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Execution Copy

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Loan Agreement
 
Dated as of October 5, 2010
 
By and between:
HOMI Industries Ltd, an Israeli company, #512805193, whose address for the
purposes of this Agreement shall be Maof Building, 35 HaMaskit Street, Herzliya
Pituach, Israel; Fax: +972-9-9728626, e-mail: jackronnel@my-homi.com, with a
mandatory copy to Reif & Reif Law Offices, 6/2 HaSitvanit Street, Bet Shemesh
99552, Israel, Fax: +972-2-9997993, e-mail: Mail@ReifLaw.com (“HOMI”); duly
represented by its Directors - Mr Daniel Cohen and Mr Jacob Ronnel as per the
attached letter of confirmation by HOMI’s lawyer.

 
And:
TOMWOOD LIMITED, a BVI company with a registered office at Vanterpool Plaza, 2nd
floor, Wickhams Cay I, Road Town, Tortola, British Virgin Islands, and whose
correspondence address for the purposes of this Agreement shall be at 8, rue
Eynard, 1205, Geneva, Switzerland, represented by Isaac Elbaz, email:
ielbaz@bluewin.ch (“Lender”);

 
Whereas:
HOMI is engaged in the development, manufacture, marketing, sale, lease, supply,
installation and/or outsource operation of minibars, including HOMI® 330 and
HOMI® 232 models, and/or external dry-sections and/or other current/future
in-room refreshment dispensing and/or display devices of various types and sizes
(“Minibars” and “HOMI Activities”, respectively); and

 
Whereas:
In the context of HOMI Activities, HOMI manufactures and/or purchases, and
installs Minibars, and incurs considerable capital expenditure in this regard,
for which it is  interested in obtaining financing in the form of a loan; and

 
Whereas:
HOMI would like to take a loan from Lender, to be used only for the Specific
Purpose, as defined below, and Lender would like to grant a loan to HOMI, to be
used only for the Specific Purpose, which will be repaid in accordance with and
subject to the terms and conditions set forth herein;

 
 
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 USD 2,000,000 (two million US Dollars) (the
“Loan”).

 
1.2  
The Loan will, subject to the provisions of Section 4.5 below, be made available
to HOMI in four instalments of USD 500,000 each. The first instalment was
received by HOMI on 3 October 2010, and the next three instalments will be made
available to HOMI on 1 January 2011, 1 April 2011 and 1 July 2011, by means of
SWIFT wire transfer to HOMI’s account No. 725000/52 at Bank Leumi, branch No.
809. IBAN: IL690108090000072500052, in US Dollars.

 
The Lender’s bank debit advice shall constitute conclusive evidence as to the
date and the amount paid to HOMI
 
2.  
Interest

 
 
Interest will accrue on the entire outstanding balance of the Loan (actually
funded to HOMI but not yet repaid by HOMI), commencing as of the funding of the
first installment of the Loan (the “Loan Date”), at the rate of 10% per annum
(the “Interest”). HOMI undertakes to pay the Interest on a quarterly basis,
commencing one quarter after the Loan Date and ending upon the full repayment of
the Loan.
 
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Loan Agreement
HOMI Industries – Tomwood limited
Execution Copy

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3.  
Repayment

 
 
3.1  
HOMI undertakes to repay the entire Loan, in the manner set forth below.

 
3.2  
Borrower shall repay the Loan in 8 (eight) consecutive, quarterly payments,
commencing as of 30 September 2013 and ending on 30 June 2015. During the period
from the Loan Date to 30 September 2013, HOMI will make only Interest payments,
pursuant to Section 2 above, without repayment of Loan principal.

 
4.  
Specified Purpose of Loan

 
 
4.1  
The Parties hereby confirm and agree that Lender has agreed to grant the Loan
for the sole purpose of manufacturing and/or purchasing, and installing,
Minibars, and performing the logistics required in connection with these
activities, including run-in of new installations, debugging of new
installations and such like, which actions may be performed by HOMI and/or by
one or more of its subsidiaries and/or affiliates (the “Specified Purpose”).

 
4.2  
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.

 
4.3  
In order to prevent the need for complex and costly auditing and accounting in
order to compute the exact cost of each Minibar purchased and/or manufactured
and/or installed within the context of the Specified Purpose, it is hereby
agreed that, for the purposes of apportioning the Loan to the Specified Purpose,
the cost to HOMI of each such Minibar is hereby established, by mutual consent
of the Parties, to be USD 450 for a HOMI® 330 or equivalent, USD 200 for a HOMI®
232 purchased from BestBar and USD 60 for an external dry section (etray).

 
4.4  
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 4.2 above, which is a
fundamental condition of this Agreement.

 
4.5  
In view of HOMI’s undertaking to use the Loan solely for the Specified Purpose,
and in light of the difficulty in forecasting the precise timing according to
which HOMI will require the Loan funds, it is hereby agreed that HOMI will be
entitled to postpone one or more of the instalments of the Loan, or change the
amount to be loaned in such instalment, by means of 21 day’s prior written
notice to Lender, provided however, that the balance of the Loan will be drawn
down by HOMI no later than 1 July 2011, and the total aggregate amount loaned to
HOMI will not exceed USD 500,000 as of 1 October 2010, and will not exceed USD
1,000,000 as of 1 January 2011, and will not exceed USD 1,500,000 as of 1 April
2011 and will equal USD 2,000,000 as of 1 July 2011.

