Document:

f8k091012ex4i_rvue.htm

Exhibit 4.1

 

SUBSCRIPTION AGREEMENT

 

This Subscription Agreement (this “Agreement”) is being delivered to the purchaser identified on the signature page to this Agreement (the “Subscriber”) in connection with its investment in rVue Holdings, Inc., a Nevada corporation (the “Company”). The Company is conducting a private placement (the “Offering”) of shares of its common stock (“Shares”) to accredited investors at a purchase price of $0.06 per Share, up to maximum gross proceeds of $2,000,000 (the “Maximum Amount”).

 

1.           SUBSCRIPTION AND PURCHASE PRICE

 

(a)           Subscription.  Subject to the conditions set forth in Section 2 hereof, the Subscriber hereby subscribes for and agrees to purchase the number of Shares indicated on the signature page hereof on the terms and conditions described herein.

 

(b)           Purchase of Shares.  The Subscriber understands and acknowledges that the purchase price to be remitted to the Company in exchange for the Shares shall be as set forth in the preamble to this Agreement, and the Company shall round up or down to the nearest whole number any fractional purchases per Share, for an aggregate purchase price as set forth on the signature pages hereof (the “Aggregate Purchase Price”). The Subscriber’s delivery of this Agreement to the Company shall be accompanied by payment in full for the Shares subscribed for hereunder, payable in United States Dollars, by wire transfer of immediately available funds delivered contemporaneously with the Subscriber’s delivery of this Agreement to the Company in accordance with the wire instructions provided on Exhibit A. The Subscriber understands and agrees that, subject to Section 2 and applicable laws, by executing this Agreement, it is entering into a binding agreement.

 

2.           ACCEPTANCE, OFFERING TERM AND CLOSING PROCEDURES

 

(a)           Acceptance or Rejection. The obligation of the Subscriber to purchase the Shares shall be irrevocable, and the Subscriber shall be legally bound to purchase the Shares subject to the terms set forth in this Agreement. The Subscriber understands and agrees that the Company reserves the right to reject this subscription for Shares in whole or part in any order at any time prior to the Closing for any reason, notwithstanding the Subscriber’s prior receipt of notice of acceptance of the Subscriber’s subscription. In the event of rejection of this subscription by the Company in accordance with this Section 2, or if the sale of the Shares is not consummated by the Company for any reason or no reason, this Agreement and any other agreement entered into between the Subscriber and the Company relating to this subscription shall thereafter have no force or effect, and the Company shall promptly return or cause to be returned to the Subscriber the purchase price remitted to the Company, without interest thereon or deduction therefrom.

 

(b)           Closing.  The closing of the purchase and sale of the Shares hereunder (the “Closing”) shall take place at the offices of Ellenoff Grossman & Schole LLP, 150 East 42nd Street, 11th Floor, New York, NY 10017 or such other place as determined by the Company.  The Closing shall take place on a Business Day promptly following the satisfaction of the conditions set forth in Section 5 below, as determined by the Company (the “Closing Date”). “Business Day” shall mean from the hours of 9:00 a.m. (Eastern Time) through 5:00 p.m. (Eastern Time) of a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required to be closed. The Shares purchased by the Subscriber will be delivered by the Company promptly following the Closing.

(c)           Following Acceptance or Rejection.  The Subscriber acknowledges and agrees that this Agreement and any other documents delivered in connection herewith will be held by the Company. In the event that this Agreement is not accepted by the Company for whatever reason, this Agreement, the Aggregate Purchase Price received (without interest thereon) and any other documents delivered in connection herewith will be returned to the Subscriber at the address of the Subscriber as set forth in this Agreement. If this Agreement is accepted by the Company, the Company is entitled to treat the Aggregate Purchase Price received as an interest free loan to the Company until such time as the Subscription is accepted.

 

  

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3.           THE SUBSCRIBER’S REPRESENTATIONS, WARRANTIES AND COVENANTS

 

The Subscriber hereby acknowledges, agrees with and represents, warrants and covenants to the Company, as follows:

 

(a)           The Subscriber has full power and authority to enter into this Agreement, the execution and delivery of which has been duly authorized, if applicable, and this Agreement constitutes a valid and legally binding obligation of the Subscriber.

 

(b)           The Subscriber acknowledges its understanding that the Offering and sale of the Shares is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 4(2) of the Securities Act and the provisions of Regulation D promulgated thereunder (“Regulation D”).  In furtherance thereof, the Subscriber represents and warrants to the Company and its affiliates as follows:

 

(i)           The Subscriber realizes that the basis for the exemption from registration may not be available if, notwithstanding the Subscriber’s representations contained herein, the Subscriber is merely acquiring the Shares for a fixed or determinable period in the future, or for a market rise, if one develops, or for sale if the market does not rise. The Subscriber does not have any such intention.

 

(ii)           The Subscriber realizes that the basis for exemption would not be available if the Offering is part of a plan or scheme to evade registration provisions of the Securities Act or any applicable state or federal securities laws.

