Document:

promissoryweil Ex 10-20

PROMISSORY
NOTE

Principal
amount $ 50,000.00                                                                                                                                                                         March 11, 2005

FOR VALUE
RECEIVED, the undersigned, eRXSYS Incorporated, hereinafter referred to as
“Borrower”, located at 18021 Sky Park Circle, Suite G2, Irvine, CA 92614, hereby
jointly and severally promise to pay to the order of Weil Consulting
Corporation, a California Company with its principal place of business at 234
South Hamilton Drive, Suite 209, Beverly Hills, CA 90211, hereinafter referred
to as “Lender”, the sum of FIFTY THOUSAND Dollars ($50,000.00), together with
interest thereon at the rate of 7.5% (Wall Street Journal Prime Rate of 5.5%
[March 11, 2005] plus 2%) per annum on the unpaid balance. Said sum shall be
paid in 60 days in the manner following:

                                                                                                                                 
60 DAY LOAN PROGRAM

	
      Loan
      Amount= $50,000.00
	
      March
      11, 2005

	
      Payment
      in 60 Days= $50,625.00
	
      May
      11, 2005

All
payments shall be first applied to interest and the balance to principal. This
note may be prepaid, at any time, in whole or in part, without
penalty.

This note
shall at the option of any holder thereof be immediately due and payable upon
the occurrence of any of the following: 1) Failure to make any payment due
hereunder within 30 days of its due date. 2) Breach of any condition of any
security interest, loan agreement, pledge agreement or guarantee granted as
collateral security for this note. 

The
undersigned and all other parties to this note, whether as endorsers, guarantors
or sureties, agree to remain fully bound until this note shall be fully paid and
waive demand, presentment and protest and all notices hereto and further agree
to remain bound, notwithstanding any extension, modification, waiver, or other
indulgence or discharge or release of any obligor hereunder or exchange,
substitution, or release of any collateral granted as security for this note. No
modification or indulgence by any holder hereof shall be binding unless in
writing; and any indulgence on any one occasion shall not be an indulgence for
any other or future occasion. Any modification of change in terms, hereunder
granted by any holder hereof, shall be valid and binding upon each of the
undersigned, notwithstanding the acknowledgement of any of the undersigned, and
each of the undersigned does hereby irrevocably grant to each of the others a
power of attorney to enter into any such modification on their behalf. The
rights of any holder hereof shall be cumulative and necessarily successive. This
note shall take effect as a sealed instrument and shall be construed, governed
and enforced in accordance with the laws of the State of
California.

 

/s/
Weil Consulting Corp/Douglas
Weil/President                                                         
/s/ Robert J.
DelVecchio                  
       CEO  

Lendor     Date      Borrower
- Robert J.
DelVecchio             
Title

Weil
Consulting Corp. / Douglas Weil                                                                      
on behalf of eRXSYS Inc.

President

 

 

1Loan Agreement between HOMI and Solog Mifalel Srigah Ltd.

FINANCING
AGREEMENT

By and
Between

HOTEL
OUTSOURCE MANAGEMENT INTERNATIONAL, INC.

And

SOLOG
MIFALEI SRIGAH LTD.

Dated
______________________

 

 

Table
of Contents

	
      Section
      Number and Heading
	
      Page

	 	 
	
      1.
	
      DEFINITIONS
	 
	 	
      1.1
	
      Defined
      Terms
	 
	 	
      1.2
	
      Preamble
      and Attachments
	 
	 	 	 	 
	
      2.
	
      THE
      FINANCING
	 
	 	
      2.1
	
      Commitment
      to Financing
	 
	 	
      2.2
	
      Exclusivity
	 
	 	
      2.3
	
      Specified
      Purpose of the Financing
	 
	 	
      2.4
	
      Nature
      and Terms of Financing
	 
	 	
      2.5
	
      Mechanism
      for Drawing Down Loans
	 
	 	
      2.6
	
      Initial
      Loans under the Financing
	 
	 	 	 	 
	
      3.
	
      OPTIONS
      TO PURCHASE SHARES
	 
	 	 	 	 
	
      4.
	
      SECURITY
	 
	 	
      4.1
	
      Charge;
      HOMI Deed of Assignment
	 
	 	
      4.2
	
      Designated
      Account 
	 
	 	
      4.3
	
      Initial
      Loans
	 
	 	 	 	 
	
      5.
	
      TERMS
      AND TERMINATION; BREACH
	 
	 	
      5.1
	
      Term
      and Termination
	 
	 	
      5.2
	
      Breach
	 
	 	 	 	 
	
      6.
	
      FUTURE
      COOPERATION
	 
	 	 	 	 
	
      7.
	
      REPRESENTATIONS
      AND WARRANTIES OF THE PARTIES
	 
	 	
      7.1
	
      Due
      Incorporation
	 
	 	
      7.2
	
      Corporate
      Power; Authorization
	 
	 	
      7.3
	
      No
      Conflict
	 
	 	
      7.4
	
      Consents;
      Licenses
	 
	 	
      7.5
	
      No
      Proceedings
	 
	 	 	 	 
	
      8.
	
