Document:

Exhibit 10.2

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

VYYO
INC.

CONVERTIBLE
NOTE

	
   

  	
   

  
	
   

  	
   

  
	
  Issuance Date: March
  28, 2007

  	
  Principal: U.S.
  $35,000,000

  

 

FOR VALUE RECEIVED, Vyyo Inc., a Delaware corporation, (the “Company”),
hereby promises to pay to Goldman, Sachs & Co.  or registered assigns (“Holder”) the amount set out above as the Principal (as
reduced pursuant to the terms hereof pursuant to redemption, conversion or
otherwise, the “Principal”) when due, whether upon the Maturity Date (each, as
defined herein) unless earlier redeemed or converted (in each case in
accordance with the terms hereof), and to pay interest (“Interest”) on any outstanding Principal at the rate of 5.0% per annum (the “Interest Rate”), from the date set out above as the Issuance Date (the “Issuance Date”) until the same becomes due and payable unless earlier redeemed or
converted.  This Convertible Note
(including all Convertible Notes issued in exchange, transfer or replacement
hereof, this “Note”) is issued on the Closing Date pursuant to the
Securities Purchase Agreement, dated as of the date hereof, by and among the
Company and the Investors identified therein (the “Securities Purchase Agreement”). Certain capitalized terms used herein are defined
in Section 28.  Capitalized terms
that are not otherwise defined herein have the meanings given to such terms in
the Securities Purchase Agreement.

1.  MATURITY.  On the Maturity Date, the Company shall pay
to the Holder an amount in cash representing all outstanding Principal and the
accrued and unpaid Interest thereon.  The
Company shall make such payment on the Maturity Date, together with the amount
of any accrued and unpaid interest on such Principal, by wire transfer of immediately
available funds to an account designated in writing by the Holder.

2.  INTEREST; INTEREST RATE. Interest on
this Note shall commence accruing on the Issuance Date and shall be computed on
the basis of a 360-day year comprised of twelve 30-day months and shall be
payable in arrears for each Calendar Quarter on the first day of the succeeding
Calendar Quarter during the period beginning on the Issuance Date and ending
on, and including, the Maturity Date (each, an “Interest Date”) with the first Interest Date being May 1, 2007
by wire transfer of immediately

payable funds. 
Interest shall be payable on each Interest Date in cash.  Prior to the payment of Interest on an
Interest Date, Interest on this Note shall accrue at the Interest Rate and be
payable in cash upon any conversion in accordance with Section 4.  Upon the occurrence and during the
continuance of any default in the payment of the Interest or Principal when
due, the Interest Rate shall be increased by two percent (2.0%) per annum (the “Default Rate”).  In the event that such Interest or Principal
payment default is subsequently cured, the adjustment referred to in the
preceding sentence shall cease to be effective as of the date of such
cure.  Interest on overdue interest shall
accrue at the same rate compounded quarterly.

3.  SUBORDINATION.  The Principal and Interest on this Note is
expressly subordinated in right of payment to (i) that certain Senior Secured
Note in the principal amount of $7,500,000 issued on March 23, 2006 (“Senior Secured Note”), and (ii) any borrowed money by the
Company designated as senior debt by the Board of Directors (“Indebtedness”).  Upon payment or distribution of the assets of
the Company to creditors upon any dissolution, winding up, liquidation,
reorganization, recapitalization or readjustment of the Company or its
property, payment of the Principal and Interest will be subordinate to the
prior payment in full of all such Indebtedness. 
No payment of Principal or Interest may be made by the Company if (i) at
any time there exists (or after giving effect to the payment there would exist)
an event of default under the agreement pursuant to which such Indebtedness has
been issued, or (ii) full payment of amounts then due for principal and
interest on the Indebtedness has not been made or duly provided for.  The Holder of this Note shall execute any
further documentation reasonably requested by a lender to effect the foregoing.

4.  CONVERSION OF NOTES.  Subject to Sections 7(a) and 15, this Note
shall be convertible into shares of common stock of the Company, $0.0001 par
value (the “Common Shares”), on
the terms and conditions set forth in this Section 4.

(a)  Conversion Right.  At any time or times on or after the Issuance
Date and prior to repayment, the Holder shall be entitled to convert any portion
of the outstanding and unpaid Conversion Amount (as defined below) into fully
paid and nonassessable Common Shares in accordance with Section 4(c), at
the Conversion Rate (as defined below); provided  that, following
a Fundamental Transaction, this Note shall be entitled to convert only into
such consideration as the Common Shares outstanding prior thereto became
entitled to receive, as appropriately adjusted to give effect to the Conversion
Rate in this Note.  The Company shall not
issue any fraction of a Common Share upon any conversion.  If the issuance would result in the issuance
of a fraction of a Common Share, the Company shall round such fraction of a
Common Share to the nearest whole share.

(b)  Conversion Rate.  The number of Common Shares issuable upon
conversion of any Conversion Amount pursuant to Section 4(a) shall be
determined by dividing (x) such Conversion Amount by (y) the
Conversion Price (such number of shares, the “Conversion Rate”).

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(i)  “Conversion Amount” means the portion of the Principal to be
converted or redeemed with respect to which this determination is being made.

(ii)  “Conversion Price” means, as of any Conversion Date (as
defined below) or other date of determination a price equal to $10.00, subject
to adjustment as provided herein.

(c)  Mechanics of Conversion.

(i)  Optional
Conversion.  To convert any
Conversion Amount greater than $500,000 into Common Shares on any date (a “Conversion Date”), the Holder shall: (A) transmit by
facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m.,
New York Time, on such date, a copy of an executed notice of conversion (the “Conversion Notice”) to the Company and (B) if required
by Section 4(e), surrender this Note to the Company (or an indemnification
undertaking with respect to this Note in the case of its loss, theft or
destruction).  On or before the first (1st) Trading Day following the
date of receipt of a Conversion Notice, the Company shall transmit by facsimile
a confirmation of receipt of such Conversion Notice to the Holder and the
Transfer Agent.  On or before the
third (3rd) Trading
Day following the date of receipt of a Conversion Notice (the “Share Delivery Date”), the Company shall: (1) (x) provided
that the Transfer Agent is participating in the DTC Fast Automated Securities
Transfer Program, credit such aggregate number of Common Shares or other
consideration to which the Holder shall be entitled to the Holder’s balance
account with DTC through its Deposit Withdrawal Agent Commission system or
(y) if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, issue and deliver to the address as specified in
the Conversion Notice, a certificate, registered in the name of the Holder, for
the number of Common Shares or other consideration to which the Holder shall be
entitled, (2) pay to the Holder in cash an amount equal to the accrued and
unpaid Interest on the Conversion Amount up to and including the Conversion
Date and (3) for any conversions prior to
March 28, 2011 in connection with a Fundamental Transaction, pay any applicable
Make-Whole Premium in accordance with Section 4(d). The Person or Persons
entitled to receive the Common Shares issuable upon a conversion of this Note
shall be treated for all purposes as the record holder or holders of such
Common Shares on the Conversion Date.

