Exhibit 4.(a)3
Amended and Restated Facility Agreement
dated July 1, 2004.
THIS AMENDING AND RESTATING AGREEMENT is made on the 1st day of July 2004,
BETWEEN:
(1) ECI TELECOM LTD., a company incorporated under the laws of Israel (company
no. 52-003290-5), whose registered office is at 00 Xxxxxxx Xxxxxx, Xxxxxx
Xxxxx 00000, Israel
("the Borrower")
(2) INOVIA TELECOMS LTD. (previously known as ECI Telecom Access Systems
Ltd.), a company incorporated under the laws of Israel (company no.
51-300354-1), whose registered office is c/o ECI Telecom Ltd., 00 Xxxxxxx
Xxxxxx, Xxxxxx Xxxxx 00000, Xxxxxx
("Inovia")
(3) ECI TELECOM NGTS LTD., a company incorporated under the laws of Israel
(company no. 51-300351-7), whose registered office is c/o ECI Telecom
Ltd., 00 Xxxxxxx Xxxxxx, Xxxxxx Xxxxx 00000, Xxxxxx
("ECI-NGTS")
(4) LIGHTSCAPE NETWORKS LTD., a company incorporated under the laws of Israel
(company no. 51-300365-7), whose registered office is c/o ECI Telecom
Ltd., 00 Xxxxxxx Xxxxxx, Xxxxxx Xxxxx 00000, Xxxxxx
("ECI-Optical")
(5) ENAVIS NETWORKS LTD., a company incorporated under the laws of Israel
(company no. 51-300353-3), whose registered office is c/o ECI Telecom
Ltd., 00 Xxxxxxx Xxxxxx, Xxxxxx Xxxxx 00000, Xxxxxx
("ECI-Transport")
(6) ECI-WAVEINNO LTD. (previously known as Innowave ECI Wireless Systems
Ltd.), a company incorporated under the laws of Israel (company no.
51-255886-7), whose registered office is 0 Xxxxxxxxxx Xxxxxx, Xxxxxx Xxxxx
00000, Xxxxxx
("Waveinno")
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AND
(7) BANK LEUMI LE-ISRAEL B.M., a banking corporation incorporated in the State
of Israel; and
(8) BANK HAPOALIM B.M., a banking corporation incorporated in the State of
Israel
WHEREAS:
(1) the parties hereto are parties to an agreement dated February 5, 2001
relating to the provision by Bank Leumi and Bank Hapoalim to the Borrower
of a term loan credit facility of up to US $300,000,000 (three hundred
million United States Dollars) ("the Facility Agreement"); and
(2) ECI Telecom (1990) Export Limited (as it was known on the date of
signature of the Facility Agreement), also a party to the Facility
Agreement, has since merged into the Borrower; and
(3) the Borrower has drawn US $250,000,000 (two hundred and fifty million
United States Dollars) under the said credit facility (US $125,000,000
(one hundred and twenty-five million United States Dollars) from each of
Bank Leumi and Bank Hapoalim); and
(4) following payments and prepayments of principal by the Borrower prior to
the date hereof, the outstanding balance of the principal of the Loan
under the said credit facility is US $37,500,000 (thirty seven million
five hundred thousand United States Dollars) (US $18,750,000 (eighteen
million seven hundred and fifty thousand United States Dollars) to each of
Bank Leumi and Bank Hapoalim); and
(5) by letter dated December, 2002, a copy of which and of the enclosures
thereto are attached as Schedule P/5/1 hereto ("the Veraz Letter"), Bank
Leumi and Bank Hapoalim have consented to the transaction referred to in
the Veraz Letter and involving transfer of certain assets of ECI-NGTS to
Veraz Networks, Inc. and following such consent, the said transaction has
been executed and a pledge of shares held by the Borrower in Veraz
Networks, Inc. has been created by share pledge dated December 31, 2002, a
copy of which is attached as Schedule P/5/2 ("the Veraz Share Pledge");
and
(6) by letter dated March 10, 2003, a copy of which and of the enclosures
thereto are attached as Schedule P/6 hereto ("the Waveinno Letter"), Bank
Leumi and Bank Hapoalim have consented to the sale of assets of Waveinno
to Alvarion Ltd. and such sale has taken place; and
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(7) the parties wish to amend the Facility Agreement so as to reflect certain
of the provisions of that certain letter agreement dated May 28, 2003
between the Borrower, Bank Leumi, Bank Hapoalim and the Original
Subsidiaries ("the Letter Agreement"), including those relating to the
restructuring of the credit facility granted under the Facility Agreement,
of the Veraz Letter and of the Waveinno Letter and in certain other
respects, including other matters referred to above, all subject to and in
accordance with the terms and conditions hereinafter set forth,
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. INTERPRETATION
1.1. In this Agreement, the following terms have the meanings given to them in
this clause 1.1:
1.1.1. "Access Debenture" - means the debenture, a copy of which
is attached as Schedule 1.1.1 hereto
and which was executed pursuant to
the Original Facility Agreement;
1.1.2. "Accounting Period" - means any period of one Quarter or a
Fiscal Year for which Accounts are
prepared;
1.1.3. "Accounts" - means:
(a) each of the audited
consolidated annual financial
statements of the Borrower,
the separate audited annual
financial statements of the
Excluded Subsidiary and the
Exclusion Statement relating
to each such consolidated
annual financial statement;
and
(b) each of the reviewed
consolidated quarterly
financial statements of the
Borrower, the separate
audited quarterly financial
statements of the Excluded
Subsidiary and the Exclusion
Statement relating to each
such consolidated quarterly
financial statement;
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1.1.4. Reserved
1.1.5. "Additional
Credit Facilities" means the Cash Credit Facilities and
the Off Balance-Sheet Facilities;
1.1.6. "Additional Lender" - has the meaning assigned to such term
in clause 26.3 below;
1.1.7. "Advance" - means an advance made or to be made
by the Banks under the Facility or,
as the case may be, the principal
amount thereof outstanding from time
to time;
1.1.8. "Approved
Financial Institutions" - means banks and other financial
institutions incorporated outside
Israel, which are rated BBB or higher
by Standard & Poor or by Xxxxx'x at
the relevant time and banks and other
financial institutions incorporated
in Israel which are rated AA or
higher by Maalot at the relevant
time, provided that for the purpose
of clause 1.1.23 below, an asset held
or issued by an institution at a
certain date (in this definition "the
Relevant Date"), shall be deemed held
or issued by an Approved Financial
Institution, even if the institution
is no longer an Approved Financial
Institution at the Relevant Date, if
it was an Approved Financial
Institution at the time the asset was
first owned by the Borrower and at
the Relevant Date no more than 3
(three) months have passed since the
institution has ceased to be an
Approved Financial Institution;
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1.1.9. "Approved Percentage(s)" - means the percentage(s) fixed by the
Bank of Israel in the Rules of
Practice, as the Credit Conversion
Factors for Off Balance-Sheet
Facilities (Mekadmei Hamara Le-Ashrai
Shel Saifim Hutz Maazanim);
1.1.10. Reserved
1.1.11. "Auditors" - means the auditors for the time being
of the Borrower;
1.1.12. "Authorisations" - has the meaning assigned to such term
in clause 14.7 below;
1.1.13. "Availability Period" - means the period commencing on the
Closing Date and ending on the
Termination Date, except as otherwise
provided in clauses 2.1.2, 25 and 29
below;
1.1.14. "Available Commitment" - means, in relation to a Bank at any
time, such Bank's Commitment at such
time, less the aggregate amount of
the Extended Portion advanced by such
Bank at such time;
1.1.15. "Bank Hapoalim" - means Bank Hapoalim B.M.;
1.1.16. "Bank Leumi" - means Bank Leumi Le-Israel B.M.;
1.1.17. "Banks" - means Bank Hapoalim, Bank Leumi, and
any bank or financial institution
which becomes a party to this
Agreement pursuant to clause 24.3
below;
1.1.18. Reserved
1.1.19. "Borrower's Debenture" - means the debenture, a copy of which
is attached as Schedule 1.1.19 hereto
and which was executed pursuant to
the Letter Agreement;
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1.1.20. "Borrowing" - means:
(a) monies borrowed (including
the Loan) or monies raised
which are in the nature of
borrowings or having the
commercial effect of
borrowing (including, monies
raised by the sale of
receivables, invoices, bills
or notes or other financial
assets on terms that recourse
may be had to the vendor in
the event of non-payment of
such receivables, invoices,
bills or financial assets
when due, to the extent of
such recourse, to the extent
that the underlying payment
obligation is not covered by
insurance) and monies raised
under acceptance credit
facilities and through the
issue of bonds, notes,
debentures, bills, loan
stocks and other debt
securities (including any
debt security convertible,
but not at the relevant time
converted, into share
capital);
(b) the acquisition cost of
assets, including goods or
services to the extent
payable on deferred payment
terms more than 180 (one
hundred and eighty) days (or
365 (three hundred and
sixty-five) days for the
purpose of the definition of
"Debt Service" in
clause 1.1.37 below) after
the time of acquisition or
possession thereof by the
party liable (whether or not
evidenced by any bond, note,
debenture, loan stock or
other debt security),
excluding any such cost
payable on deferred payment
terms which are treated as
trade credit in accordance
with GAAP;
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(c) monies received in
consideration for the supply
of goods and/or services to
the extent received more than
6 (six) months before the due
date for such supply (but
excluding any liability in
respect of deposits received
from customers in the
ordinary course of trade)
where the receipt as
aforesaid is arranged
primarily as a method of
raising finance;
(d) leases (whether in respect of
land, machinery, equipment or
otherwise) and hire purchase
agreements, conditional sale
agreements, sale and lease
back, sale and repurchase and
similar agreements and
instruments, provided, in the
case of leases, they are
treated as finance leases in
accordance with GAAP; and/or
(e) any guarantee, indemnity or
other legally binding
instrument to assure payment
of, or against loss in
respect of non-payment of,
any of the indebtedness
specified in this definition
and any counter-indemnity in
respect of any thereof or in
respect of any letter of
credit or guarantee issued by
any bank or other financial
institution in respect of any
indebtedness referred to in
this definition (all
guarantees, indemnities and
other instruments as
aforesaid issued by the
Borrower or any Included
Subsidiary as well as
counter-indemnities as
aforesaid issued in respect
thereof by any bank or
financial institution, are
referred to, hereinafter,
collectively, in this
clause 15.20(e), as
"Guarantees"), it being
agreed that:
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(i) except as provided in
(ii) and (iii) below,
the full amount of all
Guarantees shall be
included in
Borrowings, regardless
of whether or not any
demand has been made
thereunder or in
connection therewith
and regardless of
whether or not any
dispute has arisen as
a consequence of which
such demand may be
made;
(ii) the value of Uncalled
Guarantees to be taken
into account in
determining Borrowings
for the purpose of
clause 15.24 below at
any time, shall be the
relevant Approved
Percentage, at such
time, of the amounts
of the Uncalled
Guarantees; and
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(iii) Uncalled Guarantees
shall not be taken
into account in
determining Borrowings
for the purpose of the
definition of "Debt
Service" in
clause 1.1.37 below.
"Uncalled Guarantees" means
Guarantees in respect of
which no demand has been made
and no dispute (known to the
Borrower or any Included
Subsidiary) has arisen as a
consequence of which such
demand may be made; and
(f) the relevant Approved
Percentage of the value of
any Forex Transaction not
yet completed to which the
Borrower or an Included
Subsidiary is party, but
excluding any Forex
Transaction to which the
Borrower or an Included
Subsidiary is party with
respect to which there is a
Forex Transaction of the same
kind which will be set-off
against the first Forex
Transaction on its date of
maturity (as long as such
exclusion is included in the
definition of future or
forward transactions in the
Rules of Practice);
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1.1.21. "Business Day" - means:
(a) with respect to payment,
purchase or any other
transaction in, or
determination of LIBOR for,
or performance of
calculations in, sums
denominated in US Dollars or
Euros, as the case may be, a
day on which: (i) the Banks
are open for trading in
Israel in US Dollars or
Euros, as the case may be;
and (ii) banks generally are
open for trading in
US Dollars or in Euros, as
the case may be, in London
and New York; and
(b) in all other cases, as a
reference to a day (other
than Saturday) on which banks
generally are open for
business in Israel;
1.1.22. Reserved
1.1.23. "Cash Balance" - means:
(a) for the purpose of
clause 15.28 below, at or
with respect to any date (in
this definition, "the
Reference Date"), the
following assets (provided
they are not Charged Assets):
(i) cash in current
accounts in Approved
Financial
Institutions;
(ii) Cash Equivalents held
in Approved Financial
Institutions;
(iii) short term cash
deposits in Approved
Financial Institutions;
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(iv) long term cash
deposits in Approved
Financial
Institutions;
(v) cash deposit
instruments, including
structured cash
deposit instruments,
payment of the
principal of which on
maturity is 100%
guaranteed and which
are held with Approved
Financial
Institutions; and
(vi) bonds and notes
(hereinafter,
together, in this
clause 1.1.23(a)(vi),
"financial
instruments")
(excluding, for the
removal of doubt,
stocks, shares and
units in mutual funds
and any instruments
which constitute,
directly or
indirectly, an
investment in stocks,
shares and/or units in
mutual funds),
provided that if such
financial instrument
is issued by an entity
incorporated outside
Israel it (i.e., such
financial instrument)
is rated BBB or higher
by Standard & Poor or
by Xxxxx'x at the
Reference Date or if
it is issued by an
entity incorporated in
Israel it (i.e., such
financial instrument)
is rated AA or higher
by Maalot at the
Reference Date, it
being agreed that the
value, at the
Reference Date, for
the purpose of this
definition, of any
asset included in this
category (vi), shall
be the value of such
asset according to the
Accounts of the
Borrower last
published prior to the
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Reference Date, or,
if the asset was
acquired after the
date of the Accounts
last published, then
according to the value
that would be
ascribed to such asset
in the Accounts of
the Borrower, were
such Accounts to be
drawn up as of the
Reference Date,
in accordance with the
method consistently
applied in the
Borrower's Accounts in
determining the value
of assets of the kind
in question, in the
latter case, as
certified in writing
by the Chief Financial
Officer of the
Borrower;
provided that for the purpose
of clause 15.28 below, (aa)
notwithstanding the
provisions of sub-paragraph
(vi) above, financial
instruments as defined in the
said sub-paragraph, which are
issued by an entity
incorporated outside Israel,
are rated BBB- (BBB minus) or
higher by Standard & Poor or
Moody's and have an aggregate
value of up to US $10,000,000
(ten million United States
Dollars) shall be included in
Cash Balance, and (bb)
assets of the kind referred
to in sub-paragraphs (i) to
(vi) above having an
aggregate value of up to
US $5,000,000 (five million
United States Dollars) shall
be included in Cash Balance,
even if the conditions
specified in this definition
above relating to the rating
of the institution holding or
issuing such asset or as to
the rating of the asset are
not fulfilled; and
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(b) for the purpose of the
definition of "Total
Liabilities", at or with
respect to any Ratio
Determination Date, "Cash
Balance" as defined in (a)
above, except that assets
which are charged by fixed
Encumbrance as security for
liabilities included in Total
Liabilities as defined below
prior to the deduction
specified in that definition,
shall not be excluded as
Charged Assets in the
calculation of "Cash Balance";
1.1.23A. "Cash Credit Facilities" means any cash credit facilities made
available to the Borrower by Bank
Leumi or Bank Hapoalim or by any
other person or entity, other than
the Loan;
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1.1.24. "Cash Equivalents" - to be construed in accordance with
GAAP;
1.1.25. Reserved
1.1.26. "a Change of
Ownership" - shall occur when the Koor Group shall
no longer have the ability to appoint
the majority of the members of the
Board of Directors of the Borrower;
1.1.26A "Charged Asset" - means any asset included in
categories (i) to (vi) of
clause 1.1.23(a) above (other than
the cash deposit in the amount of
US $8,300,000 (eight million three
hundred thousand United States
Dollars) pledged in favour of Bank
Hapoalim to secure the Ji-Tong
Transaction) which is charged by any
fixed Encumbrance and/or is subject
to a specific right of set-off in
favour of or by the Approved
Financial Institution or other entity
holding the asset, it being agreed
that: (i) the existence and freedom
from Encumbrance of any such asset
shall be supported by copies of
statements and other appropriate
documents of the relevant Approved
Financial Institution or other entity
certified by it as correct and
(ii) the freedom of all such assets
from any specific right of set-off as
aforesaid shall be supported by the
certificate last issued pursuant to
clause 15.4.3(b) or clause 15.28
below by the Chief Financial Officer
of the Borrower, except that if a
certificate should have been provided
pursuant to the provisions of
clause 15.4.3(b) or clause 15.28
below and has not been provided, the
assets in question shall be deemed
subject to a specific right of
set-off;
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1.1.27. "Closing Date" - means February 14, 2001;
means, in relation to a Bank at any
time, such Bank's commitment under
the Facility, being, in the case of
Bank Leumi and Bank Hapoalim at the
date hereof, the amounts specified in
clause 29 below, and in the case of
any Bank which becomes a party to
this Agreement in accordance with
clause 24.3 below, the amount of such
Commitment assigned or transferred to
it pursuant to such clause, as such
amounts may respectively be reduced,
cancelled, assigned or transferred in
accordance with this Agreement;
1.1.28. "Commitment" -
1.1.29. "Completion" - means completion of receipt by the
Banks, before the Effective Date, of
all the documents, matters and things
listed in clauses 3.1 to 3.9
(inclusive) below in form and
substance satisfactory to the Banks;
1.1.30. Reserved
1.1.31. "Contribution" - means, in relation to a Bank at any
time, that portion of the Loan
outstanding at the time that is owing
to such Bank;
1.1.32. Reserved
1.1.33. Reserved
1.1.34. "Current Assets" - means any assets which, in accordance
with GAAP, will be classified as
Current Assets;
1.1.35. "Current Liabilities" - means any liabilities which, in
accordance with GAAP, will be
classified as Current Liabilities;
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1.1.36. "Dangerous Substance" - means any radioactive or
electromagnetic emissions and any
natural or artificial substance
(whether in the form of a solid,
liquid, gas or vapour) the
generation, transportation, storage,
treatment, use or disposal of which
(whether alone or in combination with
any other substance and including any
controlled, special, hazardous,
toxic, radioactive or dangerous
waste), gives rise to a risk of
causing harm to man or any other
living organism or damaging the
Environment or public health;
1.1.37. "Debt Service" - means, in relation to any Ratio
Determination Date:
(a) all Interest in respect of
the Facility and all other
Borrowings scheduled to be
paid (whether or not paid and
whether or not capitalised)
by the Borrower and the
Included Subsidiaries in
respect of the 12 (twelve)
month period commencing on
the first day of the Quarter
immediately following such
Ratio Determination Date
("the Relevant Twelve-Month
Period") as well as any
Interest due prior to the
Relevant Twelve-Month Period
and not paid by commencement
thereof; and
(b) scheduled repayments of
principal by the Borrower and
the Included Subsidiaries in
respect of the Facility and
all other Borrowings (other
than Borrowings being Cash
Credit Facilities to be
repaid within no more than 12
(twelve) months of being
borrowed and not being
renewable or extendable
without the prior consent of
the lender, in accordance
with the terms and conditions
governing such facility at
the time of its grant) in the
Relevant Twelve-Month Period;
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1.1.38. Reserved
1.1.39. "Default" - means any Event of Default or any
event which with the giving of notice
or lapse of time, or the making of
any determination hereunder, or the
satisfaction of any other condition
(or any combination thereof) would
constitute an Event of Default;
1.1.40. "Distribution" - has the meaning assigned to the term
"haluka" in the Companies Law, 1999;
1.1.41. "Drawdown Date" - means, in respect of any Drawdown
Request, the requested date for the
making of the relevant Advance as set
out in such Drawdown Request;
1.1.42. "Drawdown Request" - means a notice substantially in the
form of Schedule 1.1.42 hereto;
1.1.43. "EBITDA" - means, in relation to any Ratio
Determination Date, the sum of the
following, multiplied by 4 (four),
all as appearing in the Accounts
(after Exclusion), for the period
being the Quarter ending on the Ratio
Determination Date ("the relevant
