Loan Agreement Dated as of December _8__, 2008
Execution
Copy
Dated
as of December _8__, 2008
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By
and between:
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Hotel
Outsource Management International, Inc., a Delaware corporation
whose address for the purposes of notices sent under this Agreement shall
be ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, Fax:
▇▇-▇▇▇-▇▇▇ 5994, e-mail: ▇▇▇▇▇▇▇▇▇▇@▇▇-▇▇▇▇.▇▇▇;
with a copy to ▇▇▇▇ & ▇▇▇▇ Law Offices, ▇▇-▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, Fax: ▇▇▇▇-▇-▇▇▇-▇▇▇▇, e-mail: ▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
(the “Borrower”);
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And:
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(1)
▇▇▇▇▇
▇▇▇▇▇▇, of ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Israel,
and
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(2) ▇▇▇▇▇
▇▇▇▇, of ▇▇-▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇
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(each
of them a “Lender”
and collectively, the “Lenders”);
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Whereas:
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Borrower
requires immediate funds, which, in the current economic climate, it has
not been able to obtain in a timely manner from banking institutions, as
interim financing until receipt of the proceeds which it anticipates
receiving from the rights offering which it expects to proceed imminently,
as soon as the SEC Registration Statement becomes effective (a revised
From S-1 was filed by Borrower on November 24, 2008) (the “Rights
Offering”); and
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Whereas:
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Borrower
has requested that Lenders, who hold office as CEO and Corporate Secretary
of Borrower, respectively, assist Borrower by agreeing to loan such funds
to Borrower in the amount and under the terms set forth in this Agreement
below; and
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Whereas:
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Each
Lender is willing to make a loan to Borrower, all subject to and in
accordance with the terms of this
Agreement;
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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, Lenders agrees to
loan to Borrower the principal amount of $420,000.- (four hundred and
twenty thousand US Dollars) (the “Loan”),
as follows:
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a.
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▇▇▇▇▇
▇▇▇▇▇▇: $400,000;
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b.
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▇▇▇▇▇
▇▇▇▇: $20,000;
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1.2
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The
Loan will be made available to Borrower within 3 business days of the date
hereof (hereinafter: the “Loan
Date”), by means of SWIFT wire transfer to Borrower’s account No.
0605079633 at HSBC Republic Bank, a division of HSBC Bank USA, in the
branch located at ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇.
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2.
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Interest
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2.1
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Borrower
shall pay interest on the entire outstanding balance of the Loan,
commencing as of the Loan Date, at the rate of 6% per annum (the “Interest”).
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2.2
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On
the Repayment Date (as defined below), Borrower shall pay Lenders, pari
passu, all of the Interest that has accrued and is outstanding on the Loan
up until that date.
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3.
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Repayment
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3.1
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Borrower
shall repay the entire Loan, with all accrued Interest, in a single, cash
payment to each Lender, pari passu, no later than the 4 month anniversary
of the Loan Date (the “Repayment
Date”).
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3.2
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Notwithstanding
the foregoing, and notwithstanding Lenders’ declaration that, as at the
date hereof, they would prefer for the Loan to be repaid in cash, the
Lenders nevertheless agree that Borrower may elect to effect repayment of
any part, or all, of the Loan and/or accrued Interest, pari passu to the
Lenders, no later than the Repayment Date, by means of the issue to the
Lenders of shares of Borrower’s common stock. The purchase price of each
share so issued shall be deemed to be the same price per share as in the
Rights Offering (the “Price Per
Share”), such that the outstanding balance of the Loan plus accrued
Interest shall be reduced, at the time of issue of such shares, by the
quantity of shares so issued multiplied by the Price Per Share. If, for
example, the Price Per Share is $0.05 and if the Repayment Date falls
exactly on the 4 month anniversary of the Loan Date, and the outstanding
balance of the Loan plus the accrued Interest is $428,400, then the issue,
on that date, of 8,568,000 shares of Borrower’s common stock, to the order
of the Lenders, as set forth herein, would constitute full repayment of
the Loan and all accrued Interest.
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For any
sums that may be payable by a Lender in the Rights Offering, in respect of
shares which such Lender may subscribe for in such Rights Offering, up to the
total amount then owed by Borrower to such Lender under this Agreement, such
Lender, or Borrower, may elect, by written notice to the other, that such sums
be offset against the outstanding balance of the Loan and accrued Interest then
owed to such Lender.
