Document:

Exhibit 10.44

 

AMENDED
AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”), is dated as of June 13, 2008, by and among
Vyyo Inc., a Delaware corporation (the “Company”), and
the undersigned Investors (each, an “Investor,” and
collectively, the “Investors”).

 

WHEREAS:

 

A.                                   In connection with
the Securities Purchase Agreements dated March 18, 2006, March 28,
2007, and June 13, 2008 (collectively, the “Securities
Purchase Agreements”) by and among the parties hereto, as
applicable, the Company has agreed, upon the terms and subject to the
conditions set forth in the Securities Purchase Agreements, to issue and sell
to the Investors:  (i) shares of the
Company’s common stock (“Common Shares”),
par value $0.0001 per share, (ii) convertible notes of the Company,
including those issued with even date hereof (the “Convertible
Notes”) which will, among other things, be convertible into shares
of Common Stock (the “Conversion Shares”)
in accordance with the terms of the Convertible Notes, and (iii) Warrants
(the “Warrants”) have been exercised to
purchase additional shares of Common Shares (as exercised collectively, the “Warrant Shares”);

 

B.                                     Goldman Sachs
Investment Partners Master Fund, L.P. (“Goldman”)
possesses registration rights and other rights pursuant to an Amended and
Restated Registration Rights Agreement dated as of March 28, 2007, between
the Company and Goldman (the “Prior Agreement”);

 

C.                                     Goldman is a
Required Holder (as defined in the Prior Agreement), and desires to terminate
the Prior Agreement and to accept the rights created pursuant hereto in lieu of
the rights granted to it under the Prior Agreement; and

 

D.                                    The Investors are
parties to the Securities Purchase Agreement of even date herewith among the
Company and the Investors, certain of the Company’s and such Investors’
obligations under which are conditioned upon the execution and delivery of this
Agreement by such Investors and the Company.

 

NOW, THEREFORE, in
consideration of the mutual promises and the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and each of the Investors hereby agree as
follows:

 

1.                                       Definitions.

 

Capitalized terms
used herein and not otherwise defined herein shall have the respective meanings
set forth in the Securities Purchase Agreements.  As used in this Agreement, the following
terms shall have the following meanings:

 

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

 

 

(b)                                 “Closing Date” shall mean the date of this
Agreement.

 

(c)                                  “Effective Date” means the date the
Registration Statement (as defined below) has been declared effective by the
SEC.

 

(d)                                 “Effectiveness Deadline” means the date
which is one hundred and eighty (180) days after the after the Closing Date.

 

(e)                                  “Investor” means an Investor or any
transferee or assignee thereof to whom an Investor assigns its rights under
this Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 12 and any transferee or assignee
thereof to whom a transferee or assignee assigns its rights under this
Agreement and who agrees to become bound by the provisions of this Agreement in
accordance with Section 12.

 

(f)                                    “Person” means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.

 

(g)                                 “register,” “registered,” and “registration”
refer to a registration effected by preparing and filing one or more
Registration Statements in compliance with the Securities Act and pursuant to Rule 415
and the declaration or ordering of effectiveness of such Registration Statement(s) by
the SEC (as defined below).

 

(h)                                 “Registrable Securities” means (i) the
Common Shares, (ii) the Conversion Shares issued or issuable upon
conversion of the Convertible Notes, (iii) the Warrant Shares issued upon
exercise of the Warrants and (iv) any share capital of the Company issued
or issuable with respect to the Common Shares, Conversion Shares or the Warrant
Shares as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise, without regard to any limitations on
conversions of the Convertible Notes or exercises of the Warrants; provided
that, such Shares will not be deemed to be “Registrable Securities” if
such Shares are sold or sellable under Rule 144 without restriction of the
volume limitations of Rule 144(e).

 

(i)                                     “Registration Statement” means a
registration statement or registration statements of the Company filed under
the Securities Act covering the Registrable Securities.

 

(j)                                     “Required Holders” means the holders of at
least a majority of the outstanding Registrable Securities.

 

(k)                                  “Rule 415” means Rule 415 under
the Securities Act or any successor rule providing for offering securities
on a continuous or delayed basis.

 

(l)                                     “SEC” means the United States Securities and
Exchange Commission.

 

(m)                               “Securities Act” means the Securities Act of
1933, as amended.

 

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2.                                       Request
for Registration.

 

(a)                                  If
the Company’s applicable Registrable Securities are eligible for listing on,
and approved for listing by, any Eligible Market, and if the Company shall
receive at any time after June 1, 2010 a written request from the Required
Holders that the Company file a Registration Statement registering shares with
an aggregate public offering price that would, net of underwriting discounts
and commissions, exceed $10,000,000, then the Company shall, within ten (10) days
of the receipt thereof, give written notice of such request to all Investors
and shall, subject to the limitations of subsection 2(b), use its commercially
reasonable efforts to effect as soon as practicable, and in any event within 60
days of the receipt of such request, the registration under the Securities Act
on Form S-1 (or any comparable successor form) of all Registrable
Securities which the Investors request to be registered, as specified by notice
given by such Investors to the Company within twenty (20) days of the mailing
of such notice by the Company in accordance with Section 11.

 

(b)                                 If
the Investors initiating the registration request hereunder (“Initiating Investors”) intend to distribute
the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to this Section 2(b) and the Company shall include such
information in the written notice referred to in Section 2(a).  The underwriter will be selected by the
Company and shall be acceptable to a majority in interest of the Initiating
Investors.  In such event, the right of
any Investor to include its Registrable Securities in such registration shall
be conditioned upon such Investor’s participation in such underwriting and the
inclusion of such Investor’s Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Investors
and such Investor) to the extent provided herein.  All Investors proposing to distribute their
securities through such underwriting shall, together with the Company, enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting. 
Notwithstanding any other provision of this Section 2(b), if the
underwriter advises the Initiating Investors in writing that marketing factors
require a limitation of the number of shares to be underwritten, then the
Initiating Investors shall so advise all Investors holding Registrable
Securities which would otherwise be underwritten pursuant hereto, and the
number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all holders thereof, including the
Initiating Investors, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each holder; provided, however,
that the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities are first
entirely excluded from the underwriting. 
If any Investor would thus be entitled to include more securities than
such Investor requested to be registered, the excess shall be allocated among
the other remaining requesting Investors in the manner described in the
immediately preceding sentence.

 

(c)                                  Notwithstanding
the foregoing, if the Company shall furnish to Investors requesting a
Registration Statement pursuant to this Section 2, a certificate signed by
the Chief Executive Officer of the Company stating that in the good faith
judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for such Registration Statement
to be filed owing to a material pending transaction or 

 

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development and it is therefore
essential to defer the filing of such Registration Statement, the Company shall
have the right to defer taking action with respect to such filing for a period
of not more than ninety (90) days after receipt of the request of the Initiating
Investors; provided, however, that the Company may not utilize
this right more than once in any twelve (12)- month period.

 

(d)                                 In
addition, the Company shall not be obligated to effect, or to take any action
to effect, any registration pursuant to this Section 2:

 

(i)                                     in
any particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance, unless the Company is already subject to service
in such jurisdiction and except as may be required by the Securities Act;

 

(ii)                                  after
the Company has effected two such (2) registrations on behalf of the
Investors pursuant to this Section 2. 
For purposes of this paragraph, a Registration Statement shall not be counted
until such time as such Registration Statement has been declared effective by
the SEC, unless the Initiating Investors withdraw their request for such
registration other than as a result of material adverse information concerning
the business or financial condition of the Company which was not known to the
Initiating Investors prior to the date on which such registration was requested
and elect not to pay the registration expenses therefor;

 

(iii)                               during
the ninety (90) day period prior to the Company’s good faith estimate of the
date of filing of, and ending on a date one hundred eighty (180) days after the
effective date of, a Company initiated registration subject to Section 3
hereof; provided that the Company is actively employing in good faith its
commercially reasonable efforts to cause such registration statement to become
effective and that the Company’s estimate of the date of filing such
registration statement is made in good faith; or

 

(iv)                              if
the Initiating Investors propose to dispose of shares of Registrable Securities
that may be immediately registered on Form S-3 pursuant to a request made
pursuant to Section 4 below.

 

3.                                       Company
Registration.  If (but without any
obligation to do so) the Company proposes to register (including for this purpose
a registration effected by the Company for stockholders other than the
Investors) any of its stock or other securities under the Securities Act in
connection with the public offering of such securities solely for cash (other
than a registration relating solely to the sale of securities to participants
in a Company stock plan, a registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities or a
registration in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities which are also being registered),
the Company shall, at such time, promptly give each Investor written notice of
such registration.  Upon the written
request of each Investor given within twenty (20) days after mailing of such
notice by the Company in accordance with Section 15, the Company shall,
subject to the provisions of Section 6(q), use its 

 

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commercially reasonable efforts
to cause to be registered under the Securities Act all of the Registrable
Securities that each such Investor has requested to be registered; provided
that the Company shall have the right to postpone or withdraw any
registration statement pursuant to this Section 3 without obligation to
any Investors.

 

4.                                       Form S-3
Registration.  In case the Company
shall receive from any Investor or Investors a written request or requests that
the Company effect a registration on Form S-3 and any related
qualification or compliance with respect to all or a part of the Registrable
Securities owned by such Investor or Investors, the Company will:

 

(a)                                  promptly
give written notice of the proposed registration, and any related qualification
or compliance, to all other Investors;

 

(b)                                 as
soon as practicable, effect such registration and all such qualifications and
compliances as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Investor’s or Investors’
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any other Investor joining in
such request as are specified in a written request given within 15 days after
receipt of such written notice from the Company; provided, however,
that the Company shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 4: (1) if Form S-3
is not available for such offering by the Investors; (2) if the Investors,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public (net of any
underwriters’ discounts or commissions) of less than $2,000,000; (3) if
the Company shall furnish to the Investors a certificate signed by the Chief
Executive Officer of the Company stating that in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the
Company and its stockholders for such Form S-3 Registration to be effected
at such time owing to a material pending transaction or development, in which
event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than ninety (90) days after
receipt of the request of the Investor or Investors under this Section 4; provided,
however, that the Company shall not utilize this right more than once in
any twelve (12)- month period; (4) if the Company has, within the
twelve (12) month period preceding the date of such request, already
effected two (2) registrations on Form S-3 for the Investors pursuant
to this Section 4; (5) in any particular jurisdiction in which the
Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or
compliance or (6) during the period ending one hundred eighty (180) days
after the effective date of a registration statement subject to Section 3;
and

 

(c)                                  subject
to the foregoing, the Company shall file a registration statement covering the
Registrable Securities and other securities so requested to be registered as
soon as practicable after receipt of the request or requests of the
Investors.  Registrations effected
pursuant to this Section 4 are in addition to, and not in lieu of, their
right to registration under Sections 2 and 3 and shall not be counted as
demands for registration or registrations effected pursuant to Sections 2 or 3,
respectively.

 

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5.                                       Legal
Counsel.  Subject to Section 8
hereof, the Required Holders shall have the right to select one legal counsel
to review and oversee any registration pursuant to this Section 5 (“Legal Counsel”), which shall be Proskauer Rose LLP or such
other counsel as thereafter designated by the Required Holders.  The Company and Legal Counsel shall
reasonably cooperate with each other in performing the Company’s obligations
under this Agreement.

 

6.                                       Related
Obligations.

 

At such time
as the Company is obligated to file a Registration Statement with the SEC
pursuant to Sections 2, 3, or 4, the Company will use commercially reasonable
efforts to effect the registration of the Registrable Securities in accordance
with the intended method of disposition thereof and, pursuant thereto, the
Company shall have the following obligations:

 

(a)                                  Subject
to sub-section (c) below, the Company shall submit to the SEC, within five
(5) Business Days after the Company learns that no review of a particular
Registration Statement will be made by the staff of the SEC or that the staff
has no further comments on a particular Registration Statement, as the case may
be, a request for acceleration of effectiveness of such Registration Statement
to a time and date not later than 48 hours after the submission of such
request.  If the Required Holders request
a shelf Registration Statement, the Company shall use commercially reasonable
efforts to keep such Registration Statement effective pursuant to Rule 415
at all times until the earlier of (i) the date as of which the Investors
may sell all of the Registrable Securities covered by such Registration
Statement without the volume limitations pursuant to Rule 144(e) (or
any successor thereto), (ii) such time as the Registrable Securities have
been sold pursuant to such Registration Statement, or (iii) two years from
the effectiveness of the first Registration Statement filed hereunder; provided
however, that after such two years if counsel to an Investor (which may
be in-house counsel) advises an Investor in writing that such Investor is
unable to freely sell Registrable Securities pursuant to Rule 144(k), then
the Company shall maintain an effective Registration Statement for the
Conversion Shares until clause (i) or (ii) is satisfied, but not to
exceed a period of up to an additional two years (together, the “Registration Period”) if such Investor has
continuously held such Conversion Shares (or the Notes relating thereto two
years from the date hereof).  The Company
shall take commercially reasonable efforts to ensure that each Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein) shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein, or necessary to
make the statements therein (in the case of prospectuses, in the light of the circumstances
in which they were made) not misleading.

 

(b)                                 The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and the
prospectus used in connection with such Registration Statement, which
prospectus is to be filed pursuant to Rule 424 promulgated under the
Securities Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such Registration
Statement.  In the case of amendments and
supplements to a Registration Statement which are required to be 

 

6

 

filed pursuant to this
Agreement (including pursuant to this Section 6(b)) by reason of the
Company filing a report on Form 10-Q, Form 10-K or any analogous
report under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company shall have
incorporated such report by reference into such Registration Statement, if
applicable, or, if necessary, shall file such amendments or supplements with
the SEC on the same day on which the Exchange Act report is filed which created
the requirement for the Company to amend or supplement such Registration
Statement.

 

(c)                                  The
Company shall (A) permit Legal Counsel to review and comment upon (i) a
Registration Statement at least five (5) Business Days prior to its filing
with the SEC and (ii) all amendments and supplements to all Registration
Statements (except for Annual Reports on Form 10-K, and Reports on Form 10-Q
and any similar or successor reports) within a reasonable number of days prior
to their filing with the SEC, and (B) not file any Registration Statement
or amendment or supplement thereto in a form to which Legal Counsel reasonably
and timely objects.  The Company shall
not submit a request for acceleration of the effectiveness of a Registration
Statement or any amendment or supplement thereto without the prior approval of
Legal Counsel, which consent shall not be unreasonably withheld.  The Company shall furnish to Legal Counsel,
without charge, (i) copies of any correspondence from the SEC or the staff
of the SEC to the Company or its representatives relating to any Registration
Statement, (ii) promptly after the same is prepared and filed with the
SEC, one copy of any Registration Statement and any amendment(s) thereto,
including financial statements and schedules, all documents incorporated
therein by reference, if requested by an Investor, and all exhibits and (iii) upon
the effectiveness of any Registration Statement, one copy, of the prospectus
included in such Registration Statement and all amendments and supplements
thereto.  The Company shall reasonably
cooperate with Legal Counsel in performing the Company’s obligations pursuant
to this Section 6.

 

(d)                                 The
Company shall furnish to each Investor whose Registrable Securities are
included in any Registration Statement, without charge, (i) promptly after
the same is prepared and filed with the SEC, at least one copy of such
Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference, if
requested by an Investor, all exhibits and each preliminary prospectus, (ii) upon
the effectiveness of any Registration Statement, ten (10) copies of the
prospectus included in such Registration Statement and all amendments and
supplements thereto (or such other number of copies as such Investor may
reasonably request) and (iii) such other documents, including copies of
any preliminary or final prospectus, as such Investor may reasonably request
from time to time in order to facilitate the disposition of the Registrable
Securities owned by such Investor.

 

(e)                                  The
Company shall use commercially reasonable efforts to (i) register and
qualify, unless an exemption from registration and qualification applies, the
resale by Investors of the Registrable Securities covered by a Registration
Statement under such other securities or “blue sky” laws of all said
jurisdictions in the United States where Investors intend to sell Shares, (ii) prepare
and file in those jurisdictions, such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof during the Registration Period,
(iii) take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during 

 

7

 

the Registration Period, and (iv) take
all other actions reasonably necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions; provided, however,
that the Company shall not be required in connection therewith or as a
condition thereto to (x) qualify to do business in any jurisdiction where
it would not otherwise be required to qualify but for this Section 6(e) or
where qualification necessitates undue time or expense, (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general
consent to service of process in any such jurisdiction.  The Company shall promptly notify Legal
Counsel and each Investor who holds Registrable Securities of the receipt by
the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or “blue sky” laws of any jurisdiction in the United
States or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.

 

(f)                                    The
Company shall notify Legal Counsel and each Investor in writing of the
happening of any event, as promptly as practicable after becoming aware of such
event, as a result of which the prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a material fact
or omission to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading (provided  that in no event shall
the Company deliver such notice to the Investors without the Investors’ prior
consent if such notice contains any material, nonpublic information), and,
subject to Section 6(r), promptly prepare a supplement or amendment to
such Registration Statement to correct such untrue statement or omission, and
deliver ten (10) copies of such supplement or amendment to Legal Counsel
and each Investor (or such other number of copies as Legal Counsel or such
Investor may reasonably request).  The
Company shall also promptly notify Legal Counsel and each Investor in writing (i) when
a prospectus or any prospectus supplement or post-effective amendment has been
filed, and when a Registration Statement or any post-effective amendment has
become effective (notification of such effectiveness shall be delivered to
Legal Counsel and each Investor by facsimile or e-mail on the same day of such
effectiveness and by overnight mail), (ii) of any request by the SEC for
amendments or supplements to a Registration Statement or related prospectus or
related information, and (iii) of the Company’s reasonable determination
that a post-effective amendment to a Registration Statement would be
appropriate.

 

(g)                                 The
Company shall use commercially reasonable efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration
Statement, or the suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction and, if such an order or suspension is
issued, to obtain the withdrawal of such order or suspension at the earliest
possible moment and to notify Legal Counsel and each Investor who holds
Registrable Securities being sold of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.

 

(h)                                 The
Company agrees that, if Goldman (together with any affiliate of Goldman, the “GS Entities” or the “GS Entity”) or any GS Entity could
reasonably be deemed to be an “underwriter,” as defined in Section 2(a)(11)
of the Securities Act, in connection with any registration of the Company’s
securities of any GS Entity pursuant to this Agreement, and any amendment or
supplement thereof (any such registration statement or amendment or supplement
a “GS Underwriter Registration Statement”),
then the Company will cooperate with such GS Entity in allowing such GS Entity
to conduct customary “underwriter’s due 

 

8

 

diligence” with respect to the
Company and satisfy its obligations in respect thereof.  In addition, at Goldman’s request, the
Company will use commercially reasonable efforts to cause its auditor or
counsel to furnish to Goldman, on the first date of the effectiveness of the GS
Underwriter Registration Statement (i) a letter, dated such date, from the
Company’s independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to Goldman, and (ii) an
opinion, dated as of such date, of counsel representing the Company for
purposes of such GS Underwriter Registration Statement, in form, scope and
substance as is customarily given in an underwritten public offering,
including, without limitation, a standard “10b-5” statement for such offering,
addressed to Goldman; such comfort letter, legal opinion and/or 10b-5 statement
shall be furnished to Goldman (A) at no additional cost to Goldman if they
are already provided to another party in connection with a GS Underwriter
Registration or (B) at Goldman’s expense if such comfort letter, legal
opinion and/or 10b-5 statement are not otherwise being provided in connection
with a GS Underwriter Statement.  The
Company will also permit legal counsel to Goldman to review and comment upon
any such GS Underwriter Registration Statement at least five (5) business
days prior to its filing with the SEC and all amendments and supplements to any
such GS Underwriter Registration Statement within a reasonable number of days
prior to their filing with the SEC and not file any GS Underwriter Registration
Statement or Amendment or supplement thereto in a form to which Goldman’s legal
counsel reasonably and timely objects.

