Exhibit 10.5

 

THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE
SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT, OR (B) IF REASONABLY REQUESTED BY THE
COMPANY, AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT.

 

 

VYYO INC.

PROMISSORY NOTE

(As Amended on March 27, 2007)

 

 

 

 

 

 

Issuance Date: March 23, 2006

 

Principal: U.S. $10,000,000

 

FOR VALUE RECEIVED, Vyyo Inc., a Delaware corporation, (the “Company”), hereby
promises to pay to Goldman, Sachs & Co. or registered assigns (“Holder”) the
amount set out above as the Principal (as reduced pursuant to the terms hereof
pursuant to redemption or otherwise, the “Principal”) when due upon the Maturity
Date (each, as defined herein) unless earlier redeemed (in each case in
accordance with the terms hereof), and to pay interest (“Interest”) on any
outstanding Principal at the rate of 10.0% per annum (the “Interest Rate”), from
the date set out above as the Issuance Date (the “Issuance Date”) until the same
becomes due and payable unless earlier redeemed.  This Note (including all Notes
issued in exchange, transfer or replacement hereof, this “Note”) is issued on
the Closing Date pursuant to the Securities Purchase Agreement, dated as of
March 18, 2006, by and among the Company and the Investors identified therein
(the “Securities Purchase Agreement”). Certain capitalized terms used herein are
defined in Section 22.  Capitalized terms that are not otherwise defined herein
have the meanings given to such terms in the Securities Purchase Agreement.

 

1.  MATURITY.  ON THE MATURITY DATE, THE COMPANY SHALL PAY TO THE HOLDER AN
AMOUNT IN CASH REPRESENTING ALL OUTSTANDING PRINCIPAL AND THE ACCRUED AND UNPAID
INTEREST THEREON.  THE COMPANY SHALL MAKE SUCH PAYMENT ON THE MATURITY DATE,
TOGETHER WITH THE AMOUNT OF ANY ACCRUED AND UNPAID INTEREST ON SUCH PRINCIPAL,
BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS TO AN ACCOUNT DESIGNATED IN
WRITING BY THE HOLDER.  EXCEPT AS SET FORTH IN SECTION 6, THIS NOTE MAY BE
REDEEMED OR PREPAID WITHOUT PREMIUM OR PENALTY.  ANY PREPAYMENTS WILL BE APPLIED
FIRST TO ANY ACCRUED BUT UNPAID INTEREST AND THEN TO UNPAID PRINCIPAL.

2.  INTEREST; INTEREST RATE. INTEREST ON THIS NOTE SHALL COMMENCE ACCRUING ON
THE ISSUANCE DATE AND SHALL BE COMPUTED ON THE BASIS OF A 360-DAY YEAR

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COMPRISED OF TWELVE 30-DAY MONTHS AND SHALL BE PAYABLE IN ARREARS FOR EACH
CALENDAR QUARTER ON THE FIRST DAY OF THE SUCCEEDING CALENDAR QUARTER DURING THE
PERIOD BEGINNING ON THE ISSUANCE DATE AND ENDING ON, AND INCLUDING, THE MATURITY
DATE (EACH, AN “INTEREST DATE”) WITH THE FIRST INTEREST DATE BEING MAY 1, 2006
BY WIRE TRANSFER OF IMMEDIATELY PAYABLE FUNDS.  INTEREST SHALL BE PAYABLE ON
EACH INTEREST DATE IN CASH.  PRIOR TO THE PAYMENT OF INTEREST ON AN INTEREST
DATE, INTEREST ON THIS NOTE SHALL ACCRUE AT THE INTEREST RATE AND BE PAYABLE IN
CASH.  UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF ANY DEFAULT IN THE
PAYMENT OF THE INTEREST OR PRINCIPAL WHEN DUE, THE INTEREST RATE SHALL BE
INCREASED BY TWO PERCENT (2.0%) PER ANNUM (THE “DEFAULT RATE”).  IN THE EVENT
THAT SUCH INTEREST OR PRINCIPAL PAYMENT DEFAULT IS SUBSEQUENTLY CURED, THE
ADJUSTMENT REFERRED TO IN THE PRECEDING SENTENCE SHALL CEASE TO BE EFFECTIVE AS
OF THE DATE OF SUCH CURE.  INTEREST ON OVERDUE INTEREST SHALL ACCRUE AT THE SAME
RATE COMPOUNDED QUARTERLY.

3.  SUBORDINATION.  THE PRINCIPAL AND INTEREST ON THIS NOTE IS EXPRESSLY
SUBORDINATED IN RIGHT OF PAYMENT TO (I) THE SENIOR SECURED NOTES ISSUED ON THE
DATE HEREOF, AND (II) ANY BORROWED MONEY BY THE COMPANY DESIGNATED AS SENIOR
DEBT BY THE BOARD OF DIRECTORS (“INDEBTEDNESS”).  UPON PAYMENT OR DISTRIBUTION
OF THE ASSETS OF THE COMPANY TO CREDITORS UPON ANY DISSOLUTION, WINDING UP,
LIQUIDATION, REORGANIZATION, RECAPITALIZATION OR READJUSTMENT OF THE COMPANY OR
ITS PROPERTY, PAYMENT OF THE PRINCIPAL AND INTEREST WILL BE SUBORDINATE TO THE
PRIOR PAYMENT IN FULL OF ALL SUCH INDEBTEDNESS.  NO PAYMENT OF PRINCIPAL OR
INTEREST MAY BE MADE BY THE COMPANY IF (I) AT ANY TIME THERE EXISTS (OR AFTER
GIVING EFFECT TO THE PAYMENT THERE WOULD EXIST) AN EVENT OF DEFAULT UNDER THE
AGREEMENT PURSUANT TO WHICH SUCH INDEBTEDNESS HAS BEEN ISSUED, OR (II) FULL
PAYMENT OF AMOUNTS THEN DUE FOR PRINCIPAL AND INTEREST ON THE INDEBTEDNESS HAS
NOT BEEN MADE OR DULY PROVIDED FOR.  THE HOLDER OF THIS NOTE SHALL EXECUTE ANY
FURTHER DOCUMENTATION REASONABLY REQUESTED BY A LENDER TO EFFECT THE FOREGOING.

