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Execution Copy

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Loan Agreement
 
Dated as of October ___, 2009
 
By and between:
HOMI Industries Ltd, an Israeli company, #512805193, whose address for the
purposes of this Agreement shall be Gav-Yam Centre, Building #3,  3rd Floor, 9
Shenkar Street, Herzliya Pituach 46725, Israel; Fax: +972-9-9728626, e-mail:
jackronnel@my-homi.com, with a mandatory copy to Reif & Reif Law Offices, 17-4
Yitzchak Rabin Road, Bet Shemesh 99585, Israel, Fax: +972-2-9997993, e-mail:
Mail@ReifLaw.com (“HOMI”);

 
And:
Moise Laurent Elkrief and Sonia Elkrief, whose address for the purposes of this
Agreement shall be 27 Avenue de Miremont, 1206 Geneva, Switzerland, email:
laurent.elkrief@primexperts.com (jointly, “Lender”);

 
Whereas:
HOMI owns a turnkey computerized minibar system, including 177 HOMI®
computerized minibars, a central unit and a license to HOMI® software, whose
installation is scheduled for no later than January 2010 at the Strand Hotel in
New York, USA (the “Hotel” and the “Minibar System”, respectively), and which
HOMI’s affiliate, HOMI USA, Inc. (the “Affiliate”), which is under common
control as HOMI, will then operate under an outsource operation agreement which
has been signed and entered into between the Affiliate and the Hotel (the
“Operation” and the “Outsource Agreement”, respectively); and

 
Whereas:
HOMI has decided to refinance the Minibar System as part of a new financing plan
for its continued operation and expansion; and

 
Whereas:
In the context of such refinancing, HOMI would like to take a loan from Lender,
and Lender would like to grant a loan to HOMI, which will be repaid out of
HOMI’s revenues from the Operation, all 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 $88,500.- (eighty eight thousand and five
hundred US Dollars) (the “Loan”), being equivalent to $500 for each minibar in
the Minibar System.

 
1.2  
The Loan will be made available to HOMI within 3 business days of the date
hereof (hereinafter: the “Loan Date”), by means of SWIFT wire transfer to HOMI’s
account No. 725000/52 at Bank Leumi, branch No. 809.

 
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 Operation, commencing as of the first
calendar month following commencement of the Operation:

 
a.  
HOMI will deliver to Lender a copy of its Affiliate’s monthly invoices to the
Hotel in respect of the full amount of monthly net revenues from the Operation
(“HOMI’s Invoice to the Hotel”), which the Hotel is obliged to pay to the
Affiliate under the Outsource Agreement for that month (“Net Revenues from
Hotel”), usually by the 10th of each calendar month.

 
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Loan Agreement - Strand
HOMI Industries - Elkrief
Execution Copy

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b.  
From the sum equal to the Net Revenues from Hotel, HOMI will deduct: (i) the
cost of goods being sold via the Minibar System, with no margin to HOMI, (ii)
Operations’ direct labour costs, (iii) maintenance fees of $0.06 per minibar per
day, and (iv) a management fee of 8% of Net Revenues from Hotel (collectively,
“Operational Payments”). 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.  
If Net Revenues from Hotel, as collected by HOMI’s Affiliate, exceed Operational
Payments by at least $2,213, then HOMI will pay to Lender a sum equal to 60% of
all such excess, towards repayment of the Loan.

 
d.  
If Net Revenues from Hotel, as collected by HOMI’s Affiliate, exceed Operational
Payments by more $1,328 but less than $2,213, then HOMI will pay to Lender
exactly $1,328 towards repayment of the Loan.

 
e.  
If Net Revenues from Hotel, as collected by HOMI’s Affiliate, exceed Operational
Payments by less than $1,328, then HOMI will pay to Lender a sum equal to 100%
of all such excess, towards repayment of the Loan.

 
f.  
If Net Revenues from Hotel, as collected by HOMI’s Affiliate, do not exceed
Operational Payments, then no payment will be made to Lender for that month.

 
g.  
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.

 
2.3  
The provisions of Sections 2.2c, 2.2d and 2.2e above shall only apply for the
first 8 years of this Agreement (the “Initial Term”). Thereafter, HOMI will pay
to Lender a sum equal to 60% of the entire amount by which Net Revenues from
Hotel shall exceed Operational Payments, if at all.

 
2.4  
A sample spreadsheet showing key elements of the mechanism for implementation of
the provisions of this Section 2 above, is attached hereto as Exhibit A’.

 
2.5  
HOMI shall continue to effect the payments to Lender pursuant to Sections
2.2 and 2.3 above, for as long as the Operation 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.

 
2.6  
If the Outsource Agreement is terminated during the Initial Term and the Minibar
System removed from the Hotel, then HOMI will, at its own cost, 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 the period between
said removal and reinstallation shall not be included in the Initial Term for
the purposes of Section 2.3 above.

 
2.7  
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 Sections 2.2 and 2.3 above,
provided that, for said 3 months, HOMI shall in any event repay to Lender 50% of
the amount specified in Section 2.2e 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.

 
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Loan Agreement - Strand
HOMI Industries - Elkrief
Execution Copy

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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;

 
4.5  
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 receipt of the Loan,
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.
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.

 
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Loan Agreement - Strand
HOMI Industries - Elkrief
Execution Copy

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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 OTCBB,
and in accordance with all laws and regulations by which it is bound.

 
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.

 
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Loan Agreement - Strand
HOMI Industries - Elkrief
Execution Copy

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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
 
________________________________
Moise Laurent Elkrief
Sonia Elkrief