EXHIBIT 10.2
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CONSENT AND SIXTH AMENDMENT TO LOAN AGREEMENT
SIXITH AMENDMENT (this "Amendment") entered into as of July 26, 2005
between MEDIS TECHNOLOGIES LTD., a Delaware corporation (the "Borrower") and
BANK OF AMERICA, N.A. (successor by merger to FLEET NATIONAL BANK) (the "Bank").
WHEREAS, the Borrower and the Bank are parties to a Loan Agreement
dated as of December 29, 2000, as amended by a First Amendment to Loan Agreement
dated as of October 24, 2002, a Second Amendment to Loan Agreement dated as of
February 20, 2003, a Third Amendment to Loan Agreement dated as of September 30,
2003, a Fourth Amendment to Loan Agreement dated as of October 18, 2004 and a
Fifth Amendment to Loan Agreement dated as of May 5, 2005 (the "Agreement"; all
capitalized terms used herein, unless otherwise defined herein, have the same
meanings provided therefor in the Agreement, as amended hereby);
WHEREAS, the Borrower has informed the Bank that it plans to issue in
one or more private offerings up to $49 million of a new class of securities,
namely, 6% senior convertible notes due 2010, that will be convertible into
common stock of the Borrower (the "Convertible Notes") pursuant to a certain
Indenture dated as of July 26, 2005 between the Borrower and Wachovia Bank,
National Association, as trustee (the "Indenture") (said transactions
hereinafter referred to individually as a "Note Offering" and collectively as
the "Note Offerings");
WHEREAS, the Borrower has requested that the Bank consent to the Note
Offerings and amend the Agreement to make relevant changes in order to permit
the Note Offerings to take place, and the Bank is agreeable to providing such
consent and amendment, subject to the terms hereof;
NOW, THEREFORE, for valuable and legally sufficient consideration, the
receipt of which is hereby acknowledged by the parties, the parties hereto
hereby agree as follows:
ARTICLE 1. CONSENT TO NOTE OFFERINGS.
1.1 Subject to all of the terms and conditions of this Amendment, the
Bank hereby consents to the Note Offerings and waives any Default or Event of
Default under any Loan Document that may exist or may arise as a result thereof.
Without limiting the effect of the foregoing, the Agreement and each of the
other Loan Documents is hereby deemed amended to the extent necessary to permit
the consummation of the Note Offerings.
ARTICLE 2. CONDITIONS OF CONSENT.
2.1 This Amendment, including the consent and waiver set forth in
Section 1.1 hereof, shall be subject to the satisfaction of each of the
following terms and conditions and shall not be effective unless and until each
of the following terms and conditions shall have been fulfilled to the
satisfaction of the Bank:
(a) The Note Offerings shall have been or shall be consummated
on or before September 15, 2005 substantially in accordance with the
description appearing in the recitals set forth above, and promptly
following the execution of the Indenture, the Borrower shall have
delivered to the Bank a final execution copy thereof and the principal
closing documents delivered in connection with the first Note Offering,
and shall have promptly delivered to the Bank the principal closing
documents delivered in connection with each subsequent Note Offering;
(b) That such consent and waiver is strictly limited to the
terms of the Note Offerings as described in this Amendment and in any
other writing delivered by Borrower to the Bank pursuant hereto;
(c) That this Amendment between the Borrower and the Bank
shall have been executed and delivered and be fully effective;
(d) All fees and expenses of the Bank, including the
reasonable fees and expenses of counsel to the Bank, incurred in
connection with this Amendment, shall have been paid in full;
(e) All representations, warranties and acknowledgements
contained in this Amendment below shall be true and correct;
(f) That, consistent with Section 5.6 of the Agreement, as
amended hereby, the Borrower shall have commenced necessary
arrangements to invest substantially all of the unused net proceeds of
the Note Offerings with or through the Bank or one or more of its
Affiliates; and
(g) That such consent and waiver is strictly limited to the
terms as set forth herein.
ARTICLE 3. AMENDMENTS TO THE AGREEMENT.
3.1 The following new definition is hereby inserted into Section 1.1 of
the Agreement in the appropriate alphabetical order:
"Note Offerings" shall mean one or more private offerings of up to $49
million of a new class of securities, namely, 6% senior convertible
notes due 2010, that will be convertible into common stock of the
Borrower (the "Convertible Notes") pursuant to a certain Indenture
dated as of July 26, 2005 between the Borrower and Wachovia Bank,
National Association, as trustee (the "Indenture").
