exv10w9



 





Exhibit 10.9




Account No(s)

613951




	 	 	 	 	 	 	 
	 	 	 	 	Identity Card No./	 	 
	 	 	 	 	Corporation Register.	 	 
	Customer’s Name	 	Address and Area Code	 	No.	 	Telephone No.
	Alma Lasers Ltd.

	 	7 Haeshel Street P.O.B. 3021
	 	51-283617-2
	 	(972-4) 627-5357
	 

	 	Caesarea Industrial Park,	 	 	 	 
	 

	 	Caesarea, Israel 38900	 	 	 	 




 


To




Bank Hapoalim B.M.




Central Branch (600)




LETTER OF UNDERTAKING




MADE AND EXECUTED IN TEL-AVIV, ON THE 23RD DAY OF March, IN THE YEAR 2006




	 	 	 
	WHEREAS

	 	Alma Lasers Ltd. (“the Borrower”) has
represented to Bank Hapoalim B.M. (“the Bank”) that it is intending to pay a cash dividend and redeem a certain
number of ordinary of the Borrower held by the current shareholders of the
Borrower (the “Shareholders”) in return for a total sum of US$35,000,000.-
to be provided to the Shareholders by the Borrower from funds made
available to the Borrower as set forth below:







	 	•	 	a US$20,000,000.- credit facility provided to the Borrower and
regarded as Senior Debt of the Borrower (the “Senior Debt”);
	 
	 	•	 	a US$14,998,037.- worth of subordinated notes and ordinary shares
(or the equivalent) of the Borrower or of Aesthetic Acquisition,
B.V. (“Buyer”) (collectively — the “Subordinated Notes”), ranking
junior in right of payment to the Senior Debt of the Borrower, to
be purchased from the Borrower or Buyer by certain funds managed
by TA Associates, Inc. (collectively — “TA”).





	 	 	 
	AND WHEREAS

	 	The Buyer represented to the Bank that it is intending to purchase directly from the Shareholders US$55,000,478.- worth of Series A-l preferred shares
(convertible into ordinary shares) of the Borrower (the “Shares”) and
initially representing 62.92% interest in the equity of the Borrower on a
fully-diluted basis (i.e. after the purchase of the Shares mentioned
above).
	 
	 	 
	AND WHEREAS

	 	The Borrower further represented to the Bank that a
contingent payment of up to US$17,000,000.- (“Contingent Payment”) is to be payable to the
Shareholders and/or certain option holders based on — and subject to —
certain 2006 financial performance targets, in the manner set forth
below:-







	 	•	 	up to US$10,000,000.- payable by the Borrower to the Shareholders
and/or certain option holders, in a method to be concluded
amongst the Borrower and such holders and subject to the
adherence — consequent to the payment of said sum — to the
financial covenants detailed hereinafter.





 









 






	 	•	 	after payment of the first US$10,000,000 of the Contingent Payment
from the Borrower, up to US$7,000,000.- payable from TA’s
resources to the Shareholders and/or certain option holders.





	 	 	 
	AND WHEREAS

	 	Based upon the above representations with respect to the
transaction contemplated amongst the Borrower, Buyer and the Shareholders (“the Transaction”),
the Borrower has requested from the Bank to finance the Senior Debt by way of
providing the Borrower, from time to time, with credit by means of a term
loan (“the Term Loan”) denominated in U.S. Dollars and/or Euro and
revolving credit (“the Revolving Credit Line”) denominated in U.S. Dollars
(collectively hereinafter “Credit”, “the Credits” or “the Credit
Facilities”) in the bank account of the Borrower, the details of which are
specified above (hereinafter - “the Borrower Account”);
	 
	 	 
	AND WHEREAS

	 	The Bank has acceded to the above request of the Borrower and made its compliance with this request dependent, inter-alia, upon the Borrower
signing this Letter of Undertaking.






ACCORDINGLY THE BORROWER HEREBY DECLARES AND COVENANTS AS FOLLOWS:




Request for Provision of Credit





	1.	 	In order to induce the Bank to provide the Borrower with Credit, the Borrower has furnished
the Bank with a request for the provision of a Term Loan in the form of Appendix “A-1” attached hereto
as an integral part hereof and a request for the provision of a Revolving Credit Line in the form
of Appendix “A-2” attached hereto as an integral part hereof.





Conditions Precedent to Provision of Credit





	2.	 	The provision of the Credit, or any part thereof, to the Borrower by the Bank is subject, to
all qualifications and conditions set forth in this Letter of Undertaking, and inter-alia, to the satisfaction
of all the following conditions precedent to the reasonable satisfaction of the Bank:






	 	a)	 	The submission to the Bank of:






	 	(i)	 	a written confirmation in the text set out in Appendix “B-1” attached hereto as
an integral part hereof, of name of trust company of Tulchinsky Stern Trust
Company Ltd., as trustee for the Buyer (the “Trustee”) to the Bank, of the
receipt of the sum of US$69,998,515.- (comprised of the purchase price of
US$14,998,037.- against Subordinated Notes and the purchase price of
US$55,000,478.- against Shares) in a bank account opened for this purpose
by the Trustee in the Bank, together with irrevocable instructions, in the
text set out in Appendix “B-1” of the Trustee to the Bank with respect to
the distribution of said sum to, as the case may be, the Shareholders (who
will confirm in writing receipt of said sums) and/or the Borrower (through
Borrower Account); and
	 
	 	(ii)	 	irrevocable instructions in the text set out in Appendix “B-2” attached hereto
as an integral part hereof, of the Borrower to the Bank, to pay the sums
transferred to Borrower Account under (i) above, together with the sums of
the Credited Facilities, out of Borrower Account to the Shareholders.






	 	b)	 	The submission to the Bank of a copy (certified to be true) of all documentation and agreements in respect of the Transaction, including in respect of the Shares and
the Subordinated Notes (the text of the documentation with respect to the
Subordinated Notes being to the Bank’s reasonable satisfaction) and any and all
other documentation and agreements relating to the redemption of the Shares and the
finance thereof.





2









 






	 	c)	 	The submission to the Bank of all applicable legal opinions to be prepared by
legal counsels acceptable to our Bank, covering all legal issues which our Bank may customarily
require and as to which such legal counsel customarily opines.
	 
	 	d)	 	The submission to the Bank of the collateral as per Paragraph 9 hereof, with
respect to any and all outstanding amount of credit granted and to be granted to the Borrower
under the Credit Facilities (the “Outstanding Debt”).
	 
	 	e)	 	The submission to our Bank of the Borrower’s minutes, regarding the obtaining
of credit from the Bank under the terms hereunder.
	 
	 	f)	 	There being no legal (inc. regulatory) impediment whatsoever in the opinion
of the Bank, to the Bank’s performance of its obligations hereunder.





Interest, Additional Interest, Default Interest and Levies





	3.	(a)	 	Any Credit allocated to Borrower in the framework of this Letter of Undertaking shall carry
interest at the rate set out in the Borrower’s request for provision of such Credit which the Bank
has complied with.
	 
	 	(b)	 	The Borrower undertakes to pay to the Bank from time to time additional amounts
(hereinafter — “additional interest”) which in the opinion of the Bank will compensate the Bank for
any increased cost of the Credit incurred by the Bank. -






	 	(1)	 	Arising from any obligation under any law or agreement or otherwise
effective after the date hereof, imposed on or incurred by the Bank, or from any
demand made upon the Bank by the Bank of Israel and/or by any competent or other
authority in Israel or abroad having jurisdiction over the Bank:






	 	(aa)	 	To hold liquid assets to any degree or in any
currencies in connection with the granting of the Credit and/or the
continued funding of the Credit; and/or
	 
	 	(bb)	 	To pay and/or make provision for any payments
whatsoever to the State Treasury and/or to the Bank of Israel and/or to
any competent and/or other authority in connection with the granting of
the Credit and/or the continued funding of the Credit; or






	 	(2)	 	If as a result of any aforesaid obligation or demand the Bank is
unable to obtain the rate of return on its overall capital which it would have
been able to obtain if not for having complied with the request of the Borrower
to provide the Borrower with the Credit.






	 	(c)	 	In case of the occurrence the events specified in the table below, then any sum
which the Borrower is obliged to pay the Bank pursuant to this Letter of Undertaking and/or
pursuant to the Borrower’s request for provision of the Credit or in connection thereto, shall carry
default interest at the rate specified in the table below, calculated on the total outstanding
principal balance of credit granted and to be granted to the Borrower under the Credit Facilities
from the due date of payment of that amount — or if there is no due date for the payment thereof
 — from the date of the Bank’s demand to pay same — until its actual payment in full
(hereinafter — “Default Interest”):-





	 	 	 
	EVENT	 	RATE OF DEFAULT INTEREST
	Sub-Paragraph 14 (j) and Paragraph 15:

	 	4.5% (four point five per cent) in excess of
the rate of interest applicable to the Credit
	 
	 	 
	All other events under Paragraph 14 which have
not been remedied by the end of the subsequent quarter:

	 	2.5% (two point five per cent) in excess of
the rate of interest applicable to the Credit






3









 







	 	(d)	 	Default Interest shall be calculated by the Bank on the daily, weekly or other
balances outstanding, as the Bank in its discretion shall decide, and shall be paid by
the Borrower or capitalised at the end of each quarter, or any other period as the Bank
shall decide in its sole discretion.





Fees and Commissions




	 	 	 	 	 
	4.

	 	(a)
	 	The Borrower shall pay the Bank the fees agreed in the Fee Letter between the Borrower
and the Bank dated February 21, 2006.
	 
	 	 	 	 
	 

	 	(b)
	 	The Bank shall be entitled to debit the Borrower Account at the payment dates
determined for any of the above fees and commissions (collectively — “Commissions”)
with the amount of fee or commission if not paid on the date when due.






Place and Manner of Payment; Taxes




	 	 	 	 	 
	5.

	 	(a)
	 	All payments to be paid by the Borrower pursuant to this Letter of Undertaking shall
be made to the Bank free of any taxes, deductions or charges and without set-off or
counterclaim, in lawful and freely transferable currency denominated in the currency
of the Credit and in funds available to the Bank at the branch where the Borrower
received the Credit or at any place nominated by the Bank, provided that 30 (thirty)
days prior written notice thereof shall have been given to Borrower by the Bank.
	 
	 

	 	(b)
	 	If at any time, any applicable law, regulation or regulatory requirement of any
governmental authority, monetary agency or central bank requires the Borrower or any
financial institution through which payment is made, to make any deduction or
withholding in respect of any payment owed to the Bank under or in connection with this
Letter of Undertaking, the sum due from the Borrower in respect of such payment shall
be increased to the extent necessary to ensure that, after the making of such deduction
or withholding, the Bank receives on the due date for such payment a net sum equal to
the sum which it would have received had no such deduction or withholding been required
to be made, and Borrower shall indemnify the Bank against any losses or costs actually
incurred by it by reason of any failure to make any such deduction or withholding or by
reason of any increased payment not being made on the due date for such payment. The
Borrower shall promptly deliver to the Bank any receipts, certificates or other proof
evidencing the amounts (if any) paid or payable in respect of any deduction or
withholding as aforesaid.






Application of Payments




	 	 	 	 	 
	6.

	 	(a)
	 	Every sum, payment or credit of every kind whatsoever, which shall be paid to Bank by Borrower in connection with the Credit shall serve for repayment and/or to secure
repayment of the Credit, interest, Additional Interest, Default Interest, Commissions
and other payments, to be applied in the order of precedence to be determined by the
Bank.
	 
	 

	 	(b)
	 	Every sum and payment of every kind whatsoever, which shall be in the hands of
the Bank as a result of realisation of any security which has or will have been given by Borrower or
others on Borrower’s behalf, shall serve for repayment and/or to secure repayment of the Credit,
interest, Additional Interest, Default Interest, Commissions and other payments, and be applied
pro-rata to the amortization instalments of the Term Loan in direct order and against amounts
outstanding under the Revolving Credit Line.






Representations and Warranties





4











 





	 	 	 	 	 	 	 	 	 
	7.	 	(a)	 	The Borrower is a company duly organised and validly existing under the laws of the
state of Israel and has the power and authority to carry on and conduct its business as
currently conducted and to own its property and other assets.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(b)	 	The Borrower has the power to execute, deliver and perform its obligations
under this Letter of
Undertaking and to borrow the amount of the Credit; all necessary action has been
taken to
authorise the execution, delivery and performance of this Letter of Undertaking and
all other
documents to be executed and delivered by Borrower in connection with same or pursuant
thereto.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(c)	 	This Letter of Undertaking constitutes Borrower’s valid and legally binding
obligations,
enforceable in accordance with its terms, subject to the effect of applicable
bankruptcy,
insolvency, reorganization, receivership, moratorium and other similar laws relating
to or
affecting creditors’ rights generally, and the effect of general principles of equity,
whether
applied by a court of law or equity.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(d)	 	The execution and delivery of, the performance of Borrower’s obligations under,
and the
compliance with the provisions of this Letter of Undertaking by the Borrower, will not
(i)
contravene any existing applicable law, statute, rule or regulation or any judgement,
decree or
permit to which the Borrower is subject, (ii) conflict with, or result in any breach
of, any of the
terms of, or constitute a default under, any agreement or other instrument to which
the
Borrower is a party or subject or by which the Borrower or any of its property is
bound, (iii)
contravene or conflict with any provisions of the instruments constituting
or defining
Borrower’s constitution.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(e)	 	No event has occurred and is continuing that constitutes, or that with the
giving of notice or the
lapse of time or both, would constitute an Event of Default specified in Paragraph 14
hereof or
would constitute a default under any agreement or instrument evidencing any
indebtedness in
excess of $500,000 of the Borrower, and no such event will occur upon the provision of
the
Credit.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(f)	 	No consent or approval of or notice to any creditor for borrowed money of the
Borrower is
required by the terms of any agreement or instrument evidencing any indebtedness of
the
Borrower, for the execution or delivery of, or the performance of the obligations
under this
Letter of Undertaking.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(g)	 	There are no actions, proceedings or claims pending, or to Borrower’s knowledge
threatened,
the adverse determination of which might have a materially adverse effect on
Borrower’s
financial condition or materially impair Borrower’s ability to perform its obligations
under or
affect the validity or enforceability of this Letter of Undertaking.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(h)	 	It is not necessary to ensure the legality, validity, enforceability or
admissibility in evidence of this Letter of Undertaking that it or any other
instrument be notarised, filed, recorded, registered or enrolled in any court, public
office or elsewhere in Israel (other than the filing of the Deed of Charge with the
Israeli Registrar of Companies) or that any stamp, registration or similar tax or
charge be paid in Israel on or in relation to this Letter of Undertaking and this
Letter of Undertaking is in proper form for its enforcement in the courts of Israel.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(i)	 	The choice of Israeli law to govern this Letter of Undertaking and its
submission to the jurisdiction of the Israeli courts are valid and binding.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(j)	 	Neither the Borrower nor any of its assets are entitled to immunity on the
grounds of sovereignty or otherwise from any legal action or proceedings (which
include, without limitation, suit, attachment before or after judgement, execution or
other enforcement).	 	 
	 
	 	 	 	 	 	 	 	 
	Prepayment	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	8.	 	(a)	 	Subject to sub-Paragraph 8(b) below, the Bank shall not be obliged to accept
from the Borrower any payment whatsoever on account of instalments of the principal sum and/or	 	 






5









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	interest and/or Additional Interest and/or Commissions prior to their due date,
unless conditions precedent, which will be communicated to the Borrower by the Bank
at its request, including payment of a prepayment fee at the rate to be determined by
the Bank as being due to it, are satisfied.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(b)	 	Notwithstanding the above, the Borrower shall have the right to make
prepayment on account of any outstanding principal sum under the Term Loan on any
Interest Payment Date, subject to the satisfaction of the following terms and
conditions:-	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	i)
	 	Any prepayment ensuring the compliance of the Borrower with the
financial covenants and undertakings of the Borrower herein and in adequate sums
for such compliance, shall be permitted without the payment to the Bank of any
prepayment fee or other similar penalty.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	ii)
	 	Any other prepayment shall be permitted subject to the payment by
the Borrower to the Bank of a commission to be calculated as 50% (fifty percent)
of the Margin payable on any sums outstanding under the Term Loan (accounting
for the scheduled amortization of the Term Loan) for the remaining duration of
the Term Loan.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	For the purposes of this Paragraph 8, the terms “Interest Payment Date” and “Margin”
shall have the same meaning ascribed to them under the request for the provision of
the Term Loan (Appendix “A-1”hereof).	 	 
	 
	 	 	 	 	 	 	 	 
	Security	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	9.	 	As security for the due and punctual performance of all or any of Borrower’s undertakings
hereunder
or pursuant hereto, the bank shall be granted — no later than the date of first granting the
Credit
Facilities, a collateral by way of a duly registered first ranking floating charge, unlimited
in amount, on
all present and future assets of the Borrower in the form set out in Appendix “C”attached
hereto as an
integral part hereof (the “Deed of Charge”).	 	 
	 
	 	 	 	 	 	 	 	 
	10.	 	[Deleted]	 	 
	 
	 	 	 	 	 	 	 	 
	11.	 	[Deleted]	 	 
	 
	 	 	 	 	 	 	 	 
	12.	 	It is hereby expressly stipulated that the Deed of Charge forms an integral part of this
Letter of
Undertaking and all the terms and conditions, declarations and obligations contained in the
Deed Of
Charge form an integral part of this Letter of Undertaking and are included herein. It is
also hereby
expressly stipulated that this Letter of Undertaking shall not operate so as to derogate from
or alter the
Deed Of Charge.	 	 
	 
	 	 	 	 	 	 	 	 
	13.	 	All guarantees, charges and other securities given or which may be given to the Bank by the
Borrower
or by others on its behalf in order to secure the payment of the above sums or the
performance Of its
obligations pursuant to this Letter of Undertaking, shall be cumulative and independent of
each other,
shall not affect nor be affected by any other securities held by the Bank and shall serve as
continuing
or revolving security until such time as all of the above sums shall have been paid in full.
The Bank.
may realise the securities in accordance with the terms of the Deed of Charge.	 	 
	 
	 	 	 	 	 	 	 	 
	Immediate Repayment	 	 
	 
	 	 	 	 	 	 	 	 
	14.	 	Without derogating from the generality of this Letter of Undertaking, the Bank shall be
entitled to
demand the immediate payment of all the above sums in any one of the events, each an “Event
of
Default” enumerated below, in which case the Borrower undertakes to pay the Bank all the
above
sums, and the Bank shall be entitled to debit any of the Borrower’s accounts with any of the
above
sums and to take whatever steps it sees fit for the collection thereof and in particular to
realise on
Borrower’s account the securities by any means permitted by law. The Events of Default are as
follows:-	 	 






6









 







	 	 	 	 	 	 	 	 	 
	 	 	(a)	 	If the Borrower commits a breach of or an “anticipatory breach” within the
meaning of clause 17 of the Contracts (Remedies for Breach of Contract) Law,
5731-1970 of or fails to perform any of the terms and conditions herein contained or
of any other obligation which Borrower has incurred or may incur towards the Bank in
relation to any Credit granted or which may be granted pursuant to this Letter of
Undertaking (including the Term Loan and the Revolving Credit Line) and does not
cure such breach or failure within 10 Business Days of such event, or if it
transpires that any declaration or representation made by the Borrower in relation
to the granting of any Credit pursuant hereto is false or inaccurate.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(b)	 	If the Borrower is in breach of (i) any of the financial covenants set forth
in Paragraph 33 below and does not remedy such breach in accordance with Section
8(b)(i) hereof or by the end of the subsequent quarter and/or (ii) any of its
additional financial undertakings set forth in Paragraphs 34 and 35 below.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(c)	 	If the Borrower or any Subsidiary adopts a resolution to restructure, or any
intention to do so, either as an absorbing, transferor or spin-off company or a
voluntary winding up resolution or if an order for winding up or for freeze of
proceedings is made against the Borrower or any Subsidiary or if Borrower’s or any
Subsidiary’s name is struck out or is about to be struck out from any official
register kept by law.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(d)	 	If a receiver is appointed over any substantial portion or all of Borrower’s
or any Subsidiary’s assets, or if an order is made against the Borrower or any
Subsidiary for receivership or an interim liquidator or special manager is appointed
over the Borrower or any Subsidiary or any bankruptcy or insolvency proceeding is
commenced with respect to the Borrower or any Subsidiary. Assets the value of which
equals or exceeds $500,000 shall be deemed “substantial portion” of Borrower’s or any
Subsidiary’s assets for the purposes hereof.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(e)	 	If an attachment or similar process of execution is levied against any
substantial portion of Borrower’s or any Subsidiary’s assets or against any
substantial portion of the collaterals given by the Borrower or on its behalf to the
Bank. Assets or collaterals the value of which equals or exceeds $500,000 shall be
deemed “substantial portion” of Borrower’s or any Subsidiary’s assets or of
collaterals given by Borrower for the purposes hereof.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(f)	 	If the Bank in its reasonable discretion considers that there is a change in
ownership or control affecting Borrower’s constitution as against its constitution on
the day of signature of this Letter of Undertaking.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(g)	 	If Borrower or any Subsidiary ceases to pay its debts generally or to
conduct its business.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(h)	 	If work at Borrower’s or any Subsidiary’s business ceases or is
substantially curtailed for two months or more.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(i)	 	If the Bank in its reasonable discretion considers that an occurrence has
taken place which has — or is liable to have — a material adverse effect upon the
Borrower’s financial ability to repay the outstanding amount of the Credit.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(j)	 	If the Borrower falls behind in the payment of any amount that the Borrower
owes to the Bank under, pursuant to and/or in connection with this Letter of
Undertaking, any appendices thereto or any application thereunder for more than 7
(seven) days.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(k)	 	If an “Event of Default” (as defined under that certain Subordinated Note
Purchase Agreement executed amongst the Borrower and TA Subordinated Debt Fund, L.P.
and TA Investors II, L.P. on 23 March, 2006 (the “Subordinated Note Purchase
Agreement”) has occurred under the Subordinated Note Purchase Agreement or if
Borrower or Noteholders identified therein have failed to comply with any of their
obligations under Section 2.14 (“Obligations Subordinate to Senior Indebtedness”)
thereof.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(l)	 	If the Borrower does not furnish the Bank with periodic financial
statements, books of account and other authorities and materials in relation to the
financial state of the Borrower, as provided	 	 






7









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	in Paragraph 21 hereof, or if the Borrower is required so to do and it does not comply
with any such requirement.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(m)	 	If, in the reasonable discretion of the Bank and in its reasonable estimation,
a material deterioration has occurred in the value of the collaterals given for
securing the repayment of the Credit.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(n)	 	If the Borrower or any subsidiary shall be required to make early repayment of
the debts, which it owes to other creditors for borrowed money.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(o)	 	If the Bank is unable to determine the rate of interest or is unable to
refinance itself in the currency of the credit due to changes affecting any of the
international money markets and/or the Bank is unable to determine the rate of
interest for any reason and/or if in the reasonable opinion of the Bank the continued
granting of the credit becomes unlawful.	 	 
	 
	 	 	 	 	 	 	 	 
	15.	 	Special Condition — Repayment in case of Refunding	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Without derogating from the generality of the provisions contained in this Letter of
Undertaking, in case amounts paid to the Shareholders by Buyer under the Share Purchase and
Redemption agreement dated as of February 15, 2006 (the “Share Purchase Agreement”) are
reduced by more than US$4,000,000 (Four Million United States Dollars) (such surplus amount
beyond the US$4,000,000 (but not including up to 65% (sixty five percent) of tax payments
actually incurred directly in connection with the transactions contemplated by the Share
Purchase Agreement from funds reserved for such tax payments under the Escrow Agreement (as
defined below), and in any event no more than $2,500,000 (Two Million Five Hundred Thousand
United States Dollars)) shall be hereinafter referred to as the “Extra Amount”) by way of
refunding monies to Buyer under the Escrow Agreement dated March 23, 2006, between the
Borrower, the Buyer, the Shareholders and Mellon Trust of New England. N.A. (the “Escrow
Agreement”), then the Borrower shall forthwith use an amount equal to 50% (fifty percent) of
the Extra Amount for prepayment of the total outstanding balance of any Credit (principal
and interest) granted and to be granted to the Borrower under the Credit Facilities and the
Credit Facilities shall be reduced accordingly.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Notwithstanding the above and in addition thereto, in case that the total amount refunded to
TA as aforesaid exceeds the amount of US$13,500,000 (Thirteen Million Five Hundred United
States Dollars), such event shall be deemed an Event of Default.	 	 
	 
	 	 	 	 	 	 	 	 
	16.	 	If the Borrower does not repay any of the outstanding amount of the Credit on the expiration
date of
the Credit or upon the Credit becoming due for immediate repayment pursuant to Paragraphs 14 and
15 hereof (hereinafter: “the due date of payment”) then such sums shall, upon demand of the Bank,
carry Default Interest from the due date of payment until their actual final payment.	 	 
	 