4.  MAKE-WHOLE PREMIUM.  IF A FUNDAMENTAL TRANSACTION OCCURS PRIOR TO THE
MATURITY DATE, THE COMPANY ALSO SHALL PAY THE MAKE-WHOLE PREMIUM, IF ANY, TO THE
HOLDER WHO ELECTS TO HAVE ITS NOTE REDEEMED PURSUANT TO SECTION 6(A) HEREOF
PURSUANT TO THE FUNDAMENTAL TRANSACTION. THE MAKE-WHOLE PREMIUM, IF ANY, SHALL
BE PAID IN CASH ON THE FUNDAMENTAL TRANSACTION EFFECTIVE DATE.  THE “MAKE-WHOLE
PREMIUM” SHALL BE AN AMOUNT EQUAL TO THE INTEREST THAT OTHERWISE WOULD ACCRUE ON
THE PRINCIPAL OF THE NOTE HAD IT REMAINED OUTSTANDING FROM THE DATE HEREOF
THROUGH THE MATURITY DATE, LESS THE AMOUNT OF INTEREST ACCRUED AND PAID PRIOR TO
THE DATE OF REDEMPTION.  FOR PURPOSES OF THIS SECTION 4, “FUNDAMENTAL
TRANSACTION EFFECTIVE DATE” MEANS THE DATE THAT A FUNDAMENTAL TRANSACTION
BECOMES EFFECTIVE.

5.  RIGHTS UPON EVENT OF DEFAULT.

(A)  EVENT OF DEFAULT.  EACH OF THE FOLLOWING EVENTS SHALL CONSTITUTE AN “EVENT
OF DEFAULT”:

(I)  THE COMPANY SHALL FAIL TO PAY ANY PRINCIPAL OWING UNDER THIS NOTE WHEN DUE;

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(II)  THE COMPANY SHALL FAIL TO PAY ANY INTEREST OWING UNDER THIS NOTE WHEN DUE,
AND SUCH FAILURE SHALL CONTINUE FOR THIRTY (30) DAYS;

 

(III)  THE COMPANY OR ANY SIGNIFICANT SUBSIDIARY SHALL (A) FAIL TO MAKE ANY
PAYMENT WHEN DUE UNDER THE TERMS OF ANY BOND, DEBENTURE, NOTE OR OTHER EVIDENCE
OF INDEBTEDNESS TO BE PAID BY THE COMPANY OR SUCH SIGNIFICANT SUBSIDIARY
(EXCLUDING THIS NOTE, WHICH DEFAULT IS ADDRESSED BY CLAUSES (I) AND (II) ABOVE,
BUT INCLUDING ANY OTHER EVIDENCE OF INDEBTEDNESS OF THE COMPANY OR SUCH
SIGNIFICANT SUBSIDIARY) AND SUCH FAILURE SHALL CONTINUE BEYOND ANY PERIOD OF
GRACE PROVIDED WITH RESPECT THERETO, OR (B) DEFAULT IN THE OBSERVANCE OR
PERFORMANCE OF ANY OTHER AGREEMENT, TERM OR CONDITION CONTAINED IN ANY SUCH
BOND, DEBENTURE, NOTE OR OTHER EVIDENCE OF INDEBTEDNESS; AND THE EFFECT OF SUCH
FAILURE OR DEFAULT IN CLAUSE (A) OR (B) IS TO CAUSE, OR PERMIT THE HOLDER
THEREOF TO CAUSE, INDEBTEDNESS IN AN AGGREGATE AMOUNT OF ONE MILLION DOLLARS
($1,000,000) OR MORE TO BECOME DUE PRIOR TO ITS STATED DATE OF MATURITY AND SUCH
FAILURE SHALL CONTINUE FOR THIRTY (30) DAYS;

(IV)  AN INVOLUNTARY PROCEEDING SHALL BE COMMENCED OR AN INVOLUNTARY PETITION
SHALL BE FILED SEEKING (A) LIQUIDATION, REORGANIZATION OR OTHER RELIEF IN
RESPECT OF THE COMPANY OR ANY SIGNIFICANT SUBSIDIARY OR ITS DEBTS, OR OF A
SUBSTANTIAL PART OF ITS ASSETS, UNDER ANY FEDERAL, STATE OR FOREIGN BANKRUPTCY,
INSOLVENCY, RECEIVERSHIP OR SIMILAR LAW NOW OR HEREAFTER IN EFFECT OR (B) THE
APPOINTMENT OF A RECEIVER, TRUSTEE, CUSTODIAN, SEQUESTRATOR, CONSERVATOR OR
SIMILAR OFFICIAL FOR THE COMPANY OR ANY SIGNIFICANT SUBSIDIARY OR FOR A
SUBSTANTIAL PART OF ITS ASSETS, AND, IN ANY SUCH CASE, SUCH PROCEEDING OR
PETITION SHALL CONTINUE UNDISMISSED FOR 30 DAYS OR AN ORDER OR DECREE APPROVING
OR ORDERING ANY OF THE FOREGOING SHALL BE ENTERED;

(V)  THE COMPANY OR ANY SIGNIFICANT SUBSIDIARY SHALL (A) VOLUNTARILY COMMENCE
ANY PROCEEDING OR FILE ANY PETITION SEEKING LIQUIDATION, REORGANIZATION OR OTHER
RELIEF UNDER ANY FEDERAL, STATE OR FOREIGN BANKRUPTCY, INSOLVENCY, RECEIVERSHIP
OR SIMILAR LAW NOW OR HEREAFTER IN EFFECT, (B) CONSENT TO THE INSTITUTION OF, OR
FAIL TO CONTEST IN A TIMELY AND APPROPRIATE MANNER, ANY PROCEEDING OR PETITION
DESCRIBED IN CLAUSE (IV) OF THIS SECTION, (C) APPLY FOR OR CONSENT TO THE
APPOINTMENT OF A RECEIVER, TRUSTEE, CUSTODIAN, SEQUESTRATOR, CONSERVATOR OR
SIMILAR OFFICIAL FOR THE COMPANY OR ANY SIGNIFICANT SUBSIDIARY OR FOR A
SUBSTANTIAL PART OF ITS ASSETS, (D) FILE AN ANSWER ADMITTING THE MATERIAL
ALLEGATIONS OF A PETITION FILED AGAINST IT IN ANY SUCH PROCEEDING, (E) MAKE A
GENERAL ASSIGNMENT FOR THE BENEFIT OF CREDITORS OR (F) TAKE ANY ACTION FOR THE
PURPOSE OF EFFECTING ANY OF THE FOREGOING;

(VI)  ONE OR MORE JUDGMENTS FOR THE PAYMENT OF MONEY IN AN AMOUNT IN EXCESS OF
FIVE MILLION DOLLARS ($5,000,000) IN THE AGGREGATE, OUTSTANDING AT ANY ONE TIME,
SHALL BE RENDERED AGAINST THE COMPANY OR ANY SIGNIFICANT SUBSIDIARY AND THE SAME
SHALL REMAIN UNDISCHARGED FOR A PERIOD OF SIXTY (60) DAYS DURING WHICH EXECUTION
SHALL NOT BE EFFECTIVELY STAYED, OR ANY JUDGMENT, WRIT, ASSESSMENT, WARRANT OF
ATTACHMENT, OR EXECUTION OR SIMILAR PROCESS SHALL BE ISSUED OR LEVIED AGAINST A
SUBSTANTIAL PART OF THE PROPERTY OF THE COMPANY OR ANY SIGNIFICANT SUBSIDIARY
AND SUCH JUDGMENT, WRIT, OR SIMILAR PROCESS SHALL NOT BE RELEASED, STAYED,
VACATED OR OTHERWISE DISMISSED WITHIN SIXTY (60) DAYS AFTER ISSUE OR LEVY;

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(VII)  FAILURE (A) OF THE COMPANY TO MAKE ANY REQUIRED FILINGS WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION OR (B) OF THE COMMON STOCK TO BE
LISTED ON AN ELIGIBLE SECURITIES EXCHANGE, AND IN EITHER CASE (A) OR (B) SUCH
FAILURE SHALL CONTINUE FOR SIXTY (60) DAYS;

 

(VIII)  THE COMPANY SHALL FAIL TO OBSERVE OR PERFORM ANY OTHER COVENANT,
OBLIGATION, CONDITION OR AGREEMENT CONTAINED IN THIS NOTE OR THE GUARANTY AND
SECURITY AGREEMENT AND, TO THE EXTENT SUCH FAILURE IS CAPABLE OF BEING CURED,
SUCH FAILURE SHALL CONTINUE FOR SIXTY (60) DAYS.

(B)  EVENT OF DEFAULT REDEMPTION RIGHT.  PROMPTLY AFTER THE OCCURRENCE OF AN
EVENT OF DEFAULT WITH RESPECT TO THIS NOTE, THE COMPANY SHALL DELIVER WRITTEN
NOTICE THEREOF VIA FACSIMILE AND OVERNIGHT COURIER (AN “EVENT OF DEFAULT
NOTICE”) TO THE HOLDER.  THE HOLDER, UPON THE APPROVAL OF HOLDERS HOLDING MORE
THAN 33 1/3% OF THE AGGREGATE PRINCIPAL BALANCE OF THE NOTES THEN OUTSTANDING,
BY WRITTEN NOTICE TO THE COMPANY, MAY DECLARE ALL OUTSTANDING AMOUNTS PAYABLE BY
THE COMPANY HEREUNDER TO BE IMMEDIATELY DUE AND PAYABLE WITHOUT PRESENTMENT,
DEMAND, PROTEST OR ANY OTHER NOTICE OF ANY KIND, ALL OF WHICH ARE HEREBY
EXPRESSLY WAIVED, ANYTHING CONTAINED HEREIN TO THE CONTRARY NOTWITHSTANDING
(“REDEMPTION PRICE”).  UPON THE OCCURRENCE OR EXISTENCE OF ANY EVENT OF DEFAULT
DESCRIBED IN SECTIONS (IV) OR (V) HEREOF, IMMEDIATELY AND WITHOUT NOTICE, ALL
OUTSTANDING AMOUNTS PAYABLE BY THE COMPANY HEREUNDER SHALL AUTOMATICALLY BECOME
IMMEDIATELY DUE AND PAYABLE, WITHOUT PRESENTMENT, DEMAND, PROTEST OR ANY OTHER
NOTICE OF ANY KIND, ALL OF WHICH ARE HEREBY EXPRESSLY WAIVED, ANYTHING CONTAINED
HEREIN TO THE CONTRARY NOTWITHSTANDING.  IN ADDITION TO THE FOREGOING REMEDIES,
UPON THE OCCURRENCE OR EXISTENCE OF ANY EVENT OF DEFAULT, THE HOLDER MAY
EXERCISE, UPON THE APPROVAL OF HOLDERS HOLDING MORE THAN A MAJORITY OF THE
AGGREGATE PRINCIPAL BALANCE OF THE NOTES, ANY OTHER RIGHT, POWER OR REMEDY
PERMITTED TO IT BY LAW, EITHER BY SUIT IN EQUITY OR BY ACTION AT LAW, OR BOTH.

6.  RIGHTS UPON FUNDAMENTAL TRANSACTION.

(A)  FUNDAMENTAL TRANSACTION REDEMPTION RIGHT.  NO SOONER THAN TWENTY (20) DAYS
NOR LATER THAN TEN (10) DAYS PRIOR TO THE CONSUMMATION OF A FUNDAMENTAL
TRANSACTION, BUT NOT PRIOR TO THE PUBLIC ANNOUNCEMENT OF SUCH FUNDAMENTAL
TRANSACTION, THE COMPANY SHALL DELIVER WRITTEN NOTICE THEREOF VIA FACSIMILE AND
OVERNIGHT COURIER TO THE HOLDER (A “FUNDAMENTAL TRANSACTION NOTICE”).  AT ANY
TIME DURING THE PERIOD (THE “FUNDAMENTAL TRANSACTION PERIOD”) BEGINNING AFTER
THE HOLDER’S RECEIPT OF A FUNDAMENTAL TRANSACTION NOTICE AND ENDING ON THE DATE
THAT IS ONE (1) TRADING DAY BEFORE THE FUNDAMENTAL TRANSACTION EFFECTIVE DATE,
THE HOLDER, AT ITS OPTION, MAY REQUIRE THE COMPANY TO REDEEM ALL OR ANY PORTION
OF THIS NOTE BY DELIVERING WRITTEN NOTICE THEREOF (“FUNDAMENTAL TRANSACTION
REDEMPTION NOTICE”) TO THE COMPANY.  THE PORTION OF THIS NOTE SUBJECT TO
REDEMPTION PURSUANT TO THIS SECTION 6 SHALL BE REDEEMED BY THE COMPANY IN CASH
AT A PRICE EQUAL TO 101% OF THE PRINCIPAL PLUS ANY ACCRUED BUT UNPAID INTEREST
THEREON UP TO, BUT NOT INCLUDING, THE FUNDAMENTAL TRANSACTION EFFECTIVE

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DATE, PLUS THE MAKE-WHOLE PREMIUM (THE “FUNDAMENTAL TRANSACTION REDEMPTION
PRICE”) ON THE FUNDAMENTAL TRANSACTION EFFECTIVE DATE.  REDEMPTIONS REQUIRED BY
THIS SECTION 6 SHALL HAVE PRIORITY TO PAYMENTS TO STOCKHOLDERS IN CONNECTION
WITH A FUNDAMENTAL TRANSACTION.  TO THE EXTENT REDEMPTIONS REQUIRED BY THIS
SECTION 6 ARE DEEMED OR DETERMINED BY A COURT OF COMPETENT JURISDICTION TO BE
PREPAYMENTS OF THE NOTE BY THE COMPANY, SUCH REDEMPTIONS SHALL BE DEEMED TO BE
VOLUNTARY PREPAYMENTS.  THE PARTIES HERETO AGREE THAT IN THE EVENT OF THE
COMPANY’S REDEMPTION OF ANY PORTION OF THE NOTE UNDER THIS SECTION 6, THE
HOLDER’S DAMAGES WOULD BE UNCERTAIN AND DIFFICULT TO ESTIMATE BECAUSE OF THE
PARTIES’ INABILITY TO PREDICT FUTURE INTEREST RATES AND THE UNCERTAINTY OF THE
AVAILABILITY OF A SUITABLE SUBSTITUTE INVESTMENT OPPORTUNITY FOR THE HOLDER. 
ACCORDINGLY, ANY REDEMPTION PREMIUM DUE UNDER THIS SECTION 6 IS INTENDED BY THE
PARTIES TO BE, AND SHALL BE DEEMED, A REASONABLE ESTIMATE OF THE HOLDER’S ACTUAL
LOSS OF ITS INVESTMENT OPPORTUNITY AND NOT AS A PENALTY.

7.  COVENANTS.  UNTIL ALL PRINCIPAL AND INTEREST AND ANY OTHER AMOUNTS DUE AND
PAYABLE UNDER THIS NOTE HAVE BEEN PAID IN FULL IN CASH, THE COMPANY SHALL, AND
SHALL CAUSE EACH SIGNIFICANT SUBSIDIARY TO:

(A)  PROVIDE PROMPT WRITTEN NOTICE TO THE HOLDER OF THE OCCURRENCE OF ANY EVENT
OF DEFAULT, OR ANY EVENT WHICH WITH THE GIVING OF NOTICE OR LAPSE OF TIME, OR
BOTH, WOULD CONSTITUTE AN EVENT OF DEFAULT, HEREUNDER;

(B)  DO OR CAUSE TO BE DONE ALL THINGS REASONABLY NECESSARY TO PRESERVE, RENEW
AND KEEP IN FULL FORCE AND EFFECT ITS LEGAL EXISTENCE; AND

(C)  KEEP PROPER BOOKS OF RECORD AND ACCOUNT IN WHICH FULL, TRUE AND CORRECT
ENTRIES ARE MADE OF ALL DEALINGS AND TRANSACTIONS IN RELATION TO ITS BUSINESS
AND ACTIVITIES, (II) PERMIT ANY REPRESENTATIVES DESIGNATED BY THE HOLDER, UPON
REASONABLE PRIOR NOTICE, TO VISIT AND INSPECT ITS PROPERTIES, TO EXAMINE AND
MAKE EXTRACTS FROM ITS BOOKS AND RECORDS, AND TO DISCUSS ITS AFFAIRS, FINANCES
AND CONDITION WITH ITS OFFICERS AND INDEPENDENT ACCOUNTANTS, ALL AT SUCH
REASONABLE TIMES AND AS OFTEN AS REASONABLY REQUESTED, AND (III) PROVIDE TO THE
HOLDER THE SAME INFORMATION RIGHTS AS IT PROVIDES TO ITS STOCKHOLDERS.

8.   VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES.  THIS NOTE MAY BE AMENDED AND
ANY PROVISION MAY BE WAIVED WITH THE CONSENT OF THE COMPANY AND THE HOLDER.  IN
ADDITION, THE NOTES MAY BE AMENDED AND A PROVISION MAY BE WAIVED BY THE COMPANY
WITH THE AFFIRMATIVE VOTE OR CONSENT OF THE HOLDERS OF A MAJORITY OF THE
AGGREGATE PRINCIPAL AMOUNT OF THE NOTES.  ANY CHANGE OR AMENDMENT SO APPROVED
SHALL BE BINDING UPON ALL EXISTING AND FUTURE HOLDERS OF THIS NOTE; PROVIDED
THAT, NO SUCH AMENDMENT OR WAIVER MAY MATERIALLY AND ADVERSELY AFFECT THE
ECONOMIC INTEREST IN THE COMPANY OF THE HOLDER OF THIS NOTE IN A MANNER
DISPROPORTIONATE TO THE HOLDERS OF OTHER NOTES WITHOUT THE CONSENT OF THE HOLDER
HEREOF.

9.  TRANSFER.  THIS NOTE MAY BE OFFERED, SOLD, ASSIGNED OR TRANSFERRED BY THE
HOLDER WITHOUT THE CONSENT OF THE COMPANY IN AGGREGATE PRINCIPAL AMOUNTS OF AT
LEAST $500,000, SUBJECT ONLY TO THE PROVISIONS OF SECTION 4.1 OF THE SECURITIES
PURCHASE AGREEMENT AND COMPLIANCE WITH APPLICABLE LAW.

