LOAN AGREEMENT
DATED AS OF MARCH 5, 2004
BY AND BETWEEN: XXXXXXX XXXXX, of 0 XxXxxxxx Xxxxxx, Xxxxx-Xxxxxx - Xxxxxx,
Xxxxxx, and XXXXX XXXXXX, whose address for the purpose of
service under this Agreement shall be c/o Adv. Xxxxxx
Xxxxxxxx, Xxxxxxx 00, Xxx-Xxxx 00000 (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 00 Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000
(the "BORROWER")
WHEREAS: The Borrower requires an immediate, short-term bridge loan and
has requested that the Lenders make this loan 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 short-term bridge 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:
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.
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
300,000.- (three hundred thousand 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
000, Xxxxx Xxxxxx, Xxx Xxxx, XX 00000.
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 LIBOR for
6-month US Dollar loans, plus 1% per annum (the "INTEREST").
3.2 On the Repayment Date, 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.
4. REPAYMENT
4.1 If, at any time at which the Loan and all accrued Interest, or any
part thereof, remain outstanding (the "OUTSTANDING BALANCE"), the
Borrower (i) performs any rights offering, whereby it offers all of
its shareholders to purchase their pro rata share of new securities
of the Borrower, or (ii) otherwise offers
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to issue and sell to the Lenders new securities of the Borrower (the
"NEW SECURITIES"), each Lender shall be entitled to notify the
Borrower, within the applicable notice period stipulated in the
offer for acceptance of the New Securities, that payment for New
Securities subscribed for in the offering by that Lender, or by any
other shareholder stipulated by that Lender, shall be by means of a
set-off of the purchase price for such new Securities against that
part of the Outstanding Balance that is owed to that Lender,
whereupon the amount so offset shall be deemed paid to the Borrower
on account of such New Securities, and so reduced from the
Outstanding Balance.
4.2
A. If there remains an Outstanding Balance at June 30, 2004, then
the Borrower shall repay to the Lenders, pari passu, in one or
more repayments, the entire Loan as well as all accrued
Interest, less any amounts prepaid, if at all, as soon after
July 7, 2004 at which there is available to the Borrower
cash-flow from operations, or income from any investment, in
an amount sufficient to effect such repayments (the "REPAYMENT
DATE").
B. Notwithstanding the foregoing, if there remains an Outstanding
Balance at September 30, 2004, then each Lender shall be
entitled, in respect of the part of the Outstanding Balance
that is owed thereto, to demand repayment of such Outstanding
Balance within a period of the 3 months following such notice,
and the Borrower hereby undertakes to repay such Outstanding
Balance within the period so stipulated, which will then be
deemed the Repayment Date.
4.3 The Borrower may at any time prepay to the Lenders, pari passu,
Outstanding Balance, in whole or in part, upon the provision of 3
business days advance written notice to the Lenders.
5. LATE PAYMENT
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 HaPoalim of Israel in respect of monies
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.
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 complete the
funding of the purchase and installation of Bartech minibars for the
Grand Hyatt Seattle and the ArabellaSheraton Bogenhausen, and to
fund other, routine business activities (the "SPECIFIED PURPOSE").
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.
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 corporate 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 7 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.
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;
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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 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 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;
9.6 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;
9.7 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;
9.8 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.
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 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 by the Borrower pursuant to the terms hereof, including
the security and collateral as set forth in Section 10.1 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.
10.3 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 10.1 above (all such security and
collateral being termed hereinafter, the "COLLATERAL"), and that the
Lender's rights herein with respect to the security and collateral
as set forth in Section 10.1 above shall remain in full force and
effect regardless of, and in addition to, any other Collateral then
held by the Lender, and the 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 Lender, in this regard.
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10.4 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.
11. MISCELLANEOUS
11.1 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.
11.2 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.
11.3 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.
11.4 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.
11.5 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.
11.6 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.
11.7 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 x/x Xxxxxxx Xxxxxxxxxxxxx Xxx., 00 XxXxxxx
Xxxxxx, Xxx-Xxxx, Xxxxxx.
11.8 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.
11.9 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:
SIGNED for and on behalf of )
HOTEL OUTSOURCE MANAGEMENT INTERNATIONAL, INC. )
)
By: /s/ Xxxxx Xxxxxx )
------------------------------
SIGNED by: /s/ Xxxxxxx Xxxxx )
------------------------
XXXXXXX XXXXX )
SIGNED by: /s/ Xxxxx Xxxxxx )
------------------------
XXXXX XXXXXX )
I, Xxxxxx Xxxxxxxx, Adv., hereby confirm that to the best of my knowledge, the
representations and warranties delivered in Section 8.2 and 8.3 above are true
and correct.
/s/ Xxxxxx Xxxxxxxx
-----------------------------------
Xxxxxx Xxxxxxxx, Adv.
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