 

(i)                                     The
Company shall use commercially reasonable efforts either to (i) cause all
of the Registrable Securities covered by a Registration Statement to be listed
on each securities exchange on which securities of the same class or series
issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange,
or (ii) secure designation and quotation of all of the Registrable
Securities covered by a Registration Statement on the American Stock Exchange
or (iii) if, despite the Company’s commercially reasonable efforts to
satisfy the preceding clauses (i) or (ii) the Company is unsuccessful
in satisfying the preceding clauses (i) or (ii), to secure the inclusion
for quotation on The Nasdaq Capital Market for such Registrable Securities and,
without limiting the generality of the foregoing, to use its best efforts to
arrange for at least two market makers to register with the U.S. Financial
Industry Regulatory Authority (formerly the National Association of Securities
Dealers Inc.) as such with respect to such Registrable Securities.  The Company shall pay all fees and expenses
in connection with satisfying its obligation under this Section 6(i).

 

(j)                                     The
Company shall cooperate with the Investors who hold Registrable Securities
being offered and, to the extent applicable, facilitate the timely preparation
and delivery of certificates (not bearing any restrictive legend) representing
the Registrable Securities to be offered and resold pursuant to a Registration
Statement and enable such certificates to be in such denominations or amounts,
as the case may be, as the Investors may reasonably request and registered in
such names as the Investors may request.

 

(k)                                  If
requested by an Investor, the Company shall (i) as soon as practicable
incorporate in a prospectus supplement or post-effective amendment such
information as an Investor reasonably requests to be included therein relating
to the sale and distribution of Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any other 

 

9

 

terms of the offering of the
Registrable Securities to be sold in such offering; (ii) as soon as
practicable make all required filings of such prospectus supplement or
post-effective amendment after being notified of the matters to be incorporated
in such prospectus supplement or post-effective amendment; and (iii) as
soon as practicable, supplement or make amendments to any Registration
Statement if reasonably requested by an Investor holding any Registrable
Securities.

 

(l)                                     The
Company shall use commercially reasonable efforts to cause the Registrable
Securities covered by a Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to consummate the disposition of such Registrable Securities.

 

(m)                               The
Company shall make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with, and in the
manner provided by, the provisions of Rule 158 under the Securities Act)
covering a twelve (12)- month period beginning not later than the first day of
the Company’s fiscal quarter next following the effective date of a
Registration Statement.

 

(n)                                 The
Company shall otherwise use commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC in connection with any
registration hereunder.

 

(o)                                 Within
two (2) Business Days after a Registration Statement which covers
Registrable Securities is declared effective by the SEC, the Company shall
deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to the Investors
whose Registrable Securities are included in such Registration Statement)
confirmation that such Registration Statement has been declared effective by
the SEC.

 

(p)                                 Notwithstanding
anything to the contrary herein, at any time the Company may delay filing the
Registration Statement or amendment or supplement thereto or the disclosure of
material, non-public information concerning the Company, if, in the good faith
opinion of the Board of Directors, the disclosure of which at the time would be
seriously detrimental to the Company and its stockholders, (a “Grace Period”); provided, that
the Company shall promptly (i) notify the Investors in writing of the
existence of material, non-public information giving rise to a Grace Period (provided
that in each notice the Company will not disclose the content of such
material, non-public information to the Investors without the prior written
consent of the Investors) and the date on which the Grace Period will begin,
and (ii) notify the Investors in writing of the date on which the Grace
Period ends; and, provided  further, that the aggregate days in
the Grace Periods shall not exceed ninety (90) days during any three hundred
sixty five (365) day period (an “Allowable
Grace Period”).  For purposes
of determining the length of a Grace Period above, the Grace Period shall begin
on and include the date the Investors receive the notice referred to in clause (i) and
shall end on and include the later of the date the Investors receive the notice
referred to in clause (ii) and the date referred to in such notice.  The provisions of Section 6(g) hereof
shall not be applicable during the period of any Allowable Grace Period.  Upon expiration of the Grace Period, the
Company shall again be bound by the first sentence of Section 6(f) with
respect to the information giving rise thereto 

 

10

 

unless such material,
non-public information is no longer applicable. 
Notwithstanding anything to the contrary, the Company shall cause its
transfer agent to deliver unlegended Common Shares to a transferee of an
Investor in accordance with the terms of the Securities Purchase Agreements in
connection with any sale of Registrable Securities with respect to which an
Investor has otherwise complied with the requirements therein and entered into
a contract for sale, and delivered a copy of the prospectus included as part of
the applicable Registration Statement, prior to the Investor’s receipt of the
notice of a Grace Period and for which the Investor has not yet settled.

 

(q)                                 In
the event of an underwritten public offering, any participant in the offering
shall be required to enter into an underwriting agreement under the terms and
conditions reasonably negotiated between the Company and the managing
underwriter.  All Investors proposing to
distribute their securities through such underwriting shall (together with the
Company) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company.  Notwithstanding any other provision of Section 6
herein, if the managing underwriter determines in its reasonable discretion
that the success of the offering will be jeopardized without a limitation on
the number of shares to be underwritten, the managing underwriter may in its
reasonable discretion limit the Registrable Securities or other securities to
be distributed through such underwriting pro rata, and if necessary, exclude
all selling stockholders, to the extent that other stockholders of the Company
that have registration rights have been similarly limited.  If any Investor disapproves of the terms of
any such underwriting, such Investor may elect to withdraw therefrom by written
notice to the Company and the managing underwriter.

 

7.                                       Obligations
of the Investors.

 

(a)                                  At
least five (5) Business Days prior to the first anticipated filing date of
a Registration Statement, the Company shall notify each Investor in writing of
the information the Company requires from each such Investor if such Investor
elects to have any of such Investor’s Registrable Securities included in such
Registration Statement.  It shall be a
condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable
Securities of a particular Investor that such Investor shall furnish to the
Company such information regarding itself, the Registrable Securities held by
it and the intended method of disposition of the Registrable Securities held by
it as shall be reasonably required in accordance with the Securities Act to
effect the effectiveness of the registration of such Registrable Securities and
shall execute such documents in connection with such registration as the
Company may reasonably request.

 

(b)                                 Each
Investor, by such Investor’s acceptance of the Registrable Securities, agrees
to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of any Registration Statement
hereunder, unless such Investor has notified the Company in writing of such
Investor’s election to exclude all of such Investor’s Registrable Securities
from such Registration Statement.

 

(c)                                  Each
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 6(g) or the
first sentence of 6(f), such Investor will immediately discontinue disposition
of Registrable Securities pursuant to any 

 

11

 

Registration Statement(s) covering
such Registrable Securities until such Investor’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 6(g) or
the first sentence of 6(f) or receipt of notice that no supplement or
amendment is required.  Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to deliver
unlegended certificates representing Common Shares to a transferee of an
Investor in accordance with the terms of the Securities Purchase Agreements in
connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the Investor’s receipt
of a notice from the Company of the happening of any event of the kind
described in Section 6(g) or the first sentence of 6(f) and for
which the Investor has not yet settled.

 

(d)                                 Unless
exempt from the prospectus delivery requirements of the Securities Act,
pursuant to Rule 172 of the Securities Act, in connection with sales of
Registrable Securities pursuant to the Registration Statement, each Investor
covenants and agrees that it will comply with the prospectus delivery
requirements Act as applicable to it in connection with sales of Registrable
Securities pursuant to the Registration Statement.

 

8.                                       Expenses
of Registration.

 

Except as
otherwise provided herein, all reasonable expenses, other than underwriting
discounts and commissions, incurred in connection with registrations, filings
or qualifications pursuant to Sections 2, 3, 4, 5 and 6, including, without
limitation, all registration, listing and qualifications fees, printers and
accounting fees, and fees and disbursements of counsel for the Company shall be
paid by the Company.

 

9.                                       Indemnification.

 

In the event
any Registrable Securities are included in a Registration Statement under this
Agreement:

 

(a)                                  To
the fullest extent permitted by law, the Company will, and hereby does,
indemnify, hold harmless and defend each Investor, the directors, officers,
members, partners, employees, agents, representatives of, and each Person, if
any, who controls any Investor within the meaning of the Securities Act or the
Exchange Act (each, an “Indemnified Person”),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
expenses, joint or several, (collectively, “Damages”)
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto (“Indemnified
Damages”), to which any of them may become subject insofar as such
Damages (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: 
(i) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or any post-effective amendment thereto or in
any filing made in connection with the qualification of the offering under the
securities or other “blue sky” laws of any jurisdiction in which Registrable
Securities are offered (“Blue Sky Filing”),
or the omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements 

 

12

 

therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in the light of the
circumstances under which the statements therein were made, not misleading, or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being,
collectively, “Violations”).  Subject to Section 9(c), the Company
shall reimburse the Indemnified Persons, promptly as such expenses are incurred
and are due and payable, for any reasonable legal fees or other reasonable
expenses incurred by them in connection with investigating or defending any
such Damages.  Notwithstanding anything
to the contrary contained herein, the indemnification agreement contained in
this Section 9(a):  (i) shall
not apply to Damages incurred by an Indemnified Person arising out of or based
upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 6(d);
(ii) with respect to any preliminary prospectus, shall not inure to the
benefit of any such Person from whom the Person asserting any such Damages
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any Person controlling such Person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to Section 6(d), and the
Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a violation and such Indemnified
Person, notwithstanding such advice, used it or failed to deliver the correct
prospectus as required by the Securities Act and such correct prospectus was
timely made available pursuant to Section 6(d); (iii) shall not be
available to the extent such Damages are based on a failure of the Investor to
deliver or to cause to be delivered the prospectus made available by the
Company, including a corrected prospectus, if such prospectus or corrected
prospectus was timely made available by the Company pursuant to Section 6(d);
and (iv) shall not apply to amounts paid in settlement of any Damages if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld or delayed.  Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 12.

 

(b)                                 In
connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to severally and not jointly
indemnify, hold harmless and defend, to the same extent and in the same manner
as is set forth in Section 9(a), the Company, each of its directors, each
of its officers who signs the Registration Statement and each Person, if any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act (each, an “Indemnified Party”),
against any Damages or Indemnified Damages to which any of them may become
subject, under the Securities Act, the Exchange Act or otherwise, insofar as
such Damages or actions or proceedings whether commenced or threatened in
respect thereof arise out of or are based upon any Violation, in each case to
the extent, and only to the extent, 

 

13

 

that such Violation occurs in
reliance upon and in conformity with written information furnished to the
Company by such Investor expressly for use in connection with such Registration
Statement or any post-effective amendment thereof or any prospectus contained
therein; and, subject to Section 9(c), such Investor will reimburse any
legal or other expenses reasonably incurred by an Indemnified Party in
connection with investigating or defending any such Damages as promptly as such
expenses are incurred and are due and payable; provided, however,
that the indemnity agreement contained in this Section 9(b) and the
agreement with respect to contribution contained in Section 10 shall not
apply to amounts paid in settlement of any Damages if such settlement is
effected without the prior written consent of such Investor, which consent
shall not be unreasonably withheld or delayed; provided, further,
however, that the Investor shall be only liable under this Section 9(b),
together with any amount of contribution contained in Section 10, for only
that amount of Damages or Indemnified Damages as does not exceed the net
proceeds to such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. 
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall survive
the transfer of the Registrable Securities by the Investors pursuant to Section 12.  Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 9(b) with
respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented.

 

(c)                                  Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 9
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving Damages, such Indemnified Person
or Indemnified Party shall, if a claim for Damages in respect thereof is to be
made against any indemnifying party under this Section 9, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
reasonably satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the reasonable fees and expenses of not more than one counsel for
such Indemnified Person or Indemnified Party to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding.  In the case of an
Indemnified Person, legal counsel referred to in the immediately preceding
sentence shall be selected by the Company, subject to the reasonable consent of
the Investors holding at least a majority in interest of the Registrable
Securities included in the Registration Statement to which the Damages
relates.  The Indemnified Party or
Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or Damages by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or Damages.  The
indemnifying party shall keep the Indemnified Party or Indemnified Person
reasonably apprised at all times as to the status of the defense or any
settlement negotiations with 

 

14

 

respect thereto.  No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its prior
written consent, provided, however, that the indemnifying party
shall not unreasonably withhold, delay or condition its consent.  No indemnifying party shall, without the
prior written consent of the Indemnified Party or Indemnified Person, consent
to entry of any judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party or Indemnified Person of a release from all
liability in respect to such Damages or litigation.  Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties,
firms or corporations relating to the matter for which indemnification has been
made.  The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of any
such action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to
the extent that the indemnifying party is prejudiced in its ability to defend
such action.

 

(d)                                 The
indemnification required by this Section 9 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or Indemnified Damages are incurred.

 

(e)                                  The
indemnity agreements contained herein shall be in addition to (i) any
cause of action or similar right of the Indemnified Party or Indemnified Person
against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.

 

10.                                 Contribution.

 

To the extent
any indemnification by an indemnifying party is prohibited or limited by law,
the indemnifying party agrees to make the maximum contribution with respect to
any amounts for which it would otherwise be liable under Section 9 to the
fullest extent permitted by law; provided, however, that:  (i) no Person involved in the sale of
Registrable Securities which Person is guilty of fraudulent misrepresentation
(within the meaning of Section 14(f) of the Securities Act) in
connection with such sale shall be entitled to contribution from any Person
involved in such sale of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of
Registrable Securities, together with any amount under Section 9, shall be
limited in amount to the net amount of proceeds received by such seller from
the sale of such Registrable Securities pursuant to such Registration
Statement.

 

11.                                 Reports
Under the Exchange Act.

 

Following the
Effective Date of any Registration Statement filed in accordance with this
Agreement (but not before), with a view to making available to the Investors
the benefits of Rule 144 promulgated under the Securities Act or any other
similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without registration
(“Rule 144”), the Company agrees to:

 

(a)                                  make
and keep public information available, as those terms are understood and
defined in Rule 144;

 

15

 

(b)                                 use
reasonable, diligent efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act
and the Exchange Act so long as the Company remains subject to such
requirements and the filing of such reports and other documents is required for
the applicable provisions of Rule 144; and

 

(c)                                  furnish
to each Investor so long as such Investor owns Registrable Securities, promptly
upon written request, (i) a written statement by the Company, if true,
that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested
to permit the Investors to sell such securities pursuant to Rule 144
without registration.

 

12.                                 Assignment
of Registration Rights.

 

The rights
under this Agreement shall be automatically assignable by the Investors to any
transferee of all or any portion of at least 100,000 shares of such Investor’s
Registrable Securities if:  (i) the
Investor agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within ten (10) days
after such assignment; (ii) the Company is, within ten (10) days
after such transfer or assignment, furnished with written notice of (a) the
name and address of such transferee or assignee, and (b) the securities
with respect to which such registration rights are being transferred or
assigned; (iii) immediately following such transfer or assignment the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act and applicable state securities laws; (iv) at
or before the time the Company receives the written notice contemplated by
clause (ii) of this sentence the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein; and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreements and applicable laws.

 

13.                                 Amendment
of Registration Rights.

 

Provisions of
this Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Required
Holders; provided, however, that no such amendment or waiver
hereunder may materially and adversely affect the economic interest of an
Investor hereunder without the written consent of such Investor.  Any amendment or waiver effected in
accordance with this Section 13 shall be binding upon each Investor and
the Company.  No such amendment shall be
effective to the extent that it applies to less than all of the holders of the
Registrable Securities.  No consideration
shall be offered or paid to any Person to amend or consent to a waiver or
modification of any provision of any of this Agreement unless the same
consideration also is offered to all of the parties to this Agreement.

 

14.                                 Waiver
by Goldman Under Prior Agreement.

 

Notwithstanding
anything to the contrary contained herein, effective upon the Closing under the
Securities Purchase Agreement and the execution of this Agreement, Goldman
hereby waives any default by the Company under the Prior Agreement.

 

16

 

15.                                 Miscellaneous.

 

(a)                                  A
Person is deemed to be a holder of Registrable Securities whenever such Person
owns or is deemed to own of record such Registrable Securities.  If the Company receives conflicting
instructions, notices or elections from two or more Persons with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from such record owner of such
Registrable Securities.

 

(b)                                 Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed
to have been delivered:  (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (iii) one
Business Day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such
communications shall be:

 

If to the
Company:

 

Vyyo Inc.

6625 The Corners Parkway

Suite 100

Norcross, Georgia 30092

Telephone:  (678) 282-8000

Facsimile:  (770) 447-2405

Attention:  General Counsel

 

With a copy
to:

 

Warner Norcross & Judd LLP

900 Fifth Third Center

111 Lyon Street, NW

Grand Rapids, Michigan 49503

Telephone:  (616) 752-2137

Facsimile:  (616) 222-2137

Attention:  Stephen C. Waterbury

 

If to an
Investor, to its address and facsimile number set forth on the Schedule of
Investors attached hereto, with copies to such Investor’s representatives as
set forth on the Schedule of Investors, or to such other address and/or
facsimile number and/or to the attention of such other Person as the recipient
party has specified by written notice given to each other party five (5) days
prior to the effectiveness of such change. 
Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a courier or overnight courier service
shall be rebuttable evidence of personal service, receipt by facsimile or
receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

 

17

 

(c)                                  Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.

 

(d)                                 All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of New York or any other jurisdictions) that
would cause the application of the laws of any jurisdictions other than the
State of New York.  Each party hereby
irrevocably submits 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 hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of 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 to such party at the address for
such 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.  If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or enforceability
of any provision of this Agreement in any other jurisdiction.  EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

 

(e)                                  This
Agreement, the other Transaction Documents (as defined in the Securities
Purchase Agreements) and the instruments referenced herein and therein
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof.  There
are no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein and therein. 
This Agreement, the other Transaction Documents and the instruments
referenced herein and therein supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and thereof.

 

(f)                                    Subject
to the requirements of Section 12, this Agreement shall inure to the benefit
of and be binding upon the permitted successors and assigns of each of the
parties hereto.

 

(g)                                 The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

 

(h)                                 This
Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
agreement.  This Agreement, once executed
by a party, may be delivered to the other party hereto by facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.

 

18

 

(i)                                     Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.

