Exhibit 10.43
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.
SENIOR
SECURED CONVERTIBLE NOTE
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Issuance Date:
June 13, 2008
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Principal: U.S. $3,000,000
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FOR VALUE RECEIVED
, Vyyo Inc., a Delaware corporation, (the “ Company
”), hereby promises to pay to Syntek Capital AG or registered
assigns (“ Holder ”) the amount set out above as
the Principal (as the same may be reduced or increased from time to
time pursuant to the terms hereof, the “ Principal
”) on the Maturity Date unless earlier redeemed, prepaid or
converted (in each case in accordance with the terms hereof), and
to pay interest on any outstanding Principal at the rate and at
such times as are set forth in Section 2 hereof, 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 Senior Secured
Convertible Note, together with the GS Note, are duly authorized
notes of the Company (this note being referred to as the “
Note ” and, together with the GS Note, the “
Notes ”), issued in the aggregate original principal
amount of $41,000,000.00 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 ”), and is entitled to the benefits
thereof and to the exercise of the remedies provided thereby or
otherwise available in respect thereof. Certain
capitalized terms used herein are defined in Section 31
hereof. 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 equal to the then outstanding
Principal and the accrued and unpaid Interest thereon. The
Company shall make such payment on the Maturity Date by wire
transfer of immediately available funds to an account designated in
writing by the Holder. Except as set forth in Section 8,
this Note may be redeemed or prepaid, in whole or in part, without
premium or penalty, at any time upon two (2) Business
Days’ prior written notice to Holder. Any prepayments
of this Note will be applied first to any accrued but unpaid Cash
Interest and then to unpaid Principal. Notwithstanding
anything contained herein to the contrary, the first $4,500,000 of
funds applied by the Company to the prepayment of unpaid Principal
and accrued but unpaid Interest under the Notes will be applied pro
rata to this Note and the GS Note in the ratio of ½:1.
For the avoidance of doubt and for illustrative purposes only, a
prepayment of unpaid Principal and accrued but unpaid Interest
under the Notes in the aggregate amount of $1,500,000 pursuant to
the immediately preceding sentence would be applied $500,000 to
this Note and $1,000,000 to the GS Note.
2.
INTEREST; INTEREST RATE . Interest on this Note
(“ Interest ”) shall accrue at the rate of 20%
per annum (“ Interest Rate ”), of which
(i) an amount equal to 5% per annum (“ Cash
Interest ”) shall be payable in cash on each Interest
Date (as defined below) by wire transfer of immediately available
funds, and (ii) an amount equal to 15% per annum shall be
added to the outstanding Principal amount on each Interest Date (as
defined below). 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 July 1, 2008. 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 ”); provided, that such 2% increase shall be payable
solely in cash. 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 (other than
Interest previously added to the Principal) shall accrue at the
same rate compounded quarterly.
3.
GUARANTY AND SECURITY AGREEMENT . This Note is a
senior secured obligation of the Company. The Company’s
obligations under this Note are (i) guarantied by certain of
its Subsidiaries, and (ii) secured by a security interest in
substantially all of the assets of the Company and such
Subsidiaries, in each case pursuant to the terms and provisions of
that certain Guaranty and Security Agreement, dated as of the date
hereof, by and among the Company, the Holder, and the other parties
identified therein (the “ Security Agreement
”). This Note is subject to the terms and provisions of
the Security Agreement, and the Holder, by its acceptance of this
Note, hereby acknowledges and agrees to such terms and
provisions.
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4.
CONVERSION OF NOTES UPON EQUITY INVESTMENT .
(a)
Optional Conversion Upon Qualified Equity Investment .
If, on or prior to the Maturity Date, there occurs a closing of the
sale and issuance of equity securities of the Company (including
rights, options or warrants to acquire equity securities and any
evidence of indebtedness or securities directly or indirectly
convertible into or exchangeable for equity securities, the “
Equity Securities ”) to investors not affiliated with
the Company that yields aggregate proceeds (cash or non-cash and
net of fees and expenses) to the Company valued at not less than
$51,000,000, including amounts in the form of forgiveness or
cancellation of indebtedness represented by conversion of the Notes
(the “ Qualified Equity Investment ”), then, at
the Holder’s option upon written notice to the Company, the
principal amount of this Note, and any Interest accrued hereon or
thereon, shall convert into shares of such Equity Securities at a
price per share equal to the price per share paid for such Equity
Securities by investors not affiliated with the Company.
(b)
Optional Conversion Upon Non-Qualified Equity Investment
. If, on or prior to the Maturity Date, a Qualified Equity
Investment does not occur, but there occurs a closing of the sale
and issuance of Equity Securities of the Company to investors not
affiliated with the Company in an alternative financing (a “
Non-Qualified Equity Investment ”), then, at the
Holder’s option upon written notice to the Company, the
principal amount of this Note, and any Interest accrued hereon or
thereon, shall convert into shares of the Equity Securities sold in
such Non-Qualified Equity Investment at a price per share equal to
ninety percent (90%) of the price per share paid for such Equity
Securities by investors not affiliated with the Company.
