Exhibit 10.3


 


THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES
LAWS. THIS NOTE 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.


 


$7,500,000.00


 


VYYO INC.


 


SENIOR SECURED NOTE DUE MARCH 22,
2011


 


Section 1.                                            General.


 


FOR VALUE RECEIVED, VYYO, INC., a Delaware
corporation (the “Company”),
hereby promises to pay to the order of Goldman, Sachs & Co., or its
registered assigns (the “Investor”),
the principal sum of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS AND ZERO CENTS
($7,500,000.00), or such lesser amount as shall then equal the outstanding
principal amount hereof, together with interest (“Interest”) thereon at a rate equal to 9.50% (the “Interest Rate”) per annum, computed on the
basis of the actual number of days elapsed and a year of 360 days comprised of
twelve 30 day months. Except as set forth herein, all unpaid principal,
together with any then unpaid and accrued interest and other amounts payable
hereunder, unless earlier redeemed or repurchased, shall be due and payable on March 22,
2011 (the “Maturity Date”). This
Note is not prepayable from March 22, 2006 through and including March 22,
2007, but shall be prepayable, in whole or in part, (i) at 104% of the
principal amount from March 22, 2007 through and including March 22,
2008, (ii) at 103% of the principal amount from March 22, 2008
through and including March 22, 2009, (iii) at 102% of the principal
amount from March 22, 2009 through and including March 22, 2010, and (iv) at
101% of the principal amount from March 22, 2010 through but excluding the
Maturity Date. Any prepayments will be applied first to any accrued but unpaid
interest and then to unpaid principal.


 


This Note is one of a duly authorized issue of notes
of the Company (this note being referred to as the “Note” and, collectively, all similar notes issued by the
Company being referred to as the “Notes”),
issued in the aggregate principal amount limited to $7,500,000.00 pursuant to
the Securities Purchase Agreement, dated as of March 18, 2006 (as the same
may be amended, supplemented or otherwise modified from time to time, the “Securities Purchase Agreement”) by and
among the Company and the Investors party thereto, and is entitled to the benefits
thereof and to the exercise of the remedies provided thereby or otherwise
available in respect thereof. Capitalized terms used herein without definition
have the meanings assigned thereto in the Securities Purchase Agreement.


 


Interest on this Note shall accrue from and including
the date of issuance through and until repayment of the principal amount of
this Note and payment of all Interest in full, and shall


 

















 


be payable in cash
quarterly in arrears on each January 1, March 1, June 1 and September 1
that the Notes are outstanding or, if any such date shall not be a Business
Day, on the next succeeding Business Day to occur after such date (each date
upon which interest shall be so payable, an “Interest
Payment Date”), beginning on June 1, 2006, by wire transfer of
immediately available funds to an account at a bank designated in writing by
the Investor on reasonable notice.


 


Notwithstanding the foregoing provisions of this Section 1,
upon any default in the payment of Interest or principal under this Note, until
such default is cured, the Interest Rate shall increase by an additional two
percent (2.0%) per annum. Subject to applicable law, any interest that shall
accrue on overdue interest on this Note as provided in the preceding sentence
and shall not have been paid in full in cash on or before the next Interest
Payment Date to occur after the date on which the overdue interest became due
and payable shall itself be deemed to be overdue interest on this Note to which
the preceding sentence shall apply.


 


Section 2.                                            Repurchase
Right Upon a Fundamental Transaction.


 


Notwithstanding anything to the contrary contained
herein and in addition to any other right of the Investor, upon the occurrence
of a Fundamental Transaction the Investor shall have the right, by written
notice to the Company, to require the Company to redeem all of this Note on the
repurchase date that is five Business Days after the date of delivery of such
notice to the Company at a price equal to 101% of the outstanding principal amount
under this Note, plus all accrued and unpaid interest on such principal amount
to, but excluding, the repurchase date, plus any other amounts due hereunder. A
“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 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. “Voting Shares” of a Person means capital shares of such Person
of the class or classes pursuant to which the holders


 


2

















 


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).


