Document:

Exhibit 10.4

 

GUARANTY AND SECURITY AGREEMENT

among

VYYO INC.,

EACH OF THE SUBSIDIARIES PARTY HERETO,

THE INVESTORS PARTY HERETO,

and

GOLDMAN, SACHS & CO., as Collateral Agent

Dated as of March 22, 2006

 

 

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

  	
   

  	
  9

  
	
  SECTION 1.3

  	
   

  	
   

  	
  GUARANTY

  	
   

  	
  9

  
	
  SECTION 1.4

  	
   

  	
   

  	
  GRANT OF SECURITY

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2.

  	
   

  	
  SECURITY FOR OBLIGATIONS; NO ASSUMPTION OF LIABILITY

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.1

  	
   

  	
   

  	
  SECURITY FOR OBLIGATIONS

  	
   

  	
  15

  
	
  SECTION 2.2

  	
   

  	
   

  	
  NO ASSUMPTION OF LIABILITY

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3.

  	
   

  	
  REPRESENTATIONS AND WARRANTIES AND COVENANTS

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.1

  	
   

  	
   

  	
  GENERALLY

  	
   

  	
  15

  
	
  SECTION 3.2

  	
   

  	
   

  	
  EQUIPMENT AND INVENTORY

  	
   

  	
  18

  
	
  SECTION 3.3

  	
   

  	
   

  	
  RECEIVABLES

  	
   

  	
  19

  
	
  SECTION 3.4

  	
   

  	
   

  	
  INVESTMENT PROPERTY

  	
   

  	
  20

  
	
  SECTION 3.5

  	
   

  	
   

  	
  LETTER OF CREDIT RIGHTS

  	
   

  	
  23

  
	
  SECTION 3.6

  	
   

  	
   

  	
  INTELLECTUAL PROPERTY COLLATERAL

  	
   

  	
  23

  
	
  SECTION 3.7

  	
   

  	
   

  	
  COMMERCIAL TORT CLAIMS

  	
   

  	
  24

  
	
  SECTION 3.8

  	
   

  	
   

  	
  DEPOSIT ACCOUNTS; CONTROL ACCOUNTS

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4.

  	
   

  	
  FURTHER ASSURANCES

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5.

  	
   

  	
  COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6.

  	
   

  	
  REMEDIES UPON DEFAULT

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.1

  	
   

  	
   

  	
  REMEDIES GENERALLY

  	
   

  	
  26

  
	
  SECTION 6.2

  	
   

  	
   

  	
  APPLICATION OF PROCEEDS OF SALE

  	
   

  	
  28

  
	
  SECTION 6.3

  	
   

  	
   

  	
  INVESTMENT PROPERTY

  	
   

  	
  29

  
	
  SECTION 6.4

  	
   

  	
   

  	
  GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7.

  	
   

  	
  REIMBURSEMENT OF COLLATERAL AGENT

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8.

  	
   

  	
  WAIVERS; AMENDMENTS

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9.

  	
   

  	
  SECURITY INTEREST ABSOLUTE

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10.

  	
   

  	
  TERMINATION; RELEASE

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11.

  	
   

  	
  ADDITIONAL SUBSIDIARY GUARANTORS AND GRANTORS

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12.

  	
   

  	
  COLLATERAL AGENT

  	
   

  	
  32

  
								

 

i

 

	
  ARTICLE 13.

  	
   

  	
  NOTICES

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 14.

  	
   

  	
  BINDING EFFECT; SEVERAL AGREEMENT; ASSIGNMENTS

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 15.

  	
   

  	
  SURVIVAL OF AGREEMENT; SEVERABILITY

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 16.

  	
   

  	
  GOVERNING LAW

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 17.

  	
   

  	
  COUNTERPARTS

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 18.

  	
   

  	
  HEADINGS

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 19.

  	
   

  	
  JURISDICTION; VENUE; CONSENT TO SERVICE OF PROCESS

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 20.

  	
   

  	
  WAIVER OF JURY TRIAL

  	
   

  	
  37

  

 

 

SCHEDULES:

 

	
  Schedule I

  	
   

  	
  List of Subsidiary Guarantors and Addresses
  for Notices

  
	
  Schedule 3.1(a)(i)

  	
   

  	
  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 March 22, 2006 (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 &
CO., 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 March 18, 2006, 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 Notes in the aggregate principal amount of
$7,500,000 (as amended, supplemented or otherwise modified, the “Senior Secured 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.  The
obligations of the Investors to purchase Senior Secured 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).

 

“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.

 

2

 

“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.

 

“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.

 

“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.

 

3

 

“Equity
Related Documents”
means the Securities Purchase Agreement, any Convertible Note or Warrant issued
pursuant to the Securities Purchase Agreement and the Registration Rights
Agreement.

 

“Event of
Default” has the meaning assigned to such term in the Senior Secured
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.

 

“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.

 

4

 

“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).

 

“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 Senior
Secured 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

 

5

 

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.

 

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

 

“Permitted Investments”
means investments permitted to be made pursuant to Section 6(h) of
the Senior Secured 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.

 

“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

 

6

 

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 Registration Rights Agreement dated as of March 22, 2006 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 Senior Secured 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 Senior Secured 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.

 

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

 

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

 

“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.

 

7

 

“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 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).

 

8

 

“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.

 

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.

 

9

 

(ii)           Each
Subsidiary Guarantor, and by its acceptance of this Subsidiary Guaranty, the
Collateral Agent and each other Investor, hereby confirms that it is the
intention of all such Persons that this 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 this 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 this Subsidiary Guaranty at any time shall be limited to the maximum
amount as will result in the Guaranteed Obligations of such Subsidiary
Guarantor under this 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 this 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.

 

(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 this 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 this 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 this 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;

 

10

 

(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 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).

 

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.

 

11

 

(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 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

 

12

 

receive payments on account of
the Subordinated Obligations as trustee for 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 this
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. 
This 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 this 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,

 

(ix)           all
Instruments,

 

(x)            all
Intellectual Property,

 

13

 

(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.

 

14

 

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 COVENANTS

 

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)          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.

 

(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

 

15

 

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, (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 Register

 

•                                          The
Israeli Patents, Trademarks and Designs Office

 

•                                          The
Israeli Register 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.

 

(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)         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

 

16

 

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.

 

(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.

 

(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

 

17

 

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 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.

 

18

 

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.

 

(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 indorsement), 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.

 

19

 

(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.

 

(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

 

20

 

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 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:

 

21

 

(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 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).

 

(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.

 

22

 

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, (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

 

23

 

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.

 

(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.

 

24

 

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
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

 

25

 

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 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 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,

 

26

 

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 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 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

 

27

 

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;

 

SECOND, to the payment in full 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); and

 

THIRD, 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.

 

28

 

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 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.

 

29

 

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 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 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

 

30

 

modified, or any departure
therefrom consented to, except pursuant to an agreement or agreements in
writing entered into by the Grantors and Investors holding more than a majority
of the aggregate principal amount of the Senior Secured Notes then outstanding,
provided 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.

 

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.

 

31

 

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 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.

 

32

 

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

 

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:

 

33

 

(a)           If
to the Company:

 

Vyyo Inc.

4015 Miranda
Avenue

First Floor

Palo Alto, CA
94304-1218

Telephone:  (650) 319-4000

Facsimile:  (650) 319-4022

Attention:  General Counsel

 

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

 

(c)           If
to the Collateral Agent:

 

Goldman, Sachs &
Co.

One New York Plaza

New York, NY  10004

Telephone:  (212) 902-4934

Facsimile:  (212) 346-3124

Attention:  Nick Advani

 

 

with a copy to:

 

Goldman, Sachs &
Co.

One New York Plaza

New York, NY  10004

Facsimile:  (212) 256-4104

Telephone:  (212) 902-7952

Attention:  Connie J. Shoemaker

 

and

 

Brown Raysman
Millstein Felder & Steiner LLP

900 Third Avenue

New York, NY  10022

Facsimile:  (212) 895-2900

Telephone:  (212) 895-2110

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.

 

34

 

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.

 

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.

 

35

 

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.

 

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.

 

36

 

(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.

