EXHIBIT 10.4
HOTEL OUTSOURCE SERVICES, INC.
STOCKHOLDERS' AGREEMENT
AGREEMENT, dated as of _______ __, 2001, among HOTEL OUTSOURCE SERVICES,
INC., a Delaware corporation (the "Company"), HILA INTERNATIONAL CORP., a
Delaware corporation ("BarMedit Sub"), BARTECH SYSTEMS INTERNATIONAL, INC., a
Delaware corporation ("Bartech") and the Persons who may hereafter become
stockholders of the Company and who execute this Agreement and agree to be bound
by the terms and conditions hereof (each such Person and each of BarMedit Sub
and Bartech being referred to herein as a "Stockholder," and collectively as the
"Stockholders").
W I T N E S S E T H:
WHEREAS, each of the Stockholders beneficially owns the number and class of
shares of the Company's common stock, par value $.01 per share (the "Common
Stock"), set forth opposite such Stockholders' name on Schedule A hereto (as
such Schedule may be amended from time to time); and
WHEREAS, the parties hereto desire to express their agreement regarding,
among other matters, the capitalization, ownership and governance of the Company
and the procedures relating to the sale or disposition of shares of the Common
Stock, all in the manner and upon the terms and conditions hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Stockholders
hereby agree as follows:
ARTICLE 1
DEFINITIONS AND USAGE
..1 Definitions. Capitalized terms used herein and not otherwise defined
shall have the following meanings:
"Affiliate" shall mean as to any specified Person, any other Person
directly or indirectly controlling, controlled by or under common control with,
such specified Person. For purposes of this definition, the term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management, policies or activities of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" this Stockholders' Agreement, as it may be amended from time to
time.
"BarMedit" shall mean Bartech Mediterranean, Ltd., a corporation organized under
the laws of Israel, and the parent corporation of BarMedit Sub.
"BarMedit Sub" shall mean Hila International Corp., a Delaware corporation and
the wholly-owned subsidiary of BarMedit.
"Bartech" has the meaning set forth in the Preamble hereto.
"Bartech Minibars" shall mean minibars which are licensed, rented or sold to
hotels by Bartech.
"Board" shall mean the Company's Board of Directors.
"Contribution" shall mean any consideration contributed to the Company by or on
behalf of a Stockholder, including all capital contributions made or to be made
pursuant to Article 5 hereof, in respect of Shares or other securities of the
Company.
"Common Stock" shall have the meaning set forth in the recitals hereto.
"Common Stock Equivalents" shall mean securities, directly or indirectly,
convertible into, or exchangeable or exercisable for, shares of Common Stock,
including the Option Agreement, dated as of the date hereof, between the Company
and Bartech (the "Option") if such Option is then exercisable, but not including
the Purchase Option Agreement, dated as of as of the date hereof,, among the
Company, Bartech, BarMedit and BarMedit Sub (the "Purchase Option").
"Company" shall mean Hotel Outsource Services, Inc., a Delaware corporation.
"Event of Bankruptcy" shall mean, with respect to any Stockholder, any of the
following: (a) filing a voluntary petition in bankruptcy or for reorganization
or for the adoption of an arrangement or an admission seeking the relief therein
provided under any existing or future law of any jurisdiction relating to
bankruptcy, insolvency, reorganization or relief of debtors; (b) making a
general assignment for the benefit of creditors; (c) consenting to the
appointment of a receiver for all or a substantial part of such person's
property; (d) in the case of the filing of an involuntary petition in
bankruptcy, an entry of an order of relief; (e) the entry of a court order
appointing a receiver or trustee for all or a substantial part of such
Stockholder's property without its consent; or (f) the assumption of custody or
sequestration by a court of competent jurisdiction of all or substantially all
of such Stockholder's property.
"GAAP" shall mean generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions or
comparable stature and authority within the accounting profession), or in such
other statements by such entity as may be in general use by significant segments
of the U.S. accounting profession.
"Indebtedness" shall mean: (i) any liability for borrowed money, (x)
evidenced by a note, debenture, bond or other instrument of indebtedness,
including any given in connection with the acquisition of property, assets or
securities, or (y) for the payment of rent or other amounts relating to
capitalized lease obligations, (ii) any liability of others of the nature
described in clause (i) which the Company has guaranteed or which is otherwise
its legal liability, or (iii) any modification, renewal, extension, replacement
or refunding of any such liability described in clause (i) or (ii).
"Initial Project" shall mean the installation of Bartech Minibars in the
Hyatt Regency Hotel in San Francisco, California.
"Liens" shall mean any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind.
"Minibar Threshold" shall mean the installation of at least 5,000 Bartech
Minibars in United States hotels in connection with Outsourcing to be provided
by the Company.
"Outsourcing" shall mean those outsourcing services provided, directly or
indirectly, by the Company to hotels and shall include (i) purchasing food,
beverages and other items for storage in and sale from Bartech Minibars, and
(ii) stocking, restocking, maintaining and otherwise servicing Bartech Minibars.