(d)  Make-Whole
Premium.

(i)  If a Fundamental Transaction
occurs prior to March 28, 2011, the Company also shall pay the Make-Whole
Premium, if any, to the Holder who elects to convert its Note pursuant to this
Section or elects to have its Note redeemed pursuant to Section 6(a)
hereof pursuant to the Fundamental Transaction. The Make-Whole Premium, if any,
shall be paid in cash on the Fundamental Transaction Effective Date  to Holders who exercise such conversion right.

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(1)  The “Make-Whole Premium” shall be determined as
follows:

(2)  If the Fundamental
Transaction Effective Date is after March 28, 2011, no Make-Whole Premium shall
be paid;

(3)  If
the Stock Price equals or exceeds $17.50 (subject to adjustment pursuant to
Section 8), no Make-Whole Premium shall be paid; and

(4)  In all other cases, the
Make-Whole Premium shall be an amount equal to the interest that otherwise
would accrue on the Principal of the Note had it remained outstanding from the
date hereof through March 28, 2011, less the amount of interest accrued and
paid prior to the date of conversion. 
Notwithstanding anything to the contrary set forth herein, the
Make-Whole Premium, if any, shall be paid in cash and shall not increase or
affect the Conversion Amount, Conversion Price, or the number of Common Shares
issuable upon conversion of this Note.

(ii)  For purposes of Section
4(d), the following terms shall have the meanings indicated:

(1)  “Fundamental Transaction Effective Date” means the date that
a Fundamental Transaction becomes effective.

(2)  “Stock Price” means the price paid per Common Share in the
transaction constituting the Fundamental Transaction, determined as follows:

(i)  If holders of the Common
Shares receive only cash in the transaction constituting the Fundamental
Transaction, then the Stock Price shall equal the cash amount paid per Common
Share; and

(ii)  In all other cases, the
Stock Price shall be the average of the daily Trading Prices per Common Share
for the ten consecutive Trading Day period ending on the Trading Day
immediately preceding the Fundamental Transaction Effective Date.

(e)  Book-Entry.  Notwithstanding anything to the contrary set
forth herein, upon conversion of any portion of this Note in accordance with
the terms hereof, the Holder shall not be required to physically surrender this
Note to the Company unless (A) the full Conversion Amount represented by
this Note is being converted or (B) the Holder has provided the Company
with prior written notice (which notice may be included in a Conversion Notice)
requesting reissuance of this Note upon physical surrender.  The Holder and the Company shall maintain
records showing the Principal converted and the dates of such conversions or
shall use such other method, reasonably satisfactory to the Holder and the
Company, so as not to require physical surrender of this Note upon conversion.

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5.  RIGHTS UPON EVENT OF DEFAULT.

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

(i)  The Company’s failure to convert a Note in
accordance with Section 4 within five (5) Trading Days after the
applicable Conversion Date;

(ii)  The Company shall fail to redeem or repay the
amounts due under the 2006 Notes pursuant to Section 4.6 of the Securities
Purchase Agreement;

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

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

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

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

(vii)  The Company or any Significant Subsidiary
shall (A) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(B) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (v) of this
Section, (C) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar

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official for the Company or any Significant
Subsidiary or for a substantial part of its assets, (D) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (E) make a general assignment for the benefit of creditors or (F) take
any action for the purpose of effecting any of the foregoing;

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

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

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

(b)  Event of Default Redemption Right.  Promptly after the occurrence of an Event of
Default with respect to this Note, the Company shall deliver written notice
thereof via facsimile and overnight courier (an “Event of Default Notice”) to the Holder.  The Holder, upon the approval of Holders
holding more than 50% of the aggregate principal balance of the Notes then
outstanding, by written notice to the Company, may declare all outstanding
amounts payable by the Company hereunder to be immediately due and payable
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived, anything contained herein to the contrary
notwithstanding (“Redemption Price”).  Upon the occurrence or existence of any Event
of Default described in Sections (v) or (vi)  hereof,
immediately and without notice, all outstanding amounts payable by the Company
hereunder shall automatically become immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived, anything contained herein to the contrary
notwithstanding.  In addition to the
foregoing remedies, upon the occurrence or existence of any Event of Default,
the Holder may exercise, upon the approval of Holders holding more than a
majority of the aggregate principal balance of the Notes, any other right,
power or remedy permitted to it by law, either by suit in equity or by action
at law, or both.

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6.  RIGHTS UPON FUNDAMENTAL TRANSACTION.

(a)  Fundamental Transaction Redemption Right.  No sooner than twenty (20) days nor
later than ten (10) days prior to the consummation of a Fundamental
Transaction, but not prior to the public announcement of such Fundamental
Transaction, the Company shall deliver written notice thereof via facsimile and
overnight courier to the Holder (a “Fundamental
Transaction Notice”).  At any
time during the period (the “Fundamental Transaction
Period”) beginning after the Holder’s receipt of a Fundamental
Transaction Notice and ending on the date that is one (1) Trading Day
before the Fundamental Transaction Effective Date, the Holder, at its option,
may require the Company to redeem all or any portion of this Note by delivering
written notice thereof (“Fundamental Transaction
Redemption Notice”) to the Company, which Fundamental Transaction
Redemption Notice shall indicate the Conversion Amount the Holder is electing
to redeem.  The portion of this Note
subject to redemption pursuant to this Section 6 shall be redeemed by the
Company in cash at a price equal to 101% of the Principal plus any accrued but
unpaid Interest thereon up to, but not including, the Fundamental Transaction
Effective Date (the “Fundamental Transaction
Redemption Price”) on the Fundamental Transaction Effective
Date.  In addition, for any redemption
made prior to March 28, 2011, the Holder shall also be paid the Make-Whole
Premium, if any, as applicable. 
Redemptions required by this Section 6 shall have priority to
payments to stockholders in connection with a Fundamental Transaction.  To the extent redemptions required by this
Section 6 are deemed or determined by a court of competent jurisdiction to be
prepayments of the Note by the Company, such redemptions shall be deemed to be
voluntary prepayments.  Notwithstanding anything
to the contrary in this Section 6, until the Fundamental Transaction
Redemption Price (together with interest thereon and the Make-Whole Premium, if
any) is paid in full, the Conversion Amount submitted for redemption under this
Section 6 may be converted, in whole or in part pursuant to Section 4.  The parties hereto agree that in the event of
the Company’s redemption of any portion of the Note under this Section 6, the
Holder’s damages would be uncertain and difficult to estimate because of the parties’
inability to predict future interest rates and the uncertainty of the
availability of a suitable substitute investment opportunity for the
Holder.  Accordingly, any redemption
premium due under this Section 6 is intended by the parties to be, and shall be
deemed, a reasonable estimate of the Holder’s actual loss of its investment
opportunity and not as a penalty.