 

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 Follows]

 

37

 

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:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FOREIGN SUBSIDIARIES

  
	
   

  	
   

  	
   

  
	
   

  	
  VYYO LTD.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  XTEND NETWORKS LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DOMESTIC SUBSIDIARY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  XTEND NETWORKS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

	
  GOLDMAN, SACHS & CO.,

  as Collateral Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  
	
  GOLDMAN, SACHS & CO.,

  as an Investor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
							

 

 

SCHEDULE I

TO GUARANTY AND SECURITY AGREEMENT

 

List of
Subsidiary Guarantors and Addresses for Notices

 

	
  U.S Subsidiary

  	
   

  	
  Address

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

	
  Israeli Subsidiary

  	
   

  	
  Address

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 

SCHEDULE 3.1(a)(i)

TO GUARANTY AND SECURITY AGREEMENT

 

List of Chief
Executive Offices, Jurisdictions of Organization, Federal Employer
Identification

Numbers and Company Organizational Numbers

 

 

SCHEDULE 3.1(a)(ii)

TO GUARANTY AND SECURITY AGREEMENT

 

List of Legal
and Other Names

 

 

SCHEDULE 3.1(a)(v)

TO GUARANTY AND SECURITY AGREEMENT

 

List of Filing
Offices

 

 

SCHEDULE 3.2

TO GUARANTY AND SECURITY AGREEMENT

 

List of
Locations of Equipment and Inventory

 

 

SCHEDULE 3.3

TO GUARANTY AND SECURITY AGREEMENT

 

List of Other Receivables

 

 

SCHEDULE 3.4

TO GUARANTY AND SECURITY AGREEMENT

 

List of
Pledged Collateral, Investment Property and Securities Accounts

 

 

SCHEDULE 3.5

TO GUARANTY AND SECURITY AGREEMENT

 

List of
Letters of Credit

 

 

SCHEDULE 3.6

TO GUARANTY AND SECURITY AGREEMENT

 

List of
Intellectual Property

 

 

SCHEDULE 3.7

TO GUARANTY AND SECURITY AGREEMENT

 

List of
Commercial Tort Claims

 

 

SCHEDULE 3.8

TO GUARANTY AND SECURITY AGREEMENT

 

List of
Deposit Accounts

 

 

EXHIBIT A

TO GUARANTY AND SECURITY AGREEMENT

 

FORM OF
SUPPLEMENT

 

SUPPLEMENT NO.     ,
dated as of                             ,
to the GUARANTY AND SECURITY AGREEMENT, dated as of March 22, 2006, among Vyyo
Inc., a Delaware corporation (the “Company”), the
subsidiaries of the Company party thereto, and Goldman, Sachs & Co., as
Collateral Agent (as amended, supplemented or otherwise modified from time to
time, the “Guaranty and Security Agreement”).

 

Reference is made to the
Securities Purchase Agreement, dated as of March 18, 2006, 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”).  Capitalized
terms (and the term “subsidiary”)
used herein and not defined herein shall have the meanings assigned to such
terms in the Guaranty and Security Agreement.

 

The Grantors have entered
into the Guaranty and Security Agreement in order to induce the Investors to
enter into the Securities Purchase Agreement and purchase the Senior Secured
Notes.  Article 11 of the Guaranty and
Security Agreement provides that additional Subsidiaries may become Subsidiary
Guarantors and Grantors under the Guaranty and Security Agreement by execution
and delivery of an instrument in the form of this Supplement.  The undersigned Subsidiary (the “New Subsidiary Guarantor and Grantor”) is executing this
Supplement in accordance with the requirements of the Senior Secured Notes to
become a Subsidiary Guarantor and Grantor under the Guaranty and Security
Agreement as consideration for the Senior Secured Notes previously made.

 

Accordingly, the
Collateral Agent and the New Subsidiary Guarantor and Grantor hereby agree as
follows:

 

1.             In
accordance with Article 11 of the Guaranty and Security Agreement, the New
Subsidiary Guarantor and Grantor by its signature below becomes a Subsidiary
Guarantor and a Grantor under the Guaranty and Security Agreement with the same
force and effect as if originally named therein as a Subsidiary Guarantor and a
Grantor, and the New Subsidiary Guarantor and Grantor hereby agrees to all the
terms and provisions of the Guaranty and Security Agreement applicable to it as
a Subsidiary Guarantor and a Grantor thereunder.  In furtherance of the foregoing, the New
Subsidiary Guarantor and Grantor, as security for the payment and performance
in full of the Obligations, does hereby create and grant to the Collateral
Agent (and its successors and assigns), for the benefit of the Secured Parties
(and their successors and assigns), a security interest in and lien on all of
the New Subsidiary Guarantor and Grantor’s right, title and interest in and to
the Collateral (as defined in the Guaranty and Security Agreement) owned or
held by or on behalf of the New Subsidiary Guarantor and Grantor.  Each reference to a “Subsidiary Guarantor” or
to a “Grantor” in the Guaranty and Security Agreement shall be deemed to
include the New Subsidiary Guarantor and Grantor.  The Guaranty and Security Agreement is hereby
incorporated herein by reference.

 

2.             The
New Subsidiary Guarantor and Grantor represents and warrants to the Collateral
Agent and the other Secured Parties that (i) this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors’ rights generally, (ii) set forth on the
Schedules attached hereto are true and complete schedules of all of the
information that would have been required to have been

 

 

delivered by or on behalf of the New Subsidiary Guarantor and Grantor
pursuant to the Guaranty and Security Agreement and the Schedules thereto if
the New Subsidiary Guarantor and Grantor had been originally named in the
Guaranty and Security Agreement, and (iii) the representations and warranties
made by it as a Grantor under the Guaranty and Security Agreement are true and
correct on and as of the date hereof based upon the applicable information
referred to in clause (ii) of this Section.

 

3.             This
Supplement may be executed in counterparts (and by each party hereto on a
different counterpart), each of which shall constitute an original, but both of
which, when taken together, shall constitute but one contract.  This Supplement shall become effective when
the Collateral Agent shall have received counterparts of this Supplement that,
when taken together, bear the signatures of the New Subsidiary Guarantor and
Grantor and the Collateral Agent. 
Delivery of an executed counterpart of this Supplement by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart of this Supplement.

 

4.             Except
as expressly supplemented hereby, the Guaranty and Security Agreement shall
remain in full force and effect.

 

5.             THIS
SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.

 

6.             In
the event any one or more of the provisions contained in this Supplement should
be held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and in the
Guaranty and Security Agreement 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 hereto 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.

 

7.             All
communications and notices hereunder shall be in writing and given as provided
in Article 13 of the Guaranty and Security Agreement.  All communications and notices hereunder to
the New Subsidiary Guarantor and Grantor shall be given to it at the address
set forth in the applicable Schedule hereto, with a copy to the Company.

 

8.             The
New Subsidiary Guarantor and Grantor agrees to reimburse the Collateral Agent
for its out of pocket expenses in connection with this Supplement, including
the fees, disbursements and other charges of counsel for the Collateral Agent.

 

[SIGNATURE PAGE
FOLLOWS]

 

 

IN WITNESS WHEREOF, the New Subsidiary Guarantor and Grantor
and the Collateral Agent have duly executed this Supplement No.     
to the Guaranty and Security Agreement as of the day and year first above
written.

 

	
   

  	
  [NAME OF NEW SUBSIDIARY

  GUARANTOR AND GRANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  GOLDMAN, SACHS & CO., as Collateral Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
											

 

[ATTACH SCHEDULES
CORRESPONDING TO THE

SCHEDULES TO THE GUARANTY AND SECURITY AGREEMENT]

 

 

EXHIBIT B

TO GUARANTY AND SECURITY AGREEMENT

 

FORM OF
BLOCKED ACCOUNT LETTER

 

[DATE]

 

[Name and Address

of Blocked Account Bank]

 

Ladies/Gentlemen:

 

Reference is made to “[account name]” with account number[s] [                                  ]
(collectively, the “Accounts”
maintained with [Name of Bank] by [Name of Grantor(s) maintaining account(s)]
(collectively, the “Companies”).  In accordance with the provisions of (i) the
Securities Purchase Agreement, dated as of                     ,
2006 (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the “Securities Purchase
Agreement”), among Vyyo Inc. and the investors party thereto (the “Investors”), and (ii) the Senior Secured Note, dated as of
March 22, 2006, among Vyyo Inc. and the Investor party thereto (as the same may
be amended, restated, supplemented or otherwise modified from time to time, the
“Senior Secured Note”), the Companies
have entered into a Guaranty and Security Agreement, dated as of March 22, 2006
(as the same may be amended, restated, supplemented or otherwise modified from
time to time, the “Guaranty and Security
Agreement”), among the Companies and the Investors and Goldman,
Sachs & Co., as Collateral Agent for the benefit of the Secured Parties
referred to therein (in such capacity, the “Collateral
Agent”).

