EXHIBIT 7
LOAN AGREEMENT
Made this 24 Day of August 2000
Between
Israel Discount Bank Ltd. ("the Bank")
party of the first part
and
Trefoil Gilat Investors L.P. ("the Borrower")
party of the second part
and
Shamrock Holdings of California Inc. ("Shamrock")
party of the third part
WITNESSETH
1. The Borrower represents, covenants and warrants as of the date of
execution and delivery hereof that:
1. The Borrower is a limited partnership duly organizes and validly
existing under the laws of the State of Delaware, USA and has
limited partnership power to make and perform this Agreement, to
borrow hereunder and to secure such borrowing as set out
hereunder.
2. Shamrock owns a majority of the equity interest in the Borrower
and Trefoil Gilat, Inc., an entity controlled by Shamrock's
executive officers, is the General Partner of the Borrower.
3. The making and performance by the Borrower of this Agreement, and
the borrowing hereunder, all as herein provided, have been duly
authorized by all necessary partnership action and will not
violate any provision of the law or of the Borrower's governing
documents or conflict with or result in a breach of, or
constitute (with or without notice as contemplated by this
Agreement) the creation of any security interest, lien, charge or
encumbrance upon any property or assets of the Borrower pursuant
to, any agreement, indenture or other instrument to which the
Borrower is a party or by which it may be bound, other than this
Agreement;
4. On 30th June 2000 Shamrock purchased from Gilat Communication
Ltd. ("Gilat") six convertible Notes ("the Notes") in a total
amount of U.S$ 25,000,000 under a Purchase Agreement ("the
Purchase Agreement") and Registration Rights Agreement ("the
Registration Agreement") of the same date. A true Photostat of
the Notes, the Purchase Agreement and the Registration Agreement
are attached herewith.
5. The Notes, the Purchase Agreement and the Registration Agreement
are valid and binding obligations of the parties thereto and are
enforceable in accordance with their respective terms
6. To the Borrower's best knowledge, no event of default nor any
other breach or non performance of any term of the Notes, the
Purchase Agreement or the Registration Agreement has occurred.
7. All licenses, consents or approvals of any governmental body or
other regulatory authority required for the making and
performance by the Borrower of this Agreement or any instrument
contemplated herein have been obtained. The Borrower is the
holder of all material certificates and authorizations of
governmental authorities required by law to enable it to engage
in the business transacted by it.
8. On or before the granting of the Loan hereunder, Shamrock shall
transfer the Notes and all its rights and liabilities under the
Purchase Agreement and the Registration Agreement to the
Borrower.
2. The Bank hereby undertakes to grant the Borrower a loan (herein called
"the Loan") in an amount of US$ 16,250,000 (sixteen million and two
hundred and fifty thousand U.S. Dollars), being 65% of the face value
of the Notes, subject to the terms and conditions of this Agreement.
3. The Loan shall be granted by the Bank to the Borrower in one lump sum
on such date as the Borrower shall notify the Bank by an irrevocable
written notice at least two business days prior to the disbursement
date (the "Disbursement Date"), provided such date is not after
30.9.2000, and provided further that by such date all the conditions
precedent for the drawing of the proceeds of the Loan, as set forth in
clause 5 hereinafter, are complied with.
4. The Loan shall be granted by the Bank to the Borrower by the transfer
of the proceeds thereof to the following account: Bank Hapoalim B.M.
Central Branch, Tel-Aviv, Account # 0000000 in the name of Shamrock
Holdings of California, Inc.
5. The obligation of the Bank to allow the drawdown of the Loan is
conditional upon all of the following:
1. The execution by the Borrower of a Trust Agreement with Israel
Discount Bank Trust Company Ltd. ("the Trust Company") in the
form attached hereto as Exhibit A.
2. The delivery to the Trust Company of the Notes duly endorsed to
the order of the Trust Company.
3. The assignment to the Trust Company of all the rights (subject to
the obligations of the Borrower) under the Purchase Agreement and
the Registration Agreement.
