Loan Agreement Dated as of February 18th , 2010
Execution
Copy
Dated as of February 18th ,
2010
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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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▇▇▇▇
▇▇▇▇▇, I.D. 032033136, email: ▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
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▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, I.D. 038299624, email: ▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇;
and
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▇▇▇▇
▇▇▇▇▇▇▇▇, I.D. 27373026, email: ▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
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all of whose address for fhe purposes of this
Agreement shall be c/o ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇-▇▇▇▇ ▇▇▇▇▇
(individually and collectively, the “Lender”);
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Whereas:
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HOMI owns a turnkey computerized minibar system,
including 280 HOMI®
computerized minibars, a central unit and a license to HOMI®
software, whose installation is scheduled for the end of February 2010 at
the Fashion 26 Wyndham Hotel, located at ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
(the “Hotel”
and the “Minibar
System”, respectively), and which HOMI’s affiliate, HOMI USA, Inc.
(the “Affiliate”),
which is under common control as HOMI, will then operate under an
outsource operation agreement which has been signed and entered into
between the Affiliate and the Hotel (the “Operation”
and the “Outsource
Agreement”, respectively);
and
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Whereas:
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HOMI would like to take a loan from Lender, and
Lender would like to grant a loan to HOMI, which will be repaid 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
$140,000.- (One hundred forty 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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All rights and obligations of Lender pursuant to this
Agreement shall be allocated as follows: ▇▇▇▇ ▇▇▇▇▇: 45%; ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇:
30%; ▇▇▇▇ ▇▇▇▇▇▇▇▇ (25%).
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1.3
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The Loan will be made available to HOMI by February
25th,
2010 (hereinafter: the “Loan
Date”), by means of SWIFT wire transfer to HOMI’s account No.
725000/52 at Bank Leumi, branch No. 809. IBAN: IL690108090000072500052,
either in US Dollars or, in Lender’s discretion, in New Israeli Shekels
according to the Dollar/Shekel Representative Rate of Exchange last
published prior to the transfer directions being given by
Lender.
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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 Loan
Date:
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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 $3,500 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 $2,100 but less than
$3,500, then HOMI will pay to Lender exactly $2,100 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 $2,100, 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,
by means of swift wire transfer to Lender’s joint account No 351325, at
the Lincoln Branch (No. 772) of Bank HaPoalim (No. 12), IBAN
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇. All payments made to such account shall be deemed
payments to Lender under this Agreement, and Lender alone shall be
responsible for allocation and distribution of payments amongst
Lender.
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2.3
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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. Initially, all
payments made to Lender hereunder shall go towards repayment of the
principal of the Loan. If and when the aggregate total of such repayments
exceeds the principal of the Loan, such repayments shall be deemed
interest on the Loan.
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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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2.8
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If the Outsource Agreement is terminated at the end
of its third year, in the context of a purchase of the Minibar System by
the Hotel, then HOMI will pay to Lender 75% of the payment it receives
from the Hotel in respect of said purchase of the Minibar System, and
this, together with all repayments already made to Lender prior to that
time, will constitute full and final repayment of the Loan and all accrued
Interest.
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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, cause its Affiliate to 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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5.5
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If HOMI and/or the Affiliate cease to operate as a
solvent, going concern, and Lender exercises its rights in the Collateral,
thereby taking title in the Minibar System, then HOMI shall cause
Affiliate to grant its consent to an assignment of the Outsource
Agreement, to Lender.
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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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Lender shall be entitled, at any time and without requiring
HOMI’s consent, to assign all or any part of his rights under this Agreement, to
any other entity. HOMI shall not be entitled to assign all or any part of its
rights and/or obligations under this Agreement, except to a subsidiary or
affiliate, without Lender’s advance written consent. 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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________________________________
Ilan Barhy
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_______________________________
HOMI
Industries Ltd
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________________________________
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________________________________
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