LOAN AGREEMENT DATED AS OF ________________, 2004 BY AND BETWEEN:
DATED
AS OF ________________, 2004 BY AND BETWEEN:
▇▇▇▇▇▇▇
▇▇▇▇▇, of 1 Gan HaShikmim Street, Ganei-▇▇▇▇▇▇ - ▇▇▇▇▇▇, Israel, and ▇▇▇▇▇
▇▇▇▇▇▇, whose address for the purpose of service under this Agreement shall be
c/o Adv. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Weizman 72, Tel-Aviv 62308 (collectively, the
“Lenders” and each of them a “Lender”);
AND:
Hotel
Outsource Management International, Inc., a Delaware corporation, whose address
for the purposes of this Agreement shall be ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the “Borrower”)
WHEREAS:
The
Borrower requires immediate funds, which it has not yet succeeded in procuring
from banking institutions in the US and for which the proceeds from its recent
rights offering did not suffice; and
WHEREAS:
The
Borrower has requested that the Lenders loan these funds to the Borrower in the
amount and under the terms set forth in this Agreement below; and
WHEREAS:
Each
Lender is willing to make a loan to the Borrower, all subject to and in
accordance with the terms of this Agreement,
THEREFORE,
THE PARTIES HAVE MADE CONDITION AND AGREED AS FOLLOWS:
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1 |
Preamble
and Headings |
1.1 The
Preamble, and any Appendices, Exhibits or Schedules to this Agreement,
constitute an integral part hereof.
1.2 Section
headings are for convenience purposes only, and may not be used in the
construction or interpretation of this Agreement.
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2 |
The
Loan |
2.1 Upon the
terms and conditions set forth in this Agreement, each Lender agrees to loan to
the Borrower the principal amount of USD 350,000.- (three hundred and fifty
thousand US Dollars) (the “Loan”).
2.2 The Loan
will be made available to the Borrower within 3 business days of the date hereof
(hereinafter: the “Loan Date”), by means of SWIFT wire transfer to the
Borrower’s account No. 0605079633 at HSBC Republic Bank, a division of HSBC Bank
USA, in the branch located at ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
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3 |
Interest |
3.1 The
Borrower shall pay interest on the entire outstanding balance of the Loan,
commencing as of the Loan Date, at the rate of 10% per annum (the “Interest”).
3.2 On the
Repayment Date (as defined below), the Borrower shall pay the Lenders, pari
passu, all of the Interest that has accrued and is outstanding on the Loan up
until that date.
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4 |
Repayment |
4.1 The
Borrower shall repay the entire Loan, with all accrued Interest, in a single,
cash payment to each Lender, pari passu, no later than the 6 month anniversary
of the Loan Date (the “Repayment Date”).
4.2 Notwithstanding
the foregoing, and notwithstanding the Lenders’ declaration that, as at the date
hereof, they would prefer for the Loan to be repaid in cash, the Lenders
nevertheless agree that the 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 the
Borrower’s common stock. The purchase price of each share so issued shall be
deemed to be $0.25, such that the outstanding balance of the Loan plus accrued
Interest shall be reduced, at the time of issue of such shares, by the sum of
$0.25 per share so issued. If, for example, the Repayment Date falls exactly on
the 6 month anniversary of the Loan Date, and the outstanding balance of the
Loan and the accrued Interest is $735,000, then the issue, on that date, of
2,940,000 shares of the 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. Furthermore, the Borrower will be entitled to combine repayment of the
Loan in the manner described in this Section 4.2 above with a rights offering to
all of its shareholders, at a price per share of $0.25, such that any shares
purchased by the Lenders in such rights offering may, at the election of either
the Lenders or the Borrower, be deemed fully paid, with the outstanding balance
of the Loan being reduced accordingly, by the total number of shares purchased
by each Lender multiplied by $0.25.
4.3 If the
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 4.2 above, then the shares must
be duly issued in the Lenders’ names, or to their order, pari passu, and
registered in the Lenders’ names, or to their order, in the Borrower’s share
register, and duly executed share certificates must be delivered to the Lenders,
or to their order, all no later than the Repayment Date.