period"):
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(a) the consolidated operating
profits of the Borrower in
the relevant period,
excluding any one-time
credits and charges;
(b) any amortisation and
depreciation reflected in the
Accounts (after Exclusion)
for the relevant period,
excluding any one-time items;
(c) interest actually received by
the Borrower in the relevant
period on credit granted to
customers, on fixed deposits,
in banks and other financial
institutions and pursuant to
the GVT Tranche A Agreement
and the GVT Tranche B
Agreement, in the relevant
period; and
(d) interest accruing in the
relevant period to (but not
actually received by) the
Borrower on assets included
in the assets listed in
paragraphs (a)(i) to (v)
(inclusive) of the definition
of "Cash Balance" in
clause 1.1.23 above;
1.1.44. "ECI-NGTS" - means ECI Telecom NGTS Ltd., Israeli
company no. 00-000000-0;
1.1.45. "ECI-Optical" - means Lightscape Networks Ltd.,
Israeli company no. 00-000000-0;
1.1.46. "ECI-Transport" - means Enavis Networks Ltd., Israeli
company no. 00-000000-0;
1.1.47. "ECtel" - means ECtel Ltd., Israeli company
no. 00-000000-0;
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1.1.48. "ECtel Shares
Debenture" - means the debenture, a copy of which
and of the amendment thereto are
attached as Schedules 1.1.48(A),
1.1.48(B) and 1.1.48(C) hereto and
which were executed pursuant to the
Original Facility Agreement;
1.1.49. "Effective Date" - means July 1, 2004;
1.1.50. "Encumbrance" - means:
(a) any mortgage, charge (whether
fixed or floating), pledge,
lien, assignment, security
interest, title retention or
other encumbrance of any kind
securing, or any right
conferring a priority of
payment in respect of, any
obligation of any person;
(b) any arrangement under which
moneys or claims to, or the
benefit of, a bank or other
account may be set-off or
made subject to a combination
of accounts so as to effect
payments of sums owed or
payable to any person; or
(c) any other type of
preferential arrangement
having similar effect;
1.1.51. "Environment" - means all, or any of, the following
media, the air (including the air
within buildings and the air within
other natural or man-made structures
above or below ground), water
(including, ground and surface
water), land (including, surface and
sub-surface soil) and all other
natural resources;
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1.1.52. "Environmental Claim" - means any claim by any person:
(a) in respect of any loss or
liability suffered or
incurred by that person as a
result of or in connection
with any violation of
Environmental Law; or
(b) that arises as a result of or
in connection with
Environmental Contamination
and that could give rise to
any remedy or penalty
(whether interim or final)
that may be enforced or
assessed by private or public
legal action or
administrative order or
proceedings including, any
such claim that arises from
injury to persons or property;
1.1.53. "Environmental
Contamination" - means each of the following and their
consequences:
(a) any release, emission,
leakage or spillage of any
Dangerous Substance at or
from any site or equipment
owned, occupied, leased or
otherwise controlled by the
Borrower into any part of the
Environment;
(b) any accident, fire, explosion
or sudden event at any site
or equipment owned, occupied,
leased or otherwise
controlled by the Borrower
which is directly caused by
or attributable to any
Dangerous Substance; or
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(c) any other pollution of the
Environment arising at or
from any site or equipment
owned, occupied, leased or
otherwise controlled by the
Borrower;
1.1.54. "Environmental Law" - means all laws and treaties
concerning pollution, the Environment
or Dangerous Substances;
1.1.55. "Environmental Licence" - means any permit, licence,
authorisation, consent or other
approval required by any
Environmental Law applicable to the
Borrower;
1.1.56. "Equity" - to be construed in accordance with
GAAP;
1.1.57. "Event of Default" - means any of the events or
circumstances described in clause 16
below;
1.1.58. "Excluded Subsidiary" - means HETC;
1.1.59. "Exclusion" - means the exclusion from any
consolidated or quarterly financial
statement included in the Accounts,
of data relating to the Excluded
Subsidiary, so as to obtain data
relating exclusively to the Borrower
itself and the Included Subsidiaries,
all as detailed in a statement in the
form of Schedule 1.1.59 hereto and
certified as correct by the Auditors
or the Chief Financial Officer of the
Borrower ("Exclusion Statement");
1.1.60. "Existing Encumbrances" - means the Encumbrances listed in
Schedule 1.1.60 hereto;
1.1.60A. "Extended Portion" - has the meaning assigned to such term
in clause 29.1 below;
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1.1.60B. "Facility" - means the long term loan facility
granted to the Borrower by the Banks
pursuant to the Facility Agreement,
including the Extended Portion;
1.1.61. "Facilities" - means the Facility and the Cash
Credit Facilities provided pursuant
to clause 25 below;
1.1.62. Reserved
1.1.63. "Facility Accounts" - means the bank accounts designated by
the Banks, by notice in writing to
the Borrower, from time to time, to
which any payments due to the Banks
hereunder shall be made;
1.1.64. "Facility Agreement" - means the Original Facility Agreement
or the Original Facility Agreement as
and to the extent amended and
restated hereby, as the context
requires;
1.1.65. Reserved
1.1.66. Reserved
1.1.67. "Final Maturity Date" - means the last Business Day of the
fourth Quarter of 2005 except as
otherwise provided in
clause 29.2.2(c) below;
1.1.68. "Finance Documents" - means this Agreement, the Facility
Agreement, the Letter Agreement, the
Veraz Letter, the Waveinno Letter,
the Security Documents and/or any
other agreement or document required
pursuant to any of the aforegoing (in
relation to the Facilities) to which
the Borrower and/or any Original
Subsidiary is party and designated by
the Majority Banks or the bank which
is a party to or beneficiary of such
agreement or document as a Finance
Document;
-23-
1.1.69. "Fiscal Year" - means a calendar year;
1.1.69A. "Fixed Assets" - means any assets which, in accordance
with GAAP, will be classified as
Fixed Assets;
1.1.70. "Foreign Subsidiaries" - means ECI Telecom SARL, ECI Telecom
(U.K.) Ltd., and ECI Telecom GmbH;
1.1.71. "Foreign Subsidiary
Negative Pledges" - means the undertakings of the
Borrower pursuant to clause 15.7.2
below;
1.1.72. "Forex Transaction" - means any foreign exchange
transaction (excluding "spot"
transactions i.e. transactions with a
settlement period not exceeding 48
(forty eight) hours), including any
future or forward transaction, in a
foreign currency or in the basket of
currencies, currency swap
transaction, cross-currency swap
transaction, currency option or other
similar transaction (including any
option with respect thereto and any
combination in respect thereof);
1.1.73. "GAAP" - means Israeli generally accepted
accounting principles, in force from
time to time, provided that if the
Borrower shall maintain Accounts
according to US generally accepted
accounting principles and shall not
be bound also to maintain Accounts
according to Israeli generally
accepted accounting principles, then
"GAAP" shall mean, with respect to
those Accounts, US generally accepted
accounting principles;
-24-
1.1.74. "Guarantee" - means the instrument, a copy of which
is attached as Schedule 1.1.74 hereto
and executed pursuant to the Original
Facility Agreement;
1.1.75. "GVT" - means Global Village Telecom Ltd., a
company organised under the laws of
Brazil;
1.1.76. "GVT Tranche A
Agreement" - means the Secured Note Purchase
Agreement dated October 31, 2000
between the Borrower and GVT, a brief
summary of which has been provided to
the Banks in a letter dated July 1,
2004 from the Borrower;
1.1.77. "GVT Tranche B
Agreement" - means the agreement dated
November 30, 2000_ between the
Borrower and GVT Antilles, Inc., a
brief summary of which has been
provided to the Banks in a letter
dated July 1, 2004 from the Borrower;
1.1.78. "HETC" - means Hangzau ECI Telecommunication
Corporation, an entity incorporated
in Hangzhou, China;
1.1.79. "Included Subsidiaries" - means any entity (other than the
Borrower and other than the Excluded
Subsidiary) the annual or quarterly
financial statements of which are
consolidated in the consolidated
annual or quarterly financial
statements of the Borrower;
1.1.80. "Indebtedness" - means any obligation (whether
incurred as principal or surety or
guarantor) for the payment or
repayment of money, whether present
or future, actual or contingent,
including all obligations with
respect to the Facilities, calculated
on the assumption that any available
commitment from any bank or financial
institution shall be drawn forthwith;
-25-
1.1.81. "Initial Banks" - means Bank Leumi and Bank Hapoalim;
1.1.82. Reserved
1.1.83. Reserved
1.1.84. "Inovia" - means Inovia Telecoms Ltd., Israeli
company no. 00-000000-0;
1.1.85. "Intellectual
Property Rights" - means all know-how, technology,
patents, trademarks, designs, trade
names, copyrights and other
intellectual property rights (in each
case whether registered or not and
including all applications for the
same);
1.1.86. "Intercreditor - means the agreement between the Banks
Agreement" and the Trustee governing the rights
of the parties secured under the Long
Term Security Documents;
1.1.87. "Interest" - means:
(a) interest and amounts in the
nature of interest (including
the interest element of
finance leases, linkage
differentials and any similar
payment in respect of
indexation, in each case with
respect to such interest); and
(b) prepayment penalties or
premiums incurred in repaying
or prepaying any Borrowing
(including, for the avoidance
of doubt, amounts payable
pursuant to clause 18 below);
-26-
1.1.88. "Interest
Determination Date" - in relation to any Interest Period,
means the Business Day falling 2
(two) Business Days prior to the
first day of such Interest Period;
1.1.89. "Interest Payment Date" - means the last Business Day of each
Quarter;
1.1.90. "Interest Periods" - means (subject to clause 17.1 below)
with respect to the Loan (or during
the Availability Period, with respect
to each Advance), consecutive periods
of 1 (one) Quarter; provided that:
(a) if any Interest Period would
otherwise end on a day which
is not a Business Day, such
Interest Period shall end on
the next following Business
Day, unless such next
following Business Day falls
in another month, in which
case such Interest Period
shall end on the immediately
preceding Business Day;
(b) during the Availability
Period, the first Interest
Period in respect of any
Advance shall commence on the
date of the making of such
Advance and end on the last
Business Day of the Quarter
during which such Advance was
made;
(c) no Interest Period may extend
later than the Final Maturity
Date; and
-27-
(d) each Interest Period (other
than the first Interest
Period) shall commence on the
expiry of the Interest Period
preceding such Interest
Period and, for the removal
of doubt, shall, subject to
(a) above, end on the last
day of the Quarter following
such preceding Interest
Period;
1.1.91. "Ji-Tong Transaction" - means the transaction pursuant to the
Basic Agreement-Credit Facility
relating to the Ji-Xxxx Xxxxxx Bridge
Project--Phase I entered into on
August 13, 1998 and pursuant to which
Bank Hapoalim has granted a line of
credit to the China Construction Bank
for the finance of exports by the
Borrower;
1.1.92. "Koor" - means Koor Industries Ltd., Israeli
company
1.1.93. "Koor Group" - means Koor, any person or entity
controlling Koor and entities
controlled by Koor, collectively;
"control" herein meaning the ability
to appoint the majority of the Board
of Directors or equivalent organ of
the controlled body;
-28-
1.1.94. "LIBOR" - means, with respect to each Interest
Period, the rate per annum
(rounded-up, if necessary, to the
nearest whole multiple of 1/16%
(one-sixteenth of one percent) for
Euro-Dollar deposits (or deposits in
Euros, as the case may be), for a
period equal to the duration of such
Interest Period, or if such Interest
Period is less than a Quarter, then
for the number of weeks of such
Interest Period, rounded-up for part
of a week, offered in the London
Interbank market, as quoted at or
about 11:00 a.m. (London time) on the
Interest Determination Date for such
Interest Period on the display
designated as page LIBOR 01 to
subscribers of the REUTERS service
("Reuters") or, in the absence of
such page or pages, or if Reuters
shall, for any reason whatsoever,
amend, change or otherwise alter the
data basis or the reference banks
used by it on the date of signature
of this Agreement, for quotations
under said page LIBOR 01 the rate of
Interest as quoted at or about
11:00 a.m. London time on the
relevant Interest Determination Date
on such other page or pages of
Reuters as shall be determined by the
Majority Banks for a period equal to
the duration of such Interest Period
or, as the case may be, such number
of weeks, rounded-up, as aforesaid.
In the event that the Reuters service
ceases to be available, the Majority
Banks may specify another service
(and the relevant page thereof)
displaying the LIBOR rate;
1.1.95. "Loan" - means, at any time, the aggregate
amount of all the Advances
outstanding at such time;
1.1.96. Reserved
1.1.97. Reserved
1.1.98. Reserved
-29-
1.1.99. "Long Term
Security Documents" - means:
(a) the ECtel Shares Debenture;
(b) the Optical Shares Debenture;
(c) the Veraz Share Pledge;
(d) the Access Debenture;
(e) each pledge or assignment by
way of charge executed or to
be executed, if any, in
favour of the Banks in
accordance with the
instruments specified in (a),
(b), (c) or (d) above;
(f) the Mortgages;
(g) the Guarantee;
(h) the Subsidiary Guarantees;
(i) all acknowledgments and
consents required to be
delivered pursuant to the
documents referred to above;
(j) the Veraz Loan Pledge and
Assignment (when executed);
and
(k) any other agreement or deed
(except the Borrower's
Debenture) from time to time
entered into by the Borrower
or any Original Subsidiary or
any other person or body in
favour of the Banks for the
purposes of securing any
obligations and liabilities
of the Borrower or of any
Original Subsidiary under the
Finance Documents;
-30-
1.1.100. Reserved
1.1.101. Reserved
1.1.102. "Majority Banks" - means the Banks whose aggregate
Contributions exceed 60% (sixty
percent) of the Loan;
1.1.103. Reserved
1.1.104. Reserved
1.1.105. "Material Adverse - means any effect, including any
Effect" effect relating to any Subsidiary,
which is or is likely to be
materially adverse to: (a) the
business or financial condition of
the Borrower, as the case may be; or
(b) the ability of the Borrower to
perform its obligations under any of
the Finance Documents;
1.1.106. "Material Contracts" - means all sales contracts, the value
or consideration for performance of
which in terms of actual obligations
to purchase by the counterparty
subsequent to the date of signature
of this Agreement, exceeds
US $30,000,000 (thirty million United
States Dollars) and the Agreements
referred to in clause (f)(ii) of the
Veraz Letter;
1.1.107. "Mortgages" - means the instruments, copies of
which are attached as
Schedule 1.1.107 hereto;
1.1.108. "Negative Pledges" - means the undertakings by the
Borrower in clause 15.3 below and the
Foreign Subsidiary Negative Pledges;
-31-
1.1.109. "New Intercreditor
Agreement" - has the meaning assigned to such term
in clause 26.2 below;
1.1.110. "Off Balance-
Sheet Facilities" - means:
(a) indemnities (including
indemnities to affiliates of
the issuing bank or other
issuing body (hereinafter, in
this definition, "bank"),
guarantees, letters of credit
and other such instruments
issued by a bank at the
request of the Borrower for
the Borrower or an Included
Subsidiary or at the request
of an Included Subsidiary for
such Included Subsidiary and
constituting or relating to
bid bonds, performance bonds,
advance payment bonds,
warranty bonds and similar
instruments;
(b) facilities in respect of
Forex Transactions;
(c) credit facilities provided
(or which a bank has
undertaken to provide) to
buyers of goods from the
Borrower or an Included
Subsidiary at the request of
the Borrower or an Included
Subsidiary and which are
secured by the indemnity or
guarantee of or other
recourse against the Borrower
or the Included Subsidiary,
to the extent of such
indemnity, guarantee or
recourse;
(d) credit facilities provided by
a bank to the Borrower or an
Included Subsidiary, in
respect of payments "subject
to reservation"; and
-32-
(e) any other facility or
service, other than a cash
facility, provided to a
Borrower or an Included
Subsidiary by a bank or other
financial institution;
1.1.111. "Optical Shares
Debenture" - means the instrument, a copy of which
is attached as Schedule 1.1.111
hereto and which was executed
pursuant to the Original Facility
Agreement;
1.1.112. "Original Facility
Agreement" - means the Facility Agreement referred
to in the preamble hereto, prior to
its amendment hereby;
1.1.113. "Original Subsidiaries" - means ECI-NGTS, ECI-Optical,
ECI-Transport, Waveinno and Inovia;
1.1.114. Reserved
1.1.115. "Quarter Days" - means 31 March, 30 June, 30 September
and 31 December in any year and
"Quarter Day" means any of them;
1.1.116. "Quarters" - means each period commencing on the
day after a Quarter Day and ending on
the next following Quarter Day;
1.1.117. "Ratio Determination
Date" - means every Quarter Day;
1.1.118. "Representative Rate" - means, with respect to any currency
other than NIS, the representative
rate of exchange of the NIS and such
currency, last published by the Bank
of Israel immediately prior to the
relevant date of payment or
calculation (as the case may be) and,
if the Bank of Israel shall cease to
publish a representative rate, then
any other rate of exchange of the NIS
and such currency, officially
published which comes in place of
such representative rate, last
published immediately prior to the
relevant date of payment or
calculation (as the case may be) and,
in the absence of any such official
rate, then the average of the selling
and buying rates of exchange of such
currency, for NIS (for cheques and
remittances) prevailing at the Banks
at the end of the last Business Day
prior to the relevant date of payment
or calculation (as the case may be);
-33-
1.1.119. "Rules of Practice" - means the rules of practice issued by
the Bank of Israel to Israeli
banks--as amended and/or substituted
from time to time;
1.1.120. "Secured Party" - has the meaning assigned to such term
in the Borrower's Debenture;
1.1.121. "Security Documents" - means:
(a) the Long Term Security
Documents;
(b) the Borrower's Debenture; and
(c) all acknowledgments and
consents required to be
delivered pursuant to the
Borrower's Debenture;
1.1.122. "Subsidiaries" - means the Included Subsidiaries
(including the Foreign Subsidiaries
which are Included Subsidiaries), the
Excluded Subsidiary, all Foreign
Subsidiaries, if any, not being an
Included Subsidiary and any other
entities the financial statements of
which are included in the Borrowers'
Accounts though not consolidated
therein);
-34-
1.1.123. "Subsidiary - means the instruments, copies of
Guarantee(s)" which are attached as
Schedule 1.1.123 hereto and executed
pursuant to the Original Facility
Agreement;
1.1.124. Reserved
1.1.125. "Tangible Equity" - means, at any date of determination,
total Equity less the aggregate
amount of any: (i) intangible assets
including, without limitation,
goodwill, franchises, licences,
patents, trademarks, trade names,
copyrights, service marks and brand
names, but excluding purchased
software consistently shown as fixed
assets in the relevant Accounts; and
(ii) software capitalisation;
1.1.126. "Taxes" - means all income and other taxes,
including, taxes or charges on
capital gains, profits, value-added
taxes and all other taxes of
whatsoever nature and levies,
imposts, duties (including stamp
duty), charges, deductions and
withholdings in the nature or on
account of tax, together with
Interest thereon and penalties and
fees with respect thereto, if any,
and any payments made on or in
respect thereof and "Tax" and
"Taxation" shall be construed
accordingly;
1.1.127. "Termination Date" - means December 31, 2001 except as
otherwise provided in clause 29 below;
-35-
1.1.128. "Total Liabilities" - to be construed in accordance with
GAAP, excluding shareholder equity
and after deduction of:
(a) the aggregate of
(i) short-term trade
payables; (ii) current
employee salaries and social
benefits payments; and
(iii) short-term credits
(excluding current maturities
of long-term debt); or
(b) the Cash Balance,
whichever of (a) and (b) is the lower
and, provided that, the said
deduction shall be made only if
supported by the certificate of the
Auditors confirming the amount of
each of the items in (a) and (b) and
providing a breakdown of the
components of each item;
1.1.129. "the Trustee" - means The Bank Leumi Le-Israel Trust
Company Ltd. or such other entity as
may be designated from time to time,
by the Majority Banks, by notice in
writing to the Borrower, as the
Trustee for the purposes of this
Agreement, substituting the previous
Trustee;
1.1.130. Reserved
1.1.131. "Veraz Loan Pledge
and Assignment" - means the instruments to be entered
into pursuant to clause (b)(i) of the
Veraz Letter;
1.1.132. "Waveinno" - means ECI-Waveinno Ltd. (previously
knows as Innowave ECI Wireless
Systems Ltd.), Israeli company
no. 00-000000-0; and
-36-
1.1.133. "Waveinno Contract" - means the agreement dated February
17, 2003 between the Borrower and
Alvarion Ltd., referred to in the
Waveinno Letter.