"Percentage Interest" shall mean the percentage that the number of Shares held
by any Stockholder bears to the total number of Shares then outstanding.
"Person" shall mean any individual, and any corporation, partnership, joint
venture, association, limited liability company, trust, unincorporated
organization or other entity.
"Proportionate Share" shall mean that number of Shares determined by
multiplying the number of Shares of capital stock subject to purchase or sale,
by a fraction, the numerator of which shall be the number of Shares of Common
Stock owned by the Stockholder whose Proportionate Share is being determined and
the denominator of which shall be the aggregate number of Shares of Common Stock
owned by all Stockholders entitled to and electing to participate in the
purchase or sale of such Shares, assuming, for purposes of the calculation, the
conversion and exchange of all Common Stock Equivalents.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Shares" shall mean and include all shares of Common Stock and any other shares
of capital stock entitled to vote as a class with the Common Stock, if any,
owned by the Stockholders, respectively, including any securities issued or
distributed in respect of, or issued in exchange or substitution for, such
shares, whether presently held or hereafter acquired and whether or not such
shares are listed on Schedule A hereto.
"Stockholder" shall have the meaning set forth in the Preamble to this
Agreement.
"Trade Secrets" shall mean, with respect to any Person, any proprietary
information, formula, patent, device or compilation used in such Person's
business, in any form or medium whatsoever, that is treated as confidential and
is generally not known by the public, including, without limitation,
confidential methods of operation, organization and sources of supply and
customer lists; provided, that, the term "Trade Secrets" shall not include
information that is required to be disclosed under applicable law or by a valid
subpoena or other court or governmental order, decree, regulation or rule.
"Turnkey Installation" shall mean the installation of Bartech Minibars.
..2 Usage.
(a) Any reference to a federal, state, local or foreign statute or law shall
be deemed also to include all rules and regulations promulgated thereunder
and any applicable common law, unless the context requires otherwise.
(b) References to a document or a statute or other governmental rule are to
it as amended and otherwise modified from time to time (and references to any
provision thereof shall include references to any successor provision).
(c) References to Sections or to Schedules or Exhibits are to sections of,
or schedules or exhibits to, this Agreement, unless the context otherwise
requires.
(d) Unless the context otherwise requires, the definitions set forth herein
are equally applicable both to the singular and plural forms and the feminine,
masculine and neuter forms of the terms defined. In addition, any neuter
personal pronoun shall be considered to mean the corresponding masculine or
feminite personal pronoun, as the context requires.
(e) The term "including" and correlative terms are used in an illustrative
sense rather than a limiting sense, and shall be deemed to be followed by
"without limitation" whether or not followed by such words or words of like
import.
(f) The use of the words "hereof," "herein," "hereunder," and words of
similar import shall refer to this entire Agreement and not to any particular
article, section, subsection, clause or paragraph of this Agreement, unless the
context clearly indicates otherwise.
ARTICLE 2
ORGANIZATION AND CAPITALIZATION
.1 Authorization and Issuance. The Company is authorized to issue 3,000
shares of Common Stock. Each Stockholder represents and warrants that it the
owner of the number and class of Shares set forth opposite his or her name on
Schedule A hereto, free and clear of all liens, security interests, pledges,
charges, encumbrances, voting trusts and other similar rights of any kind or
nature whatsoever other than those created by this Agreement.
ARTICLE 3
MANAGEMENT OF THE COMPANY; OPERATIONS
..1 Board Representation; Committees.
(a) The Board shall consist of no more than three members, or in the event
that Bartech acquires additional shares of Common Stock pursuant to the Option,
then the Board shall consist of no more than four members. Bartech shall be
entitled to designate one member of the Board, or, in the event that Bartech
acquires additional shares of Common Stock pursuant to the Option, then Bartech
shall be entitled to designate two members of the Board (any such designated
member, hereinafter referred to as a "Bartech Representative"). Bartech will
not be required to designate any Board member it has a right to designate and,
if it does not, such Board position shall remain vacant.
(b) The Board may establish such committees as its members deem necessary,
desirable or appropriate. The members of any such committee shall be appointed
by the Board; provided, that, unless otherwise agreed by Bartech, at least one
Bartech Representative shall be appointed as a member of any such committee if
Bartech has designated such Representation.
.2 Observer Rights. If at any time Bartech opts not to designate a Bartech
Representative to which it is so entitled, then Bartech shall instead be
entitled to designate a person to act as an observer to attend any meeting of
the Board. Such observer may be designated at or in advance of such meeting by
written notice to the Company. Such observer shall be entitled to receive all
notices relating to meetings of the Board as well as any documentation
distributed to members of the Board prior to or at any meeting of the Board. If
no observer has been designated at the time notice of any meeting or any
documentation with respect thereto is to be sent to members of the Board, such
notice and documentation shall be sent to Bartech as provided in Section 8.10
hereto. Any observer appointed pursuant hereto shall have the right to
participate in meetings of the Board, receive all information and material
presented to the Board, and be treated in all respects as a director; provided,
that, an observer shall not have the right to vote at meetings of the Board and
shall not have any of the fiduciary or other obligations of a director.