7.  RIGHTS UPON CERTAIN OTHER CORPORATE
EVENTS.

(a)  Corporate Events.  Subject to the Section 4(d) and 6 herein as
applicable, prior to the consummation of any Fundamental Transaction pursuant
to which holders of Common Shares are entitled to receive securities or other
assets with respect to or in exchange for Common Shares (a “Corporate Event”), the Company shall make appropriate
provision to insure that the Holder will thereafter have the right to receive
upon a conversion of this Note, such securities or other assets received by the
holders of Common Shares in connection with the consummation of such Corporate
Event in such amounts as the Holder would have been entitled to receive had
this Note initially been issued with conversion

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rights for the form of such consideration (as
opposed to Common Shares) at a conversion rate for such consideration
commensurate with the Conversion Rate. 
The provisions of this Section shall apply similarly and equally to
successive Corporate Events unless or until the Note is redeemed or repaid.

8.  ADJUSTMENT OF CONVERSION PRICE UPON
SUBDIVISION OR COMBINATION OF COMMON SHARES.  If the Company at any time on or after the
Issuance Date subdivides (by any share split, share dividend, recapitalization
or otherwise) one or more classes of its outstanding Common Shares into a
greater number of shares, the Conversion Price in effect immediately prior to
such subdivision will be proportionately reduced.  If the Company at any time on or after the
Issuance Date combines (by combination, reverse share split or otherwise) one
or more classes of its outstanding Common Shares into a smaller number of
shares, the Conversion Price in effect immediately prior to such combination
will be proportionately increased.

9.  COVENANTS.

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

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

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

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

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

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

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

 

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

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

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

(E)           indebtedness under the Convertible
Notes;

(F)           indebtedness that is by its terms
subordinate to the indebtedness under the Convertible Notes up to $15,000,000;

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

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

(I)            up to $2,500,000 of additional
indebtedness in the aggregate outstanding at any time; and

(J)            inter-company indebtedness for valid
business purposes and consistent with the Company’s past practices.

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

 

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

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

(C)           Licenses and
sublicenses of the Company’s Intellectual Property Rights in the ordinary
course of business;

(D)          Liens created in
connection with Section 9(b)(i)(B),(G), (H) and (J) above;

(iii)  enter into any transaction, including,
without limitation, the purchase, sale, or exchange of property or the
rendering of any service with any Affiliate, except pursuant to the reasonable
requirements of the Company’s or such Subsidiary’s business and upon fair and
reasonable terms no less favorable to the Company or such Subsidiary, than
would obtain in a comparable arm’s length transaction with a Person not an
Affiliate as reasonably determined by the Audit Committee of the Company’s
Board of Directors;

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

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

(vi)  create or acquire any new Significant
Subsidiary;

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

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

10.  RESERVATION
OF AUTHORIZED SHARES.

(a)  Reservation.
The Company shall have sufficient authorized and unissued Common Shares for
each of the Notes equal to the number of Common Shares necessary to effect the
conversion at the Conversion Rate with respect to the Conversion Amount of each
such Note as of the Issuance Date. So long as any of the Notes are outstanding,
the Company shall take all action necessary to reserve and keep available out
of its authorized and unissued Common Shares, solely for the purpose of
effecting the conversion of the Notes, the number of Common Shares as shall
from time to time be necessary to effect the conversion of all of the Notes
then outstanding; provided that at no time shall the number of Common Shares so
available be less than the number of shares required to be reserved by the
previous sentence (without regard to any limitations on conversions) (the “Required Amount”).

11.   REDEMPTION MECHANICS.  In the event that the Company does not pay
the applicable Redemption Price to the Holder within five (5) Trading Days, at
any time thereafter and until the Company pays such unpaid Redemption Price in
full, the Holder shall have the option, in lieu of redemption, to require the
Company to promptly return to the Holder all or any portion of this Note
representing the Conversion Amount that was submitted for redemption and for
which the applicable Redemption Price has not been paid.  Upon the Company’s receipt of such notice,
(x) the Redemption Notice shall be null and void with respect to such
Conversion Amount, (y) the Company shall immediately return this Note, or
issue a new Note (in accordance with Section 16(d)) to the Holder representing
such Conversion Amount.

12.  RIGHTS UPON DISTRIBUTION OF ASSETS.  If the Company shall declare or make any
dividend or other distribution of its assets (or rights to acquire its assets)
to holders of Common Shares, by way of return of capital or otherwise
(including, without limitation, any distribution of cash, shares or other
securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or other
similar transaction) (a “Distribution”),
at any time after the issuance of this Note, then, in each such case any
Conversion Price in effect immediately prior to the close of business on the
record date fixed for the determination of holders of Common Shares entitled to
receive the Distribution shall be reduced, effective as of the close of
business on such record date, to a price determined by multiplying such
Conversion Price by a fraction of which (i) the numerator shall be the
Closing Bid Price of the Common Shares on the trading day immediately preceding
such record date minus the value of the Distribution (as determined in good
faith by the Company’s Board of Directors) applicable to one Common Share, and
(ii) the denominator shall be the Closing Bid Price of the Common Shares
on the trading day immediately preceding such record date.

