the Board Increase
is approved, at the meeting held for approval of such increase, the Company
shall use its best efforts to cause the Non-Voting Observer (or any such
individual so designated pursuant to this paragraph from time to time, a
"Purchaser Designee") to be nominated to the Board of Directors and shall
recommend to the stockholders the election of such Purchaser Designee as
director. In the event that any vacancy arises on the Board of Directors
prior to the Board Increase, the Company shall use its best efforts to
cause the Purchaser Designee to be nominated to the Board of Directors and
recommend to the Board of Directors the appointment of such Purchaser
Designee as a director. After the Purchaser Designee becomes a director, as
long as (i) 35% or more of the aggregate principal Face Amount of the Notes
(excluding any additional Notes issued pursuant to the terms thereof)
remain outstanding and the Purchasers or their Permitted Transferees hold
at least 50% of the aggregate principal Face Amount of the Notes (excluding
any additional Notes issued pursuant to the terms thereof), or (ii) the
Purchasers or their Permitted Transferees beneficially own at least 35% of
the Ordinary Shares issuable upon conversion of the Notes, the Company, in
connection with any annual meeting of stockholders at which directors are
to be elected or the term of a Purchaser Designee is to expire, will use
its best efforts to cause such Purchaser Designee to be elected to the
Board of Directors including, without limitation, inclusion of such
Purchaser Designee on the slate of directors submitted by the Company to
the stockholders for appointment or election. In the event of any vacancy
arising by reason of the resignation, death, removal or inability to serve
of any Purchaser Designee, the Majority Holders shall be entitled to
designate a successor to fill such vacancy for the unexpired term (and,
thereafter, such successor shall be deemed a Purchaser Designee for all
purposes of this paragraph). If a designee of the Holders of the Notes is
no longer a member of the Company's Board of Directors because either event
specified in clause (i) or (ii) of this paragraph (b) is not applicable,
the Majority Holders' right to have a Non-Voting Observer pursuant to
Section 7.13(a) hereof shall be reinstated.
(c) In addition to any requirements specified in the charter
documents of the Company, the Company shall notify each Purchaser Designee
and the Non-Voting Observer, by telecopy, of every meeting (or action by
written consent) of the Board of Directors and of any committee of the
Board of Directors, at least seven Business Days in advance of such meeting
(or distribution of written consents), or, if such notice under the
circumstances is not practicable, as soon before the meeting (or
distribution) as is practicable.
(d) The Non-Voting Observer shall be entitled to indemnification
from the Company to the maximum extent permitted by law as though he or she
were a director of the Company.
(e) The Company covenants and agrees to expand the size of the
Board of Directors from eight to up to ten members (including the outside
directors) to fulfill its obligations under the Transaction Documents with
respect to the appointment or election of the Purchaser Designee once that
individual has been so selected for election or appointment subject to the
terms and conditions described in section (b) above.
7.14. Survival. All covenants, agreements, representations and
warranties contained herein and in any certificates delivered pursuant
hereto in connection with the transactions contemplated hereby shall
survive the Closing and the delivery of the Transaction Documents,
regardless of any investigation made by or on behalf of any party.
7.15. Transfer of Notes and Ordinary Shares. Each Holder
understands and agrees that the Notes and the Ordinary Shares issuable upon
conversion of the Notes have not been registered under the Securities Act
or the securities laws of any state and that they may be sold or otherwise
disposed of only in one or more transactions registered under the
Securities Act and, where applicable, such laws or transactions as to which
an exemption from the registration requirements of the Securities Act and,
where applicable, such laws are available. Each Holder acknowledges that,
except as provided in the Registration Rights Agreement, such Holder has no
right to require the Company to register the Notes. Each Holder understands
and agrees that each Note or certificate representing the Notes shall bear
the following legends:
THIS NOTE AND THE SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES
LAWS OF ANY STATE. THIS NOTE AND SUCH SHARES MAY BE
OFFERED OR SOLD ONLY IF REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR IF AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
7.16. Governing Law. THIS AGREEMENT AND THE NOTES SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES
SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK EXCLUDING
CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
7.17. Submission to Jurisdiction. If any Litigation shall be
brought by any party which arises out of or is related in any manner to
this Agreement or any of the Notes, the parties hereby consent and submit
to the jurisdiction of the state or federal court of competent jurisdiction
sitting within the area comprising the Southern District of New York on the
date of this Agreement. Notwithstanding the foregoing sentence, a court
sitting in Israel may exercise jurisdiction solely in connection with the
enforcement of any judgment rendered by such federal or state court in the
area comprising the Southern District of New York. Each party hereto hereby
irrevocably waives any objection, including, but not limited to, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such
Litigation in such jurisdiction.
7.18. Service of Process. Nothing herein shall affect the right
of any party hereto to serve process in any other manner permitted by
applicable law or to commence legal proceedings or otherwise proceed
against the other party in any other jurisdiction.
7.19. Waiver of Jury Trial. The Company hereby waives any right
it may have to a trial by jury in respect of any action, proceeding or
litigation directly or indirectly arising out of, under or in connection
with, THIS AGREEMENT AND THE NOTES.
7.20. Public Announcements. Neither the Company nor any Purchaser
shall make any public statements, including, without limitation, any press
releases, with respect to this Agreement and the transactions contemplated
hereby without the prior written consent of the other party (which consent
shall not be unreasonably withheld) except as may be required by Law. If a
public statement is required to be made by Law, the parties shall consult
with each other in advance as to the contents and timing thereof.
7.21. Further Assurances. The Company agrees that it shall, at
the Company's expense and upon the reasonable request of the Purchasers,
duly execute and deliver, or cause to be duly executed and delivered, to
the Purchasers such further instruments, agreements and documents and do
and cause to be done such further acts as may be reasonably necessary or
proper in the in the discretion of the Purchasers to carry out more
effectually the provisions and purposes of the Transaction Documents.
7.22. Transfer of Notes. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto. Subject to this Section 7.22, the Purchasers may freely
assign their rights under any of the Transaction Documents (including all
or any portion of the Notes) to any other Person, and the Company
acknowledges that the Purchaser currently contemplates the assignment of
all or a portion of the Notes to one or more Permitted Transferees;
provided, however that the Purchasers shall not knowingly assign their
rights under any of the Transaction Documents or any of the Notes to any
entity primarily engaged in e-learning and training services or VSAT
satellite business without the prior written consent of the Board of
Directors. Any such transferee shall be deemed a Purchaser for all purposes
of the Transaction Documents. Each such transferee shall deliver to the
Company a written representation substantially in the form of Section 3.3
herein.
7.23. Signatures. This Agreement shall be effective upon delivery
of original signature pages or facsimile copies thereof executed by each of
the parties hereto.
IN WITNESS WHEREOF, the Company, the Purchasers have caused this
Agreement to be executed and delivered by their respective officers or
partners thereunto duly authorized.
GILAT COMMUNICATIONS LTD.
By: /s/ Xxxx Xxxx
---------------------------------
Name: Xxxx Xxxx
Title: Executive Vice President
& Chief Financial Officer
SHAMROCK HOLDINGS
OF CALIFORNIA, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Executive Vice President