.3 Voting Agreement; Irrevocable Proxy. Each of the Stockholders shall vote
its Shares (whether now owned or hereinafter acquired) as required (including,
without limitation, by amending the Company's Certificate of Incorporation
and/or Bylaws, if necessary) in order to effect the Board and committee
composition described in Sections 3.1(a) and 3.1(b). Each Stockholder hereby
irrevocably constitutes and appoints Bartech as its proxy and attorney-in-fact
with full power of substitution and acknowledges that the constitution and
appointment of such proxy and attorney-in-fact are coupled with an interest and
are irrevocable until the termination of the term of this Agreement, provided,
that the foregoing appointment shall be limited only as necessary or appropriate
to effect the Board and committee composition described in Sections 3.1(a) and
3.1(b) and for no other purposes.
.4 Consent Rights. For so long as Bartech and/or any of its Affiliates
collectively own at least 25% of then outstanding Shares (assuming, for purposes
of this calculation, the conversion and exchange of all Common Stock
Equivalents), the Company shall not, and no other Stockholder shall cause or
permit the Company to, without the affirmative vote or written consent of
Bartech:
(a) alter or amend the terms of any provision of the Company's Certificate
of Incorporation, By-Laws or other governing documents;
(b) change the size of the Board;
(c) enter into a new line of business or change its primary line of
business;
(d) enter into any transaction with an Affiliate unless such Affiliate is a
wholly-owned subsidiary;
(e) enter into any contract or commitment out of the ordinary course of
business or involving in excess of $1,000,000;
(f) authorize or issue any capital stock or any option, warrant, put, call,
note, bond, debenture, or other right exercisable, convertible or exchangeable
for the Company's capital stock, other than issuances pursuant to a Board
approved stock option or equity incentive plan;
(g) declare or pay any dividend or make any distribution on, or purchase,
redeem, or retire, any shares of its capital stock or any warrants, options or
other rights to acquire any such shares, units, interests or other securities;
(h) create, incur or suffer to exist any Indebtedness other than unsecured
trade debt and any Indebtedness provided for in a Board approved budget;
(i) incur any expense or make any capital expenditure out of the ordinary
course of business, in one or more transactions, involving in excess of $100,000
at any one time or in excess of $100,000 in the aggregate;
(j) sell or dispose of assets of the Company other than in the ordinary
course of business;
(k) take any action relating to the merger, sale, consolidation,
dissolution, winding-up, liquidation or similar transaction, in one or more
related transactions, involving all or substantially all of the capital stock or
assets of the Company;
(l) commence or consummate an underwritten public offering of the Company's
equity securities;
(m) enter into, terminate, modify or amend any contract or agreement out of
the ordinary course of business;
(n) create any subsidiary, unless such subsidiary shall be a wholly-owned
subsidiary of the Company;
(o) permit any subsidiary to authorize or issue any capital stock,
membership units, partnership interests or other equity securities, or any
option, warrant, put, call, note, debenture or other right exercisable,
convertible or exchangeable for such subsidiary's equity securities, to any
person or entity other than to the Company; or
(p) agree to or permit any subsidiary to take any action set forth above.
ARTICLE 4
OPERATIONS
.1 Character of the Business. The business of the Company (the "Business")
is to provide Outsourcing to hotels using Bartech Minibars and related products
in the United States. The Company shall be solely responsible for all sales to
and negotiations with hotels for Outsourcing contracts, for the performance of
such Outsourcing agreements, and for compliance with all applicable laws, rules
and regulations.
.2 Exclusivity.
(a) BarMedit, BarMedit Sub and the Company each agree, on behalf of
themselves and each of their respective Affiliates, to provide Outsourcing
services in the United States only by using Bartech Minibars.
(b) Bartech will not refer Outsourcing leads in the United States to any
Person other than the Company and will not, without the Company's consent,
knowingly sell, rent or license Bartech Minibars in the United States to any
Person which intends to use them in Outsourcing for hotels; provided, that
Bartech may refer Outsourcing leads or sell, rent or license Bartech Minibars to
hotels (i) which have pre-existing relationships with outsourcing vendors other
than the Company, or (ii) to which the Company is not able or not willing to
provide Outsourcing. The Company shall promptly, but in any event no later than
10 days after receiving an inquiry from Bartech, indicate whether it is
interested in pursuing a particular referral. If the Company does wish to pursue
a particular referral or if the Company does not respond within such
aforementioned 10-day period, then Bartech shall be free to refer such
particular opportunity and any other hotels in the same chain as such particular
opportunity to any other Person. Bartech will not enter into any joint venture,
partnership or similar arrangement with any Person other than the Company
relating to Outsourcing services in the United States.