1.2. Clause headings and the table of contents are inserted for convenience of
reference only and shall be ignored in the interpretation of this
Agreement.
1.3. In this Agreement, unless the context otherwise requires:
1.3.1. references to clauses and Schedules are to be construed as
references to the clauses of, and Schedules to, this Agreement and
references to this Agreement include its Schedules;
1.3.2. references to (or to any specified provision of) this Agreement or
any other document shall be construed as references to this
Agreement, that provision or that document as in force for the time
being and as amended in accordance with the terms thereof, or, as
the case may be, with the agreement of the relevant parties;
1.3.3. words importing the plural shall include the singular and vice
versa;
1.3.4. "Affiliate" shall, with respect to the Banks, mean any company which
controls, is controlled by, or under common control with, the Banks;
"control" shall in this clause 1.3.4 bear the meaning assigned to
such term in Section 1 of the Securities Law;
1.3.5. "Banks" shall be construed so as to include any subsequent permitted
successors, transferees and permitted assigns of a Bank in
accordance with their respective interests;
1.3.6. the "equivalent" on any given date in one currency (the "first
currency") of an amount denominated in another currency (the "second
currency") means the amount of the first currency which could be
purchased with the amount of the second currency at: (i) in the case
that one of the two relevant currencies is NIS, the Representative
Rate for the other currency; or (ii) in the case that neither of the
relevant currencies is NIS, the rate equal to a fraction, the
numerator of which is the Representative Rate of the second currency
and the denominator of which is the Representative Rate of the first
currency;
-37-
1.3.7. "including" and "includes" means including, without limiting the
generality of any description preceding such terms;
1.3.8. a "law" includes any statute, law, regulation, rule, official
directive, request or guideline (having the force of law) of any
governmental body, agency, department or regulatory, self-regulatory
or other authority or organisation, including, the position
(guidelines) of the Examiner of Banks with respect to proper conduct
of bank affairs ("Xxxxx Bankai Takin");
1.3.9. a "person" shall be construed as a reference to any person, firm,
company, corporation, government, state or agency of a state or any
association or partnership (whether or not having separate legal
personality) or two or more of the aforegoing;
1.3.10. "US $", "USD", "dollars", "US Dollars" and "Dollars" denote the
lawful currency of the United States of America; "Euro" denotes the
single currency of Participating Member States introduced in
accordance with the provisions of Article 109(1)4 of the Treaty;
"Participating Member State" means a member state of the European
Union that has adopted the single currency in accordance with the
Treaty; "Treaty" means the Treaty establishing the European Economic
Community, being the Treaty of Rome of 25 March 1957 as amended by
the Single Xxxxxxxx Xxx 0000 and the Maastricht Treaty (which was
signed on 7 February 1992 and came into force on 1 November 1993) as
amended, varied or supplemented from time to time;
1.3.11. "VAT" shall be construed as a reference to value added tax,
including any similar Tax which may be imposed in place thereof from
time to time;
1.3.12. the "winding-up", "dissolution" or "administration" of a company or
corporation shall be construed so as to include any equivalent or
analogous proceedings under the law of the jurisdiction in which
such company or corporation is incorporated or any jurisdiction in
which such company or corporation carries on business, including the
seeking of liquidation, winding-up, reorganisation, dissolution,
administration, arrangement, adjustment, protection or relief of
debtors;
-38-
1.3.13. all accounting expressions which are not otherwise defined herein
shall be construed in accordance with GAAP; and
1.3.14. any reference in this Agreement to a law shall be construed as a
reference to such law as the same may have been, or may from time to
time be, amended or re-enacted.
2. OUTSTANDING PRINCIPAL; EXTENSION OF AVAILABILITY; RESTRUCTURING
2.1.
2.1.1. The parties hereto hereby confirm that, on signature of this
Agreement, the outstanding principal of the Loan is US $37,500,000
(thirty seven million five hundred thousand United States Dollars),
owed as follows:
(i) US $18,750,000 (eighteen million seven hundred and fifty
thousand United States Dollars) to Bank Hapoalim;
(ii) US $18,7500,000 (eighteen million seven hundred and fifty
thousand United States Dollars) to Bank Leumi.
2.1.2. The parties hereby agree: (i) that the Availability Period as
defined in the Original Facility Agreement be extended, solely so as
to enable the sum of US $50,000,000 (fifty million United States
Dollars) included in the Commitment of US $300,000,000 (three
hundred million United States Dollars) of Bank Leumi and Bank
Hapoalim under the Original Facility Agreement and not drawn
hitherto to be made available hereunder, and (ii) that the sum of US
$10,000,000 (ten million United States Dollars) being part of the
principal of the Loan already repaid (and only the said US
$10,000,000 (ten million United States Dollars) be made available
again in the manner specified hereunder, all as provided in and
subject to the terms and conditions of clauses 25 and 29 below and
the other terms and conditions of this Agreement. It is expressly
stated, for the removal of doubt, that the aggregate amount of US
$60,000,000 (sixty million United States Dollars) referred to in
this clause 2.1.2 above is the same US $60,000,000 (sixty million
United States Dollars) constituting the aggregate of the amounts
referred to in clauses 25 and 29 below (and is not in addition
thereto).
-39-
2.2. The obligations of the Banks under this Agreement shall be several;
accordingly, a failure of a Bank to perform its obligations under this
Agreement shall not result in: (i) the obligations of any other Bank being
increased; nor (ii) the Borrower or any other Bank being discharged (in
whole or in part) from its obligations under this Agreement; and in no
circumstances shall a Bank have any responsibility for a failure of
another Bank to perform its obligations under this Agreement.
2.3. The Borrower shall apply the Advances only for the following purposes or
payments, all at the times and subject to the limits and conditions set
out in this Agreement below:
2.3.1. for financing the business operations of the Borrower;
2.3.2. for payment of interest on the Loan, fees, costs and expenses
arising in connection with the establishment or modification of the
Facilities (including, without limitation, any fees, costs and
expenses payable by the Borrower and referred to in clause 3 below
or any of the Security Documents).
2.4. The Banks shall not be under any obligation to monitor use of the proceeds
of the Facility.
3. CONDITIONS PRECEDENT
The obligations of the Banks under this Agreement are subject to the
condition that the Banks shall have received, before the Effective Date,
the following documents, matters and things in form and substance
satisfactory to the Banks:
3.1. a copy, certified as a true copy by the general counsel of the Borrower,
of the Certificate of Incorporation, Memorandum of Association (if any)
and Articles of Association of the Borrower and of each Original
Subsidiary, such copy to be certified as a true copy by the general
counsel of the Borrower, provided that if any of the said documents were
received by the Banks upon or before the Closing Date and has not been
amended since then and general counsel of Borrower so certifies to the
Banks in writing, then such certificates may be provided to the Banks in
lieu of such documents;
-40-
3.2. copies of resolutions of the Board of Directors of the Borrower and of
each Original Subsidiary and to the extent applicable, its respective
audit committees and shareholders, evidencing approval, as applicable, of
this Agreement and the other Finance Documents to which the Borrower and
any Original Subsidiary is party and which have not been executed and
delivered to the Banks prior to the date hereof ("the Completion Finance
Documents") and authorising named officers of the Borrower and each
Original Subsidiary to execute, deliver and perform this Agreement and
each of the Completion Finance Documents, together with a certificate from
the Board of Directors of the Borrower and of each Original Subsidiary
certifying, pursuant to Section 282 of the Companies Law, that all
requisite approvals in connection with the aforegoing have been duly
obtained;
3.3. original executed copies of this Agreement, and the other Completion
Finance Documents, together with any documents required to be delivered on
the date of signature thereof or as conditions precedent to the
effectiveness thereof, all such documents to bear counsel's certificate
confirming the authority of the signatories thereon on behalf of the
Borrower and the Original Subsidiaries and otherwise to be in a form and
on terms and conditions acceptable to the Banks;
3.4. all the Authorisations, if any, listed in Schedule 3.4 hereto;
3.5.1. a certificate in the form of Schedule 3.5.1 hereto of the Auditors
or the Chief Financial Officer or the Chief Executive Officer of the
Borrower stating as at March 31, 2004 (in this clause 3.5.1, "the
Reference Date"):
3.5.1.1. the aggregate Borrowings (with detailed breakdown), so as to
demonstrate compliance with the provisions of clause 15.7.1 below on
the Reference Date;
3.5.1.2. all data necessary to demonstrate compliance with the provisions of
clause 15.7.2 below on the Reference Date; and
3.5.1.3. all data necessary to demonstrate compliance with clause 15.28 below
as at the Reference Date;
3.5.2. a certificate in the form of Schedule 3.5.2 hereto of the Auditors
or the Chief Finance Officer or the Chief Executive Officer of the
Borrower confirming the truth and completeness of the
representations and warranties set out in clause 14 below, subject
to the qualifications set out in Schedule 14.1 hereto;
-41-
3.5.3. a certificate in the form of Schedule 3.5.3 hereto of the Auditor or
the Chief Finance Officer or Vice-President Finance or the Chief
Executive Officer of the Borrower confirming compliance with the
provision of clause 15.24 below as at the Ratio Determination Date
falling on the last day of the first Quarter of 2004 and that,
according to the information available to the Borrower, no event has
occurred or is likely to occur that would cause the Borrower not to
be in compliance with the provisions of clause 15.24 at the next
Ratio Determination Date.
3.6. a certificate in the form of Schedule 3.6 hereto of the Auditors or the
Chief Financial Officer of the Borrower stating the amount of the Cash
Credit Facilities and Off Balance-Sheet Facilities granted by each Bank to
the Borrower as at the Reference Date, it being understood that in order
to facilitate the provision of the said certificate, each Bank shall
provide the Borrower, following Borrower's written request specifying the
relevant branches and requested information and against payment of the
relevant bank charges, with statements customarily furnished by each Bank
to its customers relating to such information, provided that the records
of each Bank and not any certificates so issued, shall be prima facie
evidence of the matters recorded therein;
3.7. opinions of the Borrower's and each Original Subsidiary's external legal
counsel or in-house legal counsel addressed to the Banks in the form of
Schedule 3.7 (A and B) hereto;
3.8. evidence that this Agreement and all documentation pursuant thereto
subject to stamp duty, has been stamped and the relevant duty payable has
been paid, as required, to the satisfaction of the Banks, provided that,
with the prior written consent of the Banks, the Borrower shall be
responsible for ensuring that such actions shall be performed and evidence
thereof shall be delivered to the Banks within 14 (fourteen) days of the
Effective Date;
3.9.
3.9.1. the documents, in form satisfactory to the Banks, listed in Schedule
3.9(A) and Schedule 3.9(B) hereto, provided that the documents
listed in clauses 1(b), 1(d), 1(e), 2(a), 3(a) and 4 of Schedule
3.9(B) shall be delivered to the Banks within 14 (fourteen) days of
the Effective Date and the documents listed in clauses 1 and 2 of
Schedule 3.9(A) shall be delivered to the Banks within 30 (thirty)
days of the Effective Date;
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3.9.2. letters in the form of Schedule 3.9.2 hereto from the Original
Subsidiaries canceling the money limit in the Subsidiary Guarantees;
3.9.3. a letter of irrevocable instructions in the form of Schedule 3.9.3
hereto from the Borrower to ECtel regarding payment of dividends and
other payments owing or becoming due to the Borrower from ECtel;
3.9.4. a letter in the form of Schedule 3.9.4 hereto, duly countersigned by
the Borrower and the Original Subsidiaries;
3.10.
3.10.1. in the event that the conditions precedent (other than those which
the Banks have agreed to the performance thereof within the time
periods set forth in clause 3.9.1 above ("the Delayed Conditions
Precedent")) are not fulfilled prior to the Effective Date, then,
save for clause 3.10.2, this Agreement shall be null and void and
the Original Facility Agreement (subject to the amendments thereto
made in the Letter Agreement which were not conditional on signature
and closing of this Agreement) and all the rights and obligations of
the parties thereunder shall remain in full force and effect and,
save as aforesaid and except as may be agreed by separate written
instrument signed by the Banks and the Borrower, neither party shall
have any claim against the other party arising out of or in
connection with this Agreement.
3.10.2. It is expressly agreed, for the removal of doubt, that in the event
the conditions precedent are not fulfilled prior to the Effective
Date as aforesaid, the Letter Agreement shall remain in full force
and effect (without modification), except that the provisions in the
Letter Agreement conditional upon signature and closing of this
Agreement shall lapse and be of no further effect; and
3.11. upon Completion, including performance of the actions (if any) with
respect to which the Banks have consented, pursuant to clause 3.8 above,
to performance thereof after the Effective Date, the Banks will have no
claims of any kind against the Borrower with respect to the obligations of
the Borrower under clause 15.24 of the Original Facility Agreement
relating to any Ratio Determination Date up to and including the Ratio
Determination Date at the end of the second Quarter of 2002. Upon
Completion as aforesaid and subject as aforesaid, the provisions of clause
15.24 of the Original Facility Agreement shall be substituted, as to any
Ratio Determination Date beginning with that falling at the end of the
second Quarter of 2002, by clause 15.24 below.
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4. DRAWDOWN
4.1. It is expressly agreed, for the removal of doubt, that the Availability
Period has ended, except as provided in clause 2.1.2 above, except for
Advances contemplated in clause 29 below and except as provided in clause
25 below. The making of an Advance under the Facility pursuant to clause
29 below, shall be subject to compliance with the following conditions (as
modified in clause 29 below):
4.1.1. the Borrower shall have delivered to the Banks a Drawdown Request
for such Advance, specifying a date for making such Advance, being
at least 7 (seven) Business Days after the date of delivery of such
Drawdown Request;
4.1.2. the proposed date for the making of such Advance is a Business Day
which is or precedes the Termination Date;
4.1.3. no Default has occurred and is continuing and no Default shall occur
as a result of the making of such Advance;
4.1.4. the share of the Advance requested from each Bank does not exceed
the Available Commitment of that Bank as at the Drawdown Date;
4.1.5. the Borrower shall have delivered to the Banks a certificate, in the
form of Schedule 4.1.5 hereto, of the Auditors or the Chief
Financial Officer or the Chief Executive Officer of the Borrower
confirming the truth and completeness of the representations and
warranties set out in clause 14 below (as qualified in Schedule
14.1) and in each Security Document are true and accurate in all
material respects on and as at the proposed date for the making of
such Advance, provided that updating of Schedule 14.1 as permitted
pursuant to clause 14.23 below shall not be grounds for refusal of
an Advance, unless: (i) as to the representations and warranties in
clauses 14.7 (as to Environmental Authorisations) and 14.9 below,
such updating reflects, in the opinion of the Banks, a Material
Adverse Effect and/or the Banks are not satisfied that the Borrower
is taking the steps necessary to remedy the deviation; (ii) as to
the representations and warranties in clause 14.11, such updating
reflects, in the opinion of the Banks, a Material Adverse Effect and
(iii) as to clause 14.19, such updating constitutes a Default; and
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4.1.6. the minimum amount of each Advance shall be US $5,000,000 (five
million United States Dollars or (euro)5,000,000 (five million
Euros) in the event the Advance is requested in Euros and the Banks
have agreed to make the Advance in Euros pursuant to clause 32
below) and each Advance shall be a multiple of US $5,000,000 (five
million United States Dollars) or (euro)5,000,000 (five million
Euros), as the case may be.
