Document:

exhibit10_1.htm

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Loan
Agreement

     

    Dated
as of January ___, 2010

     

    
      	
              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, 6-2 HaSitvanit Street., Bet
      Shemesh 99552, Israel, Fax: +972-2-999-7993, e-mail: Mail@ReifLaw.com
      (the “Borrower”);

            

    

     

    
      	
              And:

            	
              Bahry Business
      & Finance (1994) Ltd, of 44 Balfour Street, Tel-Aviv 65226,
      Israel (the “Lender”);

            

    

     

    
      	
              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
      medium term financing until its business becomes cash-flow positive;
      and

            

    

     

    
      	
              Whereas:

            	
              Borrower
      has requested that Lender, which is owned by the Chairman of Borrower,
      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:

            	
              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, Lender agrees to
      loan to Borrower the principal amount of NIS 1,125,000 (one million, one
      hundred and twenty-five thousands NIS) (the “Loan”).

            

    

     

    
      	
              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 one or more bank transfers in New Israeli
      Shekels, to the account of Borrower’s subsidiary, HOMI Israel Ltd, account
      No. 640600/48 at Bank Leumi, branch No. 809 in Tel-Aviv,
      Israel.

            

    

     

    
      	
              2.  

            	
              Interest;
      CPI Linkage

            

    

     

     

    
      	
              2.1  

            	
              Interest
      will accrue 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  

            	
              The
      Loan and the Interest shall be linked to Israel’s Consumer Price Index,
      with the base index being the index most recently published prior to the
      date of this Agreement. Each repayment of Loan and/or Interest hereunder
      shall be adjusted in accordance with the ratio between the index most
      recently published before the date of such repayment, and the base index
      as described above. For example, if the base index was 10, and the index
      at the repayment was 11, then the repayment would be adjusted upwardly by
      10%. All references herein to payments of Loan and/or Interest shall be
      deemed to refer to the payment as adjusted in accordance with the index
      linking specified above.

            

    

     

    
      	
              3.  

            	
              Repayment

            

    

     

     

    
      	
              3.1  

            	
              Borrower
      shall repay the entire Loan, with all accrued Interest in 16 (sixteen)
      consecutive, quarterly payments, commencing as of April 1, 2010 and
      thereafter on the first day of each calendar quarter, ending with the
      final payment on January 1, 2014.

            

    

     

    
      
        
        

      

      
        
          2

           

          
            
              Loan
Agreement: HOMI - Bahry Business & Finance (1994) Ltd

            

            Execution
Copy

          

        

        
          

        

      

      
        
        

      

    

     

    
      	
              3.2  

            	
              As
      of the Loan Date, there will be a two year grace period prior to
      commencement of repayment of the principal of the Loan (the “Grace
      Period”). Accordingly, for each of the first eight quarterly
      repayments, the repayment will comprise of accrued Interest, without
      principal. The principal of the Loan will be repaid in eight equal
      installments over the subsequent eight quarters, together with accrued
      Interest.

            

    

     

    
      	
              4.  

            	
              Conversion

            

    

     

     

    
      	
              4.1  

            	
              During the Grace Period, Lender shall have the
      right, in its discretion, to convert the Loan into shares of Borrower’s
      common stock, in accordance with the provisions of this Section 
‎4.

            

    

     

    
      	
              4.2  

            	
              Conversion
      may be of all of the Loan and accrued Interest, or any part thereof from
      time to time during the Grace
Period.

            

    

     

    
      	
              4.3  

            	
              During
      the first year of the Grace Period, the conversion will be at a price per
      share of $0.08, according to the Representative Dollar/Shekel Exchange
      Rate known at the date of conversion. During the second year of the Grace
      Period, the conversion will be at a price per share of $0.12, according to
      the Representative Dollar/Shekel Exchange Rate known at the date of
      conversion.

            

    

     

    
      	
              4.4  

            	
              Conversion
      will be by means of written notice by Lender to Borrower, stating the
      amount of Loan and accrued Interest which is being converted. Within 30
      days of receiving a conversion notice, the Borrower shall issue to Lender,
      or to Lender’s order, the applicable quantity of shares of Borrower’s
      common stock.

