SUBORDINATED NOTE PURCHASE AGREEMENT

Exhibit 10.6

SUBORDINATED NOTE PURCHASE AGREEMENT

Among

ALMA LASERS LTD.

AND

Dated as of March 23, 2006

Alma Lasers Ltd.

Subordinated Note Purchase Agreement

Dated as of March 23, 2006

TABLE OF CONTENTS

						Page
ARTICLE I — DEFINITIONS							1
	1.1.			Definitions			1
	1.2.			Accounting Terms			6
ARTICLE II — AUTHORIZATION, PURCHASE, SALE AND TERMS OF NOTES; PAYMENTS							6
	2.1.			The Notes			6
	2.2.			Purchase of the Notes			6
	2.3.			Use of Proceeds			7
	2.4.			Payments and Endorsements			7
	2.5.			Redemptions and Mandatory Repurchase			7
	2.6.			Default Rate			9
	2.7.			Maximum Legal Rate of Interest			9
	2.8.			Payment on Non-Business Days			9
	2.9.			Transfer and Exchange of Notes			9
	2.10.			Replacement of Notes			10
	2.11.			Other Notices			10
	2.12.			Liability			10
	2.13.			Purchase of Ordinary Shares			11
	2.14.			Obligations Subordinate to Senior Indebtedness			11
ARTICLE III — CONDITIONS TO CLOSING							13
	3.1.			Loan Documents			13
	3.2.			Subordinated Notes Documents			13
	3.3.			Completion of Transaction			13
	3.4.			Fees			13
	3.5.			Delivery of Documents to Noteholders			13
	3.6.			Delivery of Documents to Borrower			14
	3.7.			Purchase and Issuance of Shares			14
	3.8.			Representations and Warranties			14
	3.9.			Use of Proceeds			14
	3.10.			Compliance with this Agreement			14
ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF THE NOTEHOLDERS							15
	4.1.			Authorization; Enforceability			15
	4.2.			Own Account			15

						Page
	4.3.			Investment Intent			15
	4.4.			Securities Laws			15
	4.5.			No Broker			15
	4.6.			Restrictive Legend			15
ARTICLE V — REPRESENTATIONS AND WARRANTIES OF THE BORROWER							16
	5.1.			Organization and Existence			16
	5.2.			Execution, Delivery and Performance			16
	5.3.			Valid and Legal Obligation			16
	5.4.			Non-Contravention			16
	5.5.			No Default			17
	5.6.			Consents and Approvals			17
	5.7.			Litigation; Orders			17
	5.8.			Registration Requirements, etc.			17
	5.9.			Choice of Law			17
	5.10.			Immunity			17
	5.11.			Compliance with Laws			17
ARTICLE VI — AFFIRMATIVE COVENANTS OF THE BORROWER							17
	6.1.			Financial Statements			18
	6.2.			Inspection			18
	6.3.			Notices			18
	6.4.			Compliance with Laws			18
	6.5.			Permits			18
ARTICLE VII — NEGATIVE COVENANTS OF THE BORROWER							18
	7.1.			Restricted Payments			19
	7.2.			Financial Covenants			19
	7.3.			Indebtedness			20
ARTICLE VIII — EVENTS OF DEFAULT; REMEDIES							20
	8.1.			Events of Default			20
	8.2.			THE NOTEHOLDERS’ RIGHTS AND REMEDIES			21
ARTICLE IX — MISCELLANEOUS							22
	9.1.			No Waiver; Cumulative Remedies			22
	9.2.			Amendments, Waivers and Consents			22
	9.3.			Addresses for Notices, Etc.			22
	9.4.			Costs, Expenses and Taxes			23
	9.5.			Assignability; Binding Agreement			23
	9.6.			Payments in Respect of Notes			24
	9.7.			Indemnification			24
	9.8.			Survival of Representations and Warranties			25
	9.9.			Prior Agreements			25
	9.10.			Severability			25
	9.11.			Governing Law			25

						Page
	9.12.			Jurisdiction			25
	9.13.			Jury Waiver			26
	9.14.			Counterparts			26
	9.15.			Further Assurances			26
	9.16.			Specific Performance			26
	9.17.			Actions by Noteholders			26
	9.18.			Limitation of Liability			26
	9.19.			Confidentiality Agreement			27

EXHIBITS

Exhibits

Exhibit A		Form of Joinder Agreement
Exhibit 2.1		Form of Note
Exhibit 2.2		Allocation of Note Purchase Amount
Exhibit 2.13		Allocation of Ordinary Shares
Exhibit 6.1		Compliance Certificate

SUBORDINATED NOTE PURCHASE AGREEMENT

     This Subordinated Note Purchase Agreement dated as of March 23, 2006 (as amended, restated or otherwise modified and in effect from time to time, this “ Agreement ”) by and among Alma Lasers Ltd., a corporation organized under the laws of Israel (the “ Borrower ”), TA Subordinated Debt Fund, L.P., a Delaware limited partnership (“ TA Debt Fund ” or a “ Noteholder ”), TA Investors II, L.P., a Delaware limited partnership (“ TA Investors ” or a “ Noteholder , the other holders of Notes party hereto from time to time (together with TA Debt Fund, TA Investors and their successors and assigns, “ Noteholders ”).

      WHEREAS , Pursuant to the Share Purchase and Redemption Agreement dated as of February 15, 2006 among Aesthetic Acquisition B.V., as buyer (“ Buyer ”), the Shareholders identified therein, the Non-Compete Parties identified therein and Sponsor (as defined below), Buyer has agreed to acquire (the “ Acquisition ”) certain of the Series A-1 Preferred Shares (the “ Preferred Shares ”) and Ordinary Shares of Borrower. Borrower has agreed to use the proceeds of the issuance of the Notes (as defined herein) to redeem a portion of its currently outstanding Ordinary Shares (together with the Acquisition, the “ Transaction ”);

      WHEREAS , Upon consummation of the Transaction, (i) the Buyer will hold a total of (A) 377,172,000 Preferred Shares of Borrower, which Preferred Shares will have an aggregate liquidation/sale preference of $55,000,478 (subject to adjustment) and will be convertible into an aggregate of 377,172,000 Ordinary Shares (subject to adjustment), and (B) upon receipt by Borrower of 124,680 NIS, 12,468,000 Ordinary Shares, and (ii) the Shareholders will hold (A) 140,766,000 Ordinary Shares and (B) Shareholder warrants representing the right to purchase up to an additional 66,620,996 Ordinary Shares.

     In consideration of the mutual agreements herein contained, the parties hereto agree as follows:

ARTICLE I — DEFINITIONS

      1.1. Definitions . As used herein, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

       “ Acquisition ” has the meaning specified therefor in the recitals of this Agreement.

       “ Agreement ” means this Agreement as amended, restated or otherwise modified and in effect from time to time.

       “ Audited Financial Statements ” means the audited consolidated balance sheet of the Borrower including its Subsidiaries for the fiscal year ended December 31, 2004, and the related consolidated statements of income, retained earnings and cash flows for the fiscal year then ended of the Borrower including its Subsidiaries, including any notes thereto.

       “ Bank Event of Default ” means an Event of Default (as such term is defined under the Senior Credit Agreement).

       “ Borrower ” has the meaning specified therefor in the preamble of this Agreement.

       “ Business Day ” means any day that is not a Saturday, Sunday, or other day on which banks are authorized or required to close in the Commonwealth of Massachusetts.

       “ Buyer ” has the meaning specified therefor in the preamble of this Agreement.

       “ Closing Date ” shall have the meaning assigned to that term in Section 2.2.

       “ Compliance Certificate ” means a certificate substantially in the form of Exhibit 6.1 , as the same may be modified with the consent of the Borrower and the Required Noteholders.

       “ Consolidated ” or “ consolidated ” means with respect to any term defined herein that term as applied to the accounts of Borrower and its Subsidiaries, consolidated in accordance with GAAP.

       “ Consolidated Leverage Ratio ” means, as of any date of determination, the ratio of (a) Consolidated Indebtedness as of such date to (b) Consolidated EBITDA for the period of the four fiscal quarters then most recently ended.

       “ Consolidated EBITDA ” means, with respect to any fiscal period, (a) Borrower’s and its Subsidiaries’ consolidated net earnings, minus (b) without duplication, the sum of the following amounts of Borrower and its Subsidiaries for such period, to the extent included in determining consolidated net earnings of Borrower and its Subsidiaries for such period, (i) extraordinary gains (including gains realized on the sale of assets), (ii) non-cash income and (iii) interest income, in the case of each of clauses (b)(i) through (b)(iii), as determined in accordance with GAAP, plus (c) without duplication, the sum of the following amounts of Borrower and its Subsidiaries for such period, to the extent deducted in determining consolidated net earnings of Borrower and its Subsidiaries, (i) income taxes and franchise taxes accrued, (ii) interest expense, (iii) depreciation and amortization, (iv) amortized debt discount for such period, (v) expenses associated with payments made to the Borrower’s or any Subsidiary’s employee stock option pool, (vi) the amount of any costs or expenses incurred by Borrower or its Subsidiaries in connection with the Transaction and (vii) non-cash expenses agreed with the Noteholders.

       “ Consolidated Indebtedness ” means, as of any date of determination, without duplication, for the Borrower and its Subsidiaries on a consolidated basis, the sum of (a) the outstanding principal amount of all obligations, whether current or long-term, for borrowed money (including Obligations hereunder) and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments, (b) all purchase money indebtedness, (c) all direct obligations arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments, (d) all obligations in respect of the deferred purchase price of property or services (other than trade accounts payable and other accrued expenses in the ordinary course of business), (e) all indebtedness due under capital or synthetic leases, (g) all guarantees with respect to outstanding indebtedness of the types specified in clauses (a) through (f) above of Persons other than the Borrower or any Subsidiary, and (h) all indebtedness of the types referred to in clauses (a) through (g) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which the Borrower or a Subsidiary is a general partner or joint venture,

except for any portion of such indebtedness that is expressly made non-recourse to the Borrower or such Subsidiary.

       “ Consolidated Interest Charges ” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses of the Borrower and its Subsidiaries in connection with Consolidated Indebtedness, in each case to the extent treated as cash interest in accordance with GAAP and (b) in the case of capitalized leases, without duplication, the portion of rent expense of the Borrower and its Subsidiaries with respect to such period under such capitalized leases that is treated as cash interest in accordance with GAAP.

       “ Consolidated Interest Coverage Ratio ” means, as of any date of determination, the ratio of (a) Consolidated EBITDA to (b) Consolidated Interest Charges, in each case, of the Borrower and its Subsidiaries for the period of four fiscal quarters then most recently ended.

       “ Default ” means an event, condition, or default that, with the giving of notice, the passage of time, or both, would be an Event of Default.

       “ Default Rate ” shall have the meaning ascribed to such term in Section 2.6 hereof.

       “ Dollars ” or “ $ ” means United States dollars.

       “ Equity Interests ” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

       “ Event of Default ” has the meaning specified therefor in Section 8.1.

       “ GAAP ” means generally accepted accounting principles as in effect from time to time in the United States, consistently applied.

       “ Governmental Authority ” means any federal, state, local, or other governmental or administrative body, instrumentality, board, department, or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar governmental dispute-resolving panel or body.

       “ Initial Noteholders ” means the purchasers of Notes under this Agreement at the Closing held on the Closing Date.

       “ Law ” means all laws, statutes and rules and regulations thereunder and interpretations thereof by any competent court or by any governmental or other regulatory body or official

charged with the administration or the interpretation thereof and requests, directives, instructions and notices at any time or from time to time heretofore or hereafter made upon or otherwise issued to any Noteholder by any central bank or other fiscal, monetary or other authority, whether or not having the force of law, including, without limitation, any change according to a prescribed schedule of increasing requirements.

       “ Loan Parties ” means the Borrower and its direct and indirect subsidiaries.

       “ Mandatory Repurchase Event ” means the occurrence of any one of any of the following events: (a) the Sponsor or its affiliates shall collectively cease to, directly or indirectly, own and control at least 51% of the outstanding voting equity interests of Borrower; (b) any change in equity ownership of the Borrower which would result in Sponsor or its affiliates ceasing at any time to, directly or indirectly, have the power to elect the Preferred A-1 Directors (as such term is defined in the Amended and Restated Articles of Association of the Company) of the Board of Directors of the Borrower, or (c) there shall be consummated (i) any consolidation or merger of Borrower where the equity interest holders of Borrower, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own, directly or indirectly, shares or other equity interests representing a majority of the voting power of the corporation or other entity issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation or other entity, if any), (ii) any sale or transfer of all or substantially all of the assets of Borrower and its Subsidiaries, taken as a whole, and (iii) any plan or proposal for the liquidation, winding up or dissolution of Borrower or any material Subsidiary (as the case may be).

       “ Noteholder ” and “ Noteholders ” means a Person or Persons who hold a Note or Notes issued pursuant to this Agreement, including successors and assigns of such persons.

       “ Notes ” shall have the meaning assigned to that term in Section 2.1 .

       “ Obligations ” means all now existing or hereafter arising debts, obligations, covenants, and duties of payment or performance of every kind, matured or unmatured, direct or contingent, owing, arising, due, or payable to the Noteholders, by or from the Borrower, whether existing on the date of this Agreement or arising thereafter, whether arising out of this Agreement or any other Subordinated Notes Document, and to pay interest, fees, costs, charges, expenses, professional fees, and all sums chargeable to the Borrower, under the Subordinated Notes Documents, whether or not evidenced by any note or other instrument.

       “ Ordinary Shares ” means the ordinary shares of the Borrower par value NIS 0.01 per share.

       “ Payment Blockage Period ” has the meaning ascribed to such term in Section 2.14.1(c) hereof.

       “ Person ” means natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political subdivisions thereof.

       “ Required Noteholders ” means “Required Noteholders” as defined in Section 9.2 .

       “ Responsible Officer ” means the chief executive officer, president, chief financial officer, treasurer or assistant treasurer of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

       “ Securities Act ” means the Securities Exchange Act of 1934, as in effect from time to time.

       “ Senior Credit Agreement ” means that certain Letter of Undertaking dated as of even date herewith by and among Borrower and Bank Hapoalim B.M., as the “Bank” thereunder, as amended, amended and restated, modified or replaced from time to time, and including any supplements and appendices thereto.

       “ Senior Default Notice ” has the meaning ascribed to such term in Section 2.14.1(c) hereof.

       “ Senior Indebtedness ” means all obligations of the Borrower now or hereafter existing under the Senior Credit Agreement and the promissory notes issued to the Senior Lender thereunder, in each case, whether created directly or acquired by assignment or otherwise and whether for principal, interest (including, without limitation, interest accruing after, or which would have accrued but for, the filing of a petition or the commencement of a case initiating any proceeding referred to in Section 2.14.1 , whether or not such interest is an allowed claim in such proceeding), reimbursement obligations, indemnities, fees, expenses or otherwise.

       “ Senior Lender ” means the “Bank” as defined in the Senior Credit Agreement and shall include each additional financial institution to which it assigns or transfers any of its interests as Bank under the Senior Credit Agreement.

       “ Senior Loan Documents ” means the Senior Credit Agreement, the Application for Term Loan, the Application for Revolving Loan, the Deed of Charge (or Debenture) and any Notices of Drawing, in each case, as amended, amended and restated, modified or replaced from time to time, and including any supplements and appendices thereto.

       “ Senior Loans ” means the Term Loan and Revolving Credit Line (each as defined in the Senior Credit Agreement) under the Senior Loan Documents.

       “ Sponsor ” means, collectively, TA Associates, Inc. and its affiliates TA IX L.P., TA/Atlantic and Pacific IV L.P., TA Strategic Partners Fund A L.P., TA Strategic Partners Fund B L.P. and TA Investors II L.P.

       “ Share Purchase and Redemption Agreement ” has the meaning specified therefor in the recitals of the Agreement.

       “ Subordinated Notes Documents ” means this Agreement and the Notes and any other document, instrument, or agreement delivered in connection therewith.

       “ Subsidiary ” means, with respect to the Borrower, as of the Closing Date, 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.

       “ Transaction ” has the meaning specified therefor in the recitals of this Agreement.

       “ Transaction Documents ” means the Share Purchase and Redemption Agreement, the Shareholders Agreement, the Escrow Agreement, any Shareholder Warrant Agreements and any other documents, instruments and agreements executed and delivered in connection with the Transaction, or otherwise relating thereto.

       “ United States ” means the United States of America.

      1.2. Accounting Terms . All accounting terms not specifically defined herein shall be construed in accordance with GAAP. When used herein, the term “financial statements” shall include the notes and schedules thereto. Whenever the term “Borrower” is used in respect of a financial covenant or a related definition, it shall be understood to mean Borrower and its Subsidiaries, on a consolidated basis unless the context clearly requires otherwise.

ARTICLE II — AUTHORIZATION, PURCHASE, SALE AND TERMS OF NOTES;
PAYMENTS

      2.1. The Notes . The Borrower has authorized the issuance of senior subordinated notes due March 23, 2011 in the aggregate original principal amount of Fourteen Million Nine Hundred Ninety-eight Thousand Thirty-seven Dollars ($14,998,037). The senior subordinated notes shall be in the form set forth as Exhibit 2.1 attached hereto and are herein referred to individually as a “ Note ” and collectively as the “ Notes ”, which terms shall also include any notes delivered in exchange or replacement therefor. The Notes shall (a) be payable on March 23, 2011 (the “ Maturity Date ”), and (b) bear interest compounded quarterly (based on a 360-day year of twelve 30-day months) on the unpaid principal amount thereof until paid in full at a net rate of ten and one-half percent (10.5%) per annum (as of the Closing Date, the withholding obligation of the Borrower with respect to such amounts is deemed to be 25% and the interest rate as of the Closing Date, adjusted therefor, is fourteen percent (14%) per annum), payable in cash quarterly in arrears on March 31, June 30, September 30 and December 31 in each year, commencing June 30, 2006, and at maturity or prior prepayment of the Notes in full or in part; provided that , from time to time upon the occurrence of a default under the Senior Credit Agreement or a payment blockage event under Section 2.14 hereof, at the option of the Noteholders, accrued but unpaid interest may be added to the outstanding principal balance of the Notes as of the date such accrued interest otherwise would have been due and payable. The Borrower has authorized the issuance to the Noteholders of the Notes.

      2.2. Purchase of the Notes .

     (a) Subject to and in reliance upon the representations, warranties, terms and conditions of this Agreement, the Initial Noteholders agree to purchase Notes from the Borrower in the aggregate principal amount of Fourteen Million Nine Hundred Ninety-eight Thousand Thirty-seven Dollars ($14,998,037), as set forth opposite each Initial Noteholder’s name on Exhibit 2.2 attached hereto, at a closing (the “ Closing ”) to be held at the offices of Goodwin Procter LLP, located at Exchange Place, 53 State Street, Boston, MA, at 10:00 a.m. Boston time, or at such other time and place as the parties hereto agree, on the date on which this Agreement is executed and delivered and upon satisfaction of the conditions described in Article III (the “ Closing Date ”).

     (b) At the Closing, the Borrower will issue the Notes to the Noteholders, payable to the Noteholders or their registered assigns, against receipt of immediately available funds by wire transfer to an account or accounts designated by the Borrower prior to the Closing in the amount set forth on Exhibit 2.2 (or in such other manner as is set forth on Exhibit 2.2 ).

      2.3. Use of Proceeds . The Borrower agrees to use the full proceeds of the Notes to consummate the transactions contemplated by the Transaction Documents.

      2.4. Payments and Endorsements .

     (a) Payments of principal, interest and premium, if any, on the Notes shall be made without set off or counterclaim, directly by wire transfer to an account designated in writing by each Noteholder, without any presentment or notation of payment, except that prior to any transfer of any Note, the holder thereof shall endorse on such Note a record of the date to which interest has been paid and all payments made on account of principal of such Note. All payments and prepayments of principal of, and interest on, the Notes shall be applied (to the extent thereof) to all of the Notes pro rata based on the principal amount outstanding and held by each holder thereof.

     (b) Anything herein to the contrary notwithstanding, if, after the date hereof, any change in applicable Law shall impose on the Borrower any obligation with respect to any amount of interest, principal or prepayment premium (for any optional or mandatory prepayment or redemption of the Notes) payable by it hereunder or under any of the other Transaction Documents to withhold or deduct any taxes, levies, imposts, duties, charges, fees, deductions or withholdings, the Borrower will pay to the Noteholders, on the date on which such amount is due and payable under the Subordinated Notes Documents, such additional amount in United States Dollars as would be necessary to enable a lender not party to a tax treaty to receive the same amount which the Noteholders would have received on such due date if no such obligation had been imposed upon the Borrower.

     (c) The obligations of the Borrower under this Section 2.4 shall survive the payment in full of all amounts due hereunder or under the Notes or the redemption of the Notes.

      2.5. Redemptions and Mandatory Repurchase .

          2.5.1. Required Redemption . Subject to the subordination provisions contained in Section 2.14 hereof and the restrictions contained in the Senior Loan Documents on the Maturity Date or accelerated maturity of the Notes (upon the acceleration of the Notes in

accordance with Section 8.2 hereof), the Borrower will pay the principal amount of the Notes then outstanding together with all accrued and unpaid interest thereon. No redemption of less than all of the Notes shall affect the obligation of the Borrower to make the redemption required by this sub-section.

          2.5.2. Optional Redemptions . In addition to the redemption of the Notes required under sub-section 2.5.1 , the Borrower may, subject to the subordination provisions contained in Section 2.14 hereof and the restrictions contained in the Senior Credit Agreement, at any time voluntarily redeem the Notes, in whole or in part (in integral multiples of Five Hundred Thousand Dollars ($500,000)), together with all accrued and unpaid interest on the amount so redeemed through the date of redemption, at a redemption price equal to:

     (a) if such voluntary redemption occurs on or prior to the first (1 ^st ) anniversary of this Agreement, one hundred six percent (106%) of the sum of the principal amount to be redeemed plus any accrued but unpaid interest thereon;

     (b) if such voluntary redemption occurs after the first (1 ^st ) anniversary of this Agreement but on or prior to the second (2 ^nd ) anniversary of this Agreement, one hundred five percent (105%) of the sum of the principal amount to be redeemed plus any accrued but unpaid interest thereon;

     (c) if such voluntary redemption occurs after the second (2 ^nd ) anniversary of this Agreement but on or prior to the third (3 ^rd ) anniversary of this Agreement, one hundred two and one-half percent (102.5%) of the sum of the principal amount to be redeemed plus any accrued but unpaid interest thereon;

     (d) if such voluntary redemption occurs after the third (3 ^rd ) anniversary of this Agreement but on or prior to the fourth (4 ^th ) anniversary of this Agreement, one hundred one percent (101%) of the sum of the principal amount to be redeemed plus any accrued but unpaid interest thereon; or

     (e) if such voluntary redemption occurs after the fourth (4 ^th ) anniversary of this Agreement, one hundred percent (100%) of the sum of the principal amount to be redeemed plus any accrued but unpaid interest thereon;

          2.5.3. Notice of Redemptions; Pro Rata Redemptions . Written notice of any redemption pursuant to sub-section 2.5.1 or sub-section 2.5.2 shall be given to all holders of the Notes at least thirty (30) Business Days prior to the date of any such redemption. Each redemption of the Notes pursuant to sub-sections 2.5.1 and 2.5.2 shall be made so that the Notes then held by each holder shall be redeemed in a principal amount which shall bear the same ratio to the total unpaid principal amount being redeemed on all the Notes as the unpaid principal amount of the Notes then held by such holder bears to the aggregate unpaid principal amount of the Notes then outstanding.

          2.5.4. Mandatory Repurchase of Notes . In accordance with Section 2.11 and subject to the subordination provisions contained in Section 2.14 hereof and the restrictions contained in the Senior Loan Documents, the Borrower shall furnish to each Noteholder written notice setting forth in reasonable detail the facts and circumstances underlying such Mandatory

Repurchase Event. The occurrence of any such Mandatory Repurchase Event shall constitute an irrevocable offer by the Borrower to purchase all of the Notes held by such Noteholder at the one hundred one percent (101%) of the sum of the principal amount to be redeemed, together with all accrued and unpaid interest on the amount so purchased through the date of purchase. Following receipt of any offer to purchase the Notes hereunder, each Noteholder shall advise the Borrower, by written notice, within ten (10) Business Days after receipt of such offer, as to whether it desires to sell all or any of the Notes, as applicable, held by it (in integral multiples of Five Hundred Thousand Dollars ($500,000)), specifying the principal amount of the Notes to be sold by it. If a Noteholder accepts such offer but does not specify an amount it wishes to receive, it will be deemed to have elected to sell all of the Notes held by it. If a Noteholder fails to respond to such offer by the Borrower within the ten (10) Business Day acceptance period, such offer shall expire in accordance with its terms.

      2.6. Default Rate . If an Event of Default has occurred and is continuing, from and after the date such Event of Default has occurred the entire outstanding unpaid principal balance of the Notes and any unpaid interest from time to time in default shall, subject to the provisions of Section 2.4 hereof, bear interest, payable on demand in cash, at the net rate of twelve and one-half percent (12.5%) per annum (as of the Closing Date, the withholding obligation of the Borrower with respect to such amounts is deemed to be 25% and as of the Closing Date, the interest rate under this Section 2.6, adjusted therefor, is sixteen and two-thirds percent (16.667%) per annum), compounded quarterly, or such lower rate as then may be the maximum rate permitted by applicable Law (the “Default Rate”); provided, however, that upon the cessation or cure of such Event of Default, if no other Event of Default is then continuing, the Notes shall again bear interest at the rate set forth in Section 2.1 .

      2.7. Maximum Legal Rate of Interest . Nothing in this Agreement or in the Notes shall require the Borrower to pay interest at a rate in excess of the maximum rate permitted by applicable Law.

      2.8. Payment on Non-Business Days . Whenever any payment to be made shall be due on a day which is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest due.

      2.9. Transfer and Exchange of Notes .

     The holder of any Note, as applicable, may, prior to maturity or prepayment thereof, surrender such Note at the principal office of the Borrower for transfer or exchange. Any holder desiring to transfer or exchange any Note shall first notify the Borrower in writing at least five (5) days in advance of such transfer or exchange. Within a reasonable time after such notice to the Borrower from a holder of its intention to make such exchange and without expense (other than transfer taxes, if any) to such holder, the Borrower shall issue in exchange therefor another Note in denominations of One Hundred Thousand Dollars ($100,000) and multiples thereof, except in the case of a Note for the balance of the aggregate amount of the Note, or Notes so transferred which shall be in a minimum denomination of One Hundred Thousand Dollars ($100,000), all as requested by the holder, for the same aggregate principal amount, as of the date of such issuance, as the unpaid principal amount of the Note or Notes so surrendered and

having the same maturity and rate of interest, containing the same provisions and subject to the same terms and conditions as the Note or Notes so surrendered (provided that no minimum shall apply to a liquidating distribution of Notes to investors in a Noteholder and any Notes so distributed may be subsequently transferred by such investor and its successors in the original denomination thereof without restriction under this sentence). Each new Note shall be made payable to such Person or Persons, or assigns, as the holder of such surrendered Note may designate, and such transfer or exchange shall be made in such a manner that no gain or loss of principal or interest shall result therefrom. The Borrower shall have no obligation hereunder or under any Note to any person other than the registered holder of each such Note.
Notwithstanding anything to the contrary contained herein, no Noteholder shall be permitted to transfer any of its Notes unless such Noteholder’s transferee has agreed in writing to be bound by the terms of this Agreement and the other Subordinated Notes Documents (and such transferee has expressly agreed in writing to assume such Noteholder’s obligations thereunder by executing a joinder substantially in the form of Exhibit A hereto) to which such Noteholder is a party, including the representations and warranties set forth in Article IV hereof.

      2.10. Replacement of Notes . Upon receipt of evidence satisfactory to the Borrower of the loss, theft, destruction or mutilation of any Note and, if requested in the case of any such loss, theft or destruction, upon delivery of an indemnity bond or other agreement or security reasonably satisfactory to the Borrower, or, in the case of any such mutilation, upon surrender and cancellation of such Note, the Borrower will issue a new Note of like tenor and amount and dated the date to which interest has been paid, in lieu of such lost, stolen, destroyed or mutilated Note; provided, however, if any Note of which a Noteholder, its nominee, or any of its partners is the holder is lost, stolen or destroyed, the affidavit of an authorized partner or officer of the holder setting forth the circumstances with respect to such loss, theft or destruction shall be accepted as satisfactory evidence thereof, and no indemnification bond or other security shall be required as a condition to the execution and delivery by the Borrower of a new Note in replacement of such lost, stolen or destroyed Note other than the holders written agreement to indemnify the Borrower.

      2.11. Other Notices . So long as any Notes are outstanding, the Borrower shall provide written notice to each Noteholder as soon as possible and at least thirty (30) Business Days prior to the occurrence or closing of a Mandatory Repurchase Event or a public offering of securities by the Borrower setting forth in reasonable detail the facts and circumstances underlying such Mandatory Repurchase Event or public offering.

      2.12. Liability . The Borrower hereby agrees that it is liable for the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all Obligations owed by it or hereafter owing by it to any Noteholder. The Borrower agrees that its obligation hereunder shall not be discharged until payment and performance, in full, of the Obligations has occurred, and that its obligations under this Section 2.12 shall be absolute and unconditional, irrespective of, and unaffected by:

          2.12.1. the genuineness, validity, regularity, enforceability or any future amendment of, or change in, this Agreement, any other Subordinated Notes Document or any other agreement, document or instrument to which such Borrower is or may become a party;

          2.12.2. the absence of any action to enforce this Agreement (including this Section 2.12 ) or any other Subordinated Notes Document or the waiver or consent with respect to any of the provisions thereof;

          2.12.3. the existence, value or condition of, or failure to perfect its Lien against, any security for the Obligations or any action, or the absence of any action, by any Noteholder in respect thereof (including the release of any such security);