4. The receipt by the Bank of a certified copy of the Board
Resolutions of the General Partner of the Borrower and Shamrock
confirming the entering of the Borrower and Shamrock into this
Agreement and authorizing their representatives therein named to
execute this Agreement and all other documents mentioned in this
Agreement (collectively: the "Documents") including the opening
and operating of accounts with the Bank.
5. The receipt by the Bank of a legal opinion in the form attached
hereto as Exhibit B.
6. The settlement by the Borrower of the payments set out in clause
21(a) which shall be deducted from the Loan.
6.
1. Within five days after disbursement of the Loan, the Borrower
will give the Trust Company a written confirmation of Gilat that
the endorsements of the Notes has been registered in its Notes
registry and that the Trust Company appears therein as owners of
the Notes and that it has received a Notice of Assignment of the
rights under the Purchase Agreement and the Registration
Agreement.
2. Within 14 days of the Disbursement Date, the Borrower shall
deliver to the Bank a confirmation from the appropriate
registrar(s), confirming that the Pledge, as defined hereinbelow,
has been registered with the appropriate registrar office in
accordance the applicable law.
7. The principal of the Loan shall be repaid, unless otherwise provided
in this Agreement, in one lump sum on 30th June 2004.
8. The Loan shall bear interest at the floating rate per annum of
1-1/4% over Libor.
9. For the purposes of clause 7 above:
1. Interest on outstanding balance of the Loan shall be paid every
calendar quarter in arrears as from the drawdown of the proceeds
of the Loan. Such period of a quarter shall be hereinafter
referred to as an "Interest Period", except for the First
Interest Period which will commence on the Disbursment Date and
terminate on the last day of the then current calendar quarter.
2. Libor for each successive Interest Period shall mean the rate of
interest quoted on the Reuters Monitor Screen FRBD page, two
business days before the commencement of each such Interest
Period, for three months United States Dollar Settlements, except
for the First Interest Period in respect of which the rate of the
closest period shall be used.
3. Interest shall be calculated on the basis of a year of 360 days
and the number of days elapsed.
4. Every payment on account of the repayment of principal or payment
of interest which remains unpaid on the due date for payment
shall bear interest as from the 5th day after the due date until
actual payment ("Arrears Period") at a rate of 3% per annum in
excess of the rate which would have been determined pursuant to
sub-clause (b) of this clause.
5. If due on either (i) introduction of or any change in the
interpretation of any law or regulation by any official authority
of the State of Israel or any U.S. governmental authority or (ii)
the compliance by the Bank with any request from the Bank of
Israel or a Federal Reserve Bank, there shall be any increase in
the cost (including reserve requirements) to the Bank of agreeing
to make or making, funding or maintaining the outstanding balance
of the Loan, as from such cost at the date hereof, then the Bank
shall so notify the Borrower of the amount of such increased
costs and the reasons for such increase. Within 30 days of such
notice, the Borrower shall notify the Bank of its intention
either (i) to prepay the Loan at the end of the current Interest
Period, with no premium or other penalty being due, save that
from the date of notice from the Bank until the end of the
Current Interest Period, the rate interest payable on the Loan
shall be increased sufficiently to indemnify the Bank against
such increased costs, or (ii) to maintain the Loan as outstanding
in which case the rate of interest payable on the Loan shall be
increased sufficiently to indemnify the Bank against such
increased costs. The Bank hereby represents that it is not aware
of any such circumstances on the date hereof, which might give
rise to a claim for increased costs hereunder.
10. All payments on account of repayment of the principal of the Loan or
Interest shall be made by the Borrower in full in free transferable US
Dollars without any deduction or withholding on account of any taxes
or imposts of any Government or authority.
In the event that any withholding tax is levied on any amount payable
to the Bank under this Agreement then the amount due shall be
increased to such amount that after such withholding the amount
payable shall be equivalent to the amount due. If such event occurs,
the Borrower shall send the Bank the original receipts issued in the
name of the Bank by the appropriate U.S tax authorities. The Bank
shall endeavor and exercise its best efforts to apply such deduction
or withholding against taxes payable by it to the income tax
authorities of the State of Israel or otherwise receive benefits by
way of any tax credit, tax deduction, tax refund ("Tax Credit"). The
Bank shall hold the amounts of the Tax Credits until such time as the
relevant final tax assessment of the Bank by the Israeli Tax
Authorities is made, and if under such final tax assessment any of the
amounts of the Tax Credit are not cancelled as Tax Credit, the Bank
shall pay such amounts to the Borrower with accrued interest.
For the purposes hereof, a tax assessment shall be deemed final only
upon expiration of the period during which the Commissioner of Income
Tax has the authority to open or review the assessment under the
provisions of Section 147 (a)(1) of the Income Tax Ordinance.
11.
1. If by reason of changes affecting the Euro-Dollar Market, the
Bank is unable, due to circumstances beyond its control, to
refinance itself in respect of the then outstanding balance of
the principal amount of the loan, then the Bank shall promptly
notify the Borrower of this fact.
2. If a notification under sub-clause (a) applies to the Loan before
it has been drawn, than the Loan shall not be drawn. However,
within three (3) Business Days of receipt of the notification,
the Borrower and the Bank shall enter into negotiations for a
period of not more than (10) days with a view to agreeing an
alternative basis for the borrowing of the Loan . Any alternative
basis agreed shall be binding on the parties.
c. If a notification under sub-clause (a) applies to the Loan after
it has been drawn to, then, notwithstanding any other provision
of this Agreement:
A) Within three (3) Business Days of receipt of the
notification, the Borrower and the Bank shall enter in
negotiations for a period of not more than (10) days with a
view to agreeing on an alternative basis for determining the
rate of interest or funding or both applicable to the Loan;
B) Any alternative basis agreed under paragraph I above shall
be binding on the Parties;
C) If no alternative basis is agreed, the Borrower shall prepay
the outstanding principal of the loan and any accrued
interest thereof;
d. The Bank hereby represents that it is not aware of any such
circumstances on the date hereof, which might give rise to a
claim under this clause 11.
12. To secure the due performance of all the obligations of the Borrower
under this Agreement, the Borrower hereby pledges in the First Degree
the Notes and assigns to the Bank by way of charge all its rights
(subject to the obligations) under the Purchase Agreement and the
Registration Agreement (the "Pledge").
Upon full repayment, or partial repayment in accordance with the
provisions of clauses 16 and 17 below, of the Loan, the Bank shall
discharge and release the Pledge and deliver the Notes or any shares
thereof to the Borrower.
13.
1. Shamrock hereby undertakes that on or before the drawing of the
Proceeds of the Loan, it shall endorse and transfer the Title to
the Notes and assign all its rights and obligations under the
Purchase Agreement and the Registration Agreement to the Borrower
and such endorsement, transfer and assignment shall be valid,
unconditional and absolute.
2. Shamrock hereby undertakes that the Borrower shall perform it's
obligations under clause 6 above.
3. Shamrock hereby undertakes that in the event that the Borrower
shall not deliver to the Bank the Notice under clause 3 above
requesting the drawing of the Proceeds of the Loan until
30.9.2000, Shamrock shall pay the Bank forthwith the amount
set-out in clause 21(a) hereinafter.
4. Shamrock hereby guarantees the due and punctual payment of
interest by the Borrower, provided such guarantee shall apply
only to the difference between the interest due under this
Agreement and the interest payable under the Notes, or the whole
interest in the event and to the extent that the Notes (including
the Additional Notes) or any part thereof have been converted to
Shares in accordance with the provisions of this Agreement.
