Loan Agreement Dated as of October ___, 2009
Execution
Copy
Dated
as of October ___, 2009
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By
and between:
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HOMI
Industries Ltd, an Israeli company, #512805193, whose address for
the purposes of this Agreement shall be Gav-Yam Centre, Building
#3, 3rd Floor, 9 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇; Fax: ▇▇▇▇-▇-▇▇▇▇▇▇▇, e-mail: ▇▇▇▇▇▇▇▇▇▇@▇▇-▇▇▇▇.▇▇▇,
with a mandatory
copy to ▇▇▇▇ & ▇▇▇▇ Law Offices, ▇▇-▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, Fax: ▇▇▇▇-▇-▇▇▇▇▇▇▇, e-mail: ▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
(“HOMI”);
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And:
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▇▇▇▇▇
▇▇▇▇▇▇▇ Elkrief and ▇▇▇▇▇
▇▇▇▇▇▇▇, whose address for the purposes of this Agreement shall be
▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, email: ▇▇▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
(jointly, “Lender”);
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Whereas:
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HOMI
owns a turnkey computerized minibar system, including 166 HOMI®
computerized minibars, a central unit and a license to HOMI®
software, which is installed at the ▇▇▇▇▇▇▇▇ Ramat HaHayal Hotel in
Tel-Aviv (the “Hotel”
and the “Minibar
System”, respectively), and which HOMI’s affiliate, HOMI Israel Ltd
(the “Affiliate”),
which is under common control as HOMI, operates under an outsource
operation agreement between the Affiliate and the Hotel (the “Operation”
and the “Outsource
Agreement”, respectively);
and
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Whereas:
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HOMI
has decided to refinance the Minibar System as part of a new financing
plan for its continued operation and expansion;
and
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Whereas:
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In
the context of such refinancing, HOMI would like to take a loan from
Lender, and Lender would like to grant a loan to HOMI, which will be
repaid out of HOMI’s revenues from the Operation, all in accordance with
and subject to the terms and conditions set forth
herein;
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Therefore,
the parties have made condition and agreed as follows:
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1.
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The
Loan
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1.1
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Upon
the terms and conditions set forth in this Agreement, Lender agrees to
loan to HOMI the principal amount of $83,000.- (eighty three thousand US
Dollars) (the “Loan”),
being equivalent to $500 for each minibar in the Minibar
System.
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1.2
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The
Loan will be made available to HOMI within 3 business days of the date
hereof (hereinafter: the “Loan
Date”), by means of SWIFT wire transfer to HOMI’s account No.
725000/52 at Bank Leumi, branch No.
809.
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2.
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Repayment
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2.1
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HOMI
undertakes to repay the entire Loan, in the manner set forth
below.
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2.2
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On
a monthly
basis, for each month of the Operation, commencing as of the first
calendar month following the date
hereof:
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a.
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HOMI
will deliver to Lender a copy of its Affiliate’s monthly invoices to the
Hotel in respect of the full amount of monthly net revenues from the
Operation (“HOMI’s Invoice
to the Hotel”), which the Hotel is obliged to pay to the Affiliate
under the Outsource Agreement for that month (“Net Revenues
from Hotel”), usually by the 10th
of each calendar month.
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b.
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From
the sum equal to the Net Revenues from Hotel, HOMI will deduct: (i) the
cost of goods being sold via the Minibar System, with no margin to HOMI,
(ii) Operations’ direct labour costs, (iii) maintenance fees of $0.06 per
minibar per day, and (iv) a management fee of 8% of Net Revenues from
Hotel (collectively, “Operational
Payments”). The aforementioned maintenance fees are all-inclusive,
and in return HOMI will take whatever action is needed, including parts
and labour, to maintain the Minibar System in normal working
condition.
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c.
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If
Net Revenues from Hotel, as collected by HOMI’s Affiliate, exceed
Operational Payments by at least $2,075, then HOMI will pay to Lender a
sum equal to 60% of all such excess, towards repayment of the
Loan.