 

(j)                                     All
consents and other determinations required to be made by the Investors pursuant
to this Agreement shall be made, unless otherwise specified in this Agreement,
by the Required Holders.

 

(k)                                  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.

 

(l)                                     This
Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns, and is not for the benefit of, nor
may any provision hereof be enforced by, any other Person.

 

(m)                               The
obligations of each Investor hereunder are several and not joint with the
obligations of any other Investor, and no provision of this Agreement is
intended to confer any obligations on any Investor vis-à-vis any other
Investor.  Nothing contained herein, and
no action taken by any Investor pursuant hereto, shall be deemed to constitute
the Investors as a partnership, an association, a joint venture or any other
kind of entity, or create a presumption that the Investors are in any way
acting in concert or as a group with respect to such obligations or the
transactions contemplated herein.

 

19

 

IN WITNESS WHEREOF,
each Investor and the Company have caused their respective signature page to
this Amended and Restated Registration Rights Agreement to be duly executed as
of the date first written above.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  	
   

  
	
   

  	
  VYYO
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Wayne H.
  Davis

  
	
   

  	
   

  	
  Name: 

  	
  Wayne H.
  Davis

  
	
   

  	
   

  	
  Title: 

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  INVESTORS:

  
	
   

  	
   

  	
   

  
	
   

  	
  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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SYNTEK
  CAPITAL AG

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s Franco Franca

  
	
   

  	
   

  	
    Name: Franco Franca

  
	
   

  	
   

  	
    Title: CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Paolo Giacometti

  
	
   

  	
   

  	
    Name: Paolo Giacometti

  
	
   

  	
   

  	
    Title:
  CFO

  

 

 

SCHEDULE OF INVESTORS

 

	
  Names and
  Addresses:

  
	
   

  
	
  Goldman
  Sachs Investment Partners Master Fund, L.P.

  
	
  Attn: Nick
  Advani

  
	
  One New York
  Plaza

  
	
  New York,
  New York 10004

  
	
  Facsimile:
  212-346-3124

  
	
  Telephone:
  212-902-4934

  
	
   

  
	
  with a copy
  to:

  
	
   

  
	
  Goldman
  Sachs Investment Partners Master Fund, L.P.

  
	
  Attn: Rashid
  Alvi

  
	
  One New York
  Plaza

  
	
  New York, NY
  10004

  
	
  Facsimile:

  
	
  Telephone:

  
	
   

  
	
  and

  
	
   

  
	
  Proskauer
  Rose LLP

  
	
  1585
  Broadway

  
	
  New York,
  New York 10036

  
	
  Attention:
  Stuart Bressman, Esq.

  
	
  Facsimile:
  (212) 969-3000

  
	
  Telephone:
  (212) 969-2900

  
	
   

  
	
  Syntek
  Capital AG

  
	
   

  
	
  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.comExhibit 10.45

 

GUARANTY AND SECURITY AGREEMENT

 

among

 

VYYO
INC.,

 

EACH
OF THE SUBSIDIARIES PARTY HERETO,

 

THE
INVESTORS PARTY HERETO,

 

and

 

GOLDMAN
SACHS INVESTMENT PARTNERS MASTER FUND, L.P., as Collateral 

Agent

 

 

Dated
as of June 13, 2008

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 1. DEFINITIONS; GUARANTY; GRANT OF
  SECURITY; CONTINUING PERFECTION AND PRIORITY

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.1

  	
  GENERAL
  DEFINITIONS

  	
   

  	
  1

  
	
  SECTION 1.2

  	
  OTHER
  DEFINITIONS; INTERPRETATION

  	
   

  	
  10

  
	
  SECTION 1.3

  	
  GUARANTY

  	
   

  	
  11

  
	
  SECTION 1.4

  	
  GRANT
  OF SECURITY

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2. SECURITY FOR OBLIGATIONS; NO
  ASSUMPTION OF LIABILITY

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.1

  	
  SECURITY
  FOR OBLIGATIONS

  	
   

  	
  17

  
	
  SECTION 2.2

  	
  NO
  ASSUMPTION OF LIABILITY

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3. REPRESENTATIONS AND WARRANTIES
  AND COVENANT

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.1

  	
  GENERALLY

  	
   

  	
  17

  
	
  SECTION 3.2

  	
  EQUIPMENT
  AND INVENTORY

  	
   

  	
  21

  
	
  SECTION 3.3

  	
  RECEIVABLES

  	
   

  	
  21

  
	
  SECTION 3.4

  	
  INVESTMENT
  PROPERTY

  	
   

  	
  23

  
	
  SECTION 3.5

  	
  LETTER
  OF CREDIT RIGHTS

  	
   

  	
  26

  
	
  SECTION 3.6

  	
  INTELLECTUAL
  PROPERTY COLLATERAL

  	
   

  	
  26

  
	
  SECTION 3.7

  	
  COMMERCIAL
  TORT CLAIMS

  	
   

  	
  28

  
	
  SECTION 3.8

  	
  DEPOSIT
  ACCOUNTS; CONTROL ACCOUNTS

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4. FURTHER ASSURANCES

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5. COLLATERAL AGENT APPOINTED
  ATTORNEY-IN-FACT

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6. REMEDIES UPON DEFAULT

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.1

  	
  REMEDIES
  GENERALLY

  	
   

  	
  30

  
	
  SECTION 6.2

  	
  APPLICATION
  OF PROCEEDS OF SALE

  	
   

  	
  32

  
	
  SECTION 6.3

  	
  INVESTMENT
  PROPERTY

  	
   

  	
  33

  
	
  SECTION 6.4

  	
  GRANT
  OF LICENSE TO USE INTELLECTUAL PROPERTY

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7. REIMBURSEMENT OF COLLATERAL
  AGENT

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8. WAIVERS; AMENDMENTS

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9. SECURITY INTEREST ABSOLUTE

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10. TERMINATION; RELEASE

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11. ADDITIONAL SUBSIDIARY
  GUARANTORS AND GRANTORS

  	
   

  	
  37

  

 

 

	
  ARTICLE 12. COLLATERAL AGENT

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 13. NOTICES

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 14. BINDING EFFECT; SEVERAL
  AGREEMENT; ASSIGNMENTS

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 15. SURVIVAL OF AGREEMENT;
  SEVERABILITY

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 16. GOVERNING LAW

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 17. COUNTERPARTS

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 18. HEADINGS

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 19. JURISDICTION; VENUE; CONSENT TO
  SERVICE OF PROCESS

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 20. WAIVER OF JURY TRIAL

  	
   

  	
  43

  

 

SCHEDULES:

 

	
  Schedule I

  	
   

  	
  List of Subsidiary Guarantors and Addresses for Notices

  
	
  Schedule 3.1(a)(í)

  	
   

  	
  List of Chief Executive Offices, Jurisdictions of Organization,
  Federal Employer Identification Numbers and Company Organizational Numbers

  
	
  Schedule 3.1(a)(ii)

  	
   

  	
  List of Legal and Other Names

  
	
  Schedule 3.1(a)(v)

  	
   

  	
  List of Filing Offices

  
	
  Schedule 3.2

  	
   

  	
  List of Locations of Equipment and Inventory

  
	
  Schedule 3.3

  	
   

  	
  List of Other Receivables

  
	
  Schedule 3.4 

  	
   

  	
  List of Pledged Collateral, Investment Property and Securities Accounts

  
	
  Schedule 3.5

  	
   

  	
  List of Letters of Credit

  
	
  Schedule 3.6

  	
   

  	
  List of Intellectual Property

  
	
  Schedule 3.7

  	
   

  	
  List of Commercial Tort Claims

  
	
  Schedule 3.8

  	
   

  	
  List of Deposit Accounts

  

 

EXHIBITS:

 

	
  Exhibit A

  	
   

  	
  Form of Supplement

  
	
  Exhibit B

  	
   

  	
  Form of Blocked Account Letter

  
	
  Exhibit C

  	
   

  	
  Form of Control Account Letter

  
	
  Exhibit D

  	
   

  	
  Form of Vyyo Ltd. Pledge Agreement

  
	
  Exhibit E

  	
   

  	
  Form of Xtend Networks Ltd. Pledge Agreement

  

 

ii

 

GUARANTY AND
SECURITY AGREEMENT, dated as of June 13, 2008 (this “Guaranty and Security Agreement”), among Vyyo Inc., a
Delaware corporation (the “Company”),
each of the subsidiaries of the Company listed on Schedule I (each such
subsidiary, individually, a “Subsidiary
Guarantor” and, collectively, the “Subsidiary
Guarantors”; the Subsidiary Guarantors and the Company are referred
to collectively herein as the “Grantors”),
the Investors from time to time party hereto (including their successors and
assigns, the “Investors”) and
GOLDMAN SACHS INVESTMENT PARTNERS MASTER FUND, L.P., as collateral agent for
the benefit of the Secured Parties (including its successors and assigns and in
such capacity, the “Collateral Agent”).

 

Reference is
made to the Securities Purchase Agreement, dated as of June 13, 2008,
among the Company and the Investors from time to time party thereto (as
amended, supplemented or otherwise modified from time to time, the “Securities Purchase Agreement”).

 

The Investors
have agreed to purchase Senior Secured Convertible Notes in the aggregate
principal amount of $41,000,000 (as amended, supplemented or otherwise
modified, the “Convertible Notes”)
from the Company pursuant to, and upon the terms and subject to the conditions
specified in, the Securities Purchase Agreement.  Each of the Subsidiary Guarantors has agreed
to guarantee, among other things, all the obligations of the Company and each
other Subsidiary Guarantor under the Secured Transaction Documents (as defined
in Section 1.1).  The obligations of
the Investors to purchase the Convertible Notes are conditioned upon, among
other things, the execution and delivery by the Grantors of an agreement in the
form hereof to guarantee and secure the Obligations.

 

Accordingly,
the Grantors and the Collateral Agent, on behalf of itself and each other
Secured Party (and each of their respective successors or assigns), hereby
agree as follows:

 

ARTICLE 1.

 

DEFINITIONS; GUARANTY; GRANT OF SECURITY;

CONTINUING PERFECTION AND PRIORITY

 

Section 1.1   General Definitions

 

As used in
this Guaranty and Security Agreement, the following terms shall have the
meanings specified below:

 

“Account Debtor” means each Person who is
obligated in respect of any Receivable or any Supporting Obligation or
Collateral Support related thereto.

 

“Accounts” means all “accounts” as defined
in Article 9 of the UCC.

 

“Additional Subsidiary Guarantor and Grantor”
has the meaning assigned to such term in Article 11.

 

“Applicable Date” means (i) in the case
of any Grantor (other than an Additional Subsidiary Guarantor and Grantor), the
date hereof, and (ii) in the case of any Additional Subsidiary Guarantor
and Grantor, the date of the Supplement executed and delivered by such
Additional Subsidiary Guarantor and Grantor.

 

 

“Approved Securities Intermediary” means a
Securities Intermediary or commodity intermediary selected or approved by the
Collateral Agent and with respect to which a U.S. Grantor has delivered to the
Collateral Agent an executed Control Account Letter.

 

“Authorization” means, collectively, any
license, approval, permit or other authorization issued by Governmental
Authority.

 

“Bankruptcy Law” means Title 11, U.S. Code,
or any similar foreign, federal or state law for the relief of debtors.

 

“Blockage Notice” has the meaning specified
in each Blocked Account Letter.

 

“Blocked Account” means a Deposit Account
maintained by any U.S. Grantor with a Blocked Account Bank which account is the
subject of an effective Blocked Account Letter, and includes all monies
on.  deposit therein and all certificates
and instruments, if any, representing or evidencing such Blocked Account.

 

“Blocked Account Bank” means a financial
institution selected or approved by the Collateral Agent and with respect to
which a U.S. Grantor has delivered to the Collateral Agent an executed Blocked
Account Letter.

 

“Blocked Account Letter” means a Blocked
Account Letter, substantially in the form of Exhibit B (with such
changes thereto as may be agreed to by the Collateral Agent), executed by the
relevant U.S. Grantor and the Collateral Agent and acknowledged and agreed to
by the relevant Blocked Account Bank.

 

“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.

 

“Cash Collateral Account” means any Deposit
Account or Securities Account established by the Collateral Agent in which cash
and/or Permitted Investments may from time to time be on deposit or held
therein pursuant to the Secured Transaction Documents.

 

“Chattel Paper” means all “chattel paper” as
defined in Article 9 of the UCC.

 

“Claim Proceeds” means, with respect to any
Commercial Tort Claim or any Collateral Support or Supporting Obligation
relating thereto, all Proceeds thereof, including all insurance proceeds and
other amounts and recoveries resulting or arising from the settlement or other
resolution thereof, in each case regardless of whether characterized as a “commercial tort claim” under Article 9 of the UCC or
“proceeds” under the UCC.

 

“Collateral” has the meaning assigned to
such term in Section 1.4(b).

 

2

 

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

 

“Collateral Records” means all books,
instruments, certificates, Records, ledger cards, files, correspondence,
customer lists, blueprints, technical specifications, manuals and other
documents, and all computer software, computer printouts, tapes, disks and
related data processing software and similar items, in each case that at any
time represent, cover or otherwise evidence any of the Collateral.

 

“Collateral Support” means all property
(real or personal) assigned, hypothecated or otherwise securing any of the
Collateral, and shall include any security agreement or other agreement
granting a lien or security interest in such real or personal property.

 

“Commercial Tort Claims” means (i) all
“commercial tort claims” as defined in Article 9 of the UCC and (ii) all
Claim Proceeds with respect to any of the foregoing; including all claims
described on Schedule 3.7.

 

“Company” has the meaning assigned to such
term in the preliminary statement of this Guaranty and Security Agreement.

 

“Concentration Account” means a Deposit
Account of the U.S. Grantors with a bank or financial institution acceptable to
the Collateral Agent, which shall be a Blocked Account.

 

“Control Account” means a Securities Account
or commodity account maintained by any U.S. Grantor with an Approved Securities
Intermediary which account is the subject of an effective Control Account
Letter, and includes all Financial Assets held therein and all certificates and
instruments, if any, representing or evidencing the Financial Assets held
therein.

 

“Control Account Letter” means a Control
Account Letter, substantially in the form of Exhibit C (with such
changes thereto as may be agreed to by the Collateral Agent), executed by any
U.S. Grantor and the Collateral Agent and acknowledged and agreed to by the
relevant Approved Securities Intermediary.

 

“Convertible Notes” has the meaning assigned
to such term in the preliminary statement of this Guaranty and Security
Agreement.

 

“Copyright License” means any written
agreement, now or hereafter in effect, granting any right to any third party
under any Copyright now or hereafter owned or held by or behalf of any Grantor
or which any Grantor otherwise has the right to license, or granting any right
to any Grantor under any Copyright now or hereafter owned by any third party,
and all rights of any Grantor under any such agreement, including each
agreement described on Schedule 3.6.

 

3

 

“Copyrights” means all of the
following:  (i) all copyright rights
in any work subject to the copyright laws of the United States or any other
country, whether as author, assignee, transferee or otherwise, and (ii) all
registrations and applications for registration of any such copyright in the
United States or any other country, including registrations, recordings,
supplemental registrations and pending applications for registration in the
United States Copyright Office or any similar offices in the United States or
any other country, including those described on Schedule 3.6.

 

“Deposit Accounts” means all “deposit
accounts” as defined in Article 9 of the UCC, including all such accounts
described on Schedule 3.4.

 

“Documents” means all “documents” as defined
in Article 9 of the UCC.

 

“Equipment” means (i) all “equipment”
as defined in Article 9 of the UCC, (ii) all machinery, manufacturing
equipment, data processing equipment, computers, office equipment, furnishings,
furniture, appliances, fixtures and tools, in each case, regardless of whether
characterized as “equipment” under the UCC, and (iii) all accessions or
additions to any of the foregoing, all parts thereof, whether or not at any
time of determination incorporated or installed therein or attached thereto,
and all replacements therefor, wherever located, now or hereafter existing.

 

“Equity Interest” means (i) shares of
corporate stock, partnership interests, membership interests, and any other
interest that confers on a Person the right to receive a share of the profits
and losses of, or distribution of assets of, the issuing Person, and (ii) all
warrants, options or other rights to acquire any Equity Interest set forth in
clause (i) of this defined term.

 

“Equity Related Documents” means the
Securities Purchase Agreement and the Registration Rights Agreement.

 

“Event of Default” has the meaning assigned
to such term in the Convertible Notes.

 

“Financial Assets” means all “financial
assets” as defined in Article 8 of the UCC.

 

“General Intangibles” means (i) all
“general intangibles” as defined in Article 9 of the UCC and (ii) all
choses in action and causes of action, all indemnification claims, all
goodwill, all tax refunds, all licenses, permits, concessions, franchises and
authorizations, all Intellectual Property, all Payment Intangibles and all
Software, in each case, regardless of whether characterized as a “general
intangible” under the UCC.

 

“Goods” means (i) all “goods” as
defined in Article 9 of the UCC and (ii) all Equipment and Inventory
and any computer program embedded in goods and any supporting information
provided in connection with such program, to the extent (a) such program
is associated with such goods in such a manner that it is customarily
considered part of such goods or (b) by becoming the owner of such goods,
a Person acquires a right to use the program in connection with such goods, in
each case, regardless of whether characterized as a “good” under the UCC.

 

4

 

“Governmental Authority” means any nation or
government, any state, province, city, municipal entity or other political
subdivision thereof, and any governmental, executive, legislative, judicial,
administrative or regulatory agency, department, authority, instrumentality,
commission, board, bureau or similar body, whether federal, state, provincial,
territorial, local or foreign.

 

“Grantor” and “Grantors” have the meanings assigned to such terms in the
preliminary statement of this Guaranty and Security Agreement.

 

“Guaranteed Obligations” has the meaning
assigned to such term in Section 1.3(a)(i).

 

“Instruments” means all “instruments” as
defined in Article 9 of the UCC.

 

“Insurance” means all insurance policies
covering any or all of the Collateral (regardless of whether the Collateral
Agent or any other Secured Party is an additional named insured or the loss
payee thereof) and all business interruption insurance policies.

 

“Intellectual Property” means all
intellectual and similar property of any Grantor of every kind and nature,
including inventions, designs, Patents, Copyrights, Trademarks, Licenses,
domain names, Trade Secrets, confidential or proprietary technical and business
information, know how, show how or other data or information, software and
databases and all embodiments or fixations thereof and related documentation, registrations
and franchises, and all additions, improvements and accessions to, and books
and records describing or used in connection with, any of the foregoing.

 

“Inventory” means (i) all “inventory”
as defined in Article 9 of the UCC and (ii) all goods held for sale
or lease or to be furnished under contracts of service or so leased or
furnished, all raw materials, work in process, finished goods and materials
used or consumed in the manufacture, packing, shipping, advertising, selling,
leasing, furnishing or production of such inventory or otherwise used or
consumed in any U.S. Grantor’s business, all goods which are returned to or
repossessed by or on behalf of any U.S. Grantor, and all computer programs
embedded in any goods, and all accessions thereto and products thereof, in each
case, regardless of whether characterized as “inventory” under the UCC.