      MISCELLANEOUS
	 
	 	
      8.1
	
      Information
      Update
	 
	 	
      8.2
	
      Notices
	 
	 	
      8.3
	
      Construction
	 
	 	
      8.4
	
      Assignment
	 
	 	
      8.5
	
      Entire
      Agreement
	 
	 	
      8.6
	
      No
      Joint Venture or Partnership
	 
	 	
      8.7
	
      Further
      Assurances
	 
	 	
      8.8
	
      Amendments,
      Modifications
	 
	 	
      8.9
	
      Severability
	 
	 	
      8.10
	
      Confidentiality
	 
	 	
      8.11
	
      Failure
      or Delay
	 
	 	
      8.12
	
      Governing
      Law and Jurisdiction
	 
	 	
      8.13
	
      Counterparts;
      Facsimile Signatures
	 

THIS
FINANCING AGREEMENT, dated
as of __________, 2005 (this “Agreement”), by
and between Hotel
Outsource Management International, Inc., a
Delaware Corporation (“HOMI”) and
Solog
Mifalei Srigah Ltd., a
public, limited liability company incorporated and existing under the laws of
Israel, Company No. 520038548 (“Solog”) (each
of HOMI and Solog a “Party” and
collectively the “Parties”).

WITNESSETH:

WHEREAS:

	
      (A)
	
      HOMI
      is interested in obtaining financing and/or refinancing for the purchase
      and/or operation of minibars used in connection with the provision of
      outsource services to hotels in various countries around the world
      (“Minibars”)
      and Solog is interested in providing such financing, all in accordance
      with and subject to the provisions of this Agreement;
  and

	
      (B)
	
      The
      Parties wish to enter into this Agreement in order to set forth their
      mutual understandings and undertakings in relation to the Financing (as
      defined below).

NOW,
THEREFORE, in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

 

	
      1.
	
      Definitions

	
      1.1
	
      Defined
      Terms

The
following terms used in this Agreement shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):

“Account” shall
have the meaning ascribed to such term in Section 2.6.1 below.

“Agreement” shall
have the meaning ascribed to such term in the Preamble.

“Bank
Directions” shall
have the meaning ascribed to such term in Section 4.2 below.

“Business
Day” means
any regular working day that is not Saturday, Sunday, a legal holiday or other
day on which banks are required to be closed in New York, NY, USA.

“Charge” shall
have the meaning ascribed to such term in Section 4.1 below.

“Designated
Account” shall
have the meaning ascribed to such term in Section 4.2 below.

“Dollar” or
“$” means
the United States Dollar.

“Draw-Down
Date” shall
have the meaning ascribed to such term in Section 2.5.3 below.

“Draw-Down
Notice” shall
have the meaning ascribed to such term in Section 2.5.3 below.

“Financing
Minibars” shall
have the meaning ascribed to such term in Section 4.1 below.

“Financing” shall
have the meaning ascribed to such term in Section 2.1 below.

“HOMI
Deed of Assignment” shall
have the meaning ascribed to such term in Section 4.2 below.

“HOMI” shall
have the meaning ascribed to such term in the Preamble, provided that, in all
matters relating to HOMI’s rights and obligations in relation to the Financing,
the term “HOMI” shall also be deemed to include any Subsidiary to which part of
the Financing has been given, in respect of that part of the
Financing.

“Hotel
Directions” shall
have the meaning ascribed to such term in Section 4.2 below.

“Hotel” shall
have the meaning ascribed to such term in Section 2.3 below.

“Initial
Loans” shall
have the meaning ascribed to such term in Section 2.6 below.

“Loan
Agreement” shall
have the meaning ascribed to such term in Section 2.5.4 below.

“Loan
Deposit Account” shall
have the meaning ascribed to such term in Section 2.5.3 below.

“Loan” shall
have the meaning ascribed to such term in Section 2.4 below.

“Minibar
Revenues” shall
have the meaning ascribed to such term in Section 4.1 below.

“Minibars” shall
have the meaning ascribed to such term in the Preamble.

“Options” shall
have the meaning ascribed to such term in Section 3 below.

“Party” shall
have the meaning ascribed to such term in the Preamble.

“Preliminary
Estimate” shall
have the meaning ascribed to such term in Section 2.5.2 below.

“Security
Documents” shall
have the meaning ascribed to such term in Section 4.1 below.

“Service
Agreements” shall
have the meaning ascribed to such term in Section 2.3 below.

“Solog’s
Monthly Repayments” shall
have the meaning ascribed to such term in Section 4.1 below.

“Solog” shall
have the meaning ascribed to such term in the Preamble.

“Specified
Purpose” shall
have the meaning ascribed to such term in Section 2.3 below.

“Subsidiary” shall
have the meaning ascribed to such term in Section 2.2 below.

“Term
of this Agreement” shall
have the meaning ascribed to such term in Section 5.1 below.

	
      1.2
	
      Preamble
      and Attachments

The
Preamble to this Agreement, as well as any and all Exhibits, Appendices,
Schedules or other attachments to this Agreement shall form an integral part
hereof. The obligations of the Parties pursuant to this Agreement are in
addition to their obligations pursuant to any and all other documents relating
to the Financing (hereinafter together: the
“Financing
Documents”). The
terms set forth in this Agreement do not in any way derogate from any of the
Parties’ rights as stipulated in the Financing Documents.

 

	
      2.
	