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3.3
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If Borrower elects to repay any part of the Loan
and/or accrued Interest by means of the issue of shares as set forth in
Section 3.2 above, then the shares must be duly issued
in Lenders’ names, or to their order, pari passu, and registered in
Lenders’ names, or to their order, in Borrower’s share register, and duly
executed share certificates must be delivered to Lenders, or to their
order, all no later than the Repayment
Date.
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3.4
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For avoidance of any doubt, Borrower undertakes to
fully repay the Loan and all accrued Interest, no later than the Repayment
Date, either by means of a cash payment as set forth in Section 3.1 above, or by means of a share issue, as set
forth in Sections 3.2 and 3.3 above, or by means of a combination of such
cash payment and such share issue, provided that all such repayments are
made for both Lenders, pari
passu.
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3.5
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Borrower may at any time prepay to the Lenders,
pari passu, any part of the outstanding balance of the Loan and accrued
Interest, by any of the methods set forth in Section 3.4 above.
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3.6
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Without
derogating from any statutory remedies and/or other remedies available
under the terms of this Agreement, if Borrower is in default under this
Agreement and does not fully repay the Loan and accrued Interest in the
manner set forth above, no later than the Repayment Date, then each Lender
shall be entitled to elect, by means of written notice to Borrower,
whether repayment of such Lender’s portion of the outstanding balance of
the Loan and accrued Interest must be made by means of cash payment, or by
means of share issue under the principles outlined above, or by a
combination of these methods, and Borrower undertakes to comply with such
election by each Lender.
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4.
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Late
Payment
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Without derogating from any statutory remedies and/or
other remedies available under the terms of this Agreement, any sums not paid by
Borrower at the appointed time under this Agreement shall be subject
to interest at the highest rate of interest then charged by Bank Leumi of Israel
in respect of Dollar sums overdrawn beyond an agreed credit facility, such
interest to accrue from the date payment was originally due until the date of
actual payment; this interest rate shall initially be determined on the date
payment was originally due, and thereafter monthly until the date of actual
payment. Nothing in this Section 4 may be construed in any way as derogating from
Borrower’s undertaking and obligation to repay the Loan and pay the Interest as
set forth above. Arrears interest accruing pursuant to the terms of this Section
4 shall, for all intents and purposes,
be deemed part of the Interest, as defined herein.
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5.
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Specified
Purpose of Loan
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5.1
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The
Parties hereby confirm and agree that Borrower 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, to finance their activity in the ordinary
course of business (the “Specified
Purpose”).
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5.2
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Borrower
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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5.3
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Borrower hereby recognizes and acknowledges that
the Lenders’ consent to make the Loan to Borrower in accordance with the
terms hereof is inter alia subject to and in reliance upon Borrower’s
undertaking as set forth in Section 5.2 above, which is a fundamental condition of
this Agreement.
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6.
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Borrower’s
General Covenants
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6.1
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Borrower
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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Borrower
shall conduct its affairs in such manner as is appropriate for 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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6.3
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Other
than in the ordinary course of business or otherwise as agreed to in
writing by the Lenders, on a case by case basis, Borrower shall not
create, incur, or assume any indebtedness, nor shall it create incur,
assume or suffer any mortgage, pledge, lien, security interest, charge or
encumbrance of any kind or nature in or upon any of its property or
assets, whether now owned or hereafter acquired, nor shall it sell, lease,
assign, transfer or otherwise dispose of any of its assets, including its
accounts receivable.
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7.
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Representations
and Warranties
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Borrower
hereby represents and warrants to the Lenders 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
and until such time as they are obtained no use will be made of the Loan,
which will, until such time, be deemed held in trust for Lenders by
Borrower;
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7.4
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that
this Agreement and the entire contents thereof do not require that any
notice be made to any authorities, other
than notice
which has already been made by Borrower or which will
be made by
Borrower in a timely manner (such as a Form 8-K), in accordance with all
laws and regulations by which Borrower is bound, in accordance with
directions which Borrower will receive from its US Legal
Counsel.
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3
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8.
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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 Interest, and all reasonable costs of collection, including
reasonable attorney fees and expenses, shall become immediately due and
payable:
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8.1
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Borrower
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 after the occurrence
thereof;
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8.2
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for the
avoidance of doubt it is hereby stipulated and emphasized that it is the
fundamental obligation and undertaking of Borrower to repay the Loan and
pay the Interest, in their entirety, on the Repayment Date, and that
failure by Borrower to repay the Loan and pay the Interest, in their
entirety, on the Repayment Date, shall be considered an Event of Default,
regardless of the reason for such failure, and without either Lender being
required to deliver any kind of notice to
Borrower;
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8.3
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Borrower
shall default in the performance of any material covenant or obligation
contained herein or in any other agreement, debenture, pledge, promissory
note or other instrument of indebtedness with a Lender and such default is
not remedied within thirty (30) days after the occurrence
thereof;
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8.4
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Borrower
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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8.5
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any
representation or warranty made by or on behalf of Borrower to the
Lenders, howsoever in connection with the Loan and/or this Agreement,
shall at any time prove to have been incorrect or
misleading;
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8.6
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any
judgment materially affecting the ability of Borrower to repay the Loan
and pay the Interest shall be entered against Borrower 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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8.7
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any
proceedings seeking to declare Borrower bankrupt, or insolvent, or seeking
liquidation, winding up, reorganization, arrangement with creditors,
composition of debts or any other similar proceedings shall be initiated
against Borrower, and such proceeding shall not be dismissed within thirty
(30) days;
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8.8
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any
event shall occur materially affecting the ability of Borrower to repay
the Loan and pay the Interest under the terms of this
Agreement.
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9.
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Miscellaneous
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9.1
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In
view of the fact that the Lenders are shareholders in Borrower and ▇▇▇▇▇
▇▇▇▇▇▇ is currently the a Director of Borrower, each Lender hereby agrees
that, if and for as long as he owns more than 1% of Borrower’s issued and
outstanding share capital or is a member of Borrower’s Board of Directors,
he will not participate in any vote taken by any of the organs within
Borrower’s corporate structure in connection with this Agreement. This
clause is in addition to, and without derogating from, the provisions of
applicable law that may apply to this Agreement in connection with its
being an agreement between a corporation and individuals who are
shareholders and directors of that
corporation.
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9.2
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Each
Lender shall be entitled, at any time and without requiring the consent of
Borrower or any other individual, to assign all or any part of its rights
under this Agreement, to any other entity. Borrower shall not be entitled
to assign all or any part of its rights and/or obligations under this
Agreement, without both Lenders’ advance written
consent.
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9.3
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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.
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9.4
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As
used in this Agreement, the term “including”, and all derivations thereof,
shall mean “including, without limitation”, unless expressly stipulated to
the contrary. Where the context permits, use of the singular number
includes the plural and vice versa and words denoting any gender shall
include all genders. The Preamble, and any Appendices, Exhibits or
Schedules to this Agreement, constitute an integral part hereof. Section
headings are for convenience purposes only, and may not be used in the
construction or interpretation of this
Agreement.
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9.5
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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.
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9.6
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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.
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9.7
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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.
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9.8
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This
Agreement shall be governed by and construed in accordance with the laws
of Israel, without regard to its rules of conflict of laws. The parties
hereby agree and submit to the exclusive jurisdiction of the competent
courts in the city of Tel-Aviv, with respect to any claim or dispute
arising out of and/or in connection with this Agreement. For this purpose,
Borrower hereby gives notice that an address for service of court papers
in any action relating to this Agreement shall be c/o HOMI Israel Ltd.,
Gav-Yam Center, Building #3, 3rd Floor, 9 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇.
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9.9
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Notices
sent by one party to the other under this Agreement will be sent by
registered mail to the addresses specified herein, delivered by hand, or
transmitted by fax and will be deemed to have reached their destination
within 5 days of being deposited with the Post Office for dispatch as
registered mail (10 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.
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9.10
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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.
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In witness
whereof the parties have executed this
Loan
Agreement on the date first above written:
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SIGNED
for and on behalf of
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)
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Hotel
Outsource Management International, Inc.
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)
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)
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By: /s/
▇▇▇▇▇▇ ▇▇▇▇▇, President
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)
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SIGNED
by: /s/
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)
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▇▇▇▇▇
▇▇▇▇▇▇
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)
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SIGNED
by: /s/
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)
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▇▇▇▇▇
▇▇▇▇
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)
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5