 

“Investor” has the meaning assigned to such
term in the preliminary statements of this Guaranty and Security Agreement.

 

“Investment Property” means, collectively,
all “investment property” as
defined in Article 9 of the UCC including all Pledged Collateral.

 

“Israeli Collateral” has the meaning
assigned to such term in Section 1.4(b).

 

“Israeli Grantor” means each Subsidiary
listed on Schedule I hereto under the heading “Israeli Subsidiary”
and each Additional Subsidiary Guarantor and Grantor from time to time as made
a party hereto (excluding any U.S. Grantor).

 

5

 

“Israeli Security Interest” has the meaning
assigned to such term in Section 1.4(b).

 

“Letter of Credit Rights” means all
“letter-of-credit rights” as defined in Article 9 of the UCC and (ii) all
rights, title and interests of each U.S. Grantor to any letter of credit, in
each case regardless of whether characterized as a “letter-of-credit right”
under the UCC.

 

“License” means any Copyright License,
Patent License, Trademark License, Trade Secret License or other license or
sublicense to which any Grantor is a party.

 

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

 

“Obligations” means (i) the due and
punctual payment of (a) principal of and premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Convertible Notes, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, and (b) all other monetary obligations, including fees,
commissions, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or allowable in such
proceeding), of the Grantors to the Secured Parties, or that are otherwise
payable to any Investor, in each case under the Secured Transaction Documents, (ii) the
due and punctual performance of all covenants, agreements, obligations and
liabilities of the Grantors or any other party (other than an Investor) under
or pursuant to the Secured Transaction Documents, and (iii) the Guaranteed
Obligations.

 

“Other Receivables” means receivables
described on Schedule 3.3 hereto.

 

“Patent License” means any written
agreement, now or hereafter in effect, granting to any third party any right to
make, use or sell any invention on which a Patent, now or hereafter owned or
held by or on behalf of any Grantor or which any Grantor otherwise has the
right to license, is in existence, or granting to any Grantor any right to
make, use or sell any invention on which a Patent, now or hereafter owned by
any third party, is in existence, and all rights of any Grantor under any such
agreement, including each agreement described on Schedule 3.6.

 

“Patents” means all of the following:  (i) all letters patent of the United
States or any other country, all registrations and recordings thereof and all
applications for letters patent of the United States or any other country,
including registrations, recordings and pending applications in the United
States Patent and Trademark Office or any similar offices in the United States
or any other country, including those described on Schedule 3.6,
and (ii) all reissues, continuations, divisions, continuations in part,
renewals or extensions thereof, and the inventions disclosed or claimed
therein, including the right to make, use and/or sell the inventions disclosed
or claimed therein.

 

6

 

“Payment Intangibles” means all “payment
intangibles” as defined in Article 9 of the UCC.

 

“Permitted Investments” means investments
permitted to be made pursuant to the Convertible Notes.

 

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

 

“Pledged Collateral” means, collectively,
Pledged Debt and Pledged Equity Interests.

 

“Pledged Debt” means all indebtedness owed
or owing to any U.S. Grantor, including all indebtedness described on Schedule 3.4,
all Instruments other than checks received in the ordinary course of business,
Chattel Paper or other documents, if any, representing or evidencing such debt,
and all interest, cash, instruments and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of such debt.

 

“Pledged Equity Interests” means all Equity
Interests owned or held by or on behalf of any U.S. Grantor, including all such
Equity Interests described on Schedule 3.4, and all certificates,
instruments and other documents, if any, representing or evidencing such Equity
Interests and all interests of such U.S. Grantor on the books and records of
the issuers of such Equity Interests, all of such U.S. Grantor’s right, title
and interest in, to and under any partnership, limited liability company,
shareholder or similar agreements to which it is a party, and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such Equity
Interests.

 

“Proceeds” means (i) all “proceeds” as
defined in Article 9 of the UCC, (ii) payments or distributions made
with respect to any Investment Property, (iii) any payment received from
any insurer or other Person or entity as a result of the destruction, loss,
theft, damage or other involuntary conversion of whatever nature of any asset
or property that constitutes the Collateral, and (iv) whatever is
receivable or received when any of the Collateral or proceeds are sold, exchanged,
collected or otherwise disposed of, whether such disposition is voluntary or
involuntary, including any claim of any Grantor against any third party for
(and the right to sue and recover for and the rights to damages or profits due
or accrued arising out of or in connection with) (a) past, present or
future infringement of any Patent now or hereafter owned or held by or on
behalf of any Grantor, or licensed under a Patent License, (b) past,
present or future infringement or dilution of any Trademark now or hereafter
owned or held by or on behalf of any Grantor, or licensed under a Trademark
License, or injury to the goodwill associated with or symbolized by any
Trademark now or hereafter owned or held by or on behalf of any Grantor, (c) past,
present or future infringement of any Copyright now or hereafter owned or held
by or on behalf of any Grantor, or licensed under a Copyright License, (d) past,
present or future infringement of any Trade Secret now or hereafter owned or
held by or on behalf of any Grantor, or licensed under a Trade Secret License,
and (e) past, present or future breach of any License, in each case,
regardless of whether characterized as “proceeds” under the UCC.

 

7

 

“Receivables” means all rights to payment,
whether or not earned by performance, for goods or other property sold, leased,
licensed, assigned or otherwise disposed of, or services rendered or to be
rendered, including all such rights constituting or evidenced by any Account,
Chattel Paper, Instrument or other document, General Intangible or Investment
Property, together with all of the applicable U.S. Grantor’s rights, if any, in
any goods or other property giving rise to such right to payment, and all
Collateral Support and Supporting Obligations related thereto and all
Receivables Records.

 

“Receivables Records” means (i) all
originals of all documents, instruments or other writings or electronic records
or other Records evidencing any Receivable, (ii) all books, correspondence,
credit or other files, Records, ledger sheets or cards, invoices, and other
papers relating to such Receivable, including all tapes, cards, computer tapes,
computer discs, computer runs and record keeping systems, whether in the
possession or under the control of the applicable U.S. Grantor or any computer
bureau or agent from time to time acting for such U.S. Grantor or otherwise, (iii) all
evidences of the filing of financing statements relating to such Receivable and
the registration of other instruments in connection therewith, and amendments,
supplements or other modifications thereto, notices to other creditors or
secured parties, and certificates, acknowledgments, or other writings,
including lien search reports, from filing or other registration officers and (iv) all
credit information, reports and memoranda relating to such Receivable.

 

“Record” means a “record” as defined in Article 9
of the UCC.

 

“Registration Rights Agreement” means the
Amended and Restated Registration Rights Agreement dated as of June 13,
2008 by and among the Company and the Investors.

 

“Related Party” means, with respect to any
specified Person, such Person’s affiliates and the respective directors,
officers, employees, agents and advisors of such Person and such Person’s
affiliates.

 

“Secured Parties” means (i) the
Collateral Agent, (ii) the Investors under the Convertible Notes, (iii) the
beneficiaries of each indemnification obligation undertaken by or on behalf of
any Grantor under any Secured Transaction Document, and (iv) the
successors and assigns of each of the foregoing.

 

“Secured Transaction Documents” means the
Convertible Notes, this Guaranty and Security Agreement, any Blocked Account
Letter, any Control Account Letter, and all other instruments, documents, certificates
and agreements related thereto (exclusive of the Equity Related Documents).

 

“Securities Accounts” means all “securities
accounts” as defined in Article 8 of the UCC, including all such accounts
described on Schedule 3.4.

 

“Securities Intermediary” has the meaning
specified in Article 8 of the UCC.

 

“Securities Purchase Agreement” has the
meaning assigned to such term in the preliminary statement of this Guaranty and
Security Agreement.

 

8

 

“Security Interest” has the meaning assigned
to such term in Section 1.4(b).

 

“Software” means all “software” as defined in Article 9 of
the UCC.

 

“Subsidiary Guarantor” has the meaning
assigned to such term in Section the preliminary statement of this
Guaranty and Security Agreement.

 

“Subsidiary Guaranty” has the meaning
assigned to such term in Section 1.3(a)(i).

 

“Subordinated Obligations” has the meaning
assigned to such term in Section 1.3(e).

 

“Supplement” means a supplement hereto,
substantially in the form of Exhibit A.

 

“Supporting Obligation” means (i) all
“supporting obligations” as defined in Article 9 of the UCC and (ii) all
Guaranties and other secondary obligations supporting any of the Collateral, in
each case regardless of whether characterized as a “supporting obligation”
under the UCC.

 

“Trade Secret Licenses” means any written
agreement, now or hereafter in effect, granting to any third party any right to
use any Trade Secrets now or hereafter owned or held by or on behalf of any
Grantor or which such Grantor otherwise has the right to license, or granting
to any Grantor any right to use any Trade Secrets now or hereafter owned by any
third party, and all rights of any Grantor under any such agreement, including
each agreement described on Schedule 3.6.

 

“Trade Secrets” means all trade secrets and
all other confidential or proprietary information and know-how now or hereafter
owned or used in, or contemplated at any time for use in, the business of any
Grantor (all of the foregoing being collectively called a “Trade Secret”),
whether or not such Trade Secret has been reduced to a writing or other
tangible form, including all documents and things embodying, incorporating or
referring in any way to such Trade Secret, the right to sue for any past, present
and future infringement of any Trade Secret, and all proceeds of the foregoing,
including licenses, royalties, income, payments, claims, damages and proceeds
of suit.

 

“Trademark License” means any written
agreement, now or hereafter in effect, granting to any third party any right to
use any Trademark now or hereafter owned or held by or on behalf of any Grantor
or which such Grantor otherwise has the right to license, or granting to any
Grantor any right to use any Trademark now or hereafter owned by any third
party, and all rights of any Grantor under any such agreement, including each
agreement described on Schedule 3.6.

 

“Trademarks” means all of the
following:  (i) all trademarks,
service marks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, trade dress, logos, other source or
business identifiers, designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all registration and recording applications filed in connection
therewith, including 

 

9

 

registrations and registration applications in the United States Patent
and Trademark Office or any similar offices in the United States or any other
country, and all extensions or renewals thereof, including those described on Schedule 3.6,
(ii) all goodwill associated therewith or symbolized by any of the
foregoing and (iii) all other assets, rights and interests that uniquely
reflect or embody such goodwill.

 

“UCC” means the Uniform Commercial Code as
in effect from time to time in the State of New York or, when the context
implies, the Uniform Commercial Code as in effect from time to time in any
other applicable jurisdiction.

 

“U.S. Collateral” has the meaning assigned
to such term in Section 1.4(a).

 

“U.S. Grantor” means the Company and each
Subsidiary listed on Schedule I hereto under the heading “U.S
Subsidiary” and each Additional Subsidiary Guarantor and Grantor from time to
time as made a party hereto (excluding any Israeli Grantor).

 

“U.S. Security Interest” has the meaning
assigned to such term in Section 1.4(a).

 

“U.S. Subsidiary Guarantor” means any U.S.
Grantor other than the Company.

 

Section 1.2   Other Definitions; Interpretation

 

(a)           Other
Definitions.  Capitalized terms used
herein and not otherwise defined herein, and the term “subsidiary” shall have
the meanings assigned to such terms in the Securities Purchase Agreement.

 

(b)           Rules of
Interpretation.  The definitions of
terms herein shall apply equally to the singular and plural forms of the terms
defined.  Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.  The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase
“without limitation”.  The word “will”
shall be construed to have the same meaning and effect as the word
“shall”.  Unless the context requires
otherwise, (i) any definition of or reference to any agreement, instrument
or other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified, (ii) any definition of or reference to any law shall
be construed as referring to such law as from time to time amended and any
successor thereto and the rules and regulations promulgated from time to
time thereunder, (iii) any reference herein to any Person shall be
construed to include such Person’s successors and assigns, (iv) the words
“herein”, “hereof’ and “hereunder”, and words of similar import, shall be
construed to refer to this Guaranty and Security Agreement in its entirety and
not to any particular provision hereof, (v) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to and any Supplement
thereto, this Guaranty and Security Agreement, and (vi) the words “asset”
and “property” shall be construed to have the same meaning and effect and to
refer to any and all tangible and intangible assets and properties, including
cash, securities, accounts and contract rights. 
All references herein to provisions of the UCC shall include all
successor provisions under any subsequent version or amendment to any Article of
the UCC.

 

10

 

Section 1.3   Guaranty

 

(a)           Subsidiary Guaranty; Limitation of
Liability.

 

(i)            Each Subsidiary Guarantor jointly
and severally, hereby absolutely, unconditionally and irrevocably guarantees,
as a primary obligor and not merely as surety, to the Collateral Agent for the
ratable benefit of the Secured Parties the punctual payment when due (but
subject to the expiration of any grace period granted by the Secured Parties in
their sole discretion or the giving of any required notice provided for in any
secured Transaction Document), whether at scheduled maturity or on any date of
a required prepayment or by acceleration, demand or otherwise, of the
Obligations of the Company and each other Grantor now or hereafter existing
under or in respect of the Secured Transaction Documents (including, without
limitation, any extensions, modifications, substitutions, amendments or
renewals of any or all of the foregoing Obligations), whether direct or
indirect, absolute or contingent, and whether for principal, interest, premiums,
fees, indemnities, contract causes of action, costs, expenses or otherwise
(such Obligations being the “Guaranteed
Obligations”), and agrees to pay any and all reasonable expenses
(including, without limitation, reasonable fees and out-of-pocket expenses of
counsel) incurred by the Collateral Agent or any other Investor in enforcing
any rights under this Subsidiary Guaranty (the “Subsidiary
Guaranty”) or any other Secured Transaction Document.  Without limiting the generality of the
foregoing, each Subsidiary Guarantor’s liability shall extend to all amounts
that constitute part of the Guaranteed Obligations and would be owed by any
other Grantor to the Collateral Agent or any Investor under or in respect of
the Secured Transaction Documents but for the fact that they are unenforceable
or not allowable due to the existence of a bankruptcy, reorganization or
similar proceeding involving such other Grantor.

 

(ii)           Each Subsidiary Guarantor, and by its
acceptance of the Subsidiary Guaranty, the Collateral Agent and each other
Investor, hereby confirms that it is the intention of all such Persons that the
Subsidiary Guaranty and the Obligations of each Subsidiary Guarantor hereunder
not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar foreign, federal or state law to the extent applicable to the
Subsidiary Guaranty and the Obligations of each Subsidiary Guarantor hereunder.  To effectuate the foregoing intention, the
Collateral Agent, the other Investors and the Subsidiary Guarantors hereby
irrevocably agree that the Guaranteed Obligations of each Subsidiary Guarantor
under the Subsidiary Guaranty at any time shall be limited to the maximum amount
as will result in the Guaranteed Obligations of such Subsidiary Guarantor under
the Subsidiary Guaranty not constituting a fraudulent transfer or conveyance.

 

(iii)          Each Subsidiary Guarantor hereby
unconditionally and irrevocably agrees that in the event any payment shall be
required to be made to the Collateral Agent or any Investor under the
Subsidiary Guaranty or any other guaranty, such Subsidiary Guarantor will
contribute, to the maximum extent permitted by law, such amounts to each other
Subsidiary Guarantor and each other guarantor so as to maximize the aggregate
amount paid to the Collateral Agent and Investors under or in respect of the
Secured Transaction Documents.

 

11

 

(b)           Subsidiary
Guaranty Absolute.  Each U.S.
Subsidiary Guarantor guarantees that the Guaranteed Obligations will be paid
strictly in accordance with the terms of the Secured Transaction Documents,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Collateral Agent
or any Investor with respect thereto. 
The Obligations of each Subsidiary Guarantor under or in respect of the
Subsidiary Guaranty are independent of the Guaranteed Obligations or any other
Obligations of any other Grantor under or in respect of the Secured Transaction
Documents, and a separate action or actions may be brought and prosecuted
against each Subsidiary Guarantor to enforce the Subsidiary Guaranty,
irrespective of whether any action is brought against the Company or any other
Grantor or whether the Company or any other Grantor is joined in any such
action or actions.  The liability of each
Subsidiary Guarantor under the Subsidiary Guaranty shall be irrevocable,
absolute and unconditional irrespective of, and each Subsidiary Guarantor
hereby irrevocably waives any defenses it may now have or hereafter acquire in
any way relating to, any or all of the following:

 

(i)            any lack of validity or
enforceability of any Secured Transaction Document or any agreement or
instrument relating thereto;

 

(ii)           any change in the time, manner or
place of payment of, or in any other term of, all or any of the Guaranteed
Obligations or any other Obligations of any other Grantor under or in respect
of the Secured Transaction Documents, or any other amendment or waiver of or
any consent to departure from any Secured Transaction Document, including,
without limitation, any increase in the Guaranteed Obligations resulting from
the extension of additional credit to any Grantor or any of its Subsidiaries or
otherwise;

 

(iii)          any taking, release or amendment or
waiver of, or consent to departure from, any other guaranty, for all or any of
the Guaranteed Obligations it being understood that any such amendment, waiver
or consent shall be applicable to the Guaranteed Obligations of the Subsidiary
Guarantors;

 

(iv)          any change, restructuring or
termination of the corporate structure or existence of any Grantor or any of
its Subsidiaries;

 

(v)           any failure of any Investor to
disclose to any Grantor any information relating to the business, condition
(financial or otherwise), operations, performance, properties or prospects of
any other Grantor now or hereafter known to such Investor (each Subsidiary
Guarantor waiving any duty on the part of the Investors to disclose such
information);

 

(vi)          the failure of any other Person to
execute or deliver this Guaranty and Security Agreement, any Supplement or any
other guaranty or agreement or the release or reduction of liability of any
Subsidiary Guarantor or other guarantor or surety with respect to the
Guaranteed Obligations; or

 

(vii)         any other circumstance (including,
without limitation, any statute of limitations) or any existence of or reliance
on any representation by any Investor that might otherwise constitute a defense
available to, or a discharge of, any Grantor or any other guarantor or surety,
in each case other than payment in full of the Guaranteed Obligations (other
than contingent indemnification obligations).

 

12

 

This
Subsidiary Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by any Investor or any other Person
upon the insolvency, bankruptcy or reorganization of the Company or any other
Grantor or otherwise, all as though such payment had not been made.

 

(c)           Waivers
and Acknowledgments.  Each Subsidiary
Guarantor hereby unconditionally and irrevocably waives:

 

(i)            promptness, diligence, notice of
acceptance, presentment, demand for performance, notice of nonperformance,
default, acceleration, protest or dishonor and any other notice with respect to
any of the Guaranteed Obligations and this Subsidiary Guaranty and any
requirement that any Investor protect, secure, perfect or insure any Lien or
any property subject thereto or exhaust any right or take any action against
any Grantor or any other Person;

 

(ii)           any right to revoke this Subsidiary
Guaranty and acknowledges that this Subsidiary Guaranty is continuing in nature
and applies to all Guaranteed Obligations, whether existing now or in the
future;

 

(iii)          (A) any defense arising by reason
of any claim or defense based upon an election of remedies by any Investor that
in any manner impairs, reduces, releases or otherwise adversely affects the
subrogation, reimbursement, exoneration, contribution or indemnification rights
of such Subsidiary Guarantor or other rights of such Subsidiary Guarantor to
proceed against any of the other Grantors, any other guarantor or any other
Person, and (B) any defense based on any right of set-off or counterclaim
against or in respect of the Obligations of such Subsidiary Guarantor
hereunder;

 

(iv)          any duty on the part of any Investor
to disclose to such Subsidiary Guarantor any matter, fact or thing relating to
the business, condition (financial or otherwise), operations, performance,
properties or prospects of any other Grantor or any of its Subsidiaries now or
hereafter known by such Investor; and

 

(v)           each Subsidiary Guarantor
acknowledges that it will receive substantial direct and indirect benefits from
the financing arrangements contemplated by the Secured Transaction Documents
and that the waivers set forth in Section 1.3(b) and this Section 1.3(c) are
knowingly made in contemplation of such benefits.

 

(d)           Subrogation.  Each Subsidiary Guarantor hereby
unconditionally and irrevocably agrees not to exercise any rights that it may
now have or hereafter acquire against the Company, any other Grantor or any
other insider guarantor that arise from the existence, payment, performance or
enforcement of such Subsidiary Guarantor’s obligations under or in respect of
this Subsidiary Guaranty or any other Secured Transaction Document, including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any claim or
remedy of any Investor against the Company, any other Grantor or any other
insider guarantor, whether or not such claim, remedy 

 

13

 

or right arises in equity or under contract,
statute or common law, including, without limitation, the right to take or
receive from the Company, any other Grantor or any other insider guarantor,
directly or indirectly, in cash or other property or by set-off or in any other
manner, payment or security on account of such claim, remedy or right, unless
and until all of the Guaranteed Obligations (other than contingent
indemnification obligations) and all other amounts payable under this
Subsidiary Guaranty shall have been paid in full in cash.  If any amount shall be paid to any Subsidiary
Guarantor in violation of the immediately preceding sentence at any time prior
to the latest of the payment in full in cash of the Guaranteed Obligations
(other than contingent indemnification obligations) and all other amounts
payable under this Subsidiary Guaranty, such amount shall be received and held in
trust for the benefit of the Investors, shall be segregated from other property
and funds of such Subsidiary Guarantor and shall forthwith be paid or delivered
to the Collateral Agent in the same form as so received (with any necessary
endorsement or assignment) to be credited and applied to the Guaranteed
Obligations and all other amounts payable under this Subsidiary Guaranty,
whether matured or unmatured, in accordance with the terms of the Secured
Transaction Documents, or to be held as collateral for any Guaranteed
Obligations or other amounts payable under this Subsidiary Guaranty thereafter
arising.  If (i) any Subsidiary
Guarantor shall make payment to any Investor of all or any part of the
Guaranteed Obligations and (ii) all of the Guaranteed Obligations (other
than contingent indemnification obligations) and all other amounts payable
under this Subsidiary Guaranty shall have been paid in full in cash, the
Investors will, at such Subsidiary Guarantor’s request and expense, execute and
deliver to such Subsidiary Guarantor appropriate documents, without recourse
and without representation or warranty, necessary to evidence the transfer by
subrogation to such Subsidiary Guarantor of an interest in the Guaranteed
Obligations resulting from such payment made by such Subsidiary Guarantor
pursuant to this Subsidiary Guaranty.

 

(e)           Subordination.  Each Subsidiary Guarantor hereby subordinates
any and all debts, liabilities and other Obligations owed to such Subsidiary
Guarantor by each other Grantor (the “Subordinated
Obligations”) to the Guaranteed Obligations to the extent and in the
manner hereinafter set forth in this Section 1.3:

 

(i)            Prohibited Payments, Etc.  Except during the continuance of an Event of
Default, each Subsidiary Guarantor may receive payments from any other Grantor
on account of the Subordinated Obligations. 
After the occurrence and during the continuance of any Event of Default,
however, any Subsidiary Guarantor may demand, accept or take any action to
collect any payment on account of the Subordinated Obligations.

 

(ii)           Prior Payment of Guaranteed
Obligations.  In any proceeding under
any Bankruptcy Law relating to any other Grantor, each Subsidiary Guarantor
agrees that the Investors shall be entitled to receive payment in full in cash
of all Guaranteed Obligations (including all interest and expenses accruing
after the commencement of a proceeding under any Bankruptcy Law, whether or not
constituting an allowed claim in such proceeding (“Post-Petition Interest”)) (other than contingent
indemnification obligations) before such Subsidiary Guarantor receives payment
of any Subordinated Obligations.

 

(iii)          Turn-Over.  After the occurrence and during the
continuance of any Event of Default, each Subsidiary Guarantor shall, if the
Collateral Agent so requests, collect, enforce and receive payments on account
of the Subordinated Obligations as trustee for 

 

14

 

the Investors
and deliver such payments to the Collateral Agent on account of the Guaranteed
Obligations (including all Post-Petition Interest), together with any necessary
endorsements or other instruments of transfer, but without reducing or
affecting in any manner the liability of such Subsidiary Guarantor under the
other provisions of the Subsidiary Guaranty.

 

(iv)          Collateral Agent Authorization.  After the occurrence and during the
continuance of any Event of Default, the Collateral Agent is authorized and
empowered (but without any obligation to so do), in its reasonable discretion, (A) in
the name of each Subsidiary Guarantor, to collect and enforce, and to submit
claims in respect of, the Subordinated Obligations and to apply any amounts
received thereon to the Guaranteed Obligations (including any and all
Post-Petition Interest), and (B) to require each Subsidiary Guarantor (1) to
collect and enforce, and to submit claims in respect of, the Subordinated
Obligations and (2) to pay any amounts received on such obligations to the
Collateral Agent for application to the Guaranteed Obligations (including any
and all Post-Petition Interest).

 

(f)            Continuing
Subsidiary Guaranty; Assignments. 
The Subsidiary Guaranty is a continuing guaranty and shall (i) remain
in full force and effect until the payment in full in cash of the Guaranteed
Obligations and all other amounts payable under the Subsidiary Guaranty, (ii) be
binding upon each Subsidiary Guarantor, its successors and assigns, and (iii) inure
to the benefit of and be enforceable by the Investors and their successors,
transferees and assigns.

 

Section 1.4   Grant of Security

 

(a)           Grant
by U.S. Grantors.  As security for
the payment or performance, as applicable, in full of the Obligations, each
U.S. Grantor hereby pledges and grants to the Collateral Agent, for the ratable
benefit of the Secured Parties, a lien on and security interest (the “U.S. Security Interest”) in and to all of the right,
title and interest of such U.S. Grantor in, to and under the following
property, wherever located, whether now existing or hereafter arising or
acquired from time to time (all of which being hereinafter collectively
referred to as the “U.S. Collateral”):

 

(i)            all Accounts,

 

(ii)           all Deposit Accounts and Securities
Accounts, including all Cash Collateral Accounts and Blocked Accounts,

 

(iii)          all Chattel Paper, Documents and
Instruments,

 

(iv)          all Commercial Tort Claims,

 

(v)           all Equipment,

 

(vi)          all General Intangibles,

 

(vii)         all Goods,

 

(viii)        all Insurance,

 

15

 

(ix)           all Instruments,

 

(x)            all Intellectual Property,

 

(xi)           all Inventory,

 

(xii)          all Investment Property,
including all Pledged Collateral and all Control Accounts,

 

(xiii)         all Proceeds of
Authorizations,

 

(xiv)        all Receivables and
Receivables Records,

 

(xv)         all
other goods and personal property of such U.S. Grantor, whether tangible or
intangible, wherever located, including letters of credit,

 

(xvi)        to the extent not otherwise included in
clauses (i) through (xv) of this Section, all Collateral Records,
Collateral Support and Supporting Obligations in respect of any of the
foregoing,

 

(xvii)       to the extent not otherwise included in
clauses (i) through (xvi) of this Section, all other property in which a
security interest may be granted under the UCC or which may be delivered to and
held by the Collateral Agent pursuant to the terms hereof (including the
account referred to in Section 3.4(c)(ii) and all funds and other
property from time to time therein or credited thereto), and

 

(xviii)      to the extent not otherwise included in
clauses (i) through (xvii) of this Section, all Proceeds, products,
substitutions, accessions, rents and profits of or in respect of any of the
foregoing.

 

(b)           Grant by Israeli Grantors.  As security for the payment or performance,
as applicable, in full of the Obligations, each Israeli Grantor hereby pledges
and grants to the Collateral Agent, for the ratable benefit of the Secured
Parties, a lien on and security interest (the “Israeli Security Interest”, together with the U.S. Security
Interest, the “Security Interest”)
in and to all of the right, title and interest of such Israeli Grantor in, to
and under the “Collateral” (as that term is defined in the Pledge Agreements
each attached substantially in the form of Exhibits D and Exhibit E
hereto, respectively, to be executed and delivered to the Collateral Agent
concurrently with this Guaranty and Security Agreement), wherever located (all
of which being hereinafter collectively referred to as the “Israeli Collateral” and together with the
U.S. Collateral, the “Collateral”).

 

(c)           Revisions to UCC.  For the avoidance of doubt, it is expressly
understood and agreed that, to the extent the UCC is revised after the date
hereof such that the definition of any of the foregoing terms included in the
description or definition of the Collateral is changed, the parties hereto
desire that any property which is included in such changed definitions, but
which would not otherwise be included in the Security Interest on the date
hereof, nevertheless be included in the Security Interest upon the effective
date of such revision.  Notwithstanding
the immediately preceding sentence, the Security Interest is intended to apply
immediately on the date hereof to all of the Collateral to the fullest extent
permitted by applicable law, regardless of whether any particular item of the
Collateral was then subject to the UCC.

 

16

 

ARTICLE 2.

 

SECURITY FOR OBLIGATIONS; NO ASSUMPTION OF
LIABILITY

 

Section 2.1   Security for Obligations

 

This Guaranty
and Security Agreement secures, and the Collateral is collateral security for,
the prompt and complete payment or performance in full when due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including the payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of Title 11 of
the United States Code, or any similar provision of any other bankruptcy,
insolvency, receivership or other similar law), of all Obligations with respect
to each Grantor.

 

Section 2.2   No Assumption of Liability

 

Notwithstanding
anything to the contrary herein, the Security Interest is granted as security
only and shall not subject the Collateral Agent or any other Secured Party to,
or in any way alter or modify, any obligation or liability of any Grantor with
respect to or arising out of the Collateral.

 

ARTICLE 3.

 

REPRESENTATIONS AND WARRANTIES AND COVENANT

 

Section 3.1   Generally

 

(a)           Representations and Warranties.  Each of the Grantors, jointly with the other
Grantors and severally, represents and warrants to the Collateral Agent and the
other Secured Parties that:

 

(i)            As of the Applicable Date, (A) such
Grantor’s chief executive office or its principal place of business is, and for
the preceding four months has been, located at the office indicated on Schedule 3.1(a)(i),
(B) such Grantor’s jurisdiction of organization is the jurisdiction
indicated on Schedule 3.1(a)(i), and (C) such Grantor’s
Federal Employer Identification Number and company organizational number is as
set forth on Schedule 3.1(a)(i).

 

(ii)           As of the Applicable Date, (A) such
Grantor’s full legal name is as set forth on Schedule 3.1(a)(ii) and
(B) such Grantor has not changed its legal name in the preceding five
years, except as set forth on Schedule 3.1(a)(ii).

 

(iii)          Except as set forth on Schedule 3.1(a)(iii),
such Grantor has not within the five years preceding the Applicable Date become
bound (whether as a result of merger or otherwise) as debtor under a security
agreement entered into by another Person, which has not theretofore been
terminated.

 

17

 

(iv)          Except as set forth on Schedule 3.1(a)(iv),
such Grantor has good and valid rights in, and title to, the Collateral with
respect to which it has purported to grant the Security Interest, except for
minor defects in title that do not interfere with its ability to conduct its
business as currently conducted or to utilize such Collateral for its intended
purposes, and except for Liens expressly permitted pursuant to the Secured
Transaction Documents.

 

(v)           All actions and consents, including
all filings, notices, registrations and recordings, necessary or desirable to
create, perfect or ensure the first priority (subject only to Liens expressly
permitted by the Secured Transaction Documents) of the Security Interest in the
Collateral  owned or held by it or on its
behalf or for the exercise by the Collateral Agent or any other Secured Party
of any voting or other rights provided for in this Guaranty and Security
Agreement or the exercise of any remedies in respect of any such Collateral
have been made or obtained or will be made and obtained promptly following the
Closing, (A) except for (1) the filing of UCC financing statements
naming such Grantor as “debtor” and the Collateral Agent as “secured party”, or
the making of other appropriate filings, registrations or recordings,
containing a description of such Collateral in each applicable governmental,
municipal or other office specified on Schedule 3.1(a)(v) and (2) the
filing, registration or recordation of fully executed security agreements in
the form hereof (or in such other form as shall be in all respects satisfactory
to the Collateral Agent) and containing a description of all such Collateral
consisting of Patents, Trademarks and Copyrights, together with all other
necessary documents, in each applicable governmental registry or office, (B) except
for any such Collateral as to which the representations and warranties in this Section 3.1(a)(v) would
not be true solely by virtue of such Collateral having been used or disposed of
in a manner expressly permitted hereunder or under any other Secured
Transaction Document, and (C) except to the extent that such Security
Interest may not be perfected by filing, registering, recording or taking any
other action in the United States.  The
filing, in a timely manner, of the Securities Purchase Agreement and/or the
Guaranty and Security Agreement and/or the Pledge Agreements with the following
governmental bodies is required in order to perfect the security interests
granted thereunder:

 

·                  The United
States Patent and Trademark Office and the United States Copyright Office

 

·                  The Israeli
Companies Registrar

 

·                  The Israeli
Patents, Trademarks and Designs Office

 

·                  The Israeli
Registrar of Pledges

 

·                  The Patents,
Trademarks and Designs Office of any other jurisdiction.

 

Subsequent recording and filing with the United States or Israeli
Patent and Trademark Office, and the United States Copyright Office and the
Israeli Companies Register may be necessary to perfect a Lien on registered
patents, trademarks, trademark applications and copyrights acquired by the
Company or any of its Subsidiaries after the date hereof.

 

18

 

(vi)          Except as set forth on Schedule 3.1(a)(vi),
it has not filed or authorized the filing of (A) any financing statement
or analogous document under the UCC or any other applicable laws covering any
such Collateral, (B) any assignment in which it assigns any such
Collateral or any security agreement or similar instrument covering any such
Collateral with the United States Patent and Trademark Office or the United
States Copyright Office, or (C) any assignment in which it assigns any
such Collateral or any security agreement or similar instrument covering any
such Collateral with any foreign governmental, municipal or other office, in
each case, which financing statement, analogous document, assignment or other
instrument, as applicable, is still in effect, except for Liens expressly
permitted by the Secured Transaction Documents.

 

(vii)         Following the filing of the Security
Interest with the Israeli Companies Registrar, the Israeli Patents, Trademarks
and Designs Office and the Israeli Registrar of Pledges, the Security Interest
in the Collateral owned or held by it or on its behalf (A) is effective to
vest in the Collateral Agent, on behalf of the Secured Parties, the rights of
the Collateral Agent in such Collateral as set forth herein and (B) does
not violate Regulation T, U or X as of the Applicable Date.

 

(viii)        Immediately after the Applicable Date, (i) the
fair value of the assets of the Company and the Subsidiary Guarantors, taken as
a whole, at a fair valuation, will exceed their debts and liabilities,
subordinated, contingent or otherwise, (ii) the present fair saleable
value of the property of the Company and the Subsidiary Guarantors, taken as a
whole, will be greater than the amount that will be required to pay the
probable liability of their debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute
and matured, (iii) the Company and the Subsidiary Guarantors, taken as a
whole, will be able to pay their debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and matured,
and (iv) each of the Company and the Subsidiary Guarantors will not have
unreasonably small capital with which to conduct the business following such
date.  The representation in this
subsection (viii) is made without giving effect to any debts and obligations
of the Company to the Investors (including Goldman Sachs Investment Partners
Master Fund, L.P. or affiliated parties and Syntek Capital AG).

 

(b)           Covenants
and Agreements.  Each Grantor hereby
covenants and agrees as follows:

 

(i)            It will promptly notify the
Collateral Agent in writing of any change (A) in its legal name, (B) in
the location of its chief executive office, principal place of business, any
office in which it maintains books or records relating to any of the Collateral
owned or held by it or on its behalf or, except to the extent permitted by Section 3.1(b)(vii) or
Section 3.2, any office or facility at which any such Collateral is
located (including the establishment of any such new office or facility), (C) in
its identity or legal or organizational structure or its jurisdiction of
formation, or (D) in its Federal Taxpayer Identification Number.  It agrees not to effect or permit any change
referred to in the preceding sentence unless all filings have been made under
the Uniform Commercial Code or otherwise that are required in order for the
Collateral Agent to continue at all times following such change to have a
valid, legal and perfected security interest in all the Collateral with the
priority required hereby.

 

19

 

(ii)           It shall maintain, at its own cost
and expense, such complete and accurate Records with respect to the Collateral
owned or held by it or on its behalf as is consistent with its current
practices and in accordance with such prudent and standard practices used in
industries that are the same as or similar to those in which it is engaged, but
in any event to include complete accounting Records indicating all payments and
proceeds received with respect to any part of such Collateral.

 

(iii)          It shall, at its own cost and expense,
take any and all actions reasonably necessary to defend title to the Collateral
owned or held by it or on its behalf against all Persons and to defend the
Security Interest in such Collateral and the priority thereof against any Lien
or other interest not expressly permitted by the Secured Transaction Documents,
and in furtherance thereof, it shall not take, or permit to be taken, any
action not otherwise expressly permitted by the Secured Transaction Documents
that could impair the Security Interest or the priority thereof or any Secured
Party’s rights in or to such Collateral.

 

(iv)          The Collateral Agent and such Persons
as the Collateral Agent may designate shall have the right, at the cost and
expense of such Grantor, to inspect all of its Records (and to make extracts
and copies from such Records), to discuss its affairs with its officers and (to
the extent consented to by such independent accountants) independent
accountants and to verify under reasonable procedures the validity, amount,
quality, quantity, value, condition and status of, or any other matter relating
to, the Collateral owned or held by or on behalf of such Grantor, including, in
the case of Receivables, Pledged Debt, General Intangibles, Commercial Tort
Claims or Collateral in the possession of any third person, by contacting
Account Debtors, contract parties or other obligors thereon or any third person
possessing such Collateral for the purpose of making such a verification.  The Collateral Agent shall maintain the
confidentiality of all such information and shall have the absolute right to
share on a confidential basis any information it gains from such inspection or
verification with any Secured Party.

 

(v)           At its option, the Collateral Agent
may discharge past due taxes, assessments, charges, fees, Liens, security
interests or other encumbrances at any time levied or placed on the Collateral
owned or held by or on behalf of such Grantor, and not permitted by the Secured
Transaction Documents, and may pay for the maintenance and preservation of such
Collateral to the extent such Grantor fails to do so as required by the Secured
Transaction Documents, and such Grantor agrees, jointly with the other Grantors
and severally, to reimburse the Collateral Agent on demand for any payment made
or any expense incurred by the Collateral Agent pursuant to the foregoing
authorization; provided, however, that nothing in this paragraph
shall be interpreted as excusing any Grantor from the performance of, or
imposing any obligation on the Collateral Agent or any other Secured Party to
cure or perform, any covenants or other promises of any Grantor with respect to
taxes, assessments, charges, fees, Liens, security interests or other
encumbrances and maintenance as set forth herein or in the other Secured
Transaction Documents.

 

(vi)          It shall not be excused from liability
as a result of granting of the security interest pursuant to this Guaranty and
Security Agreement to observe and perform all the conditions and obligations to
be observed and performed by it under each contract, agreement or instrument
relating to the Collateral owned or held by it or on its behalf, all in
accordance with 

 

20

 

the terms and
conditions thereof and it agrees, jointly with the other Grantors and
severally, to indemnify and hold harmless the Collateral Agent and the other
Secured Parties from and against any and all liability for such performance.

 

(vii)         It shall not make, or permit to be
made, an assignment, pledge or hypothecation of the Collateral owned or held by
it or on its behalf, or grant any other Lien in respect of such Collateral,
except as expressly permitted by the Secured Transaction Documents.  Except as expressly permitted by the Secured
Transaction Documents, it shall not make or permit to be made any transfer of
such Collateral, and it shall remain at all times in possession of such
Collateral and the direct owner, beneficially and of record, of the Pledged Equity
Interests included in such Collateral, except that (A) Inventory may be
sold in the ordinary course of business and (B) unless and until the
Collateral Agent shall notify it that an Event of Default shall have occurred
and be continuing and that, during the continuance thereof, it shall not sell,
convey, lease, assign, transfer or otherwise dispose of any such Collateral
(which notice may be given by telephone if promptly confirmed in writing), it
may use and dispose of such Collateral in any lawful manner not inconsistent
with the provisions of this Guaranty and Security Agreement or any other
Secured Transaction Document.

 

Section 3.2   Equipment and Inventory

 

Each of the
U.S. Grantors, jointly with the other U.S. Grantors and severally, represents
and warrants to the Collateral Agent and the other Secured Parties that, except
for such Equipment and Inventory that does not exceed a book value of $50,000
in the aggregate for all U.S. Grantors as of the Applicable Date, all of the
Equipment and Inventory included in the Collateral owned or held by it or on
its behalf (other than mobile goods and Inventory and Equipment in transit) is
kept only at the locations specified on Schedule 3.2.  In addition, each U.S. Grantor covenants and
agrees that it shall not permit any Equipment or Inventory owned or held by it
or on its behalf to be in the possession or control of any warehouseman,
bailee, agent or processor for a period of greater than one hundred and eighty
(180) consecutive days, except for such Equipment or Inventory that (i) was
sent to customers for trial or evaluation in the ordinary course of the
Company’s business, provided  that the book value of such
Equipment or Inventory does not exceed $2,000,000 in the aggregate for all U.S.
Grantors, (ii) is identified on Schedule 3.2, and/or (iii) is
within the possession of the Subsidiaries, unless such warehouseman, bailee,
agent or processor shall have been notified of the Security Interest and shall
have agreed in writing to hold such Equipment or Inventory subject to the
Security Interest and the instructions of the Collateral Agent and to waive and
release any Lien held by it with respect to such Equipment or Inventory,
whether arising by operation of law or otherwise.

 

Section 3.3   Receivables

 

(a)           Representations
and Warranties.  Each of the U.S.
Grantors, jointly with the other U.S. Grantors and severally, represents and
warrants to the Collateral Agent and the other Secured Parties that, except for
Receivables valued at less than $10,000 individually and $50,000 in the
aggregate for all U.S. Grantors, no Receivable is evidenced by an Instrument
(other than checks received in the ordinary course of business) or Chattel
Paper that has not been delivered to the Collateral Agent.

 

21

 

(b)           Covenants
and Agreements.  Each U.S. Grantor
hereby covenants and agrees that:

 

(i)            At the reasonable request of the
Collateral Agent, it shall mark conspicuously, in form and manner reasonably
satisfactory to the Collateral Agent, all Chattel Paper, Instruments (other
than checks received in the ordinary course of business) and other evidence of
any Receivables owned or held by it or on its behalf (other than any delivered
to the Collateral Agent as provided herein and other than purchase orders sent
to customers), as well as the related Receivables Records, with an appropriate
reference to the fact that the Collateral Agent has a security interest
therein.

 

(ii)           It will not, without the Collateral
Agent’s prior written consent (which consent shall not be unreasonably
withheld), grant any extension of the time of payment of any such Receivable,
compromise, compound or settle the same for less than the full amount thereof,
release, wholly or partly, any Supporting Obligation or Collateral Support
relating thereto, or allow any credit or discount whatsoever thereon, other
than extensions, credits, discounts, releases, compromises or settlements
granted or made in the ordinary course of business and consistent with its then
current practices and in accordance with such practices reasonably believed by
such U.S. Grantor to be prudent.

 

(iii)          Except as otherwise provided in this Section and
unless otherwise determined by such Grantor in accordance with its good faith
business judgment, it shall continue to collect all amounts due or to become
due to it under all such Receivables (other than Other Receivables) and any
Supporting Obligations or Collateral Support relating thereto, and diligently
exercise each material right it may have thereunder, in each case at its own
cost and expense, and in connection with such collections and exercise, it
shall, upon the occurrence and during the continuance of an Event of Default,
take such action as it or the Collateral Agent may reasonably deem necessary.  Notwithstanding the foregoing, the Collateral
Agent shall have the right at any time after the occurrence and during the
continuance of an Event of Default to notify, or require such U.S. Grantor to
notify, any Account Debtor with respect to any such Receivable, Supporting
Obligation or Collateral Support of the Collateral Agent’s security interest
therein, and in addition, at any time during the continuation of an Event of
Default, the Collateral Agent may:  (i) direct
such Account Debtor to make payment of all amounts due or to become due to such
U.S. Grantor thereunder directly to the Collateral Agent and (ii) enforce,
at the cost and expense of such U.S. Grantor, collection thereof and to adjust,
settle or compromise the amount or payment thereof, in the same manner and to
the same extent as such U.S. Grantor would be able to have done.  If the Collateral Agent notifies such U.S.
Grantor that it has elected to collect any such Receivable, Supporting
Obligation or Collateral Support in accordance with the preceding sentence, any
payments thereof received by such U.S. Grantor shall not be commingled with any
of its other funds or property but shall be held separate and apart therefrom,
shall be held in trust for the benefit of the Collateral Agent hereunder and
shall be forthwith delivered to the Collateral Agent in the same form as so
received (with any necessary endorsement), and such U.S. Grantor shall not
grant any extension of the time of payment thereof, compromise, compound or
settle the same for less than the full amount thereof, release the same, wholly
or partly, or allow any credit or discount whatsoever thereon.

 

22

 

(iv)          It shall use its best efforts to keep
in full force and effect any Supporting Obligation or Collateral Support
relating to any Receivable.

 

(v)           During the continuance of an Event of
Default, at the request of the Collateral Agent, it shall direct each Account
Debtor to make payment on each Receivable to a Blocked Account or the
Concentration Account.

 

Section 3.4   Investment Property

 

(a)           Representations
and Warranties.  Each of the U.S.
Grantors, jointly with the other U.S. Grantors and severally, represents and
warrants to the Collateral Agent and the other Secured Parties that:

 

(i)            Schedule 3.4 sets forth,
as of the Applicable Date, (i) all, of the Investment Property (other than
(A) Receivables not evidenced by an Instrument or Chattel Paper and (B) Equity
Interests with an immaterial value) owned or held by or on behalf of such U.S.
Grantor to the extent not held in a Securities Account and (ii) each
Securities Account or commodities account maintained by or on behalf of such
U.S. Grantor.

 

(ii)           All Pledged Equity Interests have
been duly authorized and validly issued and are fully paid and nonassessable,
and such U.S. Grantor is the direct owner, beneficially and of record, thereof,
free and clear of all Liens (other than Liens expressly permitted by the
Secured Transaction Documents).

 

(iii)          All Pledged Debt other than Pledged
Debt described on Schedule 3.4 hereto have been duly authorized,
issued and delivered and, where necessary, authenticated, and constitutes the
legal, valid and binding obligation of the obligor with respect thereto,
enforceable in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors’ rights generally, and general
equitable principles (whether considered in a proceeding in equity or at law).

 

(iv)          All Investment Property consisting of
certificated securities, Chattel Paper or Instruments other than checks
received in the ordinary course of business has been delivered to the
Collateral Agent.

 

(v)           All Pledged Collateral held by a
Securities Intermediary in a Securities Account or a commodities account is in
a Control Account.

 

(vi)          Other than the Pledged Equity
Interests that constitute General Intangibles, there is no Investment Property
other than that represented by certificated securities or Instruments in the
possession of the Collateral Agent.

 

(vii)         No Person other than the Collateral
Agent or an Approved Securities Intermediary has “control” (within the meaning
of Article 8 of the UCC) over any Investment Property of such U.S.
Grantor.

 

23

 

(b)           Registration
in Nominee Name; Denominations.  Each
U.S. Grantor hereby agrees that (i) without limiting Article 5, the
Collateral Agent, on behalf of the Secured Parties, shall have the right (in
its sole and absolute discretion) to hold any Investment Property in its own
name as pledgee, the name of its nominee (as pledgee or as sub agent) or the
name of the applicable U.S. Grantor, endorsed or assigned, where applicable, in
blank or in favor of the Collateral Agent, (ii) at the Collateral Agent’s
request, such U.S. Grantor will promptly give to the Collateral Agent copies of
any material notices or other communications received by it with respect to any
Investment Property registered in its name, and (iii) the Collateral Agent
shall at all times have the right to exchange any certificates, instruments or
other documents representing or evidencing any Investment Property owned or
held by or on behalf of such U.S. Grantor for certificates, instruments or
other documents of smaller or larger denominations for any purpose consistent
with this Guaranty and Security Agreement.

 

(c)           Voting
and Distributions.

 

(i)            Unless and until an Event of Default
shall have occurred and be continuing:

 

(A)          Each U.S. Grantor shall be entitled to
exercise any and all voting and/or other consensual rights and powers inuring
to an owner of the Investment Property, or any part thereof, for any purpose
consistent with the terms of this Guaranty and Security Agreement and the other
Secured Transaction Documents; provided, however, that such U.S. Grantor
will not be entitled to exercise any such right if the result thereof could
materially and adversely affect the rights inuring to a holder of the
Investment Property or the rights and remedies of the Collateral Agent under
this Guaranty and Security Agreement or any other Secured Transaction Document
or the ability of the Collateral Agent to exercise the same.

 

(B)           The Collateral  Agent shall execute and deliver to each U.S.
Grantor, or cause to be executed and delivered to each U.S. Grantor, all such
proxies, powers of attorney and other instruments as such U.S. Grantor may
reasonably request for the purpose of enabling it to exercise the voting and/or
consensual rights and powers it is entitled to exercise pursuant to subsection
(c)(i)(A) and to receive the cash payments it is entitled to receive
pursuant to subsection (c)(i)(C).

 

(C)           Each U.S. Grantor shall be entitled
to receive, retain and use any and all cash dividends, interest and principal
paid on the Investment Property owned or held by it or on its behalf to the
extent and only to the extent that such cash dividends, interest and principal
are not prohibited by, and otherwise paid in accordance with, the terms and
conditions of the Securities Purchase Agreement, the other Secured Transaction
Documents and applicable laws.  All
non-cash dividends, interest and principal, and all dividends, interest and
principal paid or payable in cash or otherwise in connection with a partial or
total liquidation or dissolution, return of capital, capital surplus or paid in
surplus, and all other distributions (other than distributions referred to in
the preceding sentence) made on or in respect of the Investment Property, whether
paid or payable in cash or otherwise, whether resulting from a subdivision,
combination or reclassification of the outstanding Pledged Equity Interests in
any issuer of any 

 

24

 

Investment Property or received in exchange
for any Investment Property, or any part thereof, or in redemption thereof, or
as a result of any merger, consolidation, acquisition or other exchange of
assets to which such issuer may be a party or otherwise, shall be and become
part of the Collateral, and, if received by such U.S. Grantor, shall not be
commingled with any of its other funds or property but shall be held separate
and apart therefrom, shall be held in trust for the benefit of the Collateral
Agent hereunder and shall be forthwith delivered to the Collateral Agent in the
same form as so received (with any necessary endorsement).

 

(ii)           Without limiting the generality of
the foregoing, upon the occurrence and during the continuance of an Event of
Default:

 

(A)          Upon the direction of the Collateral
Agent, all rights of each U.S. Grantor to dividends, interest or principal that
it is authorized to receive pursuant to subsection (c)(i)(C) shall cease,
and all such rights shall thereupon become vested in the Collateral Agent,
which shall have the sole and exclusive right and authority to receive and
retain such dividends, interest or principal, as applicable.  All dividends, interest and principal
received by or on behalf of any U.S. Grantor contrary to the provisions of this
Section shall be held in trust for the benefit of the Collateral Agent,
shall be segregated from other property or funds of such U.S. Grantor and shall
be forthwith delivered to the Collateral Agent upon demand in the same form as
so received (with any necessary endorsement). 
Any and all money and other property paid over to or received by the
Collateral Agent pursuant to the provisions of this subsection (c)(ii)(A) shall
be retained by the Collateral Agent in an account to be established in the name
of the Collateral Agent, for the ratable benefit of the Secured Parties, upon
receipt of such money or other property and shall be applied in accordance with
the provisions of Section 6.2. 
Subject to the provisions of this subsection (c)(ii)(A), such account
shall at all times be under the sole dominion and control of the Collateral
Agent, and the Collateral Agent shall at all times have the sole right to make
withdrawals therefrom and to exercise all rights with respect to the funds and
other property from time to time deposited therein or credited thereto as set
forth in the Secured Transaction Documents. 
After all Events of Default have been cured or waived, the Collateral
Agent shall, within five (5) Business Days after all such Events of
Default have been cured or waived, repay to the applicable U.S. Grantor all
cash dividends, interest and principal (without interest) that such U.S.
Grantor would otherwise be permitted to retain pursuant to the terms of
subsection (c)(i)(C) and which remain in such account.

 

(B)           Upon the direction of the Collateral
Agent, all rights of each U.S. Grantor to exercise the voting and consensual
rights and powers it is entitled to exercise pursuant to subsection (c)(i)(A),
and the obligations of the Collateral Agent under subsection (c)(i)(B), shall
cease, and all such rights shall thereupon become vested in the Collateral
Agent, which shall have the sole and exclusive right and authority to exercise
such voting and consensual rights and powers, provided that, unless otherwise
directed by the Required Investors, the Collateral Agent shall have the right
from time to time following and during the continuance of an Event of Default
to permit such U.S. Grantor to exercise such rights.  After all Events of Default have been cured
or waived, the applicable U.S. Grantor will have the right to exercise the
voting and consensual rights and powers that it would otherwise be entitled to
exercise pursuant to the terms of subsection (c)(i)(A).

 

25

 

(d)           Covenants
and Agreements.  Each U.S. Grantor
hereby covenants and agrees as follows:

 

(i)            Each U.S. Grantor agrees that it
will not establish or maintain, or permit any other U.S. Grantor to establish
or maintain, any Securities Account or commodities account that is not a
Control Account.

 

(ii)           In the event (A) any U.S.
Grantor or any Approved Securities Intermediary shall, after the date hereof,
terminate an agreement with respect to the maintenance of a Control Account for
any reason, (B) the Collateral Agent shall demand the termination of an
agreement with respect to the maintenance of a Control Account as a result of
the failure of an Approved Securities Intermediary to comply with the terms of
the applicable Control Account Letter, or (C) the Collateral Agent
determines in its sole discretion that the financial condition of an Approved
Securities Intermediary has materially deteriorated, such U.S. Grantor agrees
to promptly transfer the assets held in such Control Account to another Control
Account reasonably acceptable to the Collateral Agent.

 

Section 3.5   Letter of Credit Rights

 

Each of the
U.S. Grantors, jointly with the other U.S. Grantors and severally, represents
and warrants to the Collateral Agent and the other Secured Parties that Schedule 3.5
sets forth, as of the Applicable Date, each letter of credit giving rise to a
Letter of Credit Right included in the Collateral owned or held by or on behalf
of such U.S. Grantor.

 

Section 3.6   Intellectual Property Collateral

 

(a)           Representations
and Warranties.  Each of the
Grantors, jointly with the other Grantors and severally, represents and
warrants to the Collateral Agent and the other Secured Parties that Schedule 3.6
sets forth, as of the Applicable Date, all of the Patents, Patent Licenses, Trademarks,
Trademark Licenses, Copyrights, Copyright Licenses, Trade Secret Licenses and
Domain Names included in the Collateral owned or held by or on behalf of such
Grantor.

 

(b)           Covenants
and Agreements.  Each Grantor hereby
covenants and agrees as follows:

 

(i)            It will not, nor will it permit any
of its licensees (or sublicensees) to, do any act, or omit to do any act,
whereby any Patent that is related to the conduct of its business may become
invalidated or dedicated to the public, and it shall continue to mark any
products covered by a Patent with the relevant patent number as necessary and
sufficient to establish and preserve its maximum rights under applicable patent
laws.

 

(ii)           It will (either directly or through
its licensees or its sublicensees), for each Trademark that is necessary for
the conduct of its business, (A) maintain such Trademark in full force
free from any claim of abandonment or invalidity for non use, 

 

26

 

(B) maintain
the quality of products and services offered under such Trademark, (C) display
such Trademark with notice of Federal or other analogous registration to the
extent necessary and sufficient to establish and preserve its rights under
applicable law, and (D) not knowingly use or knowingly permit the use of
such Trademark in violation of any third party’s valid and legal rights.

 

(iii)          It will (either directly or through
its licensees or its sublicensees), for each work covered by a Copyright that
is related to the conduct of its business, continue to publish, reproduce,
display, adopt and distribute the work with appropriate copyright notice as
necessary and sufficient to establish and preserve its maximum rights under
applicable copyright laws.

 

(iv)          It will promptly notify the Collateral
Agent in writing if it knows or has reason to know that any Intellectual
Property material to the conduct of its business may become abandoned, lost or
dedicated to the public, or of any adverse determination or development
(including the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office or the United
States Copyright Office, or any similar offices or tribunals in the United
States or any other country) regarding such Grantor’s ownership of any such
Intellectual Property, its right to register the same, or to keep and maintain
the same.

 

(v)           In no event shall it, either directly
or through any agent, employee, licensee or designee, file an application for
any Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar offices in the United States
or any other country, unless it promptly notifies the Collateral Agent in
writing thereof and, upon request of the Collateral Agent, executes and
delivers any and all agreements, instruments, documents and papers as the
Collateral Agent may request to evidence the Collateral Agent’s security
interest in such Intellectual Property, and such Grantor hereby appoints the
Collateral Agent as its attorney in fact to execute and file such writings for
the foregoing purposes, all acts of such attorney being hereby ratified and
confirmed; such power, being coupled with an interest, is irrevocable.

 

(vi)          It will take all necessary steps that
are consistent with the practice in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any similar
offices or tribunals in the United States, Israel and the European Union, and
except as otherwise determined in its good faith business judgment, any other
country, to maintain and pursue each material application relating to the
Intellectual Property owned or held by it or on its behalf (and to obtain the
relevant grant or registration) and to maintain each issued Patent and each
registered Trademark and Copyright that is material to the conduct of its
business, including timely filings of applications for renewal, affidavits of
use, affidavits of incontestability and payment of maintenance fees, and, if
consistent, in good faith, with good business judgment, to initiate opposition,
interference and cancellation proceedings against third parties.  In the event that it has reason to believe
that any Intellectual Property material to the conduct of its business has been
or is about to be infringed, misappropriated or diluted by a third party, it
promptly shall notify the Collateral Agent in writing and shall, if consistent
with good business judgment, promptly sue for infringement, misappropriation or
dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and take such other actions as are appropriate
under the circumstances to protect such Intellectual Property.

 

27

 

(vii)         During the continuance of an Event of
Default, it shall use its best efforts to obtain all requisite consents or
approvals by the licenser of each License to effect the assignment (as
collateral security) of all of its right, title and interest thereunder to the
Collateral Agent or its designee.

 

(viii)        It shall take all steps reasonably
necessary to protect the secrecy of all Trade Secrets relating to the products
and services sold or delivered under or in connection with the Intellectual
Property owned or held by or on its behalf, including entering into
confidentiality agreements with employees and labeling and restricting access
to secret information and documents.

 

(ix)           It shall in accordance with its past
practices continue to collect all amounts due or to become due to such Grantor
under all Intellectual Property, and diligently exercise each material right it
may have thereunder, in each case at its own cost and expense, and in
connection with such collections and exercise, it shall, upon the occurrence
and during the continuance of an Event of Default, take such action as it or
the Collateral Agent may reasonably deem necessary.  Notwithstanding the foregoing, the Collateral
Agent shall have the right at any time after the occurrence and during the
continuance of an Event of Default to notify, or require such Grantor to
notify, any relevant obligors with respect to such amounts of the Collateral
Agent’s security interest therein.

 

Section 3.7   Commercial Tort Claims

 

(a)           Representations and Warranties.  Each of the U.S. Grantors, jointly with the
other U.S. Grantors and severally, represents and warrants to the Collateral
Agent and the other Secured Parties that Schedule 3.7 sets forth,
as of the Applicable Date, all Commercial Tort Claims made by it or on its
behalf or to which it otherwise has any right, title or interest.

 

(b)           Covenants and Agreements.  Each U.S. Grantor hereby covenants and agrees
that promptly after the same shall have been commenced, it shall provide to the
Collateral Agent written notice of any Commercial Tort Claim and any judgment,
settlement or other disposition thereof.

 

Section 3.8   Deposit Accounts; Control Accounts

 

(a)           Representations and Warranties.  The only Deposit Accounts maintained by any
U.S. Grantor on the Applicable Date are those listed on Schedule 3.8
which sets forth such information separately for each U.S. Grantor.

 

(b)           Covenants and Agreements.  Each U.S. Grantor hereby covenants and agrees
as follows:

 

Upon the direction of the Collateral Agent following the occurrence or
during the continuance of an Event of Default, each U.S. Grantor shall cause
the financial institution where any Deposit Account is maintained to enter in
to a Blocked Account Letter with 

 

28

 

respect to such Deposit Account, other than any Deposit Account where (1) the
amount of cash on deposit in any such account shall not exceed $50,000
(exclusive of the amounts in accounts for unpaid payroll, payroll taxes and
withholding taxes), and (2) the aggregate amount of cash on deposit in all
accounts other than the Concentration Account or a Blocked Account shall not
exceed $100,000 (exclusive of the amounts in accounts for unpaid payroll,
payroll taxes and withholding taxes).

 

ARTICLE 4.

 

FURTHER ASSURANCES

 

Each Grantor
hereby covenants and agrees, at its own cost and expense, to execute,
acknowledge, deliver and/or cause to be duly filed all such further agreements,
instruments and other documents (including favorable legal opinions in
connection with any Transaction) that may be reasonably requested by the
Collateral Agent, and take all such further actions, that the Collateral Agent
may from time to time reasonably request to preserve, protect and perfect the
Security Interest granted by it and the rights and remedies created hereby,
including the payment of any fees and taxes required in connection with its
execution and delivery of this Guaranty and Security Agreement, the granting by
it of the Security Interest and the filing of any financing statements or other
documents in connection herewith or therewith. 
In addition, to the extent permitted by applicable law, each Grantor
hereby irrevocably authorizes the Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all
or any part of the Collateral owned or held by it or on its behalf without the
signature of such Grantor and additionally agrees that a photographic or other
reproduction of this Guaranty and Security Agreement may be filed with the
United States Patent and Trademark Office and/or the United States Copyright
Office, as applicable.  Each Grantor
hereby further irrevocably authorizes the Collateral Agent to file a Record or
Records, including financing statements, in all jurisdictions and with all
filing offices that the Collateral Agent may determine, in its sole and
absolute discretion, are necessary, advisable or prudent to perfect the
Security Interest granted by it and agrees that such financing statements may
describe the Collateral owned or held by it or on its behalf in the same manner
as described herein or may contain an indication or description of collateral
that describes such property in any other manner that the Collateral Agent may
determine, in its sole and absolute discretion, is necessary, advisable or
prudent to perfect the Security Interest granted by such Grantor, including
describing such property as “all assets” or “all personal property.”

 

ARTICLE 5.

 

COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT

 

Each Grantor
hereby appoints the Collateral Agent and any officer or agent thereof, as its
true and lawful agent and attorney in fact for the purpose of carrying out the
provisions of this Guaranty and Security Agreement and taking any action and
executing any instrument that the Collateral Agent may deem necessary or
advisable to accomplish the purposes hereof, which appointment is irrevocable
and coupled with an interest, and without limiting the generality of the
foregoing, the Collateral Agent shall have the right, with power of
substitution for such Grantor and in such Grantor’s name or otherwise, for the
use and benefit of 

 

29

 

the Collateral Agent and the other Secured Parties, upon the occurrence
and during the continuance of an Event of Default and at such other time or
times permitted by the Secured Transaction Documents, (i) to receive,
endorse, assign and/or deliver any and all notes, acceptances, checks, drafts,
money orders or other evidences of payment relating to the Collateral owned or
held by it or on its behalf or any part thereof; (ii) to demand, collect,
receive payment of, give receipt for, and give discharges and releases of, any
of such Collateral; (iii) to sign the name of such U.S. Grantor on any
invoice or bill of lading relating to any of such Collateral; (iv) to send
verifications of Receivables owned or held by it or on its behalf to any
Account Debtor; (v) to commence and prosecute any and all suits, actions
or proceedings at law or in equity in any court of competent jurisdiction to
collect or otherwise realize on any of the Collateral owned or held by it or on
its behalf or to enforce any rights in respect of any of such Collateral; (vi) to
settle, compromise, compound, adjust or defend any actions, suits or
proceedings relating to any of such Collateral; (vii) to notify, or to
require such U.S. Grantor to notify, Account Debtors and other obligors to make
payment directly to the Collateral Agent, and (viii) to use, sell, assign,
transfer, pledge, make any agreement with respect to or otherwise deal with any
of such Collateral, and to do all other acts and things necessary to carry out
the purposes of this Guaranty and Security Agreement, as fully and completely
as though the Collateral Agent were the absolute owner of such Collateral for
all purposes; provided, however, that nothing herein contained
shall be construed as requiring or obligating the Collateral Agent or any other
Secured Party to make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Collateral Agent or any other
Secured Party, or to present or file any claim or notice, or to take any action
with respect to any of the Collateral or the moneys due or to become due in
respect thereof or any property covered thereby, and no action taken or omitted
to be taken by the Collateral Agent or any other Secured Party with respect to
any of the Collateral shall give rise to any defense, counterclaim or offset in
favor of such Grantor or to any claim or action against the Collateral Agent or
any other Secured Party.  The provisions
of this Article shall in no event relieve any Grantor of any of its
obligations hereunder or under the other Secured Transaction Documents with
respect to any of the Collateral or impose any obligation on the Collateral
Agent or any other Secured Party to proceed in any particular manner with
respect to any of the Collateral, or in any way limit the exercise by the
Collateral Agent or any other Secured Party of any other or further right that
it may have on the date of this Guaranty and Security Agreement or hereafter,
whether hereunder, under any other Secured Transaction Document, by law or
otherwise.  Any sale pursuant to the
provisions of this paragraph shall be deemed to conform to the commercially
reasonable standards as provided in Part 6 of Article 9 of the UCC.

 

ARTICLE 6.

 

REMEDIES UPON DEFAULT

 

Section 6.1   Remedies Generally

 

(a)           General
Rights.  Upon the occurrence and
during the continuance of an Event of Default, each Grantor agrees to deliver
each item of Collateral owned or held by it or on its behalf to the Collateral
Agent on demand, and it is agreed that the Collateral Agent shall have the
right to take any of or all the following actions at the same or different
times to the extent permitted by law:  (i) with
respect to any Collateral consisting of Intellectual Property or 

 

30

 

Commercial Tort Claims, on demand, to cause
the Security Interest to become an assignment, transfer and conveyance of any
such Collateral by the applicable Grantors to the Collateral Agent, or, in the
case of Intellectual Property, to license or sublicense, whether general,
special or otherwise, and whether on an exclusive or non-exclusive basis, any
such Collateral throughout the world on such terms and conditions and in such
manner as the Collateral Agent shall determine (other than in violation of any
then-existing licensing arrangements to the extent that waivers cannot be
obtained), and (ii) with or without legal process and with or without
prior notice or demand for performance, to take possession of the Collateral
owned or held by it or on its behalf and without liability for trespass to
enter any premises where such Collateral may be located for the purpose of
taking possession of or removing such Collateral and, generally, to exercise
any and all rights afforded to a secured party under the UCC or other
applicable law.  Without limiting the
generality of the foregoing, each Grantor agrees that the Collateral Agent
shall have the right, subject to the mandatory requirements of applicable law,
to sell or otherwise dispose of any of the Collateral owned or held by or on
behalf of such Grantor, at public or private sale or at any broker’s board or
on any securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. 
The Collateral Agent shall be irrevocably authorized at any such sale of
such Collateral constituting securities (if it deems it advisable to do so) to
restrict the prospective bidders or purchasers to Persons who will represent
and agree that they are purchasing such Collateral for their own account for
investment and not with a view to the distribution or sale thereof, and upon
consummation of any such sale, the Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold.  Each such purchaser at
any such sale shall hold the property sold absolutely, free from any claim or
right on the part of the applicable Grantor, and such Grantor hereby waives (to
the extent permitted by law) all rights of redemption, stay, valuation and
appraisal which such Grantor now has or may at any time in the future have
under any rule of law or statute now existing or hereafter enacted.

 

(b)           Sale
of Collateral.  The Collateral Agent
shall give each Grantor ten (10) days’ written notice (which such Grantor
agrees is reasonable notice within the meaning of Part 6 of Article 9
of the UCC) of the Collateral Agent’s intention to make any sale of any of the
Collateral owned or held by or on behalf of such Grantor.  Such notice, in the case of a public sale,
shall state the time and place for such sale and, in the case of a sale at a
broker’s board or on a securities exchange, shall state the board or exchange
at which such sale is to be made and the day on which such Collateral will
first be offered for sale at such board or exchange.  Any such public sale shall be held at such
time or times within ordinary business hours and at such place or places as the
Collateral Agent may fix and state in the notice (if any) of such sale.  At any such sale, the Collateral to be sold
may be sold in one lot as an entirety or in separate parcels, as the Collateral
Agent may (in its sole and absolute discretion) determine.  The Collateral Agent shall not be obligated
to make any sale of any Collateral if it shall determine not to do so, regardless
of the fact that notice of sale of such Collateral shall have been given.  The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned.  In
case any sale of any of the Collateral is made on credit or for future
delivery, the Collateral so sold may be retained by the Collateral Agent until
the sale price is paid by the purchaser or purchasers thereof, but the
Collateral Agent shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in
case of any 

 

31

 

such failure, such Collateral may be sold
again upon like notice.  At any public
(or, to the extent permitted by applicable law, private) sale made pursuant to
this Section, any Secured Party may bid for or purchase, free (to the extent
permitted by applicable law) from any right of redemption, stay, valuation or
appraisal on the part of such Grantor (all said rights being also hereby waived
and released to the extent permitted by law), any of the Collateral offered for
sale and may make payment on account thereof by using any claim then due and
payable to such Secured Party from such Grantor as a credit against the
purchase price, and such Secured Party may, upon compliance with the terms of
sale, hold, retain and dispose of such property without further accountability
to such Grantor therefor.  For purposes
hereof, (i) a written agreement to purchase any of the Collateral shall be
treated as a sale thereof, (ii) the Collateral Agent shall be free to
carry out such sale pursuant to such agreement, and (iii) no Grantor shall
be entitled to the return of any of the Collateral subject thereto,
notwithstanding the fact that after the Collateral Agent shall have entered
into such an agreement all Events of Default shall have been remedied and the
Obligations paid in full.  As an
alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or in equity to
foreclose upon any of the Collateral and to sell any of the Collateral pursuant
to a judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver.  Without limiting the generality of the
foregoing, each Grantor agrees as follows: 
(A) if the proceeds of any sale of the Collateral owned or held by
it or on its behalf pursuant to this Article are insufficient to pay all
the Obligations, it shall be liable for the resulting deficiency and the fees,
charges and disbursements of any counsel employed by the Collateral Agent or
any other Secured Party to collect such deficiency, (B) it hereby waives
any claims against the Collateral Agent arising by reason of the fact that the
price at which any such Collateral may have been sold at any private sale
pursuant to this Article was less than the price that might have been
obtained at a public sale, even if the Collateral Agent accepts the first offer
received and does not offer such Collateral to more than one offeree, (C) there
is no adequate remedy at law for failure by it to comply with the provisions of
this Section and that such failure would not be adequately compensible in
damages, and therefore agrees that its agreements in this Section may be
specifically enforced, (D) the Collateral Agent may sell any such
Collateral without giving any warranties as to such Collateral, and the
Collateral Agent may specifically disclaim any warranties of title or the like,
and (E) the Collateral Agent shall have no obligation to marshall any such
Collateral.

 

Section 6.2   Application of Proceeds of Sale

 

The Collateral
Agent shall apply the proceeds of any collection or sale of the Collateral, as
well as any Collateral consisting of cash, as follows:

 

FIRST, to the payment of all reasonable costs
and expenses incurred by the Collateral Agent in connection with such
collection or sale or otherwise in connection with this Guaranty and Security
Agreement, any other Secured Transaction Document or any of the Obligations,
including all out of pocket court costs and the reasonable fees and expenses of
its agents and legal counsel, the repayment of all advances made by the
Collateral Agent hereunder or under any other Secured Transaction Document on
behalf of any Grantor and any other reasonable out-of-pocket costs or expenses
incurred in connection with the exercise of any right or remedy hereunder or
under any other Secured Transaction Document;

 

32

 

SECOND, to the payment of the portion up to
$4,500,000 of the Obligations (the amounts so applied to be distributed among
Goldman Sachs Investment Partners GP, LLC and Syntek Capital AG pro rata in the ratio of 1:1/2);

 

THIRD, to the payment in full of the remaining
amount of the Obligations (the amounts so applied to be distributed among the
Secured Parties pro rata in accordance with the amounts of the Obligations owed
to them on the date of any such distribution);

 

FOURTH, to the applicable Grantor, its successors or assigns, or as a
court of competent jurisdiction may otherwise direct.

 

The Collateral
Agent shall have sole and absolute discretion as to the time of application of
any such proceeds, moneys or balances in accordance with this Guaranty and
Security Agreement.  Upon any sale of the
Collateral by the Collateral Agent (including pursuant to a power of sale
granted by statute or under a judicial proceeding), the receipt of the purchase
money by the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.

 

Section 6.3   Investment Property

 

In view of the
position of each Grantor in relation to the Investment Property, or because of
other current or future circumstances, a question may arise under the
Securities Act of 1933, as now or hereafter in effect, or any similar statute
hereafter enacted analogous in purpose or effect (such Act and any such similar
statute as from time to time in effect being called the “Federal securities laws”) with respect to
any disposition of the Investment Property permitted hereunder.  Each U.S. Grantor understands that compliance
with the Federal securities laws might very strictly limit the course of
conduct of the Collateral Agent if the Collateral Agent were to attempt to
dispose of all or any part of the Investment Property, and might also limit the
extent to which or the manner in which any subsequent transferee of any
Investment Property could dispose of the same. 
Similarly, there may be other legal restrictions or limitations
affecting the Collateral Agent in any attempt to dispose of all or part of the
Investment Property under applicable Blue Sky or other state securities laws or
similar laws analogous in purpose or effect. 
Each U.S. Grantor recognizes that in light of such restrictions and
limitations the Collateral Agent may, with respect to any sale of the
Investment Property, limit the purchasers to those who will agree, among other
things, to acquire such Investment Property for their own account, for
investment, and not with a view to the distribution or resale thereof.  Each U.S. Grantor acknowledges and agrees
that in light of such restrictions and limitations, the Collateral Agent, in
its sole and absolute discretion, (i) may proceed to make such a sale
whether or not a registration statement for the purpose of registering such
Investment Property, or any part thereof, shall have been filed under the
Federal securities laws and (ii) may approach and negotiate with a single
potential purchaser to effect such sale. 
Each U.S. Grantor acknowledges and agrees that any such sale might
result in prices and other terms less favorable to the seller than if such sale
were a public sale without such restrictions. 
In the event of any such sale, the Collateral Agent shall incur no
responsibility or liability for selling all or any part of the 

 

33

 

Investment Property at a price that the Collateral Agent, in its
discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid
or if more than a single purchaser were approached.  The provisions of this Section will
apply notwithstanding the existence of a public or private market upon which
the quotations or sales prices may exceed substantially the price at which the
Collateral Agent sells any such Investment Property.

 

Section 6.4   Grant of License to Use Intellectual Property

 

For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Article, at such time as the Collateral Agent shall be lawfully entitled
to exercise such rights and remedies, each Grantor hereby grants to the
Collateral Agent an irrevocable, non exclusive license (exercisable without
payment of royalty or other compensation to such Grantor) to use, license or
sub license any of the Collateral consisting of Intellectual Property now owned
or held or hereafter acquired or held by or on behalf of such Grantor, and
wherever the same may be located, and including in such license reasonable
access to all media in which any of the licensed items may be recorded or
stored and to all computer software and programs used for the compilation or
printout thereof.  The use of such license
by the Collateral Agent shall be exercised, at the option of the Collateral
Agent, upon the occurrence and during the continuation of an Event of Default; provided
that any license, sub license or other transaction entered into by the
Collateral Agent in accordance herewith shall be binding upon such Grantor
notwithstanding any subsequent cure of an Event of Default.  Any royalties and other payments received by
the Collateral Agent shall be applied in accordance with Section 6.2.

 

ARTICLE 7.

 

REIMBURSEMENT OF COLLATERAL AGENT

 

Each Grantor
agrees, jointly with the other Grantors and severally, to pay to the Collateral
Agent the amount of any and all reasonable out-of-pocket expenses, including
the fees, other charges and disbursements of counsel and of any experts or
agents, that the Collateral Agent may incur in connection with (i) the
administration of this Guaranty and Security Agreement relating to such Grantor
or any of its property, (ii) the custody or preservation of, or the sale
of, collection from, or other realization upon, any of the Collateral owned or
held by or on behalf of such Grantor, (iii) the exercise, enforcement or
protection of any of the rights of the Collateral Agent hereunder relating to
such Grantor or any of its property, or (iv) the failure by such Grantor
to perform or observe any of the provisions hereof.  Without limitation of its indemnification
obligations under the other Secured Transaction Documents, each of the Grantors
agrees, jointly with the other Grantors and severally, to indemnify the
Collateral Agent and each Related Party thereof (each such Person being called
an “Indemnitee”) against, and hold
each Indemnitee harmless from, any and all losses, claims, damages, liabilities
and related out-of-pocket expenses, including reasonable counsel fees, other
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (a) the
execution or delivery by such Grantor of this Guaranty and Security Agreement
or any other Secured Transaction Document or any agreement or instrument
contemplated hereby or thereby, or the performance by such Grantor of its
obligations under the Secured 

 

34

 

Transaction Documents and the other transactions contemplated thereby
or (b) any claim, litigation, investigation or proceeding relating to any
of the foregoing, whether or not any Indemnitee is a party thereto, provided
that such indemnity shall not, as to any Indemnitee, be available to the
extent that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee.  Any amounts payable as
provided hereunder shall be additional Obligations secured hereby and by the
other Secured Transaction Documents.  The
provisions of this Section shall remain operative and in full force and
effect regardless of the termination of this Guaranty and Security Agreement or
any other Secured Transaction Document, the consummation of the transactions
contemplated hereby or thereby, the repayment of any of the Obligations, the
invalidity or unenforceability of any term or provision of this Guaranty and
Security Agreement or any other Secured Transaction Document or any
investigation made by or on behalf of the Collateral Agent or any other Secured
Party.  All amounts due under this Section shall
be payable within ten (10) days of written demand therefor and shall bear
interest at the rate of 9.50% per annum.

 

ARTICLE 8.

 

WAIVERS; AMENDMENTS

 

No failure or
delay of the Collateral Agent in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. 
The rights and remedies of the Collateral Agent and the other Secured
Parties hereunder and under the other Secured Transaction Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have.  No waiver of any
provision of this Guaranty and Security Agreement or any other Secured
Transaction Document or consent to any departure by any Grantor therefrom shall
in any event be effective unless the same shall be permitted by this Section,
and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. 
No notice or demand on any Grantor in any case shall entitle such
Grantor to any other or further notice or demand in similar or other
circumstances.  Neither this Guaranty and
Security Agreement nor any provision hereof may be waived, amended, supplemented
or otherwise modified, or any departure therefrom consented to, except with the
affirmative vote or consent of each of the Company and each Investor; provided,
however, that following repayment of $1,500,000 of the principal amount
(plus all accrued and unpaid Interest thereon) under the Convertible Note
issued to Syntek Capital AG (“Syntek”), 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 prior written consent of Syntek; provided,
further, that no such agreement shall waive, amend, supplement or otherwise
modify, or consent to a departure to, the rights or duties of the Collateral
Agent hereunder without the prior written consent of the Collateral Agent.

 

35

 

ARTICLE 9.

 

SECURITY INTEREST ABSOLUTE

 

All rights of
the Collateral Agent hereunder, the Security Interest and all obligations of
each Grantor hereunder shall be absolute and unconditional irrespective of (i) any
lack of validity or enforceability of the Securities Purchase Agreement, any
other Secured Transaction Document, any agreement with respect to any of the
Obligations, or any other agreement or instrument relating to any of the
foregoing, (ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other waiver,
amendment, supplement or other modification of, or any consent to any departure
from, the Securities Purchase Agreement, any other Secured Transaction Document
or any other agreement or instrument relating to any of the foregoing, (iii) any
exchange, release or non-perfection of any Lien on any other collateral, or any
release or waiver, amendment, supplement or other modification of, or consent
under, or departure from, any guaranty, securing or guaranteeing all or any of
the Obligations, or (iv) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, any Grantor in respect of
the Obligations or in respect of this Guaranty and Security Agreement or any
other Secured Transaction Document.

 

ARTICLE 10.

 

TERMINATION; RELEASE

 

This Guaranty
and Security Agreement and the Security Interest shall terminate when the
Obligations shall have been finally and indefeasibly paid in full.  Upon (i) any sale, transfer or other
disposition permitted by the Secured Transaction Documents (other than any
sale, transfer or other disposition of any Collateral that would, immediately
after giving effect thereto, continue to be Collateral but for the release of
the Security Interest therein pursuant to this clause) or (ii) the
effectiveness of any written consent to the release of the Security Interest in
any Collateral pursuant to Article 8, the Security Interest in such
Collateral shall be automatically released. 
In addition, if any of the Pledged Equity Interests in any Subsidiary
are sold, transferred or otherwise disposed of pursuant to a transaction
permitted by the Secured Transaction Documents and, immediately after giving
effect thereto, such Subsidiary or subsidiary, as applicable, would no longer
be a Subsidiary or a subsidiary, as applicable, then the obligations of such
Subsidiary or subsidiary, as applicable, under this Guaranty and Security
Agreement and the Security Interest in the Collateral owned or held by or on
behalf of such Subsidiary or such subsidiary, as applicable, shall be automatically
released.  In connection with any
termination or release pursuant to this Section, the Collateral Agent shall
execute and deliver to the applicable Grantor, and hereby authorizes the filing
of, at such Grantor’s cost and expense, all Uniform Commercial Code termination
statements and similar  documents that
such Grantor may reasonably request to evidence such termination or
release.  Any execution and delivery of
documents pursuant to this Article shall be without recourse to or
warranty by the Collateral Agent or any other Secured Party.

 

36

 

ARTICLE 11.

 

ADDITIONAL SUBSIDIARY GUARANTORS AND GRANTORS

 

Upon execution
and delivery after the date hereof by the Collateral Agent and a Subsidiary of
a Supplement, such Subsidiary shall become a Subsidiary Guarantor and an
Israeli Grantor or U.S. Grantor, as applicable, hereunder with the same force
and effect as of the date of such execution as if originally named as a
Subsidiary Guarantor and a U.S. Grantor or Israeli Grantor, as applicable,
herein (each an “Additional Subsidiary
Guarantor and Grantor”).  The
execution and delivery of any Supplement shall not require the consent of any
other Grantor hereunder.  The rights and
obligations of each Grantor hereunder and each Grantor and other party (other
than an Investor) under the Secured Transaction Documents shall remain in full
force and effect notwithstanding the addition of any Additional Subsidiary
Guarantor and Grantor as a party to this Guaranty and Security Agreement.

 

ARTICLE 12.

 

COLLATERAL AGENT

 

Each Investor
hereby irrevocably appoints the Collateral Agent as its agent and authorizes
the Collateral Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Collateral Agent by the terms hereof, together
with such actions and powers as are reasonably incidental thereto.

 

The Person
serving as the Collateral Agent hereunder shall have the same rights and powers
in its capacity as an Investor as any other investor and may exercise the same
as though it were not the Collateral Agent, and such Person and its Affiliates
may accept deposits from, lend money to and generally engage in any kind of
business with the Company or any Subsidiary or other Affiliate thereof as if it
were not the Collateral Agent hereunder.

 

The Collateral
Agent shall not have any duties or obligations except those expressly set forth
herein.  Without limiting the generality
of the foregoing, (i) the Collateral Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether an Event of Default
has occurred and is continuing, (ii) the Collateral Agent shall not have
any duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights and powers expressly contemplated by this
Agreement, and (iii) except as expressly set forth herein, the Collateral
Agent shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Company or any of the Subsidiaries
that is communicated to or obtained by the Person serving as Collateral Agent
or any of its Affiliates in any capacity. 
The Collateral Agent shall not be liable for any action taken or not
taken by it in the absence of its own gross negligence or willful
misconduct.  The Collateral Agent shall
be deemed not to have knowledge of any Event of Default unless and until
written notice thereof is given to the Collateral Agent by the Company or an
Investor (and, promptly after its receipt of any such notice, it shall give
each Investor and the Company notice thereof), and the Collateral Agent shall
not be responsible for or have any duty to ascertain or inquire into (a) any
statement, warranty or representation made in or in connection with any Secured
Transaction Document, (b) the contents of any certificate, report or other
document delivered thereunder or in connection 

 

37

 

therewith, (c) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth therein, (d) the
validity, enforceability, effectiveness or genuineness thereof or any other
agreement, instrument or other document or (e) the satisfaction of any
condition set forth in herein, other than to confirm receipt of items expressly
required to be delivered to the Collateral Agent.

 

The Collateral
Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument,
document or other writing believed by it to be genuine and to have been signed
or sent by the proper Person.  The
Collateral Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. 
The Collateral Agent may consult with legal counsel (who may be counsel
for the Grantors), independent accountants and other experts selected by it,
and shall not be liable for any action taken or not taken by it in accordance
with the advice of any such counsel, accountants or experts.

 

The Collateral
Agent may perform any and all its duties and exercise its rights and powers by
or through any one or more sub agents appointed by the Collateral Agent,
provided that no such delegation shall serve as a release of the Collateral
Agent or waiver by the Company of any rights hereunder.  The Collateral Agent and any such sub agent
may perform any and all its duties and exercise its rights and powers through
their respective affiliates.  The
exculpatory provisions of the preceding paragraphs shall apply to any such sub
agent and to the affiliates of the Collateral Agent and any such sub agent, and
shall apply to their respective activities acting for the Collateral Agent.

 

Subject to the
appointment and acceptance of a successor Collateral Agent as provided in this
paragraph, the Collateral Agent may resign at any time by notifying the
Investors and the Company.  Upon any such
resignation, the Investors shall have the right to appoint a successor.  If no successor shall have been so appointed
by the Investors and shall have accepted such appointment within 30 days after
the retiring Collateral Agent gives notice of its resignation, then the
retiring Collateral Agent may, on behalf of the Investors, appoint a successor
Collateral Agent which shall be a bank with an office in New York, New York, or
an affiliate of any such bank.  Upon the
acceptance of its appointment as Collateral Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Collateral Agent, and the retiring
Collateral Agent shall be discharged from its duties and obligations
hereunder.  After the Collateral Agent’s
resignation hereunder, the provisions of this Article shall continue in
effect for the benefit of such retiring Collateral Agent, its sub agents and
their respective affiliates in respect of any actions taken or omitted to be
taken by any of them while it was acting as Collateral Agent.

 

Each Investor
acknowledges that it has, independently and without reliance upon the
Collateral Agent or any other Investor and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into the Secured Transaction Documents.  Each Investor also acknowledges that it will,
independently and without reliance upon the Collateral Agent or any other
Investor and based on such documents and information as it shall from time to
time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon any Secured Transaction Document, any related
agreement or any document furnished thereunder

 

38

 

ARTICLE 13.

 

NOTICES

 

All notices,
requests, demands and other communications to any party hereunder shall be in
writing (including facsimile or similar writing) and shall be given to such
party at its address or facsimile number set forth below or such other address
or facsimile number as such party may hereafter specify by notice to the other
parties listed below:

 

(a)           If
to the Company:

 

Vyyo Inc.

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

 

(b)           If to a Subsidiary Guarantor:  At its address for notices set forth on
Schedule I.

 

(c)           If to the Collateral Agent:

 

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

 

39

 

with a copy to:

 

Goldman, Sachs & Co.

One New York Plaza

New York, NY 10004

Facsimile:

Telephone:

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.

 

Each such
notice, request or other communication shall be effective (i) upon receipt
(provided, however, that notices received on a Saturday, Sunday
or legal holiday or after 6:30 p.m. (New York City time) on any other day
will be deemed to have been received on the next Business Day), if given by
facsimile transmission, (ii) the Business Day following the date of
delivery with a nationally recognized overnight courier service or (iii) if
given by any other means, when delivered at the address specified in this Article 13.

 

ARTICLE 14.

 

BINDING EFFECT; SEVERAL AGREEMENT;
ASSIGNMENTS

 

Whenever in
this Guaranty and Security Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and assigns of such
party, and all covenants, promises and agreements by or on behalf of any
Grantor that are contained in this Guaranty and Security Agreement shall bind
and inure to the benefit of each party hereto and its successors and
assigns.  This Guaranty and Security
Agreement shall become effective as to any Grantor when a counterpart hereof
executed on behalf of such Grantor shall have been delivered to the Collateral
Agent and a counterpart hereof shall have been executed on behalf of the
Collateral Agent, and thereafter shall be binding upon such Grantor and the
Collateral Agent and their respective successors and assigns, and shall inure
to the benefit of such Grantor, the Collateral Agent and the other Secured
Parties, and their respective successors and assigns, except that no Grantor
shall have the right to assign its rights or obligations hereunder or any
interest herein or in any of the Collateral (and any such attempted assignment
shall be void), except as expressly contemplated by this Guaranty and Security
Agreement or the other Secured Transaction Documents.  This Guaranty and Security Agreement shall be
construed as a separate agreement with respect to each of the Grantors and may
be amended, supplemented, waived or otherwise modified or released with respect
to any Grantor without the approval of any other Grantor and without affecting
the obligations of any other Grantor hereunder.

 

40

 

ARTICLE 15.

 

SURVIVAL OF AGREEMENT; SEVERABILITY

 

All covenants,
agreements, representations and warranties made by the Grantors herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Guaranty and Security Agreement or any other Secured
Transaction Document shall be considered to have been relied upon by the
Collateral Agent and the other Secured Parties and shall survive the execution
and delivery of any Secured Transaction Document and the making of any Loan,
regardless of any investigation made by the Secured Parties or on their behalf,
and shall continue in full force and effect until this Guaranty and Security
Agreement shall terminate.  In the event
any one or more of the provisions contained in this Guaranty and Security
Agreement or in any other Secured Transaction Document should be held invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or therein shall
not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other jurisdiction).  The parties shall endeavor in good faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.

 

ARTICLE 16.

 

GOVERNING LAW

 

THIS GUARANTY
AND SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.

 

ARTICLE 17.

 

COUNTERPARTS

 

This Guaranty
and Security Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which, when taken together, shall constitute but one
contract (subject to Article 14), and shall become effective as provided
in Article 14.  Delivery of an
executed counterpart of this Guaranty and Security Agreement by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart of this Guaranty and Security Agreement.

 

ARTICLE 18.

 

HEADINGS

 

Article and
Section headings and the Table of Contents used herein are for convenience
of reference only, are not part of this Guaranty and Security Agreement and
shall not affect the construction of, or be taken into consideration in
interpreting, this Guaranty and Security Agreement.

 

41

 

ARTICLE 19.

 

JURISDICTION; VENUE; CONSENT TO SERVICE OF
PROCESS

 

(a)           EACH
OF THE GRANTORS 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 THE SECURED PARTIES 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.

 

(b)           EACH
OF THE GRANTORS 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 GUARANTY AND SECURITY AGREEMENT OR ANY OTHER SECURED
TRANSACTION DOCUMENT IN ANY COURT REFERRED TO IN THE PRECEDING 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.

 

(c)           EACH
PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE
MANNER PROVIDED FOR NOTICES IN ARTICLE 13. 
NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS
AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

42

 

ARTICLE 20.

 

WAIVER OF JURY TRIAL

 

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 GUARANTY AND SECURITY AGREEMENT
OR ANY OTHER SECURED TRANSACTION DOCUMENTS 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 INDUCED TO ENTER INTO THIS GUARANTY AND SECURITY
AGREEMENT AND THE OTHER SECURED TRANSACTION DOCUMENTS BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

[Signature
Pages Follow]

 

43

 

VYYO INC.

 

GUARANTY AND
SECURITY AGREEMENT

 

IN WITNESS WHEREOF, the parties hereto have
duly executed this Guaranty and Security Agreement as of the day and year first
above written.

 

	
   

  	
  VYYO INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Wayne H.
  Davis

  
	
   

  	
  Name:

  	
   Wayne H. Davis

  
	
   

  	
  Title:

  	
   Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FOREIGN
  SUBSIDIARIES

  
	
   

  	
   

  	
   

  
	
   

  	
  VYYO LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Wayne H.
  Davis

  
	
   

  	
  Name:

  	
   Wayne H. Davis

  
	
   

  	
  Title:

  	
   Chief Executive Officer of Vyyo Inc.,

  
	
   

  	
   

  	
   parent of Vyyo Ltd.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  XTEND
  NETWORKS LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Wayne H.
  Davis

  
	
   

  	
  Name:

  	
   Wayne H. Davis

  
	
   

  	
  Title:

  	
   Chief Executive Officer of Vyyo Inc.,

  
	
   

  	
   

  	
   parent of Xtend Networks Ltd.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DOMESTIC
  SUBSIDIARY

  
	
   

  	
   

  	
   

  
	
   

  	
  XTEND
  NETWORKS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Wayne H.
  Davis

  
	
   

  	
  Name:

  	
   Wayne H. Davis

  
	
   

  	
  Title:

  	
   Chief Executive Officer of Vyyo Inc.,

  
	
   

  	
   

  	
   parent of Xtend Networks Inc.

  
				

 

 

VYYO INC.

 

GUARANTY AND
SECURITY AGREEMENT

 

	
  GOLDMAN
  SACHS INVESTMENT PARTNERS MASTER FUND, L.P.,

  	
   

  
	
  as
  Collateral Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: Goldman
  Sachs Investment Partners GP, LLC, its General Partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Nick
  Advani

  	
   

  	
   

  
	
  Name: Nick
  Advani

  	
   

  	
   

  
	
  Title:
  Managing Director

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GOLDMAN
  SACHS INVESTMENT PARTNERS MASTER FUND, L.P.,

  	
   

  
	
  as an
  Investor

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: Goldman
  Sachs Investment Partners GP, LLC, its General Partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Nick
  Advani

  	
   

  	
   

  
	
  Name: Nick
  Advani

  	
   

  	
   

  
	
  Title:
  Managing Director

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SYNTEK
  CAPITAL AG,

  	
   

  	
   

  
	
  as an
  Investor

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Franco
  Franca

  	
   

  	
   

  
	
  Name: Franco
  Franca

  	
   

  	
   

  
	
  Title: CEO

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Paolo
  Giacometti

  	
   

  	
   

  
	
  Name: Paolo
  Giacometti

  	
   

  	
   

  
	
  Title: CFO

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