3.2 The following definitions found in Section 1.1 of the Agreement are
hereby amended in their entirety to read as follows:
"Cash Collateral Effective Date" shall mean the first Business Day
after the consummation of the first Subsequent Offering to occur after
the date of this Agreement that the Bank obtains a first priority
perfected Lien on Cash Collateral in an amount not less than 100% of
the then aggregate principal balance of all outstanding Loans.
"Subsequent Offering" shall mean each and every public or private sale
of debt or Capital Stock of the Borrower occurring after the date of
this Agreement, including without limitation the Note Offerings.
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3.3 Section 2.12 of the Agreement is hereby amended in its entirety to
read as follows:
SECTION 2.12 USE OF PROCEEDS
The proceeds of Loans hereunder shall be used to bridge the
Borrower's working capital needs until it consummates any Subsequent
Offering and it is expressly acknowledged and agreed by the Borrower
that proceeds of each Subsequent Offering shall be utilized as Cash
Collateral in the manner provided in this Agreement if there are any
Loans then outstanding. Furthermore, it is expressly agreed that the
Loans shall be utilized for the Borrower's working capital purposes in
an manner consistent with Borrower's working capital needs in its most
recent fiscal year; PROVIDED, THAT, in no event shall any Loans be used
to fund construction of any of the Borrower's (or its Affiliate's)
manufacturing plants or to pay fees to any Person in connection with
any Subsequent Offering.
3.4 Section 5.6 of the Agreement is hereby amended in its entirety to
read as follows:
SECTION 5.6. MAINTAIN OPERATING ACCOUNTS; INVESTMENT OF SUBSEQUENT
OFFERING PROCEEDS
Maintain all of its primary operating and investment accounts
with the Bank and invest with or through the Bank or one or more of its
Affiliates substantially all of the unused net proceeds of each
Subsequent Offering.
3.5 Section 5.9(a) of the Agreement is hereby amended by inserting the
word "first" immediately prior to the words "Subsequent Offering".
3.6 Section 7.1 of the Agreement is hereby amended by deleting clause
(v) at the end thereof and substituting the following replacement clause (v):
and (v) the Note Offerings (and any Subsequent Offering that was
consummated prior to the Note Offerings that constitutes Indebtedness
for borrowed money, if any).
3.7 Section 7.6 of the Agreement is hereby amended in its entirety to
read as follows:
SECTION 7.6. DIVIDENDS
Declare or pay any dividends on its Capital Stock (other than
dividends payable solely in shares of its own common stock), or
purchase, redeem, retire or otherwise acquire any of its Capital Stock
at any time outstanding, except (i) any Subsidiary wholly owned by the
Borrower may declare and pay dividends to the Borrower, and (ii) the
Borrower may exercise its option to redeem, repurchase or convert the
Convertible Notes solely to the extent permitted under the terms of the
Indenture in connection with the Note Offerings.
3.8 Section 7.9 of the Agreement is hereby amended in its entirety to
read as follows:
SECTION 7.9. AMENDMENT OF INDENTURE
Without the prior written consent of the Bank, enter into any
amendment of Article XI of the Indenture or otherwise permit the
amendment or waiver of any subordination provision running to the favor
of senior creditors in any document delivered in connection with the
Note Offerings in a manner which is adverse to the Bank or such other
senior creditors.
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ARTICLE 4. ACKNOWLEDGMENTS AND CONFIRMATIONS
4.1 The Agreement and all other Loan Documents shall each be deemed
amended hereby to the extent necessary, if any, to give effect to the provisions
of this Amendment.
4.2 All Collateral is and shall continue to be collateral security for
the Obligations, as amended hereby. Without limiting the generality of the
foregoing, the Borrower hereby absolutely and unconditionally confirms that the
Agreement (as amended hereby), the Note (as amended and restated pursuant
hereto), and all other Loan Documents (to the extent amended hereby), to which
it is a party, and any other documents delivered by it in connection therewith,
continue in full force and effect, are ratified and confirmed in all respects
and are and shall continue to be fully effective.
4.3 Whenever the Agreement is referred to in the Agreement or in any of
the other Loan Documents or other documents delivered in connection therewith,
it shall be deemed to mean the Agreement as amended by this Amendment.
4.4 All Obligations under the Loan Documents are and shall continue to
constitute Secured Indebtedness and Designated Secured Indebtedness for purposes
of (and as such terms are defined in) the Indenture.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants to the Bank that:
5.1 The Borrower has the power to execute, deliver and perform this
Amendment and has taken all necessary action, corporate or otherwise, to
authorize the execution, delivery and performance thereof. No consent or
approval of any Person, no waiver of any Lien or right of distraint or other
similar right and no consent, license, approval, authorization or declaration of
any governmental authority, bureau or agency, or any other third party, is or
will be required in connection with the execution, delivery or performance by
the Borrower of this Amendment.