4.4 For
avoidance of any doubt, the Borrower undertakes to fully repay the Loan and all
accrued Interest, no later than the 6 month anniversary of the Loan Date, either
by means of a cash payment as set forth in Section 4.1 above, or by means of a
share issue, as set forth in Sections 4.2 and 4.3 above, or by means of a
combination of such cash payment and such share issue, provided that all such
repayments are made in the same way for both Lenders, pari passu.
4.5 The
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 4.4 above.
4.6 Without
derogating from any statutory remedies and/or other remedies available under the
terms of this Agreement, if the 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 the 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 the
Borrower undertakes to comply with such election by each Lender.
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5 |
Late
Payment |
5.1 Without
derogating from any statutory remedies and/or other remedies available under the
terms of this Agreement, any sums not paid by the 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 the 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 |
Specified
Purpose of Loan |
6.1 The
Parties hereby confirm and agree that the Borrower requested the Loan for the
sole purpose of using all of said Loan to invest in the Borrower’s subsidiary,
Hotel Outsource Services, Inc. (“HOS”), and to procure that a further $300,000
will be invested in HOS by Bartech Systems International, Inc. (“BSI”) and that
all of said Loan, together with said investment by BSI, will be used by HOS to
fund the purchase and installation of Bartech minibars, pursuant to purchase
orders which have been and/or will soon be entered into with BSI (the “Specified
Purpose”). The Specified Purpose will be subject to adjustment and amendment, by
mutual written consent of the Parties.
6.2 The
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.
6.3 The
Borrower hereby recognizes and acknowledges that the Lenders’ consent to make
the Loan to the Borrower in accordance with the terms hereof is inter alia
subject to and in reliance upon the Borrower’s undertaking as set forth in
Section 6.2 above, which is a fundamental condition of this
Agreement.
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7 |
Borrower’s
General Covenants |
7.1 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.
7.2 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.
7.3 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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8 |
Representations
and Warranties |
The
Borrower hereby represents and warrants to the Lenders as follows:
8.1 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;
8.2 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;
8.3 that all
actions on its part and on the part of its directors and shareholders, 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 the Lenders by the Borrower;
8.4 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 the
Borrower or which will be made by the Borrower in a timely manner, in accordance
with all laws and regulations by which the Borrower is bound.
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9 |
Events
of Default |
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:
9.1 the
Borrower shall fail to make any payment which it is obliged to make under the
terms of this Agreement;
9.2 for the
avoidance of doubt it is hereby stipulated and emphasized that it is the
fundamental obligation and undertaking of the Borrower to repay the Loan and pay
the Interest, in their entirety, on the Repayment Date, and that failure by the
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 the Borrower;
9.3 the
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;
9.4 the
Borrower uses and/or attempts and/or purports and/or permits HOS to use the
Loan, or any part thereof, for any purpose other than the Specified Purpose, in
breach of the provisions of Section 6.2 above;
9.5 the
Borrower fails to take any action required of it pursuant to Section 10.5 below.
9.6 any
representation or warranty made by or on behalf of the 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;
9.7 any
judgment materially affecting the ability of the Borrower to repay the Loan and
pay the Interest shall be entered against the 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;
9.8 any
proceedings seeking to declare the 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 the
Borrower, and such proceeding shall not be dismissed within thirty (30) days;
any event
shall occur materially affecting the ability of the Borrower to repay the Loan
and pay the Interest under the terms of this Agreement.
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10 |
Security
and Collateral |
10.1 As
security and collateral for the full and timely fulfillment of all of the
Borrower’s undertakings pursuant to this Agreement, including the repayment of
the Loan and the payment of the Interest, on the Repayment Date, the Borrower
hereby grants the Lenders, pari passu, a first priority security interest in,
and lien upon, all of the Borrower’s rights and assets, of any kind whatsoever,
provided however that, solely in respect of rights or assets already encumbered
by the Borrower to a third party, prior to the date hereof and/or rights or
assets which are in the future acquired by the Borrower using funding received
from other parties and encumbered to said other parties (in each case, “Existing
Liens”), such security interest and lien in the Lenders’ favor shall be of
second priority, and shall be subordinate solely to said Existing Liens.
