EXHIBIT 10.11
Made and entered this 9 day of August, 1998
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BETWEEN:
Bartech Mediterranean Limited (hereinafter: "Bartech")
of Tel Aviv, Israel of the first part;
AND:
Inter-Continental Hotels Corporation for and on behalf of
Classic Hotel Management Ltd. of 000 Xxxxxxxx Xxxxxx, Xxx-Xxxx, Xxxxxx
(hereinafter: the "Hotel") of Tel Aviv, Israel
of the second part;
WHEREAS
Inter-Continental Hotels Corporation is manager and operator of the Xxxxx
Inter-Continental Hotel, and has been authorized by the Hotel to
enter into this Agreement as its agent for and on its behalf; and
WHEREAS
The Hotel has requested that Bartech install, maintain and operate the
Units in the premises of the Xxxxx Inter-Continental, pursuant to a
revenue sharing scheme; and
WHEREAS
Bartech shall purchase the Units for the sole purpose of their installation and
operation in the Xxxxx Inter-Continental, pursuant to such revenue
sharing scheme; and
WHEREAS
As a consequence of and in connection with the foregoing, each of the
parties are entering into this Agreement to reflect their understandings
and agreements with respect to the installation, maintenance and
operation of the Units in the Xxxxx Inter-Continental.
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NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Definitions; Interpretations
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1.1 The preamble and schedules to this Agreement form an integral part hereof.
1.2 The paragraph headings are included solely for the sake of convenience and
shall not serve in any way for interpretive purposes.
1.3 For the purposes of this Agreement, the following terms shall have the
following meanings:
1.3.1 The term "Net Revenues" means all of the actual revenues collected from
Hotel guests due to the sale of the Products offered in the Units.
1.3.2 The term the "Products" means those items which are to be placed and sold
in the Units.
1.3.3 The term the "Xxxxx Inter-Continental" means the Xxxxx Inter-Continental
Tel Aviv hotel that is located at 00 Xxxxxxx Xxxxxx Xxx Xxxx, Xxxxxx.
1.3.4 The term the "Units" means the Bartech mini-bar units described in
Schedule with Top Dry Section Double Balcony together with a fully
functional energy efficiency facility to reduce use of electricity in
the refrigeration system, which shall be operated to the fullest
extent possible in coordination with the Hotel.
2. Representations and Undertakings
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2.1 Each party hereto (each a "Representing Party") represents, warrants and
undertakes to each other party hereto as follows:
a. The Representing Party is duly organized validly existing and in good
standing under the laws of the jurisdiction of its incorporation or formation.
b. The Representing Party has all necessary corporate power and authority to
enter into this Agreement and to comply with and fulfill its obligations
hereunder. The execution, delivery and performance by the Representing Party of
this Agreement has been duly authorized by all necessary corporate actions and
proceedings and this Agreem_nt constitutes a legal, valid and binding obligation
of the Representing Party, enforceable against it in accordance with its terms.
c. Neither the execution, delivery and performance by the Representing Party of
this Agreement nor compliance by the Representing Party with any provision
hereof shall (with or without the giving of notice or the passage of time or
both) violate, conflict with, result in a breach of or constitute a default
under (i) the articles of incorporation, by-laws or any similar organizational
document of the Representing Party, (ii) any agreement or instrument to which
the Representing Party is a party or by which the Representing Party or its
assets are bound or affected or (iii) any order, injunction, decree, statute,
law, rule or regulation applicable to the Representing Party.
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2.2 Bartech represents that it has and for the term of this Agreement will
continue to have full title and ownership of the Units and any other equipment
necessary for their operation, and that it will not create or permit to exist
any security, pledge, lien, mortgage or other encumbrance (a "Security") on the
Units or such equipment during the term of this Agreement, other than by means
of an agreement creating a Security for the benefit of an entity financing the
purchase and installation of the Units ("Finance Agreement" and "Financier", as
appropriate), which Finance Agreement shall contain, inter alia, the following
conditions:
2.2.1 The Financier acknowledges the terms of this Agreement and undertakes that
none of the Hotel's rights hereunder, including operation of the Bartech system,
shall be prejudiced in any way by the exercise of its security or by any other
rights granted to the Financier under the Finance Agreement;
2.2.2 The Financier shall notify the Hotel as soon as practicable of any event
of default by Bartech under the Finance Agreement; and
2.2.3 The Hotel shall have the right to approve in advance any entity which the
Financier proposes to appoint in place of Bartech to operate the Units.