4.1.7. the Borrower shall have delivered to the Banks a certificate in the
form of Schedule 4.1.7 hereto of the Auditors or the Chief Financial
Officer or the Chief Executive Officer or Vice President Finance of
the Borrower stating as at a specified date (such date being no
earlier than 10 (ten) Business Days before the date of delivery of
the Drawdown Request) (in this clause 4.1.7, "the Reference Date"):
4.1.7.1. the aggregate Borrowings (with detailed breakdown), so as to
demonstrate compliance with the provisions of clause 15.7.1 below on
the Reference Date;
4.1.7.2. all data necessary to demonstrate compliance with the provisions of
clause 15.7.2 below on the Reference Date;
4.1.7.3. all data necessary to demonstrate compliance with clause 15.28 below
on the Reference Date;
4.1.8. the Borrower shall have delivered to the Banks:
4.1.8.1. a certificate, in the form of Schedule 4.1.8.1 hereto, from the
Auditors or the Chief Financial Officer or Vice President Finance or
the Chief Executive Officer of the Borrower confirming compliance
with the Financial Undertakings pursuant to clause 15.24 below at
the Ratio Determination Date last occurring before the date of
delivery of such Drawdown Request, except that with respect to the
Financial Undertaking relating to the ratio between EBITDA and Debt
Service, such certificate shall confirm compliance (at the said
Ratio Determination Date) with the provisions of clause 29.2.1
below, such certificate to be supported by suitable financial
statements setting out in detail all data relevant for determination
of compliance with the said financial undertakings; and
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4.1.8.2. a certificate, in the form of Schedule 4.1.8.2 hereto, from the
Auditors or the Chief Financial Officer or Vice President Finance or
the Chief Executive Officer of the Borrower confirming that
according to the information available to the Borrower, no event has
occurred or is likely to occur that would cause the Borrower not to
be in compliance with the provisions of the Financial Undertakings
pursuant to clause 15.24 and clause 29.2.1 as aforesaid at the next
Ratio Determination Date;
4.1.9. the Delayed Conditions Precedent shall have been fulfilled to the
Banks' satisfaction.
4.2. Subject to clause 32 below, all Advances made under this Agreement shall
be in US Dollars.
4.3. Subject to clause 29 below, on the Termination Date, the aggregate
principal amount of all Advances then outstanding shall become one loan,
the term of which will terminate on the Final Maturity Date and which will
be repayable in accordance with clause 5 below (for the removal of doubt,
without derogating from clauses 6 and 7 below).
4.4. Subject to the terms of this Agreement, on the Drawdown Date relating to
an Advance, each Bank shall make available the amount of its participation
in such Advance in an amount equal to the proportion thereof which its
Available Commitment bears to the total Available Commitments at such
Drawdown Date.
4.5. All Advances shall be made by transfer of the amount thereof to an account
of the Borrower maintained at the main Tel-Aviv branch of the Bank making
the Advance.
4.6. No Advances shall be made after the Termination Date and, for the removal
of doubt, all Available Commitments as at the Termination Date shall be
cancelled.
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5. REPAYMENT
5.1. Except for the Extended Portion, the Borrower shall repay the Loan in 5
(five) equal instalments payable on the fourth Interest Payment Date in
2004 and on each Interest Payment Date in 2005, i.e., in 5 (five)
instalments of US $7,500,000 (seven million five hundred thousand United
States Dollars) payable in equal shares to Bank Leumi and Bank Hapoalim.
5.2. It is agreed, for the removal of doubt, that the Loan, as well as all
Interest thereon, shall be repaid in US Dollars (except any portion of the
Loan granted in Euros which, as well as Interest thereon, shall be repaid
in that currency).
5.3. All repayments as aforesaid shall be made by transfer thereof to each
Bank's Facility Account.
5.4. On the Final Maturity Date, the Borrower shall additionally pay to the
Banks all other sums then outstanding under the Finance Documents.
5.5. Except as expressly provided in clause 2.1.2 above, the Borrower shall not
be entitled to reborrow any amount repaid on account of the Loan.
6. PREPAYMENT
6.1. The Borrower may, if it has given to the Banks not less than 7 (seven)
Business Days' advance written notice to such effect, prepay the Loan (or
part thereof) on an Interest Payment Date, provided that the minimum
amount of any such prepayment shall be US $5,000,000 (five million United
States Dollars) or, in the event the relevant part of the Loan has been
made in Euros pursuant to clause 32 below, (euro)5,000,000 (five million
Euros). Amounts prepaid as aforesaid shall be applied pro rata on account
of settlement of all remaining instalments of the Loan.
6.2. Any notice of prepayment given by the Borrower pursuant to clause 6.1
above shall be irrevocable, shall specify the Interest Payment Date upon
which such prepayment is to be made and the amount of such prepayment and
shall oblige the Borrower to make such prepayment on such date.
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6.3. The Borrower shall not prepay any part of the Loan except in accordance
with the aforegoing in this clause 6 and pursuant to clauses 7, 9 and 13
below.
6.4. The Borrower shall not be entitled to reborrow any amount prepaid on
account of the Loan.
6.5. In the event that the Borrower makes a prepayment of the Loan or any part
thereof pursuant to this clause 6 and shall finance such prepayment by
obtaining, directly or indirectly, a credit facility (short-term or
long-term), from another bank or financial institution, the Borrower shall
pay the Banks a prepayment commission of 0.1% (nought point one percent)
per annum on the amount of the prepayment, such commission to be
calculated from the date of prepayment until the date such amount would
otherwise have become due, having regard to the provisions of the second
sentence of clause 6.1 above. At the Banks' request, the Borrower shall
provide the Banks with documentation and information to the Banks'
satisfaction regarding the source of the funds used by the Borrower to
finance any prepayment made.
6.6. All prepayments as aforesaid shall be made by transfer thereof to each
Bank's Facility Account.
7. MANDATORY PREPAYMENT
7.1. All the following amounts shall be applied in mandatory prepayment of the
Loan on the first Interest Payment Date after receipt thereof by the
Borrower (pro rata on account of settlement of all outstanding instalments
of principal due on the Loan):
7.1.1. all proceeds from time to time received under insurance policies, in
excess of the amount of US $7,500,000 (seven million five hundred
thousand United States Dollars) per occurrence, but excluding: (i)
any proceeds received under policies of credit or marine insurance
and policies of that kind; (ii) proceeds received under D&O
Insurance and Manager's Insurance; and (iii) any proceeds applied in
rebuilding or reinstatement operations required as a consequence of
the occurrence in respect of which the proceeds were received;
7.1.2. (a) in the event of a public offering of shares or other
securities in the Borrower for cash consideration, in whole or
in part, 20% (twenty percent) of the net cash proceeds of such
offering or 10% (ten percent) of the outstanding balance of
the Loan on the date the offer is effective, whichever is the
higher;
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(b) in the event of a private placement of shares or other
securities in the Borrower for cash consideration, in whole or
in part, 20% (twenty percent) of the net cash proceeds of such
placement; and
7.1.3. all proceeds from time to time received by the Borrower in
connection with the nationalisation, expropriation or requisition of
any of the Borrower's assets.
7.2. The Borrower shall not be entitled to reborrow any amount mandatorily
prepaid in accordance with this clause 7 above.
7.3. Any mandatory prepayment in accordance with this clause 7 above shall be
made by transfer of the amount to each Bank's Facility Account.
8. INTEREST
8.1. The rate of Interest applicable to each of the Advances under the Loan in
respect of each Interest Period shall be the rate per annum being the sum
of: (i) the percentage per annum agreed in writing, prior to the date
hereof or hereafter, between each of the Banks and the Borrower as to that
part of the Loan owing to such Bank ("Margin"); and (ii) LIBOR on the
Interest Determination Date for such Interest Period ("Interest Rate"),
provided that the Margin shall be increased automatically by:
8.1.1. 1% (one percent) per annum in respect of any Interest Period
commencing on the day following a Ratio Determination Date with
respect to which the ratio of EBITDA to Debt Service shall be 0.8:1
or less (except for any part of such Interest Period in respect of
which interest at the rate specified in clause 17.2 below is due);
and/or
8.1.2. 2% (two percent) per annum in respect of any Interest Period (or
part thereof) during which Borrower is not in compliance with the
provisions of clause 15.28 below (except for any part of such
Interest Period in respect of which interest at the rate specified
in clause 17.2 below is due).
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It is agreed, for the removal of doubt: (a) that the proviso in the
previous sentence of this clause 8.1 above shall not derogate from
the Banks' rights to other remedies and reliefs on the occurrence of
the events giving rise to an increase in the Margin described in (i)
and (ii) above ("the Margin-increase events"); (b) that the Margin
shall be increased by 2% (two percent) per annum as aforesaid with
respect to periods to which both of the Margin-increase events have
occurred (and shall not be increased by 3% (three percent) per annum
with respect to such periods); and (c) it shall be the duty and
obligation of the Borrower to pay Interest with the increased Margin
as aforesaid without prior or any notice from the Banks and any
Interest not so paid on due date shall itself bear Interest at the
rate specified in clause 17 below.
8.2. Interest as aforesaid in clause 8.1 above in respect of Advances under the
Loan shall accrue from day to day, from the date the Advance is actually
made (or as to the additional Interest due pursuant to the proviso to
clause 8.1 above, from the commencement of the period in respect of which
such additional Interest is due) and shall be calculated on the basis of
the actual number of days elapsed and a 360 (three hundred and sixty) day
year.
8.3. Except as otherwise expressly provided herein, all Interest accrued as
aforesaid in clause 8.2 above on each Advance shall be paid on each
Interest Payment Date (up to and including the Final Maturity Date).
9. SUBSTITUTE INTEREST RATES
9.1. If and whenever, at any time prior to the commencement of any Interest
Period, the Banks shall have determined that:
9.1.1. adequate means do not exist for ascertaining LIBOR during such
Interest Period; or
9.1.2. deposits in Dollars are not available to any of the Banks in the
London Interbank market in the ordinary course of business in
sufficient amounts to fund the relevant Advances for such Interest
Period or that LIBOR as determined under this Agreement does not
constitute an accurate base for the determination of the cost to any
of the Banks of obtaining such deposits, the Banks shall forthwith
give notice ("a Determination Notice") of such event to the Borrower
(a Determination Notice to contain particulars of the relevant
circumstances giving rise to its issue) and, notwithstanding the
provisions of clause 8 above, the Banks shall designate an
alternative basis ("the Substitute Basis") for the determination of
the relevant Interest Rate for such Interest Period. Subject to
clause 9.2 below, the Substitute Basis shall be binding upon the
Borrower and shall take effect in accordance with its terms from the
commencement of the relevant Interest Period.
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9.2. Upon receipt of a Determination Notice, the Borrower may prepay the Loan
in full, provided written notice of prepayment ("the Prepayment Notice")
is given to the Banks by the Borrower no later than 7 (seven) Business
Days after receipt of the Determination Notice, such prepayment to be made
on the first Interest Payment Date after receipt by the Borrower of the
Determination Notice, if received more than 14 (fourteen) Business Days
prior to the said Interest Payment Date or otherwise by no later than 7
(seven) Business Days from the date of the Prepayment Notice. The
provisions of clause 18 below shall not apply to prepayment pursuant to
this clause 9.2.
10. COMMISSIONS, FEES AND EXPENSES
10.1. Deleted.
10.2. The Borrower shall from time to time pay to the Banks or the Trustee, as
the case may be, on demand:
10.2.1. all costs and expenses (including legal fees for external counsel,
expert's fees, consultant's fees, fees of other professionals, all
whether Israeli or foreign, engaged by the Banks and all reasonable
out-of-pocket expenses), incurred by the Banks and out-of-pocket
expenses of the Trustee, in connection with the negotiation,
preparation, execution and implementation of this Agreement and the
other Finance Documents (and any amendments thereto) and the
completion of the transactions therein contemplated; and
10.2.2. all expenses (including legal fees and reasonable out-of-pocket
expenses) incurred by the Banks (or any of them) or the Trustee in
contemplation of, or otherwise in connection with, the enforcement
of, or preservation of any rights under, this Agreement or any of
the other Finance Documents or otherwise in respect of the monies
owing under this Agreement, together with Interest at the rate
referred to in clause 17 from the date on which such expenses were
incurred to the date of payment (after as well as before judgment).
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10.3. The Borrower shall pay all stamp, documentary, registration or other like
duties or Taxes (including any duties or Taxes payable by the Banks)
imposed on or in connection with this Agreement, the Loan or any of the
Finance Documents, such payments to be made within the period required by
law or the period required by this Agreement or within the period during
which such payment must be made in order to enable the timely performance
of other obligations of the Borrower under this Agreement, whichever is
the shorter.
10.4.
10.4.1. Without derogating from or limiting the generality of any provision
of this clause 10, the Borrower shall pay to the Banks on the
Effective Date: (i) all the costs, expenses and fees referred to in
clause 10.2.1 above, incurred by the Banks prior to the Effective
Date; and (ii) an amount equal to all stamp duties payable in
respect of this Agreement and all other Finance Documents executed
on or prior to the Effective Date (and not stamped by the Effective
Date); the Borrower and the Original Subsidiaries hereby authorise
the Banks to pay all such stamp duties on behalf of the Borrower to
the relevant authorities.
10.4.2. If the Majority Banks shall advise the Borrower in writing at any
time after the Effective Date, that amounts are payable in respect
of the duties and Taxes referred to in clause 10.3 above (including
any Interest, penalty, surcharge or the like due as a consequence of
late payment), the Borrower shall pay the said amounts forthwith
upon the first written demand of the Majority Banks and, failing
that and without derogating from other reliefs and remedies
available to the Banks in such event, the Banks shall be entitled
(but not obliged) to pay the said amounts on behalf of the Borrower
and to debit the accounts of the Borrower with such amounts.
10.5. Nothing in this clause 10 shall be construed as derogating from the
obligations of the Borrower to pay the Banks other commissions, fees and
reasonable expenses usually payable to banks in connection with banking
transactions performed in connection with the Facilities.
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10.6. If any amendment to this Agreement is requested, required or agreed by the
Borrower in accordance with clause 35 below, then the Borrower shall, on
demand of the Banks, reimburse the Banks for all costs and reasonable
expenses (including legal fees) incurred by the Banks in responding to or
complying with such requests. For the removal of doubt, nothing herein
contained shall be construed as implying that the Banks have any
obligation whatsoever to agree to any such request for amendment by the
Borrower.
10.7. The Borrower shall pay the Trustee (in addition to the amounts payable
pursuant to clause 10.2 above), a trustee fee of US $22,000 (twenty-two
thousand United States Dollars) per annum plus an additional $2,000 (two
thousand United States Dollars) per annum for each Bank (in addition to
the Initial Banks) which shall be Secured Parties under any of the
Security Documents in such year or any part thereof until the total
release and discharge of all security arrangements hereunder or under the
Security Documents or otherwise pursuant hereto involving the Trustee and
termination of all its functions pursuant to such arrangements and/or in
the enforcement thereof. The fee shall be paid each year on or before
February 5 in that year, the payments due in 2003 and 2004 having been
made.
10.8. All amounts payable pursuant to this clause 10 above shall be paid
together with VAT (if any) thereon.
10.9. All sums payable by the Borrower under this clause 10 shall be payable in
the currency stated or, in the case of payment of expenses incurred, in
the currency in which such sums were incurred by the relevant Bank or the
Trustee, as the case may be.
11. TAXES
11.1. All payments to be made by the Borrower to the Banks shall be made free
and clear of and without deduction or withholding for or on account of
Tax, unless the Borrower is required by law to make such payment subject
to the deduction or withholding of Tax, in which case (save where such
deduction or withholding is in respect of income Tax of a Bank and the
Borrower shall have delivered to such Bank a receipt as referred to in
clause 11.3 below) the sum payable by the Borrower in respect of which
such deduction or withholding is required to be made shall be increased,
to the extent necessary, to ensure that after the making of the required
deduction or withholding, such Bank receives and retains (free from any
liability in respect of any such deduction or withholding) a net sum equal
to the sum which it would have received and so retained had no such
deduction or withholding been made or required to be made.
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11.2. If, at any time, the Borrower is required by law to make any deduction or
withholding from any sum payable by it hereunder, the Borrower shall, as
soon as reasonably practicable, notify the relevant Bank.
11.3. If the Borrower makes any payment hereunder in respect of which it is
required to make any deduction or withholding, it shall pay the full
amount required to be deducted or withheld to the relevant taxation or
other authority within the time allowed for such payment under applicable
law and shall deliver to the relevant Bank, as soon as reasonably
practicable after it has made such payment to the applicable authority, an
original receipt (or a certified copy thereof) issued by such authority
evidencing the payment to such authority of all amounts so required to be
deducted or withheld in respect of such payment.
12. INCREASED COSTS
If by reason of any change in, or the introduction of, or any change in
the interpretation, administration or application by any competent court,
authority or organisation in the relevant jurisdiction, of any law,
regulation or treaty or in or of any official directive or official
request from, or the rules of, any governmental, fiscal, monetary or
regulatory (including self-regulatory) authority, organisation or agency
including the implementation in any jurisdiction the proposals made by the
Basel Committee on Banking Regulations and Supervisory Practices for the
international convergence of capital measurements and capital standards
(whether or not having the force of law but, if not having the force of
law, being a regulation, treaty, official directive, official request or
rule which it is the practice of banks in Israel to comply with) after the
date of this Agreement which affects the Banks or compliance by any of the
Banks with any such change or introduction, including, in each case, those
relating to Taxation, reserves, special deposit, cash ratio, liquidity or
capital adequacy requirements or other forms of banking, fiscal, monetary
or regulatory controls:
12.1. any of the Banks incurs an increased cost as a result of it having entered
into and/or performing and/or maintaining and/or funding its obligations
under, any Finance Document; or
12.2. any amount receivable by any of the Banks under any Finance Document is
reduced (save to the extent matched by a reduction in the cost of
providing the Facility) or the effective rate of return to any of the
Banks under any Finance Document or on its capital employed for the
purpose of this Agreement is reduced; or
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12.3. any of the Banks makes any payment or forgoes any Interest or other return
on, or calculated by reference to, any amount received or receivable by it
from the Borrower under any Finance Document,
and such increased cost (or the relevant proportion thereof), reduction,
payment, forgone Interest or other return is not compensated for by any
other provision of this Agreement, then and in each such case:
(a) such Bank shall notify the Borrower of that event promptly upon it
becoming aware of the event, including, in reasonable detail,
particulars of the event; and
(b) within 14 (fourteen) Business Days after receipt by the Borrower of
a demand from time to time by such Bank accompanied by a certificate
of such Bank specifying the amount of compensation claimed and
setting out the calculation of the amount in reasonable detail, the
Borrower shall pay to such Bank such amount as shall compensate such
Bank for such increased cost, reduction, payment or forgone Interest
or other return.
