Document:

puredepth_ex1040.htm

     

    Exhibit
10.40

    
      

      [Portions
herein identified by [***] have been omitted pursuant to a request for
confidential treatment and have been filed separately with the Commission
pursuant to Rule 406 of the Securities Act of 1933.]

      

      

      Amendment
No. 1

      to
the

      Patent and Technology License and
Technology Transfer
Agreement

       

      This
Amendment No. 1 (“Amendment”) is by and between IGT, a Nevada corporation
with principal offices at 9295 Prototype Drive, Reno, Nevada, 89521 (“IGT”) and
PureDepth Inc., a Delaware corporation with principal offices at 230 Twin
Dolphin Drive, Suite D, Redwood City, California, 94065 (together with its
subsidiaries PureDepth Limited and PureDepth Incorporated Limited, collectively
“PureDepth”) and amends the Patent and Technology License and Technology
Transfer Agreement (the “Agreement”) between IGT and PureDepth.  The
effective date of this Amendment is the date on which the prepaid royalty of
$10,000,000 described in item 9 below (referencing Section 4.01) is delivered by
IGT to PureDepth.

       

      
        	
                1.

              	
                Section 1.06
      (Field of Use) is hereby amended by adding the following sentence after
      the last existing sentence:

              

      

       

      “Notwithstanding
the foregoing, the Field of Use in Japan specifically excludes Pachinko and
Pashislot and related Administrative Machines for Pachinko and
Pashislot.”

       

       

      
        	
                2.

              	
                Section 1.16
      (Territory) is hereby deleted in full and replaced with the
      following:

              

      

       

      “’Territory’
means worldwide, however with respect to Japan, the Field of Use is limited as
described in Section 1.06 (Field of Use).”

       

       

      
        	
                3.

              	
                Section 2.01
      (Term) is hereby amended by adding the following sentence after the
      existing sentence:

              

      

       

      “Thereafter,
this Agreement shall automatically be extended for an additional ten (10) year
period (the “Second Term”).”

       

       

      
        	
                4.

              	
                Section 2.04
      (Option for Renewal) is hereby amended by replacing the “Initial Term”
      with “Second Term” and concluding with the following new
      sentences:

              

      

       

      “To be
clear, [***] prior to the end of the Second Term, the Parties agree to discuss a
further extension of the Agreement (Third Term) and negotiate in good faith the
conditions of such Third Term, if any, taking into account market
conditions.  If the parties are not able to agree upon the terms of a
further extension prior to the end of the Second Term, this Agreement will
terminate upon expiration of the Second Term in accordance with its
terms.

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      However
if [***] PureDepth will not [***] except as otherwise provided for in this
Section 2.04.

       

      If at any
time within [***] PureDepth proposes to [***] then PureDepth shall
[***]

       

      [***]

      

       

      
        	
                5.

              	
                Section 3.01
      (Grant) is hereby amended by adding the phrase “and IGT’s Affiliates”
      after “IGT” in the first and second sentences, and by adding the following
      new sentences below the existing two
sentences:

              

      

       

      “The
parties agree that upon [***] PureDepth and IGT will negotiate in good faith to
[***].

       

      For
avoidance of doubt, PureDepth shall have no rights under the Licensed
Intellectual Property, within the Territory and within the Field of Use, while
the exclusive license to IGT under this section 3.01 remains in effect, to make,
have made, use, market, distribute, Sell, offer to Sell, license, import, or
export Gaming Machines to any person and in any manner.

       

      Nothing
in this paragraph shall affect PureDepth’s rights to make, have made, use,
market, distribute , sell, offer to sell, license, import, or export
[***]

       

       

      
        	
                6.

              	
                Section
      3.02 (Right to Sublicense) is hereby amended by adding the phrase “and
      IGT’s Affiliates” after the first occurrence of “IGT” in the first
      sentence of the first paragraph.

              

      

       

       

      
        	
                7.

              	
                Section
      3.02 (Right to Sublicense) is hereby amended by replacing all text after
      “pay over to PureDepth” in the first sentence of the third paragraph with
      the following new text:

              

      

       

      “a Fixed
Fee as set forth in Section 4.05.”

       

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

      
        	
                8.