 

Pursuant to the Guaranty
and Security Agreement and related documents, the Companies have granted to the
Collateral Agent, for the benefit of the Secured Parties, a security interest
in certain property of the Companies consisting of all cash and all Proceeds
(as such term is defined in the Guaranty and Security Agreement) received by
such Companies during the term of the Guaranty and Security Agreement
(collectively, the “Collateral”).  Payments with respect to the Collateral shall
hereafter be deposited or swept into the Accounts.

 

The Companies hereby
transfer to the Collateral Agent exclusive control of the Accounts and all
funds and other property on deposit therein. 
By your execution of this Blocked Account Letter (the “Blocked Account Letter”), you: (a) agree that you will
comply with instructions originated by the Collateral Agent directing
disposition of the funds and other property on deposit in the Accounts without
further consent of any of the Companies; and (b) acknowledge that all funds in
the Accounts shall be transferred to the Collateral Agent as provided herein,
that the Accounts are being maintained by you for the benefit of the Collateral
Agent (as provided herein), and that all amounts and other property therein are
held by you as custodian for the Collateral Agent (as provided herein).

 

Except as provided in
paragraph (e) below, the Accounts shall not be subject to deduction, set-off,
banker’s lien, counterclaim, defense, recoupment or any other right in favor of
any person or entity other than the Collateral Agent.  The Accounts are “deposit
accounts” (as defined in Section 9-102(a)(24) of the Uniform
Commercial Code (the “UCC”)).  By your execution of this Blocked Account
Letter you also acknowledge that, as of the date hereof, you have received no
notice of any other pledge or assignment of the Accounts and you, the Companies
and the Collateral Agent agree as follows:

 

 

(a)           Notwithstanding
anything to the contrary or any other agreement relating to the Accounts, the
Accounts are and will be maintained for the benefit of the Collateral Agent,
will be entitled “                        Account”
and will be subject to written instructions from an authorized officer of the
Collateral Agent as provided herein.

 

(b)           Prior
to the effectiveness of a written notice from the Collateral Agent in the form
of Annex 1 hereto (a “Blockage Notice”),
you are authorized to transfer to the Companies the balance in the Accounts as
the Companies may from time to time designate in writing.

 

(c)           Any
Blockage Notice shall be marked as “Urgent;”
dispatched by Federal Express or other overnight courier for overnight delivery
before noon on a Banking Day, and by facsimile transmission, addressed as
follows:

 

[NAME]

[ADDRESS]

Attention:                          

Facsimile: (       )                   

 

Such notice shall be effective at such time as you
determine in your sole and absolute discretion, but not later than the end of
the second Banking Day following your receipt of the overnight delivery
thereof.  As used herein, the term “Banking Day” means any day other than a Saturday, a Sunday
or other day in which banks in the State of New York are authorized or required
to close.

 

The Collateral Agent
agrees with the Companies that it will not deliver a Blockage Notice unless an
Event of Default shall have occurred and is continuing under the Senior Secured
Notes.  You shall be entitled to rely and
shall be fully protected in relying on the due authorization of a Blockage
Notice without inquiry.

 

(d)           From
and after the effectiveness of a Blockage Notice, you will transfer (by wire
transfer or other method of transfer mutually acceptable to you and the
Collateral Agent) to the Collateral Agent, in same day funds, on each Banking
Day, the entire balance of collected funds in the Accounts to the following
account (the “Collateral Agent Concentration Account”):

 

ABA Number:                         

[Goldman, Sachs & Co.]

                                              

New York, New York               

Account Name:                         

Account Number:                     

Attn:                                         

 

or to such other account as the Collateral Agent may
from time to time designate in writing.

 

(e)           All
customary service charges and fees with respect to the Accounts, as well as the
amount of any returned, dishonored or uncollected check, draft, instrument or
other item or media of payment may be debited from the Accounts.  In the event insufficient funds remain in the
Accounts to cover such customary service charges and fees or returned,
dishonored or uncollected items or payments, the Companies agree, jointly and
severally, to pay and indemnify you for such amounts.

 

2

 

In the event that any
check, draft, instrument, or other item or media of payment constituting part
of the collections credited by you to the Accounts and transferred to the
Collateral Agent is subsequently dishonored, returned, or otherwise not
collected (“Returned Remittance”), the
Collateral Agent will, upon demand of you pay to you in immediately available
funds the amount of each such Returned Remittance.

 

This Blocked Account
Letter shall be binding upon and shall inure to the benefit of you, the
Companies, the Collateral Agent and the respective successors, transferees and
assigns of any of the foregoing.  This
Blocked Account Letter may not be modified except upon the mutual consent of
the Collateral Agent, the Companies and you. 
You may terminate this Blocked Account Letter only upon 30 days’ prior
written notice to the Companies and the Collateral Agent.  The Collateral Agent may terminate this
Blocked Account Letter upon 10 days’ prior written notice to you and the
Companies.  Upon such termination you
shall close the Accounts and transfer all collected funds in the Accounts to
the Collateral Agent Concentration Accounts or as otherwise directed by the
Collateral Agent.  After any such
termination, you shall nonetheless remain obligated promptly to transfer to the
Collateral Agent Concentration Account or as the Collateral Agent may otherwise
direct all funds and other property received in respect of the Account.

 

The Accounts shall remain
subject to your contract rules and regulations for non-personal checking
accounts (the “Rules and Regulations”); provided,
however, that in the event of a conflict between the terms of this
Blocked Account Letter and the terms of the Rules and Regulations, the terms of
this Blocked Account Letter shall prevail.

 

You shall have no
liability arising out of or relating to this Blocked Account Letter except for
liability for actual damages incurred by the Companies or the Collateral Agent
as a direct result of your gross negligence or willful misconduct.  Without limiting the foregoing, you shall
have no liability whatsoever to any person for any indirect, consequential,
incidental, special or reliance damages, regardless of the form of action in
which such damages are asserted (whether in contract, tort or otherwise) even
if you were aware of or have been advised of the possibility of such
damages.  In no event shall you have any
liability for damages or other losses caused in any way by acts of god, acts of
war or terrorism, machine or computer breakdown or malfunction, interruption or
malfunction of communication facilities, labor difficulties or any other
similar or dissimilar cause beyond your reasonable control.

 

Under no circumstances
shall you be obligated to make any independent inquiry whatsoever as to the
Collateral Agent’s right or authority to give you any instruction, order or
direction with respect to the Accounts or the items or payments received
therein, or as to the use the Collateral Agent makes of any monies deposited to
the Accounts.

 

The Companies agree that
they jointly and severally indemnify and hold you harmless from and against any
and all loss, claims, damages, costs, charges, counsel fees, payments, expenses
and liabilities whatsoever which you shall or may sustain or incur at any time
by reason of or in consequence of (i) this Blocked Account Letter or actions or
omissions in connection with this Blocked Account Letter, or (ii) your having
complied with any instructions furnished by the Companies or the Collateral
Agent pursuant to this Blocked Account Letter or in acting on any order or
direction by the Companies or the Collateral Agent respecting the Accounts or
the items and other payments received therein; provided, however, that you
shall not be so indemnified for your own gross negligence or willful
misconduct.

 

Any action arising out of
or relating to this Blocked Account Letter shall be litigated in, and only in,
courts located in New York City, New York, Borough of Manhattan, and the
parties hereby submit to

 

3

 

the exclusive jurisdiction of such courts and agree
that they are a convenient forum.  Each
party hereby waives the right to trial by jury in any action arising out of or
relating to this Blocked Account Letter.