2.3 Both parties represent that they have fully examined all aspects of this
transaction and are not entering into it in reliance upon any representation of
the other party as to the profitability or commercial success of the venture,
nor have they received any such representation. In addition, Bartech confirms
that it shall have no claim against the Hotel as a result of the Hotel's policy
regarding allocation of rooms to guests and/or the clientele frequenting the
Xxxxx Inter-Continental and/or, without derogating from Clause 8.9 hereof, the
provision of food and drinks, including VIP amenities, to hotel guests or in
guest rooms by the Hotel or any third party.
2.4 The Hotel represents that the Xxxxx Inter-Continental shall have 560 rooms
in which the Units are to be installed.
3. Installation of the Units
3.1 Bartech hereby agrees to install the Units in the premises of the Xxxxx
Inter-Continental. The Units and their installation shall be of the standard
customary and usual for five star hotels in Europe and Israel, as provided
herein. In this regard, Bartech confirms that it has examined the plans related
to the cabinets for the Units and their design, and finds them fully suitable
for its aims and for the fulfillment of its undertakings and obligations under
this Agreement and in particular, this section, and waives any claim of
unsuitability in regard thereto, provided that there are no changes to such
plans examined by Bartech. Notwithstanding the aforesaid it is agreed that
Bartech shall not be exempt from performance of this Agreement on the grounds of
unsuitability, if such exist.
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3.2 The first two hundred (200) Units shall be installed no later than
October 20, 1998 (the "First Installation Date").
3.3 Following the First Installation Date, the Hotel shall be entitled to give
two (2) weeks notice setting forth its request that Bartech proceed with the
installation of a further forty (40) Units (a "Notice Period"). Following the
conclusion of each Notice Period, the Hotel shall be entitled to give notice
once again for the installation of a further forty (40) Units, and so on, until
all of the Units are installed.
3.4 Bartech undertakes that the relevant Units shall be fully installed and
operable on or prior to the First Installment Date and the remaining Units shall
be fully installed and operable in batches of forty on or prior to the
conclusion of each relevant Notice Period. The Units shall be installed on all
floors of the Xxxxx Inter-Continental in the above stages in accordance with a
work plan to be agreed in writing between the parties. Bartech acknowledge that
in the event that all the Bartech System and the Units are not installed and
operable on or prior to the First Installation Date, or on or prior to the
conclusion of each Notice Period in the manner set forth above, substantial
damage will be caused to the Hotel and such damage may not be easily
quantifiable. In such event Bartech agrees that, without derogating from any
other remedy available to the Hotel, it shall pay to the Hotel liquidated
damages in the amount of U.S.$4,000 for each week that the first 200 Units are
not fully installed and operable following the First Installation Date, and
US$2,000 for each week that each relevant batch of 40 Units are not fully
installed and operable following the conclusion of the relevant Notice Period.
If there is a delay in installing Units due to the fact that the cabinets do not
match specifications given to the manufacturer, the installation period shall be
extended for the length of the delay.
3.5 The Hotel undertakes to install and to provide the items set forth in
SCHEDULE 3.5.
3.6 The Units shall be interfaced with the PMS system in use in the Xxxxx
Inter-Continental. The parties agree that the license fee due to the PMS
suppliers (as evidenced by the relevant agreement with such license holder)
shall be fully paid by Bartech.
3.7 One half of the cost of the items set forth in the technical Specifications
attached as Schedule 3.A hereto shall be borne by Bartech. Payment by Bartech
for those items (together with applicable VAT) which have been paid for by the
Hotel prior to the signing of this Agreement shall be made on the date hereof.