 

(iii)           The Subscriber is acquiring the Shares solely for the Subscriber’s own beneficial account, for investment purposes, and not with a view towards, or resale in connection with, any distribution of the Shares. If other than an individual, the Subscriber also represents it has not been organized solely for the purpose of acquiring the Shares.

 

(iv)           The Subscriber has the financial ability to bear the economic risk of the Subscriber’s investment, has adequate means for providing for its current needs and contingencies, and has no need for liquidity with respect to an investment in the Company.

 

(v)           The Subscriber and the Subscriber’s attorney, accountant, purchaser representative and/or tax advisor, if any (collectively, the “Advisors”) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of a prospective investment in the Shares. The Subscriber has not authorized any person or entity to act as its Purchaser Representative (as that term is defined in Regulation D of the General Rules and Regulations under the Securities Act) in connection with the Offering.

 

(vi)           The Subscriber (together with its Advisors, if any) has received all documents requested by the Subscriber, if any, has carefully reviewed them and understands the information contained therein, prior to the execution of this Agreement.

 

(c)           The Subscriber is not relying on the Company or any of its employees, agents, sub-agents or advisors with respect to the legal, tax, economic and related considerations involved in this investment. The Subscriber has relied on the advice of, or has consulted with, only its Advisors. Each Advisor, if any, has disclosed to the Subscriber in writing (a copy of which is annexed to this Agreement) the specific details of any and all past, present or future relationships, actual or contemplated, between the Advisor and the Company or any affiliate or sub-agent thereof.

 

(d)           The Subscriber has carefully considered the potential risks relating to the Company and a purchase of the Shares, and fully understands that the Shares are a speculative investment that involves a high degree of risk of loss of the Subscriber’s entire investment.

 

  

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(e)           The Subscriber will not sell or otherwise transfer any Shares without registration under the Securities Act or an exemption therefrom, and fully understands and agrees that the Subscriber must bear the economic risk of its purchase because, among other reasons, the Shares have not been registered under the Securities Act or under the securities laws of any state and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless they are subsequently registered under the Securities Act and under the applicable securities laws of such states, or an exemption from such registration is available.  In particular, the Subscriber is aware that the Shares are “restricted securities,” as such term is defined in Rule 144 promulgated under the Securities Act (“Rule 144”), and they may not be sold pursuant to Rule 144 unless all of the conditions of Rule 144 are met. The Subscriber is aware that sales may not currently be made pursuant to Rule 144 as the Company is not current with its Securities and Exchange Commission (“SEC”) public filing requirements.  The Subscriber also understands that the Company is under no obligation to register the Shares on behalf of the Subscriber or to assist the Subscriber in complying with any exemption from registration under the Securities Act or applicable state securities laws. The Subscriber understands that any sales or transfers of the Shares are further restricted by state securities laws and the provisions of this Agreement.

 

(f)           No oral or written representations or warranties have been made, or information furnished, to the Subscriber or its Advisors, if any, by the Company or any of its officers, employees, agents, sub-agents, affiliates, advisors or subsidiaries in connection with the Offering, other than any representations of the Company contained herein, and in subscribing for the Shares, the Subscriber is not relying upon any representations other than those contained herein.

 

(g)           The Subscriber’s overall commitment to investments that are not readily marketable is not disproportionate to the Subscriber’s net worth, and an investment in the Shares will not cause such overall commitment to become excessive.

 

(h)           The Subscriber understands and agrees that the certificates for the Shares shall bear substantially the following legend until (i) such Shares shall have been registered under the Securities Act and effectively disposed of in accordance with a registration statement that has been declared effective or (ii) in the opinion of counsel for the Company, such Shares may be sold without registration under the Securities Act, as well as any applicable “blue sky” or state securities laws:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS.  SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED BY THE ISSUER WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION COVERING SUCH SECURITIES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.

 

(i)           Neither the SEC nor any state securities commission has approved the Shares or passed upon or endorsed the merits of the Offering. There is no government or other insurance covering any of the Shares.

 

(j)           The Subscriber and its Advisors, if any, have had a reasonable opportunity to ask questions of and receive answers from a person or persons acting on behalf of the Company concerning the Offering and the business, financial condition, results of operations and prospects of the Company, and all such questions have been answered to the full satisfaction of the Subscriber and its Advisors, if any.

 

(k)           The Subscriber is unaware of, is in no way relying on, and did not become aware of, the Offering through or as a result of, any form of general solicitation or general advertising, including, without limitation, any article, notice, advertisement or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or electronic mail over the Internet, in connection with the Offering and is not subscribing for Shares and did not become aware of the Offering through or as a result of any seminar or meeting to which the Subscriber was invited by, or any solicitation of a subscription by, a person not previously known to the Subscriber in connection with investments in securities generally.

 

(l)           The Subscriber has taken no action that would give rise to any claim by any person for brokerage commissions, finders’ fees or the like relating to this Agreement or the transactions contemplated hereby.

 

  

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(m)           The Subscriber acknowledges that any estimates or forward-looking statements or projections furnished by the Company to the Subscriber were prepared by the management of the Company in good faith, but that the attainment of any such projections, estimates or forward-looking statements cannot be guaranteed by the Company or its management and should not be relied upon.

 

(n)            (For ERISA plans only) The fiduciary of the ERISA plan (the “Plan”) represents that such fiduciary has been informed of and understands the Company’s investment objectives, policies and strategies, and that the decision to invest “plan assets” (as such term is defined in ERISA) in the Company is consistent with the provisions of ERISA that require diversification of plan assets and impose other fiduciary responsibilities. The Subscriber or Plan fiduciary (i) is responsible for the decision to invest in the Company; (ii) is independent of the Company and any of its affiliates; (iii) is qualified to make such investment decision; and (iv) in making such decision, the Subscriber or Plan fiduciary has not relied primarily on any advice or recommendation of the Company or any of its affiliates.

 

(o)           This Agreement is not enforceable by the Subscriber unless it has been accepted by the Company, and the Subscriber acknowledges and agrees that the Company reserves the right to reject any subscription for any reason or withdraw the Offering.

 

(p)           The Subscriber acknowledges that the Company is relying on the representations and warranties of the Subscriber to be accurate so that this Offering is exempt from registration under the Securities Act.  The Subscriber will indemnify and hold harmless the Company and, where applicable, its directors, officers, employees, agents, advisors, affiliates and shareholders, and each other person, if any, who controls any of the foregoing from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) (a “Loss”) arising out of or based upon any representation or warranty of the Subscriber contained herein or in any document furnished by the Subscriber to the Company in connection herewith being untrue in any material respect or any breach or failure by the Subscriber to comply with any covenant or agreement made by the Subscriber herein or therein.

 

(q)           The Subscriber is, and on the date on which the Subscriber’s subscription is accepted by the Company will be, an “Accredited Investor” as defined in Rule 501(a) under the Securities Act. In general, an “Accredited Investor” is deemed to be an institution with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 (not including the value of his or her primary residence) or annual income exceeding $200,000 or $300,000 jointly with his or her spouse.

 

(r)           If the Subscriber is not a United States person, such Subscriber shall immediately notify the Company and the Subscriber hereby represents that the Subscriber is satisfied as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Shares or any use of this Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Shares, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Shares. Such Subscriber’s subscription and payment for, and continued beneficial ownership of, the Shares will not violate any applicable securities or other laws of the Subscriber’s jurisdiction.

 

4.           THE COMPANY’S REPRESENTATIONS, WARRANTIES AND COVENANTS

 

The Company hereby acknowledges, agrees with and represents, warrants and covenants to the Subscriber, as follows:

 

(a)           The Company has the corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement has been duly authorized, executed and delivered by the Company and is valid, binding and enforceable against the Company in accordance with its terms.  No action by or on behalf of the Board of Directors or shareholders of the Company that has not been taken prior to the acceptance of the subscription by the Company is required under applicable United States Federal or state laws in order for the Company to offer or sell the Shares or to otherwise perform its obligations under this Agreement.

 

(b)           The Shares to be issued to the Subscriber pursuant to this Agreement, when issued and delivered in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and non-assessable.

 

  

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(c)           Neither the execution and delivery nor the performance of this Agreement by the Company will conflict with the Company’s organizational materials, as amended to date, or result in a breach of any terms or provisions of, or constitute a default under, any material contract, agreement or instrument to which the Company is a party or by which the Company is bound.

 

(d)           Within a reasonable period of time following consummation of the Offering, the Company will file its Quarterly Report on Form 10-Q for the period ended June 30, 2012 and take all actions necessary to be current with its SEC public filing requirements.

 

(e)           The Company will indemnify and hold harmless the Subscriber and, where applicable, its directors, officers, employees, agents, advisors and shareholders, from and against any and all Loss arising out of or based upon any representation or warranty of the Company contained herein being untrue in any material respect or any breach or failure by the Company to comply with any covenant or agreement made by the Company to the Subscriber in connection therewith; provided, however, that the Company’s liability shall not exceed the Subscriber’s Aggregate Purchase Price tendered hereunder.

 

5.           CONDITIONS TO ACCEPTANCE OF SUBSCRIPTION

 

The Company’s right to accept the subscription of the Subscriber is conditioned upon satisfaction of the following conditions precedent on or before the date the Company accepts such subscription:

 

(a)           As of the Closing, no legal action, suit or proceeding shall be pending that seeks to restrain or prohibit the transactions contemplated by this Agreement.

 

(b)           The representations and warranties of the Company contained in this Agreement shall have been true and correct in all material respects on the date of this Agreement and shall be true and correct as of the Closing as if made on the Closing Date.

 

6.           MISCELLANEOUS PROVISIONS

 

(a)           The parties agree to execute and deliver all such further documents, agreements and instruments and take such other and further actions as may be necessary or appropriate to carry out the purposes and intent of this Agreement.