              	
                Section 4.01
      (Prepaid Royalty) is hereby amended by inserting the number “$3,750,000”
      inside of the parentheses and in front of the phrase “Prepaid Royalty” at
      the end of the existing first
sentence.

              

      

       

      

       

      
        	
                9.

              	
                Section 4.01
      (Prepaid Royalty) is hereby amended by inserting the following two
      sentences after the end of the existing first
  sentence:

              

      

       

      “On or
before September 16, 2008, IGT will deliver a nonrefundable ([***]) prepaid
royalty of ten million dollars ($10,000,000) to PureDepth (‘$10,000,000 Prepaid
Royalty’).  The $3,750,000 Prepaid Royalty and the $10,000,000 Prepaid
Royalty will collectively be referred to as the ‘Prepaid Royalty.’”

       

       

      
        	
                10.

              	
                Section 4.02
      (Royalty Schedule) is hereby amended by inserting the phrase “During the
      Initial Term,” at the front of the existing first
  sentence.

              

      

       

       

      
        	
                11.

              	
                Section 4.02
      (Royalty Schedule) is hereby amended by inserting the words “, an
      Affiliate of IGT” before the text “or any sublicensee” in the existing
      first sentence.

              

      

       

       

      
        	
                12.

              	
                Section 4.02
      (Royalty Schedule) is hereby amended by adding the following new paragraph
      below the last sentence of the existing text of the first paragraph in
      Section 4.02 (Royalty
Schedule):

              

      

       

      “During
the Second Term and only after the $3,750,000 Prepaid Royalty is exhausted as
applied to royalties due under Section 4.02, the royalty structure described in
this Section 4.02 (Royalty Schedule) will still be applicable but the
royalty rate will increase from [***] as follows:

       

      [***]

       

      [***]

       

      [***]

       

       

      
        	
                13.

              	
                Section 4.03
      (Payments and Reporting) subsection (a) is hereby amended by adding the
      phrase “and the $10,000,000 Prepaid Royalty” after the phrase “$3,750,000
      Prepaid Royalty.”

              

      

       

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      
        	
                14.

              	
                Section 4.03
      (Payments and Reporting) subsection (b) is amended by adding the phrase
      “and all fees received by IGT from sublicenses as set forth in Section
      4.05” after the phrase “Sales of Licensed
  Product.”

              

      

       

       

      
        	
                15.

              	
                Section 4.03
      (Payments and Reporting) subsection (c) is amended by adding the phrase
      “and all fees received by IGT from sublicenses as set forth in Section
      4.05” after the phrase “Sales of Licensed Products (and all Wagering
      Stations).”

              

      

       

       

      
        	
                16.

              	
                Section 4.03
      (Payments and Reporting) subsection (d) is amended by adding the phrase
      “and Fixed Fees” after the word “royalties” in each of the two places
      where such term is used in the last sentence of Section 4.03
      subsection (d) (Payment and
Reporting).

              

      

       

       

      
        	
                17.

              	
                Section 4.03
      (Payments and Reporting) subsection (e) is amended by adding the phrase
      “and Fixed Fee payments” after the phrase “Royalty payments” in the first
      sentence of Section 4.03 (Payments and Reporting) subsection
      (e).

              

      

       

       

      
        	
                18.

              	
                Section 4.03
      (Payments and Reporting) subsection (f) is amended by adding the phrase
      “and Fixed Fee payments” after the word “royalties” in Section 4.03
      (Payments and Reporting) subsection
(f).

              

      

       

       

      
        	
                19.

              	
                Section 4.03
      (Payments and Reporting) is amended by adding a new subsection (g) after
      existing subsection (f) as follows:

              

      

       

      “(g) IGT
will compute and pay the Fixed Fee pursuant to and as defined in
Section 4.05 (Fixed Fees for Sublicenses) to PureDepth within thirty (30)
days after the end of each quarter of the calendar year - - the quarters ending
on March 31st, June 30th, September 30th, and
December 31st.”

       

       

      
        	
                20.

              	
                Section
      4.04 (No Royalty for Samples) is amended by adding the phrase “or Fixed
      Fee payments” after the word “royalty” in Section 4.04 (No Royalty
      for Samples).