            

    

     

    
      	
              4.5  

            	
              Any
      and all amounts of the Loan and accrued Interest which are so converted by
      Lender will be deemed repaid by Borrower upon the issue to Lender, or to
      Lender’s order, of the applicable quantity of shares of Borrower’s common
      stock.

            

    

     

    
      	
              4.6  

            	
              The
      conversion right shall expire at the end of the Grace
    Period.

            

    

     

    
      	
              5.  

            	
              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 
‎5 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

‎5 shall, for all intents and purposes, be deemed
part of the Interest, as defined herein.

     

    
      	
              6.  

            	
              Specified
      Purpose of Loan

            

    

     

     

    
      	
              6.1  

            	
              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”).

            

    

     

    
      	
              6.2  

            	
              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.

            

    

     

    
      	
              6.3  

            	
              Borrower hereby recognizes and acknowledges that
      Lender’s 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 
‎6.2 above, which is a fundamental condition of
      this Agreement.

            

    

     

    
      
        
        

      

      
        
          3

           

          
            
              
                Loan
Agreement: HOMI - Bahry Business & Finance (1994) Ltd

              

              Execution
Copy

            

          

        

        
          

        

      

      
        
        

      

    

     

    
      	
              7.  

            	
              Borrower’s
      General Covenants

            

    

     

     

    
      	
              7.1  

            	
              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.

            

    

     

    
      	
              7.2  

            	
              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.

            

    

     

    
      	
              7.3  

            	
              Other
      than in the ordinary course of business or otherwise as agreed to in
      writing by the Lender, 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.

            

    

     

    
      	
              8.  

            	
              Representations
      and Warranties

            

    

     

     

    Borrower
hereby represents and warrants to Lender as follows:

     

    
      	
              8.1  

            	
              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;

            

    

     

    
      	
              8.2  

            	
              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;

            

    

     

    
      	
              8.3  

            	
              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 Lender by
      Borrower;

            

    

     

    
      	
              8.4  

            	
              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.

            

    

     

    
      	
              9.  

            	
              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:

     

    
      	
              9.1  

            	
              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;

            

    

     

    
      	
              9.2  

            	
              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 accordance with the schedule set forth herein, and
      that failure by Borrower to repay the Loan and pay the Interest in such
      manner shall be considered an Event of Default, regardless of the reason
      for such failure, and without Lender being required to deliver any kind of
      notice to Borrower;

            

    

     

    
      
        
        

      

      
        
          4

          
            
              
                Loan
Agreement: HOMI - Bahry Business & Finance (1994) Ltd

              

              Execution
Copy

            

          

        

        
          

        

      

      
        
        

      

    

     

    
      	
              9.3  

            	
              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 Lender and such default is
      not remedied within thirty (30) days after the occurrence
      thereof;

            

    

     

    
      	
              9.4  

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

            

    

     

    
      	
              9.5  

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

            

    

     

    
      	
              9.6  

            	
              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;

            

    

     

    
      	
              9.7  

            	
              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;

            

    

     

    
      	
              9.8  

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

            

    

     

    
      	
              10.  

            	
              Miscellaneous

            

    

     

     

    
      	
              10.1  

            	
              In
      view of the fact that Lender is owned by a shareholder in Borrower who is
      currently the Chairman of Borrower’s Board of Directors, Lender hereby
      agrees that, so long as its owner 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.

            

    

     

    
      	
              10.2  

            	
              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 Lender’s advance written
  consent.

            

    

     

    
      	
              10.3  

            	
              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.

            

    

     

    
      	
              10.4  

            	
              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.

            

    

     

    
      	
              10.5  

            	
              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.

            

    

     

    
      	
              10.6  

            	
              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.

            

    

     

    
      	
              10.7  

            	
              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.

            

    

     

    
      
        
        

      

      
        
          5

           

          
            
              
                Loan
Agreement: HOMI - Bahry Business & Finance (1994) Ltd

              

              Execution
Copy

            

          

        

        
          

        

      

      
        
        

      

    

     

    
      	
              10.8  

            	
              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.

            

    

     

    
      	
              10.9  

            	
              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.

            

    

     

    
      	
              10.10  

            	
              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:
      Daniel Cohen, Jacob Ronnel

              	
                )

              

      

       

      
        	
                SIGNED
      by:

              	
                )

              

      

      
        	
                Bahry Business
      & Finance (1994) Ltd

              	
                )exhibit10_2.htm

    
      
          

      

      
        Execution Copy 

        
          
 

      

      
          

      

    

    Loan Agreement

     

    Dated as of January ___, 2010

     

    
      	
              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, 6-2 HaSitvanit Street., Bet
      Shemesh 99552, Israel, Fax: +972-2-999-7993, e-mail: Mail@ReifLaw.com
      (the “Borrower”);

            

    

     

    
      	
              And:

            	
              Daniel
      Cohen, of 10 Iris Street, PO Box 4591, Caesarea 30889, Israel (the
      “Lender”);

            

    

     

    
      	
              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 medium term financing until its
      business becomes cash-flow positive;
and

            

    

     

    
      	
              Whereas:

            	
              Borrower has requested that Lender, who holds office
      as President of Borrower, 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:

            	
              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, Lender agrees to loan to Borrower the principal amount of US
      100,000 (one hundred thousand USD) (the “Loan”).

            

    

     

    
      	
              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 one or more bank transfers to the account of
      Borrower’s subsidiary, HOMI Israel Ltd, account No. 640600/48 at Bank
      Leumi, branch No. 809 in Tel-Aviv, Israel, or to such other account as
      Borrower may specify.

            

    

     

    
      	
              2.  

            	
              Interest

            

    

     

     

    Interest will accrue on the entire outstanding balance of
the Loan, commencing as of the Loan Date, at the rate of 8% per annum (the
“Interest”).

     

    
      	
              3.  

            	
              Repayment

            

    

     

     

    
      	
              3.1  

            	
              Borrower shall repay the entire Loan, with all
      accrued Interest in 16 (sixteen) consecutive, quarterly payments,
      commencing as of April 1, 2010 and thereafter on the first day of each
      calendar quarter, ending with the final payment on January 1,
      2014.

            

    

     

    
      	
              3.2  

            	
              As of the Loan Date, there will be a two year grace
      period prior to commencement of repayment of the principal of the Loan
      (the “Grace
      Period”). Accordingly, for each of the first eight quarterly
      repayments, the repayment will comprise of accrued Interest, without
      principal. The principal of the Loan will be repaid in eight equal
      installments over the subsequent eight quarters, together with accrued
      Interest.

            

    

     

    
      
        
        

      

      
        
          2

           

          
            
              Loan Agreement: HOMI - Cohen

            

            Execution Copy

          

        

        
          
 

      

      
        
        

      

    

     

    
      	
              4.  

            	
              Conversion

            

    

     

     

    
      	
              4.1  

            	
              During the Grace Period,
      Lender shall have the right, in his discretion, to convert the Loan into
      shares of Borrower’s common stock, in accordance with the provisions of
      this Section ‎4.

            

    

     

    
      	
              4.2  

            	
              Conversion may be of all of the Loan and accrued
      Interest, or any part thereof from time to time during the Grace
      Period.

            

    

     

    
      	
              4.3  

            	
              During the first year of the Grace Period, the
      conversion will be at a price per share of $0.08. During the second year
      of the Grace Period, the conversion will be at a price per share of
      $0.12.

            

    

     

    
      	
              4.4  

            	
              Conversion will be by means of written notice by
      Lender to Borrower, stating the amount of Loan and accrued Interest which
      is being converted. Within 30 days of receiving a conversion notice, the
      Borrower shall issue to Lender, or to Lender’s order, the applicable
      quantity of shares of Borrower’s common
stock.

            

    

     

    
      	
              4.5  

            	
              Any and all amounts of the Loan and accrued Interest
      which are so converted by Lender will be deemed repaid by Borrower upon
      the issue to Lender, or to Lender’s order, of the applicable quantity of
      shares of Borrower’s common stock.

            

    

     

    
      	
              4.6  

            	
              The conversion right shall expire at the end of the
      Grace Period.

            

    

     

    
      	
              5.  

            	
              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
‎5 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 ‎5 shall, for all intents and
purposes, be deemed part of the Interest, as defined herein.

     

    
      	
              6.  

            	
              Specified Purpose of
  Loan

            

    

     

     

    
      	
              6.1  

            	
              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”).

            

    

     

    
      	
              6.2  

            	
              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.

            

    

     

    
      	
              6.3  

            	
              Borrower hereby recognizes
      and acknowledges that Lender’s 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 ‎6.2 above, which is a
      fundamental condition of this
Agreement.

            

    

     

    
      	
              7.  

            	
              Borrower’s General
  Covenants

            

    

     

     

    
      	
              7.1  

            	
              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.

            

    

     

    
      	
              7.2  

            	
              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.

            

    

     

    
      
        
        

      

      
        
          3

           

          
            
              Loan Agreement: HOMI - Cohen

            

            Execution Copy

          

        

        
          
 

      

      
        
        

      

    

     

    
      	
              7.3  

            	
              Other than in the ordinary course of business or
      otherwise as agreed to in writing by the Lender, 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.

            

    

     

    
      	
              8.  

            	
              Representations and
  Warranties

            

    

     

     

    Borrower hereby represents and warrants to Lender as
follows:

     

    
      	
              8.1  

            	
              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;

            

    

     

    
      	
              8.2  

            	
              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;

            

    

     

    
      	
              8.3  

            	
              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 Lender by
Borrower;

            

    

     

    
      	
              8.4  

            	
              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.

            

    

     

    
      	
              9.  

            	
              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:

     

    
      	
              9.1  

            	
              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;

            

    

     

    
      	
              9.2  

            	
              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 accordance with the schedule set forth herein, and
      that failure by Borrower to repay the Loan and pay the Interest in such
      manner shall be considered an Event of Default, regardless of the reason
      for such failure, and without Lender being required to deliver any kind of
      notice to Borrower;

            

    

     

    
      	
              9.3  

            	
              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 Lender and such default is not remedied within thirty
      (30) days after the occurrence
thereof;

            

    

     

    
      	
              9.4  

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

            

    

     

    
      	
              9.5  

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

            

    

     

    
      
        
        

      

      
        
          4

           

          
            
              Loan Agreement: HOMI - Cohen

            

            Execution Copy

          

        

        
          
 

      

      
        
        

      

    

     

    
      	
              9.6  

            	
              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;

            

    

     

    
      	
              9.7  

            	
              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;

            

    

     

    
      	
              9.8  

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

            

    

     

    
      	
              10.  

            	
              Miscellaneous

            

    

     

     

    
      	
              10.1  

            	
              In view of the fact that Lender is a shareholder in
      Borrower and holds office as a Director and as President of Borrower,
      Lender hereby agrees that, so 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 or management, 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.

            

    

     

    
      	
              10.2  

            	
              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 his 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 Lender’s advance written
      consent.

            

    

     

    
      	
              10.3  

            	
              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.

            

    

     

    
      	
              10.4  

            	
              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.

            

    

     

    
      	
              10.5  

            	
              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.

            

    

     

    
      	
              10.6  

            	
              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.

            

    

     

    
      	
              10.7  

            	
              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.

            

    

     

    
      	
              10.8  

            	
              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.

            

    

     

    
      
        
        

      

      
        
          5

           

          
            
              Loan Agreement: HOMI - Cohen

            

            Execution Copy

          

        

        
          
 

      

      
        
        

      

    

     

    
      	
              10.9  

            	
              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.

            

    

     

    
      	
              10.10  

            	
              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: Avraham Bahry, Jacky Ronnel

              	
                )

              

      

       

      
        	
                SIGNED by:

              	
                )

              

      

      
        	
                Daniel Cohen

              	
                )

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