      The
      Financing

	
      2.1
	
      Commitment
      to Financing

2.1.1 Solog
hereby undertakes to provide HOMI with financing, for the Specified Purpose, in
accordance with draw-downs which may be made by HOMI from time to time during
the Term of this Agreement and in accordance with the provisions hereof,
provided that the cumulative amount of financing which HOMI may draw-down from
Solog, and which Solog undertakes to provide, if so required under this
Agreement, will not exceed $10 million principal (the “Financing”) and
further provided that HOMI shall, in respect of a particular Loan, have met the
preconditions required for grant of that Loan, as set forth in Section 4 of the
Loan Agreement.

2.1.2 Notwithstanding
the provisions of Section 2.1.1 above, in the event that, at any given time
during the Term of this Agreement:

2.1.2.1 repayments
to Solog of principal and interest under one or more Loan Agreements, in an
amount of more than $100,000, and in an amount of more than $200,000 once
$5,000,000 of the Financing has already been drawn-down, remain outstanding,
representing an event of default by HOMI under such Loan Agreements that has not
been cured in accordance with the applicable Loan Agreements;
and/or

2.1.2.2 any
proceedings seeking to declare HOMI bankrupt, or insolvent, or seeking
liquidation, winding up, reorganization, arrangement with creditors, composition
of debts or any other similar proceedings shall be initiated against HOMI or any
resolution shall be passed by HOMI for the appointment of a liquidator,
administrator or receiver of, or for the winding up of HOMI, and in any such
case, such resolution or proceeding shall not be dismissed within thirty (30)
days; and/or

 

2.1.2.3 HOMI
sells all or substantially all of its assets or is acquired by another entity by
means of merger, consolidation or other transaction resulting in the exchange of
the outstanding shares of HOMI’s capital stock such that the stockholders of
HOMI prior to such transaction own, directly or indirectly, less than 50% of the
voting power of the surviving entity; then
Solog shall forthwith be deemed released of any further obligation under Section
2.1.1 above, such that it shall not then be obliged to provide any further part
of the Financing that was not actually loaned already to HOMI, provided that
Solog shall be entitled, in its discretion, to provide such Financing, during
the period in which said event or events still prevail and/or, in the case of
Sections 2.1.2.1 and/or 2.1.2.2 above, at such time as such events may no longer
prevail, whether to HOMI or, in the case of Section 2.1.2.3 above, to the
surviving entity, in which case any such Financing subsequently provided by
Solog shall continue to be governed by this Agreement and Solog’s obligation
under Section 2.1.1 above shall be reinstated and the provisions of Section 2.2
below shall continue to apply, such that if HOMI (or the post-merger surviving
entity) shall be in breach of the provisions of Section 2.2 below, then the
provisions of Section 5.2.1 below shall apply. Any such
decision by Solog to recommence provision of Financing subsequent to the
occurrence of one or more of the events set forth in Sections 2.1.2.1 to 2.1.2.3
above, shall in no way derogate from (i) HOMI’s obligation to pay any and all
sums owing to Solog; and (ii) the Parties’ respective rights and obligations
under the Loan Agreements.

	
      2.2
	
      Exclusivity

       

2.2.1 HOMI
hereby undertakes not to obtain external, third party non-convertible debt
financing from any party other than Solog, at any time during the Term of this
Agreement, said undertaking being subject to Solog’s fulfilling all of its
undertakings herein. For
avoidance of any doubt: (i) HOMI will be free to raise funds by any other means,
in its discretion, even during the Term of this Agreement, including, without
limitation, by means of equity investments, rights issues, options, or any
instruments convertible into any of the foregoing; (ii) in territories in which
HOMI, or any subsidiary of HOMI anywhere in the world (each, a “Subsidiary”), has
and/or shall have one or more partners, who may be obliged and/or entitled to
contribute loans towards the funding of such company’s operations and/or the
purchase and/or operation of Minibars thereby, any such contribution of loans by
said partners, if at all, shall not be deemed external debt financing under this
Agreement and Solog’s undertaking pursuant to Section 2.1 above shall apply
fully, without regard to any such partners; (iii) debt financing to HOMI by any
shareholder of HOMI that is the registered and/or beneficial owner of at least
4% of HOMI’s issued and outstanding share capital at that time, and/or by any
company in which HOMI owns at least 50.1% of the issued and outstanding share
capital, shall not be deemed external debt financing under this Agreement,
provided that such debt financing is funded entirely with such shareholder
and/or such company’s own funds and not in any part with funds loaned to such
shareholder and/or such company by a third party.

2.2.2 Notwithstanding
the provisions of Section 2.2.1 above, in the event that, at any given time
during the Term of this Agreement:

2.2.2.1 any
proceedings seeking to declare Solog bankrupt, or insolvent, or seeking
liquidation, winding up, reorganization, arrangement with creditors, composition
of debts or any other similar proceedings shall be initiated against Solog or
any resolution shall be passed by Solog for the appointment of a liquidator,
administrator or receiver of, or for the winding up of Solog, and in any such
case, such resolution or proceeding shall not be dismissed within thirty (30)
days; and/or

 

2.2.2.2 Solog
sells all or substantially all of its assets or is acquired by another entity by
means of merger, consolidation or other transaction resulting in the exchange of
the outstanding shares of Solog’s capital stock such that the stockholders of
Solog prior to such transaction own, directly or indirectly, less than 50% of
the voting power of the surviving entity; then
HOMI shall forthwith be deemed released of any further obligation under Section
2.2.1above, such that it shall in all cases be free to obtain even external,
third party non-convertible debt financing from any party other than Solog,
provided that HOMI shall be entitled, in its discretion, to decide to draw-down
Financing, during the period in which said event or events still prevail and/or,
in the case of Section 2.2.1 above, at such time as such events may no longer
prevail, whether from Solog or, in the case of Section 2.2.2.2 above, from the
surviving entity, in which case any such Financing subsequently provided to HOMI
shall continue to be governed by this Agreement and HOMI’s obligation under
Section 2.2.1above shall be reinstated and the provisions of Section 2.1 above
shall continue to apply, such that if Solog (or the post-merger surviving
entity) shall be in breach of the provisions of Section 2.1 above, then the
provisions of Section 5.2.2 below shall apply. Any such decision by HOMI to
recommence draw-down of Financing subsequent to the occurrence of one or more of
the events set forth in Sections 2.2.2.1 to 2.2.2.2 above, shall in no way
derogate from the Parties’ respective rights and obligations under the Loan
Agreements.

2.2.3 For the
Term of this Agreement enters into effect, Solog undertakes not to provide,
directly or indirectly, any financing and/or refinancing, to any entity other
than HOMI (or a post-merger entity pursuant to Section 2.1.2.3 above), howsoever
in connection with and/or for the purpose of outsource operation of minibars in
hotels, and for a period of at least two calendar years following the execution
of this Agreement Solog undertakes not to engage, directly or indirectly, in the
outsource operation of minibars in hotels.

	
      2.3
	
      Specified
      Purpose of the Financing

The
Financing will be used by HOMI for the purpose of the purchase and/or operation
of Minibars which are already or which will be installed in hotels in various
countries around the world (each, a “Hotel”) and
serviced by HOMI, or a Subsidiary, under outsource service agreements with
Hotels (the “Service
Agreements”) and/or
to refinance, in whole or in part, HOMI investments in the purchase and/or
operation of Minibars that were, or will be, purchased and/or operated by HOMI
or a Subsidiary with its other funds (the “Specified
Purpose”).

	
      2.4
	
      Nature
      and Terms of Financing

The
Financing will be provided directly by Solog, or through any company directly
and/or indirectly owned and/or controlled by Solog, in the form of loans to
HOMI, or, at HOMI’s direction, to any Subsidiary, provided however that any such
loan granted to any such Subsidiary shall hereby be deemed unconditionally
guaranteed by HOMI. HOMI hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of merger or bankruptcy of
the Subsidiary, any right to require a hearing first against the Subsidiary, and
all demands whatsoever, and covenants that HOMI’s obligations hereunder will not
be discharged except by the payment in full of the Subsidiary’s obligations and
the performance of all obligations contained in the Loan Agreement and in this
Agreement. HOMI’s guarantee of payment hereunder shall remain in full force and
effect and be binding upon HOMI until payment in full by the Subsidiary and/or
HOMI to Solog of all its obligations. HOMI shall indemnify Solog fully on its
demand in respect of all expenses, liabilities and losses which are suffered or
incurred by Solog, as a result of or in connection with the Subsidiary’s Event
of Default (as defined in the Loan Agreement) and in the event of any failure
(for whatever reason) by the Subsidiary to make payment of any amount due under
the Loan Agreement or the Security Documents on the due date or, if so payable,
on demand. The exercise of any of Solog’s rights with respect to such Subsidiary
shall not relieve HOMI of such guarantee nor will it constitute a waiver or
diminish Solog’s right to demand strict compliance of the Subsidiary’s
commitments hereunder from HOMI, as guarantor, and each such loan (a
“Loan”) will
be subject to a Loan Agreement as set forth in Section 2.5.4 below.

	
      2.5
	
      Mechanism
      for Drawing Down Loans

2.5.1 With
respect to any particular Service Agreement between HOMI (or a Subsidiary) and a
Hotel, HOMI will be entitled, in its discretion, and subject only to the prior
satisfaction by HOMI of the preconditions set forth in the Loan Agreement and
the provisions of Section 2.1.2 above, to draw down part of the Financing, in
the form of a Loan in an amount equal to the number of rooms in which Minibars
will be and/or have been installed at that Hotel multiplied by up to $1,000 to
be decided in HOMI’s discretion. In connection with each and any Service
Agreement, HOMI will be entitled to decide, in its discretion, whether the
purchase and/or operation of all of the Minibars under that Service Agreement
will be funded through the Financing, or whether some or all of said Minibars
will be purchased and/or operated with HOMI’s working capital and/or surplus
cash-flow and or other sources of funding of the kind set forth in Section
2.2.1(i) above.

2.5.2 Attached
hereto as Exhibit 2.5.2 is HOMI’s preliminary estimate of a possible schedule
for utilization of Financing, to be used for the Specified Purpose as defined
herein, assuming HOMI elects to utilize all of the Financing (the “Preliminary
Estimate”). The
Preliminary Estimate is not binding in any way whatsoever. HOMI will be entitled
to draw-down the Financing according to its actual needs, in accordance with the
provisions of this Agreement, and the amount and timing of such draw-downs,
individually and/or cumulatively, may be higher or lower, earlier or later than
those shown in the Preliminary Estimate, provided that they are in accordance
with the provisions of this Agreement. HOMI will notify Solog, upon request from
Solog no more than once per quarter, of any material changes to the amounts and
dates contained in the Preliminary Notice, all of which amendments, if any, will
continue to be subject to the foregoing.

2.5.3 Once HOMI
has decided to make a draw-down of Financing in respect of a Service Agreement
with a Hotel, HOMI will deliver to Solog a Draw-Down Notice in the form attached
as Exhibit 2.5.3 hereto (the “Draw-Down
Notice”), in
which HOMI will notify Solog of the quantity of rooms in respect of which the
draw-down is being made, an estimation of the commencement of installation at
the Hotel (to the extent the draw-down is being taken for new installations),
the term of the Service Agreement, the identity of the Subsidiary that is
drawing down the Loan, the amount of the Loan and the bank account details (the
“Loan
Deposit Account”), into
which Solog will deposit the Loan, no later than a specified date, which will be
a date at least 60 days after delivery of the Draw-Down Notice (the
“Draw-Down
Date”). HOMI
will endeavor to minimize the number of Loan Deposit Accounts, with a view to
achieving a situation, where reasonable, where there is a single Loan Deposit
Account in each of the territories set forth in Section 4.2 below.

2.5.4 Upon
delivery of a Draw-Down Notice, the Parties will enter into a Loan agreement for
the amount and in accordance with the details contained in the Draw-Down Notice,
and this agreement shall, unless, and only to the extent, otherwise agreed in
writing by both Parties, if at all, be in the form attached hereto as Exhibit
2.5.4 and provided that if such loan agreement is not actually signed by the
Parties, for whatever reason, within 14 days of the delivery of the Draw-Down
Notice, then the Parties will be deemed to have entered into a loan agreement
for the amount and in accordance with the details contained in the Draw-Down
Notice, pursuant to the form of loan agreement set forth in said Exhibit 2.5.4
(in each case, the “Loan
Agreement”). Once
the Loan Agreement has been made, or deemed made, then Solog shall make the Loan
available to HOMI, no later than the Draw-Down Date, subject only to the prior
satisfaction by HOMI of the preconditions set forth in the Loan Agreement and
the provisions of Section 2.1 above.

	
      2.6
	
      Initial
      Loans under the Financing

Notwithstanding
the provisions of Section 2.5 above, it is hereby agreed that the procedure for
the draw-down of the first $675,000 of the Financing (the “Initial
Loans”) will
be as follows:

2.6.1 On the
date of execution of this Agreement, Solog
will wire to HOMI’s bank account No. 0605079633 at HSBC Republic Bank, a
division of HSBC Bank USA, in the branch located at 452, Fifth Avenue, New York,
NY 10018, SWIFT Code MRMDUS33 (the “Account”) the
sum of $675,000, which will be funded entirely from Solog’s readily available
funds. This
Initial Loan shall be in accordance with and subject to Draw-Down Notices and
Loan Agreements in the forms attached hereto as and
Exhibit 2.6.1a and Exhibit 2.6.1b respectively, which the relevant Parties shall
execute concurrently with the execution of this Agreement.

2.6.2 In
respect of utilization by HOMI of the first $2.65 million of Financing,
including the Initial Loans under this Section 2.6 above, the Specified Purpose
shall be deemed to also include the repayment by HOMI of any existing debt,
including but not limited to bank loans and shareholder loans of any kind
whatsoever, plus interest payments.

 

	
      3.
	
      Options
      to Purchase Shares

For each
$1 million Financing that has been completed by Solog, Solog will be entitled to
receive non-assignable, non-transferable options to purchase 300,000 shares of
HOMI’s common stock, at a price of $0.65 per share, which options may be
exercised by cash payment upon 45 days’ advance written notice to HOMI, at any
time within a period ending on the third anniversary of the date of this
Agreement, all subject to SEC regulations and restrictions and applicable law
(“Options”). Solog
shall have the right for two "demand registrations" of any common stock
exercised under the Options, at Solog’s expense. Solog shall also be entitled to
unlimited piggyback registration rights, at Solog’s expense subject to any
applicable cutbacks (on a pro rata basis), SEC regulations and restrictions and
applicable law.

 

	
      4.
	
      Security

       

	
      4.1
	
      Charge;
      HOMI Deed of Assignment

As
security and collateral for the full and timely fulfillment of all of HOMI’s
undertakings pursuant to each Loan Agreement, including the repayment of said
Loan provided by Solog to HOMI and the due payment of any Interest thereon, on
the Repayment Dates (as defined in the Loan Agreement), HOMI will
grant Solog: (I) a first degree fixed security interest in, and lien upon (a)
all of the Minibars whose purchase and/or operation was funded and/or refinanced
by such Loan (“Financing
Minibars”)
substantially in the form attached hereto as Exhibit 4.1a (the “Charge”), and
(b) with respect to any given month, the portion of revenues generated by said
Financing Minibars and received by HOMI, from the applicable Hotel, that is
required to be repaid (principal and interest) on the Loan, as set forth in the
Loan Agreement, (to be termed hereinafter, the “Minibar
Revenues”); and
(II) an assignment by way of security in favor of Solog of all of the Minibar
Revenues in the Designated Account substantially in the form attached hereto as
Exhibit 4.1b (“HOMI
Deed of Assignment”) (in
respect of each Loan in respect of which they are given, the Charge and HOMI
Deed of Assignment shall be referred to collectively as the “Security
Documents”). The
Security Documents will be subject to adjustment and/or amendment as may be
necessary in order to comply with custom and practise under applicable law in
the jurisdiction in which they are to be registered, provided however that the
substance of the document will be retained and will not be materially changed.
Solog is aware that, at the same Hotel at which the Financing Minibars mentioned
in (I)(a) above are located, there may be other Minibars, funded in whole or in
part by one or more partners or affiliates of HOMI as set forth in Section 2.2
above, upon which a first degree or other security interest and/or lien may be
granted to such partner(s) and/or affiliate(s).

 

	
      4.2
	
      Designated
      Account; Bank Directions; Hotel
Directions

It is
hereby agreed that there will be a single designated bank account belonging to
HOMI or the applicable Subsidiary, whose details HOMI undertakes to deliver to
Solog, for all
revenues generated by all Financing Minibars, in each of the following
territories in which HOMI conducts its business: Europe, Africa, South-East Asia
and North America - USA (each of such accounts shall be referred to as a
“Designated
Account”). It is
further agreed that with respect to any given month, the portion of funds in the
Designated Account required for the accumulated repayments of the principal and
interest, under all outstanding Loans for Hotels in that territory at that
specific month, will be encumbered in Solog’s favor. HOMI or the applicable
Subsidiary will deliver to each bank that holds a Designated Account one or more
sets of irrevocable directions, following Loan Agreements as entered into from
time to time, (the “Bank
Directions”) which,
in total, direct the bank to pay to Solog, each month, from the Designated
Account, a sum equal to the total of all the monthly repayments, principal and
interest, due for that month, on all outstanding Loans in that territory in the
form attached hereto as Exhibit 4.2a (for each territory, “Solog’s
Monthly Repayments”). Solog
shall open a counterpart account in the same branch and bank holding each
Designated Account to which Solog’s Monthly Repayments shall be transferred
pursuant to the Bank Directions. HOMI
will likewise deliver, to each Hotel at which the Financing Minibars in that
territory are located, irrevocable directions (the “Hotel
Directions”) to
deposit all sums owing to HOMI, or its Subsidiary, under the Service Agreement,
into the Designated Account, including, without limitation, any and all revenues
from operation of said Financing Minibars and any payments under any and all
insurance policies in respect of said Financing Minibars, all in the form
attached hereto as Exhibit 4.2b.

	
      4.3
	
      Initial
      Loans

Notwithstanding
the foregoing, in respect of the Initial Loans, the term “Financing Minibars”
shall be deemed as referring to the Minibars set forth in Exhibit 4.3 hereto and
the provisions of Sections 4.1 and 4.2 above shall apply mutatis
mutandis.

 

	
      5.
	
      Term
      and Termination; Breach

	
      5.1
	
      Term
      and Termination

This
Agreement shall enter into force after being signed by both Parties and approved
by their respective Boards of Directors, and shall then remain in force until
the earlier to occur of (i) the entire Financing, in the amount of $10 million,
having been loaned to HOMI by Solog, or (ii) the two year anniversary of the
date this Agreement enters into force, at which time this Agreement shall
terminate (the “Term
of this Agreement”). Solog
shall not be under any commitment to advance any portion of the Financing after
the expiry of the Term of this Agreement or upon the earlier termination of
Solog’s undertaking pursuant to the provisions of Section 2.1 above and HOMI
shall not be under any commitment of exclusivity towards Solog after the expiry
of the Term of this Agreement or upon the earlier termination of HOMI’s
undertaking pursuant to the provisions of Section 2.2 above. Subject to
applicable law, this Agreement may not be terminated by either Party at any time
during the Term of this Agreement and it is specifically agreed that it may not
be terminated on the grounds of its being breached by either Party.

	
      5.2
	
      Breach

       

5.2.1 In the
event of HOMI obtaining external, third party non-convertible debt financing
from a party other than Solog, during the Term of this Agreement, in
contravention of Section 2.2 above, which breach is not cured by HOMI within 15
days of written notice of the breach being issued by Solog, then Solog’s sole
remedies in respect of such breach, to the exclusion of all other remedies,
shall be as follows, subject to which the Agreement shall continue in force and
effect:

5.2.1.1 Solog
shall forthwith be deemed released of any further obligation under Section 2.1.1
above, such that it shall not then be obliged to provide any further part of the
Financing that was not actually loaned already to, and received by, HOMI, and
the provisions of the last paragraph of Section 2.1.2 above shall apply, mutatis
mutandis;

5.2.1.2 the
manner of repayment of any existing or future Loans in the context of the
Financing will change, such that the monthly repayments of $15 per month per
$1,000 of Loans, as set forth in the respective Loan Agreements, will be deemed
adjusted up to $18 per month per $1,000 of Loans, principal and interest
together, for the balance of the term of repayment under the respective Loan
Agreements;

5.2.1.3 HOMI will
be obliged to pay Solog liquidated damages in an amount equal to 12.5% of
whatever portion of the Financing was not actually loaned already to, and
received by, HOMI.

5.2.2 In the
event of Solog not providing HOMI with part of the Financing in the amount and
on the date specified in a Draw-Down Notice, in contravention of Section 2.1
above, which breach is not cured by Solog within 15 days of written notice of
the breach being issued by HOMI, then HOMI’s sole remedies in respect of such
breach, to the exclusion of all other remedies, shall be as follows, subject to
which the Agreement shall continue in force and effect:

5.2.2.1 HOMI
shall forthwith be deemed released of any obligation under Section 2.2 above and
the provisions of the last paragraph of Section 2.2.2 above shall apply, mutatis
mutandis;

5.2.2.2 the
manner of repayment of any existing or future Loans in the context of the
Financing will change, such that the monthly repayments of $15 per month per
$1,000 of Loans, as set forth in the respective Loan Agreements, will be deemed
adjusted down to $12 per month per $1,000 of Loans, principal and interest
together, for the balance of the term of repayment under the respective Loan
Agreements, and this will be deemed full and final repayment of such
Loans;

5.2.2.3 Solog
will be obliged to pay HOMI liquidated damages in an amount equal to 12.5% of
whatever portion of the Financing was not yet actually funded to, and received
by, HOMI.

5.2.3 For
avoidance of doubt, it is hereby stipulated that default under any particular
Loan Agreement shall carry the consequences stipulated in that Loan Agreement
and shall be deemed to be a default under that Loan agreement, but it shall not
be deemed a breach of this Agreement or any other Loan Agreement.

5.2.4 The
Parties confirm that the liquidated damages as set forth in Sections 5.2.1.3 and
5.2.2.3 respectively will be payable without the need to evidence actual damage,
and that they reasonably reflect the extent of damage which the Parties
anticipate could be caused to the injured Party, respectively, in such
circumstances.

 

	
      6.
	
      Future
      Cooperation

The
Parties hereby declare that if both Parties are satisfied with the commercial
relations between them under this Agreement, then each of them will be prepared
following the culmination of the Term of this Agreement to examine the
possibility and the feasibility of cooperating with the other, in additional
projects thereafter.

 

	
      7.
	
      Representations
      and Warranties of the Parties

Each
Party hereby represents and warrants to the other Party as follows, in
recognition of the fact that the other Party is entering into this Agreement
inter alia in reliance upon these representations and warranties:

 

	
      7.1
	
      Due
      Incorporation

It is a
duly incorporated and validly existing corporation in good standing under the
laws of the State of its incorporation, with all requisite power and authority
(corporate and other) to own its properties and conduct its
business.

 

	
      7.2
	
      Corporate
      Power; Authorization

It has
the corporate power and authority to execute and deliver this Agreement and to
carry out the transactions contemplated hereby; once this Agreement will have
been signed by said Party and approved by its Board of Directors, it will have
been duly and validly authorized by all necessary action, corporate or
otherwise, on its part, and will constitute a legal, valid and binding
obligation, enforceable against it in accordance with its terms.

 

	
      7.3
	
      No
      Conflict

Delivery
and performance by it of this Agreement, and the performance by it of its
obligations hereunder, will not:

7.3.1 conflict
with or result in a breach of any of the provisions of its incorporation
documents;

7.3.2 contravene
any law, rule or regulation of any jurisdiction to which it is subject, or any
political subdivision thereof or therein, or any order, writ, judgment,
injunction, decree, determination or award currently in effect, which, singly or
in the aggregate, would have a material adverse effect on it;

7.3.3 conflict
in any respect with or result in a breach of or default under any agreement,
contract or instrument to which it is a party or by which it or any of its
properties may be affected or bound, such as would, singly or in the aggregate,
would have a material adverse effect on it.

 

	
      7.4
	
      Consents;
      Licenses

All
consents, licenses, approvals and authorizations required by it in connection
with the entry into, performance, validity and enforceability of this Agreement
have been or (upon execution thereof) shall have been obtained and are (or upon
execution thereof shall be) in full force and effect during the Term of this
Agreement.

 

	
      7.5
	
      No
      Proceedings

There is
no action, proceeding or claim pending or, so far as it is aware or ought
reasonably to be aware, threatened against it (or, in the case of HOMI, any
Subsidiary) before any court or administrative agency which might have a
material adverse affect on its business or operations (or, in the case of HOMI,
that of any Subsidiary).

 

	
      8.
	
      Miscellaneous

       

	
      8.1
	
      Information
      Update

       

The
Parties agree that, at Solog’s request, no more than twice in any calendar
quarter, HOMI will arrange for an officer, legal counsel or corporate secretary
of HOMI to meet with a representative of Solog in order to discuss the quarterly
financial statements most recently published by HOMI prior to said
meeting.

 

	
      8.2
	
      Notices

       

All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered by messenger, transmitted by
facsimile or mailed by registered or certified mail, postage prepaid, as
follows, and will be deemed to have reached their destination within 5 business
days of being deposited with the Post Office for dispatch as registered mail (10
business 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
facsimile:

 

If
to Solog, to:

[_______________________]

[_______________________]

Attention: [_______________________]

Fax:  [_______________________]

e-mail:  [_______________________]

 

With
a copy to:

Shinar,
Weissberger - Attorneys 

1 Azrieli
Center (The Round Tower-33rd Flr), Tel-Aviv 67021

Attention:
Doron Shinar, Adv.

Fax: +972-3-6081797

e-mail:
Doronshinar@israelilaw.com

 

If
to HOMI, to:

Hotel
Outsource Management International, Inc.

c/o
Schonfeld & Weinstein, L.L.P., 80 Wall Street, Suite 815, New York, NY 
10005, USA

Attention: Jacky
Ronnel, CEO

Fax:  +1-212-480-0717

e-mail:  jackronnel@my-homi.com

 

With
a copy to:

Reif
& Reif, Law Offices

17-4
Yitzchak Rabin Street, POB 10371, Bet Shemesh 99583, Israel

Attention: Aryeh
Reif, Adv.

Fax:  +972-2-999-7993

e-mail:  Aryeh@ReifLaw.com

	
      8.3
	
      Construction

 

The
headings used in this Agreement are for convenience of reference only and will
not be used in the construction of this Agreement. Any use of the word
“including” in this Agreement shall be construed as meaning “including, without
limitation”, unless expressly stipulated to the contrary. All pronouns contained
herein, and any variations thereof, shall be deemed equally to refer to the
masculine, feminine or neutral, singular or plural, as the context may require.
No principle of construction against the drafter shall apply in any way to this
Agreement or any of the Exhibits, Appendices and/or Schedules attached
hereto.

 

	
      8.4
	
      Assignment

 

Neither
Party shall be entitled to assign all or any part of its rights and/or
obligations under this Agreement to any third party other than a wholly owned
subsidiary, unless it shall first have received the other Party’s advance
written consent to such assignment. For avoidance of doubt, nothing in this
Section 8.4 above shall be deemed as limiting (i) HOMI’s
right to direct that all or any part of the Financing be given to any
Subsidiary, as set forth in Section 2.4 above, or (ii) Solog’s
right to provide any part of the Financing through any company owned and
controlled by Solog, provided however that in each such instance Solog shall be
deemed to have unconditionally guaranteed all the obligations of such company in
relation to the provision of such part of the Financing to HOMI, such guarantee
being in accordance with and subject to the same provisions applying to HOMI’s
guarantee pursuant to Section 2.4 above, mutatis mutandis.

 

	
      8.5
	
      Entire
      Agreement

 

This
Agreement contains the entire agreement among the Parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous arrangements
or understandings between the Parties with respect thereto.

 

	
      8.6
	
      No
      Joint Venture or Partnership

 

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 independent contractor relations alone shall
subsist between the Parties under this Agreement.

 

	
      8.7
	
      Further
      Assurances

 

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.

 

	
      8.8
	
      Amendments,
      Modifications

 

The terms
and provisions of this Agreement may not be amended except pursuant to a written
instrument executed by both Parties.

 

	
      8.9
	
      Severability

 

It is the
desire and intent of the Parties that the provisions of this Agreement be
enforced to the fullest extent permissible by law. Accordingly, 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 and the Parties will cooperate in order to implement an arrangement which
is as close as possible to the arrangement as set forth in any provision so
declared invalid, illegal or unenforceable.

 

	
      8.10
	
      Confidentiality

 

All
manner of documents and/or information of a confidential nature which are
furnished in any form which is either (i) marked "Confidential" by the
disclosing Party, or (ii) in the case of oral disclosures, is identified at the
time of disclosure or within two weeks thereafter as being proprietary and
confidential to the disclosing Party, by one Party to the other Party shall
remain the exclusive property of the disclosing Party and the receiving Party
shall be obliged and hereby undertakes not to disclose it, in whole or part, to
any third party (except as may be required by court order, subpoena or otherwise
by law, subject to the disclosing Party having given notice to all other Parties
of such disclosure requirement, immediately upon its becoming aware thereof), in
any circumstances whatsoever, without the prior written consent of the
disclosing Party, recognizing that any such disclosure could be expected to
incur grave harm to the disclosing Party. Confidential information belonging to
HOMI specifically includes knowledge, data, information and expertise relating
to the purchase, maintenance and operation of Minibars and any and all
negotiations howsoever relating to any of the foregoing, and all financial data,
information, estimates and/or forecasts.

Confidential
information, as it applies to either Party, shall not include information and/or
materials which (a) are now or subsequently becomes generally available to the
public through no fault or breach of such Party, or (b) are received from a
third party through no fault of the former party, or (c) are in such Party's
possession prior to the time of disclosure and which was not acquired directly
or indirectly under obligations of confidentiality to the other Party, or (d)
are demonstrated by such Party to have been independently developed or
discovered by it without actual access to the confidential
information.

 

	
      8.11
	
      Failure
      or Delay

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.

 

	
      8.12
	
      Governing
      Law and Jurisdiction

This
Agreement shall be deemed to have been made and concluded in Israel and the
construction, validity and performance of this Agreement shall be governed by
the laws of the State of Israel, without giving effect to the conflicts of law
principles thereunder. By their execution hereof, the parties irrevocably agree
to submit all disputes arising hereunder to the exclusive jurisdiction of the
competent Courts in the
District of Tel-Aviv, Israel.

 

	
      8.13
	
      Counterparts;
      Facsimile Signatures

This
Agreement may be executed in two or more counterparts, in original or by
facsimile, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.

In
witness whereof the parties have executed this 

Financing
agreement on the date first above written:

SIGNED
for and on behalf of )

Solog
Mifalei Srigah Ltd. )

By )

Its )

Date )

SIGNED
for and on behalf of )

Hotel
Outsource Management International, Inc. )

By )

Its )

Date )

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