              

      

       

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      
        	
                21.

              	
                New
      Section 4.05 (Fixed Fee for Sublicenses) is hereby added after
      Section 4.04 (No Royalty for Samples) as
  follows:

              

      

       

      “With
respect to sublicenses granted by IGT to third parties, other than IGT
Affiliates, for Gaming Machines and Administrative Machines pursuant to the
terms of Section 3.02 (Right to Sublicense), IGT will pay PureDepth, as set
forth below, (a) license fees for sublicensee Sales of Gaming Machines or
Administrative Machines, (b) [***] of all Net Proceeds received by IGT from
periodic fees paid by sublicensees, or (c) a negotiated fee on participation
game revenue (hereinafter collectively referred to as the “Fixed
Fee”).  Net Proceeds means IGT’s sublicense proceeds less taxes,
duties, and shipping charges.  In such cases where IGT pays PureDepth
a Fixed Fee as specified in this Section 4.05, IGT shall [***]

       

      For
avoidance of doubt, Sales by IGT to casinos or other end users do not constitute
"sublicenses" and are therefore not subject to a Fixed Fee.  Further,
IGT shall not be obligated to pay a Fixed Fee on any Sale by it or any of its
Affiliates, regardless of whether the Gaming Machine Sold provides a daily fee,
a revenue share, or like proceeds to IGT.

       

      To be
clear, the Parties agree that for each sublicense the Fixed Fee will apply
according to only one of the following structures:

       

      If a
sublicensee Sells a Gaming Machine or Administrative Machine and remits to IGT a
one time license fee, IGT will pay PureDepth the royalty rate currently in
effect as set out in the Royalty Schedule in section 4.02.

       

      If a
sublicensee places a Gaming Machine or Administrative Machine and remits to IGT
an associated daily fee (or other periodic fee) IGT will pay PureDepth [***] of
IGT’s Net Proceeds associated with the daily fee.

       

      If a
sublicensee places a Gaming Machine or Administrative Machine and remits to IGT
associated recurring revenue, IGT shall negotiate a daily fee (or other periodic
fee) due to Pure Depth concurrently with IGT entering into a sublicense with the
sublicense.

       

      To be
clear, if a Fixed Fee does not apply in respect of a Gaming Machine or
Administrative Machine, then the Royalty Schedule of Section 4.02 shall
apply.

       

      Any Fixed
Fees paid by IGT to PureDepth prior to exhaustion of the total Prepaid Royalty
under Section 4.02 will be applied against the Prepaid Royalty in the amounts of
the Fixed Fees.”

       

       

      
        	
                22.

              	
                A
      new Section 4.06 (Option) will be added after new Section 4.05
      (Fixed Fee for Sublicenses) as
follows:

              

      

       

      “Section
4.06 Option.  If, by the end of the first three (3) years of the
Second Term (the “First Segment”), and if by the end of each subsequent year of
the Second Term thereafter (each an “ Annual Period”), IGT has not Sold and/or
sublicensed an average of [***] Wagering Stations or [***] during the then
expired portion of the Second Term, PureDepth will have the option, in
PureDepth’s sole discretion, to terminate IGT’s exclusive license under
Section 3.01 (Grant) by written notice delivered to IGT within sixty (60)
days after expiration of the First Segment or the applicable Annual Period,
subject to payment by PureDepth of a “Buy Back Payment” to IGT.  The
Buy Back Payment will be [***] As an example, if IGT Sells [***]Wagering
Stations in the first year of the Second Term, [***]Wagering Stations in the
second year of the Second Term and [***]Wagering Stations in the third year of
the Second Term, then IGT shall be deemed to have met its obligation of having
Sold an average [***]Wagering Stations per year during the then expired portion
of the Second Term and PureDepth shall not have the option to terminate IGT’s
exclusive license at that time.

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      In
addition, IGT shall have the right to maintain its exclusive license under this
Agreement by purchasing additional licenses ("Additional Licenses") in lieu of
Sales of Gaming Machine such that with the Additional Licenses the average
calculates to [***] Wagering Stations Sold by IGT per year during the then
expired portion of the Second Term.  Any Additional Licenses as may be
purchased by IGT shall be purchased at a royalty rate [***] per Wagering
Station.  If such Additional Licenses are to be purchased by IGT prior
to exhaustion of the total Prepaid Royalty under Section 4.02, then such
Additional Licenses will be applied against the Prepaid Royalty.

       

      If
PureDepth makes the Buy Back Payment as set forth in this Section 4.06 and IGT
does not purchase Additional Licenses as necessary to maintain exclusivity, then
the exclusive license granted by PureDepth to IGT in Section 3.01 will convert
to a non-exclusive license until the end of the Second Term.  Under
the non-exclusive license, IGT will pay PureDepth a royalty of [***] for each
Wagering Station provided with Gaming Machines that are Sold by IGT or any
sublicensee of IGT.  However, if PureDepth grants to any manufacturer
or distributor of Gaming Machines, a license that is under any Licensed
Intellectual Property and that will permit such manufacturer or distributor to
manufacture or Sell Gaming Machines licensed in this Agreement for any use
within the scope of the license granted in this Agreement, that is within the
Territory and within the Field of Use, at royalty rates that, calculated on an
equivalent basis in respect to the Licensed Intellectual Property in question,
are lower than [***] per Wagering Station, then PureDepth will (a) promptly
notify IGT of such license, provided however that PureDepth need not disclose
the identify of the licensee or specific license terms to IGT, and (b) extend to
IGT the lower royalty rates of the noticed license, effective as of the date on
which they became effective in respect to the noticed license.”

       

       

      
        	
                23.

              	
                Section 6
      (Technology Transfer) is hereby amended by adding a new subsection 6.05
      (Third Party Software Development) as
follows:

              

      

       

      “Section 6.05
Third Party Software
Development.  IGT acknowledges and agrees that PureDepth has
the right to enter into contracts with third party subcontractors under which
PureDepth will perform software development for such third parties solely to
develop software to be delivered to IGT in return for consideration to be paid
to PureDepth by such third parties.”

       

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      
        	
                24.

              	
                Section
      5.03 (Intellectual Property Review by IGT and Maintenance Rights) is
      hereby amended by adding the following phrase at the beginning of the
      second sentence: “With respect to PureDepth Patent Applications which have
      been published or which have direct counterparts that has been
      published,”.

              

      

       

       

      
        	
                25.

              	
                Section
      5.03 (Intellectual Property Review by IGT and Maintenance Rights) is
      hereby amended by replacing the sentence that begins “PureDepth shall also
      provide IGT with copies of any proposed PureDepth Patent Applications” and
      the sentence that follows with the following two
  sentences:

              

      

       

      “PureDepth
and its agents shall not provide IGT or its agents with copies of confidential
unpublished Patent Applications or prosecution documents associated with such
confidential unpublished Patent Applications.  If PureDepth provides
confidential unpublished Patent Applications or prosecution documents associated
therewith to IGT, such applications shall not be deemed Confidential Information
within the meaning of Section 9.01.”

       

       

      
        	
                26.

              	
                Section
      1.13 is hereby amended by adding the following text after "'Existing
      Patent Applications'" in the first
sentence:

              

      

       

      "relating
to MLD Technology, filed in the US or elsewhere on or before the Effective Date,
and owned by PureDepth or any Affiliate of PureDepth, including all patent
applications".

       

       

      
        	
                27.

              	
                Section
      1.13 is hereby amended by adding the following text after "during the term
      of this Agreement" in the first
sentence:

              

      

       

      "and
owned by PureDepth or any Affiliate of PureDepth".

       

       

      
        	
                28.

              	
                Section
      1.14 is hereby amended by adding the following text after "controlled by
      PureDepth":

              

      

       

      "or any
Affiliate of PureDepth".

       

       

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      
        	
                29.

              	
                Section
      8.03 is hereby amended by replacing
[***]

              

      

       

       

      
        	
                30.

              	
                Section
      1.15 is hereby amended by adding the following text after “the
      sale,”:

              

      

       

      “lease,”

       

       

      Except as
expressly amended herein, all other terms of the Agreement shall remain in full
force and effect.

       

      IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
duly authorized officers thereof or authorized representatives.