 

(b)           All parties hereto have been represented by counsel, and no inference shall be drawn in favor of or against any party by virtue of the fact that such party’s counsel was or was not the principal draftsman of this Agreement.

 

(c)           Each of the parties hereto shall be responsible to pay the costs and expenses of its own legal counsel in connection with the preparation and review of this Agreement and related documentation.

 

(d)           Neither this Agreement, nor any provisions hereof, shall be waived, modified, discharged or terminated except by an instrument in writing signed by the party against whom any waiver, modification, discharge or termination is sought.  It is agreed that a waiver by a party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by that same party.

 

(e)           The holding of any provision of this Agreement to be invalid or unenforceable by a court of competent jurisdiction shall not affect any other provision of this Agreement, which shall remain in full force and effect.

 

(f)           The representations, warranties and agreement of the Subscriber and the Company made in this Agreement shall survive the execution and delivery of this Agreement and the delivery of the Shares.

 

(g)           Any party may send any notice, request, demand, claim or other communication hereunder to the Subscriber at the address set forth on the signature page of this Agreement or to the Company at its primary office (including personal delivery, expedited courier, messenger service, fax, ordinary mail or electronic mail). Notices shall be deemed to have been given on the earlier of when delivered, the date when sent by facsimile transmission, the business day after sent by overnight courier or two business days after sent by ordinary mail.  Any party may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other parties written notice in the manner herein set forth.

 

  

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(h)           Except as otherwise provided herein, this Agreement shall be binding upon, and inure to the benefit of, the parties to this Agreement and their heirs, executors, administrators, successors, legal representatives and assigns.  If the Subscriber is more than one person or entity, the obligation of the Subscriber shall be joint and several and the agreements, representations, warranties and acknowledgments contained herein shall be deemed to be made by, and be binding upon, each such person or entity and its heirs, executors, administrators, successors, legal representatives and assigns. This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them.

 

(i)           This Agreement is not transferable or assignable by the Subscriber.

 

(j)           This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, without giving effect to conflicts of law principles.

 

(k)           The Company and the Subscriber hereby agree that any dispute that may arise between them arising out of or in connection with this Agreement shall be adjudicated before a court located in Palm Beach County, Florida, and they hereby submit to the exclusive jurisdiction of the federal and state courts of the State of Florida located in the County of Palm Beach with respect to any action or legal proceeding commenced by any party, and irrevocably waive any objection they now or hereafter may have respecting the venue of any such action or proceeding brought in such a court or respecting the fact that such court is an inconvenient forum, relating to or arising out of this Agreement or any acts or omissions relating to the sale of the securities hereunder, and consent to the service of process in any such action or legal proceeding by means of registered or certified mail, return receipt requested, postage prepaid, in care of the address set forth herein or such other address as either party shall furnish in writing to the other.

 

(l)           This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Upon the execution and delivery of this Agreement by the Subscriber, this Agreement shall become a binding obligation of the Subscriber with respect to the purchase of Shares as herein provided; subject, however, to the right hereby reserved by the Company to reduce the amount of or reject any subscription.

 

 

 [Signature Pages Follow]

 

  

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ALL SUBSCRIBERS MUST COMPLETE THIS PAGE

IN WITNESS WHEREOF, the Subscriber has executed this Agreement on the 10th day of September 2012.

 

	
20,000,000

	
x $0.06=

	
$1,200,0001

	
Shares subscribed for

	  	
      Aggregate Purchase Price

Manner in which Title is to be held (Please Check One):

 

	
1.

	
___

	
Individual

	
7.

	
___

	
Trust/Estate/Pension or Profit sharing Plan

Date Opened:______________

	
2.

	
___

	
Joint Tenants with Right of Survivorship

	
8.

	
___

	
As a Custodian for

________________________________

Under the Uniform Gift to Minors Act of the State of

________________________________

	
3.

	
___

	
Community Property

	
9.

	
___

	
Married with Separate Property

	
4.

	
___

	
Tenants in Common

	
10.

	
___

	
Keogh

	
5.

	
  X   

	
Corporation/Partnership/ Limited Liability Company

	
11.

	
___

	
Tenants by the Entirety

	
6.

	
___

	
IRA

	  	  	  

IF MORE THAN ONE SUBSCRIBER, EACH SUBSCRIBER MUST SIGN.

 

 

ALSO: INDIVIDUAL SUBSCRIBERS MUST COMPLETE PAGE 8;

SUBSCRIBERS WHICH ARE ENTITIES MUST COMPLETE PAGE 9.

