Loan Agreement Dated as of January ___, 2010
Execution Copy
Dated as of January ___, 2010
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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 Xxx Xxxxxxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx XX 00000, Fax:
x0-000-000 5994, e-mail: xxxxxxxxxx@xx-xxxx.xxx;
with a copy to Xxxx & Xxxx Law Offices, 0-0 XxXxxxxxxx Xxxxxx., Xxx
Xxxxxxx 00000, Xxxxxx, Fax: x000-0-000-0000, e-mail: Xxxx@XxxxXxx.xxx
(the “Borrower”);
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And:
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Xxxxxx
Xxxxx, of 00 Xxxx Xxxxxx, XX Xxx 0000, Xxxxxxxx 00000, Xxxxxx (the
“Lender”);
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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 medium term financing until its
business becomes cash-flow positive;
and
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Whereas:
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Borrower has requested that Lender, who holds office
as President of Borrower, 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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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, Lender agrees to loan to Borrower the principal amount of US
100,000 (one hundred thousand USD) (the “Loan”).
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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 one or more bank transfers to the account of
Borrower’s subsidiary, HOMI Israel Ltd, account No. 640600/48 at Bank
Leumi, branch No. 809 in Tel-Aviv, Israel, or to such other account as
Borrower may specify.
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2.
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Interest
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Interest will accrue on the entire outstanding balance of
the Loan, commencing as of the Loan Date, at the rate of 8% per annum (the
“Interest”).
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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 16 (sixteen) consecutive, quarterly payments,
commencing as of April 1, 2010 and thereafter on the first day of each
calendar quarter, ending with the final payment on January 1,
2014.
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3.2
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As of the Loan Date, there will be a two year grace
period prior to commencement of repayment of the principal of the Loan
(the “Grace
Period”). Accordingly, for each of the first eight quarterly
repayments, the repayment will comprise of accrued Interest, without
principal. The principal of the Loan will be repaid in eight equal
installments over the subsequent eight quarters, together with accrued
Interest.
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4.
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Conversion
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4.1
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During the Grace Period,
Lender shall have the right, in his discretion, to convert the Loan into
shares of Borrower’s common stock, in accordance with the provisions of
this Section 4.
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4.2
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Conversion may be of all of the Loan and accrued
Interest, or any part thereof from time to time during the Grace
Period.
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4.3
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During the first year of the Grace Period, the
conversion will be at a price per share of $0.08. During the second year
of the Grace Period, the conversion will be at a price per share of
$0.12.
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4.4
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Conversion will be by means of written notice by
Lender to Borrower, stating the amount of Loan and accrued Interest which
is being converted. Within 30 days of receiving a conversion notice, the
Borrower shall issue to Lender, or to Lender’s order, the applicable
quantity of shares of Borrower’s common
stock.
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4.5
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Any and all amounts of the Loan and accrued Interest
which are so converted by Lender will be deemed repaid by Borrower upon
the issue to Lender, or to Lender’s order, of the applicable quantity of
shares of Borrower’s common stock.
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4.6
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The conversion right shall expire at the end of the
Grace Period.
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5.
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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
5 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 5 shall, for all intents and
purposes, be deemed part of the Interest, as defined herein.
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6.
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Specified Purpose of
Loan
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6.1
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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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6.2
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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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6.3
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Borrower hereby recognizes
and acknowledges that Lender’s 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 6.2 above, which is a
fundamental condition of this
Agreement.
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7.
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Borrower’s General
Covenants
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7.1
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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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7.2
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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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7.3
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Other than in the ordinary course of business or
otherwise as agreed to in writing by the Lender, 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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8.
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Representations and
Warranties
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Borrower hereby represents and warrants to Lender as
follows:
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8.1
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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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8.2
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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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8.3
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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 Lender by
Borrower;
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8.4
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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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9.
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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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9.1
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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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9.2
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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 accordance with the schedule set forth herein, and
that failure by Borrower to repay the Loan and pay the Interest in such
manner shall be considered an Event of Default, regardless of the reason
for such failure, and without Lender being required to deliver any kind of
notice to Borrower;
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9.3
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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 Lender and such default is not remedied within thirty
(30) days after the occurrence
thereof;
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9.4
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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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9.5
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any representation or warranty made by or on behalf
of Borrower to Lender, 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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9.6
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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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9.7
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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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9.8
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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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10.
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Miscellaneous
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10.1
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In view of the fact that Lender is a shareholder in
Borrower and holds office as a Director and as President of Borrower,
Lender hereby agrees that, so 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 or management, 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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10.2
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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 his 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 Lender’s advance written
consent.
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10.3
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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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10.4
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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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10.5
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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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10.6
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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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10.7
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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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10.8
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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 Xxxxxxx
Xxxxxx, Xxxxxxxx Xxxxxxx 00000,
Xxxxxx.
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10.9
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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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10.10
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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: Xxxxxxx Xxxxx, Xxxxx Xxxxxx
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)
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SIGNED by:
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)
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Xxxxxx Xxxxx
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)
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