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

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

15.  RESTRICTIONS ON CONVERSION.  The Company shall not effect any conversion
of this Note, and the Holder of this Note shall not have the right to convert
any portion of this Note pursuant to Section 4(a), to the extent that after
giving effect to such conversion, and taking into account all other shares of
Common Stock beneficially owned by the Holder and its Affiliates,  the Holder (together with the Holder’s Affiliates) would
beneficially own in excess of 14.80% (the “Maximum  Percentage”) of the number of shares of Common Stock
outstanding immediately after giving effect to such conversion.  For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its
Affiliates shall include the number of shares of Common Stock issuable upon
conversion of this Note with respect to which the determination of such
sentence is being made, but shall exclude the number of shares of Common Stock
which would be issuable upon (A) conversion of the remaining, nonconverted
portion of this Note beneficially owned by the Holder or any of its Affiliates
and (B) exercise or conversion of the unexercised or nonconverted portion of
any other securities of the Company subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially owned by the
Holder or any of its Affiliates, in each case if such conversion or exercise of
such instrument is not permitted in order to keep the Holder’s beneficial
ownership of Common Stock at or below the Maximum Percentage. Except as set
forth in the preceding sentence, for purposes of this Section 15, beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange
Act. For purposes of this Section 15, in determining the number of outstanding
shares of Common Stock, the Holder may rely on the number of outstanding shares
of Common Stock as reflected in (x) the Company’s most recent Form 10-K, Form
10-Q or Form 8-K, as the case may be, (y) a more recent public announcement by
the Company or (z) any other notice by the Company or the Transfer Agent
setting forth the number of shares of Common Stock outstanding.  For any reason and at any time, upon the
written or oral request of the Holder, the Company shall within one (1)
Business Day confirm orally and in writing to the Holder the number of shares
of Common Stock then outstanding. In any case, the number of outstanding shares
of Common Stock shall be determined after giving effect to the conversion or
exercise of securities of the Company, including this Note, by the Holder or
its Affiliates since the

 12
 

date as of which such number of outstanding shares of
Common Stock was reported.  By written
notice to the Company, the Holder may from time to time increase or decrease
the Maximum Percentage to any other percentage specified in such notice so long
as such specified Maximum Percentage shall not exceed 14.80%; provided that (i)
any such increase will not be effective until the sixty-first (61st) day after such notice is
delivered to the Company, and (ii) any such increase or decrease will apply
only to the Holder and not to any other holder of Notes.

16.  REISSUANCE OF THIS NOTE.

(a)  Transfer.  If this Note is to be transferred, the Holder
shall surrender this Note to the Company, whereupon the Company will forthwith
issue and deliver upon the order of the Holder a new Note (in accordance with
Section 16(d)), registered as the Holder may request, representing the
outstanding Principal being transferred by the Holder and, if less then the
entire outstanding Principal is being transferred, a new Note (in accordance
with Section 16(d)) to the Holder representing the outstanding Principal not
being transferred.  The Holder and any
assignee, by acceptance of this Note, acknowledge and agree that, by reason of
the provisions of Section 4(e) following conversion or redemption of any
portion of this Note, the outstanding Principal represented by this Note may be
less than the Principal stated on the face of this Note.

(b)  Lost, Stolen or Mutilated
Note.  Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Note, and, in the case of loss, theft or destruction, of
any indemnification undertaking by the Holder to the Company in customary form
and, in the case of mutilation, upon surrender and cancellation of this Note,
the Company shall execute and deliver to the Holder a new Note (in accordance
with Section 16(d)) representing the outstanding Principal.

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

(d)  Issuance of New Notes.  Whenever the Company is required to issue a
new Note pursuant to the terms of this Note, such new Note (i) shall be of
like tenor with this Note, (ii) shall represent, as indicated on the face of
such new Note, the Principal remaining outstanding (or in the case of a new
Note being issued pursuant to Section 16(a) or Section 16(c), the Principal
designated by the Holder which, when added to the principal represented by the
other new Notes issued in connection with such issuance, does not exceed the
Principal remaining outstanding under this Note immediately prior to such
issuance of new Notes), (iii) shall have an issuance date, as indicated on
the face of such new Note, which

 13
 

is the same as
the Issuance Date of this Note, (iv) shall have the same rights and conditions
as this Note, and (v) shall represent accrued and unpaid Interest on the
Principal of this Note, from the Issuance Date.

17.  REMEDIES, CHARACTERIZATIONS, OTHER
OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies provided in this Note shall be
cumulative and in addition to all other remedies available under this Note and
any of the other Transaction Documents at law or in equity (including a decree
of specific performance and/or other injunctive relief).  Amounts set forth or provided for herein with
respect to payments, conversion and the like (and the computation thereof)
shall be the amounts to be received by the Holder and shall not, except as
expressly provided herein, be subject to any other obligation of the Company
(or the performance thereof).  The
Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Holder and that the remedy at law for any such
breach may be inadequate.  The Company
therefore agrees that, in the event of any such breach or threatened breach,
the Holder shall be entitled, in addition to all other available remedies, to
an injunction.

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

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

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

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

 14
 

detail a description of such action and the reason
therefore.  Without limiting the
generality of the foregoing, the Company will give written notice to the Holder
(i) immediately upon any adjustment of the Conversion Price, setting forth
in reasonable detail, and certifying, the calculation of such adjustment and
(ii) at least twenty (20) days prior to the date on which the Company
closes its books or takes a record (A) with respect to any dividend or
distribution upon the Common Shares or (B) for determining rights to vote with
respect to any Fundamental Transaction, dissolution or liquidation, provided in
each case that such information shall be made known to the public prior to or
in conjunction with such notice being provided to the Holder.

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

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

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

25.  INDEMNIFICATION.

(a)  Subject to the limitations herein, the
Company shall indemnify the Holder, and each Affiliate of the Holder (each such
Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, (excluding the legal fees of counsel
for any Indemnitee), incurred by or asserted against any Indemnitee by a third
party arising out of, in connection with, or as a result of:  (i) the execution or delivery of this Note,
the performance by the Company and its Subsidiaries

 15
 

hereto of their respective obligations
hereunder or the consummation of or the use of the proceeds therefrom, or
(ii) the material breach by the Company or any Subsidiary of (a) any
representation, warranty, covenant or agreement contained herein or (b) any
representation or warranty in Section 3.1 of the Securities Purchase Agreement,
as they relate to this Note; provided  that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and non-appealable judgment to have resulted from the
gross negligence or willful misconduct of such Indemnitee.

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

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

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

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

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

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

 16
 

(c)  “Eligible
Market” means the Principal Market, The New York Stock Exchange,
Inc., The Nasdaq Global Select Market or The Nasdaq Capital Market.

(d)  “Fundamental
Transaction” means that the Company shall, directly or indirectly,
in one or more related transactions, (i) consolidate or merge with or into
(whether or not the Company, is the surviving corporation) another Person, or
(ii) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of the Company to another Person,
or (iii) be subject to an offer from another Person or group of related Persons
(as defined in Sections 13(d) and 14(d) of the Exchange Act) other than the
Holder to make a purchase, tender or exchange offer that is accepted by the
holders of more than the 50% of the outstanding Voting Shares (not including
any Voting Shares held by the Person or Persons making or party to, or
associated or affiliated with the Persons making or party to, such purchase,
tender or exchange offer), or (iv) consummate a share purchase agreement or other
business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person or
group of related Persons (as defined in Sections 13(d) and 14(d) of the
Exchange Act) whereby such other Person or group acquires more than the 50% of
the outstanding Voting Shares (not including any Voting Shares held by the
other Person or other Persons making or party to, or associated or affiliated
with the other Persons making or party to, such share purchase agreement or
other business combination), provided  however, a Fundamental
Transaction shall not include (i) any reorganization, recapitalization or
reclassification of the Common Shares in which holders of the Company’s voting
power immediately prior to such reorganization, recapitalization or
reclassification continue after such reorganization, recapitalization or
reclassification to hold publicly traded securities and, directly or
indirectly, the voting power of the surviving entity or entities necessary to
elect a majority of the members of the board of directors (or their equivalent
if other than a corporation) of such entity or entities, or (ii) pursuant to a
migratory merger effected solely for the purpose of changing the jurisdiction
of incorporation of the Company.

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

(f)  “Maturity
Date” means March 27, 2012.

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

(h)  “Principal
Market” means The Nasdaq Global Market.

 17
 

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

(j)  “Registration
Rights Agreement” means that certain registration rights agreement
dated as of the Closing Date by and among the Company and the initial holders
of the Notes relating to, among other things, the registration of the resale of
the Common Shares issuable upon conversion of the Notes.

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

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

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

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

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

[Signature Page
Follows]

 18
 

IN WITNESS WHEREOF, the Company has caused this Note
to be duly executed as of the Issuance Date set out above.

 

	
  

  	
  VYYO INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 19Exhibit 10.3

 

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

This AMENDED AND RESTATED REGISTRATION
RIGHTS AGREEMENT (this “Agreement”),
is dated as of March 28, 2007, by and among Vyyo Inc., a Delaware
corporation (the “Company”), and
the undersigned Investors (each, a “Investor”,
and collectively, the “Investors”).

 

WHEREAS:

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

B. To induce the Investors to execute and deliver the Securities
Purchase Agreements, the Company has agreed to provide the registration rights
under the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the “Securities Act”), and applicable state securities laws set
forth in this Agreement.

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

1. Definitions.

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

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

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

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

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

  
  
 

 

(e) “Investor”
means an Investor or any transferee or assignee thereof to whom an Investor
assigns its rights under this Agreement and who agrees to become bound by the
provisions of this Agreement in accordance with Section 9 and any transferee or
assignee thereof to whom a transferee or assignee assigns its rights under this
Agreement and who agrees to become bound by the provisions of this Agreement in
accordance with Section 9.

 

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

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

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

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

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

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

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

2. Registration.

(a) Mandatory Registration.  The Company shall prepare and, as soon as
reasonably practicable, file with the SEC the Registration Statement on Form
S-3 covering the resale of all of the Registrable Securities.  In the event that Form S-3 is unavailable for
such a registration, the Company shall use such other form as is available for
such a registration on another appropriate form reasonably acceptable to the
Required Holders, subject to the provisions of Section 2(d).  The Registration Statement shall contain
(except if otherwise directed by the Required Holders) “Selling Shareholders”
and “Plan of Distribution” sections to be mutually agreed upon by the Company
and the Required Holders.  The Company
shall use reasonable commercial efforts to have the Registration Statement
declared effective by the SEC as soon as practicable, but in no event later
than the Effectiveness Deadline.

 2
 

 

(b) Legal Counsel. 
Subject to Section 5 hereof, the Required Holders shall have the right
to select one legal counsel to review and oversee any registration pursuant to
this Section 2 (“Legal Counsel”),
which shall be Thelen Reid Brown Raysman & Steiner LLP or such other
counsel as thereafter designated by the Required Holders.  The Company and Legal Counsel shall
reasonably cooperate with each other in performing the Company’s obligations
under this Agreement.

 

(c) Ineligibility for Form S-3.  In the event that Form S-3 is not available
for the registration of the resale of Registrable Securities hereunder, the
Company shall (i) register the resale of the Registrable Securities on another
appropriate form reasonably acceptable to the Required Holders and (ii)
undertake to register the Registrable Securities on Form S-3 as soon as either
such form is available, provided that the Company shall maintain the
effectiveness of the Registration Statement then in effect until such time as a
Registration Statement on Form S-3 covering the Registrable Securities has been
declared effective by the SEC or the Company is no longer obligated to maintain
a registration statement for the Registrable Securities pursuant to the terms
hereof.

3. Related Obligations.

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

 

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

 

 3
 

 

(b) The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the Securities Act, as may be necessary to keep such Registration
Statement effective at all times during the Registration Period, and, during
such period, comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such Registration
Statement.  In the case of amendments and
supplements to a Registration Statement which are required to be filed pursuant
to this Agreement (including pursuant to this Section 3(b)) by reason of the
Company filing a report on Form 10-Q, Form 10-K or any analogous report under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company shall have incorporated such
report by reference into such Registration Statement, if applicable, or, if
necessary, shall file such amendments or supplements with the SEC on the same
day on which the Exchange Act report is filed which created the requirement for
the Company to amend or supplement such Registration Statement.

 

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

 

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

 4
 

 

(e) The Company shall use commercially
reasonable efforts to (i) register and qualify, unless an exemption from
registration and qualification applies, the resale by Investors of the
Registrable Securities covered by a Registration Statement under such other
securities or “blue sky” laws of all said jurisdictions in the United States
where Investors intend to sell Shares, (ii) prepare and file in those
jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however,
that the Company shall not be required in connection therewith or as a
condition thereto to (x) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(e) or where
qualification necessitates undue time or expense, (y) subject itself to general
taxation in any such jurisdiction, or (z) file a general consent to service of
process in any such jurisdiction.  The
Company shall promptly notify Legal Counsel and each Investor who holds
Registrable Securities of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or “blue sky” laws of any
jurisdiction in the United States or its receipt of actual notice of the
initiation or threatening of any proceeding for such purpose.

(f) The Company shall notify Legal Counsel
and each Investor in writing of the happening of any event, as promptly as
practicable after becoming aware of such event, as a result of which the
prospectus included in a Registration Statement, as then in effect, includes an
untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading
(provided that in no event shall the Company deliver such notice to the
Investors without the Investors’ prior consent if such notice contains any material,
nonpublic information), and, subject to Section 3(r), promptly prepare a
supplement or amendment to such Registration Statement to correct such untrue
statement or omission, and deliver ten (10) copies of such supplement or
amendment to Legal Counsel and each Investor (or such other number of copies as
Legal Counsel or such Investor may reasonably request).  The Company shall also promptly notify Legal
Counsel and each Investor in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a Registration
Statement or any post-effective amendment has become effective (notification of
such effectiveness shall be delivered to Legal Counsel and each Investor by
facsimile or e-mail on the same day of such effectiveness and by overnight
mail), (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related prospectus or related information, and (iii)
of the Company’s reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.

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

 

 5

 

(h) The Company agrees that, if Goldman, Sachs & Co. (“Goldman Sachs” and, together with any other affiliate of
Goldman Sachs, the “GS Entities” or
the “GS Entity”) or any GS Entity could
reasonably be deemed to be an “underwriter,” as defined in Section 2(a)(11) of
the Securities Act, in connection with any registration of the Company’s
securities of any GS Entity pursuant to this Agreement, and any amendment or
supplement thereof (any such registration statement or amendment or supplement
a “GS Underwriter Registration Statement”),
then the Company will cooperate with such GS Entity in allowing such GS Entity
to conduct customary “underwriter’s due diligence” with respect to the Company
and satisfy its obligations in respect thereof. 
In addition, at Goldman Sachs’ request, the Company will use
commercially reasonable efforts to cause its auditor or counsel to furnish to
Goldman Sachs, on the first date of the effectiveness of the GS Underwriter
Registration Statement (i) a letter, dated such date, from the Company’s
independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to Goldman Sachs, and (ii) an
opinion, dated as of such date, of counsel representing the Company for
purposes of such GS Underwriter Registration Statement, in form, scope and
substance as is customarily given in an underwritten public offering,
including, without limitation, a standard “10b-5” statement for such offering,
addressed to Goldman Sachs; such comfort letter, legal opinion and/or 10b-5
statement shall be furnished to Goldman Sachs (i) at no additional cost to
Goldman Sachs if they are already provided to another party in connection with
a GS Underwriter Registration or (ii) at Goldman Sachs’ expense if such comfort
letter, legal opinion and/or 10b-5 statement are not otherwise being provided
in connection with a GS Underwriter Statement. 
The Company will also permit legal counsel to Goldman Sachs to review
and comment upon any such GS Underwriter Registration Statement at least five
business days prior to its filing with the SEC and all amendments and
supplements to any such GS Underwriter Registration Statement within a
reasonable number of days prior to their filing with the SEC and not file any
GS Underwriter Registration Statement or amendment or supplement thereto in a
form to which Goldman Sachs’ legal counsel reasonably and timely objects.

 

(i) The Company shall use commercially
reasonable efforts either to (i) cause all of the Registrable Securities
covered by a Registration Statement to be listed on each securities exchange on
which securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange, or (ii) secure designation and quotation of
all of the Registrable Securities covered by a Registration Statement on the
American Stock Exchange or (iii) if, despite the Company’s commercially
reasonable efforts to satisfy, the preceding clauses (i) or (ii) the Company is
unsuccessful in satisfying the preceding clauses (i) or (ii), to secure the
inclusion for quotation on The Nasdaq SmallCap Market for such Registrable
Securities and, without limiting the generality of the foregoing, to use its
best efforts to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. (“NASD”) as such with respect to such Registrable
Securities.  The Company shall pay all
fees and expenses in connection with satisfying its obligation under this
Section 3(i).

(j) The Company shall cooperate with the
Investors who hold Registrable Securities being offered and, to the extent
applicable, facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legend) representing the Registrable Securities to be
offered and resold pursuant to a Registration Statement and enable such
certificates to be in

 6
 

 

such
denominations or amounts, as the case may be, as the Investors may reasonably
request and registered in such names as the Investors may request.

 

(k) If requested by an Investor, the Company
shall (i) as soon as practicable incorporate in a prospectus supplement or
post-effective amendment such information as an Investor reasonably requests to
be included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being offered or sold, the purchase price
being paid therefor and any other terms of the offering of the Registrable
Securities to be sold in such offering; (ii) as soon as practicable make all
required filings of such prospectus supplement or post-effective amendment
after being notified of the matters to be incorporated in such prospectus
supplement or post-effective amendment; and (iii) as soon as practicable,
supplement or make amendments to any Registration Statement if reasonably
requested by an Investor holding any Registrable Securities.

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

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

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

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

(p)
Notwithstanding anything to the contrary herein, at any time the Company may
delay filing the Registration Statement or amendment or supplement thereto or
the disclosure of material, non-public information concerning the Company, if,
in the good faith opinion of the Board of Directors, the disclosure of which at
the time would be seriously detrimental to the Company and its stockholders, (a
“Grace Period”); provided, that
the Company shall promptly (i) notify the Investors in writing of the existence
of material, non-public information giving rise to a Grace Period (provided
that in each notice the Company will not disclose the content of such material,
non-public information to the Investors without the prior written consent of
the Investors) and the date on which the Grace Period will begin, and
(ii) notify the Investors in writing of the date on which the Grace Period
ends; and, provided

 7
 

 

further, that
the aggregate days in the Grace Periods shall not exceed ninety (90) days
during any three hundred sixty five (365) day period (an “Allowable Grace Period”). 
For purposes of determining the length of a Grace Period above, the
Grace Period shall begin on and include the date the Investors receive the
notice referred to in clause (i) and shall end on and include the later of the
date the Investors receive the notice referred to in clause (ii) and the date
referred to in such notice.  The
provisions of Section 3(g) hereof shall not be applicable during the period of
any Allowable Grace Period.  Upon
expiration of the Grace Period, the Company shall again be bound by the first
sentence of Section 3(f) with respect to the information giving rise thereto
unless such material, non-public information is no longer applicable.  Notwithstanding anything to the contrary, the
Company shall cause its transfer agent to deliver unlegended Common Shares to a
transferee of an Investor in accordance with the terms of the Securities
Purchase Agreements in connection with any sale of Registrable Securities with
respect to which an Investor has otherwise complied with the requirements
therein and entered into a contract for sale, and delivered a copy of the
prospectus included as part of the applicable Registration Statement, prior to
the Investor’s receipt of the notice of a Grace Period and for which the
Investor has not yet settled.

 

(q) If the
Company proposes to register any of its stock or other securities under the
Securities Act in connection with an underwritten public offering of such
securities solely for cash other than on Form S-8 or similar form, the Company
shall, at such time, promptly give each Investor notice of such
registration.  Upon the request of each
Investor given within twenty (20) days after such notice is given by the
Company, the Company shall, subject to the provisions of Section 3(r), cause to
be registered all of the Registrable Securities that each such Investor has
requested to be included in such registration.

(r) In the event
of an underwritten public offering, any participant in the offering shall be
required to enter into an underwriting agreement under the terms and conditions
reasonably negotiated between the Company and the managing underwriter.  All Investors proposing to distribute their
securities through such underwriting shall (together with the Company) enter
into an underwriting agreement in customary form with the managing underwriter
selected for such underwriting by the Company. 
Notwithstanding any other provision of Section 3 herein, if the managing
underwriter determines in its reasonable discretion that the success of the
offering will be jeopardized without a limitation on the number of shares to be
underwritten, the managing underwriter may in its reasonable discretion limit
the Registrable Securities or other securities to be distributed through such
underwriting pro rata, and if necessary, exclude all selling stockholders, to
the extent that other stockholders of the Company that have registration rights
have been similarly limited.  If any
Investor disapproves of the terms of any such underwriting, such Investor may
elect to withdraw therefrom by written notice to the Company and the managing
underwriter.

4. Obligations of the
Investors.

(a) At least five (5) Business Days prior to
the first anticipated filing date of a Registration Statement, the Company
shall notify each Investor in writing of the information the Company requires
from each such Investor if such Investor elects to have any of such Investor’s
Registrable Securities included in such Registration Statement.  It shall be a condition precedent to the
obligations of the Company to complete the registration pursuant to this
Agreement with

 8
 

 

respect to the
Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required in accordance with the
Securities Act to effect the effectiveness of the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.

 

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

(c) Each Investor agrees that, upon receipt
of any notice from the Company of the happening of any event of the kind
described in Section 3(g) or the first sentence of 3(f), such Investor will
immediately discontinue disposition of Registrable Securities pursuant to any
Registration Statement(s) covering such Registrable Securities until such
Investor’s receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(g) or the first sentence of 3(f) or receipt of notice
that no supplement or amendment is required. 
Notwithstanding anything to the contrary, the Company shall cause its
transfer agent to deliver unlegended Shares of Common Stock to a transferee of
an Investor in accordance with the terms of the Securities Purchase Agreements
in connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the Investor’s receipt
of a notice from the Company of the happening of any event of the kind
described in Section 3(g) or the first sentence of 3(f) and for which the Investor
has not yet settled.

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

5. Expenses of
Registration.

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

6. Indemnification.

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

(a) To the fullest extent permitted by law,
the Company will, and hereby does, indemnify, hold harmless and defend each
Investor, the directors, officers, members, partners, employees, agents,
representatives of, and each Person, if any, who controls any Investor within

 9
 

 

the meaning of
the Securities Act or the Exchange Act (each, an “Indemnified Person”), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’
fees, amounts paid in settlement or expenses, joint or several, (collectively, “Damages”) incurred in investigating, preparing or defending
any action, claim, suit, inquiry, proceeding, investigation or appeal taken
from the foregoing by or before any court or governmental, administrative or other
regulatory agency, body or the SEC, whether pending or threatened, whether or
not an indemnified party is or may be a party thereto (“Indemnified
Damages”), to which any of them may become subject insofar as such
Damages (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: 
(i) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or any post-effective amendment thereto or in
any filing made in connection with the qualification of the offering under the
securities or other “blue sky” laws of any jurisdiction in which Registrable
Securities are offered (“Blue Sky Filing”),
or the omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
any untrue statement or alleged untrue statement of a material fact contained
in any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in the light of the
circumstances under which the statements therein were made, not misleading, or
(iii) any violation or alleged violation by the Company of the Securities
Act, the Exchange Act, any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to the offer or
sale of the Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being, collectively, “Violations”). 
Subject to Section 6(c), the Company shall reimburse the Indemnified
Persons, promptly as such expenses are incurred and are due and payable, for
any reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Damages.  Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section
6(a):  (i) shall not apply to a
Damages by an Indemnified Person arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in writing
to the Company by such Indemnified Person expressly for use in connection with
the preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(d); (ii) with respect to any preliminary prospectus,
shall not inure to the benefit of any such Person from whom the Person
asserting any such Damages purchased the Registrable Securities that are the
subject thereof (or to the benefit of any Person controlling such Person) if
the untrue statement or omission of material fact contained in the preliminary
prospectus was corrected in the prospectus, as then amended or supplemented, if
such prospectus was timely made available by the Company pursuant to
Section 3(d), and the Indemnified Person was promptly advised in writing
not to use the incorrect prospectus prior to the use giving rise to a violation
and such Indemnified Person, notwithstanding such advice, used it or failed to
deliver the correct prospectus as required by the Securities Act and such
correct prospectus was timely made available pursuant to Section 3(d);
(iii) shall not be available to the extent such Damages is based on a
failure of the Investor to deliver or to cause to be delivered the prospectus
made available by the Company, including a corrected prospectus, if such
prospectus or corrected prospectus was timely made available by the Company
pursuant to Section 3(d); and (iv) shall

 10
 

 

not apply to
amounts paid in settlement of any Damages if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed.  Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer
of the Registrable Securities by the Investors pursuant to Section 9.

 

(b) In connection with any Registration
Statement in which an Investor is participating, each such Investor agrees to
severally and not jointly indemnify, hold harmless and defend, to the same
extent and in the same manner as is set forth in Section 6(a), the Company,
each of its directors, each of its officers who signs the Registration
Statement and each Person, if any, who controls the Company within the meaning
of the Securities Act or the Exchange Act (each, an “Indemnified Party”), against any Damages or Indemnified
Damages to which any of them may become subject, under the Securities Act, the
Exchange Act or otherwise, insofar as such Damages or actions or proceedings
whether commenced or threatened in respect thereof or Indemnified Damages arise
out of or are based upon any Violation, in each case to the extent, and only to
the extent, that such Violation occurs in reliance upon and in conformity with
written information furnished to the Company by such Investor expressly for use
in connection with such Registration Statement or any post-effective amendment
thereof or any prospectus contained therein; and, subject to Section 6(c), such
Investor will reimburse any legal or other expenses reasonably incurred by an
Indemnified Party in connection with investigating or defending any such
Damages as promptly as such expenses are incurred and are due and payable; provided,
however, that the indemnity agreement contained in this Section 6(b) and
the agreement with respect to contribution contained in Section 7 shall not
apply to amounts paid in settlement of any Damages if such settlement is
effected without the prior written consent of such Investor, which consent
shall not be unreasonably withheld or delayed; provided, further,
however, that the Investor shall be only liable under this Section 6(b),
together with any amount of contribution contained in Section 7, for only that
amount of a Damages or Indemnified Damages as does not exceed the net proceeds
to such Investor as a result of the sale of Registrable Securities pursuant to
such Registration Statement.  Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the transfer
of the Registrable Securities by the Investors pursuant to Section 9.  Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented.

(c) Promptly after receipt by an Indemnified
Person or Indemnified Party under this Section 6 of notice of the commencement
of any action or proceeding (including any governmental action or proceeding)
involving a Damages, such Indemnified Person or Indemnified Party shall, if a
Damages in respect thereof is to be made against any indemnifying party under
this Section 6, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel reasonably satisfactory to the indemnifying party
and the Indemnified Person or the Indemnified Party, as the case may be;
provided, however, that an Indemnified Person or Indemnified Party shall have
the right to retain

 11
 

 

its own counsel
with the reasonable fees and expenses of not more than one counsel for such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party,
the representation by such counsel of the Indemnified Person or Indemnified
Party and the indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or Indemnified
Party and any other party represented by such counsel in such proceeding.  In the case of an Indemnified Person, legal
counsel referred to in the immediately preceding sentence shall be selected by
the Company, subject to the reasonable consent of the Investors holding at
least a majority in interest of the Registrable Securities included in the
Registration Statement to which the Damages relates.  The Indemnified Party or Indemnified Person
shall cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or Damages by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or
Damages.  The indemnifying party shall
keep the Indemnified Party or Indemnified Person reasonably apprised at all
times as to the status of the defense or any settlement negotiations with
respect thereto.  No indemnifying party
shall be liable for any settlement of any action, claim or proceeding effected
without its prior written consent, provided, however, that the indemnifying
party shall not unreasonably withhold, delay or condition its consent.  No indemnifying party shall, without the
prior written consent of the Indemnified Party or Indemnified Person, consent
to entry of any judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party or Indemnified Person of a release from all
liability inrespect to such Damages or litigation.  Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties,
firms or corporations relating to the matter for which indemnification has been
made.  The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement
of any such action shall not relieve such indemnifying party of any liability
to the Indemnified Person or Indemnified Party under this Section 6, except to
the extent that the indemnifying party is prejudiced in its ability to defend
such action.

 

(d) The indemnification required by this
Section 6 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
Indemnified Damages are incurred.

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

7. Contribution.

To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted by law; provided,
however, that:  (i) no Person
involved in the sale of Registrable Securities which Person is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) in connection with such sale shall be entitled to contribution
from any Person

 12
 

 

involved
in such sale of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of Registrable
Securities, together with any amount under Section 6, shall be limited in
amount to the net amount of proceeds received by such seller from the sale of
such Registrable Securities pursuant to such Registration Statement.

 

8. Reports Under the
Exchange Act.

With a view to making available to the Investors the
benefits of Rule 144 promulgated under the Securities Act or any other similar
rule or regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration (“Rule 144”), the Company agrees to:

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

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

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

9. Assignment of
Registration Rights.

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

10. Amendment of
Registration Rights.

Provisions of this Agreement may be amended and the
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of
the Company and the Required Holders. 
Any amendment or waiver

 13
 

 

effected
in accordance with this Section 10 shall be binding upon each Investor and the
Company.  No such amendment shall be
effective to the extent that it applies to less than all of the holders of the
Registrable Securities.  No consideration
shall be offered or paid to any Person to amend or consent to a waiver or
modification of any provision of any of this Agreement unless the same
consideration also is offered to all of the parties to this Agreement.

 

11. Miscellaneous.

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

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

If to the Company:

Vyyo Inc.

6625 The Corners Parkway

Suite 100 

Norcross, Georgia 30092

Telephone:  (678) 282-8000

Facsimile:  (770) 447-2405

Attention:  General Counsel

 

With a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

525 University Avenue

Palo Alto, CA 94301

Telephone:  (650)
470-4500

Facsimile: 
(650) 470-4570

Attention: 
Gregory Smith, Esq.

 

If to an Investor, to its
address and facsimile number set forth on the Schedule of Investors attached
hereto, with copies to such Investor’s representatives as set forth on the
Schedule of Investors, or to such other address and/or facsimile number and/or
to the attention of such other Person as the recipient party has specified by
written notice given to each other party five (5) days prior to the
effectiveness of such change.  Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or

 14
 

 

electronically generated by the sender’s facsimile machine containing
the time, date, recipient facsimile number and an image of the first page of
such transmission or (C) provided by a courier or overnight courier service
shall be rebuttable evidence of personal service, receipt by facsimile or
receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

 

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

(d) All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of New York or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of New
York.  Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting
in The City of New York, Borough of Manhattan, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is brought in an inconvenient forum or that the venue of
such suit, action or proceeding is improper. 
Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by
law.  If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.  EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.

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

(f) Subject to the requirements of Section 9,
this Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.

 15
 

 

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

 

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

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

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

(k) The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent and no rules of strict construction will be applied against any party.

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

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

 16

 

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

 

	
  

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  VYYO INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

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

 

	
  

  	
   

  	
  INVESTORS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GOLDMAN, SACHS & CO.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

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