 

 

 

1  $100,000 has previously been delivered by the Subscriber to the Company

 

  

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EXECUTION BY NATURAL PERSONS

 

	 	 	 
	 	Exact Name in Which Title is to be Held	 

 

	 	 	 	 
	Name (Please Print)	 	Name of Additional Purchaser	 
	 	 	 	 
	 	 	 	 
	Residence: Number and Street	 	Address of Additional Purchaser	 
	 	 	 	 
	 	 	 	 
	City, State and Zip Code	 	City, State and Zip Code	 
	 	 	 	 
	 	 	 	 
	Social Security Number	 	Social Security Number	 
	 	 	 	 
	 	 	 	 
	Telephone Number	 	Telephone Number	 
	 	 	 	 
	 	 	 	 
	Fax Number (if available)	 	Fax Number (if available)	 
	 	 	 	 
	 	 	 	 
	E-Mail (if available)	 	E-Mail (if available)	 
	 	 	 	 
	 	 	 	 
	(Signature)	 	(Signature of Additional Purchaser)	 

 

 

ACCEPTED this ___ day of _________ 2012, on behalf of the Company.

 

	 	 	 	 
	 	
By: 

	 	 
	 	 	Name:  Michael Mullarkey	 
	 	 	Title:   Chief Executive Officer	 
	 	 	 	 

 

  

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EXECUTION BY SUBSCRIBER WHICH IS AN ENTITY

(Corporation, Partnership, LLC, Trust, Etc.)

 

	
 Acorn Composite Corporation

Name of Entity (Please Print)

	
 

Date of Incorporation or Organization:  12/1/1992

	 
	
State of Principal Office:  Nevada

	 
	
Federal Taxpayer Identification Number: __________

 

____________________________________________

Office Address

 

____________________________________________

City, State and Zip Code

 

____________________________________________

Telephone Number

 

____________________________________________

Fax Number (if available)

 

____________________________________________

E-Mail (if available)

 

 

	 	 	 	 
	
 

	
By: 

	/s/ Robert W. Roche	 
	 	 	Name:  Robert W. Roche	 
	 	 	Title:   President	 
	 	 	 	 

 

 

	Attest:	 	 	 	 
	 	(If Entity is a Corporation)	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	Address	 

 

 

 

ACCEPTED this 10th day of September 2012, on behalf of the Company.

 

	 	 	 	 
	 	
By: 

	/s/ Michael Mullarkey	 
	 	 	Name:  Michael Mullarkey	 
	 	 	Title:   Chief Executive Officer	 
	 	 	 	 

 

 

 

9exhibit10_1.htm

  

Execution Copy

  

 

 

Loan Agreement

 

Dated as of September 1st , 2012

 

	
By and between:

	
HOMI Industries Ltd, an Israeli company, #512805193, whose address for the purposes of this Agreement shall be Merkazim A Building, 1 Aba Eben Street, 3rd Floor, Herzliya Pituach Herzliya Pituach 46725, Israel; Fax: +972-9-9728626, e-mail: jackronnel@my-homi.com, with a mandatory copy to Reif & Reif Law Offices, e-mail: Mail@ReifLaw.com (“HOMI”);

 

	
And:

	
Bahry Business and Finance (1994) Ltd, an Israeli company, #511939670, whose address for the purposes of this Agreement shall be c/o Avraham Bahry, 1 Gan Hashikmim St., Savion 56905, Israel, email: Avraham@bahry.co.il (“Lender”);

 

	
Whereas:

	
HOMI owns a turnkey computerized mini-bar system, including 401 HOMI® 330 computerized minibars, 401 external dry sections, a central unit and a license to HOMI® software, which HOMI’s affiliate, HOMI UK Limited (the “Affiliate”), which is under common control as HOMI, operates at the Hilton Olympia Hotel in London (the “Hotel” and the “Minibar System”, respectively), under a revenue share agreement between the Affiliate and the Hotel (the “Revenue Share Agreement”), of which a copy is attached hereto as Exhibit A’; and

 

	
Whereas:

	
Lender loaned NIS 850,000 to HOMI, pursuant to an agreement dated January 8, 2012 (the “Previous Loan” and the “Previous Agreement”, respectively); and

 

	
Whereas:

	
In accordance with the terms of the Previous Loan Agreement, HOMI has paid all the interest and index-linkage payments on the Previous Loan that have accrued up until June 30, 2012 and will also pay to Lender, by or soon after the date hereof,  the interest and index-linkage payments for the period July 1, 2012 through August 31, 2012, but has not repaid any of the principal of the Previous Loan, such that the remaining total amount outstanding and owed to Lender by HOMI, under the Previous Loan Agreement, is, as of the date hereof, equal to the original principal of the Previous Loan, namely, NIS 850,000; and

 

	
Whereas:

	
Pursuant to the Previous Loan Agreement, HOMI was scheduled to repay the principal on the Previous Loan over a period of less than two years, between April 1, 2014 and January 1, 2016; and

 

	
Whereas:

	
HOMI has requested that Lender, which is owned by the Chairman of HOMI, renew a portion of the Previous Loan, under the terms set forth in this Agreement below, in accordance with the “New Business Model” pursuant to which HOMI has taken loans from other third parties in recent years, for repayment over a substantially longer period than pursuant to the Previous Agreement; and

 

	
Whereas:

	
Lender is willing to so renew a portion of the Previous Loan, all subject to and in accordance with the terms of this Agreement;

 

 

Therefore, the parties have made condition and agreed as follows:

 

	
1.  

	
The Loan

 

	
1.1  

	
Upon the terms and conditions set forth in this Agreement, Lender agrees to loan to HOMI the principal amount of $200,901.- (two hundred thousand nine hundred and one US Dollars) (the “Loan”), being equivalent to $440 for each minibar and $61 for each external dry section in the Minibar System, it being understood that these amounts were computed on the basis of said units having already been operational at the hotel for a term prior to this Agreement, whereas if they had been installed brand new at the date hereof, the amount of loan would have been $500 per minibar and $70 per external dry section.

 

  

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Loan Agreement – Hilton Olympia

HOMI Industries – Bahry Business & Finance

Execution Copy

  

 

	
1.2  

	
The Loan will be deemed made to HOMI as of September 1, 2012 (the “Effective Date”), in the following manner:

 

	
a.  

	
At HOMI’s request, Lender agrees to recycle a portion of the Previous Loan, such portion being in the amount of NIS 809,229.-, which is equal to the sum of the Loan multiplied by the Representative Dollar/Shekel Exchange Rate ($1 = NIS 4.028), as known at the close of business on the Effective Date (the “Loan Portion”), such that, as of the Effective Date, HOMI shall be deemed to have fulfilled all of its obligations, with respect to the Loan Portion, under the Previous Loan Agreement, and the Loan Portion shall concurrently be deemed re-loaned to HOMI by Lender, under the terms set forth herein, instead of the terms set forth in the Previous Loan Agreement.

 

	
b.  

	
The balance of the Previous Loan, in the amount of NIS 40,771.-, namely, the Previous Loan less the Loan Portion, as governed by the Previous Loan Agreement, will not be affected by this Agreement, but, for the sake of good order and clarity, it is hereby stated that it is the Parties’ intention to recycle that balance also, pursuant to a separate agreement that will be entered into by and between the Parties, concurrently with the execution of this Agreement.

 

	
2.  

	
Repayment

 

	
2.1  

	
HOMI undertakes to repay the entire Loan, in the manner set forth below.

 

	
2.2  

	
On a monthly basis, for each month of the revenue share arrangement under the Revenue Share Agreement (the “Revenue Share”), commencing as of the Effective Date:

 

	
a.  

	
HOMI will deliver to Lender a copy of its Affiliate’s invoices to the Hotel in respect of all sums due to the Affiliate, for that month, pursuant to the Revenue Share Agreement (“HOMI’s Invoice to the Hotel”), which the Hotel is obliged to pay to the Affiliate under the Revenue Share Agreement (“Net Revenues from Hotel”).

 

	
b.  

	
From the sum equal to the Net Revenues from Hotel, HOMI will deduct: maintenance fees of $0.06 per minibar per day and $0.01 per external dry section per day, and management fees equal to 8% of cash flow generated by Hotel. Net Revenues from Hotel, less said maintenance and management fees shall be termed herein the “Effective Revenues”. The aforementioned maintenance fees are all-inclusive, and in return HOMI will take whatever action is needed, including parts and labour, to maintain the Minibar System in normal working condition.

 

	
c.  

	
Commencing as of the Effective Date, HOMI will pay to Lender a sum equal to 60% of the Effective Revenues, towards repayment of the Loan.

 

	
d.  

	
Payments to Lender as set forth above will be effected on the 30th of the calendar month following the month for which payment is being made, by means of swift wire transfer to Lender’s account No. 347379 in Bank Hapoalim Lincoln branch (772) Tel Aviv or any other account as directed in writing, from time to time, by Avraham Bahry or by Guy Bahry, I.D. 028941136.

 

	
2.3  

	
A sample spreadsheet showing key elements of the mechanism for implementation of the provisions of this Section ‎1.2a above, is attached hereto as Exhibit B’.

 

	
2.4  

	
HOMI shall continue to effect the payments to Lender pursuant to Section ‎2.2 above, for as long as the Revenue Share continues in respect of the Minibar System. If and when the aggregate total of such repayments exceeds the principal of the Loan, such repayments shall be deemed interest on the Loan, up to and including a sum equivalent to annual interest of 8%, and thereafter will be deemed additional interest, in respect of which Lender shall deliver a monthly invoice to HOMI.

 

  

3

 

Loan Agreement – Hilton Olympia

HOMI Industries – Bahry Business & Finance

Execution Copy

  

 

	
2.5  

	
If the Revenue Share Agreement is terminated during an initial term of 9 years from the Effective Date (the “Initial Term”) and the Hotel buys the Minibar System from HOMI, pursuant to Section 16 of the Revenue Share Agreement, then HOMI will deliver to Lender prompt written notice, and Lender may choose, by means of written notice to HOMI within 30 days of receiving HOMI’s notice,  EITHER (but not both) of the following paths:

 

	
a.  

	
Out of the amount received from the Hotel for purchase of the Minibar System, (“Hotel Purchase Payment”) HOMI will pay to Lender, in cash, the greater of (i) 60% of the Hotel Purchase Payment; or (ii) an amount equal to the outstanding balance of the Loan, but no more than 100% of the Hotel Purchase Payment; and, as a result of said payment to Lender, HOMI will be deemed to have discharged all of its obligations hereunder and repaid the Loan in full, and this Agreement shall terminate; OR

 

	
b.  

	
HOMI shall transfer the fixed charge being granted to Lender under Section ‎5.1 below, to other installed minibars, of equivalent value and revenue earning capacity, and such other minibars will then form the basis for the computations as set forth in Section ‎2.2 above.

 

	
2.6  

	
If the Revenue Share Agreement is terminated during an initial term of 9 years from the Effective Date (the “Initial Term”) and the Hotel pays HOMI in order to remove the Minibar System, pursuant to Section 16 of the Revenue Share Agreement, then,  out of the amount received from the Hotel for removal of the Minibar System, less HOMI’s costs associated with removal and reinstallation of the Minibar System (“Net Hotel Payment”), HOMI will pay to Lender, in cash, 60% of the Net Hotel Payment and HOMI will then reinstall the Minibar System at one or more other hotels at which the Minibar System will have equivalent revenue earning capacity as in the Hotel, as soon as possible and in any event within 6 months of its removal from the Hotel, and if reinstallation was not performed within said 6 months, then HOMI shall be obliged, at any time during the following 3 months, to transfer the fixed charge being granted to Lender under Section ‎5.1 below, to other installed minibars, of equivalent value and revenue earning capacity, and such other minibars will then form the basis for the computations as set forth in Section ‎2.2 above.

 

	
3.  

	
Specified Purpose of Loan

 

 

	
3.1  

	
The Parties hereby confirm and agree that HOMI requested the Loan for the sole purpose of using all of said Loan to finance its activity in the ordinary course of business, including making financing available to one or more of its subsidiaries and/or affiliates, to finance their activity in the ordinary course of business (the “Specified Purpose”).

 

	
3.2  

	
HOMI hereby undertakes to use the Loan solely for the Specified Purpose and not to use any part of the Loan for any purpose other than the Specified Purpose.

 

	
3.3  

	
HOMI hereby recognizes and acknowledges that Lender’s consent to make the Loan to HOMI in accordance with the terms hereof is inter alia subject to and in reliance upon HOMI’s undertaking as set forth in Section ‎3.2 above, which is a fundamental condition of this Agreement.

 

	
4.  

	
Events of Default

 

The occurrence and continuation of any of the following events shall be considered an Event of Default upon the occurrence of which the entire unpaid balance of the Loan, and all reasonable costs of collection, including reasonable attorney fees and expenses, shall become immediately due and payable:

 

	
4.1  

	
HOMI shall fail to make any payment which it is obliged to make under the terms of this Agreement and such failure is not fully remedied within thirty (30) days of HOMI’s receiving written notice from Lender of the occurrence thereof;

 

	
4.2  

	
for the avoidance of doubt it is hereby stipulated and emphasized that it is the fundamental obligation and undertaking of HOMI to repay the Loan, in its entirety, and failure by HOMI to repay the Loan in its entirety shall be considered an Event of Default, regardless of the reason for such failure;

 

	
4.3  

	
HOMI shall default in the performance of any material covenant or obligation contained herein and such default is not remedied within thirty (30) days of HOMI’s receiving written notice from Lender of the occurrence thereof;

 

	
4.4  

	
HOMI uses and/or attempts and/or permits use of the Loan, or any part thereof, for any purpose other than the Specified Purpose;

 

  

4

 

Loan Agreement – Hilton Olympia

HOMI Industries – Bahry Business & Finance

Execution Copy

  

 

	
4.5  

	
any representation or warranty made by or on behalf of HOMI to Lender, howsoever in connection with the Loan and/or this Agreement, shall at any time prove to have been materially incorrect or misleading;

 

	
4.6  

	
any judgment materially affecting the ability of HOMI to repay the Loan and pay the Interest shall be entered against HOMI or any attachment, levy or execution against a substantial portion of its properties shall remain unpaid, or shall not be released, discharged, dismissed, suspended or stayed for a period of thirty (30) days or more after its entry, issue or levy, as the case may be;

 

	
4.7  

	
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, and such proceeding shall not be dismissed within thirty (30) days;

 

	
4.8  

	
any event shall occur materially adversely affecting the ability of HOMI to repay the Loan under the terms of this Agreement.

 

	
5.  

	
Security and Collateral

 

	
5.1  

	
As security and collateral for the full and timely repayment of the Loan pursuant to this Agreement, HOMI will, promptly upon execution of this Agreement, encumber the Minibar System by registering a first degree fixed charge over the Minibar System, in favour of the Lender and will take such action as is required in order to give this fixed charge full effect, including by means of its being reported and registered with the appropriate authorities, with a copy to Lender. The fixed charge will be effected by means of a Deed of Pledge, substantially in the form that is attached hereto as Exhibit C’. This fixed charge will remain in force until the Loan has been repaid in full, at which time Lender will cooperate with HOMI in the cancellation and removal of the fixed charge.

 

	
5.2  

	
Upon the occurrence of an Event of Default, and for as long as said Event of Default remains uncured, Lender may, without prejudice to any and all other rights, remedies and/or relief to which Lender may be entitled by law, exercise and realize any and all security interests and/or collateral granted to Lender by HOMI pursuant to the terms hereof, including the security and collateral as set forth in Section ‎5.1 above, without in any way derogating from HOMI’s obligation to pay to Lender any and all sums still owed by HOMI to Lender pursuant to the terms hereof even after said actions by the Lender.

 

	
5.3  

	
HOMI hereby recognizes, acknowledges and agrees that Lender may, at any particular time, hold various forms of security and/or collateral in respect of the Loan, whether received from HOMI or from any third party, including the security and collateral as set forth in Section ‎5.1 above (all such security and collateral being termed hereinafter, the “Collateral”), and that Lender’s rights herein with respect to the security and collateral as set forth in Section ‎5.1 above shall remain in full force and effect regardless of, and in addition to, any other Collateral then held by Lender, and Lender shall have full and absolute discretion as to the order and/or nature in which it exercises and/or realizes its rights in the Collateral, if at all, and as to the timing of any such exercise and/or realization, and HOMI hereby waives any and all claims, demands and/or actions, of any kind whatsoever, against Lender, in this regard.

 

	
5.4  

	
HOMI undertakes, from time to time forthwith upon a Lender’s demand, in order to guarantee Lender’s rights with respect to any current and/or and future creditors, to take any action and sign any instrument and/or form and/or agreement as per Lender’s request, in the event Lender and/or HOMI believes that any laws by which it or its assets are bound require such action or signature in order to accord full validity to the Collateral, against the whole world.

 

	
6.  

	
HOMI’s General Covenants

 

	
6.1  

	
HOMI shall keep proper records and books of account in accordance with generally accepted accounting principles consistently applied, and shall maintain, preserve and keep all of its properties and assets in good working order and condition, subject to ordinary wear and tear.

 

	
6.2  

	
HOMI shall conduct its affairs in such manner as is appropriate for the subsidiary of a public company whose shares are traded on the New York OTCQB, and in accordance with all laws and regulations by which it is bound.

 

  

5

 

Loan Agreement – Hilton Olympia

HOMI Industries – Bahry Business & Finance

Execution Copy

  

 

	
7.  

	
Representations and Warranties

 

HOMI hereby represents and warrants to Lender as follows:

 

	
7.1  

	
that it is duly organized and existing under the laws of the jurisdiction in which it was incorporated, with the requisite corporate or other power to own and operate its properties and assets, and to carry on its business as presently conducted and to execute and perform its obligations under this Agreement;

 

	
7.2  

	
that this Agreement is valid and binding upon it and it is bound by it and obliged to act in accordance with its terms; and that the execution and performance by it of this Agreement, and compliance therewith, and the consummation of the transactions contemplated by this Agreement will not result in any violation of and will not conflict with, or result in a breach of any of the terms of, or constitute a default under, any document, other obligation, law, regulation or order to which it is or will be party or by which it is or will be bound;

 

	
7.3  

	
that all actions on its part and on the part of its directors, required for the authorization, execution, and performance by it, of this Agreement, and the consummation of all the transactions contemplated herein, have been obtained, or that they will be obtained within 30 days of the date hereof.

 

	
8.  

	
Miscellaneous

 

No Amendment to this Agreement, or any part thereof, shall be valid or binding upon the Parties unless drawn up in writing and signed by both Parties. The Preamble, and any Appendices, Exhibits or Schedules to this Agreement, constitute an integral part hereof. 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. 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. 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. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and replaces any previous agreements between the Parties, if at all, whether written or verbal, pertaining to any of the subject-matter hereof. 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 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 jurisdiction of the competent courts of Tel-Aviv, Israel. Notices sent by one Party to the other under this Agreement will be sent by registered mail to the addresses specified in the Preamble, delivered by hand, transmitted by fax, or sent by e-mail or other electronic means of communication and will be deemed to have reached their destination within 3 days of being deposited with the Post Office for dispatch as registered mail (7 days in the case of air mail), upon actual delivery when delivered by hand, and upon receipt of the recipient’s confirmation of receipt when sent by fax, e-mail or other electronic means of communication. This Agreement may be executed in any number of counterparts, in original or by facsimile, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute one and the same agreement.

 

 

 

In witness whereof the Parties have executed this

 

Loan Agreement on the date first above written:

 

	
_______________________________

HOMI

Industries Ltd

	  	
________________________________

BAHRY BUSINESS AND FINANCE (1994) LTD

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