.3 Future Financings. If the Company's net income attributable to the
Initial Project is positive, as determined in accordance with GAAP, BarMedit Sub
shall, as soon as reasonably practicable, cause the Company to prepare and
deliver a plan for financing (a "Financing Plan") additional projects and shall
deliver such Financing Plan to Bartech. Such Financing Plan shall set forth the
Company's plans in reasonable detail and shall be subject to the reasonable
approval of Bartech.
.4 Future Operations. If the Initial Project is successful, BarMedit Sub
shall cause the Company to establish an Operating Office and Training Center in
the United States. The expenses of such center will be borne by the Company, as
will other costs related to the operation of the Company's business. The parties
hereto agree that Bartech's sole financial commitment and responsibility with
respect to the Company and its Business will be to make the Contributions
described in Article 5.
.5 Discount. Bartech shall sell Bartech Minibars for Turnkey Installation
to the Company at a 15% discount from its then current United States price list
and shall not offer such 15% discounts to other providers of Outsourcing
arrangements in the United States except as contemplated by Section 4.2 hereof;
provided, that such 15% discount shall apply to hardware and software only, and
not to labor, training, transportation, taxes or duties, if any. In addition,
Bartech shall provide certain maintenance services for $20 per hotel room per
year, which services are more fully set forth on Schedule B hereto.
Notwithstanding anything contained herein to the contrary, there shall be no
discounts with respect to installation fees.
.6 Best Efforts. BarMedit and the Company shall each use its best efforts
to cause the Company to succeed and prosper in the Business.
ARTICLE 5
EQUITY CONTRIBUTIONS
.1 Initial Equity Contributions. Each of the Stockholders has made the
Contributions set forth opposite their respective names on Schedule A hereto.
..2 Additional Equity Contributions.
(a) Until the Minibar Threshold is accomplished, if the Board shall
reasonably determine based on the Financing Plan that the Company requires
additional funds for any purpose consistent with the character of the business
of the Company as described in Section 4.1 hereof, then the Board may request
that each of the Stockholders make an additional Contribution in the amount
determined by the Board by delivering a notice (a "Contribution Notice") to each
Stockholder, specifying: (i) the total amount of additional Contribution
requested, (ii) each Stockholder's portion of the additional Contributions
requested (which portion shall equal each such Stockholder's Percentage
Interest), (iii) the use of the requested funds, (iv) the type and amount of
Shares or other securities that such Stockholder will receive in respect of such
additional Contribution, and (v) the date by which such requested funds are
required, which date shall not be less than 120 days after the date such
Contribution Notice is given. The Board shall also deliver to the Stockholders
such additional information as may be reasonably requested by any Stockholder in
connection with such additional Contribution. Each Stockholder shall contribute
its respective portion of the additional Contribution requested by the Board on
or prior to the date specified in the Contribution Notice (a member so
contributing being referred to as a "Contributing Stockholder") by delivery of
the applicable amount to the Company by wire transfer of immediately available
funds or by bank or certified check and shall, promptly after receipt thereof by
the Company, receive stock certificates or other evidence of the Shares or other
securities specified in the Contribution Notice. (b) If any Stockholder shall
fail to contribute all or any portion of its additional Contribution by the date
specified in the Contribution Notice (hereinafter, a "Non-Contributing
Stockholder"), then the other Stockholder(s) shall be entitled, but not
required, to fund all or any portion of the additional Contribution which the
Non-Contributing Stockholder failed to pay and to receive, in respect thereof,
additional Shares so that the Stockholders' respective Percentage Interests will
be adjusted to reflect the amounts actually contributed by the parties hereto.
ARTICLE 6
RESTRICTIONS ON TRANSFER OF SHARES
.1 General Restrictions.
(a) No Stockholder shall transfer or otherwise dispose of any of its Shares
or Common Stock Equivalents unless such transfer is made in accordance with the
terms of this Agreement. Any attempt by any Stockholder to effect a transfer in
violation of this Article 6 shall be void and ineffective for all purposes. The
words "transfer" and "dispose" include the making of any sale, exchange,
assignment, gift, security interest, pledge or other encumbrance, or any
contract therefor, any voting trust or other agreement or arrangement with
respect to the transfer of voting rights or any other beneficial interest in the
Shares or Common Stock Equivalents, the creation of any other claim thereto or
any other transfer or disposition whatsoever, affecting the right, title,
interest or possession with respect to the Shares or Common Stock Equivalents.
(b) Each certificate representing Shares or Common Stock Equivalents shall
bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS' AGREEMENT, DATED AS OF __________ __, 2001, WHICH
CONTAINS PROVISIONS REGARDING THE ELECTION OF DIRECTORS OF THE
COMPANY, RESTRICTIONS ON THE TRANSFER OF SUCH SECURITIES AND
OTHER MATTERS. A COPY OF SUCH AGREEMENT IS AVAILABLE FOR
INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY.