(c)
Exercise of Conversion Right . The Company shall give
the Holder notice of any Qualified Equity Investment or
Non-Qualified Equity Investment promptly upon the occurrence of
such event (the “ Company Notice ”). In
order to exercise the conversion right in this Section 4, the
Holder shall, within thirty (30) days of receipt of the Company
Notice, surrender this Note to the office of the Company and shall
deliver to the Company a notice (a “ Conversion Notice
”) at least two (2) Business Days prior to the intended
exercise thereof specifying the unpaid principal amount of the Note
to be converted to Equity Securities. Upon receiving any
Conversion Notice, the Company shall within five (5) days (or
at such later time as to which the Company and the Holder may
agree) deliver to the address of the Holder as set forth in the
Securities Purchase Agreement, (i) at the Company’s
expense (including any stamp taxes or similar governmental
charges), the appropriate number of duly or validly issued and
fully paid and nonassessable shares of Equity Securities, as
applicable, and one or more stock certificates therefor (in such
number and
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registered in such names as the Holder may
direct) and, (ii) to the extent the Note is converted in part
only, a new Note (with the same terms as the original Note) in
principal amount equal to the unconverted portion of such
Note. Any accrued or unpaid interest on the unpaid principal
amount of the Note being converted, up to and including the date of
conversion, shall be added to the remaining outstanding principal
amount of the Note (and such amount shall bear interest and be
converted into shares of Equity Securities at the time the last
remaining principal amount of the Note is being converted).
Such conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of the Note,
and the Holder shall be treated for all purposes as the record
holder of such shares of Equity Securities as of such
date.
5.
AUTOMATIC CONVERSION UPON CONVERSION OF GS NOTE .
Notwithstanding anything herein to the contrary, upon the
conversion from time to time of all or any portion of the GS Note
in connection with (i) a Qualified Equity Investment or
(ii) a Non-Qualified Equity Investment, a pro
rata portion of this Note in the ratio of 35:1.5 shall
automatically convert upon such Qualified Equity Investment or
Non-Qualified Equity Investment, as applicable, in accordance with
the terms of Section 4 hereof (the “ Automatic Syntek
Conversion ”). Notwithstanding anything herein to
the contrary, the aggregate Principal amount of this Note subject
to the Automatic Syntek Conversion shall not exceed
$1,500,000. For the avoidance of doubt and for illustrative
purposes only, a conversion of $1,000,000 of Principal and accrued
but unpaid Interest in respect of the GS Note would result in
automatic conversion of $42,857.14 of Principal and accrued but
unpaid Interest in respect of this Note.
6.
CONVERSION OF NOTES INTO COMMON SHARES . Subject to
Sections 10 and 18, 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 6.
(a)
Conversion Right . At any time or times on or after
the Issuance Date and prior to repayment or conversion pursuant to
Section 4, 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 6(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.
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(b)
Conversion Rate . The number of Common Shares issuable
upon conversion of any Conversion Amount pursuant to
Section 6(a) shall be determined by dividing
(x) such Conversion Amount by (y) the Conversion Price
(such number of shares, the “ Conversion Rate
”).
(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 $5.00, subject to adjustment as provided herein.
(c)
Mechanics of Conversion . To convert any Conversion
Amount 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 “ Common Conversion Notice
”) to the Company and (B) if required by
Section 6(d), 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 (1
st ) Business Day following the date of receipt of a
Common Conversion Notice, the Company shall transmit by facsimile a
confirmation of receipt of such Common Conversion Notice to the
Holder and the Transfer Agent. On or before the third (3rd)
Business Day following the date of receipt of a Common 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 Common 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 and
(2) pay to the Holder in cash an amount equal to the accrued
and unpaid Cash Interest on the Conversion Amount up to and
including the Conversion Date. 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)
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
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(which notice may be included in a Common
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.
7.
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 the time period specified in
Section 4(c);
(ii)
The Company’s failure to convert a Note in accordance with
Section 6 within five (5) Business Days after the
applicable Conversion Date;
(iii)
The Company shall fail to pay the Interest Payment pursuant to
Section 4.6 of the Securities Purchase Agreement;
(iv)
The Company shall fail to pay any Principal owing under this Note
when due;
(v)
The Company shall fail to pay any Interest owing under this Note
when due, and such failure shall continue for thirty (30)
days;
(vi)
The Company or any Significant Subsidiary shall fail to observe or
perform any other covenant, obligation, condition or agreement
contained in this Note (other than those specified in clauses
(iv) or (v) above) or the Security Agreement, and, to the
extent such failure is capable of being cured, such failure shall
continue for sixty (60) days;
(vii)
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 (iv) and (v) 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;
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(viii)
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;
(ix)
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
(viii) of this Section, (C) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Company or any Significant
Subsidiary or for a substantial part of its assets, (D) file
an answer admitting the material allegations of a petition filed
against it in any such proceeding, (E) make a general
assignment for the benefit of creditors or (F) take any action
for the purpose of effecting any of the foregoing;
(x)
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;
(xi)
This Note or the Security Agreement shall cease, for any reason, to
be in full force and effect, or the Company or any Significant
Subsidiary shall so assert in writing or shall disavow any of its
obligations thereunder;
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(xii)
Any Lien purported to be created under the Security Agreement shall
cease to be, or shall be asserted by the Company or any Significant
Subsidiary not to be, a valid and perfected Lien on any Collateral,
with the priority required by the Security Agreement; or
(xiii)
The Company shall fail to observe or perform any other covenant,
obligation, condition or agreement contained in this Note or the
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, 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 (viii), (ix) or (x) 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.
8.
REDEMPTION RIGHT UPON FUNDAMENTAL TRANSACTION . 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) Business 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 8 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
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including, the Fundamental Transaction
Effective Date (the “ Fundamental Transaction Redemption
Price ”) on the Fundamental Transaction Effective
Date. Redemptions required by this Section 8 shall have
priority to payments to stockholders in connection with a
Fundamental Transaction. To the extent redemptions required
by this Section 8 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
contr
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