Document:

Exhibit 10.4

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

	
  March 23, 2006

  	
   

  	
  $7,500,000.00

  

 

VYYO
INC.

SENIOR
SECURED NOTE DUE MARCH 22, 2011

(As
Amended on March 28, 2007)

Section 1.               General.

FOR VALUE RECEIVED, VYYO, INC., a Delaware corporation
(the “Company”), hereby promises
to pay to the order of Goldman, Sachs & Co., or its registered assigns (the
“Investor”), the principal sum of
SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS AND ZERO CENTS ($7,500,000.00), or
such lesser amount as shall then equal the outstanding principal amount hereof,
together with interest (“Interest”)
thereon at a rate equal to 9.50% (the “Interest
Rate”) per annum, computed on the basis of the actual number of days
elapsed and a year of 360 days comprised of twelve 30 day months.  Except as set forth herein, all unpaid
principal, together with any then unpaid and accrued interest and other amounts
payable hereunder, unless earlier redeemed or repurchased, shall be due and
payable on March 22, 2011 (the “Maturity Date”).  Notwithstanding anything to the contrary
herein, this Note may be redeemed or prepaid without premium or penalty
pursuant to the terms of that certain Securities Purchase Agreement dated March
28, 2007 between the Company and the Investor. 
Any prepayments will be applied first to any accrued but unpaid interest
and then to unpaid principal.

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

Interest on this Note shall accrue from and including
the date of issuance through and until repayment of the principal amount of
this Note and payment of all Interest in full, and shall be payable in cash
quarterly in arrears on each November 1, February 1, May 1 and
August 1

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

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

Section 2.               Repurchase
Right Upon a Fundamental Transaction.

Notwithstanding anything to the contrary contained
herein and in addition to any other right of the Investor, upon the occurrence
of a Fundamental Transaction the Investor shall have the right, by written
notice to the Company, to require the Company to redeem all of this Note on the
repurchase date that is five Business Days after the date of delivery of such
notice to the Company at a price equal to 101% of the outstanding principal
amount under this Note, plus all accrued and unpaid interest on such principal
amount to, but excluding, the repurchase date, plus any other amounts due
hereunder. A “Fundamental Transaction”
means that the Company shall, directly or indirectly, in one or more related
transactions, (i) consolidate or merge with or into (whether or not the
Company, is the surviving corporation) another Person, or (ii) sell, assign,
transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company to another Person, or (iii) be subject to
an offer from another Person or group of related Persons (as defined in
Sections 13(d) and 14(d) of the Exchange Act) other than the Holder to make a
purchase, tender or exchange offer that is accepted by the holders of more than
the 50% of the outstanding Voting Shares (not including any Voting Shares held
by the Person or Persons making or party to, or associated or affiliated with
the Persons making or party to, such purchase, tender or exchange offer), or
(iv) consummate a share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with another Person or group of related Persons (as
defined in Sections 13(d) and 14(d) of the Exchange Act) whereby such other
Person or group acquires more than the 50% of the outstanding Voting Shares
(not including any Voting Shares held by the other Person or other Persons
making or party to, or associated or affiliated with the other Persons making
or party to, such share purchase agreement or other business combination), provided
however, a Fundamental Transaction shall not include (i) any
reorganization, recapitalization or reclassification of the Common Shares in
which holders of the Company’s voting power immediately prior to such
reorganization, recapitalization or reclassification continue after such
reorganization, recapitalization or reclassification to hold publicly traded
securities and, directly or indirectly, the voting power of the surviving
entity or entities necessary to elect a majority of the members of the board of
directors (or their equivalent if other than a corporation) of such entity or
entities, or (ii) pursuant to a migratory merger effected solely for the
purpose of changing the jurisdiction of incorporation of the Company.  “Voting
Shares” of a Person means capital shares of such Person of the class
or classes pursuant to which the holders

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thereof have the general voting power to elect, or the
general power to appoint, at least a majority of the board of directors,
managers or trustees of such Person (irrespective of whether or not at the time
capital shares of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).

Section 3.               Events
of Default.

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

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

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

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

(d)           The Company or any
Significant Subsidiary shall (i) fail to make any payment when due under the
terms of any bond, debenture, note or other evidence of indebtedness to be paid
by the Company or such Significant Subsidiary (excluding this Note, which
default is addressed by clauses (a) and (b) above, but including any other
evidence of indebtedness of the Company or such Significant Subsidiary) and
such failure shall continue beyond any period of grace provided with respect
thereto, or (ii) default in the observance or performance of any other
agreement, term or condition contained in any such bond, debenture, note or
other evidence of indebtedness; and the effect of such failure or default in
clause (i) or (ii) is to cause, or permit the holder thereof to cause,
indebtedness of the Company and the Subsidiaries in an aggregate amount of One
Million Dollars ($1,000,000) or more to become due prior to its stated date of
maturity and such failure shall continue for thirty (30) days; or

(e)           An involuntary
proceeding shall be commenced or an involuntary petition shall be filed seeking
(i) liquidation, reorganization or other relief in respect of the Company or
any Significant Subsidiary or its debts, or of a substantial part of its
assets, under any federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar
official for the Company or any Significant Subsidiary or for a substantial
part of the Company’s or such Significant Subsidiary’s assets, and, in any such
case, such proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall be entered; or

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

 3
 

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

(g)           One or more
judgments for the payment of money in an amount in excess of Five Million
Dollars ($5,000,000) in the aggregate, outstanding at any one time, shall be
rendered against the Company and the Significant Subsidiaries and the same
shall remain undischarged for a period of sixty (60) days during which
execution shall not be effectively stayed, or any judgment, writ, assessment,
warrant of attachment, or execution or similar process shall be issued or
levied against a substantial part of the property of the Company or any
Significant Subsidiary and such judgment, writ, or similar process shall not be
released, stayed, vacated or otherwise dismissed within sixty (60) days after
issue or levy; or

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

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

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

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

Section 4.               Rights
Of Investor Upon Default.

Upon the occurrence or existence of any Event of
Default (other than an Event of Default referred to in Sections 3(f) or 3(g)
hereof) and at any time thereafter during the continuance of such Event of
Default, the Investor, upon the approval of Investors holding more than 33-1/3%
of the aggregate principal balance of the Notes then outstanding, by written
notice to the Company, may declare all outstanding amounts payable by the
Company hereunder to be immediately due and payable without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly

 4
 

waived, anything contained herein to the contrary
notwithstanding.  Upon the occurrence or
existence of any Event of Default described in Sections 3(f) or 3(g) hereof,
immediately and without notice, all outstanding amounts payable by the Company
hereunder shall automatically become immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived, anything contained herein to the contrary
notwithstanding.  In addition to the
foregoing remedies, upon the occurrence or existence of any Event of Default,
the Investor may exercise, upon the approval of Investors holding more than a
majority of the aggregate principal balance of the Notes, any other right,
power or remedy permitted to it by law, either by suit in equity or by action
at law, or both.

Section 5.               Affirmative
Covenants.

Until all principal and interest and any other amounts
due and payable under this Note have been paid in full in cash, the Company
shall, and shall cause each Significant Subsidiary to:

(a)           provide prompt
written notice to the Investor of:  (i)
the occurrence of any Event of Default, or any event which with the giving of
notice or lapse of time, or both, would constitute an Event of Default,
hereunder; and (ii) any loss or damage to any Collateral (as defined in the
Security Agreement) in excess of $100,000;

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

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

(d)           (i) keep proper
books of record and account in which full, true and correct entries are made of
all dealings and transactions in relation to its business and activities, (ii)
permit any representatives designated by the Investor, upon reasonable prior
written notice, to visit and inspect its properties, to examine and make
extracts from its books and records, and to discuss its affairs, finances and
condition with its officers and independent accountants, all at such reasonable
times and as often as reasonably requested, and (iii) provide to the Investor
the same information rights as it provides to its stockholders.

Section 6.               Negative
Covenants.

Until all principal and interest and any other amounts
due and payable under this Note have been paid in full in cash, the Company
shall not, and shall not permit any Subsidiary to:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 6
 

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

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

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

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

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

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

Section 7.               Defenses.

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

Section 8.               Guaranty
and Security Agreement.

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

 7
 

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

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

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

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

Section 10.             Attorneys’ and Collection Fees.

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

Section 11.             Indemnification

(a)           The Company shall
indemnify the Investor, and each Affiliate of the Investor (each such Person
being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and expenses incurred by or asserted against any
Indemnitee by a third party arising out of, in connection with, or as a result
of (i) the execution or delivery of this Note, the performance by the
Company and its Subsidiaries hereto of their respective obligations hereunder or
the consummation of or the use of the proceeds therefrom, or (ii) the
material breach by the Company or any Subsidiary of (a) any representation,
warranty, covenant or agreement contained herein or (b) any representation or
warranty in Section 3.1 of the Securities Purchase Agreement as they
relate to the Note; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or expenses are determined by a court of competent jurisdiction by
final and non-appealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnitee.

 8
 

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

(c)           To the extent
permitted by applicable law, the Company shall not assert, and hereby waives,
any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages arising out of, in connection with,
or as a result of, this Note, the Securities Purchase Agreement, the Security
Agreement or any agreement or instrument contemplated hereby or thereby, or the
use of the proceeds thereof.

Section 12.             Waivers.

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

Section 13.             Amendments.

 This Note may
be amended and any provision may be waived with the consent of the Company and
the Holder.  In addition, the Notes may
be amended and any provision may be waived by the Company with the affirmative
vote or consent of the holders of more than a majority of the principal amount
outstanding under the Notes.  Any change
or amendment so approved shall be binding upon all existing and future holders
of this Note; provided that, no such amendment or waiver may materially
and adversely affect the economic interest in the Company of the Holder of this
Note in a manner disproportionate to the holders of other Notes without the
consent of the Holder hereof.

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

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

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

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

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

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

 10
 

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

Section 15.             Successors
and Assigns.

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

Section 16.             Notices.

Whenever notice is
required to be given under this Note, unless otherwise provided herein, such
notice shall be delivered in accordance with Section 6.4 of the Securities
Purchase Agreement.  The Company shall
provide the Holder with prompt written notice of all actions taken pursuant to
this Note, including in reasonable detail a description of such action and the
reason therefore.

Section 17.             Entire
Agreement.

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

Section 18.             Headings.

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

[Signature
Page Follows]

 11
 

IN WITNESS WHEREOF, the Company has
caused this Note, as amended, to be duly executed
as of March 28,
2007.

	
  

  	
   

  	
  VYYO INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  

 

 12Exhibit 10.5

 

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

 

 

VYYO
INC.

PROMISSORY
NOTE

(As
Amended on March 27, 2007)

 

	
  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Issuance Date: March 23, 2006

  	
   

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

  

 

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

 

1.  MATURITY.  On the Maturity Date, the Company shall pay
to the Holder an amount in cash representing all outstanding Principal and the
accrued and unpaid Interest thereon.  The
Company shall make such payment on the Maturity Date, together with the amount
of any accrued and unpaid interest on such Principal, by wire transfer of
immediately available funds to an account designated in writing by the
Holder.  Except as set forth in Section
6, this Note may be redeemed or prepaid without premium or penalty.  Any prepayments will be applied first to any
accrued but unpaid interest and then to unpaid principal.

2.  INTEREST; INTEREST RATE. Interest on
this Note shall commence accruing on the Issuance Date and shall be computed on
the basis of a 360-day year

 

comprised
of twelve 30-day months and shall be payable in arrears for each Calendar
Quarter on the first day of the succeeding Calendar Quarter during the period
beginning on the Issuance Date and ending on, and including, the Maturity Date
(each, an “Interest Date”) with
the first Interest Date being May 1, 2006 by wire transfer of immediately
payable funds.  Interest shall be payable
on each Interest Date in cash.  Prior to
the payment of Interest on an Interest Date, Interest on this Note shall accrue
at the Interest Rate and be payable in cash. 
Upon the occurrence and during the continuance of any default in the
payment of the Interest or Principal when due, the Interest Rate shall be
increased by two percent (2.0%) per annum (the “Default Rate”).  In the
event that such Interest or Principal payment default is subsequently cured,
the adjustment referred to in the preceding sentence shall cease to be
effective as of the date of such cure. 
Interest on overdue interest shall accrue at the same rate compounded
quarterly.

3.  SUBORDINATION.  The Principal and Interest on this Note is
expressly subordinated in right of payment to (i) the Senior Secured Notes
issued on the date hereof, and (ii) any borrowed money by the Company
designated as senior debt by the Board of Directors (“Indebtedness”).  Upon payment or distribution of the assets of
the Company to creditors upon any dissolution, winding up, liquidation,
reorganization, recapitalization or readjustment of the Company or its
property, payment of the Principal and Interest will be subordinate to the
prior payment in full of all such Indebtedness. 
No payment of Principal or Interest may be made by the Company if (i) at
any time there exists (or after giving effect to the payment there would exist)
an event of default under the agreement pursuant to which such Indebtedness has
been issued, or (ii) full payment of amounts then due for principal and
interest on the Indebtedness has not been made or duly provided for.  The Holder of this Note shall execute any
further documentation reasonably requested by a lender to effect the foregoing.

4.  MAKE-WHOLE PREMIUM. 
If a Fundamental Transaction occurs prior to the Maturity Date, the
Company also shall pay the Make-Whole Premium, if any, to the Holder who elects
to have its Note redeemed pursuant to Section 6(a) hereof pursuant to the
Fundamental Transaction. The Make-Whole Premium, if any, shall be paid in cash
on the Fundamental Transaction Effective Date.  The “Make-Whole Premium”
shall be an amount equal to the interest that otherwise would accrue on the
Principal of the Note had it remained outstanding from the date hereof through
the Maturity Date, less the amount of interest accrued and paid prior to the
date of redemption.  For purposes of this
Section 4, “Fundamental Transaction Effective Date”
means the date that a Fundamental Transaction becomes effective.

5.  RIGHTS UPON EVENT OF DEFAULT.

(a)  Event of Default.  Each of the following events shall constitute
an “Event of Default”:

(i)  The Company shall fail to pay any Principal
owing under this Note when due;

 

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

 

(iii)  The Company or any Significant Subsidiary
shall (A) fail to make any payment when due under the terms of any bond,
debenture, note or other evidence of indebtedness to be paid by the Company or
such Significant Subsidiary (excluding this Note, which default is addressed by
clauses (i) and (ii) above, but including any other evidence of indebtedness of
the Company or such Significant Subsidiary) and such failure shall continue
beyond any period of grace provided with respect thereto, or (B) default in the
observance or performance of any other agreement, term or condition contained
in any such bond, debenture, note or other evidence of indebtedness; and the
effect of such failure or default in clause (A) or (B) is to cause, or permit
the holder thereof to cause, indebtedness in an aggregate amount of One Million
Dollars ($1,000,000) or more to become due prior to its stated date of maturity
and such failure shall continue for thirty (30) days;

(iv)  An involuntary proceeding shall be commenced
or an involuntary petition shall be filed seeking (A) liquidation,
reorganization or other relief in respect of the Company or any Significant
Subsidiary or its debts, or of a substantial part of its assets, under any
federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect or (B) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Company or any
Significant Subsidiary or for a substantial part of its assets, and, in any such
case, such proceeding or petition shall continue undismissed for 30 days or an
order or decree approving or ordering any of the foregoing shall be entered;

(v)  The Company or any Significant Subsidiary
shall (A) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(B) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (iv) of this
Section, (C) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Company or any
Significant Subsidiary or for a substantial part of its assets, (D) file an
answer admitting the material allegations of a petition filed against it in any
such proceeding, (E) make a general assignment for the benefit of creditors or
(F) take any action for the purpose of effecting any of the foregoing;

(vi)  One or more judgments for the payment of
money in an amount in excess of Five Million Dollars ($5,000,000) in the
aggregate, outstanding at any one time, shall be rendered against the Company
or any Significant Subsidiary and the same shall remain undischarged for a
period of sixty (60) days during which execution shall not be effectively
stayed, or any judgment, writ, assessment, warrant of attachment, or execution
or similar process shall be issued or levied against a substantial part of the
property of the Company or any Significant Subsidiary and such judgment, writ,
or similar process shall not be released, stayed, vacated or otherwise
dismissed within sixty (60) days after issue or levy;

 

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

 

(viii)  The Company shall fail to observe or perform
any other covenant, obligation, condition or agreement contained in this Note
or the Guaranty and Security Agreement and, to the extent such failure is
capable of being cured, such failure shall continue for sixty (60) days.

(b)  Event of Default
Redemption Right.  Promptly after the
occurrence of an Event of Default with respect to this Note, the Company shall
deliver written notice thereof via facsimile and overnight courier (an “Event of Default Notice”) to the Holder.  The Holder, upon the approval of Holders
holding more than 33 1/3% of the aggregate principal balance of the Notes then
outstanding, by written notice to the Company, may declare all outstanding
amounts payable by the Company hereunder to be immediately due and payable
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived, anything contained herein to the contrary
notwithstanding (“Redemption Price”).  Upon the occurrence or existence of any Event
of Default described in Sections (iv) or (v)  hereof,
immediately and without notice, all outstanding amounts payable by the Company
hereunder shall automatically become immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived, anything contained herein to the contrary
notwithstanding.  In addition to the
foregoing remedies, upon the occurrence or existence of any Event of Default,
the Holder may exercise, upon the approval of Holders holding more than a
majority of the aggregate principal balance of the Notes, any other right,
power or remedy permitted to it by law, either by suit in equity or by action
at law, or both.

6.  RIGHTS UPON FUNDAMENTAL TRANSACTION.

(a)  Fundamental Transaction
Redemption Right.  No sooner than
twenty (20) days nor later than ten (10) days prior to the
consummation of a Fundamental Transaction, but not prior to the public
announcement of such Fundamental Transaction, the Company shall deliver written
notice thereof via facsimile and overnight courier to the Holder (a “Fundamental Transaction Notice”).  At any time during the period (the “Fundamental Transaction Period”) beginning after the Holder’s
receipt of a Fundamental Transaction Notice and ending on the date that is one
(1) Trading Day before the Fundamental Transaction Effective Date, the
Holder, at its option, may require the Company to redeem all or any portion of
this Note by delivering written notice thereof (“Fundamental
Transaction Redemption Notice”) to the Company.  The portion of this Note subject to
redemption pursuant to this Section 6 shall be redeemed by the Company in
cash at a price equal to 101% of the Principal plus any accrued but unpaid
Interest thereon up to, but not including, the Fundamental Transaction
Effective

 

Date, plus the Make-Whole Premium (the “Fundamental Transaction Redemption Price”)
on the Fundamental Transaction Effective Date. 
Redemptions required by this Section 6 shall have priority to
payments to stockholders in connection with a Fundamental Transaction.  To the extent redemptions required by this
Section 6 are deemed or determined by a court of competent jurisdiction to be
prepayments of the Note by the Company, such redemptions shall be deemed to be
voluntary prepayments.  The parties
hereto agree that in the event of the Company’s redemption of any portion of
the Note under this Section 6, the Holder’s damages would be uncertain and
difficult to estimate because of the parties’ inability to predict future
interest rates and the uncertainty of the availability of a suitable substitute
investment opportunity for the Holder. 
Accordingly, any redemption premium due under this Section 6 is intended
by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s
actual loss of its investment opportunity and not as a penalty.

7.  COVENANTS.  Until all Principal and Interest and any
other amounts due and payable under this Note have been paid in full in cash,
the Company shall, and shall cause each Significant Subsidiary to:

(a)  provide prompt written
notice to the Holder of the occurrence of any Event of Default, or any event
which with the giving of notice or lapse of time, or both, would constitute an
Event of Default, hereunder;

(b)  do or cause to be done all
things reasonably necessary to preserve, renew and keep in full force and
effect its legal existence; and

(c)  keep proper books of record
and account in which full, true and correct entries are made of all dealings
and transactions in relation to its business and activities, (ii) permit any
representatives designated by the Holder, upon reasonable prior notice, to
visit and inspect its properties, to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and as often
as reasonably requested, and (iii) provide to the Holder the same
information rights as it provides to its stockholders.

8.   VOTE TO ISSUE, OR CHANGE THE TERMS
OF, NOTES.  This Note may be amended
and any provision may be waived with the consent of the Company and the
Holder.  In addition, the Notes may be
amended and a provision may be waived by the Company with the affirmative vote
or consent of the holders of a majority of the aggregate principal amount of
the Notes.  Any change or amendment so
approved shall be binding upon all existing and future holders of this Note; provided
that, no such amendment or waiver may materially and adversely affect
the economic interest in the Company of the Holder of this Note in a manner
disproportionate to the Holders of other Notes without the consent of the
Holder hereof.

9.  TRANSFER.  This Note may be offered, sold, assigned or
transferred by the Holder without the consent of the Company in aggregate
principal amounts of at least $500,000, subject only to the provisions of
Section 4.1 of the Securities Purchase Agreement and compliance with applicable
law.

 

10.  REISSUANCE
OF THIS NOTE.

 

(a)  Transfer.  If this Note is to be transferred, the Holder
shall surrender this Note to the Company, whereupon the Company will forthwith
issue and deliver upon the order of the Holder a new Note (in accordance with
Section 10(d)), registered as the Holder may request, representing the
outstanding Principal being transferred by the Holder and, if less then the
entire outstanding Principal is being transferred, a new Note (in accordance
with Section 10(d)) to the Holder representing the outstanding Principal not being
transferred.  The Holder and any
assignee, by acceptance of this Note, acknowledge and agree that, following
redemption of any portion of this Note, the outstanding Principal represented
by this Note may be less than the Principal stated on the face of this Note.

(b)  Lost, Stolen or Mutilated
Note.  Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Note, and, in the case of loss, theft or destruction, of
any indemnification undertaking by the Holder to the Company in customary form
and, in the case of mutilation, upon surrender and cancellation of this Note,
the Company shall execute and deliver to the Holder a new Note (in accordance
with Section 10(d)) representing the outstanding Principal.

(c)  Note Exchangeable for
Different Denominations.  This Note
is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Note or Notes (in accordance with Section
10(d) and in principal amounts of at least $100,000) representing in the
aggregate the outstanding Principal of this Note, and each such new Note will
represent such portion of such outstanding Principal as is designated by the
Holder at the time of such surrender.

(d)  Issuance of New Notes.  Whenever the Company is required to issue a
new Note pursuant to the terms of this Note, such new Note (i) shall be of
like tenor with this Note, (ii) shall represent, as indicated on the face of
such new Note, the Principal remaining outstanding (or in the case of a new
Note being issued pursuant to Section 10(a) or Section 10(c), the Principal
designated by the Holder which, when added to the principal represented by the
other new Notes issued in connection with such issuance, does not exceed the
Principal remaining outstanding under this Note immediately prior to such
issuance of new Notes), (iii) shall have an issuance date, as indicated on
the face of such new Note, which is the same as the Issuance Date of this Note,
(iv) shall have the same rights and conditions as this Note, and
(v) shall represent accrued and unpaid Interest on the Principal of this
Note, from the Issuance Date.

11.  REMEDIES, CHARACTERIZATIONS, OTHER
OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies provided in this Note shall be
cumulative and in addition to all other remedies available under this Note and
any of the other Transaction Documents at law or in equity (including a decree
of specific

 

performance
and/or other injunctive relief).  Amounts
set forth or provided for herein with respect to payments and the like (and the
computation thereof) shall be the amounts to be received by the Holder and
shall not, except as expressly provided herein, be subject to any other
obligation of the Company (or the performance thereof).  The Company acknowledges that a breach by it
of its obligations hereunder will cause irreparable harm to the Holder and that
the remedy at law for any such breach may be inadequate.  The Company therefore agrees that, in the
event of any such breach or threatened breach, the Holder shall be entitled, in
addition to all other available remedies, to an injunction.

12.  PAYMENT OF COLLECTION, ENFORCEMENT AND
OTHER COSTS.  If following an Event
of Default (a) this Note is placed in the hands of an attorney for
collection or enforcement or is collected or enforced through any legal
proceeding or the Holder otherwise takes action to collect amounts due under
this Note or to enforce the provisions of this Note or (b) there occurs
any bankruptcy, reorganization, receivership of the Company or other
proceedings affecting Company creditors’ rights and involving a claim under
this Note, then the Company shall pay the reasonable costs incurred by the
Holder for such collection, enforcement or action or in connection with such
bankruptcy, reorganization, receivership or other proceeding, including, but
not limited to, attorneys’ fees and disbursements.

13.  CONSTRUCTION; HEADINGS.  This Note shall be deemed to be jointly
drafted by the Company and all the Holders and shall not be construed against
any person as the drafter hereof.  The
headings of this Note are for convenience of reference and shall not form part
of, or affect the interpretation of, this Note.

14.  FAILURE OR INDULGENCE NOT WAIVER.  No failure or delay on the part of the Holder
in the exercise of any power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privilege.

15.  NOTICES. 
Whenever notice is required to be given under this Note, unless
otherwise provided herein, such notice shall be delivered in accordance with
Section 6.4 of the Securities Purchase Agreement.  The Company shall provide the Holder with
prompt written notice of all actions taken pursuant to this Note, including in
reasonable detail a description of such action and the reason therefore.  Without limiting the generality of the
foregoing, the Company will give written notice to the Holder at least
twenty (20) days prior to the date on which the Company closes its books
or takes a record for determining rights to vote with respect to any
Fundamental Transaction, dissolution or liquidation, provided in each case that
such information shall be made known to the public prior to or in conjunction
with such notice being provided to the Holder.

16.  CANCELLATION.  After all Principal, accrued Interest and
other amounts at any time owed on this Note have been paid in full, this Note
shall automatically be deemed canceled, shall be surrendered to the Company for
cancellation and shall not be reissued.

 

17.  WAIVER
OF NOTICE.  To the extent permitted
by law, the Company hereby waives demand, notice, protest and all other demands
and notices in connection with the delivery, acceptance, performance, default
or enforcement of this Note and the Securities Purchase Agreement.

18.  GOVERNING LAW.  This Note shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the internal
laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any
other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. 
Any action brought by either party against the other concerning the
transactions contemplated by this Agreement shall be brought only in the state
courts of New York or in the federal courts located in the State of New York
and waive trial by jury.  Both parties
agree to submit to the jurisdiction of such courts.  The prevailing party shall be entitled to
recover from the other party its reasonable attorney’s fees and costs.  In the event that any provision of this Note
is invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law.  Any such provision which may prove
invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision of this Note.  Nothing contained herein shall be deemed or
operate to preclude the Holder from bringing suit or taking other legal action
against the Company in any other jurisdiction to collect on the Company’s
obligations to the Holder, to realize on any collateral or any other security
for such obligations, or to enforce a judgment or other court ruling in favor
of the Holder.

19.  INDEMNIFICATION.

(a)  Subject to the limitations
herein, the Company shall indemnify the Holder, and each Affiliate of the
Holder (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
(excluding the legal fees of counsel for any Indemnitee), incurred by or
asserted against any Indemnitee by a third party arising out of, in connection
with, or as a result of:  (i) the
execution or delivery of this Note, the performance by the Company and its
Subsidiaries hereto of their respective obligations hereunder or the
consummation of or the use of the proceeds therefrom, or (ii) the material
breach by the Company or any Subsidiary of (a) any representation, warranty,
covenant or agreement contained herein or (b) any representation or warranty in
Section 3.1 of the Securities Purchase Agreement, as they relate to this Note; provided
that such indemnity shall not, as to any Indemnitee, be available to the
extent that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and non-appealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee.

 

(b)           To the extent permitted by applicable law, the Company and
the Holder hereof shall not assert, and hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages arising out of, in connection with, or as a result of, this
the this Note, the Securities Purchase Agreement or any agreement or instrument
contemplated hereby or thereby, or the use of the proceeds thereof.

20.  MAXIMUM PAYMENTS.  Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law.  In the event that the rate of interest
required to be paid or other charges hereunder exceed the maximum permitted by
such law, any payments in excess of such maximum shall be credited against
amounts owed by the Company to the Holder and thus refunded to the Company.

21.  NONCIRCUMVENTION. The Company hereby
covenants and agrees that the Company will not, by amendment of its Certificate
of Incorporation or Bylaws, or through any reorganization, transfer of assets,
consolidation, merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Note, and will at all
times in good faith carry out all of the provisions of this Note and take all
action as may be required to protect the rights of the Holder of this Note.

22.  CERTAIN DEFINITIONS.  For purposes of this Note, the following
terms shall have the following meanings:

(a)   “Calendar Quarter” means each of: the period beginning on and
including February 1 and ending on and including April 30; the period beginning
on and including May 1 and ending on and including July 31; the period
beginning on and including August 1 and ending on and including
October 31; and the period beginning on and including November 1 and
ending on and including January 31.

(b)  “Closing Date” shall have the meaning set forth in the
Securities Purchase Agreement, which date is the date the Company initially
issued Notes pursuant to the terms of the Securities Purchase Agreement.

(c)   “Fundamental Transaction” means that the Company shall,
directly or indirectly, in one or more related transactions, (i) consolidate or
merge with or into (whether or not the Company, is the surviving corporation)
another Person, or (ii) sell, assign, transfer, convey or otherwise
dispose of all or substantially all of the properties or assets of the Company
to another Person, or (iii) be subject to an offer from another Person or group
of related Persons (as defined in Sections 13(d) and 14(d) of the Exchange Act)
other than the Holder to make a purchase, tender or exchange offer that is
accepted by the holders of more than the 50% of the outstanding Voting Shares
(not including any Voting Shares held by the Person or Persons making or party
to, or associated or affiliated with the Persons making or party to, such
purchase, tender or exchange offer), or (iv) consummate a share purchase
agreement or other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or

 

scheme of arrangement) with another Person or
group of related Persons (as defined in Sections 13(d) and 14(d) of the
Exchange Act) whereby such other Person or group acquires more than the 50% of
the outstanding Voting Shares (not including any Voting Shares held by the
other Person or other Persons making or party to, or associated or affiliated
with the other Persons making or party to, such share purchase agreement or
other business combination), provided  however, a Fundamental
Transaction shall not include (i) any reorganization, recapitalization or
reclassification of the Common Shares in which holders of the Company’s voting
power immediately prior to such reorganization, recapitalization or
reclassification continue after such reorganization, recapitalization or
reclassification to hold publicly traded securities and, directly or
indirectly, the voting power of the surviving entity or entities necessary to
elect a majority of the members of the board of directors (or their equivalent
if other than a corporation) of such entity or entities, or (ii) pursuant to a
migratory merger effected solely for the purpose of changing the jurisdiction
of incorporation of the Company.

 

(d)  “GAAP” means United States generally accepted accounting
principles, consistently applied.

(e)  “Maturity Date” means September 26, 2007.

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

(g)  “Principal Market” means The Nasdaq National Market.

(h)  “Redemption Notices” means, collectively, the Event of
Default Redemption Notices, and the Fundamental Transaction Redemption Notices,
each of the foregoing, individually, a Redemption Notice.

(i)  “Required Holders” means the holders of Notes representing at
least a majority of the aggregate principal amount of the Notes then
outstanding.

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

(k)   “Tax” means any tax, levy, impost, duty or other charge or
withholding of a similar nature (including any related penalty or interest).

(l)   “Trading Day” means (a) any day on which the Common Stock is
listed or quoted and traded on its primary Trading Market, (b) if the Common
Stock is not then listed or quoted and traded on any Eligible Market, then a
day on which trading occurs on the NASDAQ National Market (or any successor
thereto), or (c) if trading ceases to occur on the NASDAQ National Market (or
any successor thereto), any Business Day.

(m)  “Voting Shares” of a Person means capital shares of such
Person of the class or classes pursuant to which the holders thereof have the
general voting power to elect, or the general power to appoint, at least a
majority of the board of directors, managers or trustees of such Person
(irrespective of whether or not at the time capital shares of any other class
or classes shall have or might have voting power by reason of the happening of
any contingency).

[Signature Page
Follows]

 

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

 

	
  

  	
   

  	
  VYYO INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Wayne H. Davis

  	
   

  
	
   

  	
   

  	
  Name: Wayne H. Davis

  
	
   

  	
   

  	
  Title: CEO

  

 

 

CONSENTED AND AGREED TO

AS OF MARCH 27, 2007 BY:

 

HOLDER:

GOLDMAN, SACHS & CO.

 

 

	
  By:

  	
   

  	
        /s/
  Nick Advani

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Nick Advani

  
	
   

  	
   

  	
  Title: Managing Director

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