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10.  REISSUANCE OF THIS NOTE.

 

(A)  TRANSFER.  IF THIS NOTE IS TO BE TRANSFERRED, THE HOLDER SHALL SURRENDER
THIS NOTE TO THE COMPANY, WHEREUPON THE COMPANY WILL FORTHWITH ISSUE AND DELIVER
UPON THE ORDER OF THE HOLDER A NEW NOTE (IN ACCORDANCE WITH SECTION 10(D)),
REGISTERED AS THE HOLDER MAY REQUEST, REPRESENTING THE OUTSTANDING PRINCIPAL
BEING TRANSFERRED BY THE HOLDER AND, IF LESS THEN THE ENTIRE OUTSTANDING
PRINCIPAL IS BEING TRANSFERRED, A NEW NOTE (IN ACCORDANCE WITH SECTION 10(D)) TO
THE HOLDER REPRESENTING THE OUTSTANDING PRINCIPAL NOT BEING TRANSFERRED.  THE
HOLDER AND ANY ASSIGNEE, BY ACCEPTANCE OF THIS NOTE, ACKNOWLEDGE AND AGREE THAT,
FOLLOWING REDEMPTION OF ANY PORTION OF THIS NOTE, THE OUTSTANDING PRINCIPAL
REPRESENTED BY THIS NOTE MAY BE LESS THAN THE PRINCIPAL STATED ON THE FACE OF
THIS NOTE.

(B)  LOST, STOLEN OR MUTILATED NOTE.  UPON RECEIPT BY THE COMPANY OF EVIDENCE
REASONABLY SATISFACTORY TO THE COMPANY OF THE LOSS, THEFT, DESTRUCTION OR
MUTILATION OF THIS NOTE, AND, IN THE CASE OF LOSS, THEFT OR DESTRUCTION, OF ANY
INDEMNIFICATION UNDERTAKING BY THE HOLDER TO THE COMPANY IN CUSTOMARY FORM AND,
IN THE CASE OF MUTILATION, UPON SURRENDER AND CANCELLATION OF THIS NOTE, THE
COMPANY SHALL EXECUTE AND DELIVER TO THE HOLDER A NEW NOTE (IN ACCORDANCE WITH
SECTION 10(D)) REPRESENTING THE OUTSTANDING PRINCIPAL.

(C)  NOTE EXCHANGEABLE FOR DIFFERENT DENOMINATIONS.  THIS NOTE IS EXCHANGEABLE,
UPON THE SURRENDER HEREOF BY THE HOLDER AT THE PRINCIPAL OFFICE OF THE COMPANY,
FOR A NEW NOTE OR NOTES (IN ACCORDANCE WITH SECTION 10(D) AND IN PRINCIPAL
AMOUNTS OF AT LEAST $100,000) REPRESENTING IN THE AGGREGATE THE OUTSTANDING
PRINCIPAL OF THIS NOTE, AND EACH SUCH NEW NOTE WILL REPRESENT SUCH PORTION OF
SUCH OUTSTANDING PRINCIPAL AS IS DESIGNATED BY THE HOLDER AT THE TIME OF SUCH
SURRENDER.

(D)  ISSUANCE OF NEW NOTES.  WHENEVER THE COMPANY IS REQUIRED TO ISSUE A NEW
NOTE PURSUANT TO THE TERMS OF THIS NOTE, SUCH NEW NOTE (I) SHALL BE OF LIKE
TENOR WITH THIS NOTE, (II) SHALL REPRESENT, AS INDICATED ON THE FACE OF SUCH NEW
NOTE, THE PRINCIPAL REMAINING OUTSTANDING (OR IN THE CASE OF A NEW NOTE BEING
ISSUED PURSUANT TO SECTION 10(A) OR SECTION 10(C), THE PRINCIPAL DESIGNATED BY
THE HOLDER WHICH, WHEN ADDED TO THE PRINCIPAL REPRESENTED BY THE OTHER NEW NOTES
ISSUED IN CONNECTION WITH SUCH ISSUANCE, DOES NOT EXCEED THE PRINCIPAL REMAINING
OUTSTANDING UNDER THIS NOTE IMMEDIATELY PRIOR TO SUCH ISSUANCE OF NEW NOTES),
(III) SHALL HAVE AN ISSUANCE DATE, AS INDICATED ON THE FACE OF SUCH NEW NOTE,
WHICH IS THE SAME AS THE ISSUANCE DATE OF THIS NOTE, (IV) SHALL HAVE THE SAME
RIGHTS AND CONDITIONS AS THIS NOTE, AND (V) SHALL REPRESENT ACCRUED AND UNPAID
INTEREST ON THE PRINCIPAL OF THIS NOTE, FROM THE ISSUANCE DATE.

11.  REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
RELIEF.  THE REMEDIES PROVIDED IN THIS NOTE SHALL BE CUMULATIVE AND IN ADDITION
TO ALL OTHER REMEDIES AVAILABLE UNDER THIS NOTE AND ANY OF THE OTHER TRANSACTION
DOCUMENTS AT LAW OR IN EQUITY (INCLUDING A DECREE OF SPECIFIC

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PERFORMANCE AND/OR OTHER INJUNCTIVE RELIEF).  AMOUNTS SET FORTH OR PROVIDED FOR
HEREIN WITH RESPECT TO PAYMENTS AND THE LIKE (AND THE COMPUTATION THEREOF) SHALL
BE THE AMOUNTS TO BE RECEIVED BY THE HOLDER AND SHALL NOT, EXCEPT AS EXPRESSLY
PROVIDED HEREIN, BE SUBJECT TO ANY OTHER OBLIGATION OF THE COMPANY (OR THE
PERFORMANCE THEREOF).  THE COMPANY ACKNOWLEDGES THAT A BREACH BY IT OF ITS
OBLIGATIONS HEREUNDER WILL CAUSE IRREPARABLE HARM TO THE HOLDER AND THAT THE
REMEDY AT LAW FOR ANY SUCH BREACH MAY BE INADEQUATE.  THE COMPANY THEREFORE
AGREES THAT, IN THE EVENT OF ANY SUCH BREACH OR THREATENED BREACH, THE HOLDER
SHALL BE ENTITLED, IN ADDITION TO ALL OTHER AVAILABLE REMEDIES, TO AN
INJUNCTION.

12.  PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS.  IF FOLLOWING AN EVENT
OF DEFAULT (A) THIS NOTE IS PLACED IN THE HANDS OF AN ATTORNEY FOR COLLECTION OR
ENFORCEMENT OR IS COLLECTED OR ENFORCED THROUGH ANY LEGAL PROCEEDING OR THE
HOLDER OTHERWISE TAKES ACTION TO COLLECT AMOUNTS DUE UNDER THIS NOTE OR TO
ENFORCE THE PROVISIONS OF THIS NOTE OR (B) THERE OCCURS ANY BANKRUPTCY,
REORGANIZATION, RECEIVERSHIP OF THE COMPANY OR OTHER PROCEEDINGS AFFECTING
COMPANY CREDITORS’ RIGHTS AND INVOLVING A CLAIM UNDER THIS NOTE, THEN THE
COMPANY SHALL PAY THE REASONABLE COSTS INCURRED BY THE HOLDER FOR SUCH
COLLECTION, ENFORCEMENT OR ACTION OR IN CONNECTION WITH SUCH BANKRUPTCY,
REORGANIZATION, RECEIVERSHIP OR OTHER PROCEEDING, INCLUDING, BUT NOT LIMITED TO,
ATTORNEYS’ FEES AND DISBURSEMENTS.

13.  CONSTRUCTION; HEADINGS.  THIS NOTE SHALL BE DEEMED TO BE JOINTLY DRAFTED BY
THE COMPANY AND ALL THE HOLDERS AND SHALL NOT BE CONSTRUED AGAINST ANY PERSON AS
THE DRAFTER HEREOF.  THE HEADINGS OF THIS NOTE ARE FOR CONVENIENCE OF REFERENCE
AND SHALL NOT FORM PART OF, OR AFFECT THE INTERPRETATION OF, THIS NOTE.

14.  FAILURE OR INDULGENCE NOT WAIVER.  NO FAILURE OR DELAY ON THE PART OF THE
HOLDER IN THE EXERCISE OF ANY POWER, RIGHT OR PRIVILEGE HEREUNDER SHALL OPERATE
AS A WAIVER THEREOF, NOR SHALL ANY SINGLE OR PARTIAL EXERCISE OF ANY SUCH POWER,
RIGHT OR PRIVILEGE PRECLUDE OTHER OR FURTHER EXERCISE THEREOF OR OF ANY OTHER
RIGHT, POWER OR PRIVILEGE.

15.  NOTICES.  WHENEVER NOTICE IS REQUIRED TO BE GIVEN UNDER THIS NOTE, UNLESS
OTHERWISE PROVIDED HEREIN, SUCH NOTICE SHALL BE DELIVERED IN ACCORDANCE WITH
SECTION 6.4 OF THE SECURITIES PURCHASE AGREEMENT.  THE COMPANY SHALL PROVIDE THE
HOLDER WITH PROMPT WRITTEN NOTICE OF ALL ACTIONS TAKEN PURSUANT TO THIS NOTE,
INCLUDING IN REASONABLE DETAIL A DESCRIPTION OF SUCH ACTION AND THE REASON
THEREFORE.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE COMPANY WILL
GIVE WRITTEN NOTICE TO THE HOLDER AT LEAST TWENTY (20) DAYS PRIOR TO THE DATE ON
WHICH THE COMPANY CLOSES ITS BOOKS OR TAKES A RECORD FOR DETERMINING RIGHTS TO
VOTE WITH RESPECT TO ANY FUNDAMENTAL TRANSACTION, DISSOLUTION OR LIQUIDATION,
PROVIDED IN EACH CASE THAT SUCH INFORMATION SHALL BE MADE KNOWN TO THE PUBLIC
PRIOR TO OR IN CONJUNCTION WITH SUCH NOTICE BEING PROVIDED TO THE HOLDER.

16.  CANCELLATION.  AFTER ALL PRINCIPAL, ACCRUED INTEREST AND OTHER AMOUNTS AT
ANY TIME OWED ON THIS NOTE HAVE BEEN PAID IN FULL, THIS NOTE SHALL AUTOMATICALLY
BE DEEMED CANCELED, SHALL BE SURRENDERED TO THE COMPANY FOR CANCELLATION AND
SHALL NOT BE REISSUED.

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17.  WAIVER OF NOTICE.  TO THE EXTENT PERMITTED BY LAW, THE COMPANY HEREBY
WAIVES DEMAND, NOTICE, PROTEST AND ALL OTHER DEMANDS AND NOTICES IN CONNECTION
WITH THE DELIVERY, ACCEPTANCE, PERFORMANCE, DEFAULT OR ENFORCEMENT OF THIS NOTE
AND THE SECURITIES PURCHASE AGREEMENT.

18.  GOVERNING LAW.  THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, INTERPRETATION
AND PERFORMANCE OF THIS NOTE SHALL BE GOVERNED BY, THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW
PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTIONS)
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTIONS OTHER THAN THE
STATE OF NEW YORK.  ANY ACTION BROUGHT BY EITHER PARTY AGAINST THE OTHER
CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT SHALL BE BROUGHT ONLY
IN THE STATE COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE OF
NEW YORK AND WAIVE TRIAL BY JURY.  BOTH PARTIES AGREE TO SUBMIT TO THE
JURISDICTION OF SUCH COURTS.  THE PREVAILING PARTY SHALL BE ENTITLED TO RECOVER
FROM THE OTHER PARTY ITS REASONABLE ATTORNEY’S FEES AND COSTS.  IN THE EVENT
THAT ANY PROVISION OF THIS NOTE IS INVALID OR UNENFORCEABLE UNDER ANY APPLICABLE
STATUTE OR RULE OF LAW, THEN SUCH PROVISION SHALL BE DEEMED INOPERATIVE TO THE
EXTENT THAT IT MAY CONFLICT THEREWITH AND SHALL BE DEEMED MODIFIED TO CONFORM
WITH SUCH STATUTE OR RULE OF LAW.  ANY SUCH PROVISION WHICH MAY PROVE INVALID OR
UNENFORCEABLE UNDER ANY LAW SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF
ANY OTHER PROVISION OF THIS NOTE.  NOTHING CONTAINED HEREIN SHALL BE DEEMED OR
OPERATE TO PRECLUDE THE HOLDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION
AGAINST THE COMPANY IN ANY OTHER JURISDICTION TO COLLECT ON THE COMPANY’S
OBLIGATIONS TO THE HOLDER, TO REALIZE ON ANY COLLATERAL OR ANY OTHER SECURITY
FOR SUCH OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT RULING IN FAVOR OF
THE HOLDER.

19.  INDEMNIFICATION.

(A)  SUBJECT TO THE LIMITATIONS HEREIN, THE COMPANY SHALL INDEMNIFY THE HOLDER,
AND EACH AFFILIATE OF THE HOLDER (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”)
AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS,
DAMAGES, LIABILITIES AND RELATED EXPENSES, (EXCLUDING THE LEGAL FEES OF COUNSEL
FOR ANY INDEMNITEE), INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE BY A THIRD
PARTY ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF:  (I) THE EXECUTION
OR DELIVERY OF THIS NOTE, THE PERFORMANCE BY THE COMPANY AND ITS SUBSIDIARIES
HERETO OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THE CONSUMMATION OF OR THE
USE OF THE PROCEEDS THEREFROM, OR (II) THE MATERIAL BREACH BY THE COMPANY OR ANY
SUBSIDIARY OF (A) ANY REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT CONTAINED
HEREIN OR (B) ANY REPRESENTATION OR WARRANTY IN SECTION 3.1 OF THE SECURITIES
PURCHASE AGREEMENT, AS THEY RELATE TO THIS NOTE; PROVIDED THAT SUCH INDEMNITY
SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES,
CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF
COMPETENT JURISDICTION BY FINAL AND NON-APPEALABLE JUDGMENT TO HAVE RESULTED
FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE.

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(B)           TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY AND THE
HOLDER HEREOF SHALL NOT ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST ANY
INDEMNITEE, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS THE
THIS NOTE, THE SECURITIES PURCHASE AGREEMENT OR ANY AGREEMENT OR INSTRUMENT
CONTEMPLATED HEREBY OR THEREBY, OR THE USE OF THE PROCEEDS THEREOF.

20.  MAXIMUM PAYMENTS.  NOTHING CONTAINED HEREIN SHALL BE DEEMED TO ESTABLISH OR
REQUIRE THE PAYMENT OF A RATE OF INTEREST OR OTHER CHARGES IN EXCESS OF THE
MAXIMUM PERMITTED BY APPLICABLE LAW.  IN THE EVENT THAT THE RATE OF INTEREST
REQUIRED TO BE PAID OR OTHER CHARGES HEREUNDER EXCEED THE MAXIMUM PERMITTED BY
SUCH LAW, ANY PAYMENTS IN EXCESS OF SUCH MAXIMUM SHALL BE CREDITED AGAINST
AMOUNTS OWED BY THE COMPANY TO THE HOLDER AND THUS REFUNDED TO THE COMPANY.

21.  NONCIRCUMVENTION. THE COMPANY HEREBY COVENANTS AND AGREES THAT THE COMPANY
WILL NOT, BY AMENDMENT OF ITS CERTIFICATE OF INCORPORATION OR BYLAWS, OR THROUGH
ANY REORGANIZATION, TRANSFER OF ASSETS, CONSOLIDATION, MERGER, SCHEME OF
ARRANGEMENT, DISSOLUTION, ISSUE OR SALE OF SECURITIES, OR ANY OTHER VOLUNTARY
ACTION, AVOID OR SEEK TO AVOID THE OBSERVANCE OR PERFORMANCE OF ANY OF THE TERMS
OF THIS NOTE, AND WILL AT ALL TIMES IN GOOD FAITH CARRY OUT ALL OF THE
PROVISIONS OF THIS NOTE AND TAKE ALL ACTION AS MAY BE REQUIRED TO PROTECT THE
RIGHTS OF THE HOLDER OF THIS NOTE.

22.  CERTAIN DEFINITIONS.  FOR PURPOSES OF THIS NOTE, THE FOLLOWING TERMS SHALL
HAVE THE FOLLOWING MEANINGS:

(A)   “CALENDAR QUARTER” MEANS EACH OF: THE PERIOD BEGINNING ON AND INCLUDING
FEBRUARY 1 AND ENDING ON AND INCLUDING APRIL 30; THE PERIOD BEGINNING ON AND
INCLUDING MAY 1 AND ENDING ON AND INCLUDING JULY 31; THE PERIOD BEGINNING ON AND
INCLUDING AUGUST 1 AND ENDING ON AND INCLUDING OCTOBER 31; AND THE PERIOD
BEGINNING ON AND INCLUDING NOVEMBER 1 AND ENDING ON AND INCLUDING JANUARY 31.

(B)  “CLOSING DATE” SHALL HAVE THE MEANING SET FORTH IN THE SECURITIES PURCHASE
AGREEMENT, WHICH DATE IS THE DATE THE COMPANY INITIALLY ISSUED NOTES PURSUANT TO
THE TERMS OF THE SECURITIES PURCHASE AGREEMENT.

(C)   “FUNDAMENTAL TRANSACTION” MEANS THAT THE COMPANY SHALL, DIRECTLY OR
INDIRECTLY, IN ONE OR MORE RELATED TRANSACTIONS, (I) CONSOLIDATE OR MERGE WITH
OR INTO (WHETHER OR NOT THE COMPANY, IS THE SURVIVING CORPORATION) ANOTHER
PERSON, OR (II) SELL, ASSIGN, TRANSFER, CONVEY OR OTHERWISE DISPOSE OF ALL OR
SUBSTANTIALLY ALL OF THE PROPERTIES OR ASSETS OF THE COMPANY TO ANOTHER PERSON,
OR (III) BE SUBJECT TO AN OFFER FROM ANOTHER PERSON OR GROUP OF RELATED PERSONS
(AS DEFINED IN SECTIONS 13(D) AND 14(D) OF THE EXCHANGE ACT) OTHER THAN THE
HOLDER TO MAKE A PURCHASE, TENDER OR EXCHANGE OFFER THAT IS ACCEPTED BY THE
HOLDERS OF MORE THAN THE 50% OF THE OUTSTANDING VOTING SHARES (NOT INCLUDING ANY
VOTING SHARES HELD BY THE PERSON OR PERSONS MAKING OR PARTY TO, OR ASSOCIATED OR
AFFILIATED WITH THE PERSONS MAKING OR PARTY TO, SUCH PURCHASE, TENDER OR
EXCHANGE OFFER), OR (IV) CONSUMMATE A SHARE PURCHASE AGREEMENT OR OTHER BUSINESS
COMBINATION (INCLUDING, WITHOUT LIMITATION, A REORGANIZATION, RECAPITALIZATION,
SPIN-OFF OR

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SCHEME OF ARRANGEMENT) WITH ANOTHER PERSON OR GROUP OF RELATED PERSONS (AS
DEFINED IN SECTIONS 13(D) AND 14(D) OF THE EXCHANGE ACT) WHEREBY SUCH OTHER
PERSON OR GROUP ACQUIRES MORE THAN THE 50% OF THE OUTSTANDING VOTING SHARES (NOT
INCLUDING ANY VOTING SHARES HELD BY THE OTHER PERSON OR OTHER PERSONS MAKING OR
PARTY TO, OR ASSOCIATED OR AFFILIATED WITH THE OTHER PERSONS MAKING OR PARTY TO,
SUCH SHARE PURCHASE AGREEMENT OR OTHER BUSINESS COMBINATION), PROVIDED HOWEVER,
A FUNDAMENTAL TRANSACTION SHALL NOT INCLUDE (I) ANY REORGANIZATION,
RECAPITALIZATION OR RECLASSIFICATION OF THE COMMON SHARES IN WHICH HOLDERS OF
THE COMPANY’S VOTING POWER IMMEDIATELY PRIOR TO SUCH REORGANIZATION,
RECAPITALIZATION OR RECLASSIFICATION CONTINUE AFTER SUCH REORGANIZATION,
RECAPITALIZATION OR RECLASSIFICATION TO HOLD PUBLICLY TRADED SECURITIES AND,
DIRECTLY OR INDIRECTLY, THE VOTING POWER OF THE SURVIVING ENTITY OR ENTITIES
NECESSARY TO ELECT A MAJORITY OF THE MEMBERS OF THE BOARD OF DIRECTORS (OR THEIR
EQUIVALENT IF OTHER THAN A CORPORATION) OF SUCH ENTITY OR ENTITIES, OR (II)
PURSUANT TO A MIGRATORY MERGER EFFECTED SOLELY FOR THE PURPOSE OF CHANGING THE
JURISDICTION OF INCORPORATION OF THE COMPANY.

 

(D)  “GAAP” MEANS UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES,
CONSISTENTLY APPLIED.

(E)  “MATURITY DATE” MEANS SEPTEMBER 26, 2007.

(F)  “PERSON” MEANS AN INDIVIDUAL, A LIMITED LIABILITY COMPANY, A PARTNERSHIP, A
JOINT VENTURE, A CORPORATION, A TRUST, AN UNINCORPORATED ORGANIZATION, ANY OTHER
ENTITY AND A GOVERNMENT OR ANY DEPARTMENT OR AGENCY THEREOF.

(G)  “PRINCIPAL MARKET” MEANS THE NASDAQ NATIONAL MARKET.

(H)  “REDEMPTION NOTICES” MEANS, COLLECTIVELY, THE EVENT OF DEFAULT REDEMPTION
NOTICES, AND THE FUNDAMENTAL TRANSACTION REDEMPTION NOTICES, EACH OF THE
FOREGOING, INDIVIDUALLY, A REDEMPTION NOTICE.

(I)  “REQUIRED HOLDERS” MEANS THE HOLDERS OF NOTES REPRESENTING AT LEAST A
MAJORITY OF THE AGGREGATE PRINCIPAL AMOUNT OF THE NOTES THEN OUTSTANDING.

(J)  “SEC” MEANS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

(K)   “TAX” MEANS ANY TAX, LEVY, IMPOST, DUTY OR OTHER CHARGE OR WITHHOLDING OF
A SIMILAR NATURE (INCLUDING ANY RELATED PENALTY OR INTEREST).

(L)   “TRADING DAY” MEANS (A) ANY DAY ON WHICH THE COMMON STOCK IS LISTED OR
QUOTED AND TRADED ON ITS PRIMARY TRADING MARKET, (B) IF THE COMMON STOCK IS NOT
THEN LISTED OR QUOTED AND TRADED ON ANY ELIGIBLE MARKET, THEN A DAY ON WHICH
TRADING OCCURS ON THE NASDAQ NATIONAL MARKET (OR ANY SUCCESSOR THERETO), OR (C)
IF TRADING CEASES TO OCCUR ON THE NASDAQ NATIONAL MARKET (OR ANY SUCCESSOR
THERETO), ANY BUSINESS DAY.

(M)  “VOTING SHARES” OF A PERSON MEANS CAPITAL SHARES OF SUCH PERSON OF THE
CLASS OR CLASSES PURSUANT TO WHICH THE HOLDERS THEREOF HAVE THE GENERAL VOTING
POWER TO ELECT, OR THE GENERAL POWER TO APPOINT, AT LEAST A MAJORITY OF THE
BOARD OF DIRECTORS, MANAGERS OR TRUSTEES OF SUCH PERSON (IRRESPECTIVE OF WHETHER
OR NOT AT THE TIME CAPITAL SHARES OF ANY OTHER CLASS OR CLASSES SHALL HAVE OR
MIGHT HAVE VOTING POWER BY REASON OF THE HAPPENING OF ANY CONTINGENCY).

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused this Note, as amended, to be duly
executed as of March 27, 2007.

 

 

VYYO INC.

 

 

 

 

 

By:

/s/ Wayne H. Davis

 

 

 

Name: Wayne H. Davis

 

 

Title: CEO

 

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CONSENTED AND AGREED TO

AS OF MARCH 27, 2007 BY:

 

HOLDER:

GOLDMAN, SACHS & CO.

 

 

By:

 

      /s/ Nick Advani

 

 

 

 

Name: Nick Advani

 

 

Title: Managing Director

 

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