10.2 The
Borrower is hereby aware that, as security and collateral for the full and
timely fulfillment of all of the Borrower’s undertakings pursuant to this
Agreement, including the repayment of the Loan and the payment of the Interest,
on the Repayment Date, certain shareholders of the Borrower may grant the
Lenders a first degree charge and security interest over a total of 2,000,000 of
the shares of common stock which they hold in the Borrower. The Borrower hereby
confirms that there is no impediment to the grant of such charge and security
interest and that it will fully cooperate with the Lenders in facilitating the
exercise and realization of such charge and security interest, in favor of the
Lenders, upon receipt of such request by the Lenders following an Event of
Default.
10.3 Upon the
occurrence of an Event of Default, and for as long as said Event of Default
remains uncured), the Lenders, pari passu, may, without prejudice to any and all
other rights, remedies and/or relief to which the Lenders may be entitled by
law, exercise and realize any and all security interests and/or collateral
granted to the Lenders pursuant to the terms hereof, including the security and
collateral as set forth in this Section 10 above, without in any way derogating
from the Borrower’s obligation to pay to the Lenders any and all sums still owed
by the Borrower to the Lenders pursuant to the terms hereof even after said
actions by the Lender.
10.4 The
Borrower hereby recognizes, acknowledges and agrees that each Lender may, at any
particular time, hold various forms of security and/or collateral in respect of
the Loan, whether received from the Borrower or from any third party, including
the security and collateral as set forth in Section 10 above (all such security
and collateral being termed hereinafter, the “Collateral”), and that each
Lender’s rights herein with respect to the security and collateral as set forth
in Section 10 above shall remain in full force and effect regardless of, and in
addition to, any other Collateral then held by the Lenders, and each 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 the Borrower hereby
waives any and all claims, demands and/or actions, of any kind whatsoever,
against the Lenders, in this regard.
10.5 The
Borrower hereby undertakes, from time to time forthwith upon a Lender’s demand,
in order to guarantee the Lenders’ 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 the Lenders’ request, in the event the Lenders and/or the
Borrower 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. Without in any way limiting or derogating from the Borrower’s
obligation and undertaking as set forth in this Section 10.5 above, and merely
as an additional form of protection for the Lenders, the Borrower hereby
undertakes to deliver to ▇▇▇▇▇▇▇ ▇▇▇▇▇, at the execution hereof, a Power of
Attorney, in the form attached as Exhibit A’ hereto, by which the Borrower will
empower ▇▇▇▇▇▇▇ ▇▇▇▇▇ inter alia to take any and all action pursuant to this
Section 10.5, in the Borrower’s name and/or place and/or on its behalf, all as
set forth in Exhibit A.
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11 |
Miscellaneous |
11.1 In view
of the fact that the Lenders are shareholders in the Borrower and are also
members of the Borrower’s Board of Directors, the Lenders hereby agree that, so
long as they own more than 1% of the Borrower’s issued and outstanding share
capital or are members of the Borrower’s Board of Directors, they will not
participate in any vote taken by any of the organs within the 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.
11.2 Each
Lender shall be entitled, at any time and without requiring the consent of the
Borrower or any other individual, to assign all or any part of its rights under
this Agreement, including the security interests contemplated hereby, to any
other entity. The Borrower shall not be entitled to assign all or any part of
its rights and/or obligations under this Agreement, without the Lenders’ advance
written consent.
11.3 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.
11.4 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.
11.5 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.
11.6 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.
11.7 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.
11.8 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 ▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇-▇▇▇▇,
▇▇▇▇▇▇.
11.9 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.
11.10 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:
SIGNED
for and on behalf of
Hotel
Outsource Management International, Inc.
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By: |
/s/
▇▇▇▇▇ ▇▇▇▇▇▇ |
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SIGNED
by: |
/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇ |
|
▇▇▇▇▇▇▇
▇▇▇▇▇ | |
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SIGNED
by: |
/s/
▇▇▇▇▇ ▇▇▇▇▇▇ |
|
▇▇▇▇▇
▇▇▇▇▇▇ |
I, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, Adv., hereby confirm that to the best of my knowledge, the
representations and warranties delivered in Section 8.2, 8.3 and 8.4 above are
true and correct.
/s/
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, Adv.