EXHIBIT 14
ADDENDUM TO LOAN AGREEMENT
This Addendum to the Loan Agreement (the "Addendum") is made and
entered into on December 31, 2001 among Israel Bank Discount Ltd. (the
"Bank"), Trefoil Gilat Investors, L.P. (the "Borrower") and Shamrock
Holdings of California, Inc. ("Shamrock");
WHEREAS, under a Loan Agreement dated as of August 24, 2000 among the
Bank, the Borrower and Shamrock (the "Loan Agreement") the Bank disbursed
to the Borrower the principal amount of US$16,250,000 in order to finance
the purchase of the Notes as defined under the Loan Agreement;
WHEREAS, on October 11, 2001 the Borrower executed (with the consent
of the Bank) together with other creditors of Gilat, Gilat and the
controlling shareholders of Gilat a Reorganization Plan of Gilat's debts to
its significant creditors (the "Reorganization Plan");
WHEREAS, under the Reorganization Plan the Borrower shall, at the
Closing Date (as such term is defined under the Reorganization Plan), (i)
shall be repaid on account of the Notes the sum of US$500,000 (value date
as of June 30, 2001) (the "Initial Payment"), and (ii) convert the
remaining Notes into shares of Gilat in accordance with the terms thereto
(the "Gilat Shares");
WHEREAS, immediately following the Closing Date and prior to the
transfer of the Initial Payment by the Borrower to the Bank as prepayment
on account of the Loan and accrued interest thereon, the outstanding
balance of the Loan and accrued interest thereon shall be US$17,823,446
(value as of December 24, 2001);
WHEREAS, the Borrower shall pledge on the Closing Date in the first
degree pledge the Gilat Shares in favor of the Bank and shall cause the
Gilat Shares to be registered in the name of the Trust Company, all in
accordance with Clause 16(b) of the Loan Agreement in order to secure the
outstanding balance of the Loan and accrued interest thereon; and
WHEREAS, subject to the approval of the Reorganization Plan by the Tel
Aviv District Court in accordance with Section 350 of the Companies Law,
1999, the receipt of the Initial Payment by the Bank, the registration of
the Gilat Shares in the name of the Trust Company and the registration of a
pledge in the first degree over the Gilat Shares by the Borrower in favor
of the Bank, the parties wish to add or amend, as provided in this
Addendum, the Loan Agreement.
NOW THEREFORE, the parties hereby agree as follows:
1. Capitalized terms not otherwise defined herein shall have the same
meaning as ascribed to them under the Loan Agreement.
2. On the Closing Date, the Borrower undertakes to (i) transfer the
Initial Payment to the Bank for the prepayment of the Loan and accrued
interest thereon in accordance with the amended Clause 17 of the Loan
Agreement (as amended under Clause 9 herein), and (ii) execute a
pledge in the first degree over the Gilat Shares, substantially in the
form attached hereto as EXHIBIT A; provided, that the Trust Company
has executed to the Borrower a proxy with respect to such pledged
Gilat Shares, substantially in the form attached hereto as EXHIBIT B,
and the Bank undertakes to (i) execute a notice to the Registrar of
Pledges, substantially in the form attached hereto as EXHIBIT C,
terminating the Bank's pledge over the Notes.
3. Clause 7 of the Loan Agreement is hereby replaced with the following:
"The principal of the Loan and the accrued interest thereon shall be
repaid, unless otherwise provided in this Agreement, in one lump sum
on December 31, 2006 (the "Maturity Date)."
4. Clause 9(a) of the Loan Agreement is hereby replaced with the
following:
"Interest on outstanding balance of the Loan shall be accrued (but not
payable) every calendar quarter 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
shall commence on the Disbursement Date and terminate on the last day
of the then current calendar quarter."
5. Clause 12 of the Loan Agreement is hereby replaced with the following:
"To secure the due performance of all the obligations of the Borrower
under this Agreement, the Borrower hereby pledges the shares of Gilat
resulting from the conversion of the Notes (the "Gilat Shares") in a
first degree pledge and assigns to the Bank by way of charge all its
rights (subject to the obligations) under the Purchase Agreement, the
Registration Agreement and the Reorganization Plan (the "Pledge").
6. Clause 13(d) of the Loan Agreement is hereby deleted and replaced by
Clause 13(e), which shall become Clause 13(d), and the following
Sub-Clauses are hereby added to Clause 13 of the Loan Agreement:
"e. The Borrower undertakes that any distributions of dividends to
the Borrower with respect to the Gilat Shares shall be used to
prepay the Loan and accrued interest thereon in accordance with
the amended Clause 17 of the Agreement.
f. The Borrower hereby assigns to the Bank any rights and claims it
may have in connection with the Notes not being subordinated to
Gilat's debt to the First International Bank of Israel Ltd., Bank
Hapoalim B.M. or Bank Leumi Le'Israel B.M. (the "Rights and
Claims"). Accordingly, the Bank and/or any person or corporation
acting on behalf of the Bank and the Bank's attorneys (the
"Attorneys") shall be entitled to pursue, demand or use any means
available under the law in order to realize the Rights and
Claims, without any further authority being required from the
Borrower, and the Borrower undertakes to employ its best efforts
to assist the Attorneys. The Borrower shall submit a law suit to
enforce such Right and Claims for the benefit of the Bank in any
court of law should the Bank or the Attorneys shall decide it is
necessary (according to their sole discretion); provided,
however, that the Borrower shall be represented by the Attorneys
representing the Bank; and further provided, that the Bank shall
pay the costs and expenses incurred in connection with such
submission immediately when such expenses are incurred and that
the Bank shall undertake in writing to indemnify the Borrower
with respect to any such costs and expense as a result of such
submission."
g. The Borrower undertakes to exercise reasonable efforts to prepay
the Loan and accrued interest thereon prior to the Maturity Date,
provided, however, that the Borrower, its general partner and/or
Shamrock shall not have any obligation to transfer any additional
funds to the Bank in order to generate the money necessary to
prepay the Loan and accrued interest thereon.
h. The Borrower undertakes that upon the full repayment of the Loan
and any accrued interest thereon in accordance with the
provisions of this Agreement and following the discharge and
release of the Pledge and delivery of the remaining Gilat Shares
to the Borrower (the "Remaining Gilat Shares"), the Borrower
shall pay to the Bank a commission in the amount of 30% (thirty
percent) of the "Net Profit" (the "Commitment Amount"). For the
purposes hereof "Net Profit" shall mean proceeds received by the
Borrower from any bona fide third party in an arm's length
transaction as consideration for the sale of the Remaining Gilat
Shares or any part thereof (whether through the NASDAQ trading
systems or not) and dividends received as holder of the Remaining
Gilat Shares (the "Sale"), minus (i) the sum of US$8,750,000
(Eight Million, Seven Hundred and Fifty Thousand United States
Dollars); (ii) all gross-up of withholding taxes, if any; and
(iii) any and all fees and expenses paid or incurred by the
Borrower or by Shamrock for the benefit of the Borrower,
including fees and expenses paid to officers of the Borrower, if
so paid in connection with the Loan, the Sale and the
transactions contented hereby, minus any Management Fees or
directors fees the Borrower or Shamrock received from Gilat;
provided, however, that the accumulative amount of all of the
fees and expenses of any kind under this Sub-Clause (iii) shall
not exceed the lower of (x) US$20,000 per annum or (y) an
aggregate amount of US$100,000.
The Borrower undertakes to provide the Bank with all relevant
information regarding the consideration received under any Sale
and any out of pocket recorded fees and expenses incurred in
connection therewith.
Shamrock hereby guarantees the due and punctual payment of the
Commitment Amount by the Borrower when such Commitment Amount is
due and not paid by the Borrower.
The Borrower undertakes to sell the Remaining Gilat Shares
pursuant to a written request of the Bank made not earlier than
one year after the repayment of the Loan and any accrued interest
thereon; provided, however, that the Net Profit pursuant to such
sale shall be positive; and further provided, that the Borrower
shall have the right in its sole discretion instead of the
execution of such request to pay the Bank the Commitment Amount,
if any, as if the sale pursuant to such request was made on the
average market price three trading days immediately prior to such
written request of the Bank and the Bank's rights under this
Agreement with respect to the Gilat Shares deemed sold shall
terminate.
Without derogating any of the Bank's rights in the previous
paragraph, it is understood and agreed that the parties' intent
is to sell the Remaining Gilat Shares and the Borrower undertakes
to employ its best efforts to accomplish such intention subject
to market conditions and to the benefit of the parties to this
Agreement."
(i) Up to the Maturity Date, the Borrower undertakes to employ its
reasonable efforts to elect the majority of the board of
directors of Gilat.
7. Clause 15(f) is hereby added to Clause 15 of the Loan Agreement:
"(f) Borrower hereby undertakes to provide the Bank with any of the
information and documents provided by Gilat to it as a
shareholder and to employ its reasonable efforts to cause Gilat
to provide the Bank with any of the information and documents
provided to the other parties to the Reorganization Plan under
Section 6 of the financial covenants agreement attached hereto as
EXHIBIT D (the "Covenants Agreement").
8. Clause 16(a) of the Loan Agreement is hereby replaced with the
following:
"a. Notwithstanding clause 12 of this Agreement, the Bank shall be
entitled from time to time to sell any of the Gilat Shares even
though an Event of Default has not occurred; provided, however,
that such sale shall be in accordance with the restrictions
and/or provisions of any applicable law, rules, regulations, and
requirements of all foreign, national, departmental and municipal
governments including rules and regulations of any applicable
stock exchange.
The Borrower undertakes to give to the Trust Company any
instructions necessary under the Trust Agreement in order to
execute the sale of the Gilat Shares under this Sub-Clause 16(a)
and to employ its best efforts to facilitate such sale, including
the registration of the Gilat Shares on the NASDAQ pursuant to
Section 16.6 of the Reorganization Plan or otherwise; subject to
any applicable law and market conditions.
The net amount received from the sale of the shares by the Bank
(after taxes and expenses) will be applied to the prepayment of
the Loan and the pro-rate portion of accrued interest thereon;
provided, however, that in the event that the amount actually
received as consideration for the sale of such shares is lower
than an amount which reflects a percentage of the outstanding
Loan and the interest accrued thereon which corresponds to the
ratio between the total number of the Gilat Shares sold to the
total number of the Gilat Shares pledged to secure the repayment
of the Loan (the "Pro-Rata Amount") (i.e., if 20% of the number
of the Gilat Shares pledged are sold, then 20% of the outstanding
amount of the Loan and the accrued interest thereon is the
Pro-Rata Amount), than, the prepaid amount of the Loan and the
interest accrued thereon shall be deemed to be the Pro-Rata
Amount and the amount of the Loan and any accrued interest
thereon shall be reduced accordingly. For the avoidance of any
doubt, in the event of any sale of the Gilat Shares by the Bank
pursuant to an Event of Default, the calculation of the Pro-Rata
Amount shall not be applied and the proceeds from the sale of the
Gilat Shares shall be applied to the repayment of the Loan in
accordance with the amended Clause 17 of this Agreement."
9. Clause 16(c) of the Loan Agreement is hereby replaced with the
following:
"c. Notwithstanding Clause 13(d) of the amended Agreement, in the
event Gilat shall pay the Borrower, Shamrock or any of their
affiliates or officeholders, management fees or any other amount
for any purpose, including in consideration for services granted
to Gilat (collectively, the "Management Fees"), the Borrower
shall use 75% of the Management Fees to prepay the Loan and
accrued interest thereon in accordance with the amended Clause 17
of this Agreement and shall be entitled use at its discretion the
remaining Management Fees."
10. Clause 17 of the Loan Agreement is hereby replaced with the following:
"The Borrower shall be entitled at any time, without premium or
penalty, to prepay the Loan in whole or in part, together with
the interest accrued thereon on the amount prepaid; provided,
however, that the Borrower has given the Bank not less than two
(2) business days prior written notice, which shall be
irrevocable and effective only upon receipt. Without derogating
any of the Bank's rights under Clauses 13(h) and subject to
Clause 16(a) of this Agreement, any prepayment (whether by the
Borrower or pursuant to the sale of the Gilat Shares or any part
thereof) shall firstly be applied against any interest accrued on
the Loan and secondly against the Loan. No amount prepaid may be
redrawn."
11. Clauses 18(e) and 18(f) of the Loan Agreement are hereby replaced with
the following:
"e. Any breach of the financial covenants that Gilat shall make under
Clause 5(a), (b) and (c) of the Covenants Agreement; provided,
however, that any such material breach under this Clause 18(e)
has occurred after 18 months have elapsed as of the Closing Date.
f. Any declaration of an event of default or an acceleration of
Gilat's debts by any of the other parties to the Reorganization
Plan.
g. Any of the events mentioned in sub-clauses (c) and (d) shall
apply to Gilat."
12. Any provision in any Loan Agreement or the Documents not amended
herein shall continue in force, as applicable. For avoidance of any
doubt, the Documents shall continue to be in effect, unless amended
herein, and shall apply with respect to the Gilat Shares mutatis
mutandis.
* * *
IN WITNESS WHEREOF, the parties have caused this Addendum to the Loan
Agreement to be duly executed and delivered as of the date first date
written above.
Israel Discount Bank Ltd.
By: /s/ Xxxx Xxxxxx
----------------------
Name: Xxxx Xxxxxx
Title:
By: /s/ Xxxxxxxx Xxxxx
----------------------
Name: Xxxxxxxx Xxxxx
Title:
Shamrock Holdings of California, Inc.
By: /s/ Xxxxxx X. Xxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxx
Title: Executive Vice President and Secretary
Trefoil Gilat Investors, L.P.
By: Trefoil Gilat, Inc.
its General Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