 

This Blocked Account
Letter may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same agreement.  Delivery of an
executed counterpart of a signature page to this Blocked Account Letter by
telecopier shall be effective as delivery of a manually executed counterpart of
this Blocked Account Letter.

 

This Blocked Account
Letter supersedes all prior agreements, oral or written, with respect to the
subject matter hereof and may not be amended, modified or supplemented except
by a writing signed by the Collateral Agent, the Companies and you.  There are no third party beneficiaries to
this Blocked Account Letter, other than as specifically referred to herein.

 

This Blocked Account
Letter shall be governed by, and construed in accordance with, the law of the
state of New York.  Regardless of any
provision in any other agreement, for purposes of the UCC, your jurisdiction
shall be New York for purposes of Section 9-304 of the UCC.

 

Upon acceptance of this
Blocked Account Letter it will be the valid and binding obligation of the
Companies, the Collateral Agent, and you, in accordance with its terms.

 

[Remainder of Page is Intentionally Blank]

 

4

 

[NAME OF COMPANY]

BLOCKED ACCOUNT LETTER

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [GRANTORS]

  
	
   

  	
   

  
	
   

  	
  AS TO EACH OF THE FOREGOING:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GOLDMAN, SACHS & CO,

  as Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
  Acknowledged and agreed to as of the date first above written:

  	
   

  
	
   

  	
   

  
	
  [NAME OF BLOCKED ACCOUNT BANK]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
											

 

 

Annex 1 to Blocked Account Letter
Form of Blockage Notice

 

 

[DATE]

 

[NAME]

[TITLE]

[ADDRESS]

[ADDRESS]

 

 

Dear [                        ]:

 

Re:          Account(s)
Numbered [                        ]
(collectively, the “Accounts”)

 

Ladies and Gentlemen:

 

Reference is made to the
Accounts and that certain Blocked Account Letter dated                         ,
         among you, the Companies (as
therein defined) and Goldman, Sachs & Co., as Collateral Agent (the “Blocked Account Letter”). 
Capitalized terms used herein shall have the meanings given to them in
the Blocked Account Letter.

 

The Collateral Agent
hereby notifies you that, from and after the date of this notice, you are
hereby directed to transfer (by wire transfer or other method of transfer
mutually acceptable to you and the Collateral Agent) to the Collateral Agent,
in same day funds, on each Banking Day, the entire balance in the Accounts to
the Collateral Agent Concentration Account specified in paragraph (d) of the
Blocked Account Letter or to such other account as the Collateral Agent may
from time to time designate in writing.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  GOLDMAN, SACHS & CO,

  as Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

EXHIBIT C

TO GUARANTY AND SECURITY AGREEMENT

 

FORM OF
CONTROL ACCOUNT LETTER

 

 

[DATE]

 

[Name and Address

of Approved Securities Intermediary]

 

 

Ladies and Gentlemen:

 

The undersigned, [Name of
Grantor maintaining securities account] (the “Pledgor”)
has entered into a Guaranty and Security Agreement, dated as of March 22, 2006
(as the same may be amended, restated, supplemented or otherwise modified from
time to time, the “Guaranty and Security
Agreement”), among Vyyo Inc. (the “Company”),
each of the Subsidiaries of the Company party thereto and Goldman, Sachs &
Co., as Collateral Agent for the benefit of the Secured Parties referred to
therein (in such capacity, the “Collateral Agent”)
as required by (i) that certain Securities Purchase Agreement, dated as of
March 18, 2006 (as the same may be amended, restated, supplemented or otherwise
modified from time to time, the “Securities Purchase
Agreement”), among Vyyo, Inc. and the investors party thereto, and
(ii) the Senior Secured Note, dated as of March 22, 2006, among Vyyo Inc. and
the Investor party thereto (as the same may be amended, restated, supplemented
or otherwise modified from time to time, the “Senior
Secured Note”).

 

Pursuant to the Guaranty
and Security Agreement and related documents, the Pledgor has granted to the
Collateral Agent, for the benefit of the Secured Parties (as defined therein),
a security interest in “[Account Name]”with
[“Account Number           ]” (the “Account”) and all present and future Assets in the
Account (the “Pledge”).

 

1.             Instructions of
the Pledgor.  The Pledgor hereby
instructs you (the “Approved Securities
Intermediary”) to, and you hereby agree that you will:

 

(a)           maintain
the Account, as “Account No.:                       
- Vyyo, Inc. Account”;

 

(b)           hold in the Account the
assets, including all financial assets, securities, security entitlements and
all other property and rights now or hereafter received in such Account
(collectively the “Assets”);

 

(c)           provide
to the Collateral Agent, with a duplicate copy to the Pledgor, a monthly
statement of Assets and a confirmation statement of each transaction effected
in the Account after such transaction is effected; and

 

(d)           honor
only the instructions or entitlement orders in regard to or in connection with
the Account given by the Collateral Agent, except that until such time as the
Collateral Agent gives a written notice to the Approved Securities Intermediary
substantially in the form of Annex 1 hereto (a “Blockage Notice”) that the Pledgor’s rights under this Control
Account Letter (the “Control Account

 

 

Letter”) have
been terminated , the Pledgor may: (i) exercise any voting rights that it may
have with respect to any of the Assets; (ii) give instructions to enter into
purchase or sale transactions in the Account; and (iii) withdraw and receive
for their own use all regularly scheduled interest and dividends paid with
respect to the Assets and all cash proceeds of any sale of Assets (“Permitted Withdrawals”); provided, however,
that unless the Collateral Agent has consented to the specific transaction, the
Pledgor shall not instruct the Approved Securities Intermediary to deliver and,
except as may be required by law or by court order, the Approved Securities
Intermediary shall not deliver, cash and/or securities, or proceeds from the
sale of, or distributions on, such securities out of the Account to the Pledgor
or to any other person or entity other than Permitted Withdrawals.  The Collateral Agent agrees with the Pledgor
that it shall not give a Blockage Notice to the Approved Securities
Intermediary unless an Event of Default has occurred and is continuing under
the Senior Secured Note.  The Approved
Securities Intermediary shall be entitled to rely and shall be fully protected
in relying on the due authorization of any such written notice without inquiry.

 

2.             Agreements
of the Approved Securities Intermediary.

 

(a)           By its signature below,
the Approved Securities Intermediary agrees to comply with the entitlement
orders and instructions of the Collateral Agent directing transfer or
redemption of the financial assets relating to the Account (including any
instructions with respect to sales, trades, transfers and withdrawals of cash
or other of the Assets) without the consent of the Pledgor or any other person
(it being understood and agreed by the Pledgor that the Approved Securities
Intermediary shall have no duty or obligation whatsoever of any kind or
character to have knowledge of the terms of the Guaranty and Security Agreement
or the Securities Purchase Agreement or to determine whether or not an event of
default exists thereunder).  The Pledgor
hereby agrees to indemnify and hold harmless the Approved Securities
Intermediary, its affiliates, officers and employees from and against any and
all claims, causes of action, liabilities, lawsuits, demands and/or damages,
including any and all court costs and reasonable attorney’s fees, that may
result by reason of the Approved Securities Intermediary complying with such
instructions of the Collateral Agent.  In
the event that the Approved Securities Intermediary is sued or becomes involved
in litigation as a result of complying with the above stated written
instructions, the Pledgor and the Collateral Agent agree that the Approved
Securities Intermediary shall be entitled to charge all costs and fees it
incurs in connection with such litigation to the Assets in the Account and
withdraw such sums as the costs and charges accrue.

 

(b)           The
Collateral Agent who shall give oral instructions hereunder shall confirm the
same in writing to the Approved Securities Intermediary within five days after
such oral instructions are given.

 

(c)           Except with respect to
the obligations and duties as set forth herein, this Control Account Letter
shall not impose or create any obligations or duties upon the Approved
Securities Intermediary greater than or in addition to the customary and usual
obligations and duties of the Approved Securities Intermediary to the Pledgor.