(c) Notwithstanding anything contained herein to the contrary, any
Stockholder may transfer all or any portion of its Shares or Common Stock
Equivalents to an Affiliate (and an Affiliate may transfer Shares or Common
Stock Equivalents back to such Stockholder or to another Affiliate of such
Stockholder) without compliance with the other provisions of this Article 6;
provided, that said Affiliate becomes a party to, and agrees to be bound by, the
terms and conditions of this Agreement by executing and delivering to the
Company an instrument of accession substantially in the form annexed hereto as
Exhibit A.
..2 Right of First Refusal.
(a) If any Stockholder (a "Selling Stockholder") desires to transfer any of
its Shares or Common Stock Equivalents pursuant to a bona fide offer received
from a third party (a "Third Party Offer"), such Selling Stockholder shall give
each other Stockholder written notice ("Notice") of such desire to transfer
Shares or Common Stock Equivalents. No Notice of any proposed transfer by sale
shall be valid unless the Selling Stockholder has received a bona fide written
offer (the "Offer") to purchase such Shares or Common Stock Equivalents from a
third party. The Notice shall describe the terms and conditions of such transfer
and shall be accompanied by a copy of such Offer and information concerning the
identity and background of the proposed purchaser. Each Stockholder (other than
the Selling Stockholder) shall then have the right, but not the obligation, to
purchase all or a portion of the Shares or Common Stock Equivalents which the
Selling Stockholder desires to sell (the "Offered Securities"), at the price and
on the terms set forth in the Offer; provided, that, within 15 days following of
the effective date of the Notice, such Stockholder gives written notice to the
Selling Stockholder of its intention to purchase such Offered Securities.
(b) If the Stockholders taken together do not elect to purchase, in the
aggregate, all of the Offered Securities, all of such Offered Securities may be
transferred to the proposed purchaser at the price, and upon the other terms,
set forth in the Offer, subject, however, to the provisions of paragraph (c)
below and the rights of the Stockholders provided in Section 6.3 hereof.
(c) The transfer of a Selling Stockholder's Shares or Common Stock
Equivalents to a third party must be consummated within 90 days following the
effective date of the Notice. If for any reason the transfer to the third party
of the Selling Stockholder's Shares or Common Stock Equivalents (and, pursuant
to Section 6.3 hereof, the Shares or Common Stock Equivalents of any other
Stockholder) is not consummated within such period, or if the terms of the
proposed transfer are changed such that they are more favorable to the third
party than those set forth in the Offer, then such sale may not be consummated
without repetition of the procedures set forth in this Section 6.2 and Section
6.3 hereof. Furthermore, no Shares or Common Stock Equivalents shall be
transferred to a third party on the books of the Company until the Company has
received a written agreement from the third party, satisfactory in scope and
form to counsel to the Company, to be bound by all the terms and conditions of
this Agreement. Upon receipt of such agreement, the third party shall be
considered a "Stockholder" for purposes of this Agreement.
(d) In no event shall a transfer of Shares or Common Stock Equivalents to
any third party pursuant to this Section 6.2 include payment of consideration
other than cash or promissory notes of the purchaser.
.3 Come-Along Right.
(a) In connection with any proposed purchase of Shares or Common Stock
Equivalents representing at least 51% of the then outstanding Shares (assuming
conversion, exercise or exchange of any Common Stock Equivalents which are
subject to such proposed purchase) from a Stockholder or Stockholders to a third
party in accordance with the provisions of Section 6.2, each other Stockholder
(other than the Stockholders desiring to sell such Shares) shall have the right,
but not the obligation (a "Come-Along Right"), to require the third party to
purchase from such Stockholder rather than from the Selling Stockholder(s), up
to the number of Shares equal to such Stockholder's Proportionate Share. The
transfer of Shares by a Stockholder exercising its Come-Along Right pursuant to
this Section 6.3 shall not be subject to the right of first refusal provided for
in Section 6.2 hereof; provided that it is understood that such transfer of
Shares or Common Stock Equivalents shall only be made if the transfer of Shares
or Common Stock Equivalents to the third party is consummated after compliance
with Section 6.2.
(b) The Come-Along Right may be exercised by a Stockholder by delivery of a
written notice to the Selling Stockholder(s) within the 30-day period following
the effective date of the Notice referred to in Section 6.2(a) hereof, which
notice shall set forth the number of Shares such Stockholder elects to sell.
(c) Notwithstanding anything to the contrary contained herein, if any third
party offering to purchase Shares or Common Stock Equivalents does not purchase
all of the Shares offered by the other Stockholders pursuant to this Section
6.3, then the Selling Stockholder(s) shall not be entitled to sell any Shares to
such third party, whether pursuant to the terms originally agreed to by the
Selling Stockholder(s) and such third party or any other terms, without again
complying with Section 6.2 and this Section 6.3.
(d) Any Stockholder exercising its Come-Along Right pursuant to this
Section 6.3 who holds Common Stock Equivalents may, pursuant hereto, sell the
Shares issuable upon exercise, conversion or exchange of such Common Stock
Equivalents if, prior to such sale, such Stockholder so exercises, converts or
exchanges such Common Stock Equivalents; provided, that, any Shares so sold
shall count towards such Stockholder's Proportionate Share. In addition, in the
event that a Selling Stockholder has proposed to sell Common Stock Equivalents,
any other Stockholder who exercises its Come-Along Right pursuant to this
Section 6.3 may sell such Stockholders' Shares on the same terms as the Selling
Stockholder sells its Common Stock Equivalents, except that the price per Share
shall be adjusted to reflect the price per Share paid for the Common Stock
Equivalent plus the additional per Share price payable upon exercise, conversion
or exchange of such Common Stock Equivalent.
.4 Closing Procedures.
(a) Any Person giving notice electing to purchase Shares or Common Stock
Equivalents which it is entitled to purchase pursuant to the terms of this
Agreement shall be obligated to purchase such Shares or Common Stock
Equivalents, and the Selling Stockholder shall be obligated to sell such Shares
or Common Stock Equivalents, at the price and upon the terms set forth in this
Agreement.
(b) Unless the parties to any purchase and sale pursuant to this Agreement
otherwise agree in writing, the closing of any purchase and sale of:
(i) Offered Securities pursuant to Section 6.2 shall take place on the
later of (x) the date specified in the Notice, and (y) the 30th day after
the effective date written notice is given by the last of the Stockholders
electing to participate in such purchase; and
(ii) Shares or Common Stock Equivalents pursuant to Section 6.3 shall
take place on the later of (x) the date specified in the Notice, and (y)
the 30th day after the effective date written notice is given by the last
of the Stockholders exercising its respective Come-Along Right; and
(iii) in any case, at such other time and place as the parties to such
purchase and sale otherwise agree in writing.
(c) At the closing, the purchaser(s) shall deliver, by wire transfer or by
certified or official bank check, an amount, in cash, equal to the full purchase
price for the Shares or Common Stock Equivalents to be purchased unless the
terms and conditions set forth in the Offer relating to such sale permit payment
of the purchase price, in whole or in part, in installments or by delivery of
one or more promissory notes in which event the purchase price may be paid in
the same manner as set forth in such Offer.
(d) By delivering the certificates at the closing, the seller of such
Shares or Common Stock Equivalents shall be deemed to represent that (i) it has
the power and authority to sell the Shares or Common Stock Equivalents being
sold by such seller, and (ii) the purchaser thereof will receive good title to
such Shares or Common Stock Equivalents, free and clear of all liens, security
interests, pledges, charges, encumbrances, voting trusts and other similar
rights of any kind or nature whatsoever, and preemptive rights, other than those
created by this Agreement. The purchaser shall deliver at the closing an
appropriate investment representation if required by the Securities Act.
ARTICLE 7
ADDITIONAL AGREEMENTS
.1 Information Rights. BarMedit Sub shall cause the Company to deliver to
Bartech:
(a) as soon as available, and in any event within 30 days after the
end of each month, a profit and loss statement and key monthly metrics for
such monthly accounting period and on a cumulative basis for the fiscal
year to date and a balance sheet as at the last day of such monthly
accounting period;
(b) as soon as available, and in any event within 45 days after the
end of each quarterly fiscal period of each fiscal year of the Company,
consolidated statements of income, retained earnings and cash flow of the
Company, for such period and for the period from the beginning of the
respective fiscal year to the end of such period, and the related
consolidated balance sheet of the Company as at the end of such period
setting forth in the case of each such statement in comparative form the
corresponding figures for the corresponding period in the preceding fiscal
year (if any);
(c) as soon as available and in any event within 90 days after the end
of each fiscal year of the Company, consolidated statements of income,
retained earnings and cash flow of the Company for such fiscal year, and
the related consolidated balance sheet of the Company as at the end of such
fiscal year, setting forth in the case of each such statement in
comparative form the corresponding figures for the preceding fiscal year
(if any), and accompanied by an audit report from the Company's independent
public accountants;
(d) with reasonable promptness after the date on which the Company
first obtains knowledge of such, written notice of all legal or arbitration
proceedings, and all proceedings by or before any governmental or
regulatory authority or agency, and each material development in respect of
such legal or other proceedings, affecting the Company, which proceeding
involves at least $50,000;
(e) as soon as available, but in any event within 90 days after
commencement of each new fiscal year, a budget consisting of a business
plan and projecting financial statements for such fiscal year; and
(f) with reasonable promptness, such other notices, information and
data as the Company deems material to its business or operations.
.2 Inspection Rights. BarMedit Sub shall cause the Company to permit
Bartech and its representatives to visit and inspect the properties of the
Company, including its corporate and financial records, and to discuss its
business and finances with officers of the Company, during normal business hours
following reasonable notice and as often as may be reasonably requested, without
interruption of the business of the Company.
.3 Insurance. BarMedit shall cause the Company to purchase and maintain
insurance policies, satisfactory to Bartech and each hotel with which the
Company contracts, of the type and with coverages in amounts customary for
companies similarly situated.
.4 Non-Disclosure; Non-Solicitation and Non-Competition.
(a) All Trade Secrets which any Stockholder may now possess or may obtain
or create while a stockholder of the Company, or may create after it is no
longer a stockholder of the Company through substantial reliance upon or
incorporation of Trade Secrets obtained while it was a stockholder of the
Company, relating to (i) the Company, (ii) any other Stockholder, or (iii) any
of their respective Affiliates, customers, suppliers, businesses and
investments, shall not, except as may otherwise be required by law or any legal
process, be used, communicated, divulged, published, disclosed or otherwise made
accessible by such Stockholder to any other Person while such Stockholder is a
stockholder of the Company or at any time thereafter.
(b) Each Stockholder agrees, during the period that it is a stockholder of
the Company and for one year thereafter (the "Restrictive Period"), not to,
directly or indirectly, alone, in association with or as a stockholder,
principal, agent, partner, officer, director, employee or consultant of any
other organization, interfere with or endeavor to entice away any Person who, is
on the date hereof, or at any time before the end of the Non-Solicitation Period
becomes an employee, or a customer or supplier of the Company, any other
Stockholder, or any of their respective Affiliates.
(c) Except as contemplated by this Agreement, each Stockholder agrees,
during the Restrictive Period, not to, directly or indirectly, alone, in
association with or as a stockholder, principal, agent, partner, officer,
director, employee or consultant of any other organization, engage in any
Competitive Enterprise, anywhere within any state in the United States. For the
purpose hereof, "Competitive Enterprise" is defined as any business that
provides services that compete with the services being provided by the Company
or any other Stockholder at any time during the Restrictive Period.
Notwithstanding the foregoing, the ownership by any Stockholder of not more than
two percent of the outstanding shares of capital stock of any corporation having
a class of equity securities actively traded on a national securities exchange
or on the Nasdaq National Market shall not be deemed, in and of itself, to be a
violation of this Section 7.4.
ARTICLE 8
MISCELLANEOUS
.1 Term. Except to the extent otherwise provided herein, this Agreement
shall continue in full force and effect as of and after the date hereof until
the earlier of (i) 10 years from the date of this Agreement, (ii) the closing of
a firm commitment underwritten public offering pursuant to an effective
registration statement under the Securities Act covering the offer and sale of
Common Stock, (iii) by the written consent of all the Stockholders, (iv) upon
the occurrence of an Event of Bankruptcy with respect to one of the
Stockholders, (v) upon written notice by any Stockholder upon the occurrence of
a material breach of this Agreement by any other party hereto, (vi) upon written
notice by any Stockholder in the event that the actions of or failure to act by
another party hereto has resulted in a material adverse effect on such
Stockholder, or (vii) upon the consummation of the transactions contemplated by
the Purchase Option.
.2 Remedies. In the event of a breach or a threatened breach by any party
to this Agreement of its obligations under this Agreement, any party injured or
to be injured by such breach, in addition to being entitled to exercise all
rights granted by law, including, without limitation, recovery of damages, will
be entitled to specific performance of its rights under this Agreement. The
parties agree that the provisions of this Agreement shall be specifically
enforceable, it being agreed by the parties that any remedy at law, including
monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense in any action for specific
performance that a remedy at law would be adequate is waived.
.3 Addition of Parties. The Company agrees that, until the termination of
this Agreement it will cause each Person who acquires Shares or Common Stock
Equivalent of the Company to enter into this Agreement and thereby to be bound
by the terms hereof, all by execution of an instrument of accession
substantially in the form annexed hereto as Exhibit A. Any such Person so
entering into this Agreement shall be deemed to be a Stockholder for purposes of
this Agreement. The parties hereto agree, that, if, at any time a Person
entering this Agreement shall be a natural person, then the parties shall in
good faith negotiate to amend or modify this Agreement to include such
additional provisions as may be appropriate, necessary or desirable, including,
without limitation, provisions relating to restrictions on transfer of Shares or
Common Stock Equivalents, or rights to purchase Shares or Common Stock
Equivalents upon such individual's death or termination of employment or in the
case of his or her bankruptcy, divorce or other circumstances.
.4 Party No Longer Owning Shares. If a party hereto ceases to own any
Shares or Common Stock Equivalent, such party will no longer be deemed to be a
Stockholder.
.5 Application to Other Securities. The provisions of this Agreement shall
be deemed to apply equally to any Shares or Common Stock Equivalent or other
securities distributed in respect of such Shares or Common Stock Equivalent.
.6 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns and the Stockholders and
their respective successors and permitted assigns.
.7 Entire Agreement. This Agreement sets forth the entire understanding of
the parties with respect to the subject matter hereof, supersedes all existing
agreements among them concerning such subject matter, and may be modified only
by a written instrument duly executed by each party.
.8 Waiver. Any waiver by any party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
.9 Severability. If any provision of this Agreement is invalid, illegal or
unenforceable, the balance of this Agreement shall remain in effect, and if any
provision is inapplicable to any person, party or circumstance, it shall
nevertheless remain applicable to all other persons, parties and circumstances.
.10 Notices. All notices and other communications provided for or permitted
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally or sent by overnight courier, telex, telegram or telecopy
or sent by registered or certified mail (return receipt requested) postage
prepaid to the address of the party set forth on Schedule A hereto, or in the
case of the Company, to its offices at 00 Xxxx Xxxxxx, Xxxxx 00X, Xxx Xxxx, Xxx
Xxxx 00000; Attention: Xxxxx Xxxxxx, or, in the case of a person who becomes a
party to this Agreement after the date hereof, at the address provided by such
party at the time he, she or it becomes a party (or at such other address for
any party as shall be specified by like notice). Any notices or other
communications given by personal delivery, overnight courier, telex, telegram or
telecopy shall be deemed given when so delivered, telexed, telegrammed or
telecopied, and any notices or other communications given by registered or
certified mail shall be deemed effective upon registration or certification
thereof; provided that notices of a change of address shall be deemed given only
upon receipt thereof.
.11 Further Assurances. At any time and from time to time each party
agrees, at his or her expense, to take such actions and to execute and deliver
such instruments, documents and agreements as may be reasonably necessary to
carry out the intent and effectuate the purposes of this Agreement.
.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
.13 Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York without giving effect to
principles governing conflicts of law.
.14 Filing of the Agreement. A copy of this Agreement shall be filed at the
offices of the Company.
.15 Arbitration. Except as otherwise expressly provided herein, any
dispute, claim or controversy arising out of, in connection with, or relating to
this Agreement, or any breach or alleged breach thereof, shall be submitted to
the American Arbitration Association in the City of New York for resolution
pursuant to its rules as then in effect. Any award rendered shall be final,
binding and conclusive upon the parties and all other persons and a judgment
thereon may be entered in any Court in the State of New York or any Federal
Court sitting within such State, and the Company and each Stockholder
irrevocably consents to the jurisdiction of such Courts for such purpose. The
Company and each Stockholder hereby waive personal service of any summons,
complaint or other process in any such action, suit or proceeding and agree that
service thereof may be made in accordance with Section 8.10 of this Agreement
.16 Construction. The initial parties to this Agreement have participated
jointly in the negotiation and drafting of this Agreement. In the event of an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by all of the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
* * * * *
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of
the day and year first above written.
HOTEL OUTSOURCE SERVICES, INC.
/s/ Xxxxx Xxxxxx and Xxxxx Xxxxx
By: ___________________________________
Xxxxx Xxxxxx and Xxxxx Xxxxx
Name: ___________________________
CEO and COO
Title: ___________________________
HILA INTERNATIONAL CORP.
/s/ Xxxxx Xxxxxx and Xxxxx Xxxxx
By: ___________________________________
Xxxxx Xxxxxx and Xxxxx Xxxxx
Name: ___________________________
CEO and COO
Title: ___________________________
BARTECH SYSTEMS INTERNATIONAL, INC.
/s/ Xxxxxx Xxxxx
By: ___________________________________
Xxxxxx Xxxxx
Name: ___________________________
President and CEO
Title: ___________________________
ACKNOWLEDGED AND AGREED:
The undersigned acknowledges and agrees
to the foregoing provisions and
guarantees in full the obligations of
the Company and BarMedit Sub under this
Agreement.
BARTECH MEDITERRANEAN LTD.
/s/ Xxxxx Xxxxx
By: ___________________________________
/s/ Xxxxx Xxxxxx
Name: ___________________________
Director and General Manager
Title: ___________________________
SCHEDULE A
Name and Address Number of Shares
Hila International Corp. 700
00 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 10005
Attention: Xxxxx Xxxxxx
Facsimile: 011.9723.516.8577
Bartech Systems International, Inc. 300
000 Xxxxxxx Xxxx, Xxxxx X
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Facsimile: (000) 000-0000
Sched. A-1
EXHIBIT A
ADOPTION AGREEMENT
This Adoption Agreement (this "Adoption Agreement") is executed pursuant to
the terms of the Stockholders' Agreement of Hotel Outsource Services, Inc., a
Delaware corporation (the "Company"), dated as of __________ ___, 2001 (as
amended, supplemented or restated, the "Stockholders' Agreement"), a copy of
which is attached hereto, by the undersigned. By executing this Adoption
Agreement, the undersigned agrees as follows:
1. Acknowledgment. The undersigned acknowledges receipt of the
Stockholders' Agreement and that the undersigned is acquiring _________ shares
of the common stock of the Company [or describe other securities], subject to
the terms and conditions of the Stockholders' Agreement. Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to such terms
in the Stockholders' Agreement.
2. Agreement. The undersigned agrees to be bound by the terms of the
Stockholders' Agreement with the same force and effect as if the undersigned
were originally a party thereto.
3. Notice. Any notice required or permitted by the Stockholders' Agreement
shall be given to the undersigned at the address listed below the undersigned's
signature.
______________________________
Agreed this ____ day of _______, 20___. {Signature}
______________________________
Address for Notice Purposes: {Print Name}
________________________________________
________________________________________
________________________________________