 


Section 3.                                            Events
of Default.


 


The occurrence of any of the following shall
constitute an “Event of Default”
under this Note:


 


(a)                                  The Company shall fail to pay
any principal owing under this Note when due; or


 


(b)                                 The Company shall fail to pay
any interest owing under this Note when due, and such failure shall continue
for thirty (30) days; or


 


(c)                                  The Company or any Significant
Subsidiary shall fail to observe or perform any other covenant,
obligation, condition or agreement contained in this Note (other than those
specified in clauses (a) or (b) above) or the Guaranty and Security
Agreement, dated the date hereof, among the Company, the Subsidiaries party
thereto and Goldman, Sachs & Co., as Collateral Agent for the benefit
of the Investors (as the same may be amended, supplemented or otherwise
modified from time to time, and together with all other documents, agreements
and instruments executed in connection therewith, the “Security Agreement”), and, to the extent such
failure is capable of being cured, such failure shall continue for sixty (60)
days; or


 


(d)                                 The Company or any Significant
Subsidiary shall (i) 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 (a) and (b) 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 (ii) 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 (i) or (ii) is to cause, or permit the holder thereof to
cause, indebtedness of the Company and the Subsidiaries 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; or


 


(e)                                  An involuntary proceeding shall
be commenced or an involuntary petition shall be filed seeking (i) 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 (ii) 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 the Company’s or such
Significant Subsidiary’s assets, and, in any such case, such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered; or


 


(f)                                    The Company or any Significant
Subsidiary shall (i) voluntarily commence any proceeding or file any
petition seeking liquidation, reorganization or other relief under any


 


3

















 


federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect, (ii) consent to the institution
of, or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (e) of this Section, (iii) 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 the Company’s assets, (iv) file an
answer admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of
creditors or (vi) take any action for the purpose of effecting any of the
foregoing; or


 


(g)                                 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 and the Significant Subsidiaries 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; or


 


(h)                                 This Note or the Security
Agreement shall cease, for any reason, to be in full force and effect, or the
Company or any Significant Subsidiary shall so assert in writing or shall
disavow any of its obligations thereunder; or


 


(i)                                     Any Lien purported to be created
under the Security Agreement shall cease to be, or shall be asserted by the
Company or any Significant Subsidiary not to be, a valid and perfected Lien on
any Collateral, with the priority required by the Security Agreement; or


 


(j)                                     Failure (i) of the Company
to make any required filings with the United States Securities and Exchange
Commission or (ii) of the Common Stock to be listed on an eligible
securities exchange and, in either case (i) or (ii), such failure shall
continue for sixty (60) days; or


 


(k)                                  Any Event of Default, under and
as defined in the Guaranty and Security Agreement shall have occurred.


 


Section 4.                                            Rights
Of Investor Upon Default.


 


Upon the occurrence or existence of any Event of
Default (other than an Event of Default referred to in Sections 3(f) or 3(g) hereof)
and at any time thereafter during the continuance of such Event of Default, the
Investor, upon the approval of Investors 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. Upon the occurrence
or existence of any Event of Default described in Sections 3(f) or 3(g) 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


 


4

















 


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
Investor may exercise, upon the approval of Investors 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.


 


Section 5.                                            Affirmative
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 Investor of:  (i) 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; and (ii) any
loss or damage to any Collateral (as defined in the Security Agreement) in
excess of $100,000;


 


(b)                                 do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business;


 


(c)                                  maintain, with financially sound
and reputable insurance companies, customary insurance for its insurable
properties, all to such extent and against such risks, including fire,
casualty, fidelity, business interruption and other risks insured against by
extended coverage, as is customary with companies in the same or similar
businesses operating in the same or similar locations; and


 


(d)                                 (i) 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 Investor, upon reasonable prior written
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 Investor the same
information rights as it provides to its stockholders.


 


Section 6.                                            Negative
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 not, and shall not permit any Subsidiary to:


 


(a)                                  create, incur, assume or permit
to exist any indebtedness or guarantee, directly or indirectly, except:


 


(i)                                     indebtedness with respect to
equipment leases or trade accounts of the Company or any Subsidiary arising in
the ordinary course of business;


 


(ii)                                  indebtedness incurred in the
ordinary course arising out of any lease agreement for the premises of the
Company or any Significant Subsidiary;


 


5

















 


(iii)                               indebtedness incurred in the
ordinary course of the Company or any Significant Subsidiary for
employee-related obligations or commitments, including, but not limited to,
obligations for the payment of salaries, accrued vacation days, severance,
prior notice periods, managers’ insurance, pension funds and other approved
employee benefits;


 


(iv)                              indebtedness for taxes
(including municipality rates), assessments, levies to statutory bodies and
government agencies, or similar charges, in all cases provided that such
obligations were incurred in the ordinary course of business that are not yet
due and payable;


 


(v)                                 indebtedness under the Notes and
the Convertible Notes;


 


(vi)                              indebtedness, not greater than
$6,500,000 in the aggregate under (A) that certain promissory note made by
the Company and payable to Syntek Capital AG dated December 16, 2005 as
amended as of the date hereof (the “Syntek Note”)
and (B) that certain letter of credit made by the Company in favor of
Syntek Capital AG in connection with the Syntek Note (the “Syntek Letter of Credit”);


 


(vii)                           up to $15,000,000 of
indebtedness assumed by the Company in the acquisition of all or substantially
all of the assets or capital stock of another Person; provided that, (a) such
indebtedness existed at the time of such acquisition and was not created in
anticipation thereof, (b) the aggregate amount of such indebtedness
assumed in connection with such acquisition shall not exceed 25% of the
aggregate amount of consideration paid by the Company for such acquisition and (c) any
Liens securing such indebtedness do not at any time cover or encumber any
assets or property other than the assets or property of the Person acquired
which is financed by such indebtedness; and


 


(viii)                        up to $2,500,000 of additional
indebtedness in the aggregate outstanding at any time.


 


(b)                                 create, incur, assume or suffer
to exist any mortgage, pledge, security interest, assignment, lien (statutory
or other), claim, encumbrance, license or sublicense or security interest
(collectively, a “Lien”)
in or upon any of its assets, except:


 


(i)                                     Liens for taxes, assessments or
similar charges incurred in the ordinary course of business that are not yet
due and payable,


 


(ii)                                  Liens created pursuant to the
Security Agreement, and


 


(iii)                               Liens created to secure the
Syntek Note, which such Liens shall only consist of the Syntek Letter of
Credit;


 


(iv)                              Liens created in connection with
Section 6(a)(ii), (vii) and (viii) above;


 


(c)                                  enter into any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service with any Affiliate, except pursuant to the
reasonable requirements of the Company’s or such Subsidiary’s business and upon
fair and


 


6

















 


reasonable terms no less favorable to the Company or such Subsidiary,
than would obtain in a comparable arm’s length transaction with a Person not an
Affiliate as reasonably determined by the Audit Committee of the Company’s
Board of Directors;


 


(d)                                 declare any cash dividends on
any shares of any class of its capital stock or membership interests, or
apply any of its property or assets to the purchase, redemption or other
retirement of, or set apart any sum for the payment of any cash dividends
on, or for the purchase, redemption or other retirement of, or make any other
distribution by reduction of capital or otherwise in respect of, any shares of
any class of its capital stock or membership interests, provided, however,
that (i) any Subsidiary wholly owned by the Company may pay dividends
directly to the Company and (ii) this restriction shall not apply to the
repurchase of shares of Common Stock from employees, officers, directors,
consultants or other persons performing services for the Company or any Subsidiary
pursuant to agreements under which the Company has the option to repurchase
such shares upon the occurrence of certain events, such as the termination of
employment;


 


(e)                                  sell, transfer, lease or
otherwise dispose (including pursuant to a merger) of any asset with a value
greater than $1,000,000, except (a) sales, transfers, leases and other
dispositions of inventory, used, obsolete or surplus equipment or other
property and investments in each case in the ordinary course of business or (b) such
sales, transfers or dispositions for cash which are reasonably approved by the
Audit Committee of the Company’s Board of Directors;


 


(f)                                    create or acquire any new
Significant Subsidiary, unless (i) such Significant Subsidiary promptly,
and in no event later than fifteen Business Days, becomes a party to the
Security Agreement in the manner provided therein and complies with all of the
terms, provisions and requirements thereof, including, without limitation,
taking such actions to create and perfect Liens on such Significant Subsidiary’s
assets, and (ii) the Investor shall have received an opinion of counsel of
such Significant Subsidiary containing such opinions that are reasonably
acceptable to the Investor and that are materially identical in substance to the
opinions received on the date hereof with respect to the Significant
Subsidiaries entering into the Security Agreement on the date hereof;


 


(g)                                 make any capital expenditures
(other than with respect to normal maintenance and replacement programs in the
ordinary course of business) exceeding $1,000,000 in any fiscal year for the
Company and its Significant Subsidiaries in the aggregate; or


 


(h)                                 permit the Subsidiaries that are
not party to the Security Agreement to have assets in an aggregate amount
greater than $500,000.


 


Section 7.                                            Defenses.


 


The obligations of the Company under this Note shall
not be subject to reduction, limitation, impairment, termination, defense,
set-off, counterclaim or recoupment for any reason.


 


Section 8.                                            Guaranty
and Security Agreement.


 


This Note is a senior secured obligation of the
Company. The Company’s obligations under this Note are (i) guarantied by
certain of its Subsidiaries, and (ii) secured by a security


 


7

















 


interest in substantially
all of the assets of the Company and such Subsidiaries, in each case pursuant
to the terms and provisions of the Security Agreement. This Note is subject to
the terms and provisions of the Security Agreement, and the Investor, by its
acceptance of this Note, hereby acknowledges and agrees to such terms and
provisions.


 


Section 9.                                            Transfer
of Note; Lost or Stolen Note.


 


(a)                                  The Investor may sell,
transfer or otherwise dispose of all or any part of this Note (including
without limitation pursuant to a pledge) to any person or entity, so long as
such sale, transfer or disposition is in accordance with the provisions of the
Securities Purchase Agreement and is of at least $500,000 in principal amount. From
and after the date of any such sale, transfer or disposition, the transferee
hereof shall be deemed to be the holder of a Note in the principal amount
acquired by such transferee, and the Company shall, as promptly as practicable,
issue and deliver to such transferee a new Note identical in all respects to
this Note, in the name of such transferee and, if such transferee acquires less
than the entire principal amount of this Note, the Company shall
contemporaneously issue to the Investor a new Note identical in all respects to
this Note, representing the outstanding balance of this Note. The Company shall
be entitled to treat the original Investor as the holder of this entire Note
unless and until it receives written notice of the sale, transfer or
disposition hereof.


 


(b)                                 Upon receipt by the Company of
evidence of the loss, theft, destruction or mutilation of this Note, and (in
the case of loss, theft or destruction) of indemnity or security reasonably
satisfactory to the Company, and upon surrender and cancellation of the Note,
if mutilated, the Company shall execute and deliver to the Investor a new Note
identical in all respects to this Note.


 


Section 10.                                      Attorneys’
and Collection Fees.


 


Should the indebtedness evidenced by this Note or any part hereof
be collected at law or in equity or in bankruptcy, receivership or other court
proceedings, the Company agrees to pay, in addition to the principal and
interest due and payable hereon, all costs of collection, including reasonable
attorneys’ fees and expenses, incurred by the Investor or its agent in collecting
or enforcing this Note.


