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LETTER OF UNDERTAKING

Loan Agreement

LETTER OF UNDERTAKING | Document Parties: ALMA LASERS LTD. | Aesthetic Acquisition, BV | TA Associates, Inc You are currently viewing:
This Loan Agreement involves

ALMA LASERS LTD. | Aesthetic Acquisition, BV | TA Associates, Inc

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Title: LETTER OF UNDERTAKING
Date: 12/31/2007

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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 23 RD 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.

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  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

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  (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

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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    

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        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:-    

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    (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    

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        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    

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        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.

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    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.

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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.

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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

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    “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 ad

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