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d.
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If
Net Revenues from Hotel, as collected by HOMI’s Affiliate, exceed
Operational Payments by more $1,245 but less than $2,075, then HOMI will
pay to Lender exactly $1,245 towards repayment of the
Loan.
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e.
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If
Net Revenues from Hotel, as collected by HOMI’s Affiliate, exceed
Operational Payments by less than $1,245, then HOMI will pay to Lender a
sum equal to 100% of all such excess, towards repayment of the
Loan.
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f.
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If
Net Revenues from Hotel, as collected by HOMI’s Affiliate, do not exceed
Operational Payments, then no payment will be made to Lender for that
month.
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g.
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Payments
to Lender as set forth above will be effected on the 30th
of the calendar month following the month for which payment is being
made.
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2.3
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The provisions of Sections 2.2c, 2.2d and 2.2e above shall only apply for the first 8 years
of this Agreement (the “Initial
Term”). Thereafter, HOMI will pay to Lender a sum equal to 60% of
the entire amount by which Net Revenues from Hotel shall exceed
Operational Payments, if at
all.
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2.4
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A sample spreadsheet showing key elements of the
mechanism for implementation of the provisions of this Section
2 above, is attached hereto as
Exhibit
A’.
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2.5
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HOMI shall continue to effect the payments to
Lender pursuant to Sections 2.2 and 2.3 above, for as long as the Operation
continues in respect of the Minibar System. If and when the aggregate
total of such repayments exceeds the principal of the Loan, such
repayments shall be deemed interest on the Loan, up to and including a sum
equivalent to annual interest of 8%, and thereafter will be deemed
additional interest, in respect of which Lender shall deliver a monthly
invoice to HOMI.
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2.6
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If the Outsource Agreement is terminated during
the Initial Term and the Minibar System removed from the Hotel, then HOMI
will, at its own cost, reinstall the Minibar System at one or more other
hotels at which the Minibar System will have equivalent revenue earning
capacity as in the Hotel, as soon as possible and in any event within 6
months of its removal from the Hotel, and the period between said removal
and reinstallation shall not be included in the Initial Term for the
purposes of Section 2.3 above.
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2.7
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If reinstallation was not performed within said 6
months, then HOMI shall be obliged, at any time during the following 3
months, to transfer the fixed charge being granted to Lender under Section
5.1 below, to other installed
minibars, of equivalent value and revenue earning capacity, and such other
minibars will then form the basis for the computations as set forth in
Sections 2.2 and 2.3 above, provided that, for said 3 months,
HOMI shall in any event repay to Lender 50% of the amount specified in
Section 2.2e above.
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3.
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Specified
Purpose of Loan
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3.1
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The
Parties hereby confirm and agree that HOMI requested the Loan for the sole
purpose of using all of said Loan to finance its activity in the ordinary
course of business, including making financing available to one or more of
its subsidiaries and/or affiliates, to finance their activity in the
ordinary course of business (the “Specified
Purpose”).
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3.2
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HOMI
hereby undertakes to use the Loan solely for the Specified Purpose and not
to use any part of the Loan for any purpose other than the Specified
Purpose.
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3.3
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HOMI hereby recognizes and acknowledges that
Lender’s consent to make the Loan to HOMI in accordance with the terms
hereof is inter alia subject to and in reliance upon HOMI’s undertaking as
set forth in Section 3.2 above,
which is a fundamental condition of this
Agreement.
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4.
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Events
of Default
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The
occurrence and continuation of any of the following events shall be considered
an Event of Default upon the occurrence of which the entire unpaid balance of
the Loan, and all reasonable costs of collection, including reasonable attorney
fees and expenses, shall become immediately due and payable:
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4.1
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HOMI
shall fail to make any payment which it is obliged to make under the terms
of this Agreement and such failure is not fully remedied within thirty
(30) days of HOMI’s receiving written notice from Lender of the occurrence
thereof;
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4.2
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for the
avoidance of doubt it is hereby stipulated and emphasized that it is the
fundamental obligation and undertaking of HOMI to repay the Loan, in its
entirety, and failure by HOMI to repay the Loan in its entirety shall be
considered an Event of Default, regardless of the reason for such
failure;
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4.3
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HOMI
shall default in the performance of any material covenant or obligation
contained herein and such default is not remedied within thirty (30) days
of HOMI’s receiving written notice from Lender of the occurrence
thereof;
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4.4
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HOMI
uses and/or attempts and/or permits use of the Loan, or any part thereof,
for any purpose other than the Specified
Purpose;
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4.5
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any
representation or warranty made by or on behalf of HOMI to Lender,
howsoever in connection with the Loan and/or this Agreement, shall at any
time prove to have been materially incorrect or
misleading;
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4.6
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any
judgment materially affecting the ability of HOMI to repay the Loan and
pay the Interest shall be entered against HOMI or any attachment, levy or
execution against a substantial portion of its properties shall remain
unpaid, or shall not be released, discharged, dismissed, suspended or
stayed for a period of thirty (30) days or more after its entry, issue or
levy, as the case may be;
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4.7
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any
proceedings seeking to declare HOMI bankrupt, or insolvent, or seeking
liquidation, winding up, reorganization, arrangement with creditors,
composition of debts or any other similar proceedings shall be initiated
against HOMI, and such proceeding shall not be dismissed within thirty
(30) days;
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4.8
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any
event shall occur materially adversely affecting the ability of HOMI to
repay the Loan under the terms of this
Agreement.
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5.
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Security
and Collateral
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5.1
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As
security and collateral for the full and timely repayment of the Loan
pursuant to this Agreement, HOMI will, promptly upon receipt of the Loan,
encumber the Minibar System by registering a first degree fixed charge
over the Minibar System, in favour of the Lender and will take such action
as is required in order to give this fixed charge full effect, including
by means of its being reported and registered with the appropriate
authorities, with a copy to Lender. This fixed charge will remain in force
until the Loan has been repaid in full, at which time Lender will
cooperate with HOMI in the cancellation and removal of the fixed
charge.
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5.2
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Upon the occurrence of an Event of Default, and
for as long as said Event of Default remains uncured, Lender may, without
prejudice to any and all other rights, remedies and/or relief to which
Lender may be entitled by law, exercise and realize any and all security
interests and/or collateral granted to Lender by HOMI pursuant to the
terms hereof, including the security and collateral as set forth in
Section 5.1 above, without in
any way derogating from HOMI’s obligation to pay to Lender any and all
sums still owed by HOMI to Lender pursuant to the terms hereof even after
said actions by the Lender.
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5.3
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HOMI hereby recognizes, acknowledges and agrees
that Lender may, at any particular time, hold various forms of security
and/or collateral in respect of the Loan, whether received from HOMI or
from any third party, including the security and collateral as set forth
in Section 5.1 above (all such
security and collateral being termed hereinafter, the “Collateral”),
and that Lender’s rights herein with respect to the security and
collateral as set forth in Section 5.1 above shall remain in full force and effect
regardless of, and in addition to, any other Collateral then held by
Lender, and Lender shall have full and absolute discretion as to the order
and/or nature in which it exercises and/or realizes its rights in the
Collateral, if at all, and as to the timing of any such exercise and/or
realization, and HOMI hereby waives any and all claims, demands and/or
actions, of any kind whatsoever, against Lender, in this
regard.
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5.4
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HOMI
undertakes, from time to time forthwith upon a Lender’s demand, in order
to guarantee Lender’s rights with respect to any current and/or and future
creditors, to take any action and sign any instrument and/or form and/or
agreement as per Lender’s request, in the event Lender and/or HOMI
believes that any laws by which it or its assets are bound require such
action or signature in order to accord full validity to the Collateral,
against the whole world.
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6.
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HOMI’s
General Covenants
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6.1
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HOMI
shall keep proper records and books of account in accordance with
generally accepted accounting principles consistently applied, and shall
maintain, preserve and keep all of its properties and assets in good
working order and condition, subject to ordinary wear and
tear.
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6.2
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HOMI
shall conduct its affairs in such manner as is appropriate for the
subsidiary of a public company whose shares are traded on the New York
OTCBB, and in accordance with all laws and regulations by which it is
bound.
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7.
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Representations
and Warranties
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HOMI
hereby represents and warrants to Lender as follows:
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7.1
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that
it is duly organized and existing under the laws of the jurisdiction in
which it was incorporated, with the requisite corporate or other power to
own and operate its properties and assets, and to carry on its business as
presently conducted and to execute and perform its obligations under this
Agreement;
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7.2
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that
this Agreement is valid and binding upon it and it is bound by it and
obliged to act in accordance with its terms; and that the execution and
performance by it of this Agreement, and compliance therewith, and the
consummation of the transactions contemplated by this Agreement will not
result in any violation of and will not conflict with, or result in a
breach of any of the terms of, or constitute a default under, any
document, other obligation, law, regulation or order to which it is or
will be party or by which it is or will be
bound;
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7.3
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that
all actions on its part and on the part of its directors, required for the
authorization, execution, and performance by it, of this Agreement, and
the consummation of all the transactions contemplated herein, have been
obtained, or that they will be obtained within 30 days of the date
hereof.
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8.
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Miscellaneous
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No
Amendment to this Agreement, or any part thereof, shall be valid or binding upon
the Parties unless drawn up in writing and signed by both Parties. The Preamble,
and any Appendices, Exhibits or Schedules to this Agreement, constitute an
integral part hereof. The headings used in this Agreement are for convenience of
reference only and will not be used in the construction of this Agreement. Any
use of the word “including” in this Agreement shall be construed as meaning
“including, without limitation”, unless expressly stipulated to the contrary.
All pronouns contained herein, and any variations thereof, shall be deemed
equally to refer to the masculine, feminine or neutral, singular or plural, as
the context may require. No principle of construction against the drafter shall
apply in any way to this Agreement or any of the Exhibits, Appendices and/or
Schedules attached hereto. No failure or delay on the part of any Party in
exercising any right and/or remedy to which it may be entitled hereunder and/or
by law shall operate as a waiver by that Party of any right whatsoever. No
waiver of any right under this Agreement shall be deemed as a waiver of any
further or future right hereunder, whether or not such right is the same kind of
right as was waived in a previous instance. In case any provision of the
Agreement shall be declared invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby and shall continue in full force and effect. This
Agreement constitutes the entire agreement between the Parties with respect to
the subject matter hereof and replaces any previous agreements between the
Parties, if at all, whether written or verbal, pertaining to any of the
subject-matter hereof. This Agreement shall be deemed to have been made and
concluded in Israel and the construction, validity and performance of this
Agreement shall be governed by the laws of Israel without giving effect to the
conflicts of law principles thereunder. By their execution hereof, the parties
irrevocably agree to submit all disputes arising hereunder to the jurisdiction
of the competent courts of Tel-Aviv, Israel. Notices sent by one Party to the
other under this Agreement will be sent by registered mail to the addresses
specified in the Preamble, delivered by hand, transmitted by fax, or sent by
e-mail or other electronic means of communication and will be deemed to have
reached their destination within 3 days of being deposited with the Post Office
for dispatch as registered mail (7 days in the case of air mail), upon actual
delivery when delivered by hand, and upon receipt of the recipient’s
confirmation of receipt when sent by fax, e-mail or other electronic means of
communication. This Agreement may be executed in any number of counterparts, in
original or by facsimile, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute one
and the same agreement.
In witness
whereof the Parties have executed this
Loan
Agreement on the date first above written:
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_______________________________
HOMI
Industries
Ltd
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________________________________
▇▇▇▇▇
▇▇▇▇▇▇▇ Elkrief
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