	 	 	 	 	 	 	 	 
	Other Rights of the Bank	 	 
	 
	 	 	 	 	 	 	 	 
	17.	 	(a)	 	The Bank shall have the right of possession, lien, set-off and charge over any amounts,
assets and rights including securities, coins, gold, banknotes, documents in
respect of goods, insurance policies, Bills, assignments of rights, deposits,
collaterals and their countervalue, in the possession of or under the control of
the Bank at any time for or on behalf of the Borrower, including such as have been
delivered for collection, as security, for safe-keeping or otherwise. The Bank
shall be entitled to retain said assets subject to the terms hereof (including,
without limitation, that the Borrower may use deposits, goods and other charged
items in the ordinary course of business and consistent with past practices) until
payment in full of the outstanding amount of the Credit or, during the continuance
of an Event of Default, to realise them by selling them and applying the
countervalue thereof in whole or in part in payment of the outstanding amount of
the Credit.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Upon the occurrence of and during the continuance of an Event of Default, in the
event that sums capable of being applied to the outstanding amount of the Credit
are deposited in a currency other than that of the outstanding amount of the
Credit, if the Bank is in the process of applying deposits to the outstanding
amount of the Credit, the Borrower hereby	 	 






8









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	gives to the Bank in advance irrevocable instructions and authority to convert, in
accordance with normal banking procedures for the conversion of currency, such
sums into the currency of the outstanding amount of the Credit at a rate to be
fixed by the Bank at which it can acquire same and to apply the proceeds, after
deduction of any taxes, and reasonable charges or commissions, to the outstanding
amount of the Credit.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(b)	 	Without derogating from the Bank’s right of lien in accordance with sub-clause
17(a) above, the Bank may at any time, but shall not be obliged:	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	(i)
	 	Upon the occurrence and during the continuance of an Event of
Default, to apply to any amounts owed by the Borrower on account of the Credit,
any amounts owed to the Borrower by the Bank in any account in Israeli currency
or in foreign currency or in any manner or for any reason.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	Upon the occurrence and during the continuance of an Event of
Default, to purchase for the Borrower’s account, any amount in foreign currency
which may be required for payment of any of the outstanding amount of the Credit
or to sell any foreign currency standing to the Borrower’s credit at the Bank
and to apply the proceeds to the payment of any of the outstanding amount of the
Credit.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	(iii)
	 	Upon the occurrence and during the continuance of an Event of
Default, to debit any of the Borrower’s accounts with any of the Credit.
However, if the state of any account does not allow it to be debited by the Bank
in order to effect final payment of any amount, the Bank may refrain from so
doing, and if the Bank has acted accordingly, the Bank may reverse any such
debit and treat any amount the debit of which was reversed as an unpaid amount
on account of the Credit and accordingly to take whatever action it sees fit
pursuant to the provisions hereof.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	(iv)
	 	Upon the occurrence of and during the continuance of an Event of
Default, the Bank may effect set-off without any prior notice. The Borrower
hereby declares that it is aware of the fact that in such cases where the Bank
may use its rights of set-off prior to the maturity of any deposit of the
Borrower or any part thereof, the Borrower’s rights in connection with the
relative deposit may be affected (for example in relating to interest rates,
linkage differences, exchange differences, rights to bonuses or loans, tax
exemptions or reductions and deductions at source, if according to the terms
governing any such deposit the Borrower had such rights). The Borrower shall
bear all the usual costs and charges resulting from making any such set-off.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(c)	 	Any purchase or sale under sub-clause (b)(ii) above, shall be effected at the
rate of exchange prevailing at the Bank, out of the amounts in Israeli currency or
foreign currency, as the case may be, standing to the Borrower’s credit at the Bank,
or which may be obtained by realising collaterals given or which may have been given
by the Borrower to the Bank.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	The terms “the rate of exchange prevailing at the Bank” shall mean, with respect to
any purchase of foreign currency for the Borrower’s account, the rate for cheques and
transfers at which the Bank at any relevant time generally sells to similarly
situated customers in similar transactions the relevant foreign currency against
Israeli currency, in addition to any conversion charge, tax, levy, compulsory
payments or any other similar payments required to be made by law; and with respect
to any sale of foreign currency from the Borrower’s account, the lowest rate for
cheques and transfers at which the Bank at any relevant time generally purchases from
similarly situated customers in similar transactions the relevant foreign currency
against Israeli currency, after deducting any conversion charge, tax, levy,
compulsory payments or any other similar payments required to be made by law.	 	 
	 
	 	 	 	 	 	 	 	 
	18.	 	The Borrower hereby instructs and authorises the Bank to debit from time to time the
Borrower Account with the amount required to pay the Credit, if not paid when due.







9












 





	 	 	 	 	 	 	 	 	 
	 	 	These instructions and authorisation do in no ways derogate from the Bank’s right to debit
any other account of the Borrower as provided in Paragraph 17 hereof. If the state of any
account of the Borrower does not allow it to be debited by the Bank in order to effect final
payment of any amount on account of the above sums, the Bank may disregard Borrower’s
instructions and authorisation and if the Bank has acted accordingly, the Bank may reverse
any such debit and treat any amount the debit of which was reversed as an unpaid amount on
account of the above sums and accordingly to take whatever action it sees fit pursuant to
the provisions hereof.
	 
	 	 	 	 	 	 	 	 
	19.	 	The Bank shall be entitled at any time to debit any of Borrower’s accounts (including such
accounts held by the Borrower jointly and severally with other parties) with any sum due or which
shall be due from the Borrower in any way and apply any sums received from or for the Borrower, to
whichever account it may see fit and to pass any amount standing to Borrower’s credit to any other
account, as it may see fit.
	 
	 	 	 	 	 	 	 	 
	20.	 	(a)	 	The Borrower hereby confirms that the Bank’s books, accounts and entries shall be binding
upon the Borrower, shall be deemed to be correct and shall be prima facie evidence
against the Borrower in all their particulars, including all reference to the
calculation of the above sums, the particulars of the bills, guarantees and other
securities and any other matter related hereto.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(b)	 	The Borrower hereby confirms receipt of the Bank’s notification that
according to the Protection of Privacy Law, 5741-1981:	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	(i)
	 	All the particulars furnished or which may be furnished by the
Borrower to the Bank may be used by the Bank in the normal course of its
operations at its own discretion and consistent with reasonable banking
practice;	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	All the particulars furnished or which may be furnished by the
Borrower to the Bank shall be stored in keeping with the Bank’s requirements
from time to time in data bases of the Bank and/or of suppliers to the Bank from
time to time of computer and data processing and warehousing services,
consistent with reasonable banking practice;	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	and the Borrower hereby confirms its agreement thereto.	 	 
	 
	 	 	 	 	 	 	 	 
	Financial Statements	 	 
	 
	 	 	 	 	 	 	 	 
	21.	 	(a)	 	The Borrower is aware that since it is obliged by law to prepare periodic financial
statements, the furnishing of such financial statements to the Bank in accordance with the
regulations for the supervision of banks and/or of the Bank of Israel and/or any
provision of law is a condition precedent for the provision of Credit, and it
undertakes to furnish same as aforesaid, in the form laid down by law or in
accordance with generally accepted accounting principles and with such regularity as
may be reasonably required of the Borrower by the Bank from time to time.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(b)	 	From time to time, as required by the Bank, the Borrower shall allow a
representative of the Bank to peruse during usual working hours and with advance
notice (provided that during an Event of Default, no advance notice shall be
required), all balances sheets, financial statements, books of account, card indexes,
ledgers and other authorities and materials in relation to the state of Borrower’s
financial condition.	 	 
	 
	 	 	 	 	 	 	 	 
	Acceptance of Orders and Notices not Reduced to Writing	 	 
	 
	 	 	 	 	 	 	 	 
	22.	 	The Bank shall be entitled, in its sole discretion, to accept or refuse any orders or notices
given verbally, by telephone or by any other mode which is not reduced to clear and legible
writing. In the event that the Bank agrees to act on Borrower’s instructions or request not being an
instruction in writing in the usual way, the Borrower accepts all responsibility for any mistake,
misunderstanding or discrepancy and for any damage, loss or breach which may be caused as a result of such
instructions being so given, unless such damage, loss or breach is caused by the Bank’s gross negligence
or wilful misconduct.






10









 







	 	 	 	 	 	 	 	 	 
	Right of Assignment; Administration of the Credit	 	 
	 
	 	 	 	 	 	 	 	 
	23.	 	(a)	 	The Bank may at any time, at its own discretion and without the consent of the
Borrower being required, transfer its rights arising from this Letter of Undertaking,
and/or its rights arising from the securities given or to be given to the Bank for the
fulfilment of the obligations of the Borrower pursuant to this Letter of Undertaking, (the
“Rights”) to any banking or other financial institution, whether in Israel or abroad (a
“Transferee”), provided however that such Transferee shall not subject the Borrower to any
increased costs, indemnification amounts or taxes, including any withholding taxes, and
further subject to the provisions of this clause 23 hereunder.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	For the purposes hereof, the term “transfer” shall mean the sale and/or assignment
of the Rights, in whole or in part, effected either directly or through a special
purpose company (“SPV”) or by way of sale of participation in the Rights and/or in
any other way the Bank deems fit. Such transfer may be effected to one or to any
number of Transferees, either simultaneously or from time to time.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(b)	 	The Bank may, at any time, disclose information with respect to a
transfer to any person and/or corporation, whether in Israel or abroad, to whom the
Rights may be transferred and with whom negotiations are taking place or may take
place for such purpose or to any person and/or corporation who may propose entering
into contractual relations with the Bank in relation to the Loan or any part
thereof (a “Potential Transferee”). The Bank may also disclose information to
consultants engaged on its own behalf and/or on behalf of any Potential Transferee,
as well as to credit rating agencies for the purpose of rating the Rights. Such
disclosure of information may be effected only upon the Bank receiving a
confidentiality letter from the Potential Transferee, consultants and/or credit
rating agencies, as the case may be, in form acceptable to the Bank and which
inures also to the benefit of the Borrower.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	For the purposes hereof, the term “information” shall mean any information that is
currently, or may in the future be, in the possession of the Bank, including
information received by the Bank from the Borrower, which in the discretion of the
Bank should be disclosed for the purpose of the transfer, including, but not limited
to, information on Loan and any other banking services provided and/or to be
provided to the Borrower under this Letter of Undertaking, information on the
securities given or to be given to the Bank for the fulfillment of the obligations
of the Borrower pursuant to this Letter of Undertaking and information on the
Borrower.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(c)	 	The Borrower will take any action that will be reasonably required by the Bank,
including in
particular, the transfer or assignment of any of the collateral, in order to ensure
that such
transfer shall be fully effectual and binding, all at no cost to the Borrower.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(d)	 	The Borrower agrees that it may not assign or transfer any of its rights or
obligations in relation
to any Credit given or which may be given pursuant to this Letter of Undertaking,
without the
prior written consent of the Bank.	 	 
	 
	 	 	 	 	 	 	 	 
	24.	 	The Bank may administer the Credit or any part thereof by booking same with any of its
branches,
whether in Israel or abroad. The Bank may at any time and from time to time at its own
discretion and
without any consent being required from the Borrower (but with advance notice to the
Borrower),
transfer the administration of the Credit or any part thereof from one branch of the Bank to
another,
whether in Israel or abroad.
	 
	 	 	 	 	 	 	 	 
	Deposit of Collaterals	 	 
	 
	 	 	 	 	 	 	 	 
	25.	 	The Bank may deposit all or any of the collaterals given or which may be given in relation to
the
Credit and/or pursuant hereto with a bailee of its own choosing, at its discretion and at
Borrower’s
reasonable expense, and may substitute such bailee with another from time to time. The Bank
may
register all or any of the collaterals with any competent authority in accordance with any
law and/or in
any public register.






11









 






	 	 	 	 	 	 	 	 	 
	The Customer’s Duty to Notify	 	 
	 
	 	 	 	 	 	 	 	 
	26.	 	(a)	 	The Borrower hereby undertakes to notify the Bank in writing of any contention or
objection it
may have, if any, in connection with any statement, extract of any account,
confirmation or notice received from the bank including information received through
any automatic terminal facility. If Borrower does not protest or object within 60
days of the date of dispatch thereof, the Bank may consider the Borrower as having
acknowledged same as correct.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(b)	 	Without derogating from the other provisions of this Letter of Undertaking,
any waiver, extension, concession, acquiescence or failure to act (hereinafter:
“waiver”) on the Bank’s part as to the non-performance, partial performance or
incorrect performance of any of the Borrower’s obligations pursuant to this Letter of
Undertaking, such waiver shall not be treated as a general waiver on the part of the
Bank or any rights, but as a limited consent given in respect of the specific
instance. Any waiver granted by the Bank to any party to any Bill held by the Bank
shall in no way affect any of the Borrower’s obligations thereunder.	 	 
	 
	 	 	 	 	 	 	 	 
	27.	 	The Borrower hereby undertakes to notify the Bank immediately.
	 
	 	 	 	 	 	 	 	 
	 	 	(a)	 	Of any claim of right to any security given or which may be given to the Bank
pursuant hereto
and/or of any execution or injunction proceedings or other steps taken to attach,
preserve or
realise any such security.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(b)	 	Of the occurrence of any Event of Default.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(c)	 	Of any change of address.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(d)	 	Of any application for winding-up of Borrower’s affairs which is filed against
the Borrower or
by the Borrower as well as the adoption by the Borrower of a resolution for voluntary
winding-up and/or merger and/or stay of proceedings.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(e)	 	Of any application to have the Borrower declared bankrupt or to appoint a
receiver over the
Borrower’s property or any part thereof.	 	 
	 
	 	 	 	 	 	 	 	 
	Expenses	 	 
	 
	 	 	 	 	 	 	 	 
	28.	 	All of the reasonable expenses (as detailed in the bank’s scale of charges) incurred by the
Bank in
preparing this Letter of Undertaking and all and any expenses involved in the enforcement
thereof or
in the realisation of the securities for the enforcement thereof (including fees of the
Bank’s advocates),
shall be paid by the Borrower to the Bank within 10 business days of the Bank’s first demand,
together
with interest at the applicable rate as set forth in the relevant application for provision
of credit from
the date which is 7 business days after demand was made until payment in full, and until
payment in
full the aforesaid expenses together with the interest thereon, shall be secured by the
securities
mentioned in Paragraph 9 hereof. Moreover, the Bank may debit any account of the Borrower
with the
aforesaid expenses together with interest thereon, if not paid when due.
	 
	 	 	 	 	 	 	 	 
	Interpretation	 	 
	 
	 	 	 	 	 	 	 	 
	29.	 	In this Letter of Undertaking — (a) the singular includes the plural and vice versa; (b) the
masculine
gender includes the feminine gender and vice versa; (c) “ Bank” means “Bank Hapoalim B.M.”
and
any of its branches or offices existing on the date hereof and/or to be subsequently opened,
wherever
they may be, its assigns, successors, or attorneys in fact; (d) “Bills” means: promissory
notes, bills of
exchange, cheques, undertakings, guarantees, collaterals, assignments, bills of lading,
deposit notes
and any other negotiable instruments; (e) “Subsidiary” means, with respect to the Borrower,
as of the
date of execution of this Letter of Undertaking, Alma Lasers, Inc., and any time
thereafter, a
corporation, partnership, limited liability company, or other entity in which the Borrower
directly or
indirectly owns or controls the shares of stock having ordinary voting power to elect a
majority of the
board of directors (or appoint other comparable managers) of such corporation, partnership,
limited
liability company, or other entity (f) the recitals hereto form an integral part hereof; (g)
the term






12









 






	 	 	 	 	 	 	 	 	 
	 	 	“Bank’s books” shall be construed so as to include any book, record, statement of account,
any copy of any statement of account, loan agreement, deed of undertaking, customers’ bill,
card index, page, film, any means of storage and retrieval of data for purposes of
electronic computers and any other means of storage and retrieval of data; (h) the term
“entries” shall be construed so as to include any entry or copy of any entry, irrespective
of whether entered or copied by hand or by typewriter or entered or copied by printing,
duplication, photocopying (including microfilm or microfiche) or by any mechanical,
electrical or electronic means or by any means of electronic computer recording or by any
other means whatsoever of recording or representation of words or numbers or other signs or
symbols generally employed by banks.
	 
	 	 	 	 	 	 	 	 
	Notices	 	 
	 
	 	 	 	 	 	 	 	 
	30.	 	The Bank or Borrower may give any notice pursuant hereto by sending same to the other party
hereto in writing. Any notice sent by the by ordinary or registered mail according to the
address set forth below:





If to the Borrower:



Alma Lasers Ltd.
 7
Haeshel Street P.O.B 3021

Caesarea Industrial Park

Caesarea, Israel 38900

Facsimile: 972-4-627-5368

Attention: Chief Executive Officer



With a copy to:



TA Associates, Inc.

High Street Tower, Suite 2500

125 High Street

Boston, MA 02110

Attention: Mr. Ajit Nedungadi

Fax:



If to the Bank:



Bank Hapoalim, B.M.

Head Office

Corporate Banking Division

23 Menachem Begin Rd.

Tel-Aviv 66183, Israel

Attention: Mr. Hannan Nuphar

Fax: (972-3) 567 4688




	 	 	 	 	 	 	 	 	 
	 	 	or to such other address in Israel as shall be identified to the other party hereto in
writing, shall be deemed to be received within 3 days of the date of dispatch of the letter
containing the notice. A certificate in writing signed by a responsible officer of the
sending party shall be conclusive as to the date of dispatch of any such notice. Any notice
given by any other method shall be deemed to have been received by it at the time it is given
or made public.
	 
	 	 	 	 	 	 	 	 
	Governing Law and Place of Jurisdiction	 	 
	 
	 	 	 	 	 	 	 	 
	31.	 	(a)	 	This Letter of Undertaking shall be construed in accordance with the laws of the
State of Israel.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(b)	 	For the purposes hereof, the exclusive place of jurisdiction shall be the
competent court of law in Israel situated in the city nearest to the place of
signature of the Letter of Undertaking or in one of the following cities: Jerusalem,
Tel Aviv — Jaffa, Haifa, Beersheva or Nazareth.	 	 







13












 








Currency Indemnity





	32.	 	The Borrower agrees to indemnify the Bank against any loss incurred by the Bank as a result
of any judgement or order being given or made for the payment of any of the outstanding amount
of the Credit and such judgement or order being expressed in a currency other than the
currency in which any such sum is payable and as a result of any variation having occurred in
the rates of exchange between the date on which any such sum becomes due pursuant hereto and
the date of actual payment thereof. The foregoing indemnity shall constitute a separate and
independent obligation of the Borrower and shall apply irrespective of any indulgence granted
to the Borrower from time to time and shall continue in full force and effect notwithstanding
any such judgement or order.





Special Conditions





	33.	 	Special Condition — Financial Covenants






As long as there is any outstanding balance of credit (principal and interest) under the
Facilities, the Borrower shall maintain the following financial covenants applicable to the
Facilities:




	 	1.	 	(a)   The EBITDA of the Borrower for 2006 shall not decrease below US$11,500,000.
	 
	 	 	 	(b)   The EBITDA of the Borrower for 2007 shall not decrease below US$13,000,000.
	 
	 	 	 	(c)   The EBITDA of the Borrower for 2008 shall not decrease below US$14,500,000.
	 
	 	 	 	(d)   The EBITDA of the Borrower for 2009 shall not decrease below US$16,000,000.
	 
	 	2.	 	(a)   The ratio of then Outstanding Debt (i.e. the outstanding amount of the Term
Loan and
the then outstanding commitment under the Revolving Credit Line) to EBITDA of
the Borrower by the end of 2005 until September 30, 2006 shall not exceed 1.75.
	 
	 	 	 	(b)   The ratio of then Outstanding Debt to EBITDA of the Borrower by the
end of 2006 until
September 30, 2007 shall not exceed 1.5.
	 
	 	 	 	(c)   The ratio of then Outstanding Debt to EBITDA of the Borrower by the
end of 2007 until
September 30, 2008 shall not exceed 1.
	 
	 	 	 	(d)   The ratio of then Outstanding Debt to EBITDA of the Borrower by the
end of 2008 until
September 30, 2009 shall not exceed 0.67.
	 
	 	 	 	For the purposes hereof, “EBITDA” shall not include expenses against the
allocation by the Borrower of sums to employee stock option pool, amortization
of intangible assets, transaction expenses and non-cash expenses (such non-cash
expenses to be agreed by the Bank).






The above financial covenants shall be calculated by the Bank according to the following
periodic financial statements to be furnished to the Bank by the Borrower as per
sub-Paragraph 21(a) above :




	 	(a)	 	annual audited consolidated financial statements of the Borrower to be furnished
by the Borrower
to the Bank not later than April 30th of the consecutive calendar year;
	 
	 	(b)	 	quarterly un-audited consolidated reviewed financial statements of the Borrower
to be furnished
by the Borrower to the Bank not later than 60 days from the end of the each calendar
quarter.






	34.	 	Special Condition — Maintenance of Deposit
	 
	 	 	As long as there is outstanding balance of Credit (principal and interest) under the
Facilities, or any part thereof, the Borrower undertakes to be maintained in the Borrower
Account and presented in the




14









 







	 	 	balance sheet of the Borrower a cash balance totalling at all times no less than
US$3,000,000 (Three Million United States Dollars).






	35.	 	Special Condition — Additional Financial Undertakings






	 	a)	 	Any future obligation, commitment and/or payment of the Borrower of any sum to
any of its
Shareholders and/or future shareholders or affiliates (including payment of dividends,
but
excluding the payment of current interest on the Subordinated Notes absent an event of
default
under the Senior Debt) shall be made only subject to prior written consent of the Bank
and only
to the extent that such obligation, commitment and/or payment of the
Borrower is in
compliance with the financial and other covenants and undertakings of the Borrower
herein.	 
	 
	 	b)	 	Subject to sub-Paragraph 35(a) above, the Borrower shall not make any future
obligation,
commitment and/or payment, other than at the ordinary course of business, of any
sum
exceeding the aggregate annual sum of US$5,000,000 (Five Million United States
Dollars) to
any third party, without the prior written consent of the Bank.	 
	 
	 	c)	 	Notwithstanding the above, the Contingent Payment is permitted subject to the
compliance with
the financial and other covenants and undertakings of the Borrower herein.	 






	36.	 	Special Condition — Additional sums under Revolving Credit Line
	 
	 	 	Subject to the full and punctual compliance of the Borrower with any and all financial and
other covenants set forth in this Letter of Undertaking and in the appendices thereto, and
further subject to the terms below, at the end of each of the first, second and third
anniversary of advancing the Term Loan, the Bank shall, upon the Borrower’s request and upon
execution of the Borrower of any documents required by the Bank for this purpose, to Bank’s
full satisfaction, be willing to increase the sums extended to the Borrower under the
Revolving Credit Line until 31.12.2009 in an additional amount totaling up to US$5,000,000.
(Five Million United States Dollars), in the following manner:






	 	-	 	At the beginning of 2007 (based on 2006 performance, i.e. full
compliance with financial and other covenants at the end 2006) — up to
US$2,000,000.
	 
	 	-	 	At the beginning of 2008 (based on 2007 performance, i.e. full
compliance with financial and other covenants at the end 2007) — up to
additional US$2,000,000.
	 
	 	-	 	At the beginning of 2009 (based on 2008 performance, i.e. full
compliance with financial and other covenants at the end 2008) — up to additional
US$1,000,000.






Compliance with the financial and other covenants mentioned in this Paragraph 36, shall be
examined by the Bank according to annual audited consolidated financial statements of the
Borrower to be furnished to the Bank by the Borrower as per sub-Paragraph 21 (a) above.



No Representations on behalf of Bank





	37.	 	Any representations in this Letter of Undertaking are made on Borrower’s behalf and at its
full responsibility and the Bank shall not be liable for the accuracy and/or completeness of
any such representations made herein.





AND IN WITNESS WHEREOF WE HAVE SIGNED




	 	 	 	 	 
	 
	 	[ ILLEGIBLE ]	 	 
	 
	 	 	 	 
	 
	 	Alma Lasers Ltd.
	 	 






15









 





Acknowledgement




I, the undersigned CRAIG RUBIN, Adv., regis. no. 20303, legal counsel for Alma Lasers Ltd., co.
no. 51-283617-2 (the “Company”), hereby certify that:





	a)	 	The Company caused the above document to be executed on its behalf by its
authorized
signatory/ies, Mr. Yaron Sucher, i.d. no. 22606875
pursuant to and in accordance with the
resolutions of the board of directors of the Company;






	b)	 	said resolutions were passed duly, lawfully and in accordance with the
constituting
documents of the Company;






	c)	 	the above signatures bind the Company, and the above document has beendulvexecuted.





	 	 	 	 	 
	March 23 2006
	 	CRAIG RUBIN
	 	[ILLEGIBLE]
	 
	 	 
	 	 
	Date
	 	Signature
	 	Stamp







16












 








Appendix “A-1”




Account No(s)

613951




	 	 	 	 	 	 	 
	 	 	 	 	 	 	I.D. Card No./
	Customer’s Name	 	Address and Area Code	 	Telephone No.	 	Corp. Reg. No.
	Alma Lasers Ltd.

	 	7 Haeshel Street P.O.B.
3021 
Caesarea Industrial
Park, 
Caesarea, Israel
38900
	 	(972-4) 627-5357
	 	51-283617-2






To

Bank Hapoalim B.M.

Central Branch (600)



Dear Sirs,




Re:     Application for Provision of Credit —





	 	 	Letter of Undertaking dated the 23rdday of March, 2006 of Alma Lasers Ltd. (the
“Company”) (the “Letter of Undertaking”).




The Company hereby requests that Bank Hapoalim, B.M. (hereinafter: “the Bank” or “you”) provide
the Company in its account with the Bank No. 613951, (hereinafter: “the Account”) with a Credit
Facility in US$ (hereinafter: “the currency of the Credit”) in the amount of $15,000,000
(Fifteen Million United States Dollars) (hereinafter: “the Credit”).



The provision of the Credit to the Account shall be treated by the Company as your agreement for
the granting of the Credit in accordance with the terms and provisions set forth in the
abovementioned Letter of Undertaking and the special conditions set forth below.





	1.	 	Commencement Date of the Credit Facility:
	 
	 	 	The Credit shall be made available on the date of the Company’s execution of this
Application.
	 
	2.	 	The Completion Date of the Credit Facility:
	 
	 	 	The Credit shall be fully repaid and terminated 36 (thirty six) months from the date of
the Company’s execution of this Application (the “Date of Provision of the Credit”).
	 
	3.	 	Repayment of the Credit Principal
	 
	 	 	The Credit principal will be repaid in the currency of the credit in 6 (six) consecutive
equal semiannual instalments, commencing on the date of the Company’s execution of this
Application and ending on March 23, 2009.
	 
	4.	 	Interest






	 	4.1	 	The Company shall pay interest to the Bank as calculated by the Bank on the balance of
the
principal amount of the Credit outstanding from time to time as of the Date of
Provision of the Credit at a rate (hereinafter called — the “Interest Rate”) which
shall be 3.25% (three point twenty five percent) per annum (hereinafter: the
“Margin”) in excess of the LIBOR (as defined below).
	 
	 	 	 	For the purpose of determining the Interest Rate from time to time applicable to
the Credit the following definitions and provisions shall apply:
	 
	 	 	 	“LIBOR (“London Interbank Offered Rate”) means the highest rate of interest
(rounded upwards to me nearest 1/8 of one percent) determined on the Determination
Date (as




 









 






	 	 	 	defined below) in the London Interbank Market for the currency corresponding to
the respective currency of the Credit and for periods corresponding to the
respective Interest Period (as defined below) published by the British Bankers
Association on or about 11.00 a.m. (London Time) according to the quotation which
appears on the Reuters Monitor Money Rate Service at such date.
	 
	 	 	 	“Determination Date” means, with reference to any Interest Period (as defined
below), two Business Days preceding the commencement of the respective Interest
Period (as defined below).
	 
	 	4.2.	 	Interest Periods
	 
	 	 	 	The Interest Rate in respect of the Credit shall be determined by the Bank every
six months on the Determination Date for the next Interest Period by reference to
the respective London Interbank Offered Rate of Interest applied by the Bank to
the respective period, and the amount of interest shall be calculated on the
balance of the Credit from time to time outstanding during such period. (Each such
period hereinafter called an “Interest Period”).
	 
	 	4.3	 	Interest Payment Dates
	 
	 	 	 	Interest (but not including Default Interest) shall be paid by the Company to the
Bank in the currency of the Credit for each Interest Period, such Interest to
accrue on each six-month instalment from the commencement of the then current
Interest Period up to the date on which payment of such instalment is due (each
such date being hereinafter called a “Interest Payment Date”), on the respective
Interest Payment Date.
	 
	 	4.4	 	The interest shall be computed on the basis of the actual number of calendar
days elapsed divided by 360.






	5.	 	If any payment due by the Company hereunder following the provision of the Credit falls due
on a day which is not a Business Day (as defined below) such payment shall be made on the next
day which is a Business Day (as defined below) unless it would thereby be made in the next
calendar month, in which case such payment will be made on the immediately preceding Business
Day (as defined below).
	 
	6.	 	Where any instalment on account of the Credit falls due in a calendar month in which any
Interest Period ends, the due date of said instalment shall, if necessary, be deferred to the
last day of said Interest Period so as to ensure that the due date of payment on account of
the Credit and the due date for payment of interest in any such case are one and the same.
	 
	7.	 	For the purposes hereof “Business Day” means a day on which banks in Tel Aviv, London and the
country in which the currency of the Credit is legal tender are open to the public and on
which transactions in the currency of the Credit may be effected.
	 
	8.	 	The headings are only indicative and are not to be used in construing this Application for
Provision of Credit.
	 
	9.	 	The provisions herein contained are in addition to those contained in the above
Letter of Undertaking, but in case of conflict between them, provisions herein contained shall
prevail.





	 	 	 	 	 
	IN WITNESS WHEREOF I HAVE SIGNED:	 	 
	 
	 	 	 	 
	Alma Lasers Ltd.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Yaron Suher	 	 
	 

	 	 	 	 
	 

	 	Yaron Suher	 	 







2









 








Appendix “A-2”




Account No(s)

613951




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	ID. Card No./
	Customer’s Name	 	Address and Area Code	 	Telephone No.	 	Corp. Reg. No.
	Alma Lasers Ltd.

	 	7 Haeshel Street P.O.B.
3021 
Caesarea
Industrial Park,

Caesarea, Israel 38900
	 	(972-4) 627-5357
	 	 	613951	 






To

Bank Hapoalim B.M.

Central Branch



Dear Sirs,



Re:   Application for Revolving Credit -





	 	 	Letter of Undertaking dated the 23rd day of March, 2006 of Alma Lasers Ltd.
(the “Company”) (the “Letter of Undertaking”).




The Company hereby requests that Bank Hapoalim, B.M. (hereinafter: “the Bank” or “you”) provide
the Company in the Company’s foreign currency account with you No. 613951, with a revolving credit
facility (hereinafter: “the Revolving Credit Line”) in U.S. Dollars currency (hereinafter: “the
Currency of the Revolving Credit”) in the aggregate principal amount of up to $5,000,000.- (Five
Million U.S. Dollars) (hereinafter: “the Amount of the Revolving Credit Line”).



In order to indues the Bank to provide the Company, from time to time, with credit under the
Revolving Credit Line (hereinafter each such drawing: “an Advance”) the Company shall submit to
the Bank a Notice of Drawdown in the form attached herewith as an integral part hereof and marked
“Schedule A” (hereinafter: “Notice of Drawdown”), which Notice of Drawdown shall be irrevocable
and receipt of which shall oblige the Company to borrow the amount therein requested upon the
terms and subject to the conditions contained herein on the date which is the later of (a) the
date proposed in such Notice of Drawdown as the drawdown date for such Advance and (b) the date which is 3 (three) Business Days after the date of receipt by the Bank of such Notice of Drawdown.



An Advance will be made to the Company by the Bank if:





	(a)	 	the proposed amount of such Advance is not less than $250,000.- (Two Hundred and Fifty
Thousand U.S. Dollars), and
	 
	(b)	 	the proposed amount of such Advance, together with all outstanding advances under the
Revolving Credit Line at the date of making such Advance, is less than or equal to the Amount
of the Revolving Credit Line; and
	 
	(c)	 	the proposed final repayment date of such Advance is no earlier than 3 (three) calendar
months from the date of making such Advance and no later than the Completion Date of the
Revolving Credit Line (as defined below). ‘
	 
	1.	 	Commencement Date of the Revolving Credit Line:
	 
	 	 	The Revolving Credit Line shall be made available on the date of the Company’s execution
of this Application.
	 
	2.	 	The Completion Date of the Revolving Credit Line:




 









 








	 	 	The Revolving Credit Line shall be fully repaid and terminated 48 (forty eight) months
from the date of the Company’s execution of this Application.
	 
	3.	 	Interest
	 
	3.1.	 	Interest Rate
	 
	 	 	Any Advance up to the Amount of the Revolving Credit Line shall bear variable interest as
calculated by the Bank as from the commencement date of the Revolving Credit Line at the
rate of 3.25% (three point twenty five percent) per annum in excess of the LIBOR Wholesale
Rate of Interest (as hereinafter defined) applicable for the relevant update period set out
in each respective Notice of Drawdown (hereinafter: “Interest”).
	 
	 	 	For the purpose of this Application LIBOR (“London Interbank Offered Rate”) — means the
highest rate of interest (rounded upwards to the nearest 1/8 of one percent) determined on
the Determination Date (as defined below) in the London Interbank Market for the currency
corresponding to the respective currency of the Credit and for periods corresponding to
the respective Interest Period (as defined below) published by the British Bankers
Association on or about 11.00 a.m. (London Time) according to the quotation which appears
on the Reuters Monitor Money Rate Service at such date.
	 
	 	 	“Determination Date” means, with reference to any Interest Period (as defined below), two
Business Days preceding the commencement of the respective Interest Period (as defined
below).
	 
	3.2.	 	Interest Payment Dates
	 
	 	 	The Interest will be paid by the Company to the Bank in the currency of the Revolving
Credit Line on payment dates per each respective Notice of Drawdown.
	 
	4.	 	Revolving Credit Fee
	 
	4.1	 	In respect of the allocation of the Revolving Credit Line I will pay the bank a Revolving
Credit fee at the rate of 1% (one percent) per annum (hereinafter: “the Revolving Credit Fee”)
calculated on any undrawn amount under the Revolving Credit Line.
	 
	4.2	 	The Revolving Credit Fee will be paid quarterly in arrears on the first day of the following
calendar quarter (i.e. on April 1st,
July 1st,
October 1st,
January 1st) or on the nearest Business Day (as defined below) to such date.
	 
	4.3	 	The Revolving Credit Fee will be calculated as follows: the undrawn amount under the
Revolving Credit Line multiplied by the rate of the Revolving Credit Fee multiplied by the
actual number of days in which the said amount has been undrawn divided by 365.
	 
	5.	 	Payment on a day not being a Business Day




If any payment due by the Company hereunder following the provision of the Revolving Credit Line
falls due on a day which is not a Business Day, such payment shall be made on the next day which
is a Business Day unless it would thereby be made in the next calendar month, in which case such
payment will be made on the immediately preceding Business Day.





	6.	 	Interpretation
	 
	6.1	 	In this letter:
	 
	 	 	The term “Business Day” — means a day on which banks in Tel-Aviv, London and the country
in which the currency of the Revolving Credit is legal tender are open to the public and
on which the Bank’s branches in Israel — or most of them — are open for business to the
public.




2









 






	6.2	 	The headings are only indicative and are not to be used in construing this Application.
	 
	6.3	 	The provisions herein contained are in addition to those contained in the abovementioned
Letter of Undertaking, but in case of conflict between them, the provisions herein contained
shall prevail.




IN WITNESS WHEREOF I HAVE SIGNED:




	 	 	 	 	 
	[ILLEGIBLE]
 

ALMA [STAMP]

	 	 
 




3








 







Appendix “C”




DEBENTURE




Made and executed this 23RD day of March 2006




	 	 	 
	WHEREAS

	 	the undersigned Alma Lasers Ltd. (hereinafter:- “the
Pledgor”) whose address is 7 Haeshel Street P.O.B 3021,
Caesarea Industrial Park, Caesarea, Israel 38900, has
received and intends to receive, from time to time,
from Bank Hapoalim B.M. (hereinafter: “the Bank”) credits,
various loans, overdrafts in current account, in revolving
debitory account or in any other account, granting of time and
various banking facilities and various other banking services,
including in connection with that certain Letter of
Undertaking dated the date hereof by and among the Pledgor and
the Bank (the “Letter of Undertaking”); capitalized terms used
herein but not herein defined shall have the meaning ascribed
thereto in the Letter of Undertaking (hereinafter, jointly and
severally — “the Banking Services”), on such conditions as
have been and/or may be agreed in writing from time to time
with respect to each such Banking Service, and
	 
	 	 
	THEREFORE,

	 	it has been agreed that the Pledgor shall secure the repayment
of the various amounts of money which the Pledgor may owe
and/or may be liable to the Bank in connection with the
granting or use of the Banking Services, all in accordance
with the terms hereinafter contained.






NATURE OF THE DEBENTURE





	1.	 	This Debenture has been made to secure the full and punctual payment of all the sums due and
to become due to the Bank from the Pledgor in connection with the granting of the Banking
Services to the Pledgor by the Bank and/or in connection with other liabilities not
being Banking Services or in any other manner, whether the Pledgor has incurred or will
incur liability with respect thereto after the date hereof, as obligor and/or as
guarantor and/or as endorser, now due or becoming due in the future, which are payable
prior to the realisation of the collateral security to which this Debenture is
applicable or subsequent thereto, whether due absolutely or contingently, directly or
indirectly, unlimited in amount, together with interest, commissions, charges, fees and
expenses of whatever nature, including costs of realising the collateral security, out
of pocket lawyers fees, insurance, stamp duty and any other costs and expenses arising
from the enforcement of this Debenture and together with any costs or expenses incurred
by the Bank as a result of prepayment of a LIBOR loan contract (all the foregoing sums
being jointly and severally hereinafter referred to as “the Secured Sums”).





THE CHARGE




	2.	 	As collateral security for the full and punctual payment of all of the Secured Sums, the
Pledgor
hereby charges to the Bank and its successors by way of a first ranking floating
charge the assets and the proceeds derived therefrom as set out below (hereinafter
“the Assets Subject to the Floating Charge”).






	 	(a)	 	All the assets, monies, deposits, inventory, receivables,
property and rights of any
kind whatsoever, whether now or hereafter at any time in the future owned by or
in
the possession of the Pledgor in any manner or way whatsoever;
	 
	 	(b)	 	All the current assets, without exception, now or hereafter at
any time in the future
owned by or in the possession of the Pledgor in any manner or way whatsoever,
the
expression “current assets” meaning all the assets, monies, deposits,
inventory,




 









 






	 	 	 	receivables, property and rights of any kind with the exception of land,
buildings and fixtures;
	 
	 	(c)	 	All the fixed assets now or hereafter at any time in the future
owned by or in
possession of the Pledgor in any manner or way whatsoever, the expression
“fixed
assets” to include, inter alia, land, buildings and fixtures;
	 
	 	(d)	 	All the securities and other documents or instruments owned by
the Pledgor and/or
which the Pledgor is entitled to give instructions to sell, now and at any time
in the
future held by the Bank and/or by others in favour of the Bank and/or any
rights in
respect thereof;
	 
	 	(e)	 	All rights in land and/or all contractual rights under agreements
between the Pledgor
and the Israel Lands Administration and/or the Israel Development Authority
and/or
the Jewish National Fund (Keren Kayemeth Le-Israel) and/or any other parties,
now
and hereafter existing at any time.
	 
	 	(f)	 	All intellectual property rights now or hereafter at any time in
the future owned by
the Pledgor or which the Pledgor in entitled to in any manner or way
whatsoever.






	3.	 	As further collateral security for the full and punctual payment of all of the Secured Sums,
the
Pledgor hereby pledges and charges to the Bank and its successors by way of a first ranking
fixed
pledge and charge any amounts due in respect of the uncalled and/or called but unpaid
issued
share capital of the Pledgor and its goodwill, as presently and in the future at any time
existing
(hereinafter, collectively — “the Charged Assets”).
	 
	4.	 	As further collateral security for the full and punctual payment of all the Secured Sums, the
Pledgor hereby pledges and charges to the Bank all such securities, documents and
instruments,
Bills drawn or made by others, which the Pledgor has delivered or may deliver to the Bank
from
time to time whether for collection, safekeeping or otherwise (hereinafter “the 
Charged
Documents”), and upon the delivery thereof shall be and be deemed pledged and charged to
the
Bank by way of a first ranking fixed pledge and charge according to the terms of this
Debenture
the provisions of which, mutatis mutandis, shall apply to the charge and pledge thereof.
The
Bank shall be exempt from taking any action whatsoever in connection with the Charged
Documents and shall not be liable for any loss or damage which may be caused in connection
therewith and the Pledgor undertakes to indemnify the Bank in any event that the Bank is
sued
for any such loss of damage by others, unless such loss or damage is caused by the gross
negligence or wilful misconduct of the Bank.
	 
	 	 	The Pledgor hereby waives in advance any defence based on prescription in relation to the
Charged Documents.
	 
	5.	 	The Assets Subject to a Floating Charge, the Charged Assets and the Charged Documents shall
be hereinafter called “the Charged Property”.
	 
	 	 	The pledge and charge created by operation of this Debenture shall apply to all and any
rights to compensation or indemnity which may accrue to the Pledgor by reason of the loss
of, damage to or appropriation of the Charged Property.





DECLARATIONS OF THE PLEDGOR




6. The Pledgor hereby declares as follows:




	 	(a)	 	That the Charged Property is not charged, pledged or attached in favour of any other
persons or parties, save for cars leased under capital lease agreements.




2









 






	 	(b)	 	That the Charged Property is, in its entirety, in the exclusive possession and
ownership
of the Pledgor or in the possession or under the control of the Bank, save for the
rights
of the Office of Chief Scientist in the intellectual property of the Pledgor as
set forth in
clause 37 below;
	 
	 	(c)	 	That no restriction or condition of law or any agreement exists or applies to
the ability
of the Pledgor to transfer or charge the Charged Property, save for the rights of
the
Office of Chief Scientist in the intellectual property of the Pledgor as set forth
in clause
37 below;
	 
	 	(d)	 	That the Pledgor is capable of and entitled to charge the Charged Property,
save for the
rights of the Office of Chief Scientist in the intellectual property of the
Pledgor as set
forth in clause 37 below;
	 
	 	(e)	 	That no assignment of rights or other disposition or circumstance
has occurred
derogating from the value of the Charged Property.





COVENANTS OF THE PLEDGOR





	7.	 	The Pledgor hereby covenants as follows:






	 	(a)	 	To maintain the Charged Property in good working order and consistent with past
practices and to notify the Bank of any case of damage or loss not covered by
insurance, to the extent such damage or loss is in excess of $1,000,000 affecting
same and to replace any damaged or lost item of Charged Property to the extent
necessary to the conduct of its business within a reasonable period of time.
	 
	 	(c)	 	To allow any representative of the Bank, to inspect and examine the condition
of the
Charged Property wherever the Charged Property may be situated during normal
business hours and upon written advance notice (such inspections and examinations to
be limited to twice per year absent an Event of Default (during an Event of Default,
no
limitation on frequency of inspections shall be imposed and no written advance
notice
shall be required));
	 
	 	(d)	 	Upon the occurrence and during the continuance of an Event of Default, upon the
Bank’s first demand, to deliver to the Bank or to any bailee on its behalf, the
Charged
Assets and/or the Charged Documents. In the event of the refusal of the Pledgor to
comply with the provisions of this sub-clause, the Bank may, without the consent of
the
Pledgor, remove the Charged Assets and/or the Charged Documents from the Pledgor’s
possession and hold the same or deliver the same to a bailee on behalf of the Bank
at the
reasonable expense of the Pledgor. Where the Charged Assets and/or
Charged
Documents have been so delivered to a bailee, the Bank shall be exempt from any loss
or damage which for any reason may be caused to the Charged Assets and/or the
Charged Documents.
	 
	 	(e)	 	Not to sell, dispose of, hire out, let, lease or transfer (or allow any other
person to do
such acts) any of the Charged Assets and the Charged Documents, except in the
ordinary course of business and Pledgor may dispose or transfer Charged Assets in an
amount not to exceed in the aggregate $500,000 per year, nor suffer any person to
use
them in any manner other than in the ordinary course of business without the prior
written consent of the Bank;
	 
	 	(f)	 	Not to sell, transfer, let, lease, surrender, dispose of, relinquish or waive,
in whole or in
part, any present or future asset, claim or right of the Pledgor, except in the
ordinary
course of business and Pledgor may dispose or transfer any such asset, claim or
right in
an amount not to exceed in the aggregate $500,000 per year for fair consideration,
without receiving the prior written consent of the Bank;




3









 







	 	(g)	 	To notify the Bank forthwith of the levying of any attachment on the Charged Property,
to forthwith notify the attachor of the charge in favour of the Bank and to take
at the Pledgor’s own expense immediately and without delay all reasonable
measures as are required for discharging such attachment;
	 
	 	(h)	 	Not to charge or pledge in any manner or way the Charged Property by conferring any
rights ranking pari-passu, prior to or deferred to the rights of the Bank and not
to make any assignment of any right which the Pledgor may have in the Charged
Property without receiving the prior written consent of the Bank;
	 
	 	(i)	 	To be liable towards the bank for any defect in the Pledgor’s title to the Charged
Property, to the extent caused by Pledgor, and to bear the responsibility for the
authenticity, regularity and correctness of all the signatures, endorsements and
particulars of any Bills, documents, instruments and securities which have been
or may be delivered to the Bank by way of collateral security;
	 
	 	(j)	 	To pay when due all taxes and compulsory payments levied against the Charged
Property and/or the income accruing thereon under any law and to furnish the
Bank, at its reasonable request, with all the receipts for such payments (but,
absent an Event of Default, not more than once per year). If the Pledgor fails to
make such payments when due and does not notify the Bank that it is contesting
such payments in judicial process, the Bank may pay the same for the account of
the Pledgor and debit the Pledgor with the payment thereof coupled with
reasonable expenses incurred in connection therewith, and interest at the then
applicable rate of interest according to the relevant application for provision
of credit. Such payments shall be secured by this Debenture;
	 
	 	(k)	 	To maintain proper books of account and to allow the Bank or its representative to
inspect such books during normal business hours and upon written advance notice
(such inspections to be limited to twice per year absent an Event of Default
(during an Event of Default, no limitation on frequency of inspections shall be
imposed and no written advance notice shall be required));. The Pledgor
undertakes to assist the Bank or its representatives and furnish them upon their
reasonable request, with any balance sheets, financial statements, books of
account, card indexes, tapes, ledgers, sources and materials and any information
which they may require, including explanations concerning the financial and
operational condition of the Pledgor and/or the business of the Pledgor, to be
limited to once per quarter absent an Event of Default;
	 
	 	(1)	 	Not, in any year, so long as the Pledgor has not yet discharged to the Bank the sums
due
to the Bank from it in such year or prior thereto in respect of the Secured Sums,
to make any loans to the Pledgor’s shareholders nor repay to any of the Pledgor’s
shareholders, any existing or future loans, without the prior written consent of
the Bank. The Pledgor undertakes to cause its shareholders to covenant with the
Bank not to demand nor claim repayment of such loans as aforesaid;
	 
	 	(m)	 	That no structural change as regards the Pledgor and no change in the
control of the Pledgor will occur without the prior written consent of the Bank.
	 
	 	(n)	 	Not to institute any proceedings whatsoever in respect of the Secured Sums which
would have an adverse effect on the ability of the Bank to realise the property
hereby charged.






	8.	 	The Pledgor undertakes to notify the Bank forthwith:






	 	(a)	 	of any claim of right to any collateral security given to the Bank to which this
Debenture
is applicable and/or of any execution or injunction proceedings or other steps
taken to attach, preserve or realise any such collateral security;




4









 






	 	(b)	 	of any of the events enumerated in Clause 18 hereof;
	 
	 	(c)	 	of any material reduction in value of any collateral security granted or
which may be
granted by the Pledgor;
	 
	 	(d)	 	of any application filed for the winding-up of the Pledgor’s
affairs or for the
appointment of a receiver over the Pledgor’s assets as well as any resolution
regarding
any structural change in the Pledgor or any intention to do so;
	 
	 	(e)	 	of any change of address.





INSURANCE





	9.	 	The Pledgor hereby undertakes to keep the Charged Property insured at all times against the
usual risks, with such insurance companies and in such amounts as are standard in the Pledgor’s
industry, and to assign to the Bank amounts payable in excess of $250,000 (Two Hundred and
Fifty Thousand US dollars) (per every one insurable event) under the insurance policies up
to the
aggregate of the Secured Sums; provided however, absent an Event of Default, the Bank shall
permit the Pledgor to collect all amounts payable under insurance policies and Pledgor
shall
reinvest such proceeds in assets used or useful in its business or that of its subsidiaries
within 180
days of the receipt thereof.
	 
	10.	 	Without derogating from the foregoing, and in addition thereto, the Pledgor hereby undertakes
to
give to the insurance company with which the Charged Property has been insured, the
following
instructions:






	 	(a)	 	To irrevocably establish the Bank as payment beneficiary under all
contracts of
insurance and to include the Bank as co-insured in the body of the insurance
contract,
but without the Bank being liable for any premiums.
	 
	 	(b)	 	Subject to the provisions of Section 9 above, the Pledgor agrees that for
insurance
proceed payments in excess of $250,000 (Two Hundred and Fifty Thousand US dollars)
(per every one insurable event), each insurance company shall pay the entire
insurance
proceeds in respect of the Charged Property directly to the Bank as and when each
insurance company is liable to pay such proceeds in accordance with the contract of
insurance or by operation of law.
	 
	 	(c)	 	To furnish the Bank with a copy of the insurance certificate specifying the
Bank as
beneficiary as mentioned above.






	 	 	All the foregoing shall not require, any further consent of the Pledgor, the Pledgor’s
successors and/or assigns.
	 
	 	 	The Pledgor further undertakes to furnish the Bank with a certificate from the insurance
company or companies containing an undertaking on its or their part not to set-off any of
the insurance proceeds payable to the Bank with respect to the Charged Property, except for
the unpaid balance of insurance premiums for insuring the Charged Property for the current
year only, and if any insurance policy applies also to other property, in addition to the
Charged Property, such certificate shall include the agreement of the insurance company to
attribute the payments of premium received in connection with this insurance company first
of all on account of insurance premiums due on account of insuring the Charged Property and
also to act in accordance with the foregoing instructions and to notify the Bank of any
cancellation or termination of any such insurance contract at least 30 (thirty) days prior
to such cancellation or termination, notwithstanding any provision to the contrary under
the Insurance Contract Law, 5741-1981, such notice constituting a condition precedent to
the effectiveness of any such cancellation or termination of any such insurance contract.




5









 






	11.	 	In any of the following events, the Bank may, in its absolute discretion, insure the
Charged
Property in the name of the Bank and debit the account of the Pledgor with any insurance
premiums and any other reasonable costs of insurance incurred by the Bank in connection
therewith:






	 	(a)	 	If the Charged Property is not insured by the Pledgor to the reasonable
satisfaction of
the Bank and the Pledgor has refused, after the Bank’s request, to obtain
additional
insurance as reasonably requested by the Bank;
	 
	 	(b)	 	If the Pledgor does not furnish the Bank within thirty (30) days from the
date of
signature of this Debenture with certificates of insurance in respect of the
Charged
Property on such conditions and for such period as shall be reasonably
satisfactory to
the Bank;
	 
	 	(c)	 	If ten (10) days prior to the expiration date of the insurance of the
Charged Property, the
Pledgor fails to furnish the Bank with certificates of insurance of the Charged
Property
on such conditions and for such period as shall be reasonably satisfactory to the
Bank;






	 	 	In the event of the insurance being effected by the bank as above, the Bank shall not be
liable for any defect or shortcoming which may come to light in connection with the
insurance. Any amounts paid (and not debited from Pledgor’s account) by way of insurance
premiums and any other costs of insurance as aforesaid shall be secured by this Debenture.
	 
	12.	 	Upon the occurrence and during the continuance of an Event of Default, the Pledgor hereby
appoints the Bank as the Pledgor’s sole representative and confers upon the Bank the
exclusive
right on behalf of the Pledgor to conduct negotiations, file claims, agree to any
settlements or
compromises, to make waivers, accept monies from insurance companies and to appropriate the
same towards the discharge of the Secured Sums. The above power of attorney is irrevocable
since the rights of the Bank and the rights of a third party are dependent thereon.
Subject to
Section 9 hereof, the Pledgor shall have no claims in connection with any
settlements,
compromises or waivers which the Bank may make with any such insurance companies.
	 
	13.	 	Subject to the agreements set forth herein, all the rights of the Pledgor deriving from the
insurance of the Charged Property, including rights under the Property Tax and Compensation
Fund Law, 5721-1961, as in force at any relevant time and under any other law, whether or
not
assigned to the Bank as aforesaid, are hereby charged to the Bank by way of a first ranking
fixed
charge and pledge.
	 
	14.	 	The Pledgor hereby undertakes to sign, upon the Bank’s first demand, all documents and
certificates required to implement the Pledgor’s obligations under this heading. The
Pledgor
further undertakes not to cancel nor vary in any manner whatsoever any of the terms or the
conditions of the insurance referred to above (other than insurance market conditions or
changes
outside the control of the Pledgor), without consulting with the Bank.





INTEREST





	15.	 	(a)	 	Interest shall be calculated as set forth in the relevant Application for Revolving Credit
or Application for Term Loan executed by the Pledgor and delivered to the Bank in
connection with the Letter of Undertaking.
	 
	 	 	(b)	 	Whenever the payment of any amount of the Secured Sums is overdue, it shall
bear
default interest at the rate which has been agreed upon in the Letter of
Undertaking;
	 
	 	 	(c)	 	Upon the occurrence of any event conferring upon the Bank the right to
realise the
collateral security granted under this Debenture, the Bank shall be entitled, upon
notice
to Pledgor, to raise the rates of interest on the Secured Sums to the Default Rate
set
forth in the Letter of Undertaking





6









 





REPAYMENT DATES





	16.	 	The Pledgor hereby undertakes to pay the Bank all and any of the Secured Sums promptly on the
dates set forth in the relevant Application for Revolving Credit or Application for Term Loan
executed by the Pledgor and delivered to the Bank in connection with the Letter of Undertaking.






	17.	 	(a) 	 	Except as set forth in Section 8(b) of the Letter of Undertaking, the Bank may decline to
accept any prepayment of the Secured Sums or pay part thereof prior to the date of
maturity thereof and the Pledgor shall not be entitled to redeem all or any of the
Charged Property by discharging the Secured Sums and/or any part thereof prior to
their prescribed maturity dates.
	 
	 	 	 	 	Neither the Pledgor nor any person having a right liable to be affected by the
pledges and charges hereby created or the realisation thereof shall have any
right under Section 13(b) of the Pledges Law. 5727-1967 or any other statutory
provisions in substitution therefor.
	 
	 	 	(b)	 	Subject to the provisions of any law, if the Bank agrees to prepayment on account of
the
Secured Sums, the Pledgor shall pay such prepayment fee as set forth in the Letter
of Undertaking, or otherwise agreed in writing between the Pledgor and the Bank.






	18.	 	Without derogating from the generality of the provisions of this Debenture, the Bank shall
be entitled to demand the immediate payment of the Secured Sums and to debit any account of
the Pledgor with the amount thereof upon the occurrence of any one of the events, each an
“Event of Default”, enumerated below and, during the continuance of an Event of Default, in
which case the Pledgor undertakes to pay the Bank all of the Secured Sums, and the Bank shall
be entitled to take whatever steps it sees fit for the collection of the Secured Sums and in
particular to crystallise the floating charge on the Assets Subject to a Floating Charge as
provided in Clause 24(a) hereof and to realise, at the Pledgor’s expense, the collateral
securities by any means allowed by law. The Events of Default are as follows:-






	 	(a)	 	If the Pledgor commits a breach of or an “anticipatory breach” within the meaning
of clause
17 of the Contracts (Remedies for Breach of Contract) Law, 5731-1970 of or fails to
perform any of the terms and conditions herein contained or of any other obligation
which
Pledgor has incurred or may incur towards the Bank in relation to any credit granted or
which may be granted pursuant to this Letter of Undertaking (including the Term Loan
and
the Revolving Credit Line) (hereinafter: “Credit”) and does not cure such breach or
failure
within 10 Business Days of such event, or if it transpires that any
declaration or
representation made by the Pledgor in relation to the granting of any Credit pursuant
hereto
is false or inaccurate.
	 
	 	(b)	 	If the Pledgor is in breach of (i) any of the financial covenants set forth in
Paragraph 33 of
the Letter of Undertaking and does not remedy such breach in accordance with Section
8(b)(i) of the Letter of Undertaking or by the end of the subsequent quarter and/or
(ii) any
of its additional financial undertakings set forth in Paragraphs 34 and 35 of the
Letter of
Undertaking.
	 
	 	(c)	 	If the Pledgor or any Subsidiary adopts a resolution to restructure, or any
intention to do so,
either as an absorbing, transferor or spin-off company or a voluntary winding up
resolution
or if an order for winding up or for freeze of proceedings is made against the Pledgor
or any
Subsidiary or if Pledgor’s or any Subsidiary’s name is struck out or is about to be
struck out
from any official register kept by law.
	 
	 	(d)	 	If a receiver is appointed over any substantial portion or all of Pledgor’s or any
Subsidiary’s
assets, or if an order is made against the Pledgor or any Subsidiary for receivership
or an
interim liquidator or special manager is appointed over the Pledgor or any Subsidiary
or any
bankruptcy or insolvency proceeding is commenced with respect to the Pledgor or any




7









 






	 	 	 	Subsidiary. Assets the value of which equals or exceeds $500,000 shall be
deemed “substantial portion” of Borrower’s or any Subsidiary’s assets for the
purposes hereof.
	 
	 	(e)	 	If an attachment or similar process of execution is levied against any
substantial portion of
Pledgor’s or any Subsidiary’s assets or against any substantial portion of the
collaterals
given by the Pledgor or on its behalf to the Bank. Assets or collaterals the value of
which
equals or exceeds $500,000 shall be deemed “substantial portion” of Borrower’s or any
Subsidiary’s assets or of collaterals given by Borrower for the purposes hereof.
	 
	 	(f)	 	If the Bank in its reasonable discretion considers that there is a change in
ownership or
control affecting Pledgor’s constitution as against its constitution on the day of
signature of
this Letter of Undertaking.
	 
	 	(g)	 	If Pledgor or any Subsidiary ceases to pay its debts generally or to conduct its
business.
	 
	 	(h)	 	If work at Pledgor’s or any Subsidiary’s business ceases or is substantially
curtailed for two months or more.
	 
	 	(i)	 	If the Bank in its reasonable discretion considers that an occurrence has
taken place which has — or is liable to have — a material adverse effect upon the
Pledgor’s financial ability to repay the outstanding amount of the Credit.
	 
	 	(j)	 	If the Pledgor falls behind in the payment of any amount that the Pledgor owes
to the Bank under, pursuant to and/or in connection with this Letter of Undertaking,
any appendices thereto or any application thereunder for more than 7 (seven) days.
	 
	 	(k)	 	If an “Event of Default” (as defined under that certain Subordinated Note
Purchase Agreement executed amongst the Pledgor and TA Subordinated Debt Fund, L.P.
and TA Investors II, L.P. on 23 March, 2006 (the “Subordinated Note Purchase
Agreement”) has occurred under the Subordinated Note Purchase Agreement or if Pledgor
or Noteholders identified therein have failed to comply with any of their obligations
under Section 2.14 (“Obligations Subordinate to Senior Indebtedness”) thereof.
	 
	 	(1)	 	If the Pledgor does not furnish the Bank with periodic financial statements,
books of account and other authorities and materials in relation to the financial state
of the Pledgor, as provided in Paragraph 21 hereof, or if the Pledgor is required so to
do and it does not comply with any such requirement.
	 
	 	(m)	 	If, in the reasonable discretion of the Bank and in its reasonable estimation, a
material deterioration has occurred in the value of the collaterals given for securing
the repayment of the Credit.
	 
	 	(n)	 	If the Pledgor or any Subsidiary shall be required to make early repayment of
the debts which it owes to other creditors for borrowed money.
	 
	 	(o)	 	If the Bank is unable to determine the rate of interest or is unable to
refinance itself in the currency of the credit due to changes affecting any of the
international money markets and/or if in the reasonable opinion of the Bank the
continued granting of the credit becomes unlawful.





RIGHTS OF THE BANK





	19.	 	The Bank shall have the right of possession, lien, set-off and charge over any amounts,
assets and rights including securities, coins, gold, banknotes, documents in respect of
goods, insurance policies, Bills, assignments of rights, deposits, collaterals and their
countervalue, in the possession of or under the control of the Bank at any time for or on
behalf of the Pledgor,





8









 






	 	 	including such as have been delivered for collection, as security, for safe-keeping or
otherwise, subject to the limitations set forth in Section 17 of the Letter of
Undertaking.
	 
	20.	 	The Bank shall be entitled, subject to the limitations set forth in Section 17 of the Letter
of
Undertaking, to retain the said assets until payment in full of the Secured Sums or to
realise them
by selling them and applying the countervalue thereof in whole or in part in payment of the
Secured Sums.
	 
	21.	 	The Pledgor confirms that the Bank’s books, accounts and entries shall be binding upon the
Pledgor, shall be deemed to be correct and shall serve as prima facie evidence against the
Pledgor in all their particulars, including all reference to the computation of the Secured
Sums,
the particulars of the Bills, guarantees and other collateral securities and any other
matter related
hereto.
	 
	22.	 	The Bank shall be entitled, in its sole discretion, to accept or refuse any instructions or
notices
given verbally or by telephone or by any other mode which is unreliable or not reduced to
clear
and legible writing. In the event that the Bank agrees to act on the Pledgor’s instructions
not
being an instruction in writing in the usual way, the Pledgor accepts all responsibility
for any
mistake, misunderstanding or discrepancy and for any damage, loss or breach which may be
caused as a result of such instructions being so given, unless such damage, loss or breach
is
caused by the Bank’s gross negligence or wilful misconduct.
	 
	23.	 	Without derogating from the other provisions contained in this Debenture, any waiver,
extension,
concession, acquiescence or forbearance (hereinafter: “waiver”) on the Bank’s part as to the
non-performance, partial performance or incorrect performance of any of the Pledgor’s obligations
pursuant to this Debenture, such waiver shall not be treated as a general waiver on the part of the
Bank of any rights but as a limited consent given in respect of the specific instance. Any waiver
granted by the Bank to any party to any Bill held by the Bank as collateral for the Secured Sums
shall in no way or manner affect any of the Pledgor’s obligations thereunder.






	24.	 	(a) 	 	Upon the occurrence of and during the continuance of an Event of Default, the Bank
shall be entitled to notify the Pledgor of the crystallisation immediately or on
a date specified by the Bank of the floating charge over the Charged Property or
any part thereof and to adopt all the measures it deems necessary in order to
recover the Secured Sums and realise all of its rights hereunder, including the
realisation of the Charged Property, in whole or in part, and to apply the
proceeds thereof to the Secured Sums without the Bank first being required to
realise any other guarantees or collateral securities, if such be held by the
Bank.
	 
	 	(b)	 	Upon the occurrence of and during the continuance of an Event of Default,
should the
Bank decide to realise securities, Bills and other negotiable instruments, then 10
days’
advance notice regarding the steps that the Bank intends to take shall be deemed to
be
reasonable advance notice for the purpose of Section 19(b) of the Pledges law,
5727-1967 or any other statutory provisions in substitution therefor.
	 
	 	(c)	 	The Bank may, upon the occurrence of and during the continuance of an Event of
Default, as attorney-in-fact of the Pledgor (and, for the limited purpose hereof,
the
Pledgor irrevocably appoints the Bank to be its attorney-in-fact upon the
occurrence and
during the continuance of an Event of Default), sell all or any of the Charged
Property
by public auction or otherwise, by itself or through others, for cash or
instalments
thereof or otherwise, at a price and on such terms as the Bank in its absolute
discretion
shall deem fit, and likewise the Bank may of its own accord or through the court or
an
execution office, realise the Charged property or any other property, inter alia,
by
appointing a receiver or receiver and manager on behalf of the Bank, who shall be
empowered, inter alia:






	 	(1)	 	to call in all or any part of the Charged Property.




9









 






	 	(2)	 	to carry on or to participate in the management of the business of
the Pledgor,
as they see fit.
	 
	 	(3)	 	to sell or agree to the sale of the Charged Property, in
whole or in part, to
dispose of same or agree to dispose of same in such other manner on such
terms as they deem fit.
	 
	 	(4)	 	to make such other arrangement regarding the Charged
Property or any part thereof as they deem fit.






	 	(d)	 	All income to be received by the receiver or the receiver and manager from the
realisation of the Charged Property from such a sale during the continuance of an
Event of Default as well as any proceeds to be received by the Bank and/or by the
receiver or receiver and manager from the sale of the Charged Property or any
part thereof shall be applied in the following order:






	 	(1)	 	firstly, to the discharge of all the costs and expenses
incurred and which may
be incurred in connection with the collection of the Secured Sums,
including
the costs and remuneration of the receiver or the receiver and manager in
such
amount as shall be prescribed by the Bank or approved by the court or the
execution office;
	 
	 	(2)	 	secondly, to the discharge of the Secured Sums becoming due
to the Bank by
reason of any terms of linkage or on account of
interest, damages,
commissions, fees, charges and expenses due and becoming due to the Bank
pursuant to this Debenture;
	 
	 	(3)	 	thirdly, to the discharge of the principal amount o the Secured Sums;






	 	 	 	or in such order of appropriation as the Bank shall reasonably determine.






	25.	 	Should the payment date of the Secured Sums or any part thereof not yet have fallen due at
the
time of the sale of the Charged Property, or the Secured Sums be due to the Bank
contingently
only, then the Bank shall be entitled to recover out of the proceeds of the sale an amount
sufficient to cover the Secured Sums and the amount so recovered and yet to be appropriated
to
the discharge of the amounts mentioned in Clause 24(d) above shall be charged to the Bank
as
security for, and be held by the Bank until the discharge in full of, the Secured Sums. Any
proceeds recovered in excess of the amount sufficient to fully cover the Secured Sums shall
be
discharged to the Pledgor.





NATURE OF THE COLLATERAL SECURITY





	26.	 	The collateral securities which have been or may be given to the Bank under this Debenture
shall
be continuing and revolving securities and shall remain in force until the Bank certifies
in writing
that this Debenture is null and void or until the obligations of the Pledgor under the
Letter of
Undertaking are paid in full and there is no further commitment on the part of the Bank to
advance any additional credit under the Letter of Undertaking and the Bank certifies same
in
writing.
	 
	27.	 	All collateral securities and guarantees which have been or may be given to the Bank for
payment
of the Secured Sums shall be independent of one another.
	 
	28.	 	The nature and effect of the collateral securities to which this Debenture is applicable
shall not be
affected nor shall the validity of any of the securities and obligations of the Pledgor
hereunder be
impaired or affected by any compromise, concession, granting of time or other like release
consented to by the Bank with respect to the Pledgor or by any variation in the Pledgor’s




10









 







	 	 	obligations towards the Bank in connection with the Secured Sums or by any release or
waiver by the Bank of any other collateral security or guarantees.
	 
	29.	 	The Bank may deposit all or any of the collaterals given or which may be given pursuant to
this
Debenture with a bailee of its own choosing, at its discretion and at the Pledgor’s
reasonable
expense, and may substitute such bailee with another from time to time. The Bank may
register
all or any of such collaterals with any competent authority in accordance with any law
and/or in
any public register.





RIGHT OF ASSIGNMENT





	30.	 	The Bank may at any time, at its own discretion and without the Pledgor’s consent being
required,
assign this Debenture and its rights arising hereunder, including its rights in the
collaterals in
whole or in part (collectively, the “Rights”) and any assignee may also reassign its
interests in
the Rights without any further consent being required from the Pledgor. Such assignment
may be
effected by endorsement on this Debenture or in any other way the Bank or any subsequent assignor deems fit to any person and/or corporation, whether in Israel
or abroad, (a
“Transferee”), subject to the provisions of this clause hereunder.
	 
	 	 	For the purposes hereof, the term “transfer” shall mean the sale and/or assignment of the
Rights, in whole or in part, effected either directly or through a special purpose
company (“SPG”) or by way of sale of participation in the Rights and/or in any other way
the Bank deems fit. Such transfer may be effected to one or to any number of Transferees,
either simultaneously or from time to time.
	 
	 	 	The Bank may, at any time, disclose information with respect to a transfer to any person
and/or corporation, whether in Israel or abroad, to whom the Rights may be transferred and
with whom negotiations are taking place or may take place for such purpose (a “Potential
Transferee”). The Bank may also disclose information to consultants engaged on its own
behalf and/or on behalf of any Potential Transferee, as well as to credit rating agencies
for the purpose of rating the Rights. Such disclosure of information may be effected only
upon the Bank receiving a confidentiality letter from the Potential Transferee,
consultants and/or credit rating agencies, as the case may be, in form acceptable to the
Bank and which inures also to the benefit of the Borrower.





NOTICE OF OBJECTION





	31.	 	The Pledgor undertakes to notify the Bank in writing of any objection or contention it may
have
regarding any statement of account, extract thereof, certificate or notice received by it
from the
Bank including information received through any automatic terminal facility. Where no such
objection or contention is received by the Bank within 60 days of the receipt of such
statement of
account, extract, certificate or notice then the Pledgor will be deemed to have confirmed
the
correctness thereof.





EXPENSES





	32.	 	All the reasonable expenses incurred by the Bank in connection with this Debenture as
detailed
in the Bank’s scale of charges, as in force from time to time, including the fee for
preparing credit
and security documents, the stamping and registration of documents, and all and any expenses
involved in the realisation of the collateral security and institution of proceedings for
collection
(including the fees of the Bank’s lawyers), insurance, safe-keeping, maintenance and repair
of the
Charged property — shall be paid by the Pledgor to the Bank within
10 business days of its first demand, together with interest at the rate set forth in the
relevant application for the provision of credit from the date 7 business days after demand
was made until payment in full, and until payment in full, all the above expenses together
with interest thereon shall be secured by this




11









 






	 	 	Debenture. The Bank may debit the Pledgor with the aforesaid expenses, together with
interest thereon, if not paid when due.





LIABILITY OF THE PLEDGOR





	33.	 	[Deleted]





INTERPRETATION





	34.	 	In this Debenture — (a) the singular includes the plural and vice versa; (b) the masculine
gender
includes the feminine gender and vice versa; (c) “Bank” means:- Bank Hapoalim B.M. and/or
                     and any of its branches existing on the date hereof and/or
to be subsequently opened, wherever they may be, its assigns, successors, or
attorneys-in-fact; (d) “Bills” means: promissory notes, bills of exchange, cheques,
undertakings, guarantees, sureties, assignments, bills of lading, deposit notes and any
other negotiable instruments; (e) “Structural change” means with respect to the Pledgor,
any merger or divestiture (within the meaning of these terms in Part E-2 of the Income Tax
Ordinance or any other statutory provision in substitution therefor) as well as any
transfer of assets in return for shares, irrespective of whether according to the
aforesaid Part E-2 or otherwise; (f) “Subsidiary” means, with respect to the Pledgor, as
of the date of execution of this Letter of Undertaking, Alma Lasers, Inc., and any time
thereafter, a corporation, partnership, limited liability company, or other entity in
which the Pledgor directly or indirectly owns or controls the shares of stock having
ordinary voting power to elect a majority of the board of directors (or appoint other
comparable managers) of such corporation, partnership, limited liability company, or other
entity; (g) the headings are only indicative and are not to be used in construing this
Debenture; (h) the recitals hereto form an integral part hereof.





NOTICES AND WARNINGS





	35.	 	Notices shall be given in accordance with Section 30 of the Letter of Undertaking (with the
Pledgor’s address set forth as the “Borrower” therein).





GOVERNING LAW AND PLACE OF JURISDICTION





	36.	 	(a) 	 	This Debenture shall be construed in accordance with the laws of the State of Israel.
	 
	 	(b)	 	The exclusive place of jurisdiction for the purpose of this Debenture is
hereby
established as the competent court of law in Israel situated in the city nearest
to the place of signature of this Debenture or in one of the following cities:
Jerusalem, Tel Aviv-Jaffa, Haifa, Beersheba or Nazareth.





SPECIAL CONDITIONS





	37.	 	Notwithstanding any of the foregoing, it is hereby stipulated that the grant of security
interest in and the rights of the Bank under the Debenture with respect to any Charged Property subject
to,
or developed under the funding of the Office of the Chief Scientist (“OCS”) pursuant to
research
plans numbers 25933, 26963, 28285 or 33125 (the “Specified Assets”), shall be subject to
the
consent and the rights of the OCS under the Encouragement of Industrial Research and
Development Law, 5744-1984 and such research plans approval letters, to the extent OCS has
not waived its rights with respect to, or consented to the grant of security interest in,
the Specified
Assets in writing.





12









 





IN WITNESS WHEREOF THE PLEDGOR HAS SIGNED




	 	 	 	 	 
	 	 	 
	 	/s/ [ILLEGIBLE]
 	 
	 	Alma Lasers Ltd  	 
	 	(The Pledgor) 	 
	 



Acknowledgement



I, the undersigned Craig Rubin, Adv., regis. no. 20303, legal counsel for Alma Lasers Ltd., Co. no.
51-2836172 (the “Company”), hereby certify that:





	a)	 	The Company caused the above document to be executed on its behalf by its authorized
signatory/ies, Mr./Mrs. Yaron Suher i-d. no. ZZ606875 pursuant to and in accordance with the
resolutions of the board of directors of the Company;
	 
	b)	 	said resolutions were passed duly, lawfully and in accordance with the constituting
documents of the Company;
	 
	c)	 	the above signatures bind the Company, and the above document has been duly
executed.





	 	 	 	 	 
	March 23, 2006	 	Craig Rubin	 	(Stamp)
	Date

	 	Signature
	 	Stamp







13











 





SCHEDULE A




FORM OF NOTICE OF DRAWDOWN




Account No(s)

613951




	 	 	 	 	 	 	 
	 	 	 	 	 	 	I.D. Card No./
	Customer’s Name	 	Address and Area Code	 	Telephone No.	 	Corp. Reg. No.
	Alma Lasers Ltd.

	 	7 Haeshel Street P.O.B. 

3021 Caesarea Industrial Park,
Caesarea, Israel 38900
	 	(972-4) 627-5357
	 	51-283617-2






To

Bank Hapoalim B.M.

Central Branch (600)




Dear Sirs,




	 	 	 
	Re:

	 	Notice of Drawdown —


Application for Revolving Credit dated the                     
day of                     , 2006


Letter of Undertaking dated the                     
day of                     , 2006







Alma Lasers Ltd. (the “Company”)
hereby refers to the Letter of Undertaking (as from time to
time amended, varied or supplemented) dated
                     , 2006 (“the Letter of Undertaking”)
and to the Application for Revolving Credit dated                      , 2006 made
thereunder (“Application”); (the Letter of Undertaking and the Application, collectively — “the Credit
Documents”).





	1.	 	The Company hereby gives the Bank notice that, pursuant to the Credit Documents and on [date
of proposed Advance], the Company wishes to borrow an Advance in the
amount of U.S.$ [ ____ ], upon the terms and subject to the terms and conditions
contained therein and hereinbelow.
	 
	2.	 	This notice is irrevocable.
	 
	3.	 	The Company confirms that, at the date hereof, the representations contained in
Paragraph 7 and elsewhere in the Letter of Undertaking are true in all material respects and
no Event of Default has occurred and is continuing.
	 
	4.	 	Terms used in capital letters herein but not defined herein bear the same meaning as in the
Credit Documents.




 









 











Following
are the terms of the Advance:





	5.	 	Repayment of Principal




The
Company undertakes to pay the principal of the Advance (“Advance Principal”) in the Currency
of the Revolving Credit in the Currency of the Revolving Credit as follows:



o     
in one lump sum due and payable on                     



o     
every month/three months/six months/
                    
months* — commencing on                     
and ending on                     .



o                                                                   





	6.	 	Interest




Advance Principal shall bear interest according to the Application.





	7.	 	Interest Periods




The Interest applicable to the Advance Principal shall be determined by the Bank two business
days in advance every month/three months/six months/                    
months by reference to the
respective LIBOR applied by the Bank to the respective Interest Period (each such period being
hereinafter — an “Interest Period”).


We are aware that the first and/or last Interest Period may be shorter or longer than the other
Interest Periods, as the Bank in its discretion may deem fit and pursuant to the conditions
prescribed for repaying the Advance Principal.





	8.	 	Interest Payment Dates




The Interest due on the Advance Principal (excluding Default Interest) shall be paid by the
Company to the Bank at the end of every Interest Period calculated on the balance of the Advance
Principal outstanding from time to time from the commencement of the current Interest Period up to
the end of the respective Interest Period, according to the Interest rate fixed for such Interest
Period.


Interest will be repaid in the currency of the Revolving Credit and be computed on the basis of
the number of days that have actually elapsed divided by 360.





	9.	 	Repayment Schedule




Details of the installments and dates of repayment of Advance Principal (reflecting Clause 5
above) and interest thereon will be contained in a repayment schedule for each Advance that will
be sent to the Company by the Bank shortly after the date of the grant of the Advance, and such
schedule will form an integral part of the Credit Documents. If the repayment schedule does not
reach the Company within 30 days of the date on which the Borrower’s Account has been credited
with the Advance Principal, the Company shall notify the Bank thereof in writing within 45 days of
the date on which such Advance Principal was credited to the Borrower’s Account and in the absence
of such notice a copy of the repayment schedule held by the Bank will be binding upon the Company.




 









 






	10.	 	Days not being Business Days




If any payment due from the Company hereunder and/or if the last day of any Interest Period falls
due on a day which is not a Business Day, such payment shall be made on and/or the respective
Interest Period shall be extended, as the case may be, until the next day which is a Business Day
and bear interest at the rate required according to clause 3 of the Application, unless it would
thereby be made in the next calendar month, in which case such payment will be made on the
immediately preceding Business Day.



Where any installment on account of the Advance Principal falls due in a calendar month in which
any Interest Period ends, the due date of said installment shall be deferred to the last day of
said Interest Period so as to ensure that the due date of payment on account of the Advance
Principal and the due date for payment of interest thereon in any such case are one and the same.




IN WITNESS WHEREOF WE HAVE SIGNED: