Exhibit 10.41


 


SECURITIES
PURCHASE AGREEMENT


 


This SECURITIES PURCHASE AGREEMENT (the “Agreement”),
is dated as of June 13, 2008, by and among Vyyo Inc., a Delaware
corporation (the “Company”), and
the investors listed on the Schedule of Investors attached hereto as Exhibit A
(individually, an “Investor” and
collectively, the “Investors”).


 


WHEREAS:


 


A.            The Company and each Investor is executing
and delivering this Agreement in reliance upon the exemption from securities
registration afforded by Section 4(2) of the Securities Act of 1933,
as amended (the “Securities Act”), and Rule 506
of Regulation D (“Regulation D”)
as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act.


 


B.            Each Investor, severally and not jointly,
wishes to purchase, and the Company wishes to sell, upon the terms and
conditions stated in this Agreement that aggregate principal amount of Senior
Secured Convertible Notes, in substantially the form attached hereto as Exhibit B
(the “Convertible Notes”), set forth opposite
such Investor’s name on the Schedule of Investors (as converted, collectively,
the “Conversion Shares”).


 


C.            The Convertible Notes and the Conversion
Shares issued pursuant to this Agreement are collectively referred to herein as
the “Securities.”


 


D.            Contemporaneously with the execution and
delivery of this Agreement, the parties hereto are executing and delivering (i) the
Convertible Notes, (ii) an Amended and Restated Registration Rights
Agreement substantially in the form attached hereto as Exhibit C
(the “Registration Rights Agreement”), and (iii) a
Guaranty and Security Agreement substantially in the form attached hereto as Exhibit D
(the “Guaranty and Security Agreement”).


 


NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Investors agree
as follows:


 


ARTICLE I

DEFINITIONS


 


1.1           Definitions.  In addition to the terms defined elsewhere in
this Agreement, the following terms have the meanings indicated:


 


“Affiliate” means any Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with a Person, as such terms are used in and construed under Rule 144
under the Securities Act.


 

















 


“Business Day” means any day other than Saturday, Sunday or
other day on which commercial banks in The City of New York are authorized or
required by law to remain closed.


 


“Closing” means the closing of the purchase and sale of the
Securities pursuant to Section 2.1.


 


“Closing Date” means the date and time of the Closing and
shall be 10:00 a.m., New York City time, on June 13, 2008 (or
such other date and time as is mutually agreed to by the Company and each
Investor).


 


“Collateral Agent” has the meaning assigned to such term in
the Guaranty and Security Agreement.


 


“Common Stock” means shares of the Company’s common stock,
par value $0.0001 per share.


 


“Conversion Shares” has the meaning set forth in the
Preamble.


 


“Convertible Notes” has the meaning set forth in the
Preamble.


 


“Eligible Market” means any of the New York Stock Exchange,
the American Stock Exchange, the Nasdaq Global Select Market, the Nasdaq Global
Market or Nasdaq Capital Market.


 


“Existing Notes” means, collectively, the GS Existing Note
and the Syntek Existing Note.


 


“GS Existing Note” means the Convertible Note in the
principal amount of $35,000,000, dated March 28, 2007, issued by the
Company to Goldman Sachs Investment Partners Master Fund, L.P. (“Goldman Sachs”).


 


“Guaranty and Security Agreement” has the meaning set forth
in the Preamble.


 


“Insignificant Subsidiaries” means Vyyo Brasil Ltd. and SHDIP
Ltd.


 


“Intellectual Property Rights” has the meaning set forth in Section 3.1(k).


 


“Investor Counsel” means Proskauer Rose LLP, counsel to the
Investors.


 


“Knowledge,” including the phrase “to the
Company’s knowledge,” and words of similar import shall mean that
which Davidi Gilo, Wayne H. Davis, Robert K. Mills and Tashia L. Rivard know or
should have known using the exercise of reasonable due diligence.


 


“Lien” means any lien, charge, claim, security interest,
encumbrance, right of first refusal or other restriction.


 


“Material Adverse Effect” has the meaning set forth in Section 3.1(a).


 


“Material Permits” has the meaning set forth in Section 3.1(y).


 


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“Person” means any individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, or joint stock company.


 


“Proceeding” means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened in writing.


 


“Registration Rights Agreement” has the meaning set forth in
the Preamble.


 


“Rule 144,” “Rule 415,”
and “Rule 424” means Rule 144, Rule 415
and Rule 424, respectively, promulgated by the SEC pursuant to the
Securities Act, as such Rules may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC having
substantially the same effect as such Rule.


 


“SEC” has the meaning set forth in the Preamble.


 


“SEC Reports” has the meaning set forth in Section 3.1(h).


 


“Securities” has the meaning set forth in the Preamble.


 


“Solvent” shall mean, with respect to any
Person on a particular date, that on such date (a) the fair value of the
property of such Person is greater than the total amount of liabilities,
including contingent liabilities, of such Person; (b) the present fair
salable value of the assets of such Person is not less than the amount that
will be required to pay the probably liability of such Person on its debts as
they become absolute and matured; (c) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such Person’s
ability to pay as such debts and liabilities mature; and (d) such Person
is not engaged in a business or transaction, and is not about to engage in a
business or transaction, for which such Person’s property would constitute an
unreasonably small capital.  The amount
of contingent liabilities (such as litigation, guarantees and pension plan
liabilities) at any time shall be computed as the amount which, in light of all
the facts and circumstances existing at the time, represents the amount which
can be reasonably be expected to become an actual or matured liability.


 


“Syntek” means Syntek Capital AG.


 


“Syntek Existing Note” means that certain promissory note in
the original principal amount of $6,500,000, dated December 16, 2005,
issued by the Company to Syntek.


 


“Significant Subsidiary” has the meaning assigned thereto in Rule 1-02(w) of
Regulation S-X, including, but not limited to: Vyyo Ltd., a corporation duly
incorporated and existing under the laws of the state of Israel; Xtend Networks
Ltd., a corporation duly incorporated and existing under the laws of the state
of Israel; and Xtend Networks, Inc., a Delaware corporation.


 


“Subsidiary” means any Person in which the Company, directly
or indirectly, owns capital stock or holds an equity or similar interest.


 


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“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 Global Market (or any
successor thereto), or (c) if trading ceases to occur on the Nasdaq Global
Market (or any successor thereto), any Business Day.


 


“Trading Market” means the Nasdaq Global Market or any other
Eligible Market, or any national securities exchange, market or trading or
quotation facility on which the Common Stock is then listed or quoted.


 


“Transaction” means the transaction contemplated by the
Transaction Documents.


 


“Transaction Documents” means this Agreement, the schedules
and exhibits attached hereto, the Convertible Notes, the Registration Rights
Agreement, and the Guaranty and Security Agreement.


 


ARTICLE II

PURCHASE AND SALE


 


2.1           Closing.


 


(a)           Subject
to the terms and conditions set forth in Article V herein, at the
Closing the Company shall issue and sell to each Investor, and each Investor
shall, severally and not jointly, purchase from the Company, a Convertible Note
in the aggregate principal amount set forth opposite such Investor’s name on Exhibit A
hereto under the heading “Convertible Note Amount.”  The date and time of the Closing and shall be
10:00 a.m., New York City time, on the Closing Date.  The Closing shall take place at the offices
of Investor Counsel.


 


(b)           At
the Closing, (i) each Investor shall deliver or cause to be delivered to
the Company the cash purchase price set forth opposite such Investor’s name on Exhibit A
hereto under the heading “Cash Purchase Price” in United States dollars and in
immediately available funds, by wire transfer to an account designated in
writing to such Investor by the Company for such purpose, and (ii) the outstanding
principal under the GS Existing Note or the Syntek Existing Note, as the case
may be, in the amount set forth opposite such Investor’s name on Exhibit A
hereto under the heading “Outstanding Principal Amount of Existing Notes” shall
be deemed canceled (for the avoidance of doubt, the accrued and unpaid interest
under such Existing Notes will be paid by the Company to the Investors in
accordance with Section 4.6 hereof).


 


ARTICLE III

REPRESENTATIONS AND WARRANTIES


 


3.1           Representations and
Warranties of the Company.  The
Company hereby represents and warrants to each Investor that, except as set
forth in the SEC Reports (as hereinafter defined) or in the Schedule of
Exceptions attached as Exhibit E to this Agreement, which
exceptions shall be deemed to be part of the representations and warranties
made hereunder, the following representations are true and complete as of the
date hereof.  The Schedule of Exceptions
shall be arranged in sections corresponding to the numbered and lettered


 


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sections and subsections
contained in this Section 3, and the disclosures in any section or
subsection of the Schedule of Exceptions shall qualify other sections and
subsections in this Section 3 only to the extent it is reasonably apparent
from a reading of the disclosure that such disclosure is applicable to such
other sections and subsections:


 


(a)           Organization
and Qualification.  Each of the
Company and the Significant Subsidiaries is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite legal
authority to own and use its properties and assets and to carry on its business
as currently conducted.  Neither the
Company nor any Significant Subsidiary is in violation of any of the provisions
of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. 
Each of the Company and the Significant Subsidiaries is duly qualified
to do business and is in good standing as a foreign corporation or other entity
in each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, would not reasonably be
expected to individually or in the aggregate, (i) materially and adversely
affect the legality, validity or enforceability of any Transaction Document, (ii) have
or result in a material adverse effect on the results of operations, assets,
business or financial condition of the Company and the Significant
Subsidiaries, taken as a whole on a consolidated basis or (iii) materially
and adversely impair the Company’s ability to perform fully on a timely basis
its obligations under any of the Transaction Documents (any of (i), (ii) or
(iii), a “Material Adverse Effect”).


 


(b)           Subsidiaries.  Other than the Significant Subsidiaries and
the Insignificant Subsidiaries, the Company has no other direct or indirect
Subsidiaries.  The Company owns, directly
or indirectly, all of the capital stock or comparable equity interests of each
Subsidiary free and clear of any Lien (except as contemplated by the Guaranty
and Security Agreement), and all the issued and outstanding shares of capital
stock or comparable equity interest of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights.  None of the Insignificant Subsidiaries (i) carries
on any substantive business operations or activities or (ii) has assets or
liabilities in excess of $50,000.


 


(c)           Authorization;
Enforcement.  The Company has the
requisite corporate authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents to which it is a party and
otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of each of the
Transaction Documents to which it is a party by the Company and the
consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action on the part of the Company and no
further consent or action is required by the Company, its Board of Directors or
its stockholders.  Each of the
Transaction Documents to which it is a party has been (or upon delivery will
be) duly executed by the Company and is, or when delivered in accordance with
the terms hereof, will constitute, the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
may be limited by (i) applicable bankruptcy, insolvency, reorganization or
other laws of general application relating to or affecting the enforcement of
creditors rights generally, and (ii) the effect of rules of law governing
the availability of specific performance and other equitable remedies.


 


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(d)           No
Conflicts.  The execution, delivery
and performance of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
do not, and will not, (i) conflict with or violate any provision of the
Company’s or any Significant Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, (ii) conflict
with, or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Significant Subsidiary debt or otherwise)
or other understanding to which the Company or any Significant Subsidiary is a
party or by which any property or asset of the Company or any Significant
Subsidiary is bound, or affected, except to the extent that such conflict,
default, termination, amendment, acceleration or cancellation right would not
reasonably be expected to have a Material Adverse Effect or (iii) result
in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the
Company or a Significant Subsidiary is subject (including federal and state
securities laws and regulations and the rules and regulations of any
self-regulatory organization to which the Company or its securities are
subject), or by which any property or asset of the Company or a Significant
Subsidiary is bound or affected, except to the extent that such violation would
not reasonably be expected to have a Material Adverse Effect.


 


(e)           Authorization
of Securities.  The Securities are
duly authorized and, when issued and paid for in accordance with the
Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens and shall not be subject to
preemptive or similar rights of stockholders. 
Upon issuance or conversion in accordance with the Convertible Notes,
the Conversion Shares will be validly issued, fully paid and nonassessable and
free from all preemptive or similar rights, taxes, liens and charges with
respect to the issue thereof, with the holders being entitled to all rights
accorded to a holder of Conversion Shares. 
As of the Closing, the Company shall have reserved from its duly
authorized capital stock the number of Conversion Shares issuable upon
conversion of the Convertible Notes (without taking into account any
limitations on the conversion, or redemption of the Convertible Notes set forth
in the Convertible Notes).


 


(f)            Capitalization.  The aggregate number of shares and type of
all authorized, issued and outstanding classes of capital stock, options and
other securities of the Company (whether or not presently convertible into or
exercisable or exchangeable for shares of capital stock of the Company) is set
forth in Schedule 3.1(f) hereto. 
All outstanding shares of capital stock are duly authorized, validly
issued, fully paid and nonassessable and have been issued in compliance with Section 5
of the Securities Act.  The Company has
not issued any other options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or entered
into any agreement giving any Person any right to subscribe for or acquire, any
shares of Common Stock, or securities or rights convertible or exchangeable
into shares of Common Stock.  Except for
customary adjustments as a result of stock dividends, stock splits,
combinations of shares, reorganizations, recapitalizations, reclassifications
or other similar events, there are no anti-dilution or price adjustment
provisions contained in any security issued by the Company (or in any agreement
providing rights to security holders) and the issuance and sale of the
Securities will not obligate the Company to issue shares of Common Stock or
other


 


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securities to
any Person (other than the Investors) and will not result in a right of any
holder of securities to adjust the exercise, conversion, exchange or reset
price under such securities.  To the
knowledge of the Company, no Person or group of related Persons beneficially
owns (as determined pursuant to Rule 13d-3 under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)),
or has the right to acquire, by agreement with or by obligation binding upon
the Company, beneficial ownership of in excess of 5% of the outstanding Common
Stock, ignoring for such purposes any limitation on the number of shares of
Common Stock that may be owned at any single time.


 


(g)           Consents.  None of the Company nor any of its
Significant Subsidiaries is required to obtain any consent, authorization or
order of, or make any filing or registration with, any court, governmental
agency or any regulatory or self-regulatory agency or any other Person in order
for it to execute, deliver or perform any of its obligations under or
contemplated by the Transaction Documents, in each case in accordance with the
terms hereof or thereof.  All consents,
authorizations, orders, filings and registrations (which the Company is
required to obtain pursuant to the preceding sentence) have been obtained or
effected, or will have been obtained or effected, on or prior to the Closing
Date, except to the extent that failure to obtain such consent would not be
expected to result in a Material Adverse Effect, and the Company and its
Significant Subsidiaries are unaware of any facts or circumstances that might
prevent the Company from obtaining or effecting any of the registration,
application or filings pursuant to the preceding sentence.


 


(h)           SEC
Reports; Financial Statements.  The
Company has filed all reports required to be filed by it under the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for
the twelve months preceding the date hereof (the foregoing materials (together
with any materials filed by the Company under the Exchange Act, whether or not
required) being collectively referred to herein as the “SEC Reports” and, together with this
Agreement and the Schedules to this Agreement, the “Disclosure Materials”) on a timely basis.  As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the SEC promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.  The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the SEC with
respect thereto as in effect at the time of filing.  Such financial statements have been prepared
in accordance with United States generally accepted accounting principles
applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise
specified in such financial statements or the notes thereto, and fairly present
in all material respects the financial position of the Company and its
consolidated subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended except as may be indicated
in the notes thereto and except, in the case of interim statements, for the
absence of footnotes and as permitted by Form 10-Q, subject, in the case
of unaudited statements, to normal, year-end audit adjustments.


 


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(i)            Termination of
Registration.  The Company filed Form 15-12(g) (the
“Certification and Notice of Termination”)
with the SEC on April 24, 2008.  As
of April 24, 2008, the Company satisfied the requirements of the
Certification and Notice of Termination. 
The Certification and Notice of Termination complied in all material
respects with the requirements of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder.


 


(j)            No
Adverse Changes.  Since February 14,
2008, (i) there has been no event, occurrence or development that,
individually or in the aggregate, has had or that would reasonably be expected
to result in a Material Adverse Effect, (ii) the Company has not incurred
any material liabilities other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed in filings
made with the SEC, (iii) the Company has not altered its method of
accounting or the identity of its auditors, (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its
stockholders, in their capacities as such, or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock (except for
repurchases by the Company of shares of capital stock held by employees,
officers, directors, or consultants pursuant to an option of the Company to
repurchase such shares upon the termination of employment or services) and (v) the
Company has not issued any equity securities to any officer, director or
Affiliate, except pursuant to existing Company stock-based plans.


 


(k)           Intellectual
Property.  To the Company’s
knowledge, the Company and the Subsidiaries own, possess, license or have other
rights to use all foreign and domestic patents, patent applications, reexams,
reissues, divisional continuations, or any patent or application claiming
priority therefrom, including any patent that may be issued as a result of an
interference action, trade and service marks, trade and service mark
registrations, trade names, copyrights, licenses, inventions, trade secrets,
technology, Internet domain names, know-how and other intellectual property
(collectively, the “Intellectual Property
Rights”) necessary for the conduct of their respective businesses
described in the SEC Reports, except where such violations or infringements
would not reasonably be expected to result in a Material Adverse Effect, (a) there
are no rights of third parties to any such Intellectual Property Rights; (b) to
the Company’s knowledge, there is no infringement by third parties of any such
Intellectual Property Rights; (c) there is no pending or, to the Company’s
knowledge, threatened action, suit, proceeding or claim by others challenging
the Company’s and its Significant Subsidiaries’ rights in or to any such
Intellectual Property Rights, and the Company is unaware of any facts which
would form a reasonable basis for any such claim; (d) there is no pending
or, to the Company’s knowledge, threatened action, suit, proceeding or claim by
others challenging the validity or scope of any such Intellectual Property
Rights and (e) there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others that the Company and its
subsidiaries infringe or otherwise violate any patent, trademark, copyright,
trade secret or other proprietary rights of others, and the Company is unaware
of any other fact which would form a reasonable basis for any such claim.  All of the licenses and sublicenses and
consent, royalty or other agreements concerning Intellectual Property Rights
which are necessary for the conduct of the Company’s business as currently
conducted to which the Company or the Significant Subsidiary is a party or by
which any of their respective assets are bound (other than generally
commercially available, non-custom, off-the-shelf software application programs
having a retail acquisition price of less than $25,000 per license)
(collectively, “License Agreements”)
are valid and binding obligations of the Company or the Significant
Subsidiaries, as the case may be


 


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and, to the
Company’s knowledge, the other parties thereto, enforceable in accordance with
their respective terms, except to the extent that enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws affecting the enforcement of
creditors’ rights generally, and there exists no event or condition which will
result in a material violation or breach of or constitute (with or without due
notice or lapse of time or both) a default by the Company under such License
Agreements.


 


(l)            Tax
Matters.  The Company and each
Significant Subsidiary (i) has timely prepared and filed all foreign,
federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject, (ii) has paid all
material taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith, with respect to which
adequate reserves have been set aside on the books of the Company and (iii) has
set aside on its books provision reasonably adequate for the payment of all
taxes for periods subsequent to the periods to which such returns, reports or
declarations apply.  To the Company’s
knowledge, there are no unpaid taxes in any material amount claimed to be past
due by the taxing authority of any jurisdiction, and the Company knows of no
basis for such claim.  The Company has
not waived or extended any statute of limitations at the request of any taxing
authority.  There are no outstanding tax
sharing agreements or other such arrangements between the Company and any other
corporation or entity and the Company is not presently undergoing any audit by
a taxing authority.


 


(m)          Absence
of Litigation.  Except as disclosed
in the Company’s SEC Reports, there is no action, suit, claim, or proceeding,
or, to the Company’s knowledge, inquiry or investigation, before or by any
court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company, threatened against or affecting
the Company or any of its Significant Subsidiaries that would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.


 


(n)           Environmental
Matters.  To the Company’s knowledge,
the Company and each Significant Subsidiary (i) is not in violation of any
statute, rule, regulation, decision or order of any governmental agency or body
or any court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, “Environmental Laws”),
(ii) does not own or operate any real property contaminated with any
substance in violation of any Environmental Laws, (iii) is not liable for
any off-site disposal or contamination pursuant to any Environmental Laws and (iv) is
not subject to any claim relating to any Environmental Laws; which violation,
contamination, liability or claim has had or would reasonably be expected to
have a Material Adverse Effect, individually or in the aggregate; and there is
no pending or, to the Company’s knowledge, threatened investigation that might
lead to such a claim.


 


(o)           Compliance.  None of the Company nor any Significant Subsidiary,
except in each case as would not, individually or in the aggregate, reasonably
be expected to have or result in a Material Adverse Effect, (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Significant Subsidiary under), nor has the Company or any


 


9

















 


Significant
Subsidiary received written notice of a claim that it is in default under or
that it is in violation of, any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party or by which it or any of
its properties is bound (whether or not such default or violation has been waived),
(ii) is in violation of any order of any court, arbitrator or governmental
body or (iii) is or has been in violation of any statute, rule or
regulation of any governmental authority.


 


(p)           Title
to Assets.  The Company and the
Significant Subsidiaries have good and marketable title in fee simple to all
real property owned by them that is material to the business of the Company and
the Significant Subsidiaries and good and marketable title in all personal
property owned by them that is material to the business of the Company and the
Significant Subsidiaries, in each case free and clear of all Liens, except for
Liens that do not, individually or in the aggregate, have or would reasonably
be expected to result in a Material Adverse Effect.  Any real property and facilities held under
lease by the Company and the Significant Subsidiaries are held by them under
valid, subsisting and enforceable leases of which the Company and the
Significant Subsidiaries are in material compliance.


 


(q)           No
General Solicitation; Placement Agent’s Fees.  Neither the Company, nor any of its
Affiliates, nor any Person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with the offer or sale of the Securities.  The Company shall be responsible for the
payment of any placement agent’s fees, financial advisory fees, or brokers’
commissions (other than for persons engaged by any Investor or its investment
advisor) relating to or arising out of the issuance of the Securities pursuant
to this Agreement.  The Company shall
pay, and hold each Investor harmless against, any liability, loss or expense
(including, without limitation, reasonable attorney’s fees and out-of-pocket
expenses) arising in connection with any such claim for fees arising out of the
issuance of the Securities pursuant to this Agreement.


 


(r)            Private
Placement.  None of the Company, its
Subsidiaries, any of their Affiliates, or any Person acting on their behalf
has, directly or indirectly, at any time within the past six months, made any
offer or sale of any security or solicitation of any offer to buy any security
under circumstances that would (i) eliminate the availability of the
exemption from registration under Regulation D under the Securities Act in
connection with the offer and sale by the Company of the Securities as
contemplated hereby or (ii) cause the offering of the Securities pursuant
to the Transaction Documents to be integrated with prior offerings by the Company
for purposes of any applicable law, regulation or stockholder approval
provisions, including, without limitation, under the rules and regulations
of any Trading Market.  The Company is
not required to be registered as a United States real property holding
corporation within the meaning of the Foreign Investment in Real Property Tax
Act of 1980, as amended.


 


(s)           Registration
Rights.  Except as described in the
Registration Rights Agreement, the Company has not granted or agreed to grant
to any Person any rights (including “piggy-back” registration rights) to have
any securities of the Company registered with the SEC or any other governmental
authority that have not been satisfied or waived.


 


10

















 


(t)            Application
of Takeover Protections.  There is no
control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s charter documents or the laws of its state of incorporation
that is or would become applicable to any of the Investors as a result of the
Investors and the Company fulfilling their obligations or exercising their
rights under the Transaction Documents, including, without limitation, as a
result of the Company’s issuance of the Securities and the Investors’ ownership
of the Securities.


 


(u)           Disclosure.  Neither this Agreement, nor any of the
Transaction Documents, certificates or other documents made or delivered at the
Closing, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not
misleading.


 


(v)           Acknowledgment
Regarding Investors’ Purchase of Securities.  Based upon the assumption that the
transactions contemplated by this Agreement are consummated in all material
respects in conformity with the Transaction Documents, the Company acknowledges
and agrees that each of the Investors is acting solely in the capacity of an
arm’s-length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby. 
The Company further acknowledges that no Investor is acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to this Agreement and the transactions contemplated hereby and any
advice given by any Investor or any of their respective representatives or
agents in connection with the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to the Investors’ purchase
of the Securities.  The Company further
represents to each Investor that the Company’s decision to enter into this
Agreement has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its representatives.


 


(w)          Insurance.  The Company and the Significant Subsidiaries
are insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and customary in the
businesses and location in which the Company and the Significant Subsidiaries
are engaged.  Neither the Company nor any
Significant Subsidiary has any knowledge that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business without a significant increase in cost.


 


(x)            ERISA.  As of the Closing Date, neither the Company
nor any of its Significant Subsidiaries has any obligation or any liability in
respect of any employee pension benefit plan subject to the provisions of Title
IV of ERISA or Section 412 of the Internal Revenue Code of 1986 or Section 302
of ERISA, and in respect of which the Company or any Significant Subsidiary
(or, if such plan were terminated, would under Section 4069 of ERISA be
deemed to be) an “employer” as defined in Section 3(5) of ERISA or
any multiemployer plan as defined in Section 4001(a)(3) of ERISA.


 


(y)           Regulatory
Permits.  The Company and the
Significant Subsidiaries possess all certificates, authorizations and permits
issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in
the SEC Reports, except where the failure to possess such permits does not,
individually or in the aggregate, have or result in a Material Adverse Effect (“Material Permits”), and neither the Company
nor any Significant Subsidiary has received any written notice of proceedings
relating to the revocation or modification of any Material Permit.


 


11

















 


(z)            Transactions
With Affiliates and Employees. 
Except as set forth in the SEC Reports made on or prior to the date
hereof, none of the officers or directors of the Company and, to the Company’s
knowledge, none of the employees of the Company is presently a party to any
transaction with the Company or any Significant Subsidiary or to a presently
contemplated transaction (other than for ordinary course services as employees,
officers and directors) that would be required to be disclosed pursuant to Item
404 of Regulation S-K promulgated under the Securities Act.


 


(aa)         Questionable
Payments.  Neither the Company nor
any Significant Subsidiary, nor, to the Company’s knowledge, directors,
officers, employees, agents or other Persons acting on behalf of the Company or
any Significant Subsidiary has, in the course of its actions for, or on behalf
of, the Company:  (i) used any
corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to foreign or domestic political activity; (ii) made
any direct or indirect unlawful payments to any foreign or domestic
governmental officials or employees from corporate funds; (iii) violated
in any respect any provision of the Foreign Corrupt Practices Act of 1977, as
amended or (iv) made any other unlawful bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic
government official or employee which, in the aggregate of clauses (i) through
(iv) would have a Material Adverse Effect.


 


(bb)         Internal
Accounting Controls.  The Company and
the Significant Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s
general or specific authorization and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.


 


(cc)         Sarbanes-Oxley
Act.  Through March 31, 2008,
the Company was in compliance with applicable requirements of the
Sarbanes-Oxley Act of 2002, as amended, and applicable rules and
regulations promulgated by the SEC thereunder, except where such noncompliance
would not have, individually or in the aggregate, a Material Adverse Effect.


 


(dd)         Investment
Company.  Neither the Company nor any
of its Significant Subsidiaries is (i) an “investment company” as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (ii) a
“holding company” as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935, as amended.


 


(ee)         Margin
Stock.  Neither the Company nor any
of the Significant Subsidiaries is engaged principally, or as one of their
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock (as such term is defined in Regulation U).  Immediately before and after giving effect to
the sale of the Convertible Notes,


 


12

















 


Margin Stock
will constitute less than 25% of the Company’s assets as determined in
accordance with Regulation U.  No part of
the proceeds of the Convertible Notes will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately, to purchase,
acquire or carry any Margin Stock or for any purpose that entails a violation
of, or that is inconsistent with, the provisions of the regulations of the
Board of Governors of the Federal Reserve System of the United States of
America, including Regulation T, U or X.


 


(ff)           Solvency.  Both before and after giving effect to (a) the
Convertible Notes to be made or extended on the Closing Date or such other date
as the Convertible Notes requested hereunder are made or extended, (b) the
disbursement of the proceeds of such Convertible Notes pursuant to the
instructions of the Company, (c) the Redemption (as hereinafter defined)
and (d) the payment and accrual of all transaction costs in connection
with the foregoing, each of the Company and each of its Subsidiaries is
Solvent.


 


3.2           Representations and
Warranties of the Investors.  Each
Investor hereby, as to itself only and for no other Investor, represents and
warrants to the Company as follows:


 


(a)           Organization;
Authority.  Such Investor is an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. 
The purchase by such Investor of the Securities hereunder has been duly
authorized by all necessary action on the part of, such Investor.  This Agreement has been duly executed and
delivered by such Investor and constitutes the valid and binding obligation of
such Investor, enforceable against it in accordance with its terms, except as
may be limited by (i) applicable bankruptcy, insolvency, reorganization or
other laws of general application relating to or affecting the enforcement of
creditors rights generally and (ii) the effect of rules of law
governing the availability of specific performance and other equitable
remedies.


 


(b)           No
Public Sale or Distribution; Investment Intent.  Such Investor is acquiring the Securities in
the ordinary course of business for its own account and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, and such Investor does not have a present arrangement to effect any
distribution of the Securities to or through any person or entity.


 


(c)           Investor
Status.  At the time such Investor
was offered the Securities, it was, and at the date hereof it is, an “accredited
investor” as defined in Rule 501(a) under the Securities Act.


 


ARTICLE IV

OTHER AGREEMENTS OF THE PARTIES


 


4.1           Transfer
Restrictions.


 


(a)           The
Investors covenant that the Securities will only be disposed of pursuant to an
effective registration statement under, and in compliance with the requirements
of, the Securities Act or pursuant to an available exemption from the
registration requirements of the Securities Act, and in compliance with any
applicable state securities laws.  In
connection with


 


13

















 


any transfer
of Securities other than pursuant to an effective registration statement or to
the Company, the Company may require the transferor to provide to the Company
an opinion of counsel selected by the transferor, the form and substance of
which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration under the Securities Act.  Notwithstanding the foregoing, the Company
hereby consents to and agrees to register on the books of the Company and with
its transfer agent, without any such legal opinion, except to the extent that
the transfer agent requests such legal opinion, any transfer of Securities by
an Investor to an Affiliate of such Investor, provided that the transferee
makes customary representations to Company and certifies to the Company that it
is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and provided that such Affiliate does not request any removal of
any existing legends on any certificate evidencing the Securities.


 


(b)           Such
Investor understands that the instruments representing the Convertible Notes
and the stock certificates representing the Conversion Shares until such time
as the resale of the Conversion Shares have been registered and sold under the
Securities Act, shall bear any legend as required by the “blue sky” laws of any
state and a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of such stock certificates):


 


NEITHER THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED (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.


 


The legend set
forth above shall be removed and the Company shall issue a certificate without
such legend to the holder of the Securities upon which it is stamped, if,
unless otherwise required by state securities laws, (i) such Securities
have been registered and sold pursuant to an effective registration statement
under the Securities Act or (ii) in connection with a sale, assignment or
other transfer, the Company reasonably requests that such holder provide the
Company with opinion of counsel reasonably acceptable to the Company that the
sale, assignment or transfer of the Securities may be made without registration
under the applicable requirements of the Securities Act.


 


4.2           Furnishing of
Information.  So long as any Investor
owns any Securities, the Company covenants to use commercially reasonable
efforts to timely file (or obtain extensions in respect thereof and file within
the applicable grace period) all reports required to be filed by the Company
after the date hereof pursuant to the Exchange Act.  Upon the reasonable request of any Investor,
the Company shall deliver to such Investor a written certification of a duly
authorized officer as to whether it has complied with the preceding
sentence.  The Company further covenants
that it will take such further action as any holder of Securities may
reasonably request to satisfy the provisions of this Section 4.2.  Notwithstanding the foregoing, each


 


14

















 


Investor acknowledges that the
Company filed the Certification and Notice of Termination with the SEC on April 24,
2008, and is no longer obligated to file reports with the SEC other than the
Annual Report on Form 10-K for the fiscal year ended March 31, 2008,
which the Company will file with the SEC within the time period required by the
SEC.


 


4.3           Integration.  The Company shall not, and shall use its
commercially reasonable efforts to ensure that no Affiliate thereof shall,
sell, offer for sale or solicit offers to buy or otherwise negotiate in respect
of any security (as defined in Section 2 of the Securities Act) that would
be integrated with the offer or sale of the Securities in a manner that would
require the registration under the Securities Act of the sale of the Securities
to the Investors or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading
Market.


 


4.4           Reservation of
Securities.  The Company shall
maintain a reserve from its duly authorized shares of Common Stock for issuance
pursuant to the Transaction Documents in such amount as may be required to
fulfill its obligations in full under the Transaction Documents.  In the event that at any time the then
authorized shares of Common Stock are insufficient for the Company to satisfy
its obligations in full under the Transaction Documents, the Company shall
promptly take such actions as may be required to increase the number of
authorized shares.


 


4.5           Securities Laws
Disclosure; Publicity.  The Company
shall disclose the material terms of the transactions contemplated hereby in its
Annual Report on Form 10-K for the fiscal year ended March 31,
2008.  The Company and the Investors
shall consult with each other in issuing any press releases or otherwise making
public statements or filings and other communications with the SEC or any
regulatory agency or Trading Market with respect to the transactions
contemplated hereby, and neither party shall issue any such press release or
otherwise make any such public statement, filing or other communication without
the prior consent of the other, except if such disclosure is required by law,
in which case the disclosing party shall promptly provide the other party with
prior notice of such public statement, filing or other communication.  Notwithstanding the foregoing, the Company
shall not publicly disclose the name of any Investor, or include the name of
any Investor in any press release without the prior written consent of such
Investor.  Except as required under the
Transaction Documents, the Company shall not, and shall cause each of its Subsidiaries
and its and each of their respective officers, directors, employees and agents
not to, provide any Investor with any material nonpublic information regarding
the Company or any of its Subsidiaries from and after the issuance of the above
referenced press release without the express written consent of such Investor.


 


4.6           Use of Proceeds.  Within two (2) Business Days following
the Closing, the Company shall use proceeds from the sale of the Securities to
pay, (i) to Goldman Sachs, all accrued and unpaid interest under the GS
Existing Note, and (ii) to Syntek, all accrued and unpaid interest under
the Syntek Existing Note (collectively, the “Interest
Payment”), in each case, in United States dollars and in immediately
available funds, by wire transfer to an account designated in writing to the
Company by the applicable Investor.  The
Company shall use the remaining net proceeds from the sale of the Securities
for working capital and general corporate purposes.  Pending use for working capital and general
corporate purposes, the Company intends to invest the net proceeds from the
sale of the Securities in short-term, interest-bearing,


 


15

















 


investment-grade securities, or
as otherwise pursuant to the Company’s customary investment policies.  Provided that the Closing has occurred in
accordance with the terms of this Agreement, then, effective upon receipt of
the Interest Payment in accordance with the terms of this Section 4.6, (i) Syntek
hereby waives any default by the Company under the Syntek Existing Note and (ii) Goldman
Sachs hereby waives any default by the Company under the GS Existing Note.


 


4.7           Short Sales.  Each Investor represents, warrants and agrees
that, since the date on which any of the Company or first contacted such
Investor about the potential sale of the Securities, it has not engaged in any
transactions in the securities of the Company (including, without limitation,
any Short Sales involving the Company’s securities).  Such Investor covenants that it will not
engage in any transactions in the securities of the Company (including Short
Sales) prior to the time that the transactions contemplated by this Agreement
are publicly disclosed.  Such Investor
further covenants that it will not engage in any Short Sales in the Company’s
securities for a period of 180 days from the Closing Date.  For purposes hereof, “Short Sales” include,
without limitation, all “short sales” as defined in Rule 3b-3 of the
Exchange Act and Rule 200 promulgated under Regulation SHO under the
Exchange Act, whether or not against the box, and all types of direct and
indirect stock pledges, forward sales contracts, options, puts, calls, short
sales, swaps, “put equivalent positions” (as defined in Rule 16a-l(h) under
the Exchange Act) and similar arrangements (including on a total return basis),
and sales and other transactions through non-US broker dealers or foreign
regulated brokers.


 


ARTICLE V

CONDITIONS


 


5.1           Conditions Precedent
to each Investor’s Obligation to Purchase. 
The obligation of each Investor to purchase the Securities at the
Closing is subject to the satisfaction or waiver by such Investor, at or before
the Closing, of each of the following conditions:


 


(a)           The
Company and each Subsidiary, as applicable, shall have duly executed and
delivered to each Investor:


 


(i)            a Convertible Note in
favor of such Investor in the aggregate principal amount as is set forth
opposite such Investor’s name on the Schedule of Investors;


 


(ii)           the Guaranty and
Security Agreement signed on behalf of the Company, and each Subsidiary party
thereto, together with the following (subject to the provisions of the Guaranty
and Security Agreement allowing delivery of certain items post-Closing):


 


(1)           any certificated
securities representing shares of capital stock or other similar interests
owned by or on behalf of any Grantor (as defined in the Guaranty and Security
Agreement) constituting Collateral (as defined in the Guaranty and Security
Agreement) as of the Closing Date after giving effect to the Transactions;


 


16














 


(2)           any promissory notes
and other instruments evidencing all loans, advances and other debt owed or
owing to any Grantor constituting Collateral as of the Closing Date after
giving effect to the Transactions;


 


(3)           stock powers and
instruments of transfer, endorsed in blank, with respect to such certificated
securities, promissory notes and other instruments;


 


(4)           descriptions of all
intellectual property, including all patents, trademarks and copyrights, owned
by the Company and its Subsidiaries in detail reasonably satisfactory to the
Investors;


 


(5)           all instruments and
other documents, including UCC financing statements, required by law or
reasonably requested by the Collateral Agent to be filed, registered or
recorded to create or perfect the Liens intended to be created under the
Guaranty and Security Agreement; and


 


(6)           results of a search of
the UCC (or equivalent) filings made and tax and judgment lien searches with
respect to the Grantors in the jurisdictions contemplated by the Guaranty and
Security Agreement and copies of the financing statements (or similar
documents) disclosed by such search and evidence reasonably satisfactory to the
Collateral Agent that the Liens indicated by such financing statements (or
similar documents) are acceptable to the Collateral Agent or have been
released; and


 


(iii)          the Registration Rights
Agreement.


 


(b)           Such
Investor shall have received the opinion from the Company’s General Counsel,
dated as of the Closing Date, in substantially the form of Exhibit F
attached hereto.


 


(c)           The
Company shall have delivered a certificate, executed on behalf of the Company
by its Secretary, dated as of the Closing Date, certifying the resolutions
adopted by the Board of Directors of the Company approving the transactions
contemplated by the Transaction Documents and the issuance of the Securities,
certifying the current versions of the Certificate and Bylaws of the Company
and certifying as to the signatures and authority of persons signing this
Agreement and related documents on behalf of the Company.


 


(d)           The
representations and warranties of the Company shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by the Company at or prior to the Closing Date.  Such Investor shall have received a
certificate, executed by the Chief Executive Officer of the Company, dated as
of the Closing Date, to the foregoing effect and as to such other matters as
may be reasonably requested by such Investor.


 


17

















 


(e)           The
Company shall have obtained all governmental, regulatory or third party
consents and approvals, if any, necessary for the sale of the Securities,
except for those consents and approvals set forth in Sections 3.1(d), 3.1(g) and
3.1(j) to the Schedule of Exceptions.


 


(f)            The
Investors shall have received all fees and other amounts due and payable on or
prior to the Closing Date pursuant to Section 6.2 hereof.


 


(g)           The
Company shall have delivered to such Investor such other documents relating to
the transactions contemplated by this Agreement as such Investor or its counsel
may reasonably request.


 


5.2           Conditions Precedent
to the Obligations of the Company. 
The Company’s obligation to sell and issue the Securities at the Closing
is, at the option of the Company, subject to the fulfillment or waiver of the
following conditions:


 


(a)           The
Investors shall have delivered payment of the purchase price to the Company for
the Securities.


 


(b)           Any
authorization, approval, or permit of any governmental authority or regulatory
body required to be obtained by the Company or any of the Investors in
connection with the issuance of and sale of the Securities and the performance
of the obligations in this Agreement shall have been obtained and effective as
of the Closing Date.


 


(c)           The
representations and warranties made by the Investors in Section 3.2
hereof qualified as to materiality shall be true and correct at all times prior
to and on the Closing Date as if made on and as of the Closing Date, except to
the extent any such representation or warranty expressly speaks as of an
earlier date, in which case such representation or warranty shall be true and
correct as of such earlier date; and the representations and warranties made by
the Investors in Section 3.2 hereof not qualified as to materiality
shall be true and correct in all material respects at all times prior to and on
the Closing Date as if made on and as of the Closing Date, except to the extent
any such representation or warranty expressly speaks as of an earlier date, in
which case such representation or warranty shall be true and correct in all
material respects as of such earlier date.


 


(d)           All
covenants, agreements and conditions contained in this Agreement to be
performed, satisfied or complied with by the Investors on or prior to the
Closing Date shall have been performed, satisfied or complied with in all
material respects.


 


ARTICLE VI

MISCELLANEOUS


 


6.1           Termination.  This Agreement may be terminated by the
Company or any Investor, by written notice to the other parties, if the Closing
has not been consummated by the third Business Day following the date of this
Agreement; provided that no such termination will affect the right of any party
to sue for any breach by the other party (or parties).


 


18

















 


6.2           Fees and Expenses.  At the Closing, the Company shall pay to the
Investor Counsel an aggregate of up to $15,000 for the legal fees and expenses
incurred or to be incurred in connection with its due diligence and the
preparation and negotiation of the Transaction Documents.  The Company further agrees it shall pay to
the Investor Counsel an aggregate of up to $50,000 for the legal fees and
expenses incurred or to be incurred in connection and the registration of the
Securities under the Registration Rights Agreement upon the effectiveness of
such registration statement.  In lieu of
the foregoing payment, Goldman Sachs may retain such amount at the Closing or
require the Company to pay such amount directly to Investor Counsel.  Except as expressly set forth in the
Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement.  The Company shall pay all transfer agent
fees, stamp taxes and other taxes and duties levied in connection with the
initial sale and issuance of their applicable Securities to the Investors, including
the conversion of the Convertible Notes.


 


6.3           Entire Agreement.  The Transaction Documents, together with the
Exhibits and Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements
and understandings, oral or written, with respect to such matters, which the
parties acknowledge have been merged into such documents, exhibits and
schedules.  At or after the Closing, and
without further consideration, the Company and the Investors will execute and
deliver such further documents as may be reasonably requested in order to give
practical effect to the intention of the parties under the Transaction
Documents.


 


6.4           Notices.  Any and all notices or other communications
or deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of (a) the
date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section prior to 6:30 p.m.  (New York City time) on a Trading Day, (b) the
next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a Trading Day or later than 6:30 p.m.  (New York City time) on any Trading Day, (c) the
Trading Day following the date of deposit with a nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom
such notice is required to be given.  The
addresses and facsimile numbers for such notices and communications are those
set forth on the signature pages hereof, or such other address or
facsimile number as may be designated in writing hereafter, in the same manner,
by any such Person.


 


6.5           Amendments; Waivers.  This Agreement may be amended and any
provision hereof may be waived (either generally or in a particular instance
and either retroactively or prospectively) with the written consent of each of (i) the
Company, (ii) Goldman Sachs, and (iii) Syntek; provided, however,
that following repayment of $1,500,000 of the principal amount under the
Convertible Note issued to Syntek hereunder (plus all accrued and unpaid
interest thereon), such amendment of or waiver under the Agreement shall no
longer require the written consent of Syntek; provided, further,
that no such amendment or waiver may materially and adversely affect the
economic interest of Syntek in the Company without the written consent of
Syntek.


 


19

















 


6.6           Construction.  The headings herein are for convenience only,
do not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.  The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict
construction will be applied against any party.


 


6.7           Successors and
Assigns.  This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
permitted assigns.  The Company may not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Investors.  Any
Investor may assign its rights under this Agreement to any Person to whom such
Investor assigns or transfers any Securities, provided such transferee agrees
in writing to be bound, with respect to the transferred Securities, by the
provisions hereof that apply to the “Investors.”


 


6.8           Governing Law;
Venue; Waiver of Jury Trial.  THE
CORPORATE LAWS OF THE STATE OF NEW YORK SHALL GOVERN ALL ISSUES CONCERNING THE
RELATIVE RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS.  ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.  THE COMPANY AND INVESTORS HEREBY
IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE
ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR ANY INVESTOR HEREUNDER,
IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED
HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS),
AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR
PROCEEDING BROUGHT BY THE COMPANY OR ANY INVESTOR, ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT,
ACTION OR PROCEEDING IS IMPROPER.  EACH
PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO
PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY
THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE
OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER
THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND
SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF.  NOTHING CONTAINED HEREIN SHALL BE DEEMED TO
LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY
LAW.  THE COMPANY AND INVESTORS HEREBY
WAIVE ALL RIGHTS TO A TRIAL BY JURY.


 


6.9           Survival.  The representations and warranties,
agreements and covenants contained herein shall survive the Closing.


 


20

















 


6.10         Execution.  This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. 
In the event that any signature is delivered by facsimile transmission,
such signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force
and effect as if such facsimile signature page were an original thereof.


 


6.11         Severability.  If any provision of this Agreement is held to
be invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.


 


6.12         Rescission and
Withdrawal Right.  Notwithstanding
anything to the contrary contained in (and without limiting any similar
provisions of) the Transaction Documents, whenever any Investor exercises a
right, election, demand or option owed to such Investor by the Company under a
Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then, prior to the performance
by the Company of the Company’s related obligation, such Investor may rescind
or withdraw, in its sole discretion, from time to time upon written notice to
the Company, any relevant notice, demand or election in whole or in part
without prejudice to its future actions and rights.


 


6.13         Replacement of
Securities.  If any certificate or
instrument evidencing any Securities is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for
and upon cancellation thereof, or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and the
execution by the holder thereof of a customary lost certificate affidavit of
that fact and an agreement to indemnify and hold harmless the Company for any
losses in connection therewith.  The
applicants for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs associated with the issuance of such
replacement Securities.


 


6.14         Other Engagements and
Activities.  The investment in the
Company made by Goldman Sachs (together with any other affiliate of Goldman
Sachs, the “GS Entities” or the “GS Entity”) pursuant to this Agreement, and
any subsequent investments in the Company by any GS Entity after the date
hereof, is made notwithstanding any engagement, prior to or subsequent to the
date hereof, by the Company, of any GS Entity as financial advisor, agent or
underwriter to the Company. 
Notwithstanding anything in the Transaction Documents to the contrary,
no GS Entity shall be restricted in any way from engaging in any brokerage, investment
advisory, financial advisory, financing, asset management, trading, market
making, arbitrage and other similar activities conducted in the ordinary course
of Goldman Sachs’s business.  Further,
neither the Company nor any Subsidiary shall have any right, by virtue of any
of the Transaction Documents to, in or to such other ventures or activities of
any GS Entity, or to the income or proceeds derived therefrom, and the pursuit
of such ventures, even if competitive with the business of the Company, shall
not be deemed wrongful or improper.  Any
GS Entity shall have the right to take for its own account or to recommend to
others, any investment opportunity including investment opportunities that may
be competitive with or involve the same line of business as that conducted or
proposed to be conducted from time to time by the Company.


 


21

















 


6.15         No Promotion.  Except as otherwise required by law and as
provided in Section 4.5 herein, the Company agrees that it will not,
without the prior written consent of Goldman Sachs in each instance, (i) use
in advertising, publicity, or otherwise the name of any GS Entity, or any
partner or employee of any GS Entity, nor any trade name, trademark, trade
device, service mark, symbol or any abbreviation, contraction or simulation
thereof owned by any GS Entity or (ii) represent, directly or indirectly,
that any product or any service provided by the Company has been approved or
endorsed by any GS Entity.  This
provision shall survive termination of the Transaction Documents.


 


[SIGNATURE PAGES TO FOLLOW]


 


22

















 


Investor
Signature Page


 


By its
execution and delivery of this signature page, the undersigned Investor hereby
joins in and agrees to be bound by the terms and conditions of the Securities
Purchase Agreement dated as of June 13, 2008 (the “Purchase Agreement”) by and among Vyyo
Inc.  and the investors (as defined
therein), as to the number of shares of Convertible Notes set forth below, and
authorizes this signature page to be attached to the Purchase Agreement or
counterparts thereof.


 


	
   

  	
   

  	
  GOLDMAN
  SACHS INVESTMENT

  
	
   

  	
   

  	
  PARTNERS
  MASTER FUND, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Goldman
  Sachs Investment Partners GP, LLC,

  
	
   

  	
   

  	
   

  	
  its General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Nick
  Advani

  
	
   

  	
   

  	
   

  	
  Name: Nick
  Advani

  
	
   

  	
   

  	
   

  	
  Title:
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for
  Notice:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Goldman
  Sachs Investment Partners Master Fund, 

  
	
   

  	
   

  	
  L.P.

  
	
   

  	
   

  	
  One New York
  Plaza

  
	
   

  	
   

  	
  New York, NY
  10004

  
	
   

  	
   

  	
  Telephone:
  (212) 902-4934

  
	
   

  	
   

  	
  Facsimile:
  (212) 346-3124

  
	
   

  	
   

  	
  Attention:
  Nick Advani

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy
  to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Goldman
  Sachs Investment Partners Master Fund, 

  
	
   

  	
   

  	
  L.P.

  
	
   

  	
   

  	
  One New York
  Plaza

  
	
   

  	
   

  	
  New York, NY
  10004

  
	
   

  	
   

  	
  Telephone:

  
	
   

  	
   

  	
  Facsimile:

  
	
   

  	
   

  	
  Attention:
  Rashid S. Alvi

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Proskauer
  Rose LLP

  
	
   

  	
   

  	
  1585
  Broadway

  
	
   

  	
   

  	
  New York, NY
  10036

  
	
   

  	
   

  	
  Facsimile:
  (212) 969-2900

  
	
   

  	
   

  	
  Telephone:
  (212) 969-3470

  
	
   

  	
   

  	
  Attention:
  Stuart Bressman, Esq.

  
					



 

















 


Investor
Signature Page


 


By its
execution and delivery of this signature page, the undersigned Investor hereby
joins in and agrees to be bound by the terms and conditions of the Securities
Purchase Agreement dated as of June 13, 2008 (the “Purchase Agreement”) by and among Vyyo
Inc.  and the investors (as defined
therein), as to the number of shares of Convertible Notes set forth below, and
authorizes this signature page to be attached to the Purchase Agreement or
counterparts thereof.


 


	
   

  	
   

  	
  Syntek
  Capital AG

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Franco Franca

  
	
   

  	
   

  	
   

  	
  Name: Franco
  Franca

  
	
   

  	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s/
  Paolo Giacometti

  
	
   

  	
   

  	
   

  	
  Name: Paolo
  Giacometti

  
	
   

  	
   

  	
   

  	
  Title: CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for
  Notice:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Syntek
  Capital AG

  
	
   

  	
   

  	
  Zugspitzstrasse
  15

  
	
   

  	
   

  	
  82049
  Pullach – Germany

  
	
   

  	
   

  	
  Telephone:
  +498955277201

  
	
   

  	
   

  	
  Facsimile:
  +498955277405

  
	
   

  	
   

  	
  Attention:
  Paolo Giacometti

  
	
   

  	
   

  	
  Email:
  paolo.giacometti@syntekcapital.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy
  to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Jeff Neurman

  
	
   

  	
   

  	
  Syntek
  Capital

  
	
   

  	
   

  	
  939 Union
  Street, #6A

  
	
   

  	
   

  	
  Brooklyn, NY
  11215

  
	
   

  	
   

  	
  Email:
  jeff.neurman@syntekcapital.com 

  



 

















 


Company
Signature Page


 


By its
execution and delivery of this signature page, the undersigned hereby joins in
and agrees to be bound by the terms and conditions of the Securities Purchase
Agreement dated as of June 13, 2008 (the “Purchase Agreement”) by and among Vyyo Inc. and the investors
(as defined therein), as to the number of shares of Convertible Notes set forth
below, and authorizes this signature page to be attached to the Purchase
Agreement or counterparts thereof.


 


	
   

  	
   

  	
  VYYO
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s/
  Wayne H. Davis

  
	
   

  	
   

  	
   

  	
  Name: 

  	
  Wayne H.
  Davis

  
	
   

  	
   

  	
   

  	
  Title: 

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for
  Notice:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6625 The
  Corners Parkway, Suite 100

  
	
   

  	
   

  	
  Norcross, GA
  30092

  
	
   

  	
   

  	
  Telephone:
  (678) 282-8011

  
	
   

  	
   

  	
  Facsimile:
  (770) 446-1110

  
	
   

  	
   

  	
  Attention:
  Tashia L. Rivard, General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy
  to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Warner
  Norcross & Judd LLP

  
	
   

  	
   

  	
  900 Fifth
  Third Center

  
	
   

  	
   

  	
  111 Lyon
  Street, NW

  
	
   

  	
   

  	
  Grand
  Rapids, MI 49503

  
	
   

  	
   

  	
  Telephone:
  (616) 752-2137

  
	
   

  	
   

  	
  Facsimile:
  (616) 222-2137

  
	
   

  	
   

  	
  Attention:
  Stephen C. Waterbury

  



 

















 


Exhibits:


 


A                                      Schedule
of Investors


 


B                                        Form of
Convertible Note


 


C                                        Form of
Restated Registration Rights Agreement


 


D                                       Form of
Guaranty and Security Agreement


 


E                                         Schedule
of Exceptions


 


F                                         Opinion
of the General Counsel of the Company


 

















 


Exhibit A


 


Schedule
of Investors


 


	
  Investor

  	
   

  	
  Convertible

  Note Amount

  	
   

  	
  Cash Purchase Price

  	
   

  	
  Outstanding Principal

  Amount of Existing

  Notes

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Goldman Sachs Investment Partners Master
  Fund, L.P.

  	
   

  	
  $

  	
  38,000,000

  	
   

  	
  $

  	
  3,000,000

  	
   

  	
  $

  	
  35,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Syntek Capital AG

  	
   

  	
  $

  	
  3,000,000

  	
   

  	
  $

  	
  1,500,000

  	
   

  	
  $

  	
  1,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  41,000,000

  	
   

  	
  $

  	
  4,500,000

  	
   

  	
  $

  	
  36,500,00