5.2 The execution and delivery by the Borrower of this Amendment, and
the performance by it hereof and of the Loan Documents as amended hereby, will
not violate any provision of law and will not conflict with or result in a
breach of any order, writ, injunction, ordinance, resolution, decree, or other
similar document or instrument of any court or governmental authority, bureau or
agency, domestic or foreign, or the organizational documents of the Borrower, or
create (with or without the giving of notice or lapse of time, or both) a
default under or breach of any agreement, bond, note or indenture to which the
Borrower is a party.
5.3 This Amendment has been duly executed and delivered by the
Borrower, and constitutes its valid and legally binding obligation, enforceable
in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, of other similar
laws, now or hereafter in effect, relating to or affecting the enforcement of
creditor's rights generally.
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5.4 The representations and warranties of the Borrower set forth in the
Agreement, as amended hereby, the other Loan Documents and/in the documents
executed pursuant thereto or in connection therewith, are true as of the date
hereof, with the same effect as though made on the date hereof, except (i) to
the extent necessarily rendered inaccurate by the passage of time and (ii) with
respect to the representation and warranties concerning Subsidiaries set forth
in Section 3.2, as they may relate to New Devices Engineering A.K.O. Ltd., a 75%
owned indirect subsidiary of the Borrower, of which the Company makes no
representations.
5.5 After giving effect to this Amendment, no Default or Event of
Default exists.
5.6 The Borrower's assets exceed its own (i.e. unconsolidated)
liabilities, and the Borrower is solvent. After giving effect to this Amendment,
the Borrower will be able to pay its debts as they mature, will own property
with fair saleable value greater than the amount required to pay its debts and
will have capital sufficient to carry on its business as then constituted.
5.7 Upon the effectiveness of this Amendment, the Borrower remains
liable to the Bank with respect to all Obligations, without offset, defense or
counterclaim (any such offset, defense or counterclaim as may exist being hereby
irrevocably waived by the Borrower). As of the date hereof, there are no Loans
outstanding.
5.8 As of the date hereof, the Borrower has not been required to
deliver to the Bank any Pledge Agreement in connection with the Loan Agreement.
ARTICLE 6. EFFECTIVENESS CONDITIONS.
This Amendment shall be effective upon completion of the following
conditions precedent (all documents to be in form and substance satisfactory to
the Bank and the Bank's counsel):
6.1 Receipt by the Bank of executed counterparts of this Amendment duly
signed by the Borrower and the Bank, and joined in by the Guarantors.
6.2 Receipt by the Bank's counsel of all fees and expenses in
connection with the preparation, execution and delivery, administration,
interpretation and enforcement hereof and all other documents contemplated
hereby.
6.3 Delivery of such other documents, instruments and agreements as the
Bank or its counsel shall reasonably request.
ARTICLE 7. MISCELLANEOUS.
7.1 As specifically amended herein, the Agreement and the other Loan
Documents, shall remain in full force and effect in accordance with their
respective terms. This Amendment is limited as written and shall not be deemed
(a) to be an amendment of or a consent under or waiver of any other term or
condition of the Agreement or any other Loan Document, or (b) to prejudice any
right which the Bank now has or may have in the future under or in connection
with the Agreement or the other Loan Documents, as new or hereafter amended.
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7.2 This Amendment shall be governed and construed in accordance with
the laws of the State of New York.
7.3 This Amendment may be signed in any number of counterparts with the
same effect as if the signature thereto and hereto were upon the same
instrument.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE.]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective duly authorized officers as of
the date first above written.
MEDIS TECHNOLOGIES LTD.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
BANK OF AMERICA, N.A. (successor by
merger to FLEET NATIONAL BANK)
By: /s/ Tanitha Boonyam
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Name: Tanitha Boonyam
Title: Vice President
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JOINDER BY GUARANTORS
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Each of the Guarantors indicated below hereby consents to this Consent
and Sixth Amendment and reaffirms its continuing liability under its respective
Guarantee in respect of the Agreement, as amended hereby, and all the documents,
instruments and agreements executed pursuant thereto or in connection therewith,
without offset, defense or counterclaim (any such offset, defense or
counterclaim as may exist being hereby irrevocably waived by such Guarantors).
PLAZA HOTEL MANAGEMENT COMPANY
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Partner
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Individually
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇, Individually