 

(d)           As
long as the Assets are pledged to the Collateral Agent: (i) the Approved
Securities Intermediary will not invade the Assets to cover margin debits or
calls in any other accounts of the Pledgor; and (ii) the Approved Securities
Intermediary agrees that, except for Liens resulting from customary
commissions, fees, or charges based upon transactions in the Account, it
subordinates in favor of the Collateral Agent any security interest, Lien or
right of setoff the Approved Securities Intermediary may have.  The Approved Securities Intermediary
acknowledges that it has not received notice of any other security interest in
the Account or the Assets.  In the event
any such notice is received, the Approved Securities Intermediary will promptly
notify the Collateral Agent.  The Pledgor
herein represents that the Assets are free and clear of any Lien or
encumbrances and agree that, with the

 

2

 

exception of the security interest granted to the Collateral Agent, no
Lien or encumbrance will be placed by them on the Assets without the express
written consent of both the Collateral Agent and the Approved Securities
Intermediary.

 

3.             Binding Agreement.  This Control Account Letter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns and it and the rights and obligations of the parties
hereto shall be governed by, and construed and interpreted in accordance with,
and the law of the Approved Securities Intermediary’s jurisdiction for the
purposes of Section 8-110 of the UCC shall be, the law of the State of New
York.

 

4.             Financial
Assets; Control.  The Approved
Securities Intermediary will treat all property at any time held by the
Approved Securities Intermediary in the Account as financial assets within the
meaning of the Uniform Commercial Code. 
The Approved Securities Intermediary acknowledges that this Control
Account Letter constitutes written notification to the Approved Securities
Intermediary, pursuant to the Uniform Commercial Code and any applicable
federal regulations for the Federal Reserve Book Entry System, of the
Collateral Agent’s security interest in the Assets.  The Pledgor, Collateral Agent and Approved
Securities Intermediary are entering into this Control Account Letter to
provide for the Collateral Agent’s control of the Assets and to confirm the
first and exclusive priority of the Collateral Agent’s security interest in the
Assets.  The Approved Securities
Intermediary agrees to promptly make and thereafter maintain all necessary
entries or notations in its books and records to reflect the Collateral Agent’s
security interest in the Assets.

 

5.             Severability.  If any term or provision of this Control
Account Letter is determined to be invalid or unenforceable, the remainder of
this Control Account Letter shall be construed in all respects as if the
invalid or unenforceable term or provision were omitted.  This Control Account Letter may not be altered
or amended in any manner without the express written consent of the Pledgor,
the Collateral Agent and the Approved Securities Intermediary.  This Control Account Letter may be executed
in any number of counterparts, all of which shall constitute one original
agreement.

 

6.             Termination.  This Control Account Letter may be terminated
by the Approved Securities Intermediary upon 30 day’s prior written notice to
the Pledgor and the Collateral Agent. 
Upon expiration of such 30-day period, the Approved Securities
Intermediary shall be under no further obligation except to hold the Assets in
accordance with the terms of this Control Account Letter, pending receipt of
written instructions from the Pledgor and the Collateral Agent, jointly,
regarding the further disposition of the pledged Assets.

 

7.             Miscellaneous.

 

(a)           The Pledgor
acknowledges that this Control Account Letter supplements any existing
agreements of the Pledgor with the Approved Securities Intermediary and, except
as expressly provided herein, is in no way intended to abridge any rights that
the Approved Securities Intermediary might otherwise have.

 

(b)           Any
action arising out of or relating to this Control Account Letter shall be
litigated in, and only in, courts located in New York City, New York, Borough
of Manhattan, and the parties hereby submit to the exclusive jurisdiction of
such courts and agree that they are a convenient forum.  Each party hereby waives the right to trial
by jury in any action arising out of or relating to this Control Account
Letter.

 

(c)           This Control Account
Letter may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be

 

3

 

an original and all of which when taken together shall constitute one
and the same agreement.  Delivery of an
executed counterpart of a signature page to this Control Account Letter by
telecopier shall be effective as delivery of a manually executed counterpart of
this Control Account Letter.

 

(d)           This
Control Account Letter supersedes all prior agreements, oral or written, with
respect to the subject matter hereof and may not be amended, modified or
supplemented except by a writing signed by the Collateral Agent, the Companies
and you.  There are no third party
beneficiaries to this Control Account Letter, other than as specifically
referred to herein.

 

(e)           This
Control Account Letter shall be governed by, and construed in accordance with,
the law of the state of New York.

 

(f)            Upon
acceptance of this Control Account Letter, it will be the valid and binding
obligation of the Pledgor, the Collateral Agent, and you, in accordance with
its terms.

 

[Remainder of Page is Intentionally Blank]

 

4

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [GRANTORS]

  
	
   

  	
   

  
	
   

  	
  AS TO EACH OF THE FOREGOING:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GOLDMAN, SACHS & CO,

  
	
   

  	
  as Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
  Acknowledged and agreed to as of the date first above written:

  	
   

  
	
   

  	
   

  
	
  [NAME OF APPROVED SECURITIES INTERMEDIARY]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
											

 

 

Annex 1 to Control Account Letter
Form of Blockage Notice

 

[DATE]

 

[NAME]

[TITLE]

[ADDRESS]

[ADDRESS]

 

Dear [                        ]:

 

Re:          “[Acct
Name]” with Account Number [                        ]
(the “Account”)

 

Ladies and Gentlemen:

 

Reference
is made to the Account and that certain Control Account Letter dated                         ,
         among you, the Pledgor (as
therein defined) and Goldman, Sachs & Co., as Collateral Agent (the “Control Account Letter”).  Capitalized terms used herein
shall have the meanings given to them in the Control Account Letter.

 

The
Collateral Agent hereby notifies you that, from and after the date of this
notice, the Collateral Agent is exercising exclusive control over the
Account.  You are directed to honor only
the instructions or entitlement orders in regard to or in connection with the
Account given by the Collateral Agent without the consent of the Pledgor in
accordance with the Control Account Letter.

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  GOLDMAN, SACHS & CO,

  as Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

EXHIBIT D

 

VYYO LTD. PLEDGE AGREEMENT

 

 

Annex
1.4(c) – Addendum to the Guaranty and Security Agreement

 

Pledge
Agreement

 

Made
and executed this 22nd of March 2006

 

By and among Vyyo Ltd., a
corporation duly incorporated and existing under the laws of the state of
Israel (the “Subsidiary Guarantor”), the
Investors (as such term is defined in the Guaranty and Security Agreement) and
GOLDMAN, SACHS & CO., as collateral agent for the benefit of the Investors
(including its successors and assigns and in such capacity, the “Collateral Agent”).

 

Whereas                                                The Investors have agreed to purchase Senior
Secured Notes in the aggregate principal amount of $7,500,000 (as amended,
supplemented or otherwise modified, the “Senior Secured Notes”)
from the Company pursuant to, and upon the terms and subject to the conditions
specified in, the Securities Purchase Agreement among the Company and the
Investor dated as of March 18, 2006; and

 

Whereas                                                The Subsidiary Guarantor has agreed to
guarantee, among other things, all the obligations of the Company and each
other Subsidiary Guarantor under the Guaranty and Security Agreement (among the
Company, the Investors and the Collateral Agent dated as of March 22, 2006, to
which this Addendum is annexed) and other Secured Transaction Documents; and

 

Whereas                                                This Pledge Agreement is additional to any
obligation or undertaking of the Subsidiary Guarantor under other documents
which form part of the Secured Transaction Documents including the Guaranty and
Security Agreement.

 

Capitalized terms used but
not defined herein shall have the meaning ascribed to such terms in the
Guaranty and Security Agreement.

 

1.                                       As security for the full and punctual payment of all Obligations of the
Company and each Grantor existing now or hereafter under or in respect of the
Secured Transaction Documents, the Subsidiary Guarantor hereby charges in favor
of the Investors and the Collateral Agent, by way of first ranking fixed
charge, all the patents and trademarks owned thereby and which are detailed in
Schedule 3.6 attached hereto.

 

2.                                       Each of the Investors, the Collateral Agent and GOLDMAN, SACHS & CO.
hereby acknowledges and understands that any and all rights of the Investors
and/or the Collateral Agent in connection with the Collateral are subject to
the provisions of the Encouragement of Research and Development in Industry
Law, 1984, the Law for Encouragement of Capital Investments, 1959 and the rules
and regulations promulgated thereunder (collectively, the “Encouragement
Laws”). Any perfection or realization of the
security interest granted to the Investors or the Collateral Agent pursuant to
this Pledge Agreement or the other Secured Transaction Documents is subject to
the rights and preferences of the Office of the Chief Scientist and Investment
Center of the Israeli Ministry of Industry, Trade and Labor under the
Encouragement Laws or under any other applicable law.

 

3.                                       The Subsidiary Guarantor’s assets detailed in Section 1 above shall be
referred to as the “Collateral”.

 

4.                                       The Subsidiary Guarantor hereby undertakes:

 

4.1.                              Not to charge or pledge in any manner the
Collateral by conferring any rights ranking pari-passu, prior to or deferred to
the rights of the Investors and the

 

 

Collateral Agent and not to
make any assignment of any right which the Subsidiary Guarantor may have in the
Collateral, without receiving the prior written consent of the Collateral
Agent. Notwithstanding the foregoing, however, the Subsidiary Guarantor may,
without receiving the prior written consent of the Collateral Agent, grant any
license (whether exclusive or otherwise) to its Intellectual Property (as such
term is defined in the Guaranty and Security Agreement), provided that, such license
is granted pursuant to an arms-length transaction on commercially reasonable
terms, does not (unless consistent in good faith with good business judgment)
restrict the Company’s ability to use or employ its Intellectual Property in
conducting its business, and is consistent, in good faith, with good business
judgment.

 

4.2.                              To file and register, as soon as possible but not
later than 21 days following the signature of the Secured Transaction
Documents, with the Israeli Companies Registrar, and with the Israeli Patent
and Trademark Offices, the charges created by this Pledge Agreement. The
registration application shall specifically state that the Subsidiary Guarantor
is prohibited from creating any additional charges over the Collateral,
excluding a deferred and a subordinated fixed charge in favor of the Company,
without receiving the prior written consent of the Collateral Agent.

 

5.                                       This fixed charge created hereby shall become crystallized upon the occurrence
of any Event of Default or at any other circumstances under which a floating
charge may become crystallized under Israeli law.

 

6.                                       Notwithstanding any provision to the contrary in the Secured Transaction
Documents, the enforcement of this Pledge Agreement shall be subject to the law
of the State of Israel and the competent courts in the District of Tel-Aviv
Israel shall have sole and exclusive jurisdiction over any matter concerning
this Pledge Agreement.

 

7.                                       In the event of any inconsistencies or conflicting provisions between the
provisions of this Pledge Agreement and the provisions of any other agreement
comprising the Transaction Documents, whether explicit or implied, the
provisions of this Pledge Agreement shall prevail.

 

 

	
   

  	
  VYYO LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

[Signature page to Addendum to the Guaranty And Security Agreement]

 

2

 

	
  GOLDMAN, SACHS & CO.,

  
	
  as Collateral Agent

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  
	
   

  
	
  GOLDMAN, SACHS & CO.,

  
	
  as an Investor

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
					

 

3

 

EXHIBIT E

 

XTEND NETWORKS LTD. PLEDGE AGREEMENT

 

 

Annex
1.4(c) – Addendum to the Guaranty and Security Agreement

 

Pledge Agreement

 

Made
and executed this 22nd of March 2006

 

By and among Xtend Networks
Ltd., a corporation duly incorporated and existing under the laws of the state
of Israel (the “Subsidiary Guarantor”), the
Investors (as such term is defined in the Guaranty and Security Agreement) and
GOLDMAN, SACHS & CO., as collateral agent for the benefit of the Investors
(including its successors and assigns and in such capacity, the “Collateral Agent”).

 

Whereas                                                The Investors have agreed to purchase Senior
Secured Notes in the aggregate principal amount of $7,500,000 (as amended,
supplemented or otherwise modified, the “Senior Secured Notes”)
from the Company pursuant to, and upon the terms and subject to the conditions
specified in, the Securities Purchase Agreement among the Company and the
Investor dated as of March 18, 2006; and

 

Whereas                                                The Subsidiary Guarantor has agreed to
guarantee, among other things, all the obligations of the Company and each
other Subsidiary Guarantor under the Guaranty and Security Agreement (among the
Company, the Investors and the Collateral Agent dated as of March 22, 2006, to
which this Addendum is annexed) and other Secured Transaction Documents; and

 

Whereas                                                This Pledge Agreement is additional to any
obligation or undertaking of the Subsidiary Guarantor under other documents
which form part of the Secured Transaction Documents including the Guaranty and
Security Agreement.

 

Capitalized terms used but
not defined herein shall have the meaning ascribed to such terms in the
Guaranty and Security Agreement.

 

1.                                       As security for the full and punctual payment of all Obligations of the
Company and each Grantor existing now or hereafter under or in respect of the
Secured Transaction Documents, the Subsidiary Guarantor hereby charges in favor
of the Investors and the Collateral Agent, by way of first ranking fixed
charge, (i) all the patents and trademarks owned thereby and which are detailed
in Schedule 3.6 attached hereto, and (ii) all Equity Interests (as such term is
defined in the Guaranty and Security Agreement) in Xtend Networks Inc. owned or
held by or on behalf of the Subsidiary Guarantor.

 

2.                                       Each of the Investors, the Collateral Agent and GOLDMAN, SACHS & CO.
hereby acknowledges and understands that any and all rights of the Investors
and/or the Collateral Agent in connection with the Collateral are subject to
the provisions of the Encouragement of Research and Development in Industry
Law, 1984, the Law for Encouragement of Capital Investments, 1959 and the rules
and regulations promulgated thereunder (collectively, the “Encouragement
Laws”). Any perfection or realization of the
security interest granted to the Investors or the Collateral Agent pursuant to
this Pledge Agreement or the other Secured Transaction Documents is subject to
the rights and preferences of the Office of the Chief Scientist and Investment
Center of the Israeli Ministry of Industry, Trade and Labor under the
Encouragement Laws or under any other applicable law.

 

3.                                       The Subsidiary Guarantor’s assets detailed in Section 1 above shall be
referred to as the “Collateral”.

 

 

4.                                       The Subsidiary Guarantor hereby undertakes:

 

4.1.                              Not to charge or pledge in any manner the
Collateral by conferring any rights ranking pari-passu, prior to or deferred to
the rights of the Investors and the Collateral Agent and not to make any
assignment of any right which the Subsidiary Guarantor may have in the
Collateral, without receiving the prior written consent of the Collateral
Agent. Notwithstanding the foregoing, however, the Subsidiary Guarantor may,
without receiving the prior written consent of the Collateral Agent, grant any
license (whether exclusive or otherwise) to its Intellectual Property (as such
term is defined in the Guaranty and Security Agreement), provided that, such license
is granted pursuant to an arms-length transaction on commercially reasonable
terms, does not (unless consistent in good faith with good business judgment)
restrict the Company’s ability to use or employ its Intellectual Property in
conducting its business, and is consistent, in good faith, with good business judgment.

 

4.2.                              To file and register, as soon as possible but not
later than 21 days following the signature of the Secured Transaction
Documents, with the Israeli Companies Registrar, and with the Israeli Patent
and Trademark Offices, the charges created by this Pledge Agreement. The
registration application shall specifically state that the Subsidiary Guarantor
is prohibited from creating any additional charges over the Collateral,
excluding a deferred and a subordinated fixed charge in favor of the Company,
without receiving the prior written consent of the Collateral Agent.

 

5.                                       This fixed charge created hereby shall become crystallized upon the
occurrence of any Event of Default or at any other circumstances under which a
floating charge may become crystallized under Israeli law.

 

6.                                       Notwithstanding any provision to the contrary in the Secured Transaction
Documents, the enforcement of this Pledge Agreement shall be subject to the law
of the State of Israel and the competent courts in the District of Tel-Aviv
Israel shall have sole and exclusive jurisdiction over any matter concerning
this Pledge Agreement.

 

7.                                       In the event of any inconsistencies or conflicting provisions between the
provisions of this Pledge Agreement and the provisions of any other agreement
comprising the Transaction Documents, whether explicit or implied, the
provisions of this Pledge Agreement shall prevail.