       

      
        	
                IGT:

              	
                PUREDEPTH:

              
	 	 
	
                By:
      /s/ Randy
      Hedrick

              	
                By:
      /s/ Jonathan J.
      McCaman

              
	
                Name:
      Randy Hedrick

              	
                Name:
      Jonathan J. McCaman

              
	
                Title:
      SR VP IGT Labs

              	
                Title:
      CFO

              
	
                Date:
      September 10, 2008

              	
                Date:
      September 10, 2008

              

      

      

       

    

    
       

      8exhibit10_1.htm

    
      
         

      

      
        Execution
Copy  

        
          
 

      

      
         

      

    

    Loan
Agreement

     

    Dated
as of December _8__, 2008

     

    
      	
              By
      and between:

            	
              Hotel
      Outsource Management International, Inc., a Delaware corporation
      whose address for the purposes of notices sent under this Agreement shall
      be One Embarcadero Center, Suite 500, San Francisco CA 94111, Fax:
      +1-415-433 5994, e-mail: jackronnel@my-homi.com;
      with a copy to Reif & Reif Law Offices, 17-4 Yitzchak Rabin Rd., Bet
      Shemesh 99585, Israel, Fax: +972-2-999-7993, e-mail: Mail@ReifLaw.com
      (the “Borrower”);

            

    

     

    
      	
              And:

            	
              (1)
      Jacky
      Ronnel, of 21 Hasavoraim Street, Tel Aviv 69207, Israel,
      and

            

    

    
      	
               
      

            	
              (2) Aryeh
      Reif, of 17-4 Yitzchak Rabin Road, Bet Shemesh 99585,
      Israel

            

    

    
      	
               
      

            	
              (each
      of them a “Lender”
      and collectively, the “Lenders”);

            

    

     

    
      	
              Whereas:

            	
              Borrower
      requires immediate funds, which, in the current economic climate, it has
      not been able to obtain in a timely manner from banking institutions, as
      interim financing until receipt of the proceeds which it anticipates
      receiving from the rights offering which it expects to proceed imminently,
      as soon as the SEC Registration Statement becomes effective (a revised
      From S-1 was filed by Borrower on November 24, 2008) (the “Rights
      Offering”); and

            

    

     

    
      	
              Whereas:

            	
              Borrower
      has requested that Lenders, who hold office as CEO and Corporate Secretary
      of Borrower, respectively, assist Borrower by agreeing to loan such funds
      to Borrower in the amount and under the terms set forth in this Agreement
      below; and

            

    

     

    
      	
              Whereas:

            	
              Each
      Lender is willing to make a loan to Borrower, 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, Lenders agrees to
      loan to Borrower the principal amount of $420,000.- (four hundred and
      twenty thousand US Dollars) (the “Loan”),
      as follows:

            

    

     

    
      	
              a.  

            	
              Jacky
      Ronnel: $400,000;

            

    

     

    
      	
              b.  

            	
              Aryeh
      Reif: $20,000;

            

    

     

    
      	
              1.2  

            	
              The
      Loan will be made available to Borrower within 3 business days of the date
      hereof (hereinafter: the “Loan
      Date”), by means of SWIFT wire transfer to Borrower’s 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.

            

    

     

    
      	
              2.  

            	
              Interest

            

    

     

     

    
      	
              2.1  

            	
              Borrower
      shall pay interest on the entire outstanding balance of the Loan,
      commencing as of the Loan Date, at the rate of 6% per annum (the “Interest”).

            

    

     

    
      	
              2.2  

            	
              On
      the Repayment Date (as defined below), Borrower shall pay Lenders, pari
      passu, all of the Interest that has accrued and is outstanding on the Loan
      up until that date.

            

    

     

    
      	
              3.  

            	
              Repayment

            

    

     

     

    
      	
              3.1  

            	
              Borrower
      shall repay the entire Loan, with all accrued Interest, in a single, cash
      payment to each Lender, pari passu, no later than the 4 month anniversary
      of the Loan Date (the “Repayment
      Date”).

