##### 



Exhibit 10.3 LOAN AGREEMENT Made and entered into in Tel Aviv as of May 20, 2003 Among:
    
    Taro Pharmaceutical Industries Ltd.Italy HouseEuro ParkYakum 60972, Israel(hereinafter: the Company)of the first partAnd:
    
    The Lenders specified in the list attached hereto as Appendix A
(each a Lender and collectively the Lenders)of the second part
 WHEREAS:
    
    The Board of Directors of the Company
has approved the taking by the Company
of a loan in accordance with the terms
of this Agreement;AND WHEREAS:
    
    Each of the Lenders has agreed to
provide a loan to the Company pursuant
to the terms of this Agreement;
 The following has therefore been agreed between the parties:  1.
    
    General1.1
    
    The recitals and the appendix attached hereto form an integral part
hereof.1.2
    
    The headings of the sections and subsections of this Agreement are for
convenience of reference only and are not to be construed when
interpreting this Agreement.1.3
    
    In this Agreement, unless the context otherwise requires, the following
terms shall have the meanings set forth below:  1.3.1
    
    Agreement  this Loan Agreement. For the avoidance of doubt,
it is hereby clarified that this Agreement constitutes a debenture
as such term is defined in Section 1 of the Israeli Companies Law 
1999.1.3.2
    
    Bank Business Day  a day on which banks in London carry out
interbank transactions in deposit in US dollars in the London
Interbank Eurodollar Market and which is also a day on which banks in
Israel actually effect transactions in US dollars without limitation
in the amounts of the transactions and customarily conduct clearing
of banking documents.1.3.3
    
    Dollar  the dollar of the United States of America.1.3.4.
    
    EBITDA  means with respect to any twelve month period, earnings
before interest, taxes, depreciation and amortization, as
conclusively determined by the audited financial statements of the
Company. Exhibit 10.3 Page 2




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1.4
    
    [reserved]1.5
    
    Indebtedness  means any obligation for the repayment of
money borrowed under a credit facility or pursuant to a note, loan
agreement or debenture.1.6
    
    LIBOR Interest  the interest rate quoted in the London
Interbank Market, for the period of six (6) months, as determined for
this purpose by Bank Hapoalim B.M. Ltd. prior to the commencement of
any Interest Period (as defined below), pursuant to the customary
procedures and regulations of Bank Leumi LeIsrael Ltd. For the
purposes of this definition, the term Interest Period shall mean
each six (6) month period commencing on the date of this Agreement.1.7
    
    Loan  the Principal Amount, together with interest payable
thereon, as further specified in Section 2 and 3 below.1.8
    
    Principal Amount  as defined in Section 2.1 below.1.9
    
    Ratio  means the ratio between the Companys EBITDA and the
Companys total net interest expenses and current principal payable
on long term Indebtedness, as conclusively determined by the
Companys audited financial statements.1.10.
    
    Relative Portion  as defined in Section 2.1 below.  2.
    
    The Loan2.1
    
    Each of the Lenders shall provide to the Company, on the date indicated
in Appendix A hereto with respect to each Lender, the amount specified
next to such Lenders name on Appendix. The amount provided by each
Lender as specified in Appendix A shall hereinafter be referred to as the
Relative Portion and the aggregate sum of the Relative Portions provided
by all the Lenders shall hereinafter be referred to as the Principal
Amount. Each Relative Portion shall be made available to the Company by
each Lender in Dollars. The Company shall repay the Loan in Dollars to
each of the Lenders in accordance with its Relative Portion and in
accordance with Section 4 below. The Company shall pay to the Lenders the
Loan at the dates for payment thereof and fulfill all of the terms and
conditions applicable to the Company as set forth in this Agreement.2.2
    
    The obligations of each of the Lenders to the Company and the obligations
of the Company to each of the Lenders, including its obligation to repay
the Loan to each of the Lenders, is several and not joint towards each of
the Lenders and without any mutual liability and/or rights among them.3.
    
    InterestUpon execution of this Agreement, each Lender will indicate in the space
provided next to such Lenders name on Appendix A, whether it elects to be
paid interest on the unpaid balance of the Relative Portion equal to (i)
an annual rate of six percent (6%) or (ii) LIBOR Interest plus two and a
quarter percent (2.25%). Interest will be computed on the basis of a three
hundred and sixty (360) day year for the actual number of days elapsed
between each interest payment date and the preceding interest payment
date. With respect to the first interest period, interest payable to each
Lender will be computed based on the actual number of days elapsed between
the first interest payment date and the date on which the Company actually
received the Relative Portion transferred by the Lender hereunder.4.
    
    Date of Payment of Principal and Interest Exhibit 10.3 Page 3




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4.1
    
    Commencing on the date following the third anniversary hereof (namely, on
May 20, 2006), and on each anniversary date thereafter, the Company shall
repay to the Lenders a total of twenty percent (20%) of the Principal
Amount as set forth in this Section 4.4.2
    
    The first payment of interest shall be made on the six (6) month
anniversary of the date hereof (namely on November 20, 2003) and
thereafter, interest shall be paid every six (6) months thereafter. The
last interest payment shall be made together with the repayment of the
unpaid balance of the Principal Amount as set forth in this Section 4.4.3
    
    Each payment on account of the Loan shall be paid to each Lender by bank
transfer to each Lenders bank account as listed on Appendix A, or such
other account as such Lender shall have provided prior written notice of
to the Company at least twenty (20) days prior to a date upon which a
payment is to be made pursuant to this Agreement.4.4
    
    In the event that the Company shall delay in the making of any payments
pursuant to this Agreement, the Company shall pay to such Lender, in
respect of such delay, interest for delay at an annual rate which shall
exceed by three percent (3%) the interest rate specified in Section 3
above, for the period from the date payment was required to be made
pursuant to this Agreement until the actual payment date (for the purposes
of calculating such annual rate, a year shall consist of three hundred and
sixty (360) days).4.5
    
    If the date that a payment is to be made pursuant to this Agreement is
not a Bank Business Day, the date for payment shall be deferred until the
first Bank Business Day thereafter. However, if the date that a payment is
to be made pursuant to this Agreement falls at the last day of a calendar
month and is not a Bank Business Day, the date for payment shall be
brought forward to the last Bank Business Day of such calendar month.5.
    
    Covenants of the Company and the Lenders5.1
    
    The Company shall pay each of the Lenders all amounts to which such
Lender is entitled to pursuant to this Agreement on the payment dates set
forth herein and fully and in a timely manner comply with all of the
Companys obligations hereunder.5.2
    
    Until such time as the Loan shall have been repaid in full, the Company
shall:  5.2.1
    
    inform the Lenders of the occurrence of one or more of the
events listed in Section 6 below, as soon as practicable after the
occurrence thereof.5.2.2
    
    continue to manage its business in accordance with its normal
business practices.5.2.3
    
    maintain proper accounting books as required by applicable
law.5.2.4
    
    periodically send to the Lenders a copy of the financial
information the Company discloses pursuant to its United States
disclosure obligations, promptly following the public disclosure of
such financial information.5.2.5
    
    send to the Lenders, a copy of the reports issued by Maalot -
the Israeli Company for Securities Rating Ltd. from time to time
regarding the Company.  5.3
    
    The Company and each of the Lenders, hereby represent that the receipt
and issuance of the Loan (as the case may be) and the execution of the
Agreement do not constitute a breach of any binding agreement to which
such party is a party or of the provisions of any applicable law, and are
not in conflict with of any of the provisions of its respective
organizational documents. Furthermore, the Company and each of the
Lenders, hereby represent that all the resolutions required, pursuant to
its respective organizational documents and applicable law, to authorize
it Exhibit 10.3 Page 4




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##### 



to receive or to issue the Loan (as the case may be) and to become a party
to this Agreement have been duly adopted.5.4
    
    For as long as any portion of the Loan shall remain outstanding and
unpaid, the Company shall not:  5.4.1 incur any additional Indebtedness as long as the Ratio shall be less
than 2:1. The Ratio shall be determined on the first day of April of each
year with respect to the prior calendar year (the Yearly Review). In the
event that a Yearly Review shall indicate that the Ratio is less than 2:1,
the Company shall not be permitted to incur additional Indebtedness until
and unless the Ratio is increased again to be 2:1 or more as shall be
determined based on the audited financial statements of the Company for
any twelve (12) month period.5.4.2 distribute dividends which, in the aggregate, exceed fifty percent
(50%) of the accumulated profit of the Company for the period commencing
as of January 1, 2003.5.4.3 encumber any of its assets, provided however, that the Company may
encumber its assets in order to secure any Indebtedness which, in the
aggregate, does not exceed twenty million Dollars ($20,000,000) (the
Permitted Sum). In the event that the Company complies with its
repayment obligations pursuant to Section 4 in full and in a timely
matter, as of the third anniversary of this Agreement, the Permitted Sum
shall be increased by an amount equal to the aggregate payments on account
of principal made to the Lenders pursuant to Section 4.1. In addition and
notwithstanding anything herein to the contrary, the Company may encumber
newly acquired assets to secure the financing provided to acquire such
assets.  For the removal of doubt, if the Company will merge with another company
or entity, the merged entity will assume the loan hereunder and will
comply with all the covenants of the Company hereunder. Exhibit 10.3 Page 5




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6.
    
    Immediate RepaymentIn the event of the occurrence of any one or more of the events specified
below, each Lender shall be entitled, after providing a prior written
notice to the Company (provided that such breach or event in connection
with which notice was sent, has not been rectified or removed during such
prior notice period), to demand the immediate repayment of the Loan, and
the Company hereby undertakes to repay the Loan to such Lender, within
three (3) business days of the Lenders demand. The prior notice period
with respect to the events listed in sub-sections 6.1, 6.4 and 6.5 shall
be thirteen (13) days and the prior notice period with respect to the
events listed in sub-section 6.2 and 6.3 shall be forty five (45) days.6.1
    
    The failure of the Company to pay, within fourteen (14) days from a
payment date pursuant to the Agreement, any of the payments which it is
required to pay to a Lender pursuant to this Agreement.6.2
    
    The breach and/or failure by the Company to fulfill any of its
undertakings to the Lenders pursuant to Section 5 of this Agreement.6.3
    
    The issuance of an order for liquidation of the Company (with the
exception of voluntary liquidation for the purposes of merging with
another company and/or changing the Companys corporate structure) and/or
permanent receivership against the Company, or the issuance of an order
for temporary liquidation and/or temporary receivership against the
Company.6.4
    
    The total cessation by the Company of making payments to substantially
all of its creditors.6.5
    
    The cessation by the Company of managing its business.7.
    
    [reserved]8.
    
    Miscellaneous8.1
    
    To the extent permitted by applicable law, each of the Lenders may
transfer and/or assign its rights to be repaid its Relative Portion,
together with any other rights it may have herein, subject to such
transferee or assignee, as applicable, assuming in writing the obligations
of such Lender under this Agreement. The transfer and/or assignment shall
be effected by providing written notice to the Company at least twenty
(20) days prior to the date of any payment of the Loan or interest
pursuant to the Agreement. Notwithstanding the foregoing, no Lender shall
transfer and/or assign its part in the Loan to a company which operates in
the same field of activity as the Company.8.2
    
    In the event that stamp tax is payable in connection with this Agreement,
it shall be borne by the Company.8.4
    
    Except as set forth in Section 8.2, each party shall bear the taxes and
levies imposed on it and expenses it incurs in respect of the fees of its
attorneys and consultants in connection with the Agreement and the
transactions contemplated therein.8.5
    
    The address of the Company is Italy House, Euro Park, Yakum 60972,
Israel, or any other address in Israel in respect of which the Company
shall provide notice to each of the Lenders by registered mail.The address of each of the Lenders is as specified in Appendix A to the
Agreement. Exhibit 10.3 Page 6




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Any notice and other communications provided by one party to the other
shall be in writing and shall be telefaxed or sent by registered mail, or
otherwise delivered by hand, according to the said addresses, and shall be
deemed to have reached its destination (i) if mailed upon the expiration
of seventy two (72) hours after mailing, (ii) if sent by hand delivery,
upon delivery, (iii) if sent via telefax, upon transmission and electronic
confirmation of receipt or (if transmitted and received on a non-business
day) on the first business day following transmission and electronic
confirmation of receipt (provided, however, that any notice of change of
address shall only be valid upon receipt).8.6
    
    This Agreement shall be governed by and construed according to the laws
of the State of Israel, without regard to the conflict of laws provisions
thereof. Any dispute arising under or in relation to this Agreement shall
be resolved in the competent court for Tel Aviv-Jaffa district only, and
each of the parties hereby submits irrevocably to the exclusive
jurisdiction of such court.8.7
    
    Any deferral and/or waiver and/or delay by any party in exercising any of
its rights pursuant to the Agreement shall not prejudice its rights and
shall not be deemed to be a waiver thereof.8.8
    
    The terms and conditions set forth in this Agreement shall also be
binding upon the liquidators and/or receivers and/or trustees in
bankruptcy or temporary and/or permanent administrators of the Company
and/or the persons acting on their behalf and/or in their place in any
other form, and shall also be binding should a temporary or permanent
dissolution and/or receivership order be issued against the Company.8.9
    
    This Agreement may be amended with the written consent of the Company and
the holders of fifty five (55%) of the outstanding amount of the Principal
Amount.8.10
    
    This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and enforceable against the parties
actually executing such counterpart, and all of which together shall
constitute one and the same instrument. In witness whereof, the parties affix their signatures: The Company: ___________________________  The Lenders: ___________________________ Exhibit 10.3 Page 7




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APPENDIX A Bank
    
    
    
    Relative Portion
    
    Transfer Date ofLender
    
    Address
    
    Account
    
    Interest Rate
    
    (in US$)
    
    Relative Portion1.
    
    Bank Leumi LeIsrael Ltd.
    
    
    
    
    
    6% (fixed)
    
    $
    10,000,000
    
    
    20/5/032.
    
    Israel Discount Bank Ltd.
    
    
    
    
    
    6% (fixed)
    
    $
    10,000,000
    
    
    21/5/033.
    
    Bank Hapoalim B.M. Ltd.
    
    
    
    
    
    LIBOR  + 2.25%
    
    $
    10,000,000
    
    
    21/5/03
 Exhibit 10.3 Page 8




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LOAN AGREEMENT Made and entered into in Tel Aviv as of November 27, 2003 Among:
    
    Taro Pharmaceutical Industries Ltd.
Italy House
Euro Park
Yakum 60972, Israel
(hereinafter: the Company)of the first partAnd:
    
    The Lenders specified in the list attached hereto as Appendix A
(each a Lender and collectively the Lenders)of the second part
 WHEREAS:
    
    The Board of Directors of the Company
has approved the taking by the Company
of a loan in accordance with the terms
of this Agreement;AND WHEREAS:
    
    Each of the Lenders has agreed to
provide a loan to the Company pursuant
to the terms of this Agreement;
 The following has therefore been agreed between the parties:  1.
    
    General1.1
    
    The recitals and the appendix attached hereto form an integral part
hereof.1.2
    
    The headings of the sections and subsections of this Agreement are for
convenience of reference only and are not to be construed when
interpreting this Agreement.1.3
    
    In this Agreement, unless the context otherwise requires, the following
terms shall have the meanings set forth below:  1.3.1
    
    Agreement  this Loan Agreement.1.3.2
    
    Bank Business Day  a day on which banks in London carry out
interbank transactions in US dollars and banks in Israel actually
effect transactions in US dollars (including conversion of NIS into
Dollars) without limitation in the amounts of the transactions and
customarily conduct clearing of banking documents.1.3.3
    
    Consumer Price Index or CPI  means, as of any given date,
the consumer price index (including fruits and vegetables) last
published by the Israeli Central Bureau of Statistics (or any other
official authority that may substitute the Israeli Central Bureau of
Statistics), as may be published from time to time.1.3.4
    
    Dollar  the dollar of the United States of America. Exhibit 10.3 Page 9




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1.3.5.
    
    EBITDA  means with respect to any twelve month period, earnings
before interest, taxes, depreciation and amortization, as
conclusively determined by the audited financial statements of the
Company.1.3.6
    
    Indebtedness  means any obligation for the repayment of
money borrowed under a credit facility or pursuant to a note, loan
agreement or debenture.1.3.7
    
    Loan  the Principal Amount, together with interest payable
thereon, as further specified in Section 2 and 3 below.1.3.8
    
    NIS  means the New Israeli Shekel.1.3.9
    
    The Original CPI  the CPI published on November 14, 2003.1.3.10
    
    Principal Amount  as defined in Section 2.1 below.1.3.11
    
    Ratio  means the ratio between the Companys EBITDA and the
Companys total net interest expenses and current principal payable
on long term Indebtedness, as conclusively determined by the
Companys audited financial statements.1.3.12
    
    Relative Portion  as defined in Section 2.1 below.  2.
    
    The Loan2.1
    
    Each of the Lenders shall provide to the Company, on the date indicated
in Appendix A hereto with respect to each Lender, the amount specified
next to such Lenders name in Appendix A. The amount provided by each
Lender as specified in Appendix A shall hereinafter be referred to as the
Relative Portion and the aggregate sum of the Relative Portions provided
by all the Lenders shall hereinafter be referred to as the Principal
Amount. The Company shall repay the Loan to each of the Lenders in
accordance with their Relative Portion and in accordance with Sections 3
and 4 below. The Company shall repay to the Lenders their Relative Portion
on the dates for repayment thereof and fulfill all of the terms and
conditions applicable to the Company as set forth in this Agreement.2.2
    
    Upon execution of this Agreement, each Lender will indicate in the space
provided next to such Lenders name on Appendix A, whether it elects the
Dollar Route or the CPI Route, as follows:(i) The Dollar Route:(a) Lenders electing the Dollar Route shall make the
Relative Portion available to the Company in Dollars; (b) such Lenders
will be paid interest on the unpaid balance of their Relative Portion at
an annual rate of sixth and one tenth percent (6.1%); and (c) the
repayment of principal and interest to such Lenders will be made in
Dollars, in accordance with Section 4 below.(ii) The CPI Route:(a) Lenders electing the CPI Route shall make the
Relative Portion available to the Company in NIS; (b) the Relative
Portion and interest thereon shall be linked to the CPI based on the
difference between the Original CPI and the CPI last published prior to
the day each payment (of principal and/or interest) is made; (c) such
Lenders will be paid interest on the unpaid balance of their Relative
Portion at an annual rate of five and eight tenths percent (5.8%); and (d)
the repayment of principal and interest to such Lenders will be made in
NIS, in accordance with Section 4 below.2.3
    
    The obligations of each of the Lenders to the Company and the obligations
of the Company to each of the Lenders, including its obligation to repay
the respective Relative Portion to each of Exhibit 10.3 Page 10




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the Lenders, is several and not joint towards each of the Lenders and
without any mutual liability and/or rights among them.3.
    
    InterestInterest for both the Dollar Route and the CPI Route will be computed on
the basis of a three hundred and sixty five (365) day year for the actual
number of days elapsed between each interest payment date and the
preceding interest payment date. With respect to the first interest
period, interest payable to each Lender will be computed based on the
actual number of days elapsed between the first interest payment date and
the date on which the Company actually received the Relative Portion
transferred by the Lender hereunder.4.
    
    Date of Payment of Principal and Interest4.1
    
    The Principal Amount will be repaid in seven (7) equal annual
installments commencing on the date following the fifth anniversary hereof
(namely, on November 27, 2008), and on each anniversary date thereafter
until the eleventh anniversary hereof (namely, on November 27, 2014).4.2
    
    The first payment of interest shall be made on the six (6) month
anniversary of the date hereof, namely on May 27, 2004 and thereafter,
interest shall be paid on May 27 and November 27 of each following year
thereafter, until November 27, 2014 (the date of payment of the last
installment on account of the Principal Amount). The last interest payment
shall be made together with the repayment of the unpaid balance of the
Principal Amount as set forth in this Section 4.4.3
    
    Each payment on account of the Loan shall be paid to each Lender by bank
transfer to each Lenders bank account as listed on Appendix A, or such
other account as such Lender shall have provided prior written notice of
to the Company at least twenty (20) days prior to a date on which a
payment is to be made pursuant to this Agreement.4.4
    
    In the event that the Company shall delay in the making of any payments
pursuant to this Agreement, the Company shall pay to such Lender, in
respect of such delay, interest for delay at an annual rate which shall
exceed by three percent (3%) the interest rate such Lender is entitled to
receive pursuant to Section 2.2 above, for the period from the date
payment was required to be made pursuant to this Agreement until the
actual payment date (for the purposes of calculating such annual rate, a
year shall consist of three hundred and sixty five (365) days).4.5
    
    If the date that a payment is to be made pursuant to this Agreement is
not a Bank Business Day, the date for payment shall be deferred until the
first Bank Business Day thereafter. However, if the date that a payment is
to be made pursuant to this Agreement falls at the last day of a calendar
month and is not a Bank Business Day, the date for payment shall be
brought forward to the last Bank Business Day of such calendar month.5.
    
    Covenants of the Company and the Lenders5.1
    
    The Company shall pay each of the Lenders all amounts to which such
Lender is entitled to pursuant to this Agreement on the payment dates set
forth herein and fully and in a timely manner comply with all of the
Companys obligations hereunder.5.2
    
    Until such time as the Loan shall have been repaid in full, the Company
shall:  5.2.1
    
    inform the Lenders of the occurrence of one or more of the
events listed in Section 6 below, as soon as practicable after the
occurrence thereof.5.2.2
    
    continue to manage its business in accordance with its normal
business practices. Exhibit 10.3 Page 11




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5.2.3
    
    maintain proper accounting books as required by applicable
law.5.2.4
    
    periodically send to the Lenders, either pursuant to Section
7.5 or via e-mail, a copy of the financial information the Company
discloses pursuant to its United States disclosure obligations,
promptly following the public disclosure of such financial
information.5.2.5
    
    send to the Lenders, a copy of the reports issued by Maalot -
the Israeli Company for Securities Rating Ltd. from time to time
regarding the Company.  5.3
    
    The Company and each of the Lenders, hereby represent that the receipt
and issuance of the Loan (as the case may be) and the execution of the
Agreement do not constitute a breach of any binding agreement to which
such party is a party or of the provisions of any applicable law, and are
not in conflict with of any of the provisions of its respective
organizational documents. Furthermore, the Company and each of the
Lenders, hereby represent that all the resolutions required, pursuant to
its respective organizational documents and applicable law, to authorize
it to receive or to issue the Loan (as the case may be) and to become a
party to this Agreement have been duly adopted.5.4
    
    For as long as any portion of the Loan shall remain outstanding and
unpaid, the Company shall not:  5.4.1 incur any additional Indebtedness as long as the Ratio shall be less
than 2:1. The Ratio shall be determined on the first day of April of each
year with respect to the prior calendar year (the Yearly Review). In the
event that a Yearly Review shall indicate that the Ratio is less than 2:1,
the Company shall not be permitted to incur additional Indebtedness until
and unless the Ratio is increased again to be 2:1 or more as shall be
determined based on the audited financial statements of the Company for
any twelve (12) month period.5.4.2 distribute dividends which, in the aggregate, exceed fifty percent
(50%) of the accumulated profit of the Company for the period commencing
as of January 1, 2003.5.4.3 encumber any of its assets, provided however, that the Company may
encumber its assets in order to secure any Indebtedness which, in the
aggregate, does not exceed twenty million Dollars ($20,000,000) (the
Permitted Sum). In the event that the Company complies with its
repayment obligations pursuant to Section 4 in full and in a timely
matter, as of the fifth anniversary of this Agreement, the Permitted Sum
shall be increased by an amount equal to the aggregate payments on account
of principal made to the Lenders pursuant to Section 4.1. In addition and
notwithstanding anything herein to the contrary, the Company may encumber
newly acquired assets to secure the financing provided to acquire such
assets.  For the removal of doubt, if the Company will merge with another company
or entity, the merged entity will assume the loan hereunder and will
comply with all the covenants of the Company hereunder.6.
    
    Immediate RepaymentIn the event of the occurrence of any one or more of the events specified
below, each Lender shall be entitled, after providing a prior written
notice to the Company (provided that such breach or event in connection
with which notice was sent, has not been rectified or removed during such
prior notice period), to demand the immediate repayment of the Loan, and
the Company hereby undertakes to repay the Loan to such Lender, within
three (3) business days of the Lenders demand. The prior notice period
with respect to the events listed in sub-sections Exhibit 10.3 Page 12




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##### 



6.1, 6.4 and 6.5 shall be thirteen (13) days and the prior notice period
with respect to the events listed in sub-section 6.2 and 6.3 shall be
forty five (45) days.6.1
    
    The failure of the Company to pay, within fourteen (14) days from a
payment date pursuant to the Agreement, any of the payments which it is
required to pay to a Lender pursuant to this Agreement.6.2
    
    The breach and/or failure by the Company to fulfill any of its
undertakings to the Lenders pursuant to Section 5 of this Agreement.6.3
    
    The issuance of an order for liquidation of the Company (with the
exception of voluntary liquidation for the purposes of merging with
another company and/or changing the Companys corporate structure) and/or
permanent receivership against the Company, or the issuance of an order
for temporary liquidation and/or temporary receivership against the
Company.6.4
    
    The total cessation by the Company of making payments to substantially
all of its creditors.6.5
    
    The cessation by the Company of managing its business.7.
    
    Miscellaneous7.1
    
    To the extent permitted by applicable law, each of the Lenders may
transfer and/or assign its rights to be repaid its Relative Portion,
together with any other rights it may have herein, subject to such
transferee or assignee, as applicable, assuming in writing the obligations
of such Lender under this Agreement. The transfer and/or assignment shall
be effected by providing written notice to the Company at least twenty
(20) days prior to the date of any payment of principal or interest
pursuant to the Agreement. Notwithstanding the foregoing, no Lender shall
transfer and/or assign any of its rights under this Agreement, to a
company which operates in the same field of activity as the Company.7.2
    
    In the event that stamp tax is payable in connection with this Agreement,
it shall be borne by the Company.7.4
    
    Except as set forth in Section 7.2, each party shall bear the taxes and
levies imposed on it and expenses it incurs in respect of the fees of its
attorneys and consultants in connection with the Agreement and the
transactions contemplated therein.7.5
    
    The address of the Company is Italy House, Euro Park, Yakum 60972,
Israel, or any other address in Israel in respect of which the Company
shall provide notice to each of the Lenders by registered mail.The address of each of the Lenders is as specified in Appendix A to the
Agreement.Any notice and other communications provided by one party to the other
shall be in writing and shall be telefaxed or sent by registered mail, or
otherwise delivered by hand, according to the said addresses, and shall be
deemed to have reached its destination (i) if mailed upon the expiration
of seventy two (72) hours after mailing, (ii) if sent by hand delivery,
upon delivery, (iii) if sent via telefax, upon transmission and electronic
confirmation of receipt or (if transmitted and received on a non-business
day) on the first business day following transmission and electronic
confirmation of receipt (provided, however, that any notice of change of
address shall only be valid upon receipt).7.6
    
    This Agreement shall be governed by and construed according to the laws
of the State of Israel, without regard to the conflict of laws provisions
thereof. Any dispute arising under or in relation to this Agreement shall
be resolved in the competent court for Tel Aviv-Jaffa district Exhibit 10.3 Page 13




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only, and each of the parties hereby submits irrevocably to the exclusive
jurisdiction of such court.7.7
    
    Any deferral and/or waiver and/or delay by any party in exercising any of
its rights pursuant to the Agreement shall not prejudice its rights and
shall not be deemed to be a waiver thereof.7.8
    
    The terms and conditions set forth in this Agreement shall also be
binding upon the liquidators and/or receivers and/or trustees in
bankruptcy or temporary and/or permanent administrators of the Company
and/or the persons acting on their behalf and/or in their place in any
other form, and shall also be binding should a temporary or permanent
dissolution and/or receivership order be issued against the Company.7.9
    
    This Agreement may be amended with the written consent of the Company and
the holders of fifty five (55%) of the outstanding amount of the Principal
Amount.7.10
    
    This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and enforceable against the parties
actually executing such counterpart, and all of which together shall
constitute one and the same instrument. In witness whereof, the parties affix their signatures: The Company: ___________________________  The Lenders: ___________________________ Exhibit 10.3 Page 14