By and between: HOMI Israel Ltd, an Israeli company, #512482787, whose address for the purposes of this Agreement shall be Gav-Yam Centre, Building #3, 3rd Floor, 9 Shenkar Street, Herzliya Pituach 46725, Israel; Fax: 09-9728626, e-mail:...
Execution Copy
Dated
as of the 30th day
of July, 2009
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By
and between:
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HOMI
Israel Ltd, an Israeli company, #512482787, whose address for the
purposes of this Agreement shall be Gav-Yam Centre, Building
#3, 3rd Floor, 9 Xxxxxxx Xxxxxx, Xxxxxxxx Xxxxxxx 00000,
Xxxxxx; Fax: 00-0000000, e-mail: xxxxxxxxxx@xx-xxxx.xxx,
with a mandatory
copy to Xxxx & Xxxx Law Offices, 00-0 Xxxxxxxx Xxxxx Xxxx, Xxx
Xxxxxxx 00000, Xxxxxx, Fax: 00-0000000, e-mail: Xxxx@XxxxXxx.xxx; (“HOMI”);
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And:
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Dry
Tongues Ltd, an Israeli company, #514328467, whose address for the
purposes of this Agreement shall be x/x Xxxx Xxxxxx Xxx., 00
Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxx; Tel. 00-0000000, Fax: 00-0000000,
email: xxxxxxxx@xxxxx.xxx (“Investor”);
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Whereas:
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HOMI
owns a turnkey computerized minibar system, including 194 computerized
minibars of type HOMI®
336, a central unit and a license to HOMI®
software, whose installation is scheduled to be completed in August 2009
at the Alrov Mamila Hotel in Jerusalem (the “Hotel”
and the “Minibar
System”, respectively), and which HOMI will then operate under an
outsource operation agreement which has been signed and entered into
between HOMI 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 this Refinancing Agreement, HOMI wishes to sell the Minibar
System to Investor and Investor wishes to purchase the Minibar System from
HOMI, with HOMI agreeing to perform the Operation, subject to a division
of revenues between the Parties, 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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Sale
of the Minibar System
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1.1
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Subject
to HOMI’s first receiving the Purchase Price (as defined below), HOMI
sells the Minibar System to Investor and Investor purchases the Minibar
System from HOMI, with effect as of 1st
August 2009 (the “Effective
Date”).
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1.2
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HOMI
represents and warrants that:
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a.
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the
Minibar System is new and free and clear of all liens, claims,
encumbrances and third party rights of any
kind;
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b.
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the
Minibar System is in normal and proper working condition, subject to
normal wear and tear and subject to ongoing evaluation and upgrading, as
customary for a novel and recently developed system, and will remain in
this condition for the duration of this Agreement, with HOMI being
responsible for Maintenance as set forth in Section 4.3a
below.
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1.3
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Investor
represents and warrants that:
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a.
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it
has been given every opportunity to inspect the Minibar System and its
operation and has satisfied itself fully as to the condition and
operational status of the Minibar
System;
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b.
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it
is fully aware that the Minibar System is a novel product, recently
developed and installed by HOMI and still undergoing debugging by HOMI,
and may not yet be functioning at optimal capacity or
efficiency.
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2.
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Purchase
Price
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In
consideration of the Minibar System, Investor will pay to HOMI the sum of
$97,000 (ninety-seven thousand USD), in a single cash payment to be deposited in
HOMI’s designated bank account no later than the date hereof (the “Purchase
Price”). VAT, if applicable, will be added to the Purchase Price, against
a tax invoice. The Purchase Price was computed on the basis of 194 x
$500.
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3.
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Title
in the Minibar System
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3.1
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As
of payment of the Purchase Price in accordance with the foregoing, title
in the Minibar System shall pass to Investor, with retroactive effect as
of the Effective Date, together with an assignment of any rights which
HOMI may have under any insurance policies that cover risk of theft and/or
damage of the Minibar System.
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3.2
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Notwithstanding
the foregoing, Investor agrees and undertakes that its ownership of the
Minibar System shall in no way detract from the Operation and Maintenance
(as defined below) by HOMI under the Outsource Agreement; Investor shall
not be entitled, and undertakes not to take any action to make any
disposition of any part of the Minibar System and/or remove any part
thereof from the Hotel and/or in any other way prevent and/or hinder the
Operation and Maintenance by HOMI, subject to Section 3.3
below.
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3.3
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If
HOMI ceases to operate as a solvent, going concern, then Investor shall be
entitled to assert its title in the Minibar System as it shall see fit,
without restriction, including by means of removal of the Minibar System
from the Hotel, or performing the Operation and Maintenance, directly or
indirectly, in place of HOMI, in coordination with the
Hotel.
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3.4
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If
HOMI has fundamentally breached any of its material obligations and/or
warranties under this Agreement and has failed to cure them within 30 days
from receipt of written notice to that effect by Investor, as determined
by a mutually agreeable arbitrator, then Investor shall be entitled to
assert its title in the Minibar System as it shall see fit, without
restriction, including by means of removal of the Minibar System from the
Hotel, or performing the Operation and Maintenance, directly or
indirectly, in place of HOMI, in coordination with the
Hotel.
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4.
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Outsource
Agreement, Operation and
Maintenance
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4.1
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HOMI
shall install the Minibar System at the Hotel and shall perform the
Operation and provide Hotel with maintenance services for the Minibar
System (the “Maintenance”),
with such services being at a satisfactory level per industry standards,
all pursuant to HOMI’s Outsource Agreement with Hotel, and such Operation
and Maintenance and Outsource Agreement shall not be affected by this
Refinancing Agreement. In the context of the Maintenance, HOMI undertakes
to use all reasonable commercial efforts to promptly resolve and correct
any debugging, functionality and efficiency issues with the Minibar
System, with a view of optimizing the system and its potential for revenue
generation.
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4.2
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Promptly
following the date hereof and commencement of Operation, HOMI shall direct
the Hotel that all payments due to be made to HOMI under the Outsource
Agreement shall be made to the Special Account (as defined
below).
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4.3
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On
a monthly
basis, commencing in respect of September 2009, immediately following
completion of installation of the Minibar
System:
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a.
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HOMI
will invoice the Hotel for the full amount of net revenues from the
Operation, which the Hotel is obliged to pay to HOMI under the Outsource
Agreement (“Net Revenues
from Hotel”), and will deliver to Investor a copy of said invoice
upon its delivery to the Hotel (“HOMI’s Invoice
to the Hotel”), usually by the 10th
of each calendar month, together with an invoice from HOMI to Investor, in
respect of the Operation and Maintenance, for (i) cost of goods to be sold
via the Minibar System as per amounts invoiced by suppliers (the first
invoice will also include the inventory of goods as at the Effective Date)
at cost, with no margin to HOMI, (ii) Operation direct labour costs as
reflected by pay-slips or invoices, (iii) Maintenance fees of $0.06 per
Minibar per day (during initial 12 months, Maintenance fees will be $0.03
per Minibar, per day), and (iv) a management fee of 8% of Net Revenues
from Hotel (collectively, “Operational
Payments” and “HOMI’s Invoice
to Investor”, respectively). The aforementioned Maintenance fees
are all-inclusive, and in return HOMI will perform the Maintenance and
take whatever action is needed, including parts and labour, to maintain
the Minibar System in normal working
condition.
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b.
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Upon
its receipt of HOMI’s Invoice to the Hotel and HOMI’s Invoice to Investor,
Investor will invoice HOMI for the entire sum of Net Revenues from Hotel
(“Investor’s
Invoice”).
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c.
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HOMI
would normally expect HOMI’s invoice to the Hotel to be settled by the
Hotel by the end of the calendar month in which it was issued. The sum by
which Net Revenues from Hotel, received and deposited in the Special
Account, exceed the sum on HOMI’s Invoice to Investor (“Operating
Cashflow”) will then be promptly transferred in full from the
Special Account to Investor's bank account as designated by Investor in
writing, while the Operational Payments will be transferred from the
Special Account to HOMI’s designated bank account, and Investor’s Invoice
and HOMI’s Invoice to Investor will be deemed settled in full. Payment of
Operational Payments will be made only out of the collected Net Revenues
from Hotel as above defined. For avoidance of doubt the parties agree that
Investor will not be required to inject cash flow to finance Operational
Payments, with the exception of one payment for the initial inventory of
goods as at the Effective Date as per Section 4.3a above. For avoidance of
any doubt, HOMI undertakes that it will fully perform in satisfactory
manner all Operation and Maintenance of the Minibar System, even during
any month where Net Revenues from Hotel will be less than the Operational
Payments.
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4.4
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At
the end of each quarter (the “Current
Quarter”), the average quarterly Operating Cashflow, commencing as
of the first quarter following this Agreement entering into effect and
ending with the Current Quarter (the “Computation
Period”), will be calculated by the Parties (the “Quarterly
Average”), and the following shall be performed and completed
within 30 days from the end of each Current
Quarter.
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a.
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If
the Quarterly Average is less than $4,365, then no further adjustment will
be made for the Current Quarter, and all of the Current Quarter’s
Operating Cashflow will be retained by
Investor.
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b.
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If
the Quarterly Average is more than $4,365 but less than $7,275, then a
reckoning will be performed between the Parties, the result of which shall
be that Investor shall retain a sum equal to $4,365 multiplied by the
number of quarters in the Computation Period, and shall immediately pay
the balance of the Operating Cashflow to
HOMI.
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c.
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If
the Quarterly Average is more than $7,275, then a reckoning will be
performed between the Parties, the result of which shall be that Investor
shall retain a sum equal to 60% of the Operating Cashflow for the entire
Computation Period and shall immediately pay to HOMI the sum needed to
cause HOMI to have received the remaining
40%.
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4.5
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The
provisions of Section 4.4 above shall only apply until such time as
Investor shall, pursuant to Section 4.4 above, have received payments in a
total aggregate amount of $120,000; thereafter, division of Operating
Cashflow, regardless of the sum thereof, shall be 60% to Investor and 40%
to HOMI, for as long as the Operation continues, and Investor’s Invoice
and Operational Payments will reflect
this.
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4.6
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A
sample spreadsheet showing key elements of the mechanism for
implementation of the provisions of this Section 4 above, is attached
hereto as Exhibit
A’.
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5.
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Special
Account
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5.1
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Promptly
following the signing of this Agreement by the Parties, Investor will open
a special bank account which will be in Investor’s name and for which
there will at all times be two groups of signatories, one designated by
HOMI and one designated by Investor, with all transfers or withdrawals of
funds from the account, and any changes to said signing rights, requiring
two signatures - one from each group (the “Special
Account”). The Parties undertake to cooperate as required of them
in the opening of the Special Account, including by means of provision of
any details and documentation required by the bank in connection with
prevention of money-laundering legislation and
regulations.
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5.2
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Net
Revenues from Hotel will be deposited solely into the Special Account, as
set forth in Section 4 above.
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5.3
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Payments
will be made from the Special Account, to Investor and to HOMI, as set
forth in Section 4 above.
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5.4
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All
payments from the Special Account shall be made after deduction of all
bank charges.
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5.5
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The
Parties undertake to pay, in equal parts between them, all such bank
charges and all expenses related to the Special Account and the
implementation of these provisions.
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6.
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Early
Termination of the Outsource
Agreement
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6.1
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If
the Outsource Agreement is terminated during the first 8 years from
installation of the Minibar System 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 to be approved by Investor 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.
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6.2
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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 substitute on a 1
to 1 basis other minibars already operating in another hotel or hotels, of
equivalent value and revenue earning capacity, which will be transferred
to Investor’s ownership in place of the Minibar System which will be
returned to HOMI’s ownership, and the terms of this Refinancing Agreement
will apply, mutatis mutandis, to said substitute minibars, provided that,
for said 3 months, HOMI shall in any event pay to Investor $2,183 per
month.
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7.
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Confidentiality
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As a
condition to this Refinancing Agreement entering into effect, and to Investor’s
entitlement hereunder, Investor will execute and deliver to HOMI a Nondisclosure
Agreement in HOMI’s customary form.
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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
Refinancing
Agreement on the date first above written:
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_______________________________
HOMI
Israel Ltd
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________________________________
Dry
Tongues Ltd
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