            

    

     

     

    
      
         

      

      
         

        
          
 

      

      
         

      

    

     

    
      
         

      

      
        
          
            Loan
Agreement: HOMI - Ronnel/Reif

            Execution
Copy

          

        

        
          
 

      

      
         

      

       

    

    
      	
              3.2  

            	
              Notwithstanding
      the foregoing, and notwithstanding Lenders’ declaration that, as at the
      date hereof, they would prefer for the Loan to be repaid in cash, the
      Lenders nevertheless agree that Borrower may elect to effect repayment of
      any part, or all, of the Loan and/or accrued Interest, pari passu to the
      Lenders, no later than the Repayment Date, by means of the issue to the
      Lenders of shares of Borrower’s common stock. The purchase price of each
      share so issued shall be deemed to be the same price per share as in the
      Rights Offering (the “Price Per
      Share”), such that the outstanding balance of the Loan plus accrued
      Interest shall be reduced, at the time of issue of such shares, by the
      quantity of shares so issued multiplied by the Price Per Share. If, for
      example, the Price Per Share is $0.05 and if the Repayment Date falls
      exactly on the 4 month anniversary of the Loan Date, and the outstanding
      balance of the Loan plus the accrued Interest is $428,400, then the issue,
      on that date, of 8,568,000 shares of Borrower’s common stock, to the order
      of the Lenders, as set forth herein, would constitute full repayment of
      the Loan and all accrued Interest.

            

    

     

    For any
sums that may be payable by a Lender in the Rights Offering, in respect of
shares which such Lender may subscribe for in such Rights Offering, up to the
total amount then owed by Borrower to such Lender under this Agreement, such
Lender, or Borrower, may elect, by written notice to the other, that such sums
be offset against the outstanding balance of the Loan and accrued Interest then
owed to such Lender.

     

    
      	
              3.3  

            	
              If Borrower elects to repay any part of the Loan
      and/or accrued Interest by means of the issue of shares as set forth in
      Section ‎3.2 above, then the shares must be duly issued
      in Lenders’ names, or to their order, pari passu, and registered in
      Lenders’ names, or to their order, in Borrower’s share register, and duly
      executed share certificates must be delivered to Lenders, or to their
      order, all no later than the Repayment
  Date.

            

    

     

    
      	
              3.4  

            	
              For avoidance of any doubt, Borrower undertakes to
      fully repay the Loan and all accrued Interest, no later than the Repayment
      Date, either by means of a cash payment as set forth in Section ‎3.1 above, or by means of a share issue, as set
      forth in Sections ‎3.2 and ‎3.3 above, or by means of a combination of such
      cash payment and such share issue, provided that all such repayments are
      made for both Lenders, pari
passu.

            

    

     

    
      	
              3.5  

            	
              Borrower may at any time prepay to the Lenders,
      pari passu, any part of the outstanding balance of the Loan and accrued
      Interest, by any of the methods set forth in Section ‎3.4 above.

            

    

     

    
      	
              3.6  

            	
              Without
      derogating from any statutory remedies and/or other remedies available
      under the terms of this Agreement, if Borrower is in default under this
      Agreement and does not fully repay the Loan and accrued Interest in the
      manner set forth above, no later than the Repayment Date, then each Lender
      shall be entitled to elect, by means of written notice to Borrower,
      whether repayment of such Lender’s portion of the outstanding balance of
      the Loan and accrued Interest must be made by means of cash payment, or by
      means of share issue under the principles outlined above, or by a
      combination of these methods, and Borrower undertakes to comply with such
      election by each Lender.

            

    

     

    
      	
              4.  

            	
              Late
      Payment

            

    

     

    Without derogating from any statutory remedies and/or
other remedies available under the terms of this Agreement, any sums not paid by
Borrower at the appointed time under this Agreement shall be  subject
to interest at the highest rate of interest then charged by Bank Leumi of Israel
in respect of Dollar sums overdrawn beyond an agreed credit facility, such
interest to accrue from the date payment was originally due until the date of
actual payment; this interest rate shall initially be determined on the date
payment was originally due, and thereafter monthly until the date of actual
payment. Nothing in this Section ‎4 may be construed in any way as derogating from
Borrower’s undertaking and obligation to repay the Loan and pay the Interest as
set forth above. Arrears interest accruing pursuant to the terms of this Section
4 shall, for all intents and purposes,
be deemed part of the Interest, as defined herein.

    
      
         

      

      
        2

        
          
 

      

      
         

      

    

     

    
      
         

      

      
        
          
            Loan
Agreement: HOMI - Ronnel/Reif

            Execution
Copy

          

        

        
          
 

      

      
         

      

    

     

    
      	
              5.  

            	
              Specified
      Purpose of Loan

            

    

     

     

    
      	
              5.1  

            	
              The
      Parties hereby confirm and agree that Borrower 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, to finance their activity in the ordinary
      course of business (the “Specified
      Purpose”).

            

    

     

    
      	
              5.2  

            	
              Borrower
      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.

            

    

     

    
      	
              5.3  

            	
              Borrower hereby recognizes and acknowledges that
      the Lenders’ consent to make the Loan to Borrower in accordance with the
      terms hereof is inter alia subject to and in reliance upon Borrower’s
      undertaking as set forth in Section 5.2 above, which is a fundamental condition of
      this Agreement.

            

    

     

    
      	
              6.  

            	
              Borrower’s
      General Covenants

            

    

     

     

    
      	
              6.1  

            	
              Borrower
      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  

            	
              Borrower
      shall conduct its affairs in such manner as is appropriate for 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.

            

    

     

    
      	
              6.3  

            	
              Other
      than in the ordinary course of business or otherwise as agreed to in
      writing by the Lenders, on a case by case basis, Borrower shall not
      create, incur, or assume any indebtedness, nor shall it create incur,
      assume or suffer any mortgage, pledge, lien, security interest, charge or
      encumbrance of any kind or nature in or upon any of its property or
      assets, whether now owned or hereafter acquired, nor shall it sell, lease,
      assign, transfer or otherwise dispose of any of its assets, including its
      accounts receivable.

            

    

     

    
      	
              7.  

            	
              Representations
      and Warranties

            

    

     

     

    Borrower
hereby represents and warrants to the Lenders 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
      and until such time as they are obtained no use will be made of the Loan,
      which will, until such time, be deemed held in trust for Lenders by
      Borrower;

            

    

     

    
      	
              7.4  

            	
              that
      this Agreement and the entire contents thereof do not require that any
      notice be made to any authorities, other
      than notice
      which has already been made by Borrower or which will
      be made by
      Borrower in a timely manner (such as a Form 8-K), in accordance with all
      laws and regulations by which Borrower is bound, in accordance with
      directions which Borrower will receive from its US Legal
      Counsel.

            

    

     

    
      
         

      

      
        3

        
          
 

      

      
         

      

    

     

    
      
         

      

      
        
          
            Loan
Agreement: HOMI - Ronnel/Reif

            Execution
Copy

          

        

        
          
 

      

      
         

      

       

    

    
      	
              8.  

            	
              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 Interest, and all reasonable costs of collection, including
reasonable attorney fees and expenses, shall become immediately due and
payable:

     

    
      	
              8.1  

            	
              Borrower
      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 after the occurrence
thereof;

            

    

     

    
      	
              8.2  

            	
              for the
      avoidance of doubt it is hereby stipulated and emphasized that it is the
      fundamental obligation and undertaking of Borrower to repay the Loan and
      pay the Interest, in their entirety, on the Repayment Date, and that
      failure by Borrower to repay the Loan and pay the Interest, in their
      entirety, on the Repayment Date, shall be considered an Event of Default,
      regardless of the reason for such failure, and without either Lender being
      required to deliver any kind of notice to
      Borrower;

            

    

     

    
      	
              8.3  

            	
              Borrower
      shall default in the performance of any material covenant or obligation
      contained herein or in any other agreement, debenture, pledge, promissory
      note or other instrument of indebtedness with a Lender and such default is
      not remedied within thirty (30) days after the occurrence
      thereof;

            

    

     

    
      	
              8.4  

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

            

    

     

    
      	
              8.5  

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

            

    

     

    
      	
              8.6  

            	
              any
      judgment materially affecting the ability of Borrower to repay the Loan
      and pay the Interest shall be entered against Borrower 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;

            

    

     

    
      	
              8.7  

            	
              any
      proceedings seeking to declare Borrower bankrupt, or insolvent, or seeking
      liquidation, winding up, reorganization, arrangement with creditors,
      composition of debts or any other similar proceedings shall be initiated
      against Borrower, and such proceeding shall not be dismissed within thirty
      (30) days;

            

    

     

    
      	
              8.8  

            	
              any
      event shall occur materially affecting the ability of Borrower to repay
      the Loan and pay the Interest under the terms of this
      Agreement.

            

    

     

    
      	
              9.  

            	
              Miscellaneous

            

    

     

     

    
      	
              9.1  

            	
              In
      view of the fact that the Lenders are shareholders in Borrower and Jacky
      Ronnel is currently the a Director of Borrower, each Lender hereby agrees
      that, if and for as long as he owns more than 1% of Borrower’s issued and
      outstanding share capital or is a member of Borrower’s Board of Directors,
      he will not participate in any vote taken by any of the organs within
      Borrower’s corporate structure in connection with this Agreement. This
      clause is in addition to, and without derogating from, the provisions of
      applicable law that may apply to this Agreement in connection with its
      being an agreement between a corporation and individuals who are
      shareholders and directors of that
corporation.

            

    

     

    
      	
              9.2  

            	
              Each
      Lender shall be entitled, at any time and without requiring the consent of
      Borrower or any other individual, to assign all or any part of its rights
      under this Agreement, to any other entity. Borrower shall not be entitled
      to assign all or any part of its rights and/or obligations under this
      Agreement, without both Lenders’ advance written
  consent.

            

    

     

    
      	
              9.3  

            	
              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.

            

    

     

    
      	
              9.4  

            	
              As
      used in this Agreement, the term “including”, and all derivations thereof,
      shall mean “including, without limitation”, unless expressly stipulated to
      the contrary. Where the context permits, use of the singular number
      includes the plural and vice versa and words denoting any gender shall
      include all genders. The Preamble, and any Appendices, Exhibits or
      Schedules to this Agreement, constitute an integral part hereof. Section
      headings are for convenience purposes only, and may not be used in the
      construction or interpretation of this
  Agreement.

            

    

     

    
      
         

      

      
        4

        
          
 

      

      
         

      

    

     

    
      
         

      

      
        
          
            Loan
Agreement: HOMI - Ronnel/Reif

            Execution
Copy

          

        

        
          
 

      

      
         

      

    

     

    
      	
              9.5  

            	
              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.

            

    

     

    
      	
              9.6  

            	
              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.

            

    

     

    
      	
              9.7  

            	
              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.

            

    

     

    
      	
              9.8  

            	
              This
      Agreement shall be governed by and construed in accordance with the laws
      of Israel, without regard to its rules of conflict of laws. The parties
      hereby agree and submit to the exclusive jurisdiction of the competent
      courts in the city of Tel-Aviv, with respect to any claim or dispute
      arising out of and/or in connection with this Agreement. For this purpose,
      Borrower hereby gives notice that an address for service of court papers
      in any action relating to this Agreement shall be c/o HOMI Israel Ltd.,
      Gav-Yam Center, Building #3, 3rd Floor, 9 Shenkar Street, Herzliya Pituach
      46725, Israel.

            

    

     

    
      	
              9.9  

            	
              Notices
      sent by one party to the other under this Agreement will be sent by
      registered mail to the addresses specified herein, delivered by hand, or
      transmitted by fax and will be deemed to have reached their destination
      within 5 days of being deposited with the Post Office for dispatch as
      registered mail (10 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.

            

    

     

    
      	
              9.10  

            	
              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:

     

     

    
      
        	 
      	 
      
	
                SIGNED
      for and on behalf of

              	
                )

              
	
                Hotel
      Outsource Management International, Inc.

              	
                )

              
	 
      	
                )

              
	
                By:           /s/
      Daniel Cohen, President

              	
                )

              
	 
      	 
      
	
                SIGNED
      by:                                /s/

              	
                )

              
	
                Jacky
      Ronnel

              	
                )

              
	 
      	 
      
	
                SIGNED
      by:                                /s/

              	
                )

              
	
                Aryeh
      Reif

              	
                )

              

      

    
      
         

      

      
        5

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