Further items shall be paid for by Bartech with ten (10) days of presentation of
an invoice to Bartech (together with applicable VAT).
3.8 Bartech undertakes to promptly remove all packaging and boxes with respect
to the Units and related equipment, from the premises of the Xxxxx
Inter-Continental, upon the completion of installation of the Units, in the
stages set forth in Section3.2 and 3.3.
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4. Operation and Maintenance of the Units
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4.1 Bartech hereby undertakes to maintain and operate the Units installed in the
Xxxxx Inter-Continental to the standard usual and customary for five star hotels
in Europe and Israel, and to repair any malfunction in a Unit upon receipt of
notification by the Hotel, pursuant to the provisions of this Agreement. In the
event that such malfunction cannot be repaired within 12 hours of receipt of the
Hotel's notice, Bartech shall replace such unit forthwith, and in all
circumstances no later than 24 hours after receipt of such notice. It is further
agreed that it is a material provision of this Agreement that each Unit and
Bartech computer system shall be fully operable for at least 360 days in every
365 day period.
4.2 The personnel operating and maintaining the Units (hereinafter: the
"Operators") . shall be the employees of Bartech. There shall be no employee -
employer relationship between the Operators and the Hotel. The terms of
employment of the Operators (including, but not limited to, salary and
termination of such employment) shall be determined by Bartech, provided that
none of the terms of their employment shall be inferior to those set forth in
the Hotel Association and Histadrut employment contract. Bartech undertakes that
it shall maintain sufficient trained personnel in order to operate and maintain
the Units and the Bartech "computer system in the manner and to the standard
contemplated by this Agreement.
4.3 Bartech undertakes that it shall cause the Operators to act in accordance
with the rules and regulations of conduct as issued by the Hotel with respect to
the conduct within the Xxxxx Inter-Continental.
4.4 The Operators shall wear the customary uniforms which are worn by employees
of the Xxxxx Inter-Continental. The Hotel shall charge Bartech for the cost for
hire of such uniforms.
4.5 The Hotel hereby agrees to provide to Bartech, for the benefit of the
Operators, meals that are customarily provided to the employees of the Xxxxx
Inter-Continental. The Hotel shall charge Bartech for the cost of such meals and
which shall be in the amount which is equal to the staff coffee shop prices
offered by the Hotel.
4.6 The Hotel shall have no vicarious liability with respect to the acts and/or
the omissions of the Operators.
4.7 Notwithstanding Section 4.2, Bartech agrees to terminate the employment of
any of the Operators, as soon as requested to do so by the Hotel, by notice in
writing for improper behavior or for behavior not in accordance with Hotel
procedure, and in such case Bartech shall not permit the Operator to enter the
Xxxxx Inter-Continental.
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4.8 The Hotel shall allow and facilitate the Operators' reasonable access to the
guest rooms not less than twice a day and for a reasonable period of time, after
coordination with the General Manager of the Hotel or his designate so as to
permit Bartech to fulfill its obligations under this Agreement at such hours as
are agreed to by the parties, and which in the Hotel's sole judgment, do not
cause a disturbance to the guests.
4.9 The Hotel undertakes to provide Bartech with a room on level 00, which is
situated close to the service elevator for the purpose of storage of the
Products and as an office for the Bartech computer system.
4.10 The room mentioned in section 4.9 above shall be locked. Bartech shall have
the sole access right to such room. A special key shall be held by the Hotel, to
enable access to the storage room in the case of an emergency. The Hotel hereby
agrees not to use the key in its possession for any purpose other than the
purpose mentioned in this section.
4.11 The measures and specifications of the room mentioned in sections 4.9 and
4.10 above are provided in SCHEDULE 4.11 of this Agreement and based on these
specifications and the room's location, Bartech waives any claim of
unsuitability in regard thereto. The Hotel shall not charge Bartech and Bartech
shall not incur any expenses/charges whatsoever in connection with the provision
and/or the use of the said rooms and office as set forth in this Agreement.
4.12 The Hotel shall bear the costs and expenses of electricity and/or energy
required for the daily operation of the Units.
4.13 The Hotel shall perform, on behalf of Bartech, the collection of the Net
Revenues from the guests.
5. THE PRODUCTS
5.1 The Products shall at all times be of a type and standard appropriate for a
five star hotel and shall at all times comply with Kashrut standards. The
Products shall be approved in advance by the Hotel General Manager or his
designate. Bartech shall elect which of such Products shall be stocked in the
Units at any given time, subject to prior approval of the Hotel.
5.2 The price of the Products to be charged to the guests shall be mutually
determined by Bartech and the Hotel. The parties agree that the pricing of the
Products shall be determined taking into account prices charged by other similar
five star hotels in Tel Aviv.
5.3 Bartech shall be responsible for the purchase of the Products. The Hotel
agrees to facilitate the purchase by Bartech of the Products from the general
suppliers of the Xxxxx Inter-Continental, should Bartech so elect.
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6. Promotion
The Hotel undertakes to provide written instructions and descriptions to the
guests with respect to the operation and location of the Units. Such written
instructions and descriptions shall be readily displayed in each guest room or
otherwise provided to guests. The design of the instructions shall be subject to
the prior written approval of the Hotel (which shall not be unreasonably
withheld) and design and printing costs of such instructions shall be at the
sole expense of Bartech.
7. Term of Agreement
7.1 The term of this Agreement shall commence with execution hereof and shall be
for a period of 6 years (72 month period) commencing on January 1, 1999.
7.2 Notwithstanding the aforementioned under section 7.1 above in the event that
the Xxxxx Inter-Continental ceases to be operated under the operating and
management agreement with the Inter-Continental Hotels Corporation, Bartech
shall be entitled to terminate this Agreement by giving notice within sixty (60)
days thereof. In such event, Bartech shall continue operating the Bartech System
for four (4) months after giving notice and shall thereafter remove the Units
and all other equipment related to the Bartech operations in the manner set
forth in Clause 9.2. Bartech shall not be entitled to receive any compensation
for such termination.
8. ,Revenue Sharing
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8.1 Bartech and the Hotel agree that the Net Revenues shall be allocated, on an
aggregate and cumulative basis, during each calendar from the generation of the
first Net Revenues as follows:
8.1.1 When the cumulative yearly Net Revenues exceed $0 but is no greater
than $400,000, the Hotel shall retain 12.5% of the Net Revenues and shall
pay Bartech 87.5% of the Net Revenues.
8.1.2 When the cumulative yearly Net Revenues exceeds $400,001 but is no
greater than $600,000, the Hotel shall retain 17.5% of all the Net Revenues
and shall pay Bartech 82.5% of all the Net Revenues.
8.1.3 When the cumulative yearly Net Revenues exceed $600,001, the Hotel
shall retain 27.5% of all the Net Revenues and shall pay Bartech 72.5% of
all the Net Revenues.
8.2 The allocation of the Net Revenues among Bartech and the Hotel, for each
calendar month shall be made as set forth section 8.1 above based upon the
amount of the Net Revenues accumulated from the beginning of such calendar year
to the end of the month with respect to which such allocation is made.
8.3 The Hotel shall pay Bartech the requisite amount plus X.XX. no later than
fifteen (15) days following the end of each calendar month against an invoice
issued to it by Bartech for such amount. Such amount so transferred shall be
paid in NIS, equivalent to the representative exchange rate for the US$:Shekel
known on the date of payment, and from such amount shall be deducted charges
incurred by the Hotel from credit card companies for the payment of such amount
should the same have been paid by credit card by guests.
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8.4 In the event that the Net Revenues are less than the amount of the gross
revenues expected according to the Bartech System, then representatives of
Bartech and the Hotel shall meet in order to discuss such discrepancy. For the
avoidance of any doubt however, such meeting shall not derogate from the
allocation of Net Revenues under Clause 8.1 unless agreed to by both parties.
8.5 At the end of each calendar year there shall be a calculation of the Net
Revenues for such calendar year in accordance with the provisions of section 8.1
above and which shall be based upon the accumulated Net Revenues from the
beginning of that calendar year. Should this calculation result in any
adjustment to be paid by one party to another, this adjustment shall be paid no
later than forty five (45) days following the date of the calculation.
8.6 In the event of a discrepancy exceeding 3.5% between the Net Revenues and
the revenues from the Units expected according to the Hotel's front desk billing
system, the parties shall meet and discuss the discrepancy.
8.7 Bartech shall furnish to the Hotel the sales reports which are generated by
the Bartech system, with respect to the previous calendar month, within five (5)
days following the end of such calendar month. This report shall be in the form
as designated by Bartech and shall specify the aggregate amount of the Net
Revenues expected with respect to the Units and shall provide all other
pertinent information requested or required by the Hotel.
8.8 Each party shall have the right and shall afford the other with the
opportunity to inspect and examine all aspects of the operation and accounting
related to the Bartech operation. It is presently anticipated th_t this shall
occur on a quarterly basis.
8.9 The Hotel shall be entitled to conduct all types of promotions and/or
discounts relating to the Units including, inter alia, complimentary discounts,
discounts for large groups and discounts to preferred guests, provided that the
Hotel shall pay to Bartech the price of the Products which are to be provided,
at a discount equal to thirty percent (30%) of such price and which shall either
(i) be deducted from the portion of the Net Revenues attributable to the Hotel;
or (ii) be paid directly by the Hotel to Bartech.
9.0 Notwithstanding the foregoing, with regard to Products provided to guests in
the framework of promotions and/or discounts conducted by the Hotel as part of
any program conducted worldwide by the Inter-Continental Hotels Corporation or
any of its affiliates, the Hotel shall pay Bartech the cost paid by Bartech for
the purchase of such Products either (i) by deduction from the portion of the
Net Revenues attributable to the Hotel; or (ii) by direct payment by the Hotel
to Bartech. of such Products either (i) by deduction from the portion of the Net
Revenues attributable to the Hotel; or (ii) by direct payment by the Hotel to
Bartech.
9.1 Ninety days prior to the end of term of this Agreement, the Hotel shall have
the option to notify Bartech in writing of its election to purchase all of the
Units from Bartech, in the condition they are in at such time ("as is"), for a
purchase price of US $50,000 plus VAT (in which case the Units shall be
transferred to the Hotel free and clear of any Security). In the event that the
Hotel exercises its option to purchase all of the Units, then transfer of title
of the Units shall occur on the termination date, simultaneously with payment of
the purchase price of the Units by the Hotel.
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9.2 Should the Hotel not provide such notification to Bartech, then Bartech
shall, sixty days prior to the end of the term of this Agreement, notify the
Hotel of its intention to remove all the Units and the Bartech computer in the
premises of the Xxxxx Inter-Continental at Bartech's sole expense and on the
date of termination of this Agreement remove the Units and the Bartech computer
from the premises of the Xxxxx Inter-Continental and leave the Hotel in the same
state of good repair, subject to fair wear and tear, as prior to installation
thereof.
9.3 In the event of a material breach of this Agreement by either party, the
injured party shall be entitled to terminate this Agreement 21 days after the
provision of written notice to the other party of its intention to terminate
this Agreement, providing, that such breach shall have remained unremedied at
the end of this 21 day period. If the injured party is the Hotel, it shall, at
its sole option and discretion, and without derogating from any other remedy
afforded to it at law or under this Agreement, be entitled to require Bartech to
remove the Units in the manner set forth under Clause 9.2 above.
10.1 Title to the Units shall remain in the sole ownership of Bartech for the
term of this Agreement.
10.2 Title to the Products shall remain in the sole ownership of Bartech until
their sale to the guests in the Xxxxx Inter-Continental.
10.3 Notwithstanding the aforementioned under section 10.1 above, all risks
pertaining to possible damage to the Units which are covered by the Hotel's
property insurance shall be transferred to the Hotel at the time of the delivery
of the Units to Xxxxx Inter-Continental and the Hotel hereby undertakes to use a
due standard of care in connection with the custody and protection of the Units
against fire and flood and all other acts which are covered by third party
insurance coverage maintained by the Hotel. The Hotel shall not be responsible
for any damage caused to the Units by guests of the Hotel.
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11. Indemni!y and Insurance
11.1 In addition to Clause 4.6, Bartech undertakes to indemnify the Hotel
against any suit or claim brought as a result of any act or omission of
Bartech's employees or as a result of Bartech's activities.
11.2 Bartech undertakes to obtain insurance as set forth in Schedule 11.2
attached hereto. In the event that Bartech fails to produce satisfactory
evidence of insurance in accordance with terms of Schedule 11.2 by the First
Installation Date, the Hotel shall be entitled but not obliged to obtain the
said insurance cover and deduct the expenses incurred in obtaining the insurance
from Bartech's share of the Net Revenues.
12. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
the State of Israel and subject to the jurisdiction of the competent court in
Tel Aviv.
13. Confidentiality and Property
All types of technical documents, general rules and special and specifications
of a confidential nature furnished either to the Hotel by Bartech and/or to
Bartech by the Hotel, in connection with this Agreement, shall remain the
exclusive property of Bartech . or the Hotel (as the case may be). None of the
information referred to in this section may . be used or disclosed to any third
parties, in any connection whatsoever, without the prior written consent of
Bartech or the Hotel (as the case may be).
14. Miscellaneous
14.1 The Hotel shall be entitled to assign its rights and obligations under this
Agreement without the prior consent of Bartech provided that the rights of
Bartech and the obligations of the Hotel under this Agreement are not affected
by such assignment and shall be fully preserved. The Hotel shall notify Bartech
of the assignment of its rights and obligations. Bartech shall not be permitted
to assign its rights or obligations under this Agreement, provided that Bartech
is specifically permitted (subject to the prior consent of the Hotel) to assign
the right to its allocation of the Net Revenues to a third party.
14.2 Nothing in this Agreement shall be construed as creating a joint venture or
partnership between the parties and neither party shall act as agent or
representative of the other for any purpose, and further, except as expressly
provided under section 10 above, Bartech shall not have any proprietary rights
in the Hotel, its fittings, fixtures or any part thereof.
14.3 In the event that the Hotel, in its sole discretion, makes any changes to
the Xxxxx Inter-Continental, including, inter alia, any change resulting in a
reduction in the total number of the rooms or floors open in the Hotel, the
Hotel shall not be liable to Bartech in any way as a result of such change or
decrease in number of rooms or floors.
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14.4 Each party shall take all reasonable steps so as to facilitate and
cooperate with respect to the performance of the other party's obligations under
this Agreement.
14.5 In the event that any provision of this Agreement is considered or held, at
any time whatsoever, to be illegal, unenforceable and/or null and void, such
fact shall not affect the validity of the remaining provisions of the Agreement,
which shall thus be deemed to be severable, and in such case, the Agreement
shall be considered as having been drafted or redrafted without the provision
that is illegal, unenforceable or null and void.
14.6 This Agreement may be amended or modified only by an instrument in writing,
executed by all of the parties.
14.7 Any notice pursuant to this Agreement shall be addressed or faxed as
follows:
Bartech:
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx Xxxxxxxxx: General Manager
Facsimile: 00-0000000
The Hotel:
00 Xxxxxxx Xxxxxx, Xxx Xxxx Attention: General Manager Facsimile:
and shall be deemed to have been received by the addressee thereof: if delivered
by a messenger, upon receipt; if sent by facsimile, at the end of24 hours from
the time of dispatch (dispatch confirmed); and if delivered by hand, at the time
of delivery.
14.8 This Agreement constitutes the entire agreement between the parties, and
supersedes all prior agreements, understandings and arrangements among the
parties, with respect to the subject matter hereof. -
14.9 This Agreement may be executed in counterparts, each of which shall
constitute an original, all of which taken together shall constitute one and the
same agreement.
IN WITNESS THEREOF, the parties have executed this Agreement as of the day and
year first above writttn.
/s/Xxxxx Xxxxx
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Directors
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