5. Shamrock hereby undertakes that monies due to it from the
Borrower shall be subordinated to monies due from the Borrower to
the Bank, and that without the Bank's prior written consent
(which shall not be unreasonably withheld) the Borrower shall not
make any payment to Shamrock as repayment of principal, payment
of interest or otherwise, unless such amounts were contributed to
the Borrower by Shamrock or received by; the Borrower in
accordance with provisions of the Loan Agreement, including
without limitation, the proceeds of the Loan hereunder and
proceeds of sale in accordance with Section 16 of this Loan
Agreement.
14. In the event that Gilat will exercise its option under section 1 (b)
of the Notes to issue Additional Notes (as such term is defined in the
Notes) instead of payment of the interest due in cash, the Borrower
shall have the option either to pay to the Bank the interest due in
cash or to settle the amount of interest due by obtaining from the
Bank an additional Loan in the required amount and the provisions of
this Agreement including clause 5 to 12 shall apply to such additional
Loan with such changes as the case may require.
In order to avoid any doubt it is hereby agreed that only in case the
Borrower elects not to pay the interest due in cash and the Bank
grants the additional loan, shall the Additional Notes be held by the
Trust Company and be subject to the first degree pledge to the Bank.
15. The Borrower undertakes that as long as any monies are due from the
Borrower to the Bank:
1. Shamrock shall hold at least a majority of the equity interest in
the Borrower and Trefoil Gilat, Inc., an entity controlled by
Shamrock's executive officers, will continue to be the General
Partner of the Borrower throughout the term of this Agreement.
2. The Borrower shall provide the Bank within 60 days of the end of
its financial year with its financial statements on a stand-alone
basis certified by an officer of the Borrower.
3. The Borrower shall forthwith deliver to the Bank a copy of any
financial statements received by it from Gilat, or any knowledge
or notice received by it under or in respect of the Notes, the
Purchase Agreement or the Registration Agreement of any material
adverse effect regarding Gilat.
4. Shall forthwith inform the Bank of an Event of Default as such
term is defined in the Notes.
5. The Borrower shall not engage in any other business except the
holding of the Notes.
16.
1. Notwithstanding clause 12 of this Agreement the Borrower shall be
entitled from time to time to sell any of the Notes or the shares
of Gilat received as a result of conversion, provided, however,
that the amount received from the selling of the Notes will not
be less than the amount paid by the Borrower and/or Shamrock in
purchasing those Notes and/or that the selling price per share
for each of the shares sold shall not be less than $US 23
(adjusted as a result of the Anti-Dillution clauses in the
Notes).
The amount received from the sale of Notes and/or shares will be
used for the prepayment of the Loan up to an amount which
reflects the ratio between the Notes and/or shares sold to the
total number of Notes and/or shares pledged to secure the
repayment of the Loan, i.e. if 20% of the amount of the Notes
and/or the number of shares pledged are sold, then 20% of the
outstanding amount of the Loan shall be repaid (the "Repaid
Amount"). Any amount received from the sale of such Notes and/or
shares in excess of the Repaid Amount shall be used by the
Borrower at its discretion. The provisions of this clause 16(a)
shall apply, mutatis mutandis, to the Optional Redemption or
Mandatory Redemption event (as such terms are defined under the
Notes).
2. The Borrower shall be entitled, by a notice to the Bank and the
Trust Company, to convert any or all of the Notes to shares
pursuant to the terms and conditions of the Notes. Upon such
notice the Bank shall surrender the Notes to Gilat in return for
the shares. Should the Notes be converted to shares, by the
Borrower, such shares shall be registered in the name of the
Trust Company and be included in the first degree pledge in favor
of the Bank.