 
4.6  
Within a reasonable time after the use of the Loan funds, HOMI shall keep
informed the Lender of the quantities and the locations (country, town, hotel)
of the Minibars purchased and/or manufactured and/or installed within the
context of the Specified Purpose, per Lender’s requests from time to time.

 
5.  
Conversion

 
 
5.1  
At any time and from time to time during a period commencing as of the Loan Date
and ending on 29 September 2013, Lender shall be entitled, but not obliged, in
its discretion, to convert all or any part of the principal sum of the Loan (the
full amount of USD 2,000,000) into shares of the common stock of Hotel Outsource
Management International, Inc. (“HOMI Inc.”), in accordance with the provisions
of this Section 5.

 
5.2  
For a conversion occurring no later than 29 September 2012, the conversion will
be at a price per share of $0.06, for a maximum of 33,333,333 shares (if the
entire Loan is converted during that period). For a conversion occurring between
29 September 2012 and 29 September 2013, the conversion will be at a price per
share of $0.08, for a maximum of 25,000,000 shares (if the entire Loan is
converted during that period).

 
 
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Loan Agreement
HOMI Industries – Tomwood limited
Execution Copy

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5.3  
Conversion will be by means of written notice by Lender to HOMI, stating the
amount of Loan that is being converted. Within 30 days of receiving such notice,
HOMI shall procure that HOMI Inc will issue to Lender, or to Lender’s order, the
applicable quantity of shares of HOMI Inc.’s common stock.

 
5.4  
Upon the issue to Lender, or to Lender’s order or to any person or legal entity
that Lender shall indicate of the applicable quantity of shares of HOMI Inc.’s
common stock, any part of the Loan that had already been funded and converted by
Lender will be deemed repaid in full by HOMI.

 
6.  
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:
 
6.1  
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;

 
6.2  
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 to pay on time the Interest as per Section 2 and failure by HOMI
to repay the Loan in its entirety, including Interest payment on time as per
Section 2, shall be considered an Event of Default, regardless of the reason for
such failure;

 
6.3  
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;

 
6.4  
HOMI uses and/or attempts and/or permits use of the Loan, or any part thereof,
for any purpose other than the Specified Purpose;

 
6.5  
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;

 
6.6  
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;

 
6.7  
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;

 
6.8  
any event shall occur materially adversely affecting the ability of HOMI to
repay the Loan under the terms of this Agreement.

 
7.  
Security and Collateral

 
 
7.1  
As security and collateral for the full and timely repayment of the Loan
pursuant to this Agreement, HOMI will, promptly upon receipt of the Loan or part
of it, and at the latest within 3 weeks after payment by the Lender and
installation of the Minibars purchased with said Loan funds, take all action
necessary on its part to encumber the Minibars purchased with the Loan by
registering a first degree fixed charge over such Minibars, 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 in Israel and, to the extent applicable and possible
under the laws of such other countries, in any other country in which the
Minibars are actually installed, with a copy to Lender. Such fixed charges will
be removed in stages, as the Loan is repaid, and the last of such charges will
be removed when the Loan has been repaid in full, and Lender will cooperate with
HOMI in the cancellation and removal of the fixed charges as above.

 
 
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Loan Agreement
HOMI Industries – Tomwood limited
Execution Copy

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7.2  
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 7.1 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.

 
7.3  
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 7.1 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
7.1 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.

 
7.4  
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.

 
HOMI’s undertakings as set forth in this Section are fundamental conditions of
this Agreement.
 
8.  
HOMI’s General Covenants

 
 
8.1  
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.

 
Commencing as of the Loan Date and until such time as the Loan is fully repaid
with all Interest, Lender will be entitled, at its own cost and no more than
twice per annum, within 7 days from the time the request is being made, to
inspect such portions of the books of accounts of HOMI that are relevant to this
Agreement, subject to delivery of written non-disclosure undertakings and
subject to any other restrictions that may be applicable in view of the fact
that HOMI is a subsidiary of a public company which is subject to SEC
regulations.
 
8.2  
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 OTCBB,
and in accordance with all laws and regulations by which it is bound.

 
9.  
Representations and Warranties

 
HOMI hereby represents and warrants to Lender as follows:
 
9.1  
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;

 
9.2  
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;

 
9.3  
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.

 
 
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Loan Agreement
HOMI Industries – Tomwood limited
Execution Copy

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10.  
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 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.
 
HOMI shall not be entitled to assign or transfer, in any way, the rights and/or
undertakings thereof according to this Loan Agreement.
 
This Agreement shall be governed by and interpreted in accordance with English
law.
 
Any dispute, controversy or claim arising out of or in connection with this
Agreement and everything in connection thereto, or the breach, termination or
invalidity thereof, shall be settled by arbitration in accordance with the LCIA
London Court of International Arbitration Rules, by 1 (one) arbitrator, mutually
agreed upon by the Parties, (the “Arbitrator”), in case the parties fail to
mutually agree on the said Arbitrator, the Arbitrator will be selected in
accordance with the said Rules.
 
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
 
 
 
________________________________
TOMWOOD LIMITED

 
 
 
 
We, Hotel Outsource Management International, Inc., confirm and agree to abide
by the provisions of Section 5 of this Agreement above.
 
 
                __________________________________________
                Hotel Outsource Management International, Inc.