Nothing in this clause 12 shall oblige such Bank to disclose any
confidential information relating to the organisation of its affairs.
13. ILLEGALITY
If any change in or the introduction of any law, regulation, treaty or
(whether or not having the force of law but, if not having the force of
law, being one with which it is the practice of banks in Israel to comply)
official directive or rule of any governmental, fiscal, monetary or
regulatory authority or agency, having jurisdiction (together in this
clause 13, "Laws"), or any change in the interpretation, administration or
application of Laws by a final decision of a competent court or the
relevant authority or agency or compliance by any of the Banks with any
such change or introduction of Laws or change in interpretation,
administration or application of Laws, shall make it unlawful or a breach
of Laws for such Bank to make available or fund or maintain the Advances
or any part of the Loan under this Agreement or to give effect to its
obligations and exercise its rights as contemplated by this Agreement,
such Bank may, by notice to the Borrower, declare that to the extent
necessary, to avoid any such illegality or breach of Laws, its obligations
to the Borrower under the Finance Documents shall be terminated forthwith
or, if later, on the latest date to which the obligations may remain in
effect without causing such Bank to be in breach of Laws, whereupon the
Borrower will forthwith, or by such later date as shall be immediately
prior to the illegality or breach in question taking effect prepay the
Loan together with all Interest and other charges accrued thereon to the
date of the prepayment (as well as all amounts payable under clause 18
below and all other amounts payable to such Bank under the Finance
Documents).
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14. REPRESENTATIONS AND WARRANTIES
14.1. The Borrower hereby repeats the representations and warranties made by the
Borrower in the Original Facility Agreement as of the date they were so
made. Further, the Borrower hereby makes the representations and
warranties set out in this clause 14 to the Banks, subject to the
qualifications set out in Schedule 14.1 hereto. The Borrower acknowledges
that the Banks have entered into this Agreement in full reliance on the
representations and warranties set out in this clause 14 below (as
qualified by Schedule 14.1 hereto as aforesaid).
14.2. The Borrower and each of the Original Subsidiaries is a company limited by
shares, duly incorporated and validly existing under the laws of Israel
and has the power to own its respective property and assets and carry on
its business as it is now being and will be conducted. No event has
occurred with respect to it which would constitute an Event of Default
under clause 16 below.
14.3. The Borrower and the Original Subsidiaries have the power to enter into
and perform the Finance Documents to which it or they are party as well as
all transactions to be implemented pursuant thereto and have taken all
necessary action to authorise the entry into and performance of those
documents and transactions.
14.4. Each Finance Document to which the Borrower or any Original Subsidiary is
at any time a party constitutes its legal, valid, binding and enforceable
obligations and (without limiting the generality of the aforegoing) each
Security Document to which the Borrower or any such Original Subsidiary is
a party validly and effectively creates the Encumbrances which that
Security Document purports to create or, as the case may be, accurately
evidences an Encumbrance which has been validly created.
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14.5. The entry into and performance of each Finance Document and each Material
Contract by the Borrower and the transactions to be implemented pursuant
to the aforegoing do not conflict (as to any Material Contract, in any
material respect) with:
14.5.1. any law or regulation or any official or judicial order applicable
to the Borrower, or
14.5.2. the Borrower's constitutional documents or any of its resolutions
(having current effect), or
14.5.3. any agreement or instrument to which the Borrower is a party or
which is binding upon it or on its assets,
nor will it result in the creation or imposition of any Encumbrance on any
of the Borrower's assets (save for any Encumbrance created pursuant to the
Security Documents).
Without limiting the generality of the aforegoing, there is no restriction
or prevention, legal or otherwise, on the creation of the Encumbrances to
be created pursuant to the Security Documents or, except as may be
required or stipulated under mandatory provisions of any law, on the
realisation, sale or assignment of any collateral continuing under any
such Security Document in the case of an Event of Default or on the
application by the Banks of any proceeds of any such realisation or sale.
14.6. No Default has occurred and is continuing which has not been waived.
14.7. All consents, approvals, authorisations, exemptions, concessions, permits
and licences and all filings, registrations and agreements with any
governmental or other regulatory authority required by any law for or in
consequence of the entry into and performance by the Borrower or any
Original Subsidiary of and/or the validity of any of the Finance Documents
or the transactions to be implemented pursuant to any of the aforegoing
("Authorisations"), have been obtained or effected or will be obtained or
effected prior to the date required by law, save for registrations (except
for those already made) with the Registrar of Pledges, the Registrar of
Lands and the Registrar of Companies in Israel (or with corresponding
authorities in other jurisdictions) which the Borrower will procure will
be effected within the time provided by law or the time specified herein,
whichever is the shorter. Without limiting the generality of the
aforegoing, the Borrower, has received and complied with all the
Authorisations, if any, listed in Schedule 3.4 hereto (including, to the
extent required, all Environmental Licences). All the Authorisations are
in full force and effect, the Borrower is in all material respects in
compliance with all provisions thereof and the Authorisations are not the
subject of any pending, or, to the best of their knowledge, threatened
attack or revocation by any competent authority.
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14.8. All of the Material Contracts to which the Borrower or any Original
Subsidiary is a party are in full force and effect and are legal, valid
and binding upon the parties thereto in accordance with their respective
terms. The Borrower or the relevant Original Subsidiary has performed, in
all material respects, all obligations to be performed on or prior to the
Effective Date under each of the Material Contracts to which it is party.
No event has occurred which constitutes a material default under or in
respect of the Material Contracts to which the Borrower or any Original
Subsidiary is a party and the Borrower is not aware of any matter or
circumstances which could comprise a cause for the cancellation of, or
default under, any of the said Material Contracts. There are no material
disputes subsisting between the Borrower or the relevant Original
Subsidiary and any other party to any Material Contract and no waivers
have been granted by or in favour of the Borrower or the relevant Original
Subsidiary pursuant to any term of any Material Contract in any respect
which would be reasonably likely to cause a Material Adverse Effect.
14.9. The material properties, material assets, employees, business and
operations of the Borrower are insured by policies which are in full force
and effect against such risks, casualties and contingencies and of such
types and amounts as are reasonable and customary for the size and scope
of the Borrower's business. All premiums due and payable for policies held
by the Borrower have been duly paid and such policies or extensions,
renewals or replacements thereof (on comparable terms to the extent
available) in such amounts will be outstanding and in full force and
effect without interruption until at least December 31, 2004. The Borrower
has not received any notice from any insurer, agent or broker with respect
to any pending or threatened terminations or increases in premiums, other
than increases contemplated by existing policies and/or in accordance with
overall market increases and the consummation of the transactions
contemplated by this Agreement will not result in the termination of any
such policy, or cause a material increase in any premiums thereunder,
pursuant to the express terms of such policy.
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14.10. (a) The Accounts most recently delivered to the Banks under clause 15.4
below have been prepared, save as disclosed in notes to or
accompanying those Accounts, in accordance with the provisions of
clause 15.6 below and fairly present in all material respects the
financial position of the Borrower and the Included Subsidiaries as
at the date to which the same were prepared and/or (as appropriate)
the results of operations and (in the case of annual Accounts)
changes in financial position during the Fiscal Year, subject, in
the case of half-yearly and quarterly Accounts, to normal year-end
adjustments made in accordance with GAAP.
(b) Nothing has occurred since the date of the Accounts referred to in
(a) above which constitutes a Material Adverse Effect.
14.11. Except as specified in Schedule 14.11 hereto, no litigation, arbitration
or administrative or regulatory proceeding or investigation involving
liability or potential liability (per proceeding) in excess of US
$1,000,000 (one million United States Dollars) for the Borrower or any
Original Subsidiary or any other subsidiary wholly-owned by the Borrower
(hereinafter, collectively, in this clause 14.11, "Subsidiaries") and for
which process, a claim or notice has been served on the Borrower or any
Subsidiary is current and, to the Borrower's knowledge, no litigation,
arbitration, administrative or regulatory proceeding involving it or any
Subsidiary and involving liability or potential liability in excess of US
$1,000,000 (one million United States Dollars) (per proceeding) as
aforesaid is pending or threatened. In particular, no claims are being
asserted against the Borrower or any Subsidiary with respect to Taxes.
The Borrower is and all the Subsidiaries are not overdue in the filing of
any Tax returns required to be filed by them and the Borrower and all the
Subsidiaries have paid all Taxes shown to be due on any Tax returns
required to be filed by them or on any assessments made against them for
non-payment.
14.12. No Encumbrance exists over any of the Borrower's assets or over the
assets of any Original Subsidiary, save for the Encumbrances under the
Security Documents and except for the Existing Encumbrances. The maximum
Indebtedness secured under each of the Existing Encumbrances is limited
to the amounts specified for such Existing Encumbrance in the last column
of Schedule 1.1.60 hereto or, for the purpose of clause 4.1.5 above and
clause 14.23 below, the said amounts--as increased, if increased--as
permitted under clause 15.3 below.
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14.13. The Borrower has good title to or valid leases or licences of or is
otherwise lawfully entitled to use all material assets necessary to
conduct its business as and to the extent conducted by it at such time.
14.14. The Borrower, to its best knowledge, owns or has the legal right to use
all the Intellectual Property Rights which are material for the carrying
on of its business and, as far as it is aware, the Borrower does not, in
carrying on its business, infringe any Intellectual Property Rights of
any third party.
14.15. The Borrower has at all times complied in all material respects with all
applicable Environmental Laws, which, if not complied with, would have a
Material Adverse Effect and, to the best of the knowledge of the
Borrower, there is no Environmental Claim pending or threatened against
the Borrower.
14.16. The Borrower and the Included Subsidiaries do not have any Borrowings of
whatsoever nature, save for: (i) Borrowings as detailed in Schedule 14.16
hereto (or for the purpose of clause 4.1.5 above and clause 14.23 below,
the said Borrowings--as increased, if increased--as permitted under
clause 15.7 below), which includes Borrowings in respect of or secured by
the Existing Encumbrances; and (ii) its obligations under the Finance
Documents.
14.17. The documents delivered to the Banks by the Borrower pursuant to clause 3
and under any other provision of the Finance Documents were genuine, or,
in the case of copies, were true, complete and accurate copies in all
respects of originals which have not been amended, varied, supplemented
or superseded in any way.
14.18. The security conferred by the Security Documents constitutes a priority
security interest of the type therein described (subject to statutory
preferences which may rank ahead of the security created thereunder) over
the security assets therein referred to, such assets are not subject to
any prior or other Encumbrances and the said security is not liable to be
set aside on insolvency of the Borrower or any Original Subsidiary, as
the case may be.
14.19. The share capital of the Borrower is owned, as of the date of signature
hereof, as shown in Schedule 14.19.
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14.20. The Borrower repeats the warranties and representations given in the
Veraz Letter and in the Waveinno Letter as of the date they were made.
14.21. Reserved
14.22. The sales turnover of the Foreign Subsidiaries constitutes at least 80%
(eighty percent) of the aggregate sales turnover of all Borrower's
subsidiaries incorporated outside Israel.
14.23. The representations and warranties set out in this clause 14 shall
survive the execution of this Agreement and shall be deemed to be
repeated on the Effective Date, on the date of each Drawdown Request and
on each Drawdown Date, subject to the qualifications set out in Schedule
14.1 hereto which may be updated on each such repetition with respect to
the representations and warranties given in clause 14.7 (as to
Environmental Authorisations) clause 14.9, clause 14.11 and clause 14.19
above, provided that neither the right to update nor the updating itself,
as aforesaid, shall be deemed to permit or to constitute acquiescence by
the Banks to any Default or Material Adverse Effect or any waiver of any
of the rights of the Banks hereunder, including their rights in the event
of Default or any Material Adverse Effect.
15. UNDERTAKINGS
The Borrower undertakes to the Banks that so long as any sum remains
payable to the Banks under any Finance Document:
15.1. The Borrower will comply in all material respects with all
applicable laws.
15.2. The Advances will be used exclusively for the purpose specified in clause
2.3 above.
15.3.
15.3.1. The Borrower shall not create or permit to subsist and shall procure
that no Included Subsidiary shall create or permit to subsist, any
Encumbrance on the whole or any part of its assets, business or
undertaking, save: (a) for the Encumbrances under the Security
Documents, (b) the Existing Encumbrances, provided that the
Indebtedness secured by the Existing Encumbrances shall not at any
time exceed US $11,000,000 (eleven million United States Dollars) in
aggregate; and (c) Encumbrances created as permitted by clauses
15.7.2(b) and 27 below.
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15.3.2. Without derogating from the Negative Pledges or clause 15.7 below
and in addition thereto, but subject to clause 15.7.2 below, the
Borrower shall not obtain a loan or credit facility of any kind from
any bank or other financial institution, directly or indirectly, if
such loan or credit facility is secured and/or supported, directly
or indirectly, by guarantee and/or any other collateral of any kind
provided by any Subsidiary.
15.4. The Borrower shall furnish and shall procure that the Excluded Subsidiary
shall furnish to each of the Banks:
15.4.1. as soon as practicable (and, in any event, within 90 (ninety) days
after the end of each Fiscal Year in the case of consolidated
Accounts (including the Exclusion Statement) of the Borrower or 120
(one hundred and twenty) days after the end of each Fiscal Year in
the case of the Accounts of the Excluded Subsidiary), the audited
annual Accounts of the Borrower (including the Exclusion Statement)
and the audited annual Accounts of the Excluded Subsidiary for that
Fiscal Year;
15.4.2. as soon as practicable (and, in any event, within 60 (sixty) days
after the end of each Quarter of each Fiscal Year in the case of
Accounts (including the Exclusion Statement) relating to the
Borrower or 90 (ninety) days after the end of each Fiscal Year in
the case of the Accounts of the Excluded Subsidiary), the unaudited,
reviewed Accounts (including the Exclusion Statement) of the
Borrower and the unaudited reviewed Accounts of the Excluded
Subsidiary for that Quarter (or with respect to the second Quarter,
for the relevant half-year or, with respect to the third Quarter,
for the relevant 9 (nine) months) and also the consolidated,
unaudited reviewed separate financial statements relating to the
Borrower, for that Quarter (or half-year or 9 (nine) months, as
applicable), if such Accounts are prepared; and
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15.4.3. at the same time as the Accounts (including the Exclusion Statement)
are delivered pursuant to clauses 15.4.1 or 15.4.2 above, a
certificate (in the form of the Compliance Certificate--form I
attached as Schedule 15.4.3(A)) signed by the Chief Executive
Officer, Chief Financial Officer, either of their deputies or the
Controller or Auditor of the Borrower: (a) certifying that the
relevant Accounts were prepared in accordance with GAAP,
consistently applied, unless the Accounts contain a certification to
that effect by the Auditors and that the relevant Accounts of HETC
were prepared in accordance with the requirements of its
jurisdiction of incorporation and the format attached as Schedule
15.4.3(B) hereto; (b) certifying the amount of the Cash Balance for
the purpose of clause 15.28 below at the end of the Fiscal Year or
the Quarter to which the said Accounts relate, such certificate to
be supported by suitable documentation setting out in detail all
data relevant for determination of the Cash Balance as aforesaid and
to include express confirmation that all assets included in Cash
Balance were not subject to a specific right of set-off; (c)
certifying that the Financial Undertakings specified in clause 15.24
below have been fulfilled, having regard to the period to which the
Accounts relate and/or as of the date ending that period (to the
extent applicable for such period and/or as of such date), or if
not, in what respect and to what extent the said financial
undertakings have not been fulfilled, such certificate to be
supported by suitable financial statements setting out in detail all
data relevant for determination of compliance with the Financial
Undertakings; (d) specifying the current shareholders holding over
5% (five percent) of the issued and outstanding share capital in the
Borrower and certifying that no Change of Ownership has occurred in
the Borrower; and (e) specifying that no Default has occurred and is
continuing, or, if a Default has occurred and is continuing,
specifying the Default and the steps, if any, being taken to remedy
it.
15.5. The Borrower shall furnish to each of the Banks:
15.5.1. promptly, all notices, reports or other documents required by law to
be dispatched by the Borrower to its shareholders generally (or any
class of them) or to holders of any other securities in the Borrower
and all notices, reports or other documents relating to the
financial difficulties or debt obligations of the Borrower
dispatched by or on behalf of the Borrower to its creditors
generally or to any class of its creditors;
15.5.2. (a) as soon as the same are instituted or, to the Borrower's
knowledge, threatened, details of any litigation, arbitration
or administrative proceedings involving it which, if adversely
determined, would have a Material Adverse Effect; and
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(b) promptly, on issue thereof, a copy of the quarterly statement
of pending claims issued by the legal advisor to the Borrower;
15.5.3. promptly, such further information regarding the Borrower's
financial condition, business and assets (including any requested
amplification or explanation of any item in any Accounts, forecasts,
projection or other material provided by the Borrower hereunder) as
the Banks may reasonably request from time to time, unless
disclosure of such information to the Banks shall contravene NASDAQ
regulations applicable to the Borrower or which would be applicable
to the Borrower if it were a US entity, provided that if such
otherwise contravening disclosure would be permissible against an
undertaking by the Banks to maintain in confidence and/or not to use
the information disclosed in connection with the trading of shares
on NASDAQ, such disclosure shall be made against such undertaking;
15.5.4. without derogating from clause 15.11 below, promptly, upon being
notified of the same, details of the occurrence of a Change of
Ownership or details of any proposed Change of Ownership of which
the Borrower is aware;
15.5.5. promptly, on request, certificates (in the form of the Compliance
Certificate--form II attached as Schedule 15.5.5) as to compliance
by the Borrower and/or any Original Subsidiary with the Finance
Documents, Security Documents and Material Contracts and as to the
absence of any Default thereunder;
15.5.6. promptly, notice of any Default and the steps being taken to remedy
same;
15.5.7. commencing on June 30, 2001 and every 6 (six) months thereafter,
details of any Material Contracts entered into during such
six-monthly period;
15.5.8. without derogating from any other provisions hereof, promptly,
notice of non-performance or cancellation of any Material Contracts
or any other contracts to which the Borrower is party, if--as to
such other contracts--such non-performance and/or cancellation would
constitute a Material Adverse Effect; and
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15.5.9. promptly, notice of any Material Adverse Effect.
15.6. The Borrower will ensure that:
15.6.1. the annual Accounts and the annual Accounts of any Excluded
Subsidiary incorporated in Israel to be delivered to the Banks
pursuant to clause 15.4 above are audited by KPMG Somekh Xxxxxxx or
another leading firm of independent Israeli auditors affiliated to
one of the big four internationally recognised firms of auditors;
15.6.2. the Borrower and the Included Subsidiaries shall at all times have
duly appointed auditors;
15.6.3. unless otherwise required by GAAP, the Borrower and the Included
Subsidiaries will not change their financial year-end without the
prior written consent of the Banks;
15.6.4. all Accounts (including the consolidated financial statements) shall
be prepared in accordance with GAAP (consistently applied) or shall
indicate in notes to or accompanying such Accounts (including the
consolidated financial statements) any material departures from
GAAP;
15.6.5. each set of Accounts (including the consolidated financial
statements) delivered to the Banks is prepared on substantially the
same basis as was used in the preparation of the Accounts (including
the consolidated financial statements) previously delivered to the
Banks;
15.6.6. in the event that any Accounts (including the consolidated financial
statements) are delivered which are not prepared on a substantially
consistent basis to Accounts (including the consolidated financial
statements) previously delivered hereunder, such Accounts (including
the consolidated financial statements) are accompanied by an
explanation of any changes to the accounting basis used;
15.6.7. all Accounts (including the consolidated financial statements) shall
fairly present in all material respects (subject to adjustments
which fall to be made at the end of the financial year in accordance
with GAAP), the financial position and results of operations of the
Borrower and of the Included Subsidiaries, as at the end of and for
the Accounting Period to which they relate;
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15.6.8. copies of all notices, reports, financial statements and all other
documents to be furnished by the Borrower to the Banks under this
Agreement or under any other Finance Document shall be delivered to
each of the Banks; and
15.6.9. the annual and quarterly consolidated Accounts of the Borrower shall
include, at least, the Borrower and all Original Subsidiaries.
15.7.
15.7.1. Without derogating from the Negative Pledges, the Borrower will
procure: (a) that the Borrower and the Included Subsidiaries will
not have or incur in aggregate Borrowings in excess of, US
$400,000,000 (four hundred million United States Dollars) in
aggregate (including the Loan and Additional Credit Facilities) of
which no more than US $250,000,000 (two hundred and fifty million
United States Dollars) shall constitute cash credit facilities
(including the Loan and Cash Credit Facilities) from any banks,
financial institutions or other sources. It is expressly agreed, for
the removal of doubt, that the Banks shall have no duty to monitor
compliance with this clause 15.7.1 and the making of any Advance
hereunder by any Bank or the provision by any Bank of Additional
Credit Facilities, whether or not it has the effect of causing
non-compliance with the provisions hereof, shall not be deemed
agreement by any Bank to such non-compliance or a waiver of the
Banks' right to compliance with such obligation by the Borrower.
15.7.2. The Borrower will procure that
(a) the total Borrowings from all banks and financial institutions
at any time of each Foreign Subsidiary shall not exceed US
$5,000,000 (five million United States Dollars); and
(b) the total amount secured at any time by the pledge of assets
of the Foreign Subsidiaries (taking all the Foreign
Subsidiaries together) shall not exceed US $7,500,000 (seven
million five hundred thousand United States Dollars).
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15.7.3. At the request of any Bank from time to time, the Borrower will
provide the requesting Bank with written confirmation of the amounts
of the Borrowings and of the value of the assets pledged by the
Foreign Subsidiaries, so as to verify compliance with the limits
specified in clauses 15.7.2(a) and (b) above.
15.8. The Borrower will deliver to the Banks, within 60 (sixty) days of the end
of each Quarter during this Agreement, a certificate in the form of
Compliance Certificate form III attached as Schedule 15.8 from the Chief
Financial Officer of the Borrower confirming compliance with the
provisions of clause 15.7 above.
15.9. Without derogating from the provisions of the Security Documents or from
the securities provided thereunder, the Borrower undertakes that its
obligations under or pursuant to this Agreement rank and will at all
times rank at least pari passu in right and priority of payment and in
priority of security with all its other present and future unsecured and
unsubordinated obligations, other than obligations which are mandatorily
preferred by law applying to companies generally.
15.10. The Borrower shall not make any Distribution and shall procure that no
Included Subsidiary shall make or resolve to make any Distribution
(including any dividend or other similar payment (in cash or in kind) on
or in respect of any share capital or equivalent of the Included
Subsidiary), except to the Borrower and to any other shareholder(s) in
the Included Subsidiary making the Distribution.
15.11. (a) The Borrower shall procure that there will be no Change in Ownership
in the Borrower, save with the prior written consent of the Banks.
(b) Without derogating from clause 15.11(a) above, the Borrower
undertakes that, without the Majority Banks' consent which may be
granted, or granted subject to conditions or refused in the
discretion of the Majority Banks: (i) it shall not issue any shares
or other securities or rights realisable into any shares; (ii) it
shall not transfer any shares or other rights realisable into shares
in any Original Subsidiary; and (iii) it shall procure that none of
the Original Subsidiaries shall issue any shares or other securities
or rights realisable into shares, whether by way of public offer,
private placement or otherwise (any issue or transfer pursuant to
subparagraphs (i), (ii) and (iii) above, collectively, hereinafter
an "issue"), unless:
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(1) the issue is for fair market value;
(2) the Banks shall, not later than 1 (one) month (and not earlier
than 3 (three) months) prior to the making of such issue, have
received notice of the Borrower's or the Original Subsidiary's
intention to make such issue);
(3) the Banks shall have received all information that they have
requested relating to such issue; and
(4) if the consideration for such issue shall not be in cash, in
whole or in part, the Banks shall have given their prior
written approval to the terms and conditions of such issue;
provided that the provisions of this clause 15.11(b) shall not
prevent the Borrower from issuing shares pursuant to any new
or existing incentive option schemes or any other similar
arrangements.
15.12. The Borrower will:
15.12.1. make such registrations and pay such fees and similar amounts as are
necessary to keep those registered Intellectual Property Rights
owned by the Borrower: (a) which are material to the business of the
Borrower; or (b) except to the extent such registration or payment
is not warranted in the Borrower's commercial judgment, reasonably
exercised, over which the Banks have been granted security pursuant
to the Security Documents (if any), in force and to record its
interest in those Intellectual Property Rights;
15.12.2. take such steps as are necessary and commercially reasonable
(including the institution of legal proceedings) to prevent third
parties infringing those Intellectual Property Rights referred to in
clause 15.12.1 above and (without prejudice to clause 15.12.1 above)
take such other steps as are reasonably practicable to maintain and
preserve its interests in those rights;
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15.12.3. promptly upon being required to do so by the Banks, comply with all
proper instructions of the Banks which the Banks are entitled to
give (if any) under the Security Documents in respect of its
Intellectual Property Rights referred to in clause 15.12.2 above;
15.12.4. not sell, transfer, lease, license on an exclusive basis or
otherwise dispose of all or any part of its interest in any of the
Intellectual Property Rights referred to in clause 15.12.1 above
(whether in a single transaction or in a series of transactions
whether related or not and whether voluntary or involuntary), save
for any transaction in respect of those rights for fair market value
and in the ordinary course of business and which do not, or are not
reasonably likely to, have a Material Adverse Effect; and
15.12.5. not permit, other than in the reasonable exercise of the Borrower's
commercial judgment, any registration of any of the Intellectual
Property Rights referred to in clause 15.12.1 above to be abandoned,
cancelled or lapsed or to be liable to any claim of abandonment for
non-use or otherwise.
15.13. The Borrower will: (i) obtain all requisite Environmental Licences; (ii)
comply in all material respects with the terms and conditions of all
Environmental Licences applicable to it; (iii) comply in all material
respects with all other applicable Environmental Laws; (iv) use its best
endeavours to prevent any Environmental Contamination; and (v) remedy all
Environment damage caused by it or them.
15.14.
15.14.1. The Borrower will insure and keep insured all the properties and
assets of the Borrower, with reputable insurance companies or
underwriters, to such extent, at such times and against such risks,
as shall be commercially reasonable.
15.14.2. The Borrower will promptly after becoming aware of the relevant
requirement, effect and maintain all insurances required by the
terms of any applicable law or any contract binding on it.
15.14.3. At the Banks' reasonable request from time to time, the Borrower
shall provide the Banks, promptly following such request, with
copies of all insurance policies held by the Borrower and any
Included Subsidiary at such time.
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15.14.4. The Borrower shall promptly notify the Banks of any insurance claim
where the amount of such claim exceeds US $1,000,000 (one million
United States Dollars) (or its equivalent, on the date on which the
claim is made, in the currency in which such claim is made).
15.15. The Borrower will not enter into any merger or consolidation or transfer
its business or part thereof.
15.16. The Borrower will obtain every Authorisation required to conduct its
business or perform this Agreement and will use its best efforts to
ensure that: (i) none of the Authorisations is revoked, cancelled,
suspended, withdrawn, terminated, expires or is not renewed or otherwise
ceases to be in full force and effect; and (ii) no Authorisation is
modified and that it does not commit any breach of the terms or
conditions of any Authorisation.
15.17. (a) The Borrower shall comply in all material respects with the terms of
each of the Material Contracts.
(b) The Borrower shall not without the prior written consent of the
Banks, amend, cancel, supplement, supersede or waive any term of a
Material Contract, if such action would have a Material Adverse
Effect.
(c) The Borrower shall take all reasonable action necessary to perfect,
preserve and enforce all of its material rights under the Material
Contracts.
15.18. (a) If the Borrower wishes to change its auditors, the Borrower will
notify the Banks as to the reasons for any such proposed change and
if the Banks so request, will instruct the audit partner of each of
the outgoing firm of auditors and the replacement firm of auditors
to discuss the financial position of the Borrower with the Banks.
(b) The Borrower will authorise the auditors to discuss the Borrower's
financial position with the Banks on the Banks' reasonable request,
at the expense of the Borrower.
15.19. The Borrower shall not: (i) acquire, without the prior written consent of
the Banks (by subscription or otherwise), any shares or equity-related
securities in any other entity at an aggregate cost in excess of US
$30,000,000 (thirty million United States Dollars) in any Fiscal Year
(such aggregate cost not to include more than US $15,000,000 (fifteen
million United States Dollars in cash); and/or (ii) expend more than US
$2,000,000 (two million United States Dollars) (by way of investment in
equity or provision of loans or guarantees) in any Financial Year in the
acquisition and/or establishment of any entity controlled by the Borrower
upon its acquisition or establishment, other than any such entity, which
upon its acquisition or establishment (as the case may be) as aforesaid
is, and remains other than with the prior written consent of the Banks, a
wholly-owned subsidiary of the Borrower. "Control" in this clause 15.19
means the holding of more than 50% of the issued share capital and/or
voting rights in the controlled entity and/or the ability to appoint the
majority of the directors of the controlled entity.
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15.20. The Borrower shall permit any professional adviser to the Banks or
representative of the Banks to have access to books, records, accounts,
documents, computer programmes, data or other information in the
possession of or available to it subject to any reasonable
confidentiality undertaking required by it and to take such copies as may
be considered appropriate by such representative or professional adviser
acting reasonably.
15.21. The Borrower will procure that the Borrower and the Included
Subsidiaries, taken together, will not acquire any Fixed Assets, save
for: (a) Fixed Assets needed for maintenance; and (b) other Fixed Assets,
the aggregate amount of which does not exceed US $60,000,000 (sixty
million United States Dollars) in any Fiscal Year.
15.22. The Borrower will not make any loans or give any credit save for: (a)
normal employee loans; (b) customer credit customary in the industry
which is given in the ordinary course of business; (c) customary advances
to suppliers; and (d) the loan to be secured by the Veraz Loan Pledge and
Assignment (provided that instrument has been duly executed to the
satisfaction of the Banks), except that the Borrower may make loans to
the Included Subsidiaries of a portion of any part of the Loan advanced
to the Borrower hereunder.
15.23. The Borrower shall not amend its Articles of Association or other
documents of incorporation in any respect materially adverse to the
interests of the Banks without the prior written consent of the Banks.
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15.24. The Borrower confirms and undertakes that as of the Ratio Determination
Date at the end of the Second Quarter in 2003 and at all times during the
term of this Agreement, the Borrower and the Included Subsidiaries, taken
together on a consolidated basis, have complied and will comply with the
financial undertakings, calculated by reference to the Accounts, set out
below (herein "the Financial Undertakings"):
15.24.1. the ratio of Tangible Equity to Total Liabilities shall continue to
be no less than 1:1;
15.24.2. for the year 2003, there shall be no minimum requirement for the
ratio of EBITDA to Debt Service;
15.24.3. for the first, second and third Quarters in the year 2004, the ratio
of EBITDA to Debt Service shall be no less than 1:1, 1.1:1 and
1.15:1, respectively. For each Quarter thereafter (i.e., commencing
the fourth Quarter of the year 2004), the ratio of EBITDA to Debt
Service shall be no less than 1.2:1;
15.24.4. for the year 2003, there shall be no minimum requirement for the
ratio of EBITDA to Borrowings. Thereafter, on every Ratio
Determination Date, the ratio of EBITDA to Borrowings shall be no
less than 1:5;
15.24.5. the ratio of Current Assets to Current Liabilities on each Ratio
Determination Date shall be no less than 1.5:1;
15.24.6. for the year 2003 and the first three quarters of 2004, the Borrower
and the Included Subsidiaries shall maintain a positive quarterly
cash flow (on an accumulated basis commencing 1 January 2003) from
operations, provided that failure to do so during the year 2004
shall not constitute a Default if the following condition is
fulfilled on the relevant Ratio Determination Date:
The ratio of A:B shall be at least 1.7:1, where:
A is the total of cash, cash equivalents, short term
investments, inventories and trade receivables;
and
B is the total of short term credit (excluding
current maturity of long term debt from banks)
plus trade payables.
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15.25. The Borrower undertakes that it shall not sell or otherwise dispose of
any material assets, except:
(a) in the ordinary course of its business or, otherwise, for fair
market value;
(b) as permitted in clause 15.11(b) (which shall govern the
subject-matter thereof exclusively);
(c) as to the assets listed in Schedule 15.25, sale of such assets not
resulting in a Material Adverse Effect for cash consideration for
fair market value not exceeding, in aggregate, US $5,000,000 (five
million United States Dollars); or
(d) as to other assets not being assets listed in Schedule 15.25, sale
of such assets not resulting in a Material Adverse Effect for cash
consideration for fair market value not exceeding, in any Fiscal
Year, US $5,000,000 (five million United States Dollars).
15.26. Deleted
15.27. The Borrower will obtain and submit to the Banks valuations including a
securities schedule (nispach bitchonot) in customary format and otherwise
in form and of scope satisfactory to the Banks by a licensed land valuer
acceptable to the Banks of all the land and rights in land which are the
subject of the Mortgages, such valuations to be provided by no later than
July 2004. The fees and expenses of the land valuer shall be borne by the
Borrower.
15.28. The Borrower shall at all times maintain a Cash Balance in an aggregate
amount of at least: (i) US $15,000,000 (fifteen million United States
Dollars) plus the amount equal to the aggregate of all cash credit
facilities owing by the Borrower and the Included Subsidiaries (including
the Loan and all Cash Credit Facilities); or (ii) 150% (one hundred and
fifty percent) of the amount equal to the aggregate of all cash credit
facilities owing by the Borrower and the Included Subsidiaries (including
the Loan and all Cash Credit Facilities), whichever of (i) and (ii) is
the lower. At its own initiative or at the request of the Majority Banks
from time to time, the Borrower shall cause the Chief Financial Officer
of the Borrower to provide the Borrower with an up-to-date version of the
certificate to be provided pursuant to clause 15.4.3(b) above. Further,
the Borrower shall advise the Banks by notice in writing forthwith upon
the Borrower ceasing to be in compliance with the aforegoing provisions
of this clause 15.28. The provisions of the previous sentence shall not
derogate from the Banks' rights to other remedies and reliefs in the
event of breach by the Borrower of its obligations pursuant to this
clause 15.28 above.
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15.29. The Borrower will provide the Banks with immediate written reports on the
occurrence of any event making it likely that a demand will be on any
Bank with respect to any Off Balance-Sheet Item issued by such Bank and
shall provide the Banks with all additional information relating to such
matter as the Borrower shall receive and/or as the Banks shall request,
from time to time.
16. DEFAULT
16.1. Each of the events set out in clause 16.2 to clause 16.17 is an Event of
Default (whether or not caused by any reason outside the control of the
Borrower or of any other person).
16.2. The Borrower does not pay on the due date any amount of principal or
Interest on the Loan payable by it under any Finance Document at the
place designated and in the funds expressed to be payable or the Borrower
does not pay within 3 (three) days of the due date any other amount
payable by it under any Finance Document at the place designated and in
the funds expressed to be payable.
16.3. (a) There is any breach of the provisions of any of clause 2.3, clause 3
(with respect to actions specified therein and permitted (if any) to
be performed after the Effective Date), clauses 10.4, 15.2, 15.3,
15.5.4, 15.7, 15.9, 15.10, 15.11, 15.15, 15.19 or 15.21- 15.29
(inclusive).
(b) The Borrower or any Original Subsidiary or any Foreign Subsidiary
fails to comply with any undertaking or obligation contained in any
Finance Document (other than an undertaking referred to in (a) above
in respect of which there shall be no cure period) and/or of any
undertaking or obligation contained in any document, including
standard terms and conditions, signed by the Borrower or any
Included Subsidiary, in connection with the provision of any Credit
Facilities and, if such default is capable of remedy within such
period, within 14 (fourteen) days after the earlier of the party in
breach becoming aware of such default and receipt by such party of
written notice from the Banks requiring the default to be remedied,
the said party shall have failed to cure such default. For the
removal of doubt, this clause 16.3 shall not be construed as
derogating from any other provision of this clause 16 and, without
limiting the generality of the aforegoing, the 14 (fourteen) day
cure period specified in this clause 16.3 above shall be applicable
only with respect to defaults specified in this clause 16.3(b) and
not to any other provision of this clause 16.
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16.4. Any representation or warranty made or repeated by or on behalf of the
Borrower in any Finance Document, or in any certificate or statement
delivered by or on behalf of the Borrower or under any Finance Document
is incorrect or misleading in any material respect when made or deemed to
be made or repeated.
16.5. Any of the Finance Documents shall cease to be in full force and effect
in any respect or shall cease to constitute the legal, valid, binding and
enforceable obligation of the Borrower or the relevant Subsidiary or in
the case of any Security Document, fail to provide effective perfected
security in favour of the Banks over the assets over which security is
intended to be given by that Security Document.
16.6. The Borrower is unable to pay its debts, including its debts to any other
bank or financial institution, as they fall due or admits inability to
pay its debts as they fall due, commences negotiations with any one or
more of its creditors with a view to the general readjustment or
rescheduling of its Indebtedness or makes a general assignment for the
benefit of or a composition with its creditors.
16.7. The Borrower takes any corporate action or other steps are taken or legal
proceedings are started or are consented to or any order is made for its
winding-up, liquidation, bankruptcy, dissolution, administration or
re-organisation (or for the suspension of payments generally or any
process giving protection against creditors) or for the appointment of a
liquidator, receiver, administrator, administrative receiver or similar
officer of it or of all or any part of its revenues or assets or such a
person is appointed, which action, steps, proceedings or order are not
cancelled or withdrawn within 60 (sixty) days of the occurrence or
institution thereof.
16.8. Any distress, execution, attachment, sequestration or other process
arising out of any claim by any third party against the Borrower, save
where: (a) the Borrower is in good faith on reasonable grounds,
contesting the distress, execution, attachment, sequestration or other
process by appropriate proceedings diligently pursued; (b) the Banks are
satisfied that the ability of the Borrower to comply with its respective
obligations under the Finance Documents will not be adversely affected
whilst such distress, execution, attachment, sequestration or other
process is being so contested; and (c) such process as aforesaid is
cancelled or withdrawn not later than 45 (forty-five) days after the
institution thereof.
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16.9. The Borrower fails to comply with any material undertaking or obligation
contained in any Material Contract and, if such default is capable of
remedy under the terms of such Material Contract and failure to remedy
could reasonably result in a Material Adverse Effect, the Borrower shall
have failed to cure such default within the time provided therefor in
such Material Contract.
16.10. The Material Contracts specified in Schedule 16.10 hereto shall cease to
be in full force and effect or shall cease to be legal, valid and binding
upon the parties thereto and such cessation is likely to have a Material
Adverse Effect; or (b) any change having a Material Adverse Effect is
made to the terms of any of such Material Contracts, without the prior
written consent of the Banks.
16.11. By or under the authority of the government of Israel or any other
competent Israeli authority any law is introduced after the date hereof
imposing restrictions on the free exchange of NIS for Dollars or Euro or
of Dollars or Euro for NIS and such restriction is likely to prevent the
due and timely performance of the Borrower's obligations under this
Agreement.
16.12. There is instituted or commenced any litigation, dispute, arbitration,
administrative, regulatory or other proceedings or enquiry concerning or
involving the Borrower which is likely to have a Material Adverse Effect.
16.13. (a) Any Authorisation necessary for the Borrower to comply with its
obligations under the Finance Documents or under any of the Material
Contracts:
(i) is not obtained or is surrendered, terminated, withdrawn,
suspended, cancelled or revoked or does not remain in full
force and effect or otherwise expires and is not renewed prior
to its expiry (in each case, without replacement by permits,
consents or authorisations, as applicable, having equivalent
effect); or
(ii) is modified in any material respect or breached.
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(b) The Borrower becomes aware of any event which is reasonably likely
to give rise to the revocation, termination, cancellation or
suspension of the Authorisations or any of them (without
replacement) and the Borrower is unable to demonstrate to the
reasonable satisfaction of the Banks within 30 (thirty) days of such
event occurring that such revocation, termination, cancellation or
suspension will not occur.
16.14. Any event or series of events occur which, in the reasonable opinion of
the Majority Banks is likely to have a Material Adverse Effect,
including, any material adverse change in the business or financial
condition of the Borrower or on the ability of the Borrower to perform
its obligations under the Finance Documents or under the Material
Contracts.
16.15. Any material insurance policy to be obtained by the Borrower pursuant to
the provisions hereof and obtained is cancelled and not restored within
60 (sixty) days of such cancellation and before any material damage
insured thereunder has occurred.
16.16. Any government or governmental authority: (a) nationalises, seizes or
expropriates all or any substantial or material part of the assets of the
Borrower, or its share capital; or (b) assumes custody or control of such
assets, or of the business or operations of the Borrower, or of its share
capital; or (c) takes any action for the dissolution of the Borrower, or
(d) takes any action that would prevent the Borrower or its officers from
carrying on its business or operations or a substantial or material part
thereof.
16.17. It is or becomes unlawful for the Borrower to perform: (i) any of its
obligations under the Finance Documents; or (ii) any of its material
obligations under any of the Material Contracts, if such non-performance
of such obligation under a Material Contract would have a Material
Adverse Effect.
16.18. Upon the occurrence of an Event of Default and at any time thereafter
while the same is continuing, the Banks may, by notice to the Borrower:
16.18.1. declare that an Event of Default has occurred; and/or
16.18.2. declare that the Loan together with all Interest accrued on the Loan
and all other amounts (including amounts due under clause 18 below,
to the extent applicable) payable by the Borrower under the Finance
Documents from time to time, shall thenceforth be repayable on
demand being made by the Banks (and in the event of any such demand,
the Loan, such Interest and such other amounts shall be immediately
due and payable); and/or
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16.18.3. declare the Loan immediately due and payable, whereupon it shall
become immediately due and payable, together with all Interest
accrued on the Loan (or part thereof as aforesaid) and all other
amounts payable by the Borrower or under the Finance Documents
(including, amounts due under clause 18, to the extent applicable).
16.19. If, pursuant to clause 16.18.2 the Banks declare the Loan (or part
thereof as aforesaid) to be due and payable on demand then, and at any
time thereafter so long as any Event of Default is continuing or has not
been waived, the Banks may by written notice to the Borrower require
repayment of the Loan (or part thereof as aforesaid) on such date as the
Banks may specify in such notice (whereupon the same shall become due and
payable on such date together with accrued Interest thereon and any other
sums then owed by the Borrower hereunder) or withdraw such declaration
with effect from such date as they may specify in such notice.
16.20. In the event of acceleration of the Loan (or part thereof as aforesaid)
pursuant to clauses 16.18.3 or 16.19 above, then, without derogating from
any other remedies or relief available to the Banks under law or under
any of the Finance Documents, the Banks shall be entitled to take all
steps as they deem fit in order to collect all sums owed by the Borrower
to the Banks, including, to realise all or any of the assets secured
under the Security Documents, all at the expense of the Borrower and to
utilise the sums received to repay in part or in full all amounts owed by
the Borrower hereunder.
16.21. The Borrower shall indemnify the Banks against any losses, charges or
expenses which the Banks may sustain or incur as a consequence of:
16.21.1. the occurrence of any Event of Default or Default; or
16.21.2. the operation of clauses 16.18, 16.19 or 16.20 above, including, any
losses, charges or expenses on account of funds acquired, contracted
for or utilised to fund any amount payable under this Agreement or
any amount repaid or prepaid. A certificate of the relevant Bank as
to the amount of any such loss or expense shall be prima facie
evidence in the absence of manifest error.
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17. DEFAULT INTEREST
17.1. If any sum due and payable by the Borrower hereunder (including any
amount becoming payable pursuant to the provisions of clauses 16.18
and/or 16.19 above) is not paid on the due date therefor in accordance
with the provisions of this Agreement ("unpaid sum"), the period
beginning on such due date and ending on the date upon which the
obligation of the Borrower to pay the unpaid sum is discharged, shall be
divided into successive periods, each of which (other than the first)
shall start on the last day of such preceding period and the duration of
each of which shall (except as otherwise provided in this clause 17) be
selected by the Banks (such periods selected as aforesaid "Interest
Periods").
17.2. During each such Interest Period as is mentioned in clause 17.1 above, an
unpaid sum shall bear Interest at the rate per annum which is the sum
from time to time of: (a) 3% (three percent); (b) the Margin; and (c)
LIBOR on the Interest Determination Date for such Interest Period,
provided that, if, for any such Interest Period LIBOR cannot be
determined, the rate of Interest applicable to such unpaid sum shall be
the rate per annum which is the sum of: (i) 3% (three percent); (ii) the
Margin; and (iii) a rate certified by the Banks in accordance with clause
9 above.
17.3. Any Interest which shall have accrued under clause 17.2 above in respect
of an unpaid sum shall accrue from day to day from the commencement of
the period in which such Interest is due, shall be calculated on the
basis of the actual number of days elapsed and a 360 (three hundred and
sixty) day year and shall be due and payable and shall be paid by the
Borrower at the end of the period by reference to which it is calculated
or on such other dates as the Banks may specify by written notice to the
Borrower.
18. BROKEN FUNDING INDEMNITY
Except as otherwise expressly provided herein, if any Bank receives or
recovers all or any part of the Loan otherwise than on the scheduled date
of repayment of such amount relating to the Loan, the Borrower shall pay
to such Bank an amount equal to the amount (if any) by which: (i) the
additional amount of Interest which would, in accordance with the terms
of this Agreement, have been payable on the amount so received or
recovered had it been received or recovered on the relevant Interest
Payment Date exceeds (ii) the amount of Interest which, in the reasonable
opinion of such Bank, would have been payable to such Bank on the last
day of such Interest Period in respect of a deposit in Dollars, of an
amount equal to the amount so received or recovered, had such an amount
been placed by it with a prime bank in London for a period starting on
the date of such receipt or recovery and ending on the relevant Interest
Payment Date.
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19. PAYMENTS
All payments to be made by the Borrower to the Banks under this Agreement
shall be made in same day funds. All payments required to be made by the
Borrower under the Finance Documents shall be calculated without
reference to any set-off or counterclaim and shall be made free and clear
of, and without any deduction for or on account of, any set-off or
counterclaim.
20. SET-OFF
20.1. Each Bank may (but shall not be obliged to) set-off against any
obligation of the Borrower due and payable by it to or for the account of
such Bank under this Agreement and not paid on the due date or within any
applicable grace period, any moneys held by such Bank for the account of
the Borrower at any office of such Bank anywhere and in any currency,
whether or not matured. For that purpose, such Bank may: (i) break or
alter the amounts of all or any deposit of the Borrower; or (ii) effect
such currency exchanges as are appropriate to implement the set-off and
any usual charges in relation to such currency exchanges shall be paid by
the Borrower and such Bank shall not be liable to the Borrower for any
penalties, losses or other damage resulting from any such breakage,
alteration or currency exchange. The Banks shall give notice to the
Borrower of any such set-off on or prior to the date of making such
set-off.
20.2. Each Bank shall be entitled (but not obliged): (i) to debit any of the
Borrower's accounts at such Bank with any amount needed to pay any amount
payable by the Borrower to such Bank under this Agreement and whether
such amount is credited or overdrawn or will become overdrawn as a result
of such debiting; and (ii) to credit any amount received from the
Borrower or for its account to such account of the Borrower at such Bank
as it deems fit. The Borrower shall be notified of any action taken
pursuant to this clause 20.2 in the manner in which the crediting or
debiting of an account is usually notified by each Bank to its clients.
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21. APPLICATION OF PAYMENTS
21.1. If any Bank receives a payment insufficient to discharge all the amounts
then due and payable by the Borrower to it under the Finance Documents,
such Bank shall apply that payment towards the obligations of the
Borrower under the Finance Documents in the following order or in such
other order as such Bank may deem fit:
21.1.1. firstly, in or towards payment of any unpaid fees, costs and
expenses of such Bank or any Receiver (as defined in any Security
Document) under the Finance Documents; and
21.1.2. secondly, in or towards payment of any other amount due to such Bank
but unpaid under this Agreement or any other Finance Document, other
than principal (including, Interest, damages, commissions, fees,
broken funding indemnity fees and all other costs), the above in
such order as such Bank deems fit; and
21.1.3. thirdly, in or towards payment to such Bank on account of the
principal of the Loan.
21.2. If, notwithstanding the obligations of the Borrower under this Agreement
(and without derogating from such obligations), any sum is received by
any Banks in a currency ("the first currency") other than the currency
("the second currency") in which the relevant amount is to be paid
pursuant to the provisions of this Agreement, then such sum shall be
converted into the second currency at the buying rate of the second
currency in the first currency prevailing at such Bank at the close of
business on the date of receipt thereof.
22. CALCULATIONS AND EVIDENCE OF DEBT
22.1. Each Bank shall maintain in accordance with its usual practice accounts
evidencing the amounts from time to time lent by and owing to it
hereunder.
22.2. In any legal action or proceeding arising out of or in connection with
this Agreement the entries made in the accounts maintained pursuant to
clause 22.1 above shall, in the absence of manifest or proven error, be
prima facie evidence of the existence and amounts of the specified
obligations of the Borrower.
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22.3. A certificate of a Bank as to: (a) the amount by which a sum payable to
it hereunder is to be increased under clause 11.1; or (b) the amount for
the time being required to indemnify it against any such cost, payment or
liability as is mentioned in clause 12 above shall, in the absence of
manifest or proven error, be prima facie evidence of the existence and
amounts of the specified obligations of the Borrower.
23. SHARING BETWEEN BANKS
23.1. If a Bank ("the Sharing Bank") receives or recovers (including by way of
set-off) any sum in respect of an amount due to it from the Borrower
under this Agreement or any of the other Finance Documents, the Sharing
Bank shall treat the amount paid to it as if it were a payment by the
Borrower on account of amounts due from the Borrower under this Agreement
for distribution to the Sharing Bank and all or any of the other Banks if
the Intercreditor Agreement or the New Intercreditor Agreement shall so
require.
23.2. Any payment made by the Sharing Bank under clause 23.1 above shall
(whether or not stated to be so subject) be subject to the condition
that, if the Intercreditor Agreement or the New Intercreditor Agreement
shall so require, each of the Banks (other than the Sharing Bank) shall
repay to the Sharing Bank the amount which the Sharing Bank distributed
to that Bank.
23.3. In the event of any dispute as to the proper implementation of this
clause 23, including any dispute as to the proper interpretation of the
Intercreditor Agreement or the New Intercreditor Agreement, the decision
of the Majority Banks shall bind all the parties hereto.
24. ASSIGNMENTS AND TRANSFERS
24.1. This Agreement shall be binding upon and enure to the benefit of each
party hereto and its or any subsequent permitted successors, transferees
and permitted assigns.
24.2. The Borrower shall not be entitled to assign or transfer all or any of
its rights, benefits and obligations under any of the Finance Documents.
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24.3. Any Bank may, at any time, assign all or any of its rights, benefits and
obligations under the Finance Documents to any bank or financial
institution (including, benefit funds): (i) being an Affiliate of the
Banks; or (ii) with the prior consent of the Borrower (not to be
unreasonably withheld), any other banking corporation or financial
institution, Israeli or foreign. Any Bank may also sell participations in
the Loan to such bank or financial institution as such Bank may deem fit,
provided that such Bank remains liable for its obligations under this
Agreement.
24.4. The Banks may at any time disclose to each other, as well as to any
actual or potential assignee or transferee or participant (or other party
entering into contractual arrangements to assume risks in relation to the
Facility) in respect of the Finance Documents, such information about the
Finance Documents and the Borrower and/or the Subsidiaries as the Banks
shall consider appropriate, provided that such disclosure (except between
the Banks themselves) shall be subject to the signature of an undertaking
of confidentiality by the disclosee in such reasonable form and substance
as the disclosing Bank shall determine. The Banks may also disclose any
such information to the Bank of Israel, the Supervisor of Banks and any
person acting on their behalf or any other governmental authority to
which the Banks are subject, upon receipt by such Bank of a demand for
such information from any such person or governmental authority.
25. CASH CREDIT FACILITIES
25.1. Pursuant to clauses 2.1.2 and 5.5 above, Bank Hapoalim and Bank Leumi
hereby confirm to the Borrower and not to any other person or body that
subject to Completion, the following Cash Credit Facilities, under which
any credit granted will be repayable by no later than June 30, 2004
(unless extended by the relevant lender), will be provided to the
Borrower:
25.1.1. US $15,000,000 (fifteen million United States Dollars) by Bank
Hapoalim; and
25.1.2. US $15,000,000 (fifteen million United States Dollars) by Bank
Leumi;
provided that the provision of the said Cash Credit Facilities by each of
Bank Hapoalim and Bank Leumi shall be subject to agreement on the
specific terms thereof between the Borrower and such Bank.
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26. BORROWER'S DEBENTURE; ADDITIONAL LENDERS
26.1. It is agreed that subject to the terms and conditions of the Borrower's
Debenture and clause 31 below, the Borrower's Debenture shall serve as
security for:
26.1.1. the Cash Credit Facilities to be provided by Bank Leumi and Bank
Hapoalim (if provided) pursuant to clause 25 above, as extended (if
extended) by the relevant lender;
26.1.2. the Loan (including any part of the Loan provided by Bank Leumi and
Bank Hapoalim pursuant to clause 29 below), in addition to the
securities already provided for the Loan;
26.1.3. all outstanding Off Balance-Sheet Facilities provided by Bank
Hapoalim and Bank Leumi from time to time (including such facilities
already provided on the date hereof); and
26.1.4. the Additional Credit Facilities provided by Additional Lenders,
subject to and in accordance with the provisions of clauses 26.2,
26.3 and 26.4 below.
26.2. It is understood and agreed that a new intercreditor agreement ("the New
Intercreditor Agreement") will be entered into between Bank Hapoalim,
Bank Leumi and the Trustee governing the Borrower's Debenture and the
rights of the Secured Parties secured under the Borrower's Debenture. The
New Intercreditor Agreement shall not contain any provisions regarding,
inter alia, the status of Additional Lenders entitled to the benefit of
the Borrower's Debenture that conflict with those specifically provided
for in clauses 26.3 and 26.4 below.
26.3. Any bank other than Bank Hapoalim and Bank Leumi ("an Additional Lender")
providing the Borrower with Additional Credit Facilities of US $8,000,000
(eight million United States Dollars) or more, of which at least US
$3,000,000 (three million United States Dollars) is by way of Cash Credit
Facilities, may (subject to clause 26.4 below) take the benefit of the
Borrower's Debenture as security for such Additional Credit Facilities
and become a Secured Party thereunder, subject to such bank becoming a
party to the New Intercreditor Agreement, it being agreed that such
Additional Credit Facilities shall include such facilities provided prior
to the Additional Lender becoming a party to the Borrower's Debenture and
still outstanding at that time.
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26.4. The New Intercreditor Agreement will provide, inter alia:
26.4.1. that a Secured Party under the Borrower's Debenture shall only be
entitled to benefit from the proceeds of any enforcement of the
Borrower's Debenture if: (a) either: (i) the Borrower shall at such
time have facilities outstanding secured under the Borrower's
Debenture in excess of US $3,000,000 (three million United States
Dollars) from such Secured Party; or (ii) if the amount of the
facilities outstanding by the Borrower from such Secured Party and
secured under the Borrower's Debenture shall be at least 331/3%
(thirty-three and one-third percent) of the total amount of the
facilities outstanding by Borrower from all Secured Parties and
secured under the Borrower's Debenture; and (b) the other relevant
terms and conditions of the New Intercreditor Agreement shall have
been fulfilled; and
26.4.2. that a Secured Party (or group of Secured Parties) under the
Borrower's Debenture shall only be entitled to require the Trustee
to commence proceedings for enforcement of the Borrower's Debenture
if the Borrower shall have at such time facilities secured under the
Borrower's Debenture and outstanding in excess of US $3,000,000
(three million United States Dollars) from such Secured Party or
group of Secured Parties, as the case may be, and such outstanding
facilities shall constitute or include either: (i) 331/3%
(thirty-three and one-third percent) of the aggregate of the
Additional Credit Facilities held by the Borrower and outstanding at
that time which are secured by the Borrower's Debenture as well as
331/3% (thirty-three and one-third percent) of the aggregate Cash
Credit Facilities included in the Credit Facilities held by the
Borrower and outstanding at that time which are secured by the
Borrower's Debenture; or (ii) 331/3% (thirty-three and one-third
percent) of the aggregate of all facilities held by the Borrower
secured under the Borrower's Debenture and outstanding at that time.
26.5. It is understood and agreed further that the parties to the New
Intercreditor Agreement shall agree a mechanism therein whereby a Secured
Party under the Borrower's Debenture will release its interest therein,
provided that all of the outstanding cash credit facilities owed to that
Secured Party and secured under the Borrower's Debenture have been repaid
and that the total value of the Off Balance-Sheet Facilities issued by
such Secured Party and secured under the Borrower's Debenture and
outstanding do not exceed US $10,000,000 (ten million United States
Dollars), provided that the Borrower shall provide alternative securities
in the form of pledged cash deposits or bank guarantees (from banks and
in a form acceptable to such Secured Party) or such other securities to
the full satisfaction of such Secured Party to secure the said
outstanding Off Balance-Sheet Facilities and provided always that the
creation by the Borrower of any Encumbrance (including the pledging of
cash deposits or the giving of such other securities as aforesaid) in
favour of such creditor shall require the prior written consent of Bank
Hapoalim and Bank Leumi. Should the Borrower create such Encumbrance in
favour of Bank Hapoalim and Bank Leumi, then only the consent of the
other said bank shall be required. The provisions of this clause 26.5 do
not derogate from the provisions of clause 27 below. For the purpose of
this clause 26, "outstanding Off Balance-Sheet Facilities" shall be
determined according to the exposure of the issuing bank in connection
therewith, as determined by that bank.
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27. PLEDGE OF CASH DEPOSITS
It is agreed that the Borrower shall be entitled, notwithstanding the
terms of the Borrower's Debenture, to pledge cash deposits in order to
secure buyers' credit (including, inter alia, interbank lines of credit)
and discounting of receivables, invoices, bills or notes or of other
similar financial assets, provided that:
27.1. the amount of the pledged cash deposit for any such transaction
shall not exceed 30% (thirty percent) of the value of such
transaction; and
27.2. the aggregate amount of the cash deposits pledged for all such
transactions at any time shall not exceed US $25,000,000 (twenty
five million United States Dollars).
28. INSTRUCTIONS TO COLLATERAL AGENT
The Banks shall procure that the Collateral Agent under the Borrower's
Debenture shall issue notices pursuant to clauses 1.1.3, 1.1.4 and 1.1.12
of the Borrower's Debenture as shall be appropriate, having regard to the
provisions of this Agreement and the Security Documents, upon the written
request of the Borrower or the written request of the Banks. It is
understood that the Encumbrances referred to in clause 26.5 above and the
pledge of cash deposits referred to in clause 27 above are intended to be
"Excluded Security Interests" and the liabilities secured thereby are
intended to be "Excluded Liabilities" for the purposes of the Borrower's
Debenture. On the written request of any Bank from time to time, the
Borrower shall furnish the requesting Bank with documentation and
information necessary to ascertain that the pledge of cash deposits
referred to in clause 27 above is in accordance with the provisions and
limitations specified in that clause. It is understood further that the
Encumbrances created prior hereto to secure the Borrower's liabilities
under the Facility Agreement are also "Excluded Security Interests" for
the purposes of the Borrower's Debenture.
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29. EXTENSION OF AVAILABILITY
29.1. Bank Leumi and Bank Hapoalim each hereby agree to extend availability to
the Borrower under the Facility of up to US $15,000,000 (fifteen million
United States Dollars) ("the Extended Portion"), on the terms and
conditions of this Agreement, subject to the following provisions of this
clause 29 and provided that neither Bank shall be obliged to make
available any part of the said US $15,000,000, if the provision of such
financing would result in the total amount outstanding to such Bank under
the Facility exceeding US $25,000,000 (twenty five million United States
Dollars).
29.2.
29.2.1. For the purpose of clause 4.1.8 above, compliance with the Financial
Undertaking relating to the ratio between EBITDA and Debt Service
shall be deemed to have been achieved if the ratio of EBITDA to Debt
Service, assuming that the Advance has been made, shall be no less
than 1.2:1 on the Ratio Determination Rate last occurring prior to
the delivery of the Drawdown Request and the average of the ratio of
EBITDA to Debt Service, assuming that the Advance has been made, on
the last 2 (two) Ratio Determination Dates prior to the delivery of
the Drawdown Request shall be no less than 1.1:1. Except for the
purpose specified in this clause 29.2.1 above, the Financial
Undertakings specified in clause 15.24 shall be those relevant for
all purposes of the Agreement.
29.2.2. Notwithstanding any other provisions of this Agreement, it is agreed
that for the purposes of and with reference to the Extended Portion:
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(a) the Availability Period shall mean the period commencing on
the Effective Date and ending on the Termination Date (as that
term is defined in paragraph (d) below of this clause 29.2.2);
(b) the Commitment of Bank Hapoalim and Bank Leumi shall be US
$15,000,000 (fifteen million United States Dollars) each;
(c) the Final Maturity Date shall mean the last Business Day of
the fourth Quarter of 2006;
(d) the Termination Date shall mean December 31, 2004;
(e) notwithstanding clause 4.3 above, the total of the Advances
from the Extended Portion made on any Drawdown Date shall be
deemed to constitute a separate loan and shall be repaid
separately as provided in paragraph (f) below of this clause
29.2.2 (and not combined with any other portion of the Loan on
any Termination Date; and
(f) notwithstanding the provisions of clause 4.6 above, the total
of the Advances from the Extended Portion made on any Drawdown
Date shall be repayable (half to each of Bank Leumi and Bank
Hapoalim) in equal instalments on each of the Quarter Days in
the period between the Drawdown Date and the Final Maturity
Date (as defined in paragraph (c) above) (including the
Quarter Day falling on the Final Maturity Date (as defined in
paragraph (c) above)).
29.2.3. In implementing the provisions of clause 5.4 above, the reference to
"Final Maturity Date" therein shall mean: (a) December 31, 2005 for
the purpose of all "other sums" (within the meaning of that term in
clause 5.4) then owing and due by the Borrower under the Finance
Documents (other than sums owing and due on or with respect to the
Extended Portion); and (b) December 31, 2006 for the purpose of all
"other sums" (within the meaning of that term in clause 5.4) then
owing and due by the Borrower under the Finance Documents on or with
respect to the Extended Portion.
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30. INFORMATION
The Borrower agrees that the Banks may at any time, amongst themselves,
disclose to each other any information in respect of: (i) Drawdown
Requests received, commitments made, Advances made and payments received
from or by the Borrower, as the case may be, under the Facilities; and
(ii) any other information in respect of the Finance Documents, the
Material Contracts and obligations as the Bank, disclosing the same,
deems appropriate.
31. SUNDRY PROVISIONS REGARDING COLLATERAL
31.1. Until discharge of all the Borrower's liabilities in respect of the
Facility, the Long Term Security Documents shall serve only as security
for the performance of the said liabilities. Following discharge as
aforesaid and as provided in the Borrower's Debenture, the assets charged
under the Long Term Security Documents (and any surplus of the proceeds
of the realisation thereof not needed in satisfaction of obligations
under the Facility) will become subject to the Borrower's Debenture.
31.2. The Borrower's Debenture shall serve as security for the liabilities
specified in clause 26.1 above.
31.3. Subject to the provisions of clauses 31.1 and 31.2 above, the entitlement
of each Bank to the proceeds of the realisation of the securities under
any Security Document shall be pro rata to the amounts owing by the
Borrower to the Banks and secured by such securities at the time of any
distribution of such proceeds, except as otherwise provided in the
Intercreditor Agreement or the New Intercreditor Agreement.
31.4. Subject to clause 31.5 below, sale by the Borrower of any asset subject
to a specific charge under the Security Documents shall be subject to the
prior written consent of the Majority Banks, provided that if the
Borrower shall wish to sell all or any of the said assets and shall
propose alternative securities satisfactory to the Majority Banks or
shall agree to pay the entire proceeds of the sale to the Banks in
repayment of amounts secured by the charge on the said shares and the
Majority Banks shall be satisfied that the position of the Banks is not
materially adversely affected by such sale, the Majority Banks shall give
the required consent.
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31.5.
31.5.1. The Borrower hereby warrants, represents and confirms that pursuant
to and in accordance with the conditions of the letter agreement
dated April 22, 2004, a copy of which is attached as Schedule 31.5.1
hereto ("the ECtel Consent Letter"), the Borrower has duly
distributed to its shareholders by way of a dividend 7,600,000
(seven million six hundred thousand) shares in ECtel previously held
by the Borrower and the parties record that pursuant to the ECtel
Consent Letter and in reliance on the representation, warranty and
confirmation of the Borrower that the said shares have been duly
distributed to the Borrower's shareholders as aforesaid, the Banks
have agreed by Deed of Amendment, attached as Schedule 1.1.48(c)
hereto, to the release of the said shares from the ECtel Share
Debenture.
31.5.2. The sale of the balance of the Borrower's shares in ECtel following
the distribution set out in the ECtel Consent Letter shall be
subject to the prior written consent of the Majority Banks and such
consent shall be given, if the Majority Banks have confirmed in
writing that they are satisfied, that in the event of such sale, 75%
(seventy-five percent) of the proceeds will be applied in prepayment
of the Loan and the remaining 25% (twenty-five percent) for the
benefit of the Borrower's current activities.
31.6. Notwithstanding the provisions of the Borrower's Debenture or any other
provision of this Agreement, the Borrower shall be entitled to sell all
of its rights pursuant to the GVT Tranche A Agreement and the GVT Tranche
B Agreement, provided that the Borrower has submitted to the Banks a
certificate, in form and content satisfactory to the Majority Banks, that
the price of such sale is both no less than 85% (eighty-five percent) of
the value of those rights as stated in the Borrower's books and also no
less than US $70,000,000 (seventy million United States Dollars).
31.7. Notwithstanding the provisions of the Veraz Letter, it is agreed that the
Veraz Loan Pledge and Assignment, shall be created by no later than the
grant by the Borrower of the credit facility referred to in clause (b)(i)
of the Veraz Letter and as a condition thereto.
32. EURO FACILITIES
Notwithstanding the references in clauses 25.1 and 29.1 above to the
provision of Facilities in US Dollars, it is agreed that if the Borrower
should so request, from any Bank, the references in such clauses to US
Dollars shall be read, in whole or in part, for the purpose of Facilities
to be provided by such Bank, as references to Euros, provided that such
Bank shall have determined, in its absolute discretion and has so
confirmed in writing to the Borrower, that it has the necessary sources
for the required Euro funds and, provided further, that all the other
conditions for the provision of such Facility shall have been fulfilled
to the satisfaction of such Bank.
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33. REMEDIES AND WAIVERS
No failure to exercise, nor any delay in exercising, on the part of the
Banks, or of the Borrower, of any right or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any
right or remedy prevent any further or other exercise thereof or the
exercise of any other right or remedy. No waiver shall be effective
unless made in writing on behalf of the waiving party by the authorised
signatories of that party. The rights and remedies herein provided are
cumulative and not exhaustive of any rights or remedies provided by law.
34. NOTICES
34.1. Notices to be given hereunder shall be in writing and may be given
personally, by facsimile or, if not available, as required by clause 34.2
below. Any notice to be given to the Banks must be given during normal
banking hours of the Banks to the person and at the address designated
below. If notice is sent by facsimile during normal banking hours as
aforesaid, it shall be deemed to have been served when confirmation of
receipt by the intended recipient has been received. All notices given by
facsimile shall be confirmed by letter despatched in the manner provided
in clause 34.2 within 24 (twenty-four) hours of transmission.
34.2. Any other notices to be given hereunder shall be served on a party by
prepaid express registered letter (or nearest equivalent) to its address
given below or such other address as may from time to time be notified
for this purpose and any notice so served shall be deemed to have been
served within 5 (five) days after the time at which such notice was
posted and in proving such service, it shall be sufficient to prove that
the notice was properly addressed and posted:
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34.2.1. to the Borrower at: ECI Telecom Ltd.
00 Xxxxxxx Xxxxxx
Xxxxxx Xxxxx 00000
Israel
Facsimile: (00) 000 0000
Attention: Chief Financial Officer
34.2.2. to ECI-NGTS at: ECI
Telecom-NGTS Ltd. 00 Xxxxxxx
Xxxxxx
Xxxxxx Xxxxx 00000
Israel
Facsimile: (00) 000 0000
Attention: Chief Financial Officer
34.2.3. to ECI-Optical at: Lightscape Networks Ltd.
00 Xxxxxxx Xxxxxx
Xxxxxx Xxxxx 00000
Israel
Facsimile: (00) 000 0000
Attention: Chief Financial Officer
34.2.4. to ECI-Transport at: Enavis Networks Ltd.
00 Xxxxxxx Xxxxxx
Xxxxxx Xxxxx 00000
Israel
Facsimile: (00) 000 0000
Attention: Chief Financial Officer
34.2.5. to Waveinno at: ECI Waveinno
Ltd.
0 Xxxxxxxxxx Xxxxxx
Xxxxxx Xxxxx 00000
Israel
Facsimile: (00) 000 0000
Attention: Chief Financial Officer
34.2.6. to Bank Leumi at: Corporate Division
00 Xxxxxx Xxxxxx Xxxxxx
Tel-Aviv
Facsimile: (00) 000 0000
Attention: Head of Technology and
Telecommunications Sector
34.2.7. to Bank Hapoalim at: Corporate Banking Division
Xxxx Xxxxxxxx
00-00 Xxxxxxxxxx Xxxxxxxxx
Tel-Aviv
Facsimile: (00) 000 0000
Attention: Xxxxx Xxxxx
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35. AMENDMENTS
Any addition, variation, modification or amendment to this Agreement
shall not be effective unless any such addition, variation, modification
or amendment is in writing and signed by the authorised signatories of
the Banks and the Borrower.
36. COUNTERPARTS
This Agreement may be executed in any number of counterparts and all of
such counterparts taken together shall be deemed to constitute one and
the same instrument.
37. GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by and shall be construed in accordance
with Israeli law and the courts of Tel-Aviv-Jaffa shall have exclusive
jurisdiction to hear any matters, provided that the Banks shall be
entitled to xxx the Borrower in any jurisdiction in which it has an
office or holds assets.
38. ENTIRE AGREEMENT
With effect from Completion, this Agreement constitutes the entire
agreement between the parties with respect to the subject-matter hereof
and supersedes any prior agreement, or arrangement amongst the parties,
including the Letter Agreement, except for the Security Documents and
except for the Veraz Letter and the Waveinno Letter. The Original
Facility Agreement continues to govern the period prior to Completion
(subject, as to the period after signature of the Letter Agreement, to
the amendments made thereto pursuant to the Letter Agreement) and, except
as expressly otherwise provided in clause 3.11 above, no waiver of any
rights of action under the Original Facility Agreement (as amended as
aforesaid) is made by Bank Leumi or Bank Hapoalim. Any addition or
amendment to this Agreement shall not be effective unless in writing
signed by the authorised signatories of both the parties. In the event of
any conflict between the Veraz Letter and this Agreement or between the
Waveinno Letter and this Agreement, the terms of this Agreement shall
govern.
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IN WITNESS WHEREOF, the parties have signed this Amending and Restating
Agreement on the date first mentioned above.
for: ECI TELECOM LTD. for: ECI-WAVEINNO LTD.
By: /s/ X. Xxxxxx By: /s/ X. Xxxxxx
------------------------------ -----------------------------------
Title: Title:
------------------------------ --------------------------------
for: INOVIA TELECOMS LTD. for: ECI TELECOM-NGTS LTD.
By: /s/ X. Xxxxxx By: /s/ X. Xxxxxx
------------------------------ -----------------------------------
Title: Title:
------------------------------ --------------------------------
for: LIGHTSCAPE NETWORKS LTD. for: ENAVIS NETWORKS LTD.
By: /s/ X. Xxxxxx By: /s/ X. Xxxxxx
------------------------------ -----------------------------------
Title: Title:
------------------------------ --------------------------------
Certificate of Counsel
I, the undersigned, X. Xxxxxxxxxx, Advocate, hereby certify (i) that all
approvals and actions necessary for the entering into and performance of the
Amended and Restating Agreement above ("the Agreement") by ECI Telecom Ltd.,
Invoia Telecoms Ltd., ECI Telecom NGTS Ltd., Lightscape Networks Ltd., Enavis
Networks Ltd. and ECI-Waveinno Ltd. ("the Companies") have been duly obtained
and taken and (ii) that the person who has signed the Agreement above on behalf
of each of the Companies has been duly authorised to do so and his signature
above binds the Company on behalf of which he has signed.
/s/ X. Xxxxxxxxxx
Xxxx Xxxxxxxxxx Adv.
for: BANK LEUMI LE-ISRAEL B.M. for: BANK HAPOALIM B.M.
By: /s/indecipherable /s/indecipherable By: /s/indecipherable /s/indecipherable
------------------------------------ ---------------------------------------
Title: Title:
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