3. In the event that the Borrower converts the Notes, in whole or in
part, into shares the following provisions shall apply:
A) If the average market price of such shares during three
consecutive trading days falls below 100% but equal to or
above 90% of the face value of the Notes which have been
converted to the said shares; or
B) If the market price of the shares during any one trading day
falls below 90% of the face value of the Notes which have
been converted to the said shares,
The Bank shall be entitled to sell the shares, provided however
that if the market value of the said shares is not less than 75%
of the face value of the Notes which have been converted to said
shares, the Bank, before taking steps to sell the shares, shall
inform Shamrock of its intention, and
then if Shamrock delivers to the Bank forthwith an undertaking to
provide the Bank with sufficient additional collateral
satisfactory to the Bank, and in fact provide such collateral
within 24 hours, or longer period as the Bank may agree, the Bank
shall abstain from selling any of the shares.
The proceeds of the sale of the shares under this sub-clause
shall be utilized to effect prepayment on account of the
principal of the Loan.
4. The amounts accumulated with the Bank and/or the Trust Company
out of the receipt of interest on the Notes (over and above the
interest due under this Agreement), dividends on converted
shares, the sale of Notes or shares or any interest thereof,
shall be held by the Bank as an additional security, and the
Borrower may utilize such monies in whole or in part to effect
prepayment of the principal of the Loan in accordance with clause
17.
17. The Borrower shall be entitled on any interest Payment Date,
without premium or penalty, to prepay the Loan in whole or part
(and if in part, in an amount not less than USDollars 250,000),
together with interest on the amount prepaid to the date of
prepayment, provided the Borrower has given the Bank not less
than two business days prior written notice, which shall be
irrevocable and effective only upon receipt. No amount prepaid
may be redrawn. The Bank shall instruct the Trust Company to
release the Pledge or any part thereof, pro-rata to the amount
prepaid by the Borrower.
18. If any of the following events ("Events of Default") occurs and
shall not have been remedied, the Bank may by a written notice to
the Borrower declare the principal of the Loan then outstanding
with accrued interest to be forthwith due and payable, whereupon
same shall become forthwith due and payable:
1. Default in the due and punctual payment of any amount due to
the Bank under this Agreement whether on account of
principal, interest or otherwise, for a period of more than
5 days after service of notice upon the Borrower.
2. There is a material default by the Borrower in the due and
punctual performance and or observation of any material
provision of this Agreement or any warranty on the part of
the Borrower hereunder is incorrect in any manner affecting
the ability of the Borrower to repay the Loan, or the
validity or efficacy of the Pledge and/or assignment in any
material respect, provided that such default or breach of
warranty, if it is capable of being remedied, is not
remedied within 30 days of service of notice upon the
Borrower.
3. If the Borrower is unable or ceases to pay its debts in the
ordinary course of business, a receiver is appointed over
the assets of the Borrower or a material part thereof and
such appointment is not cancelled within 60 days, or the
Borrower passes a resolution for winding up (other than
within the context of a corporate reorganization).
4. An application is made for the liquidation of the Borrower
or an attachment is levied on all the assets of the Borrower
or a material part thereof and such application or
attachment is not cancelled within -60 days.
5. A material breach or material non performance of any
material obligation or material undertaking by Gilat under
the Notes, the Purchase Agreement or the Registration
Agreement (provided however any deviation from financial
covenants or payment provisions shall always be considered
material).
6. Any of the events mentioned in sub-clauses (c) and (d) shall
apply to Gilat, with such changes as the case may requires,
that is the reference when required, shall be to the Notes
purchase Agreement and the Registration Agreement.
Notwithstanding the aforesaid:
A) The Bank shall not exercise its rights under this
clause in respect of any of the events set out in
sub-clause (e) unless the Bank is of the opinion that
the occurrence of such event may jeopardize the due and
punctual repayment of the Loan.
B) The Bank shall not exercise its rights under this
clause if the Borrower shall provide the Bank with
sufficient additional collateral to the satisfaction of
the Bank in its absolute discretion.
C) The Bank shall not be obliged to defer taking steps
under this clause if the delay may cause the Bank
substantial irreparable damage.
D) Notwithstanding Section 6 of the Companies Law
5759-1999, the Bank hereby agrees that in any Event of
Default it shall have no claim, demand or any recourse
to the assets and rights of any of the shareholders,
partners, equity holders or beneficial holders of the
Borrower; unless otherwise expressly provided in this
Agreement.
19. This Agreement and transactions and the documents provided for herein
shall be governed by and construed in accordance with the Laws of the
State of Israel. Any legal action or proceedings against the Borrower
or Shamrock with respect to this Agreement or any instrument provided
for herein may be brought in the courts of Tel-Aviv, Israel or in the
courts of any other appropriate jurisdiction, as the Bank may elect,
and the Borrower and Shamrock hereby irrevocably accepts the
jurisdiction of such courts for the purpose of any action or
proceeding.
20. The Borrower and Shamrock hereby agree that service of process in any
such action or proceedings brought in Israel may be made upon them by
service upon Zellermayer, Pelossof, Adv., and the Borrower and
Shamrock hereby irrevocably appoint Zellermayer, Pelossof, Adv. as
their authorized agent to accept such service of process in Tel-Aviv
and agree that failure of such Agent to give any notice of any such
service to the Borrower or Shamrock shall not impair or affect the
validity of such service or of any judgment rendered in any action or
proceeding based thereon. The Borrower undertakes to deliver to the
Bank before the proceeds of the Loan is drawn the written irrevocable
acceptance of the above appointment by Zellermayer, Pelossof, Adv.
21.
1. The Borrower undertakes to pay the Bank the amount of US$ 35,000
to cover the Bank's costs and expenses in connection with the
preparation of the Loan documents, such payment to be effected
upon disbursement of the Loan.
2. The Borrower shall bear and pay all stamp duties (including
penalties for late payment) and registration fees, if any,
payable in respect of this Agreement and documents provided for
herein.
22. Business day for the purposes of this Agreement is a day in which
Banks in New York and London are open for business and the Bank of
Israel conducts business in a non-Israeli currency. In the event that
any payment is due on a date which is not a business day such payment
shall be postponed to the next business day, unless such day falls in
the next calendar month in which case the payment shall be effected in
the previous business day.
23. All notices, requests and demands shall be given or made upon the
respective parties hereto as follows:
To the Bank: 00/00 Xxxxxx Xxxxxx Xxxxxx, Xxx-Xxxx
Tel. 000-0-0000000
Fax: 000-0-0000000
Attention: Corporate Division
To the Borrower and/or Shamrock:
0000 Xxxxxxxx Xxxxx, Xxxxxxx
Xxxxxxxxxx, XXX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxxxxxx
Until one of the parties shall inform the others of a different
address.
As a matter of courtesy, the Bank may send copies of notices, requests
and demands sent to the Borrower and/or Shamrock to:
Zellermayer, Pelossof, Advocates
Xxxxxx Xxxxx
00 Xxxxx Xxxxxxxx Xxxx.
Xxx Xxxx 00000
Tel: 00-0000000
Fax: 00-0000000
Attention: Xxxxxxx Xxxxxxxxxxx, Adv.
IN WITNESS THEREOF THE PARTIES HAVE SET THEIR HANDS AT TEL-AVIV ON THE DATE
HEREIN BEFORE MENTIONED.
/s/ M. Belisha /s/ Xxxxxx X. Xxxxxxxxx
------------------ -------------------------------
/s/ H. Xxxxx Shamrock Holding of
------------------ California Inc.
Israel Discount Bank Ltd Name: Xxxxxx X. Xxxxxxxxx
--------------------------
Name: M. Belisha Title: Executive Vice President
----------- -------------------------
Title: General Manager's Assistant
----------------------------
Name: H. Xxxxx
---------
Title: Corporate Banking Officer
--------------------------
/s/ Xxxxxx X. Xxxxxxxxx
---------------------------
Trefoil Gilat Investors L.P.
By its General Partner: Trefoil Gilat Inc.
Name: Xxxxxx X. Xxxxxxxxx
----------------------
Title: Vice President
---------------------