 

 

	
   

  	
  XTEND NETWORKS LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

[Signature page to Addendum to the Guaranty And Security Agreement]

 

2

 

	
  GOLDMAN, SACHS & CO.,

  
	
  as Collateral Agent

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  
	
   

  
	
  GOLDMAN, SACHS & CO.,

  
	
  as an Investor

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
					

 

3Exhibit 10.5

 

NEITHER THESE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR (B) IF REASONABLY REQUESTED BY THE
COMPANY, AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT.

 

VYYO
INC.

 

WARRANT

 

	
  Warrant No. [   ]

  	
   

  	
  Dated: March 22, 2006

  

 

Vyyo Inc., a Delaware corporation (the “Company”), hereby certifies that, for value received, Goldman,
Sachs & Co., or its registered assigns (the “Holder”), is entitled to purchase from the
Company up to a total of 298,617 shares of common stock, $0.0001 par value per
share (the “Common Stock”), of the
Company (each such share, a “Warrant Share”
and all such shares, the “Warrant Shares”)
at an exercise price equal to $0.10 per share (as adjusted from time to time as
provided in Section 9, the “Exercise
Price”), at any time and from the date hereof and through and
including the date that is the earlier of five (5) years from the date of
issuance hereof and the closing of the sale of all or substantially all of the
Company’s assets or a merger or acquisition of the Company (the “Expiration Date”), and subject to the
following terms and conditions. This Warrant (this “Warrant”) is one of a series of similar warrants issued
pursuant to that certain Securities Purchase Agreement, dated as of the date
hereof, by and among the Company and the Investors identified therein (the “Securities Purchase Agreement”) and in
connection with the issuance of certain of the Company’s Senior Secured Notes. All
such warrants are referred to herein, collectively, as the “Warrants.”

 

1.                                       Definitions.
In addition to the terms defined elsewhere in this Warrant, capitalized terms
that are not otherwise defined herein have the meanings given to such terms in
the Securities Purchase Agreement.

 

2.                                       Registration
of Warrant. The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof
from time to time. The Company may deem and treat the registered Holder of
this Warrant as the absolute owner hereof for the purpose of any exercise
hereof or any distribution to the Holder, and for all other purposes, absent
actual notice to the contrary.

 

3.                                       Registration
of Transfers. The Company shall register the transfer of any portion of
this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of
Assignment attached hereto duly completed and signed, to the transfer agent or
to the Company at its address specified herein. Upon any such registration or
transfer, a new warrant to purchase Common Stock, in substantially the form of
this Warrant (any such new warrant, a “New

 

 

Warrant”),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The acceptance
of the New Warrant by the transferee thereof shall be deemed the acceptance by
such transferee of all of the rights and obligations of a holder of a Warrant.

 

4.                                       Exercise and
Duration of Warrants.

 

(a)                                  This Warrant shall be
exercisable by the registered Holder at any time and from time to time on or
after the date hereof to and including the Expiration Date. At 6:30 P.M.,
New York City time on the Expiration Date, the portion of this Warrant not
exercised prior thereto shall be and become void and of no value; provided
that, if on the Expiration Date, there is no effective Registration
Statement covering the resale of the Warrant Shares, then this Warrant shall be
deemed to have been exercised in full (to the extent not previously exercised)
on a “cashless exercise” basis at 6:30 P.M. New York City time on the
Expiration Date.

 

(b)                                 A Holder may exercise
this Warrant by delivering to the Company (i) an exercise notice, in the form attached
hereto (the “Exercise Notice”),
appropriately completed and duly signed along with the Warrant, and (ii) payment
of the Exercise Price for the number of Warrant Shares as to which this Warrant
is being exercised (which may take the form of a “cashless exercise”
if so indicated in the Exercise Notice only if a “cashless exercise” may occur
at such time pursuant to Section 10 below), and the date such items
are delivered to the Company (as determined in accordance with the notice
provisions hereof) is an “Exercise Date.”  Execution and delivery of the Exercise Notice
shall have the same effect as cancellation of the original Warrant and issuance
of a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares.

 

5.                                       Delivery of
Warrant Shares.

 

(a)                                  Upon exercise of this Warrant,
the Company shall promptly issue or cause to be issued and cause to be
delivered to or upon the written order of the Holder a certificate for the
Warrant Shares issuable upon such exercise. The Company shall, upon request of
the Holder, use its commercially reasonable efforts to deliver Warrant Shares
hereunder electronically through the Depository Trust Corporation or another
established clearing corporation performing similar functions.

 

(b)                                 This Warrant is exercisable,
either in its entirety or, from time to time, for a portion of at least 10,000
Warrant Shares. Upon surrender of this Warrant following one or more partial
exercises, the Company shall issue or cause to be issued, at its expense, a New
Warrant evidencing the right to purchase the remaining number of Warrant Shares.

 

(c)                                  The Company’s obligations to
issue and deliver Warrant Shares in accordance with the terms hereof are
absolute and unconditional, irrespective of any action or inaction by the
Holder to enforce the same, any waiver or consent with respect to any provision
hereof, the recovery of any judgment against any Person or any action to
enforce the same, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the Holder or any other Person
of any obligation to the Company or any violation or alleged

 

2

 

violation of law by the Holder or any other
Person, and irrespective of any other circumstance which might otherwise limit
such obligation of the Company to the Holder in connection with the issuance of
Warrant Shares. Nothing herein shall limit a Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock upon exercise of the Warrant as required pursuant to the
terms hereof.

 

6.                                       Charges,
Taxes and Expenses. Initial issuance and delivery of certificates for
shares of Common Stock upon exercise of this Warrant shall be made without
charge to the Holder for any issue or transfer tax, withholding tax, transfer
agent fee or other incidental tax or expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by the Company;
provided, however, that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the registration of any
certificates for Warrant Shares or Warrants in a name other than that of the
Holder. The Holder shall be responsible for all other tax liability that may arise
as a result of holding or transferring this Warrant or receiving Warrant Shares
upon exercise hereof.

 

7.                                       Replacement
of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution for and
upon cancellation hereof, or in lieu of and substitution for this Warrant, a
New Warrant, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable bond or
indemnity, if requested. Applicants for a New Warrant under such circumstances
shall also comply with such other reasonable regulations and procedures and pay
such other reasonable third-party costs as the Company may prescribe.

 

8.                                       Reservation
of Warrant Shares. The Company covenants that it will at all times reserve
and keep available out of the aggregate of its authorized but unissued and
otherwise unreserved Common Stock, solely for the purpose of enabling it to
issue Warrant Shares upon exercise of this Warrant as herein provided, the
number of Warrant Shares which are then issuable and deliverable upon the
exercise of this entire Warrant, free from preemptive rights or any other
contingent purchase rights of persons other than the Holder (after giving
effect to the adjustments and restrictions of Section 9, if any). The
Company covenants that all Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid
and nonassessable. The Company will
take all such action as may be necessary to assure that such shares of Common
Stock may be issued as provided herein without violation of any applicable
law or regulation, or of any requirements of any securities exchange or
automated quotation system upon which the Common Stock may be listed.

 

9.                                       Certain Adjustments.
The Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this Section 9.

 

(a)                                  Stock Dividends and Splits. If the Company, at any time
while this Warrant is outstanding, (i) pays a stock dividend on its Common
Stock or otherwise makes a distribution on any class of capital stock that
is payable in shares of Common Stock

 

3

 

(ii) subdivides outstanding shares of
Common Stock into a larger number of shares or (iii) combines outstanding
shares of Common Stock into a smaller number of shares, then in each such case
the Exercise Price shall be multiplied by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding immediately before
such event and of which the denominator shall be the number of shares of Common
Stock outstanding immediately after such event. Any adjustment made pursuant to
clause (i) of this paragraph shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of
this paragraph shall become effective immediately after the effective date of
such subdivision or combination.

 

(b)                                 Calculations. All calculations under this Section 9
shall be made to the nearest cent or the nearest 1/100th of a share, as
applicable. The number of shares of Common Stock outstanding at any given time
shall not include shares owned or held by or for the account of the Company,
and the disposition of any such shares shall be considered an issue or sale of
Common Stock.

 

(c)                                  Notice of Adjustments. Upon the occurrence of each
adjustment pursuant to this Section 9, the Company at its expense
will promptly compute such adjustment in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment, including a
statement of the adjusted Exercise Price and adjusted number or type of Warrant
Shares or other securities issuable upon exercise of this Warrant (as
applicable), describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based. Upon written
request, the Company will promptly deliver a copy of each such certificate to
the Holder and to the Company’s transfer agent.

 

(d)                                 Notice of Corporate Events. If the Company (i) declares
a dividend or any other distribution of cash, securities or other property in
respect of its Common Stock, including without limitation any granting of
rights or warrants to subscribe for or purchase any capital stock of the
Company or any Subsidiary, (ii) authorizes or approves, enters into any
agreement contemplating or solicits stockholder approval for  (x) any sale of all or substantially all of
its assets in one or a series of related transactions, (y) any tender
offer or exchange offer (whether by the Company or another Person) pursuant to
which holders of Common Stock are permitted to tender or exchange their shares
for other securities, cash or property, or (z) any reclassification of the
Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or
property or (iii) authorizes the voluntary dissolution, liquidation or
winding up of the affairs of the Company, then the Company shall deliver to the
Holder a notice describing the material terms and conditions of such
transaction, at least ten business days prior to the applicable record or
effective date on which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction, and the Company will
take all steps reasonably necessary in order to insure that the Holder is given
the practical opportunity to exercise this Warrant prior to such time so as to
participate in or vote with respect to such transaction; provided, however,
that the failure to deliver such notice or any defect therein shall not affect
the validity of the corporate action required to be described in such notice.

 

10.                                 Payment of Exercise
Price. The Holder shall pay the Exercise Price in immediately available
funds; provided, however, that if at any time after the Required
Effective

 

4

 

Date a Registration Statement covering the resale of the Warrant Shares
is not effective on the Exercise Date, the Holder may satisfy its
obligation to pay the Exercise Price through a “cashless exercise,” in which
event the Company shall issue to the Holder the number of Warrant Shares
determined as follows:

 

	
   

  	
   

  	
  X = Y [(A-B)/A]

  
	
  where:

  	
   

  	
   

  
	
   

  	
   

  	
  X = the number of Warrant Shares to be issued to the Holder.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Y = the number of Warrant Shares with respect to which this Warrant
  is being exercised.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A = the average of the Closing Prices for the five Trading Days
  immediately prior to (but not including) the Exercise Date.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B = the Exercise Price.

  

 

For purposes of Rule 144 promulgated
under the Securities Act, it is intended, understood and acknowledged that the
Warrant Shares issued in a cashless exercise transaction shall be deemed to
have been acquired by the Holder, and the holding period for the Warrant Shares
shall be deemed to have commenced, on the date this Warrant was originally
issued pursuant to the Securities Purchase Agreement.

 

11.                                 Fractional Shares.
The Company shall not be required to issue or cause to be issued fractional
Warrant Shares on the exercise of this Warrant. If any fraction of a Warrant Share
would, except for the provisions of this Section, be issuable upon exercise of
this Warrant, the number of Warrant Shares to be issued will be rounded up to
the nearest whole share.

 

12.                                 Notices. Any
and all notices or other communications or deliveries hereunder (including
without limitation any Exercise Notice) shall be in writing and shall be deemed
given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in the Securities Purchase Agreement prior to 6:30 p.m. (New
York City time) on a Trading Day, (ii) the next Trading Day after the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile number specified in the Securities Purchase Agreement on a day
that is not a Trading Day or later than 6:30 p.m. (New York City time) on
any Trading Day, (iii) the Trading Day following the date of mailing, if
sent by nationally recognized overnight courier service or (iv) upon
actual receipt by the party to whom such notice is required to be given. The
address for such notices or communications shall be as set forth in the
Securities Purchase Agreement.

 

13.                                 Registration Rights
Agreement. The Common Shares for which this Warrant is exercisable are
entitled to the benefits of a Registration Rights Agreement, dated as of the
date hereof, between the Company and the Holder and subject to the limitations
therein.

 

14.                                 Miscellaneous.

 

5

 

(a)                                  Subject to the restrictions on
transfer set forth herein, this Warrant may be assigned by the Holder in
not less than 100,000 Warrant Shares. This Warrant may not be assigned by
the Company except to a successor in the event of a Fundamental Transaction. This
Warrant shall be binding on and inure to the benefit of the parties hereto and
their respective successors and assigns. Subject to the preceding sentences,
nothing in this Warrant shall be construed to give to any Person other than the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing signed by
the Company and the Holder and their successors and assigns.

 

(b)                                 The Company will not, by
amendment of its governing documents or through any reorganization, transfer of
assets, consolidation, merger, 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 Warrant, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such action as may be
reasonably necessary or appropriate in order to protect the rights of the
Holder against impairment. Without limiting the generality of the foregoing,
the Company (i) will not increase the par value of any Warrant Shares
above the amount payable therefor on such exercise, (ii) will take all
such action as may be reasonably necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable
Warrant Shares on the exercise of this Warrant, and (iii) will not close
its stockholder books or records in any manner which interferes with the timely
exercise of this Warrant.

 

(C)                                GOVERNING LAW; VENUE; WAIVER OF
JURY TRIAL. ALL
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION
OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING REGARD TO ANY APPLICABLE
PRINCIPALS OF CONFLICTS OF LAW. 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 (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE
TRANSACTION DOCUMENTS), 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
IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND
CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY
(WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES
TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD
AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN
SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER
PERMITTED BY LAW. THE COMPANY HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.

 

6

 

(d)                                 The headings herein are for
convenience only, do not constitute a part of this Warrant and shall not
be deemed to limit or affect any of the provisions hereof.

 

(e)                                  In case any one or more of the
provisions of this Warrant shall be invalid or unenforceable in any respect,
the validity and enforceability of the remaining terms and provisions of this
Warrant shall not in any way be affected or impaired thereby and the parties
will attempt in good faith to agree upon a valid and enforceable provision
which shall be a commercially reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Warrant.

 

[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK,

SIGNATURE PAGE FOLLOWS]

 

7

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.

 

	
   

  	
  VYYO INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

FORM OF
EXERCISE NOTICE

 

[To be executed by the Holder to exercise the right to purchase shares
of Common Stock under the foregoing Warrant]

 

To:  VYYO INC.

 

The undersigned is the Holder of Warrant No.       
(the “Warrant”) issued by Vyyo
Inc., a Delaware corporation (the “Company”).
Capitalized terms used herein and not otherwise defined have the respective
meanings set forth in the Warrant.

 

1.                                       The
Warrant is currently exercisable to purchase a total of               
Warrant Shares.

 

2.                                       The
undersigned Holder hereby exercises its right to purchase                  
Warrant Shares pursuant to the Warrant.

 

3.                                       The
Holder intends that payment of the Exercise Price shall be made as (check one):

 

o                                    “Cash Exercise”
under Section 10

 

o                                    “Cashless Exercise”
under Section 10

 

4.                                       If
the holder has elected a Cash Exercise, the holder shall pay the sum of $            
to the Company in accordance with the terms of the Warrant.

 

5.                                       Pursuant
to this exercise, the Company shall deliver to the holder              
Warrant Shares in accordance with the terms of the Warrant.

 

6.                                       Following
this exercise, the Warrant shall be exercisable to purchase a total of              
Warrant Shares.

 

	
  Dated:            ,     

  	
  Name of Holder:

  
	
   

  	
   

  
	
   

  	
  (Print)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature must conform in all respects to

  name of holder as specified on the face of the

  Warrant)

  
							

 

 

FORM OF
ASSIGNMENT

 

[To be completed and signed only upon transfer of Warrant]

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto                                         
the right represented by the within Warrant to purchase                
shares of Common Stock of Vyyo Inc. to which the within Warrant relates and
appoints                     
attorney to transfer said right on the books of Vyyo Inc. with full power of
substitution in the premises.

 

 

	
  Dated:           ,     

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Signature must conform in all respects to name of holder

  as specified on the face of the Warrant)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address of Transferee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  In the presence of:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00100-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00100-of-00352.parquet"}]]