 


Section 11.                                      Indemnification


 


(a)                                  The Company shall indemnify the
Investor, and each Affiliate of the Investor (each such Person being called an “Indemnitee”) against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
expenses 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 the Note; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or expenses are determined by a court
of competent jurisdiction by


 


8

















 


final and non-appealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.


 


(b)                                 The Company shall pay all
reasonable out of pocket costs and expenses incurred by the Investor, including
the reasonable fees, charges and disbursements of counsel for the Investor and
any consultant or expert witness fees and expenses, in connection with (i) any
amendment, modification or waiver of any provision of any Transaction Document
(whether or not the transactions contemplated thereby shall be consummated)
required by the Company, and (ii) the enforcement or protection of its
rights in connection with any Transaction Document, including its rights under
this Section, and including all such reasonable out of pocket costs and
expenses incurred during any workout, restructuring or negotiations in respect
of any such Transaction Document (provided that references to the Transaction
Documents contained therein shall be deemed to relate only to the Notes and the
Guaranty and Security Agreement).


 


(c)                                  To the extent permitted by
applicable law, the Company 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 Note, the Securities Purchase Agreement, the Security Agreement
or any agreement or instrument contemplated hereby or thereby, or the use of
the proceeds thereof.


 


Section 12.                                      Waivers.


 


The Company hereby waives presentment, demand for
payment, notice of dishonor, notice of protest and all other notices or demands
in connection with the delivery, acceptance, performance or default of this
Note. No delay by the Investor in exercising any power or right hereunder shall
operate as a waiver of any power or right, nor shall any single or partial
exercise of any power or right preclude other or further exercise thereof, or
the exercise thereof, or the exercise of any other power or right hereunder or
otherwise; and no waiver whatsoever or modification of the terms hereof shall
be valid unless set forth in writing by the Investor and then only to the
extent set forth therein.


 


Section 13.                                      Amendments.


 


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 any provision may be waived by the Company with the
affirmative vote or consent of the holders of more than a majority of the
principal amount outstanding under 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.


 


Section 14.                                      Governing
Law; Jurisdiction; Consent to Service of Process; Waiver of Jury Trial.


 


(a)                                  THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAW.


 


9

















 


(b)                                 THE COMPANY HEREBY IRREVOCABLY
AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK
COUNTY AND OF THE UNITED STATES’ DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER COLLATERAL DOCUMENT,
OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT
OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW
YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF
THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS
BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
AGREEMENT SHALL AFFECT ANY RIGHT THAT LENDER MAY OTHERWISE HAVE TO BRING
ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST THE COMPANY OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.


 


(c)                                  THE COMPANY HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND
EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS NOTE, THE SECURITIES PURCHASE AGREEMENT OR THE SECURITY AGREEMENT IN ANY
COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.


 


(d)                                 EACH PARTY TO THIS AGREEMENT
IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES
IN SECTION 16. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY
PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.


 


(d)                                 EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS NOTE, THE SECURITIES PURCHASE AGREEMENT, THE SECURITY
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE
OTHER PARTIES HERETO HAVE BEEN


 


10

















 


INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.


 


Section 15.                                      Successors
and Assigns.


 


The terms and conditions of this Note shall inure to
the benefit of and be binding upon the respective successors (whether by merger
or otherwise) and permitted assigns of the Company and the Investor. The
Company may not assign its rights or obligations under this Note.


 


Section 16.                                      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.


 


Section 17.                                      Entire
Agreement.


 


The Securities Purchase Agreement, the Notes and the
Security Agreement constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereto and thereof.


 


Section 18.                                      Headings.


 


The headings used in this Note are used for
convenience only and are not to be considered in construing or interpreting
this Note.


 


[Signature
Page Follows]


 


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IN WITNESS WHEREOF, the Company has caused this Senior
Secured Note to be duly executed by its duly authorized officer as of the date
indicated below.


 


Date:  March 22,
2006


 


	
   

  	
  VYYO INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title: