VYYO INC, S-1/A, 2000-03-31

VYYO INC
S-1/A, 2000-03-31
COMMUNICATIONS EQUIPMENT, NEC

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 31, 2000

REGISTRATION STATEMENT NO. 333-96129
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

---------------------

VYYO INC.
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C> <C>
Delaware 3670 94-3241270
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>

--------------------------

20400 Stevens Creek Boulevard, 8th Floor
Cupertino, California 95014
(408) 863-2300
(Address, Including Zip Code, and Telephone Number
Including Area Code, of Registrant's Principal Executive Offices)
------------------------------

Davidi Gilo
Chief Executive Officer
Vyyo Inc.
20400 Stevens Creek Boulevard, 8th Floor
Cupertino, California 95014
(408) 863-2300
(Name, Address, Including Zip Code, and Telephone Number
Including Area Code, of Agent for Service)
------------------------------

COPIES TO:

<TABLE>
<S> <C> <C>
Gregory C. Smith, Esq. Donald C. Reinke, Esq. Nora L. Gibson, Esq.
Keith L. Belknap, Jr., Esq. Bruce D. Whitley, Esq. Angela C. Hilt, Esq.
Genae M. Richardson, Esq. Gizelle A. Barany, Esq. Jeanine M. Larrea, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP Bay Venture Counsel, LLP Shelley E. Wharton, Esq.
525 University Avenue, Suite 220 1999 Harrison Street, Suite 1300 Brobeck, Phleger & Harrison, LLP
Palo Alto, California 94301 Oakland, California 94612 One Market, Spear Street Tower,
(650) 470-4500 (510) 273-8750 San Francisco, California 94105
(415) 442-0900
</TABLE>

--------------------------

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 of the Securities Act of
1933, check the following box. / /

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

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- --------------------------------------------------------------------------------
<PAGE>
Prospectus (not complete)

Issued March 31, 2000

The information in this prospectus is not complete and may be changed without
notice. We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and we are not soliciting offers to buy these
securities in any state where the offer or sale is not permitted.
<PAGE>
6,750,000 SHARES

[VYYO LOGO]

COMMON STOCK

------------------

Vyyo Inc. is offering shares of its common stock in an initial public
offering. No public market currently exists for our common stock. We anticipate
that the initial public offering price for our common stock will be between $13
and $15 per share.

------------------------

We have applied to have our common stock approved for quotation on the
Nasdaq National Market under the symbol "VYYO."

------------------------

INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 5.

---------------------

<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Offering Price.................................... $ $
Discounts and Commissions to Underwriters......... $ $
Offering Proceeds to Vyyo Inc..................... $ $
</TABLE>

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

Vyyo Inc. has granted the underwriters the right to purchase up to an
additional 1,012,500 shares of common stock to cover any over-allotments. The
underwriters can exercise this right at any time within 30 days after the
offering. Banc of America Securities LLC expects to deliver the shares of common
stock to investors on , 2000.

BANC OF AMERICA SECURITIES LLC

CIBC WORLD MARKETS

DAIN RAUSCHER WESSELS

WR HAMBRECHT + CO

---------------------

The date of this prospectus is , 2000
<PAGE>
[The graphic is a base station connected to an antenna that transmits to a modem
located in residences and businesses.]
<PAGE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO
BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTION WHERE OFFERS AND SALES ARE
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS OR OF ANY SALE OF OUR COMMON STOCK.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C>
Prospectus Summary.......................................... 1
Risk Factors................................................ 5
Cautionary Note on Forward-Looking Statements............... 21
Use of Proceeds............................................. 22
Dividend Policy............................................. 22
Capitalization.............................................. 23
Dilution.................................................... 24
Selected Consolidated Financial Data........................ 25
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 26
Business.................................................... 33
Management.................................................. 49
Certain Relationships and Related Transactions.............. 65
Principal Stockholders...................................... 73
Description of Capital Stock................................ 76
Shares Eligible for Future Sale............................. 79
Underwriting................................................ 81
Legal Matters............................................... 85
Experts..................................................... 85
Available Information....................................... 85
Index to Consolidated Financial Statements.................. F-1
</TABLE>

------------------------

Our principal executive offices are located at 20400 Stevens Creek
Boulevard, 8th Floor, Cupertino, California 95014, and our telephone number is
(408) 863-2300. Our World Wide Web site address is www.vyyo.com. The information
on our Web site does not constitute part of this prospectus.
<PAGE>
PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS.
YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE RISK FACTORS AND
CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE IN THIS
PROSPECTUS.

VYYO

We supply broadband wireless access systems used by communications service
providers to deliver wireless, high-speed data connections to business and
residential subscribers. Our systems enable data transmission between a service
provider's central location and multiple subscribers, based on the networking
standard used to deliver voice and data over the Internet. Our systems are
designed to allow service providers to rapidly and cost-effectively bridge the
segment of the network that connects the service providers' systems directly to
subscribers, commonly referred to as the last mile. Our first-generation
broadband wireless access system has been commercially deployed at 21 domestic
and international sites and the initial commercial deployment of our
second-generation system occurred in the first quarter of 2000.

Internet and data network traffic growth has created demand for
cost-effective, high-speed communications, as subscribers increasingly rely on
content-rich applications and remote access to data networks. In the United
States and abroad, the communications industry is in varying stages of
deregulation, which has created the opportunity for new competitors to use
existing and emerging broadband technologies to offer multiple communications
services directly to subscribers. There are a number of broadband wire-based
technologies that do not utilize airwaves for data transport, but instead use
copper wire, fiber optic cable or other physical wires to transport voice and
data to and from points on a network. These wire-based technologies deliver
high-speed connections at transmission rates comparable to or, in the case of
fiber optic cable, faster than those delivered by most broadband wireless
technologies, but performance, cost, time for deployment or service availability
may limit the use of these alternative technologies to satisfy the needs of
service providers and subscribers. Broadband wireless technologies deliver
high-speed connections and offer service providers the ability to rapidly and
cost-effectively expand their current market coverage or to enter new markets
while avoiding the limitations of the existing wire-based infrastructure.

Our systems are deployed for use at the frequencies licensed for two-way
broadband communication at transmission rates comparable to most wire-based
technologies. Our second-generation system, which is based on the cable
industry's standard set of communications rules, or protocols, that we have
adopted for use in wireless applications, consists of a wireless hub, network
management system software and wireless subscriber modems. Each hub transmits,
receives and manages data traffic to and from our wireless modems, which are
installed at multiple subscriber locations. We sell our systems directly to
service providers and system integrators, who provide network planning and
integration services and integrate our systems with other components to provide
their customers with end-to-end network solutions.

1
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As key elements of our strategy, we intend to:

- use existing commercially deployed systems to demonstrate our
capabilities;

- broaden our product offerings;

- improve cost-effectiveness and performance of our systems;

- leverage key strategic relationships; and

- participate in the development of industry standards.

We began commercial shipments of our first-generation broadband wireless
access systems in the first quarter of 1999. We have a very limited operating
history in the broadband wireless access market upon which to evaluate our
future prospects. We have incurred significant losses since our inception. We
incurred net losses of approximately $43.6 million in 1999. As of December 31,
1999, our accumulated deficit was approximately $66.2 million. We expect to
continue to incur net losses for the foreseeable future.

We were incorporated in 1996 in Delaware under the name PhaseCom, Inc. In
January 2000, we changed our name to Vyyo Inc. Our principal executive offices
are located at 20400 Stevens Creek Boulevard, 8th Floor, Cupertino, California
95014, and our telephone number is (408) 863-2300.

2
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THE OFFERING

Common stock offered by Vyyo......... 6,750,000 shares

Common stock to be outstanding after
this offering...................... 33,697,286 shares

Use of proceeds...................... We expect to use the net proceeds of
this offering for working capital and
other general corporate purposes,
including research and development
activities. We may use a portion of
the net proceeds to acquire
complementary products, technologies
or businesses.

Proposed Nasdaq National Market
symbol............................. VYYO
</TABLE>

The common stock to be outstanding after this offering is based on shares
outstanding as of December 31, 1999. The common stock outstanding excludes:

- 3,771,195 shares of common stock issuable as of February 29, 2000 upon the
exercise of outstanding stock options issued under our option plans at a
weighted average exercise price of $0.83 per share;

- 801,958 shares of common stock issued from January 1, 2000 through
February 29, 2000 upon the exercise of stock options issued under our
option plans;

- 4,369,189 additional shares of common stock reserved as of February 29,
2000 for issuance under our stock option plans;

- 750,000 shares of common stock initially reserved for issuance under our
employee stock purchase plan; and

- 187,785 shares of common stock issuable as of December 31, 1999 upon the
exercise of outstanding warrants with a weighted average exercise price of
$1.26 per share.

---------------------

EXCEPT AS OTHERWISE INDICATED, INFORMATION IN THIS PROSPECTUS ASSUMES THE
FOLLOWING:

- THE AMENDMENT AND RESTATEMENT OF OUR CERTIFICATE OF INCORPORATION;

- THE CONVERSION OF ALL OUTSTANDING SHARES OF PREFERRED STOCK INTO 3,944,553
SHARES OF COMMON STOCK;

- THE 1-FOR-5 REVERSE STOCK SPLIT EFFECTED ON JANUARY 3, 2000;

- THE 3-FOR-2 STOCK SPLIT EFFECTED ON MARCH 14, 2000; AND

- NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION.

3
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1997 1998 1999
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<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues................................................ $ 1,537 $ 2,449 $ 4,230
Cost of revenues............................................ 1,556 2,568 4,316
------- ------- --------
Gross loss.................................................. (19) (119) (86)
Operating expenses:
Research and development.................................. 2,398 3,252 3,678
Sales and marketing....................................... 1,484 2,413 1,972
General and administrative................................ 1,200 1,363 2,148
Amortization of deferred stock compensation............... -- -- 9,300
------- ------- --------
Total operating expenses.................................... 5,082 7,028 17,098
------- ------- --------
Operating loss.............................................. (5,101) (7,147) (17,184)
Charge for amended financing arrangements................. -- -- (25,700)
Interest and other income (expense), net.................. (244) (524) (717)
------- ------- --------
Net loss.................................................... $(5,345) $(7,671) $(43,601)
======= ======= ========
Net loss per share:
Basic and diluted......................................... $ (5.91) $ (5.43) $ (5.40)
======= ======= ========
Pro forma basic and diluted (unaudited)................... $ (4.30)
========
Shares used in per share computations:
Basic and diluted......................................... 905 1,412 8,078
======= ======= ========
Pro forma basic and diluted (unaudited)................... 10,137
========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1999
----------------------
PRO FORMA
ACTUAL AS ADJUSTED
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<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $5,036 $91,321
Working capital............................................. 210 86,495
Total assets................................................ 8,363 94,648
Long-term obligations, net of current portion............... -- --
Total stockholders' equity.................................. 1,305 87,590
</TABLE>

This balance sheet data is presented on a pro forma as adjusted basis to
give effect to:

- the sale of the shares of common stock in this offering at the assumed
initial public offering price of $14 per share after deducting the
underwriting discounts and commissions and estimated offering expenses.

4
<PAGE>
RISK FACTORS

ANY INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS BEFORE MAKING AN INVESTMENT
DECISION.

RISKS RELATED TO OUR BUSINESS

WE HAVE A LIMITED OPERATING HISTORY IN THE BROADBAND POINT-TO-MULTIPOINT
WIRELESS ACCESS MARKET, WHICH MAY LIMIT YOUR ABILITY TO EVALUATE OUR BUSINESS
AND INCREASE THE RISK OF YOUR INVESTMENT.

The broadband wireless access market is only beginning to emerge. We began
commercial shipments of our first-generation broadband wireless access system in
the first quarter of 1999, and we began commercial shipments of our
second-generation wireless access system in the fourth quarter of 1999. All of
our product revenues in 1997 and 1998, and a substantial portion of our product
revenues in 1999, relate to sales of cable modem products that we are no longer
developing. Virtually all of the remaining revenues in 1999 relate to sales of
our first-generation wireless modem products, which we phased out with the
launch of our second-generation wireless access system in the fourth quarter of
that year. Our second generation wireless access system is based on the cable
industry's standard set of communications rules, or protocols, that we have
adopted for use in wireless applications. Therefore, the success of our business
will be entirely dependent upon the success of our wireless products generally,
and our new wireless products in particular. We have a very limited operating
history in the broadband wireless access market upon which to evaluate our
future prospects, and the revenue and income potential of our business and
market are unproven. Our limited operating history in this market may limit your
ability to evaluate our prospects due to:

- our limited historical financial data from our wireless products;

- our unproven potential to generate profits; and

- our limited experience in addressing emerging trends that may affect our
business.

As a young company, we face risks and uncertainties relating to our ability
to implement our business plan successfully. You should consider our prospects
in light of the risks, expenses and difficulties we may encounter.

WE HAVE A HISTORY OF LOSSES, EXPECT FUTURE LOSSES AND MAY NEVER ACHIEVE OR
SUSTAIN PROFITABILITY.

We have incurred significant losses since our inception, and we expect to
continue to incur net losses for the foreseeable future. We incurred net losses
of approximately $43.6 million in 1999. As of December 31, 1999, our accumulated
deficit was approximately $66.2 million. We intend to significantly increase our
operating expenses, especially our marketing and selling expenses, and our
research and

5
<PAGE>

development expenses. However, our revenues may not grow or even continue at
their current level. If our revenues do not rapidly increase or if our expenses
increase at a greater pace than our revenues, we will never become profitable.

OUR QUARTERLY OPERATING RESULTS FLUCTUATE, WHICH MAY CAUSE OUR SHARE PRICE TO
DECLINE.

Our quarterly operating results have varied significantly in the past and
are likely to vary significantly in the future. These variations result from a
number of factors, including:

- the uncertain timing and level of market acceptance for our systems;

- the effectiveness of our system integrator customers in marketing and
selling their network systems equipment;

- reductions in pricing by us or our competitors;

- the mix of systems sold by us and the mix of sales channels through which
they are sold; and

- changes in the prices or delays in deliveries of the components we
purchase or license.

A delay in the recognition of revenue, even from one customer, may have a
significant negative impact on our results of operations for a given period. We
have experienced such delays in the past, and our results of operations for
those periods were negatively impacted. Also, because only a small portion of
our expenses vary with our revenues, if revenue levels for a quarter fall below
our expectations, we will not be able to timely adjust expenses accordingly,
which would harm our operating results in that period. We believe that
period-to-period comparisons of our results of operations are not meaningful and
should not be relied upon as indicators of future performance. If our operating
results fall below the expectations of investors in future periods, our share
price will likely decline.

IF BROADBAND WIRELESS TECHNOLOGY OR OUR IMPLEMENTATION OF THIS TECHNOLOGY IS NOT
BROADLY ACCEPTED, WE WILL NOT BE ABLE TO SUSTAIN OR EXPAND OUR BUSINESS.

Our future success depends on high-speed wireless communications products
gaining market acceptance as a means to provide voice and data communications
services. Because these markets are relatively new, it is difficult to predict
which market segments will develop or expand. We have recently invested and
expect to continue to invest significant time and resources in the development
of new products for this market. In the event that service providers adopt
technologies other than the high-speed access and other wireless technologies
that we offer, we will not be able to sustain or expand our business.

Service providers continually evaluate alternative technologies, including
digital subscriber line, fiber and cable. The failure of service providers to
accept our products would seriously harm our business.

6
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WE DEPEND ON ONE SYSTEM INTEGRATOR FOR A SIGNIFICANT PORTION OF OUR REVENUES AND
IF THIS SYSTEM INTEGRATOR DOES NOT PROMOTE OR PURCHASE OUR PRODUCTS, OUR
BUSINESS WILL BE SERIOUSLY HARMED.

We generated approximately 20% of our 1999 revenues from sales to
ADC Telecommunications. The loss of ADC Telecommunications as a customer, or the
delay of significant orders from it, even if only temporary, could, among other
things:

- reduce or delay our revenues;

- harm our reputation with major service providers, particularly if ADC
Telecommunications were to replace our products with a competitor's
products; or

- reduce our ability to predict our cash flow accurately.

Sales through ADC Telecommunications accounted for approximately 20% of our
net revenues for 1999 and approximately 31% of our net revenues for 1998. There
are a limited number of system integrators that have the financial resources or
technical expertise to sell or integrate our systems globally. If ADC
Telecommunications will not sell, service or integrate our products, and we
cannot secure other system integrators as replacements, we would be limited in
our ability to sell our products. ADC Telecommunications has the exclusive right
to market, sell and distribute our systems to MCI WorldCom, Sprint, BellSouth,
Wireless One and Irish Multi Channel. Should ADC Telecommunications cease to
emphasize systems that include our products, choose to emphasize alternative
technologies or promote systems of our competitors, our business would be
seriously harmed.

THE LOSS OF ONE OR MORE OF OUR KEY CUSTOMERS WOULD RESULT IN A LOSS OF A
SIGNIFICANT AMOUNT OF OUR REVENUES.

A relatively small number of customers account for a large percentage of our
revenues. In 1999, ADC Telecommunications accounted for approximately 20% of our
revenues, Aster City Cable accounted for approximately 14% of our revenues,
Shanghai Bell accounted for approximately 13% of our revenues and Philips
Semiconductor accounted for approximately 12% of our revenues. Revenues
attributable to Aster City Cable and Shanghai Bell relate to sales of cable
products that we are no longer developing. Accordingly, we do not anticipate
recognizing material amounts of revenue from these products in the future.
Revenues attributable to Philips Semiconductor relate to a joint technology
development arrangement that we expect to complete in 2000 and no similar
arrangements are contemplated.

We expect that we will continue to depend on a relatively limited number of
customers for a substantial portion of our revenues in future periods. The loss
of a major customer or the reduction, delay or cancellation of orders from one
or more of our customers could seriously harm our ability to sustain revenue
levels, which would seriously harm our operating results.

7
<PAGE>
COMPETITION MAY DECREASE OUR MARKET SHARE, NET REVENUES AND GROSS MARGINS, WHICH
MAY CAUSE OUR STOCK PRICE TO DECLINE.

The market for broadband access systems is intensely competitive, rapidly
evolving and subject to rapid technological change. Many of our competitors and
potential competitors have substantially greater financial, technical,
distribution, marketing and other resources than we have and, therefore, may be
able to respond more quickly to new or changing opportunities, technologies and
other developments. In addition, many of our competitors have longer operating
histories, greater name recognition and established relationships with system
integrators and service providers. Our primary competitor is Hybrid
Networks, Inc. In addition, well-capitalized companies such as Cisco Systems,
Lucent Technologies, Nortel Networks, Newbridge Networks and other vendors have
announced plans to enter, or are potential entrants into, the broadband wireless
market. Most of these competitors have existing relationships with one or more
of our prospective customers. We also face competition from technologies such as
digital subscriber line, fiber and cable. We may not be able to compete
successfully against our current and future competitors and competitive
pressures may seriously harm our business.

IF WE DO NOT DEVELOP NEW SYSTEMS AND SYSTEM FEATURES IN RESPONSE TO CUSTOMER
REQUIREMENTS OR IN A TIMELY WAY, CUSTOMERS MAY NOT BUY OUR PRODUCTS, WHICH WOULD
SERIOUSLY HARM OUR BUSINESS.

The broadband wireless access industry is rapidly evolving and subject to
technological change and innovation. We may experience design or manufacturing
difficulties that could delay or prevent our development, introduction or
marketing of new systems and enhancements, any of which could cause us to incur
unexpected expenses or lose revenues. If we are unable to comply with diverse,
new or varying governmental regulations or industry standards in each of the
many worldwide markets in which we compete, we may not be able to respond to
customers in a timely manner, which would harm our business.

WE DEPEND ON CONTRACT MANUFACTURERS AND THESE MANUFACTURERS MAY BE UNABLE TO
FILL OUR ORDERS ON A TIMELY BASIS, WHICH WOULD RESULT IN DELAYS THAT COULD
SERIOUSLY HARM OUR RESULTS OF OPERATIONS.

We currently have relationships with three contract manufacturers for the
manufacturing of our systems, two of which are located in Israel and one of
which is located in Taiwan. These relationships may be terminated by either
party with little or no notice. If our manufacturers are unable or unwilling to
continue manufacturing our systems in required volumes, we would have to
identify qualified alternative manufacturers, which would result in delays that
could cause our results of operations to suffer. Our limited experience with
these manufacturers does not provide us with a reliable basis on which to
project their ability to meet delivery schedules, yield targets or costs. If we
are required to find alternative manufacturing sources, we may not be

8
<PAGE>
able to satisfy our production requirements at acceptable prices and on a timely
basis, if at all. Any significant interruption in supply would affect the
allocation of systems to customers, which in turn could seriously harm our
business.

WE OBTAIN SOME OF THE COMPONENTS INCLUDED IN OUR SYSTEMS FROM A SINGLE SOURCE OR
A LIMITED GROUP OF SUPPLIERS, AND THE LOSS OF ANY OF THESE SUPPLIERS COULD CAUSE
PRODUCTION DELAYS AND A SUBSTANTIAL LOSS OF REVENUE.

We currently obtain key components from a limited number of suppliers. Some
of these components, such as semiconductor components for our wireless hubs, are
obtained from a single source supplier. We generally do not have long-term
supply contracts with our suppliers. These factors present us with the following
risks:

- delays in delivery or shortages in components could interrupt and delay
manufacturing and result in cancellation of orders for our systems;

- suppliers could increase component prices significantly and with immediate
effect;

- we may not be able to develop alternative sources for system components,
if or as required in the future;

- suppliers could discontinue the manufacture or supply of components used
in our systems. In such event, we might need to modify our systems, which
may cause delays in shipments, increased manufacturing costs and increased
systems prices; and

- we may hold more inventory than is immediately required to compensate for
potential component shortages or discontinuation.

The occurrence of any of these or similar events would harm our business.

DELAYS AND SHORTAGES IN THE SUPPLY OF COMPONENTS FROM OUR SUPPLIERS COULD REDUCE
OUR REVENUES OR INCREASE OUR COST OF REVENUE.

Delays and shortages in the supply of components are typical in our
industry. We have experienced minor delays and shortages on more than one
occasion in the past. In addition, any failure of necessary worldwide
manufacturing capacity to rise along with a rise in demand could result in our
subcontract manufacturers allocating available capacity to larger customers or
to customers that have long-term supply contracts in place. Our inability to
obtain adequate manufacturing capacity at acceptable prices, or any delay or
interruption in supply, could reduce our revenues or increase our cost of
revenue and could seriously harm our business.

9
<PAGE>
COMPETITION MAY RESULT IN LOWER AVERAGE SELLING PRICES AND WE MAY BE UNABLE TO
REDUCE OUR COSTS AT OFFSETTING RATES, WHICH MAY IMPAIR OUR ABILITY TO ACHIEVE OR
MAINTAIN PROFITABILITY.

We expect that price competition among broadband wireless access systems
suppliers will reduce our gross margins in the future. We anticipate that the
average selling prices of broadband wireless access systems will continue to
decline as product technologies mature. Since we do not manufacture our own
systems, we may be unable to reduce our manufacturing costs in response to
declining average per unit selling prices. Our competitors may be able to
achieve greater economies of scale and may be less vulnerable to the effects of
price competition than we are. These declines in average selling prices will
generally lead to declines in gross margins and total profitability for these
systems. If we are unable to reduce our costs to offset declines in average
selling prices, we may not be able to achieve or maintain profitability.

IF WE DO NOT EFFECTIVELY MANAGE OUR EXPANSION, OUR REVENUES MAY NOT INCREASE,
OUR COSTS MAY INCREASE AND OUR BUSINESS COULD BE SERIOUSLY HARMED.

We are continuing to actively expand our operations. This growth has placed,
and will continue to place, a significant strain on our managerial, operational
and financial resources. We also need to implement sophisticated inventory and
control systems.

To manage growth effectively, we must, among other things:

- improve and expand our information and financial systems, and managerial
procedures and controls;

- hire, train, manage and retain qualified employees; and

- effectively manage relationships with our customers, suppliers and other
third parties.

We may not have made adequate allowances for the costs and risks associated
with this expansion, our systems, procedures or controls may not be adequate to
support our operations, and our management may be unable to offer and expand our
product categories successfully. Any delay in implementing, or transitioning to,
new or enhanced systems, procedures or controls may seriously harm our ability
to record and report financial and management information on a timely and
accurate basis or otherwise manage our expanding operations. If we are unable to
do so effectively, our business may be seriously harmed.

BECAUSE WE OPERATE IN INTERNATIONAL MARKETS, WE ARE EXPOSED TO ADDITIONAL RISKS
WHICH COULD CAUSE OUR INTERNATIONAL SALES TO DECLINE AND OUR FOREIGN OPERATIONS
TO SUFFER.

Sales outside of North America accounted for approximately 39% of our
revenues in 1999 and 55% of our revenues in 1998. We expect that international
sales will continue to account for a significant portion of our revenues. In
addition, we

10
<PAGE>
maintain research and development facilities in Israel. Our reliance on
international sales and operations exposes us to foreign political and economic
risks, which may impair our ability to generate revenues. These risks include:

- economic and political instability;

- changes in regulatory requirements and licensing frequencies to service
providers;

- import or export licensing requirements and tariffs;

- trade restrictions; and

- more limited protection of intellectual property rights.

Any of the foregoing difficulties of conducting business internationally
could seriously harm our business.

BECAUSE WE DO NOT HAVE LONG-TERM CONTRACTS WITH OUR CUSTOMERS, OUR CUSTOMERS CAN
DISCONTINUE PURCHASES OF OUR SYSTEMS AT ANY TIME.

We sell our systems based on individual purchase orders. Our customers are
generally not obligated by long-term contracts to purchase our systems. Our
customers can generally cancel or reschedule orders on short notice and can
discontinue using our systems at any time. Further, having a successful system
trial does not necessarily mean that the customer will order large volumes of
our systems. The inability to retain our customers and increase their orders
would seriously harm our business.

IF OUR SENIOR MANAGEMENT TEAM IS UNABLE TO WORK TOGETHER EFFECTIVELY, OUR
BUSINESS MAY BE SERIOUSLY HARMED.

Several of our existing senior management personnel, including Michael
Corwin, our Chief Operating Officer, Eran Pilovsky, our Chief Financial Officer,
and Arnon Kohavi, our Senior Vice President of Strategic Relations, joined us in
the last nine months. As a result, our senior management team has had a limited
time to work together. If they are unable to work together effectively to manage
our organization as a public company, our business may be seriously harmed.

IF WE ARE UNABLE TO ATTRACT, TRAIN AND RETAIN QUALIFIED ENGINEERS, MARKETING,
SALES AND TECHNICAL SUPPORT PERSONNEL, WE MAY NOT BE ABLE TO DEVELOP OUR
BUSINESS.

We will need to hire additional engineers and highly trained technical
support personnel in Israel and in Northern California in order to succeed. We
will need to increase our technical staff to support new customers and the
expanding needs of existing customers, as well as for our continued research and
development operations.

Hiring engineers, marketing, sales and technical support personnel is very
competitive in our industry due to the limited number of people available with
the necessary skills and understanding of our products. This is particularly
true in Israel and Northern California, where competition for such personnel is
intense.

11
<PAGE>
Our systems require a sophisticated marketing and sales effort targeted at
several levels within a prospective customer's organization. We have recently
expanded our sales force and we plan to hire additional sales personnel,
particularly in the United States. Competition for qualified sales personnel is
intense, and we may not be able to hire sufficient sales personnel to support
our marketing efforts. If we are unable to hire and retain necessary personnel
in each of these rapidly expanding areas, our business will not develop, and our
operating results will be harmed.

WE DEPEND ON OUR KEY PERSONNEL, IN PARTICULAR DAVIDI GILO, OUR CHAIRMAN AND
CHIEF EXECUTIVE OFFICER, AND MENASHE SHAHAR, OUR VICE PRESIDENT, ENGINEERING AND
CHIEF TECHNICAL OFFICER, THE LOSS OF ANY OF WHOM COULD SERIOUSLY HARM OUR
BUSINESS.

Our future success depends in large part on the continued services of our
senior management and key personnel. In particular, we are highly dependent on
the service of Davidi Gilo, our Chairman and Chief Executive Officer, and
Menashe Shahar, our Chief Technical Officer. We do not carry key person life
insurance on our senior management or key personnel. Any loss of the services of
Davidi Gilo, Menashe Shahar, other members of senior management or other key
personnel could seriously harm our business.

THIRD PARTIES MAY BRING INFRINGEMENT CLAIMS AGAINST US WHICH COULD HARM OUR
ABILITY TO SELL OUR PRODUCTS AND RESULT IN SUBSTANTIAL LIABILITIES.

We expect that we will increasingly be subject to license offers and
infringement claims as the number of products and competitors in our market
grows and the functionality of products overlaps. In this regard, in early 1999,
we received a written notice from Hybrid Networks in which Hybrid claimed to
have patent rights in certain technology. Hybrid requested that we review our
products in light of six of Hybrid's issued patents.

Third parties, including Hybrid, could assert, and it could be found, that
our technologies infringe their proprietary rights. We could incur substantial
costs to defend any litigation, and intellectual property litigation could force
us to do one or more of the following:

- obtain licenses to the infringing technology;

- pay substantial damages under applicable law;

- cease the manufacture, use and sale of infringing products; or

- expend significant resources to develop non-infringing technology.

Accordingly, any infringement claim or litigation against us could significantly
harm our business, operating results and financial condition.

12
<PAGE>
IF WE FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY, WE MAY NOT BE ABLE
TO COMPETE.

Our success depends in part on our ability to protect our proprietary
technologies. We rely on a combination of patent, copyright and trademark laws,
trade secrets and confidentiality and other contractual provisions to establish
and protect our proprietary rights. Our pending or future patent applications
may not be approved and the claims covered by such applications may be reduced.
If allowed, our patents may not be of sufficient scope or strength, others may
independently develop similar technologies or products, duplicate any of our
products or design around our patents, and the patents may not provide us
competitive advantages. Litigation, which could result in substantial costs and
diversion of effort by us, may also be necessary to enforce any patents issued
or licensed to us or to determine the scope and validity of third-party
proprietary rights. Any such litigation, regardless of outcome, could be
expensive and time consuming, and adverse determinations in any such litigation
could seriously harm our business.

UNDETECTED HARDWARE DEFECTS OR SOFTWARE ERRORS MAY INCREASE OUR COSTS AND IMPAIR
THE MARKET ACCEPTANCE OF OUR SYSTEMS.

Our systems may contain undetected defects or errors. This may result either
from defects in components supplied by third parties or from errors in our
software that we have failed to detect. These defects or errors are likely to be
found from time to time in new or enhanced products and systems after
commencement of commercial shipments. Our customers integrate our systems into
their networks with components from other vendors. Accordingly, when problems
occur in a network system it may be difficult to identify the component that
caused the problem. Regardless of the source of these defects or errors, we will
need to divert the attention of our engineering personnel from our product
development efforts to address the defect or error. We may incur significant
warranty and repair costs related to defects or errors, and we may also be
subject to liability claims for damages related to these defects or errors. The
occurrence of defects or errors, whether caused by our systems or the components
of another vendor, may result in significant customer relations problems and
injury to our reputation and may impair the market acceptance of our systems.

BECAUSE OF OUR LONG PRODUCT DEVELOPMENT PROCESS AND SALES CYCLE, WE MAY INCUR
SUBSTANTIAL EXPENSES WITHOUT ANTICIPATED REVENUES WHICH COULD CAUSE OUR
OPERATING RESULTS TO FLUCTUATE.

A customer's decision to purchase many of our systems typically involves a
significant technical evaluation, formal internal procedures associated with
capital expenditure approvals and testing and acceptance of new systems that
affect key operations. For these and other reasons, the sales cycle associated
with our systems can be lengthy and subject to a number of significant risks
over which we have little or no control. Our next-generation systems are
expected to have even longer sales

13
<PAGE>
cycles and involve demonstrations, field trials and other evaluation periods,
which will further lengthen the sales cycle. Because of the growing sales cycle
and the possibility that we may rely on a concentrated number of customers for
our revenues, our operating results could be seriously harmed if such revenues
do not materialize when anticipated, or at all.

IF WE CHOOSE TO ACQUIRE NEW AND COMPLEMENTARY BUSINESSES, PRODUCTS OR
TECHNOLOGIES, WE MAY NOT BE ABLE TO SUCCESSFULLY INTEGRATE AN ACQUIRED BUSINESS
IN A COST-EFFECTIVE AND NON-DISRUPTIVE MANNER AND REALIZE ANTICIPATED BENEFITS.

We may make investments in complementary companies, products or
technologies. If we acquire a company, we may have difficulty integrating that
company's personnel, operations, products and technologies. These difficulties
may disrupt our ongoing business, distract our management and employees and
increase our expenses. Moreover, the anticipated benefits of any acquisition may
not be realized. Future acquisitions could result in dilutive issuances of
equity securities, the incurrence of debt, contingent liabilities or
amortization expenses related to goodwill and other intangible assets and the
incurrence of large and immediate write-offs, any of which could seriously harm
our business.

IF THE COMMUNICATIONS AND INTERNET INDUSTRIES DO NOT CONTINUE TO GROW AND EVOLVE
IN A MANNER FAVORABLE TO US OR OUR BUSINESS STRATEGY, OUR BUSINESS MAY BE
SERIOUSLY HARMED.

Our future success is dependent upon the continued growth of the
communications industry and, in particular, the Internet. The global
communications and Internet industries are evolving rapidly, and it is difficult
to predict growth rates or future trends in technology development. In addition,
the deregulation, privatization and economic globalization of the worldwide
communications market, that have resulted in increased competition and
escalating demand for new technologies and services, may not continue in a
manner favorable to us or our business strategies. In addition, the growth in
demand for Internet services and the resulting need for high-speed or enhanced
communications products may not continue at its current rate or at all.

WE MAY NEED TO RAISE ADDITIONAL CAPITAL IN THE FUTURE, AND IF WE ARE UNABLE TO
SECURE ADEQUATE FUNDS ON TERMS ACCEPTABLE TO US, WE MAY NOT BE ABLE TO EXECUTE
OUR BUSINESS PLAN.

We expect that the net proceeds from this offering and cash from operations
will be sufficient to meet our working capital and capital expenditure needs for
at least the next 12 months. After that, we may need to raise additional funds
for a number of uses, including:

- expanding research and development programs;

- hiring additional qualified personnel;

14
<PAGE>
- implementing further marketing and sales activities; and

- acquiring complementary technologies or businesses.

We may have to raise funds even sooner in order to fund more rapid
expansion, to respond to competitive pressures or to otherwise respond to
unanticipated requirements. If we raise additional funds through the issuance of
equity or convertible debt securities, the percentage ownership of our existing
stockholders will be reduced. We may not be able to obtain additional funds on
acceptable terms, or at all. If we cannot raise needed funds on acceptable
terms, we may not be able to increase our ongoing operations and complete our
planned expansion, take advantage of acquisition opportunities, develop or
enhance systems or respond to competitive pressures. This potential inability to
raise funds on acceptable terms could seriously harm our business.

GOVERNMENT REGULATION AND INDUSTRY STANDARDS MAY INCREASE OUR COSTS OF DOING
BUSINESS, LIMIT OUR POTENTIAL MARKETS OR REQUIRE CHANGES TO OUR BUSINESS MODEL.

The emergence or evolution of regulations and industry standards for
broadband wireless products, through official standards committees or widespread
use by operators, could require us to modify our systems, which may be expensive
and time-consuming, and to incur substantial compliance costs. Radio frequencies
are subject to extensive regulation under the laws of the United States, foreign
laws and international treaties. Each country has different regulations and
regulatory processes for wireless communications equipment and uses of radio
frequencies. Failure by the regulatory authorities to allocate suitable,
sufficient radio frequencies to potential customers in a timely manner could
result in the delay or loss of potential orders for our systems and seriously
harm our business.

IF WE FAIL TO SUCCESSFULLY ESTABLISH OUR NEW VYYO NAME, OUR BUSINESS COULD BE
SERIOUSLY HARMED.

In January 2000, we changed our name from PhaseCom, Inc. to Vyyo Inc. to
better represent the diversity of our broadband wireless systems. Our new Vyyo
name may cause confusion to current and potential customers, which could
seriously harm our business. We may be unable to enforce rights related to the
Vyyo Inc. name, we may not be free to use the name in all jurisdictions, our use
of the name may be challenged and we may be required to expend significant
resources in defending the use of the name.

15
<PAGE>
RISKS RELATING TO THIS OFFERING

BECAUSE OUR PRINCIPAL STOCKHOLDERS AND MANAGEMENT HAVE THE ABILITY TO CONTROL
STOCKHOLDER VOTES, THE PREMIUM OVER MARKET PRICE THAT AN ACQUIRER MIGHT
OTHERWISE PAY MAY BE REDUCED AND ANY MERGER OR TAKEOVER MAY BE DELAYED.

Upon completion of this offering, our management and ADC Telecommunications
will collectively own approximately 63% of our outstanding common stock. As a
result, these stockholders, acting together, will be able to control the outcome
of all matters submitted for stockholder action, including:

- electing members to our board of directors;

- approving significant change-in-control transactions;

- determining the amount and timing of dividends paid to themselves and to
our public stockholders; and

- controlling our management and operations.

This concentration of ownership may have the effect of impeding a merger,
consolidation, takeover or other business consolidation involving us, or
discouraging a potential acquirer from making a tender offer for our shares.
This concentration of ownership could also negatively affect our stock's market
price or decrease any premium over market price that an acquirer might otherwise
pay.

BECAUSE THE NASDAQ NATIONAL MARKET IS LIKELY TO CONTINUE TO EXPERIENCE EXTREME
PRICE AND VOLUME FLUCTUATIONS, THE PRICE OF OUR STOCK MAY DECLINE.

The market price of our shares is likely to be highly volatile and could be
subject to wide fluctuations in response to numerous factors, including the
following:

- actual or anticipated variations in our quarterly operating results or
those of our competitors;

- announcements by us or our competitors of new products or technological
innovations;

- introduction and adoption of new industry standards;

- changes in financial estimates or recommendations by securities analysts;

- changes in the market valuations of our competitors;

- announcements by us or our competitors of significant acquisitions or
partnerships; and

- sales of our common stock.

Many of these factors are beyond our control and may negatively impact the
market price of our common stock, regardless of our performance. In addition,
the stock market in general, and the market for technology companies in
particular, has been highly volatile. Our common stock may not trade at the same
levels of shares as

16
<PAGE>
that of other technology companies and shares of technology companies, in
general, may not sustain their current market prices. In the past, securities
class action litigation has often been brought against a company following
periods of volatility in the market price of its securities. We may be the
target of similar litigation in the future. Securities litigation could result
in substantial costs and divert management's attention and resources, which
could seriously harm our business and operating results.

OUR MANAGEMENT HAS BROAD DISCRETION IN USING THE PROCEEDS FROM THIS OFFERING,
WHICH MIGHT NOT BE USED IN WAYS THAT IMPROVE OUR OPERATING RESULTS OR INCREASE
OUR MARKET VALUE.

Our management will have broad discretion as to how the net proceeds of this
offering will be used, including uses which may not improve our operating
results or increase our market value. Investors will be relying on the judgment
of management regarding the application of the proceeds of this offering. The
results and the effectiveness of the application of the proceeds are uncertain
and you will not have the opportunity, as part of your investment decision, to
assess whether the proceeds are being used appropriately.

PROVISIONS OF OUR GOVERNING DOCUMENTS AND DELAWARE LAW COULD DISCOURAGE
ACQUISITION PROPOSALS OR DELAY A CHANGE IN CONTROL.

Upon the closing of this offering, our certificate of incorporation and
bylaws will be amended and restated. Our amended and restated certificate of
incorporation and bylaws will contain anti-takeover provisions that could make
it more difficult for a third party to acquire control of us, even if that
change in control would be beneficial to stockholders. Specifically:

- our board of directors will have the authority to issue common stock and
preferred stock and to determine the price, rights and preferences of any
new series of preferred stock without stockholder approval;

- our board of directors will be divided into three classes, each serving
three-year terms;

- super-majority voting will be required to amend key provisions of our
certificate of incorporation and by-laws;

- there will be limitations on who can call special meetings of
stockholders;

- stockholders will not be able take action by written consent; and

- advance notice will be required for nominations of directors and for
stockholder proposals.

In addition, provisions of Delaware law and our stock option plans may also
discourage, delay or prevent a change of control or unsolicited acquisition
proposals.

17
<PAGE>
FUTURE SALES OF OUR COMMON STOCK COULD DEPRESS OUR STOCK PRICE.

We cannot predict if future sales of our common stock, or the availability
of our common stock for sale, will depress the market price for our common stock
or our ability to raise capital by offering equity securities. Sales of
substantial amounts of common stock, or the perception that these sales could
occur, may depress prevailing market prices for the common stock.

After this offering, approximately 33,697,286 shares of common stock will be
outstanding. All of the shares sold in this offering will be freely tradeable
except for any shares purchased by affiliates of Vyyo. The remaining shares of
common stock outstanding after this offering will be restricted as a result of
securities laws or lock-up agreements. These remaining shares will be available
for sale in the public market as follows:

<TABLE>
<CAPTION>
DATE OF AVAILABILITY FOR SALE NUMBER OF SHARES
- ----------------------------- -----------------
<S> <C>
As of the date of this prospectus......................... 95,064
September 27, 2000........................................ 24,251,729
At various times thereafter upon expiration of applicable
holding periods......................................... 2,600,493
</TABLE>

Banc of America Securities LLC may release all or a portion of the shares
subject to lock-up agreements at any time without notice. See "Underwriting" and
"Shares Eligible for Future Sale."

WE MAY HAVE CONTINGENT SECTION 5 LIABILITY ARISING IN CONNECTION WITH OUR PRESS
RELEASE.

We issued a press release that announced the initial filing with the
Securities and Exchange Commission of a registration statement relating to this
offering. This press release, which we believe was in customary form, also
contained limited information regarding Vyyo. If the press release were
determined to have constituted a prospectus that did not meet the requirements
of Section 5 of the Securities Act, then any purchasers in this offering who
viewed this press release could have the right, for a period of one year from
the date of their purchase, to bring an action for rescission or for damages
resulting from their purchase of our common stock. We do not believe that the
existence of this press release caused a violation of the Securities Act.
Accordingly, we do not believe that our exposure, if any, resulting from this
press release will be material to our results of operations or financial
condition.

RISKS RELATING TO OUR LOCATION IN ISRAEL

CONDITIONS IN ISRAEL AFFECT OUR OPERATIONS AND MAY LIMIT OUR ABILITY TO PRODUCE
AND SELL OUR SYSTEMS.

Our final testing and assembly and research and development facilities are
located in Israel. Political, economic and military conditions in Israel
directly affect

18
<PAGE>
our operations. Since the establishment of the State of Israel in 1948, a number
of armed conflicts have taken place between Israel and its Arab neighbors and a
state of hostility, varying in degree and intensity, has led to security and
economic problems for Israel. We could be adversely affected by any major
hostilities involving Israel, the interruption or curtailment of trade between
Israel and its trading partners, a significant increase in inflation, or a
significant downturn in the economic or financial condition of Israel. Despite
the progress towards peace between Israel and its Arab neighbors, the future of
these peace efforts is uncertain. Moreover, several countries still restrict
business with Israel and with Israeli companies. We could be adversely affected
by restrictive laws or policies directed towards Israel or Israeli businesses.

Some of our directors, officers and employees are currently obligated to
perform annual reserve duty and are subject to being called to active duty at
any time under emergency circumstances. Our business cannot assess the full
impact of these requirements on our workforce or business if conditions should
change and we cannot predict the effect on us of any expansion or reduction of
these obligations.

BECAUSE SUBSTANTIALLY ALL OF OUR REVENUES ARE GENERATED IN U.S. DOLLARS WHILE A
PORTION OF OUR EXPENSES ARE INCURRED IN NEW ISRAELI SHEKELS, OUR RESULTS OF
OPERATIONS MAY BE SERIOUSLY HARMED IF THE RATE OF INFLATION IN ISRAEL EXCEEDS
THE RATE OF DEVALUATION OF THE NEW ISRAELI SHEKEL AGAINST THE U.S. DOLLAR.

We generate substantially all of our revenues in U.S. dollars, but we incur
a substantial portion of our expenses, principally salaries and related
personnel expenses related to research and development, in New Israeli shekels,
or NIS. As a result, we are exposed to the risk that the rate of inflation in
Israel will exceed the rate of devaluation of the NIS in relation to the dollar
or that the timing of this devaluation lags behind inflation in Israel. If the
dollar costs of our operations in Israel increase, our dollar-measured results
of operations will be seriously harmed.

THE GOVERNMENT PROGRAMS AND BENEFITS WE RECEIVE REQUIRE US TO SATISFY PRESCRIBED
CONDITIONS. THESE PROGRAMS AND BENEFITS MAY BE TERMINATED OR REDUCED IN THE
FUTURE, WHICH WOULD INCREASE OUR COSTS AND TAXES AND COULD SERIOUSLY HARM OUR
BUSINESS.

Several of our capital investments have been granted "approved enterprise"
status under Israeli law providing us with tax benefits. The benefits available
to an approved enterprise are conditioned upon the fulfillment of conditions
stipulated in applicable law and in the specific certificate of approval. If we
fail to comply with these conditions, in whole or in part, we may be required to
pay additional taxes for the period in which we benefitted from the tax benefits
and would likely be denied these benefits in the future. From time to time, the
Government of Israel has discussed reducing or eliminating the benefits
available under the approved enterprise program. These tax benefits may not be
continued in the future at their current levels or at all. This termination or
reduction of these benefits would increase our taxes and could seriously harm
our business.

19
<PAGE>
In the past, we received grants from the government of Israel for the
financing of a portion of our research and development expenditures in Israel.
The regulations under which we received these grants restrict our ability to
manufacture products or transfer technology outside of Israel for products
developed with this technology. We believe that most of our current products are
not based on Chief Scientist funded technology and therefore are not subject to
this restriction.

IT MAY BE DIFFICULT TO ENFORCE A U.S. JUDGMENT AGAINST US AND OUR NONRESIDENT
OFFICERS, DIRECTORS AND EXPERTS.

Our Chief Technology Officer, one of our directors and some of the experts
named in this prospectus are nonresidents of the United States, and a
substantial portion of our assets and the assets of these persons are located
outside the United States. Therefore, it may be difficult to enforce a judgment
obtained in the United States based upon the civil liabilities provisions of the
United States federal securities laws against us or any of those persons or to
effect service of process upon these persons in the United States.

20
<PAGE>
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

Some of the matters discussed under the captions "Prospectus Summary," "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business" and elsewhere in this prospectus include
forward-looking statements. We have based these forward-looking statements on
our current expectations and projections about future events, including, among
other things:

- implementing our business strategy;

- attracting and retaining customers and employees;

- obtaining and expanding market acceptance of the products we offer and
developing new products;

- forecasts of Internet usage and the size and growth of relevant markets;

- rapid technological changes in our industry and relevant markets; and

- competition in our market.

In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "could," "predicts," "potential," "continue,"
"expects," "anticipates," "future," "intends," "plans," "believes," "estimates"
and similar expressions. These statements are based on our current beliefs,
expectations and assumptions and are subject to a number of risks and
uncertainties. Actual results, levels of activity, performance, achievements and
events may vary significantly from those implied by the forward-looking
statements. A description of risks that could cause our results to vary appears
under the caption "Risk Factors" and elsewhere in this prospectus.

21
<PAGE>
USE OF PROCEEDS

We estimate that we will receive net proceeds from the sale of shares of our
common stock in this offering of approximately $86.3 million, or $99.5 million
if the underwriters exercise their over-allotment option in full, based upon an
assumed offering price of $14 per share and after deducting underwriting
discounts and commissions and estimated offering expenses. The principal
purposes of this offering are to obtain additional capital and to create a
public market for our common stock. We expect to use the net proceeds from this
offering for working capital and other general corporate purposes, including
research and development. In particular, we expect to spend between $9 million
and $12 million on research and development activities in 2000. We may also use
a portion of the net proceeds to acquire complementary products, technologies,
or businesses; however, we currently have no commitments or agreements relating
to any such transactions.

We will have significant discretion in the use of the net proceeds of this
offering. Investors will be relying on the judgment of our management regarding
the application of the proceeds of this offering. Pending use of the net
proceeds as discussed above, we intend to invest these funds in short-term,
interest-bearing, investment-grade obligations.

DIVIDEND POLICY

We have never declared or paid any dividends on our capital stock. We intend
to retain any future earnings to fund the development and expansion our
business. Therefore, we do not anticipate paying cash dividends on our common
stock in the foreseeable future. Through our subsidiary, Vyyo Ltd., we
participate in the "alternative benefits program" under the Israeli law for the
Encouragement of Capital Investments, 1959, under which we realize certain tax
exemptions. If Vyyo Ltd. distributes a cash dividend to Vyyo Inc. from income
which is tax exempt, it would have to pay corporate tax at the rate of up to 25%
on an amount equal to the amount distributed and the corporate tax which would
have been due in the absence of the tax exemption.

22
<PAGE>
CAPITALIZATION

The following table sets forth as of December 31, 1999:

- our actual capitalization;

- our pro forma capitalization, assuming the conversion of our preferred
stock; and

- our pro forma as adjusted capitalization after giving effect to the sale
of the shares of common stock in this offering at an assumed initial
public offering price of $14 per share after deducting the underwriting
discounts and commissions and estimated offering expenses.

This information should be read in conjunction with our consolidated
financial statements and the related notes and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" appearing elsewhere
in this prospectus.

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
----------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Bank line of credit......................................... $ 2,280 $ 2,280 $ 2,280
======== ======== ========
Stockholders' equity:
Convertible preferred stock, $0.001 par value at amounts
paid in; 100,000,000 shares authorized, 11,564,269
shares issued and outstanding, actual; no shares issued
and outstanding pro forma; 5,000,000 shares authorized,
no shares issued and outstanding pro forma as
adjusted................................................ $ 15,369 $ -- $ --
Common stock, $0.0001 par value at amounts paid in;
200,000,000 shares authorized, 23,002,733 shares issued
and outstanding, actual; 26,947,286 shares issued and
outstanding pro forma; 33,697,286 shares issued and
outstanding, pro forma as adjusted...................... 66,412 81,781 168,066
Note receivable from stockholder.......................... (920) (920) (920)
Deferred compensation..................................... (13,400) (13,400) (13,400)
Accumulated deficit....................................... (66,156) (66,156) (66,156)
-------- -------- --------
Total stockholders' equity.................................. 1,305 1,305 87,590
-------- -------- --------
Total capitalization........................................ $ 1,305 $ 1,305 $ 87,590
======== ======== ========
</TABLE>

The shares of common stock outstanding in the actual, pro forma and pro
forma as adjusted columns exclude:

- 801,958 shares of common stock issued from January 1, 2000 through
February 29, 2000 upon the exercise of stock options issued under our
option plans;

- 4,369,189 additional shares of common stock reserved as of February 29,
2000 for issuance under our stock option plans;

- 750,000 shares of common stock initially reserved for issuance under our
employee stock purchase plan; and

- 187,785 shares of common stock issuable as of December 31, 1999 upon the
exercise of outstanding warrants with a weighted average exercise price of
$1.26 per share.

23
<PAGE>
DILUTION

Our pro forma net tangible book value as of December 31, 1999 was
approximately $1.3 million, or $0.05 per share of common stock. Pro forma net
tangible book value per share represents the amount of total tangible assets
less total liabilities, divided by 26,947,286, the number of shares of common
stock treated as outstanding on a pro forma basis after giving effect to the
conversion of the preferred stock. After giving effect to the sale of the shares
of common stock offered in this offering at the assumed public offering price,
our pro forma net tangible book value at December 31, 1999 would have been $87.6
million, or $2.60 per share. This represents an immediate increase in net pro
forma tangible book value to existing stockholders of $2.55 per share and an
immediate dilution of $11.40 per share to new investors. The following table
illustrates the per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share:............ $14.00
------
Pro forma net tangible book value per share before this
offering as of December 31, 1999........................ $0.05
-----
Increase per share attributable to new investors.......... 2.55
-----
Pro forma net tangible book value per share after this
offering.................................................. 2.60
------
Dilution per share to new investors......................... $11.40
======
</TABLE>

The following table summarizes on a pro forma basis, after giving effect to
the conversion of the preferred stock, the total number of shares of common
stock purchased from us, the total consideration paid to us and the average
price per share paid by existing stockholders and by new investors, in each case
based upon the number of shares of common stock outstanding as of December 31,
1999.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ----------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- -------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders..................... 26,947,286 80.0% $ 33,381,000 26.1% $ 1.24
New investors............................. 6,750,000 20.0 94,500,000 73.9 14.00
---------- ----- ------------ -----
Total................................... 33,697,286 100.0% $127,881,000 100.0%
========== ===== ============ =====
</TABLE>

If the underwriters' over-allotment is exercised in full, the percentage of
shares of common stock held by existing stockholders will be reduced to 77.6% of
the total number of shares of common stock to be outstanding after this offering
and the number of shares of common stock held by new investors will increase to
7,762,500, or 22.4% of the total number of shares of common stock to be
outstanding immediately after this offering.

The foregoing discussions and tables assume no exercise of any stock options
or warrants outstanding. There were options outstanding to purchase
3,771,195 shares of common stock as of February 29, 2000 at a weighted average
exercise price of $0.83 per share, 801,958 shares of common stock issued from
January 1, 2000 through February 29, 2000 upon the exercise of stock options
issued under our option plans, 5,119,189 shares of common stock reserved for
issuance under our stock option and purchase plans, and warrants outstanding to
purchase 187,785 shares of common stock at a weighted average exercise price of
$1.26 per share. To the extent that any of these options or warrants are
exercised, there will be further dilution to the new investors.

24
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The statements of operations data for each of the years in the three-year
period ended December 31, 1999 and the balance sheet data at December 31, 1998
and 1999 are derived from our audited financial statements included elsewhere in
this prospectus. The statements of operations data for the year ended
December 31, 1996 and the balance sheet data at December 31, 1996 and 1997, are
derived from our audited financial statements that are not included in this
prospectus. The statements of operations data for the year ended December 31,
1995 and the balance sheet data at December 31, 1995 are derived from our
unaudited financial statements that are not included in this prospectus. The
following selected consolidated financial data should be read in conjunction
with our consolidated financial statements and related notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues................................... $ 759 $ 478 $ 1,537 $ 2,449 $ 4,230
Cost of revenues............................... 658 896 1,556 2,568 4,316
------- ------- ------- ------- --------
Gross profit (loss)............................ 101 (418) (19) (119) (86)
Operating expenses:
Research and development..................... 649 1,444 2,398 3,252 3,678
Sales and marketing.......................... 527 929 1,484 2,413 1,972
General and administrative................... 854 1,180 1,200 1,363 2,148
Amortization of deferred compensation........ -- -- -- -- 9,300
------- ------- ------- ------- --------
Total operating expenses....................... 2,030 3,553 5,082 7,028 17,098
------- ------- ------- ------- --------
Operating loss................................. (1,929) (3,971) (5,101) (7,147) (17,184)
Charge for amended financing arrangements.... -- -- -- -- (25,700)
Interest and other income (expense), net..... (750) (131) (244) (524) (717)
------- ------- ------- ------- --------
Net loss....................................... $(2,679) $(4,102) $(5,345) $(7,671) $(43,601)
======= ======= ======= ======= ========
Net loss per share:
Basic and diluted............................ $ (5.91) $ (5.43) $ (5.40)
======= ======= ========
Pro forma basic and diluted (unaudited)...... $ (4.30)
========
Shares used in per share computations:
Basic and diluted............................ 905 1,412 8,078
======= ======= ========
Pro forma basic and diluted (unaudited)...... 10,137
========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.......................... $ 695 $1,459 $ 510 $ 131 $5,036
Working capital (deficiency)....................... (658) 785 (4,497) (10,581) 210
Total assets....................................... 2,309 3,074 2,976 3,380 8,363
Long-term obligations, net of current portion...... 71 2,328 394 -- --
Total shareholders' equity (net capital
deficiency)...................................... (470) (560) (3,811) (9,571) 1,305
</TABLE>

25
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

We supply broadband wireless access systems used by telecommunications
service providers to deliver wireless, high-speed data connections to business
and residential subscribers. We sell our systems directly to service providers,
as well as to system integrators that deploy our systems as part of their
end-to-end network solutions for service providers. We have incurred significant
losses since our inception, and we expect to continue to incur net losses for
the foreseeable future. We incurred net losses of approximately $43.6 million
for the year ended December 31, 1999. As of December 31, 1999, our accumulated
deficit was approximately $66.2 million.

We were incorporated in 1996 in Delaware and succeeded to the business of
Vyyo Ltd., formerly PhaseCom Ltd., an Israeli company, under a reorganization.
As a result, Vyyo Ltd. became our wholly-owned subsidiary. Prior to our
introduction of broadband wireless access systems, we developed and marketed
cable broadband communication systems. Our first-generation broadband wireless
system was commercially deployed during the first quarter of 1999 for the local
multipoint distribution system, or LMDS, and the multichannel multipoint
distribution system, or MMDS, frequency bands. Our second-generation,
DOCSIS-based, broadband wireless access system was commercially deployed during
the first quarter of 2000 for the LMDS and MMDS frequency bands. Our
first-generation broadband wireless access system has been commercially deployed
at 21 domestic and international sites and our second-generation system has been
commercially deployed at one domestic site.

RESULTS OF OPERATIONS

NET REVENUES. Net revenues include product revenues and, in 1999,
technology development revenues. Product revenues are derived primarily from
sales of hubs and modems to telecommunications service providers and to system
integrators. Product revenues are generally recorded when products are shipped,
provided there are no customer acceptance requirements and we have no additional
performance obligations. We accrue for estimated sales returns or exchanges and
product warranty and liability costs upon recognition of product revenues.
Technology development revenues consist of license fees paid by Philips
Semiconductor under a license and development agreement, and are recognized when
the applicable customer milestones are met, including deliverables, but not in
excess of the estimated amount that would be recognized using the
percentage-of-completion method. We expect to complete this arrangement in 2000
and no other similar arrangements are contemplated. Deferred revenues represent
the gross profit on product revenues subject to return or exchange and total
payments on technology development not yet recognized.

26
<PAGE>
In 1999, approximately 61% of our revenues were derived from customers in
North America, 22% from customers in Europe, 13% from customers in Asia and 4%
from other regions.

Our revenue is concentrated among relatively few customers. In 1999, four
customers collectively represented approximately 59% of our net revenues. In
1999, revenues from each of four customers represented approximately 20%, 14%,
13% and 12% of net revenues. In 1998, revenues from each of three customers
represented approximately 31%, 23% and 15% of net revenues. In 1997, revenue
from each of three customers represented approximately 27%, 12% and 11% of total
revenues. Though our principal revenue-generating customers are likely to vary
on a quarterly basis, we anticipate that our revenues will remain concentrated
among a few customers for the foreseeable future. In August 1999, ADC
Telecommunications, Inc., one of our major customers, made an approximately 10%
equity investment in Vyyo.

Net revenues increased 59% from $1.5 million in 1997 to $2.4 million in 1998
and 73% to $4.2 million in 1999. This increase primarily reflects the increase
in unit sales of our systems in 1998 and 1999 and the technology development
activities in 1999. We began commercial shipments of our first-generation
broadband wireless access system in the first quarter of 1999, and we began
commercial shipments of our second-generation DOCSIS-based wireless access
system in the fourth quarter of 1999. All of our product revenues in 1997 and
1998, and a substantial portion of our product revenues in 1999, relate to sales
of cable modem products that we are no longer developing. Virtually all of the
remaining revenues in 1999 relate to sales of our first-generation wireless
modem products, which we phased out with the launch of our second-generation,
DOCSIS-based, wireless access systems in the fourth quarter of that year.
Therefore, the success of our business will be entirely dependent upon the
success of our wireless products generally, and our new DOCSIS-based wireless
products in particular. We do not anticipate recognizing material amounts of
revenue from cable modem or first-generation wireless products in subsequent
periods. Technology development revenues were $480,000 in 1999. There were no
technology development revenues in either 1997 or 1998.

COST OF REVENUES. Cost of revenues consist of costs of product revenues and
in 1999 included $313,000 of costs of technology development revenues. There
were no costs of technology development revenues in either 1997 or 1998. Cost of
technology development revenues consist of component and material costs, direct
labor costs, warranty costs, royalties in connection with Israeli government
incentive programs and overhead related to manufacturing our products. Cost of
technology development consist of direct labor costs and materials for the
engineering efforts related to the technology development arrangement.

Cost of revenues increased from $1.6 million in 1997 to $2.6 million in 1998
and to $4.3 million in 1999. These increases were attributable primarily to
increased shipments of our products in each of the three years and in 1999
included the technology development activities. Gross margins were negative in
each year. Gross

27
<PAGE>
margins in 1997 and 1998 were negatively affected by the high initial fixed
costs and low volumes associated with our proprietary cable modem products. In
addition, gross margins in 1999 were negatively affected by the high fixed costs
associated with the first generation wireless modem products and inventory
write-offs associated with the discontinuation of in-house cable modem assembly,
as well as the replacement of a modem system for a key customer with
next-generation technology. We expect that our gross margins will continue to
fluctuate.

Prior to 1997, we participated in several Israeli government research and
development incentive programs under which we received research and development
participation of approximately $3.7 million. We are obligated to pay royalties
at rates that generally range from 2.5% to 5% of revenues resulting from the
funded projects up to maximum amounts of 100% or 150% of the funded amount. As
of December 31, 1999, we had repaid or provided for the repayment of grants
amounting to $651,000. As we currently intend to gradually decrease the
manufacture and sale of products developed within any of the projects funded by
the Office of the Chief Scientist in the Israeli Ministry of Industry and Trade
or by the Israel-United States Binational Industrial Research and Development
Foundation, we believe that the remaining contingent royalty liability is
approximately $800,000.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
consist primarily of personnel, facilities, equipment and supplies for our
research and development activities. Substantially all of our research and
development activities are carried out in our facility in Israel. These expenses
are charged to operations as incurred. Our research and development expenses
increased from $2.4 million in 1997 to $3.3 million in 1998 and to $3.7 million
in 1999. These increases were due to increased levels of activities and related
costs of personnel and facilities. We believe significant investment in research
and development is essential to our future success and plan on increasing our
research and development activities. We expect to spend between $9 million and
$12 million on research and development activities in 2000. This includes
recruiting and hiring additional personnel and expanding our research and
development facility to accommodate the additional personnel, which will result
in increased expenses in absolute dollars. Accordingly, we expect that research
and development expenses will continue to increase in future periods.

SALES AND MARKETING EXPENSES. Sales and marketing expenses consist of
salaries and related costs of sales and marketing employees, consulting fees and
expenses for travel, trade shows and promotional activities. Selling and
marketing expenses increased from $1.5 million in 1997 to $2.4 million in 1998
and decreased to $2.0 million in 1999. The fluctuation in sales and marketing
expenses in each of the years was primarily due to changes in the number of
sales and marketing personnel. We plan to increase our sales and marketing
activities, including recruiting and hiring additional senior personnel, which
will result in increased expenses in absolute dollars. Accordingly, we expect
that sales and marketing expenses will increase in future periods.

28
<PAGE>
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
consist primarily of personnel and related costs for general corporate
functions, including finance, accounting, strategic and business development,
human resources and legal. General and administrative expenses increased from
$1.2 million in 1997 to $1.4 million in 1998 and to $2.1 million in 1999. We
recently hired additional senior management personnel and are planning to expand
operational and corporate activities, including support of our operations as a
public company. We expect that general and administrative expenses will increase
in future periods.

AMORTIZATION OF DEFERRED STOCK COMPENSATION. Deferred stock compensation
represents the aggregate differences between the respective exercise price of
stock options or purchase price of stock at their dates of grant or sale and the
deemed fair market value of our common stock for accounting purposes. Deferred
stock compensation is presented as a reduction of stockholders' equity and is
amortized over the vesting period of the underlying options. Amortization
expense was $9.3 million in 1999. We currently expect to record amortization of
deferred stock compensation expense of approximately $8.1 million in 2000,
$3.3 million in 2001 and $2.0 million thereafter for options issued through
December 31, 1999, and to record additional expenses for options granted
subsequent to that date.

CHARGE FOR AMENDED FINANCING ARRANGEMENT. Charge for amended financing
arrangement represents the aggregate differences between the amended notes
payable conversion price per share or the related amended warrants exercise
price and the deemed fair market value of our common stock for accounting
purposes.

INTEREST INCOME (EXPENSE), NET. Interest income (expense) consists of
interest earned on cash and cash equivalents offset by interest expense related
to bank loans and convertible notes. Net interest expense increased from
($244,000) in 1997 to ($524,000) in 1998 to ($717,000) in 1999 due to increased
borrowings.

INCOME TAXES. As of December 31, 1999, we had approximately $19 million of
Israeli net operating loss carryforwards and $41 million of United States
federal and state net operating loss carryforwards. The Israeli net operating
loss carryforwards have no expiration date and have not been recorded as tax
assets because the losses are expected to be utilized during a tax exempt
period. The United States net operating loss carryforwards expire in various
amounts between the years 2004 and 2019. We have provided a full valuation
allowance against our United States deferred tax assets as the future
realization of the tax benefit is not sufficiently assured.

QUARTERLY RESULTS OF OPERATIONS

The table below sets forth statement of operations data for each of the four
consecutive quarters for the year ended December 31, 1999. This information has
been derived from our unaudited consolidated financial statements. We have
prepared the unaudited consolidated financial statements on the same basis as
our audited consolidated financial statements contained elsewhere in this
prospectus and include

29
<PAGE>
all adjustments, consisting only of normal recurring adjustments, that we
consider necessary for a fair presentation of such information. You should read
this information in conjunction with our consolidated financial statements and
the accompanying notes appearing elsewhere in this prospectus. Our limited
operating history makes the prediction of future operating results difficult or
impossible. We do not believe that period-to-period comparisons of our operating
results are meaningful or should be relied upon as an indication of future
performance.

<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1999 1999 1999 1999
---------- --------- ------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net revenues...................................... 942 1,024 1,110 1,154
Cost of revenues.................................. (864) (1,147) (1,111) (1,194)
------ ------ ------ --------
Gross profit (loss)............................... 78 (123) (1) (40)
Operating expenses:
Research and development........................ 785 868 842 1,183
Sales and marketing............................. 378 376 574 644
General and administrative...................... 429 415 597 707
Amortization of deferred compensation........... -- 400 400 8,500
------ ------ ------ --------
Total operating expenses.......................... 1,592 2,059 2,413 11,034
------ ------ ------ --------
Operating loss.................................... (1,514) (2,182) (2,414) (11,074)
Charge for amended financing arrangements....... -- -- (5,200) (20,500)
Interest and other income (expense), net........ (198) (195) (163) (161)
------ ------ ------ --------
Net loss.......................................... (1,712) (2,377) (7,777) (31,735)
====== ====== ====== ========
</TABLE>

Cost of revenues in the third quarter of 1999 reflect approximately $200,000
in inventory write-downs associated with discontinuation of in-house cable modem
production. Operating expenses in the third and fourth quarters of 1999 reflect
higher sales and marketing and general and administrative expenses due primarily
to the general increase in personnel and the increase in sales and marketing and
corporate activities. Our quarterly operating results have varied significantly
in the past and are likely to vary significantly in the future. These variations
result from a number of factors, many of which are beyond our control. In
addition, our operating results may be below the expectations of securities
analysts and investors in future periods. Our failure to meet these expectations
will likely cause our share price to decline.

LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have funded operations primarily through the private
placement of our equity securities and borrowings from stockholders and banks.
We raised approximately $4.2 million in 1997, $6.8 million in 1998 and
$11.7 million in 1999 in convertible debt from stockholders and equity. As of
December 31, 1999, we had cash and cash equivalents of approximately
$5.0 million.

Cash used by operations include expenditures associated with development
activities and marketing efforts related to commercialization of our products.
In 1999,

30
<PAGE>
cash used in operations was $6.2 million comprised of our net loss of
$43.6 million, increase in accounts receivable of $336,000, partially offset by
non-cash charges of $35 million for deferred stock compensation and amended
financing agreements, a decrease in inventories of $512,000 and increase in
accounts payable and accrued liabilities of $1.5 million. In 1998, cash used in
operations was $6.7 million comprised of our net loss of $7.7 million, increase
in inventory of $638,000, partially offset by a $1.1 million increase in
accounts payable and accrued liabilities. In 1997, cash used in operations was
$4.7 million comprised of our net loss of $5.3 million, increase in inventory of
$639,000, partially offset by a $1.1 million increase in accounts payable and
accrued liabilities.

We have made investments in property and equipment of approximately
$1.3 million in 1997 through 1999.

We have a line of credit arrangement with a bank for an aggregate amount of
$2.5 million. The loans under this line of credit bear interest at a rate of
LIBOR plus 1.5%. At December 31, 1999, the applicable rate was 7.25% per annum.
Borrowings and bank guarantees under the line of credit were $2,280,000 and
$220,000 at December 31, 1999. As of December 31, 1999, all assets of our
Israeli subsidiary are subject to fixed and floating liens pursuant to certain
loan agreements.

Our capital requirements depend on numerous factors, including market
acceptance of our products, the resources we devote to developing, marketing,
selling and supporting our products, the timing and extent of establishing
additional international operations and other factors. We expect to devote
substantial capital resources to hire and expand our research and development
and our sales and marketing organizations, to expand marketing programs and for
other general corporate activities. In particular, we expect to spend between
$9 million and $12 million on research and development activities in 2000. We
expect that the net proceeds from this offering and cash from operations will be
sufficient to meet our working capital and capital expenditure needs for at
least the next 12 months. After that, we may need to raise additional funds for
a number of uses. If we raise additional funds through the issuance of equity or
convertible debt securities, the price paid for such securities may be
substantially less than the price paid for the common stock sold in this
offering and, in any event, the percentage ownership of our existing
stockholders will be reduced. We may not be able to obtain additional funds on
acceptable terms, or at all. If we cannot raise needed funds on acceptable
terms, we may not be able to increase our ongoing operations and complete our
planned expansion, take advantage of acquisition opportunities, develop or
enhance systems or respond to competitive pressures.

EFFECTIVE CORPORATE TAX RATES

Our tax rate will reflect a mix of the United States federal and state tax
on our United States income and Israeli tax on non-exempt income. The majority
of our Israeli subsidiary's income is derived from our company's capital
investment program

31
<PAGE>
with "Approved Enterprise" status under the Law for the Encouragement of Capital
Investments, and is eligible therefore for tax benefits. Because of these
benefits, we will enjoy a tax exemption on income derived from this investment
program for a period of six years commencing in the first year in which the
Israeli subsidiary will have taxable income, provided that we do not distribute
such income as a dividend, and a reduced tax rate of 10 to 15% for up to four
subsequent years. All of these tax benefits are subject to various conditions
and restrictions. There can be no assurance that we will obtain approval for
additional Approved Enterprises Programs or that the provisions of the law will
not change. Since we have incurred tax losses through December 31, 1999, we have
not yet used the tax benefits for which we are eligible.

YEAR 2000 ISSUES

We currently are not aware of any Year 2000 problem in any of our critical
systems and products. However, the success to date of our Year 2000 efforts
cannot guarantee that a Year 2000 problem affecting third parties upon which we
rely will not become apparent in the future, which could harm our business.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities, or SFAS
No. 133, which establishes accounting and reporting standards for derivative
instruments and hedging activities. The statement requires recognition of all
derivatives at fair value in the financial statements. FASB Statement No. 137,
Accounting for Derivative Instruments and Hedging Activities Deferral of the
Effective Date of FASB Statement No. 133, an amendment of FASB Statement
No. 133, defers implementation of SFAS No. 133 until fiscal years beginning
after June 15, 2000. We believe that upon implementation the standard will not
have a significant effect on our financial statements.

DISCLOSURES ABOUT MARKET RISK

We are exposed to financial market risks including changes in interest rates
and foreign currency exchange rates. As of December 31, 1999, we had cash and
cash equivalents of $5.0 million. Substantially all of these amounts consisted
of checking account cash balances and are therefore not subject to interest rate
risk. Substantially all of our revenue and capital spending is transacted in
U.S. dollars, although a substantial portion of the cost of our operations,
relating mainly to our personnel and facilities in Israel, is incurred in New
Israeli shekels, or NIS. We have not engaged in hedging transactions to reduce
our exposure to fluctuations that may arise from changes in foreign exchange
rates. In the event of an increase in inflation rates in Israel, or if
appreciation of the NIS occurs without a corresponding adjustment in our
dollar-denominated revenues, our results of operation and business could be
materially harmed.

32
<PAGE>
BUSINESS

OVERVIEW

We supply broadband wireless access systems used by telecommunications
service providers to deliver wireless, high-speed data connections to business
and residential subscribers. Our systems are deployed in point-to-multipoint
applications at the radio frequencies licensed for two-way broadband
communication. Point-to-multipoint technology refers to the ability of a
central, wireless hub to transmit and receive network traffic to and from
multiple subscriber modems. Our systems are based on the Internet protocol, or
IP, which is the networking standard used to deliver voice and data over the
Internet. Networking standards are the special set of rules for communicating
that the end points in a telecommunication connection use when they send signals
back and forth. Our system is designed to allow service providers to support
rapid and cost-effective broadband service roll-outs directly to business and
residential subscribers. Service providers use our system to bridge the segment
of the network that connects the service providers' systems directly to the
subscribers, commonly referred to as the last mile.

In recent years, the volume of high-speed data traffic across worldwide
communications networks has grown dramatically as the public Internet and
private corporate intranets have been broadly adopted for communications and
e-commerce. This traffic growth has created demand for cost-effective,
high-speed communications, as subscribers increasingly rely on numerous
applications and data-intensive content, such as full-streaming video where
subscribers watch video clips with sound over the Internet, voice over IP where
subscribers conduct voice calls over the Internet instead of their telephones,
and provide remote access to corporate networks where telecommuters can access
corporate networks from locations other than their offices. In the United States
and abroad, the communications industry is in varying stages of deregulation.
Deregulation has created the opportunity for new competitors to use existing and
emerging broadband technologies to offer multiple communications services
directly to subscribers. There are a number of broadband wire-based technologies
that do not utilize airwaves for data and voice transport, but instead use
copper wire, fiber optic cable, or other physical wires to transport voice and
data. These wire-based technologies deliver high-speed connections, but
performance, cost, time for deployment or service availability may limit the use
of these alternative technologies to satisfy the needs of service providers and
subscribers. Broadband wireless technologies deliver high-speed connections and
offer service providers the ability to rapidly and cost-effectively expand their
subscriber base or to enter new markets while avoiding the limitations of the
existing wire-based infrastructure.

Our system consists of a wireless hub, which serves as a point of
convergence for data traffic in a network, network management system software
and wireless subscriber modems. Each wireless hub is located at a base station,
which houses the components in the network. Our system is designed to allow
service providers to

33
<PAGE>
rapidly deploy cost-effective, high-speed data connections directly to business
and residential subscribers. Each hub transmits and receives network traffic to
and from our wireless modems, which are installed at multiple subscriber
locations. Our integrated network management system, which manages the traffic
over the network, optimizes how quickly and efficiently the system operates by
allocating bandwidth, or the amount of data which can travel over the wireless
signal. These system characteristics allow service providers to maximize the
number of simultaneous subscribers on their networks. Using our
point-to-multipoint system, service providers can roll out network service
quickly and with a minimal initial investment and can then expand their networks
by adding more wireless hubs and subscriber wireless modems as the number of
subscribers grows.

We sell our systems directly to service providers and system integrators,
who provide network planning and integration services and integrate our systems
with other components in the network and provide their customers with end-to-end
network solutions. We also provide system integration services to some of our
service provider customers to more effectively implement our systems. As of
January 31, 2000, our first-generation system had been commercially deployed at
21 domestic and international sites and our second-generation system had been
commercially deployed at one domestic site. Our second-generation systems use
our enhanced version of the cable industry's Data Over Cable Service Integration
Specification, or DOCSIS, standard.

We have applied for federal registration of our trademarks DOCSIS(+) and
LMDS Lite. Other service marks, trademarks and trade names referred to in this
prospectus are the property of their respective owners.

INDUSTRY BACKGROUND

Use of the Internet and private communications networks has expanded and
continues to expand rapidly. International Data Corporation estimates that there
were 142 million Internet subscribers at the end of 1998, and projects that this
number will grow to over 500 million subscribers by 2003. Businesses
increasingly depend upon data networks, not only for communication within the
office, but also to exchange information among corporate sites, remote
locations, telecommuting employees, business partners, suppliers and customers.
Consumers are also accessing the Internet to communicate, collect and publish
information and conduct retail purchases.

The growth in data traffic is resulting in an increase in the demand for
high-speed access. In light of this demand, the FCC has taken steps to increase
the availability of frequencies and bandwidth that may be used by wireless
carriers in the United States for such data transmission. The FCC has increased
the availability of various frequencies within the bands of 24 to 40 Gigahertz,
or GHz, frequencies often referred to as LMDS. In addition, an FCC ruling in
September 1998 allowed license holders of MMDS, or various frequencies within
the band of 2.15 to 2.68 GHz, to offer two-way broadband wireless data services.
Previously, these frequencies had been

34
<PAGE>
restricted to one-way video transmissions. The FCC has also adopted orders to
allocate additional spectrum through auctions during 2000 which can be used by
high-speed data transmission service providers. Opportunities in broadband
wireless access are increasing globally as Europe, Latin America, Asia Pacific
and Canada join the United States in promoting competition in the local
communications services market by allocating frequencies and bandwidth and
issuing transmission licenses. In this regard, at least 26 countries have
allocated broadband wireless frequency bands for use or trials in the last mile,
according to Global Telephony.

Deregulation has been a significant catalyst for increased competition in
the long-haul segment of the market and massive spending on network
infrastructure, as incumbent and emerging carriers have sought to address the
growing demand for bandwidth. In the local access segment of the market,
deregulation has also been a significant catalyst for the growing interest in
providing broadband access directly to subscribers. Data services that
historically were offered only by a single provider for a region now may be
offered by a number of competing service providers. This increased competition
has given local service providers compelling incentives to improve data
transmission rates in order to offer additional value-added services to
subscribers. However, bandwidth limitations of the existing last mile
infrastructure have constrained service providers from exploiting these
opportunities. Last mile links to subscribers typically consist of copper wires
that operate at substantially lower transmission speeds than those offered in
the long-haul segment of a network, or by some available broadband alternatives.
These copper wires were originally intended to carry only analog
circuit-switched, voice signals. As a result, the last mile has become a
bottleneck that limits high-speed data transmission.

Alternative technologies for broadband access include:

- DIGITAL SUBSCRIBER LINE. Digital subscriber line, or DSL, technology
improves the data transmission rates of a telephone company's existing
copper wire network.

- CABLE MODEMS. Cable modems are designed to provide broadband Internet
access and are targeted primarily at the residential market.

- FIBER-BASED SOLUTIONS. Fiber-based solutions and high-capacity leased
lines offer the highest data transmission rate of any of the alternative
technologies for broadband access.

- POINT-TO-POINT WIRELESS TECHNOLOGY. Point-to-point wireless technology
enables data transmission using a dedicated radio link between two
locations.

- BROADBAND POINT-TO-MULTIPOINT WIRELESS TECHNOLOGY. Broadband
point-to-multipoint wireless networks consist of a wireless hub that
communicates over radio frequencies to transmit and receive network
traffic to and from wireless modems installed at multiple subscriber
locations.

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Broadband wireless technology is being utilized by both incumbent and
emerging service providers. The established carriers are expected to use
broadband wireless technology to reach new customers to whom they previously
could not provide access, fill coverage gaps in their existing networks and
deploy value-added services in a cost-effective manner. For example,
International Data Corporation reports that in 1999, Sprint and MCI WorldCom
spent over $1.5 billion to purchase companies holding MMDS licenses. Emerging
carriers may use this technology to bypass existing wire-based infrastructure
and to compete with incumbent carriers. In addition, this technology may be used
to deploy broadband services in regions where there is no wire-based
communications infrastructure. International Data Corporation estimates that
revenue generated by basic services delivered via fixed wireless technologies
will grow from $767 million last year to $7.4 billion in 2003.

THE VYYO SOLUTION

Our systems are designed to provide the following benefits:

COST-EFFECTIVENESS. Service providers worldwide are beginning to use
wireless access technologies as a cost-effective alternative to wire-based
communications, such as cable modems and digital subscriber lines. Our wireless
system avoids many of the high costs associated with wire-based solutions, such
as costs of installing copper wire, cable or fiber and obtaining access
rights-of-way and digging up streets to lay wire. We believe that our systems
are more cost-effective than other wireless access systems because our IP-based
systems are easy to operate and less expensive to install and maintain. Our
second-generation systems use our enhanced version of the DOCSIS standard, which
also contributes to cost-effectiveness.

DOCSIS-BASED SYSTEMS. We use our enhanced version of the DOCSIS standard,
which we call DOCSIS(+), in our second-generation wireless access systems.
Because different manufacturers may use different protocols or rules for
communicating and sending signals back and forth in their products, these
products are often unable to communicate with one another or with products from
other manufacturers. By designing systems with communication rules based on the
DOCSIS standard, our systems can be more easily adapted to new standards and
rules and make them easier to integrate with other manufacturers' equipment.
Widely-available key components make our DOCSIS-based systems less expensive to
use than most other currently available systems.

COMMERCIAL DEPLOYMENTS. Our product is one of the first commercially
available wireless hub and modem systems for the multichannel multipoint
distribution system, or MMDS, and local multipoint distribution system, or LMDS,
frequency bands. Our first-generation system has been commercially deployed at
21 domestic and international sites and our second-generation, DOCSIS-based,
system has been commercially deployed at one domestic site.

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FLEXIBLE PLATFORM. Our systems are highly scalable which allows additional
users and hubs to be added quickly and easily, so our customers can establish a
wireless broadband access network with a relatively low initial investment and
later expand the geographic coverage area of the network and increase the number
of users who can be served on the network as subscriber demand increases. Our
integrated network management system is designed to allow new system features
and benefits to be added without costly replacements of existing hardware.
Service providers also use the integrated network management system to manage
the traffic over the network and optimize the how quickly and efficiently the
system operates by efficiently allocating bandwidth, or the amount of data which
can travel over the wireless signal. These system characteristics allow service
providers to maximize the number of simultaneous end-users served by a hub while
preserving the speed and quality of data transmission.

STRATEGY

Our objective is to be a leading worldwide supplier to service providers and
system integrators of broadband wireless access systems used in
point-to-multipoint applications. Our strategy to accomplish this objective is
to:

- USE EXISTING COMMERCIALLY DEPLOYED SYSTEMS TO DEMONSTRATE OUR
CAPABILITIES. We intend to use the early acceptance of our systems to
demonstrate our capabilities to potential customers as we seek to expand
our customer base.

- BROADEN OUR PRODUCT OFFERINGS. We intend to develop products with
additional features and benefits and new systems for use in additional
wireless frequency bands worldwide as these frequencies become available.
We expect to make relatively minor modifications in our transmission
components to enable our systems to operate in different frequency bands.
We do not expect to redesign our entire system architecture.

- IMPROVE COST-EFFECTIVENESS AND PERFORMANCE. We intend to continue
improving the performance and quality of our systems, while reducing costs
by integrating advanced components. We are developing additional software
code, which is intended to enhance the functions of the system and
allocate frequencies more efficiently.

- LEVERAGE KEY STRATEGIC RELATIONSHIPS. We have established strategic
relationships with several service providers and system integrators. We
expect to strengthen our existing relationships and establish new
relationships with other system integrators and service providers, to
increase product distribution and expand into additional geographic
markets.

- PARTICIPATE IN DEVELOPING INDUSTRY STANDARDS. We expect that our
technological expertise will allow us to play an integral role in the
development of the wireless DOCSIS standard. In this regard, we are
participating in the Institute of Electrical and Electronic Engineers, or
IEEE, subcommittee to develop wireless industry standards.

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<PAGE>
PRODUCTS

Our systems are deployed in point-to-multipoint applications at the
frequencies licensed for these applications. Our system is comprised of wireless
hubs and wireless subscriber modems.

The following diagram depicts our broadband wireless access system:

[The graphic is a base station connected to an antenna that transmits to a modem
located in residences and businesses.]

- Point-to-multipoint wireless hubs are located in base stations and send
and receive data traffic to and from up to 8,000 wireless subscriber
modems at very high speeds. Our network management system manages and
controls the traffic transmitted over our broadband wireless system.

- Our wireless modems connected to PCs or LANs are located in residences,
small/home offices, and medium-sized businesses. These modems send and
receive data traffic and provide access to the Internet.

- Our wireless hub interfaces with a router located in the base station that
sends data traffic to the Internet and, in the future, will send voice
traffic to the gateway that connects with the public telephone network.

- System integrators or service providers add additional network equipment,
such as antennae to transmit wireless radio frequency signals, and
complete the network infrastructure.

WIRELESS HUB. Our wireless hub manages data communications between wireless
modems located at subscribers' locations and network devices such as routers
located at a central office or base station. The primary role of the wireless
hub is to manage

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the upstream traffic from the subscriber toward the public telephone and data
networks, and the downstream traffic from the networks toward the subscriber.
Our wireless hub can support up to 8,000 wireless modems.

Our wireless hub employs a unique open physical layer architecture that
allows us to easily replace the circuit boards in the hub as more sophisticated
technology becomes available. Our wireless hub is designed to support a variety
of channel capacities by using any combination of six upstream receivers and
four downstream transmitters. For example, our system can provide, among other
combinations, 60 upstream channels and 8 downstream channels or 48 upstream
channels and 16 downstream channels. A channel is a subdivision of a frequency
band used to transmit radio frequency signals. This flexibility allows the
system engineer to configure a system for each specific situation. Several
frequency bands may be used within the same wireless hub.

Our wireless hub may be accessed for modification or transmitter or receiver
module replacement by the operator while maintaining continuous operation. Most
of the modules are identical, which is intended to reduce maintenance and
inventory requirements. When used in combination with our wireless modems, our
wireless hub enables radio frequency performance in any of the currently
licensed point-to-multipoint frequency bands. Multiple wireless hubs may be
controlled through the same network management system operator interface, either
locally or from a remote location.

Our integrated network management system is a Windows NT-based software
package that manages overall system operations. The system features graphical
views of all parts of the network, subscribers, modems and traffic patterns. The
network management system allows network operators to configure, maintain and
troubleshoot hubs and modems from a central workstation. Our network management
system also enables the network operator to work at a location remote from the
public telephone network or the data network, thereby increasing the system's
operational flexibility. In addition, our systems can adjust automatically to
more efficiently utilize available bandwidth. This utilization can translate
into increased potential revenue for service providers as compared to other
currently available wireless products.

WIRELESS MODEM. Our wireless subscriber modem is suitable for residential,
home office or small office deployment. It supports up to 15 individual users
simultaneously through a separate Ethernet hub or switch.

We introduced our first-generation broadband wireless access system during
the third quarter of 1998, for the LMDS frequency band, and during the first
quarter of 1999, for the MMDS frequency band. We introduced our
second-generation broadband wireless access system during the fourth quarter of
1999, for the MMDS and LMDS frequency bands. Currently, the primary frequency
bands for broadband

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<PAGE>
data services in the United States or other countries are various frequencies
within these bands:

- WCS--Wireless Communications Service--2.305 to 2.320 GHz and 2.345 to
2.360 GHz;

- MMDS--Multichannel Multipoint Distribution Service--2.150 to 2.680 GHz;
and

- LMDS--Local Multipoint Distribution Service--24 to 40 GHz.

We began commercial shipments of our first-generation broadband wireless
access system in the first quarter of 1999, and we began commercial shipment of
our second-generation, DOCSIS-based, wireless access system in the fourth
quarter of 1999. All of our product revenues in 1997 and 1998, and a substantial
portion of our product revenues in 1999, relate to sales of cable modem products
that we are no longer developing. Virtually all of the remaining revenues in
1999 relate to sales of our first-generation wireless modem products, which we
phased out with the launch of our second-generation, DOCSIS-based, wireless
access systems in the fourth quarter of that year. Therefore, the success of our
business will be entirely dependent upon the success of our wireless products
generally, and our new DOCSIS-based wireless products in particular.

TECHNOLOGY

Our experience in designing shared bandwidth communications systems using
time division multiple access technology is the foundation of our expertise in
the point-to-multipoint broadband wireless access market. "Time division
multiple access" is a wireless technology that allows multiple users to share
available bandwidth. We believe that we have extensive expertise in system
design, as well as modem and broadband radio frequency technology. We have
developed media access controller, or MAC, layer algorithms, or software code,
that maximize the number of subscribers that can share a single upstream
channel.

INTERNET PROTOCOL EXPERTISE. Our system architecture supports Internet
Protocol communications traffic, and our primary systems component, the media
access controller, is optimized for Internet Protocol communications traffic. We
have designed our systems to support variable-length Internet Protocol packets,
which carry the data being transmitted, including the most common packet size of
64 bytes.

DOCSIS(+) STANDARD. Our second-generation systems are based on the cable
industry's DOCSIS standard that we have adapted and enhanced for use in the
wireless environment. Our DOCSIS(+) standard provides for comprehensive support
of all Internet Protocol-based services. We believe that we are the first
company to modify the DOCSIS standard to suit the wireless environment. We have
developed media access controller layer algorithms, or software code, based on
DOCSIS(+) for our

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<PAGE>
wireless hubs and modems and have made additional enhancements to facilitate
reliable communication over the MMDS and LMDS frequency bands.

ENHANCED MAC LAYER ALGORITHMS. Our enhanced media access controller layer
software code, combined with select physical layer software code, provide robust
performance under adverse conditions and effectively utilize the limited
frequency and bandwidth allocations of the MMDS band.

SIGNAL PROCESSING TECHNOLOGY. We develop, deploy and support the networking
architecture for the multiple modules required in our systems. Specifically, we
have developed technology that is designed to correct transmission errors and
prevent unauthorized access to the data being transmitted. We believe that our
ability to rapidly develop and integrate such modules into our systems provides
us with a competitive advantage.

SCHEDULING ALGORITHMS. We develop scheduling software code for time
division multiple access-based point-to-multipoint systems. Our network
management system is designed to predict user behavior and automatically adjust
allocation of frequencies to more efficiently utilize bandwidth. The ability to
control and modify the characteristics of the network management system allows
us to further optimize them for changing environments and future services.

CUSTOMERS

We sell our systems directly to service providers and system integrators
that deploy our systems as part of their end-to-end network solutions for
service providers. We also provide system integration services to some of our
service provider customers to more effectively implement our systems. We sell
our systems based on individual purchase orders. Our customers are not obligated
by long-term contracts to purchase our systems. Our customers can generally
cancel or reschedule orders upon short notice and can discontinue using our
systems at any time.

COLLABORATION AGREEMENT. In August 1999, we entered into a collaboration
agreement with ADC Telecommunications, under which we agreed to sell our hubs
and modems to ADC for resale and distribution to ADC's customers at a market
price to be established by good faith negotiation between ADC and us. Under this
agreement, ADC has the exclusive right to market, sell and distribute our
products to MCI WorldCom, Sprint, BellSouth, Wireless One and Irish Multi
Channel. We also

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<PAGE>
agreed to grant to ADC a non-exclusive license to use specified software
embedded in or provided with our products.

In connection with the collaboration agreement, ADC made about a 10% equity
investment in Vyyo. Additional information regarding ADC's investment is
contained in this prospectus under the heading "Certain Relationships and
Related Transactions."

LICENSE AND DEVELOPMENT AGREEMENT. In December 1999, we entered into a
license and development agreement with Philips Semiconductor relating to cable
modem systems. Under this contract, we agreed to license two versions of our
DOCSIS MAC system to Philips. We have given Philips a non-exclusive,
royalty-free right to use our DOCSIS 1.0 MAC in exchange for a one-time license
fee. In addition, we have given Philips a non-exclusive, royalty-bearing right
to use our DOCSIS 1.1 MAC in exchange for a license fee, a percentage of which
is paid upon the achievement of specified milestones related to the development
of the DOCSIS 1.1 MAC.

SALES AND MARKETING

The global telecommunications industry is dominated by a limited number of
network system integrators. We focus our marketing efforts on network system
integrators that have the means to provide vendor financing in situations where
our equipment is purchased as part of the total network. For some service
providers, this financing is a necessary part of the total network solution. We
support our system integrator customers with site demonstrations for their
service provider customers. The objective of a site demonstration is to promote
the adoption of our systems for deployment within the service provider's
network.

We also sell our systems directly to service providers. In determining which
accounts to service directly, we focus on those service providers that prefer to
work with a vendor directly and serve as their own system integrator. In some
instances, we may serve as a system integrator and provide, through third
parties, the other components of the network system.

Our direct sales force maintains contact with the service provider and the
system integrator account team, regardless of the actual distribution channel.
This contact keeps us informed of the evolving needs of the service providers
and helps strengthen our relationship with each customer. In some markets, we
have established distribution relationships with local resellers that also
provide support and maintenance to their service provider customers.

Our marketing group provides marketing support services for our executive
staff, direct sales force, system integrators and resellers. Through our
marketing activities, we provide technical and strategic sales support to our
direct sales personnel and system integrators or resellers, including in-depth
product presentations, technical manuals, sales tools, pricing, marketing
communications, marketing research, trademark administration and other support
functions.

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Our marketing group is also responsible for product management activities
throughout each product's lifecycle. These activities include the definition of
product features, approval of product releases, specification of enhancements to
our product and service offerings, and determination of future product
platforms.

MANUFACTURING

We outsource manufacturing to contract manufacturers that have the expertise
and ability to reduce costs associated with volume manufacturing and to respond
quickly to customer orders while maintaining high quality standards. We
outsource printed circuit board assembly and manufacturing of our wireless hubs
to contract manufacturers located in Israel. We outsource manufacturing of our
wireless modems to a contract manufacturer located in Taiwan. Any inability of
these manufacturers to provide the necessary capacity or output could result in
significant production delays which could harm our business. Our wireless hubs
and modems are currently purchased on a purchase order basis. We have no
guaranteed supply or long-term contractual agreements with any of our suppliers.
In addition, some of the components included in our systems are obtained from a
single source or limited group of suppliers. The partial or complete loss of
such suppliers could increase our costs, delay shipments or require redesigns of
our products.

We assemble our wireless hubs and perform final tests on our systems at our
facility located in Jerusalem, Israel. Our facility is ISO 9002-certified. ISO
9002 is a set of international quality assurance standards for companies
involved in the design, development, manufacturing, installation and servicing
of products or services. These standards are set by the International
Organization for Standardization, or ISO, an international federation of
national standards bodies. To be recommended for ISO 9002 certification, a
company must be audited by an ISO-accredited auditing company and must meet or
surpass ISO standards.

RESEARCH AND DEVELOPMENT

The goal of our research and development activities is to continue the
development and introduction of next-generation products for our customers. Our
efforts are also focused on reducing the cost and increasing the functionality
of our systems, while adapting them to the frequency and interface
specifications required for new markets. Our ongoing new product development
program assesses service providers' needs and technological changes in the
communications market. We are pursuing new generations of many of our products,
including our second-generation system for MMDS frequencies, our
second-generation system for LMDS frequencies and high-capacity,
third-generation wireless hubs for LMDS frequencies.

We believe that our extensive experience designing and implementing high
quality network and radio components and system software allows us to develop
high-value integrated systems solutions. As a result of these development
efforts, we believe that we have created an industry-leading platform for
cost-effective broadband wireless voice and data delivery with dynamic bandwidth
allocation.

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Our future success depends on our continued investment in research and
development in radio, networking and software technologies, and we expect to
continue to invest a significant portion of revenues in this area. Our research
and development expenditures were $2.4 million for 1997, $3.3 million for 1998
and $3.7 million for 1999. We are currently investing significant resources to
enhance our network management system software, integrate base station
components and extend the capabilities, frequencies and transmission capacity of
our systems.

As of December 31, 1999, our research and development staff consisted of 53
employees, all of whom are located in Israel.

COMPETITION

The market for broadband wireless access systems is intensely competitive,
rapidly evolving and subject to rapid technological change. The principal
competitive factors in this market include:

- product performance and features;

- price of competitive products;

- reliability and stability of operation;

- ability to develop and implement new services and technologies;

- ability to support newly allocated frequencies; and

- sales capability, technical support and service.

The primary competing alternative technologies for broadband access include:

DIGITAL SUBSCRIBER LINE. Digital subscriber line, or DSL, technology today
transmits data approximately 50 times faster than a conventional dial-up modem
using the existing copper wire network. DSL transmission rates are limited,
however, by the length and quality of the available copper wires. Various
implementations of DSL are being developed and deployed. Service providers
deploying DSL technology include incumbent local exchange carriers, such as SBC
Communications, Inc. and Bell Atlantic Corporation, as well as numerous
competitive local exchange carriers.

CABLE MODEMS. Cable modems are designed to provide broadband Internet
access and are targeted primarily at the residential market. Cable lines pass by
100 million homes in North America, but only a portion of those homes currently
have access to two-way cable modem service. Several cable companies are
currently offering broadband access services across two-way cable, including
Excite@Home and Time Warner. In addition, we believe that as a result of AT&T's
recent acquisition of Tele-Communications, Inc. and the proposed merger of
America Online, Inc. and Time Warner, cable TV networks will be used
increasingly for voice and high-speed data services.

FIBER-BASED SOLUTIONS. Fiber-based solutions and high-capacity leased lines
offer the highest data transmission rate of any of the alternative technologies
for broadband access. Fiber optic cables use pulses of light to transmit digital
information. Because

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fiber optic cables support thousands of high-speed, local digital connections
onto a single higher-speed connection to the central office or the central side
of the cable TV network where all the video signals emanate, they offer
virtually unlimited bandwidth capacity. Due to their high capacity, fiber optic
cables are increasingly being used in the access network in both
telecommunications and cable TV applications. However, these solutions are
costly to deploy for small business and residential subscribers.

DSL and cable modem technologies offer data transmission speeds comparable
to our broadband wireless technology at comparable modem costs. Fiber optic
cable provides faster transmission rates than our broadband wireless technology,
though at significantly higher costs.

Many of our competitors and potential competitors have substantially greater
financial, technical, distribution, marketing and other resources than we have
and, therefore, may be able to respond more quickly to new or changing
opportunities, technologies and other developments. In addition, many of our
competitors have longer operating histories, greater name recognition and
established relationships with system integrators and service providers. These
competitors may also be able to undertake more extensive marketing campaigns,
adopt more aggressive pricing policies and devote substantially more resources
to developing new products. Our primary competitor is Hybrid Networks, Inc. In
addition, well-capitalized companies such as Cisco Systems, Lucent Technologies,
Nortel Networks, Newbridge Networks and other vendors have announced plans to
enter, or are potential entrants into, the broadband wireless market. These
vendors have been attracted by recent investments by MCI WorldCom, Sprint and
other service providers in wireless operations. Most of these competitors have
existing relationships with one or more of our prospective customers. We may not
be able to compete successfully against our current and future competitors and
competitive pressures may seriously harm our business.

GOVERNMENT REGULATION

Our business is premised on the availability of certain radio frequencies
for broadband two-way communications. Radio frequencies are subject to extensive
regulation under the laws of the United States, foreign laws and international
treaties. Each country has different regulation and regulatory processes for
wireless communications equipment and uses of radio frequencies. The regulatory
environment in which we operate is subject to significant change, the results
and timing of which are uncertain. Historically, in many countries the
unavailability of radio frequencies for two-way broadband communications has
inhibited the growth of such networks. The process of establishing new
regulations for broadband wireless frequencies and allocating such frequencies
to operators is complex and lengthy. Our customers and potential customers may
not be able to obtain sufficient frequencies for their planned uses of our
systems. Failure by the regulatory authorities to allocate suitable, sufficient
radio frequencies for such uses in a timely manner could deter potential
customers from ordering our systems and seriously harm our business.

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Our systems must conform to a variety of domestic, foreign and international
regulatory requirements established to, among other things, avoid interference
among users of radio frequencies and permit interconnection of equipment.
Regulatory bodies worldwide have adopted and are adopting or revising standards
for wireless communications products. The emergence or evolution of regulations
and industry standards for broadband wireless products, through official
standards committees or widespread use by operators, could require us to modify
our systems, which may be expensive and time-consuming, and incur substantial
compliance costs and seriously harm our business.

We are subject to export control laws and regulations with respect to all of
our products and technology. We are subject to the risk that more stringent
export control requirements could be imposed in the future on product classes
that include products exported by us, which would result in additional
compliance burdens and could impair the enforceability of our contract rights.
Some of our products contain encryption technologies to enable the transfer of
data in a manner that preserves the privacy of the parties communicating such
data. United States law requires that we obtain an export license for our
systems and that we comply with various restrictions on exporting our systems to
certain countries. Our United States license expires October 31, 2000. Under
Israeli Law, means of encryption and encryption equipment are controlled
commodities within the meaning of the Control of Commodities and Services Law,
5718-1957, and are therefore subject to the prohibitions, restraints,
supervision and control governing it by virtue of such law and regulations and
orders thereunder. Such law and regulation prohibit the engagement in means of
encryption otherwise than pursuant to a license from the authorized person
appointed by the Minister of Defense. Vyyo Ltd.'s license to engage in
encryption expires on February 28, 2001. We may not be able to renew these
licenses as necessary from time to time. In addition, we may be required to
apply for additional licenses to cover modifications and enhancements to our
products. Any revocation or expiration of any requisite license, the failure to
obtain a license for product modifications, or more stringent export control
requirements could seriously harm our business.

INTELLECTUAL PROPERTY

We have 16 patent applications pending in the United States. We rely on a
combination of patent, copyright and trademark laws, trade secrets and
confidentiality and other contractual provisions to establish and protect our
proprietary rights, each of which is important to our business.

Our success depends in part on our ability to protect our proprietary
technologies. Our pending or future patent applications may not be approved and
the claims covered by such applications may be reduced. If allowed, our patents
may not be of sufficient scope or strength, others may independently develop
similar technologies or products, duplicate any of our products or design around
our patents, and the patents may not provide us competitive advantages. Further,
patents held by third parties may not prevent the commercialization of products
incorporating our

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<PAGE>
technologies or third parties may challenge or seek to narrow, invalidate or
circumvent any of our pending or future patents. We also believe that foreign
patents, if obtained, and the protection afforded by such foreign patents and
foreign intellectual property laws, may be more limited than that provided under
United States patents and intellectual property laws. Litigation, which could
result in substantial costs and diversion of effort by us, may also be necessary
to enforce any patents issued or licensed to us or to determine the scope and
validity of third-party proprietary rights. Any such litigation, regardless of
outcome, could be expensive and time-consuming, and adverse determinations in
any such litigation could seriously harm our business.

We also rely on unpatented trade secrets and know-how and proprietary
technological innovation and expertise which are protected in part by
confidentiality and invention assignment agreements with our employees, advisors
and consultants and non-disclosure agreements with certain of our suppliers and
distributors. These agreements may be breached, we may not have adequate
remedies for any breach or our unpatented proprietary intellectual property may
otherwise become known or independently discovered by competitors. Further, the
laws of certain foreign countries may not protect our products or intellectual
property rights to the same extent as do the laws of the United States.

From time to time, third parties, including our competitors, may assert
patent, copyright and other intellectual property rights to technologies that
are important to us. We expect that we will increasingly be subject to license
offers and infringement claims as the number of products and competitors in our
market grows and the functionality of products overlaps. In this regard, in
early 1999, we received a written notice from Hybrid Networks in which Hybrid
claimed to have patent rights in certain technology. Hybrid requested that we
review our products in light of six of Hybrid's issued patents.

We, with the advice of counsel, believe the patents are invalid or are not
infringed by our products. However, others' patents, including Hybrid's, may be
determined to be valid, or some or all of our products may ultimately be
determined to infringe the Hybrid patents or those of other companies. Hybrid or
other companies may pursue litigation with respect to these or other claims. The
results of any litigation are inherently uncertain. In the event of an adverse
result in any litigation with respect to intellectual property rights relevant
to our products that could arise in the future, we could be required to obtain
licenses to the infringing technology, pay substantial damages under applicable
law, to cease the manufacture, use and sale of infringing products or to expend
significant resources to develop non-infringing technology. Licenses may not be
available from third parties, including Hybrid, either on commercially
reasonable terms or at all. In addition, litigation frequently involves
substantial expenditures and can require significant management attention, even
if we ultimately prevail. Accordingly, any infringement claim or litigation
against us could significantly harm our business, operating results and
financial condition.

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EMPLOYEES

As of December 31, 1999, we had 98 full-time employees, of whom 15 were
employed in the United States and 83 were employed in Israel. Of these full-time
employees, 53 were principally dedicated to research and development, 11 were
dedicated to sales, marketing and customer support and 24 were involved in
manufacturing and operations. None of our U.S. employees is represented by a
union.

Our Israeli subsidiary is subject to Israeli labor laws and regulations with
respect to our Israeli employees. These laws principally concern matters such as
paid annual vacation, paid sick days length of work day and work week, minimum
wages, pay for overtime, insurance for work related accidents, severance pay and
other conditions of employment.

Our Israeli subsidiary and our Israeli employees are subject to provisions
of the collective bargaining agreements between the Histadrut, the General
Federation of Labor in Israel, and the Coordination Bureau of Economic
Organizations, including the Industrialists Associations, by order of the
Israeli Ministry of Labor and Welfare. These provisions principally concern cost
of living expenses, recreation pay and other conditions of employment. Our
Israeli subsidiary provides our Israeli employees with benefits and working
conditions above the required minimums. Our employees are not represented by a
labor union. We have not experienced any work stoppages.

FACILITIES

We are headquartered in Cupertino, California, where we lease approximately
9,000 square feet of commercial space under a month-to-month sublease. These
facilities are used for executive office space, including sales and marketing
and finance and administration. We also lease approximately 27,000 square feet
of commercial space in Jerusalem, Israel under a term lease that expires on
December 31, 2003, subject to one five-year extension at our option. These
facilities are used for research and development activities and for product
assembly and testing.

LEGAL PROCEEDINGS

We may from time to time become a party to various legal proceedings arising
in the ordinary course of our business. However, we are not currently a party to
any material legal proceedings.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth information regarding the executive officers
and directors of Vyyo as of January 31, 2000:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- -------- -----------------------------------
<S> <C> <C>
Davidi Gilo........................ 43 Chairman of the Board and Chief
Executive Officer
Michael Corwin..................... 43 Chief Operating Officer
Eran Pilovsky...................... 38 Vice President, Finance and Chief
Financial Officer
Arnon Kohavi....................... 35 Senior Vice President, Strategic
Relations
Menashe Shahar..................... 49 Vice President, Engineering and
Chief Technical Officer
Stephen P. Pezzola................. 43 General Counsel and Secretary
Lewis S. Broad..................... 42 Director
Neill H. Brownstein................ 55 Director
Avraham Fischer.................... 43 Director
John P. Griffin.................... 49 Director
Samuel L. Kaplan................... 63 Director
Alan L. Zimmerman.................. 57 Director
</TABLE>

DAVIDI GILO has served as Vyyo's Chairman of the Board of Directors since
its inception in 1996. Mr. Gilo was appointed as Chief Executive Officer of Vyyo
in April 1999. From October 1998 until November 1999, Mr. Gilo also served as
Chairman of the Board of DSP Communications, Inc., a developer of chip sets for
wireless personal communications applications, and from June 1999 until
November 1999, he served as DSP Communications' Chief Executive Officer.
Mr. Gilo also served as the Chairman of the Board of DSP Communications from its
founding in 1987 through November 1997. Since 1996, Mr. Gilo has also been the
manager of the Gilo Group, LLC, an investment company he founded in 1996.
Between 1987 and 1993 he was the President and Chief Executive Officer of
DSP Group, Inc., a developer of telephony and speech compression components, and
he served as Chairman of the Board of DSP Group from 1987 until April 1995.

MICHAEL CORWIN was appointed as Chief Operating Officer of Vyyo in
August 1999. From August 1995 until August 1999, Mr. Corwin served as Vice
President, Operations of Harmony Management, Inc., a private investment company.
From June 1994 until August 1995, he served as Vice President of Operations of
Nogatech, Inc., a consumer electronics company, and from 1986 until 1994, he was
Vice President of Purchasing and Production of DSP Group.

49
<PAGE>
ERAN PILOVSKY joined Vyyo as Vice President, Finance and Chief Financial
Officer in January 2000. Prior to joining Vyyo, Mr. Pilovsky spent over
14 years in various positions with Ernst & Young LLP's advisory and assurance
business service group, and became a partner at Ernst & Young in October 1997.
Mr. Pilovsky is a certified public accountant in California.

ARNON KOHAVI joined Vyyo in November 1999 as Senior Vice President,
Strategic Relations. From July 1994 until October 1995, he served as Director of
Strategic Planning of DSP Communications, and from October 1995 until
January 1999, he was Vice President of Business Development of
DSP Communications. From January 1999 until November 1999 he served as Senior
Vice President, Strategic Relations of DSP Communications. From May 1994 until
July 1994, Mr. Kohavi was Manager of Business Development of DSP Group, Inc.

MENASHE SHAHAR has served as Vyyo's Vice President, Engineering since
July 1994 and as Chief Technical Officer since May 1999. Prior to joining Vyyo,
Mr. Shahar served as Chief Engineer for the Data Communications Department of
Tadiran Telecommunications Group, where he spent five years in the development
of products in the area of packet switching, frame relay and ISDN. Prior to
joining Tadiran, Mr. Shahar served for eight years as a design engineer in the
Israeli Defense Force, where he was involved in designing modems and other data
communications products.

STEPHEN P. PEZZOLA joined Vyyo in September 1996 as General Counsel and
Secretary. From September 1996 until November 1999, Mr. Pezzola also served as
General Counsel and Corporate Secretary of DSP Communications. Since
September 1996, Mr. Pezzola has also been a member of Gilo Group. Since
September 1996, he has also served as General Counsel and Secretary of Zen
Research, N.V., until January 2000, when he became Chairman of the Board. From
May 1986 until September 1996, Mr. Pezzola was a founding shareholder and
president of the law firm of Pezzola & Reinke, APC, of Oakland, California.

LEWIS S. BROAD has been a member of the board of directors since
November 1999. Mr. Broad is a private investor. He is also a member of the board
of directors of Carrier Services, Inc., a company specializing in payment
processing and fraud prevention for telephone and Internet transactions. From
November 1994 until November 1999, Mr. Broad also served as a director of DSP
Communications.

NEILL H. BROWNSTEIN was appointed as a member of the board of directors in
December 1999. Mr. Brownstein is President of Neill H. Brownstein Corporation, a
strategic investment management consulting firm which he founded in 1976. From
June 1970 to January 1995, Mr. Brownstein was associated with Bessemer
Securities Corporation and Bessemer Venture Partners, and during that period he
served as a founding general partner of three affiliated venture capital funds.
Mr. Brownstein also serves on the board of directors of Giga Information Group.
From November 1994

50
<PAGE>
until November 1999, Mr. Brownstein also served as a director of DSP
Communications.

AVRAHAM FISCHER has been a member of the board of directors since April
1996. Mr. Fischer is a managing partner in the law firm of Fischer, Behar,
Chen & Co., of Tel Aviv, Israel, where he has served since 1982. Since
January 1998, Mr. Fischer has served as co-chairman of the Board of Isra-air
Aviation and Tourism, and, since January 1997, he has been co-chairman of the
board of Ganden Investment Ltd. which has holdings in a group of Israeli tourism
and aviation companies. From 1996 until November 1999, Mr. Fischer also served
as a director of DSP Communications.

JOHN P. GRIFFIN has been a member of the board of directors since
November 1999. From September 1996 through April 1998, Mr. Griffin served as
Vice President of Marketing for the Network Services Division of ADC
Telecommunications. In April 1998, Mr. Griffin was appointed as General Manager
of the Loop Transport Division of ADC Telecommunications. In May 1999, he was
appointed President of the Broadband Wireless Group of ADC Telecommunications.
From March 1995 through September 1996, Mr. Griffin served as Vice President of
Marketing of RSI Systems, a manufacturer of desktop video conferencing
equipment. Prior to that, he served for 9 years with ADC Telecommunications, the
first year as Manager of Technical Support and the remaining 8 years in various
marketing positions.

SAMUEL L. KAPLAN has been a member of the board of directors since July
1999. Mr. Kaplan has been a partner in the law firm of Kaplan, Strangis and
Kaplan, P.A. of Minneapolis, Minnesota, since October 1978. Mr. Kaplan also
serves as a director of USP Real Estate Investment Trust, a real estate
investment trust. From 1991 until June 1999, Mr. Kaplan also served as a
director of DSP Group.

ALAN L. ZIMMERMAN has been a member of the board of directors since July
1999. Since November 1994, Mr. Zimmerman has served as President of Law Finance
Group, Inc., a provider of financing in connection with anticipated awards in
legal proceedings. From 1992 through December 1999, he was Vice President of
Inheritance Funding Company, LLC, a provider of financing to heirs in connection
with anticipated inheritance payments.

BOARD OF DIRECTORS

Upon completion of this offering, our certificate of incorporation will
provide for a classified board of directors consisting of three classes of
directors, each serving staggered three-year terms. As a result, a portion of
our board of directors will be elected each year. Class I directors' terms will
expire at the annual meeting of stockholders to be held in 2001, Class II
directors' terms will expire at the annual meeting of stockholders to be held in
2002 and Class III directors' terms will expire at the annual meeting of
stockholders to be held in 2003. Messrs. Fischer, Gilo and Griffin have been
designated Class I directors, Messrs. Broad and Brownstein have

51
<PAGE>
been designated Class II directors, and Messrs. Kaplan and Zimmerman have been
designated Class III directors. There are no family relationships among any of
our directors, officers or key employees.

BOARD COMMITTEES

We have established an audit committee and a compensation committee. The
audit committee reviews our internal accounting procedures and considers and
reports to the board of directors with respect to other auditing and accounting
matters, including the selection of our independent auditors, the scope of
annual audits, fees to be paid to our independent auditors and the performance
of our independent auditors. The audit committee currently consists of
Messrs. Broad, Brownstein and Kaplan. The compensation committee reviews and
recommends to the board of directors the salaries, benefits and stock option
grants for all employees, consultants, directors and other individuals
compensated by us. The compensation committee also administers our stock option
and other employee benefit plans. The compensation committee currently consists
of Messrs. Broad and Zimmerman.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Prior to establishing the compensation committee, the board of directors as
a whole performed the functions delegated to the compensation committee. No
member of the board of directors or the compensation committee serves as a
member of the board of directors or compensation committee of any entity that
has one or more executive officers serving as a member of our board of directors
or compensation committee.

DIRECTOR COMPENSATION

Directors serving on the board of directors do not currently receive any
compensation for serving on the board. Directors are reimbursed for their
out-of-pocket expenses incurred in attending board and committee meetings. In
addition, all directors are eligible to participate in our 2000 Employee and
Consultant Equity Incentive Plan.

In December 1999, the board of directors granted options to purchase 15,000
shares of our common stock to each of Messrs. Broad and Brownstein and an option
to purchase 75,000 shares of our common stock to Mr. Fischer, in each case at an
exercise price of $0.83 per share.

In June 1999, the board of directors granted an option to purchase 75,000
shares of our common stock to Mr. Zimmerman and an option to purchase 66,000
shares of our common stock to Mr. Fischer, in each case at an exercise price of
$0.50 per share.

In February 2000, the board of directors granted options to purchase 22,500
shares of our common stock to each of Messrs. Broad, Brownstein, Fischer,
Griffin, Kaplan and Zimmerman, in each case at an exercise price of $1.87 per
share.

52
<PAGE>
EXECUTIVE COMPENSATION

The following table sets forth the compensation earned, awarded or paid for
services rendered to us in all capacities for the fiscal year ended
December 31, 1999, by our Chief Executive Officer, our former Chief Executive
Officer and our two next most highly compensated executive officers who earned
more than $100,000 in salary and bonus during the fiscal year ended
December 31, 1999. These executives are referred to collectively as the named
executive officers elsewhere in this prospectus.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------------- ------------------------------
ALL OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY ($) BONUS ($) COMPENSATION ($) OPTIONS (#) COMPENSATION ($)
- -------------------------------- ---------- --------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Davidi Gilo..................... $175,000(1) -- -- 975,000 --
Chairman of the Board and
Chief Executive Officer
Stephen P. Pezzola.............. 140,000(2) -- -- 193,500 --
General Counsel
Menashe Shahar.................. 122,370 $20,420 $17,739(3) 255,000 $28,043(4)
Vice President, Engineering
and Chief Technical Officer
Shaul Berger(5)................. 96,200 -- -- -- --
Former Chief Executive Officer
</TABLE>

- ---------------------

(1) Mr. Gilo's salary for services performed in 1999 has been accrued, and is
expected to be paid to Mr. Gilo in 2000.

(2) $52,500 of this amount was paid to Mr. Pezzola in 1999, and $87,500 has been
accrued by Vyyo and is expected to be paid to Mr. Pezzola in 2000.

(3) Includes (i) $4,761 reimbursed to Mr. Shahar for taxes on a company
automobile, (ii) $9,978 paid to Mr. Shahar for accrued but unused vacation
time and (iii) $3,000 paid to Mr. Shahar for travel expenses incurred by
Mr. Shahar's wife.

(4) Includes a total of $28,043 paid on behalf of Mr. Shahar to a severance
fund, a pension fund and a risk/disability fund. The amounts held in such
funds on Mr. Shahar's behalf are, generally, payable to him upon the
termination of his employment with Vyyo.

(5) Mr. Berger resigned as Chief Executive Officer in April 1999.

53
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR

The following table provides information concerning grants of options to
purchase our common stock made during the fiscal year ended December 31, 1999 to
the named executive officers.

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENT OF ASSUMED ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS INITIAL STOCK APPRECIATION FOR
UNDERLYING GRANTED DURING PUBLIC OPTION TERM(3)
OPTIONS FISCAL EXERCISE EXPIRATION OFFERING -----------------------------
NAME GRANTED(1) 1999(2) PRICE DATE PRICE OF $14 5% 10%
- ---- ---------- -------------- -------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Davidi Gilo............ 585,000 12.38% $0.50 06/01/04 $7,897,500 $10,160,246 $12,897,577
390,000 8.25 0.83 11/23/04 5,136,300 6,644,797 8,469,685
Stephen P. Pezzola..... 193,500 4.10 0.50 06/01/04 2,612,250 3,360,697 4,266,122
Menashe Shahar......... 255,000 5.40 0.50 06/01/04 3,442,500 4,428,825 5,622,021
Shaul Berger........... -- -- -- -- -- -- --
</TABLE>

- ---------------------

(1) All options were granted pursuant to the 1999 Employee and Consultant Equity
Incentive Plan or the 2000 Employee and Consultant Equity Incentive Plan.

(2) Based on an aggregate of 4,726,050 options granted to employees, officers,
directors and consultants in fiscal 1999.

(3) All options were granted at an exercise price that was equal to or greater
than the fair market value of our common stock, as determined by the board
of directors on the date of grant. The assumed 5% and 10% rates of stock
appreciation are based on an assumed initial public offering price of $14
per share. Amounts represent hypothetical gains that could be achieved for
the options if exercised at the end of the term. The assumed 5% and 10%
rates of stock price appreciation are provided in accordance with the rules
of the Securities and Exchange Commission and do not represent our estimate
or projection of the future stock price. Actual gains, if any, are
contingent upon the continued employment of the named executive officer
through the expiration date, as well as being dependent upon the general
performance of the common stock. The potential realizable values have not
taken into account amounts required to be paid for federal income taxes.

54
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES

The following table describes for the named executive officers the number
and amount of stock options exercised during fiscal 1999 and securities
underlying unexercised options held at December 31, 1999.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1999 DECEMBER 31, 1999
ACQUIRED ON VALUE ----------------------------------- -----------------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE (#) UNEXERCISABLE (#) EXERCISABLE ($) UNEXERCISABLE ($)
- ---- ------------ ------------ --------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Davidi Gilo.......... 585,000 195,000 -- -- -- --

390,000 -- -- -- -- --

Stephen P. Pezzola... 120,000 40,000 73,500 -- 24,500 --

46,500 23,250 -- -- -- --

Menashe Shahar....... -- -- 30,563 269,438 15,281 92,219

Shaul Berger......... 123,899 61,949 -- -- -- --
</TABLE>

The value realized on exercised options and the value of unexercised
in-the-money options at December 31, 1999 is based on a value of $0.83 per
share, the fair market value of our common stock at December 31, 1999, as
determined by our board of directors, minus the per share exercise price,
multiplied by the number of shares underlying the options.

STOCK OPTION PLANS

AMENDED AND RESTATED 2000 EMPLOYEE AND CONSULTANT EQUITY INCENTIVE
PLAN. The 2000 Employee and Consultant Equity Incentive Plan, or 2000 Plan, was
adopted by our board of directors and approved by our stockholders on
November 22, 1999 for the benefit of our officers, directors, employees,
advisors and consultants. The 2000 Plan provides for the issuance of stock-based
incentive awards, including stock options, stock appreciation rights, limited
stock appreciation rights, restricted stock, deferred stock, and performance
shares. An award may consist of one arrangement or benefit or two or more of
them in tandem or in the alternative. Under the 2000 Plan, awards covering no
more than 80% of the shares reserved for issuance under the plan may be granted
to any participant in any one year. An aggregate of 4,050,000 shares of common
stock was initially reserved for issuance under the 2000 Plan. On February 2,
2000 our board of directors approved an amendment to the 2000 Plan to increase
the total number of shares reserved for issuance under the plan from
4,050,000 shares to 7,500,000 shares, plus an annual increase to be added
automatically on the first day of each fiscal year, commencing in 2001, equal to
the lesser of (1) 1,350,000 shares or (2) 5% of the number of outstanding shares
on the last day of the immediately preceding fiscal year. This amendment was
approved by our stockholders on February 2, 2000.

55
<PAGE>
Each of our non-employee directors elected to the board of directors for the
first time after February 2, 2000 will receive, upon such election, an initial
grant of options to purchase 75,000 shares of common stock at fair market value
on the date of grant. These options will have a 10-year term and will vest over
a four-year period. In addition, each of our non-employee directors will receive
an annual grant of options to purchase 22,500 shares for each year during such
director's term. These options will have a 10-year term and will vest
immediately upon the date of grant. The foregoing award of options will be
granted automatically under the 2000 Plan.

The 2000 Plan will initially be administered by our board of directors,
although it may be administered by either our board of directors or any
committee of our board of directors. The board or committee is sometimes
referred to in this prospectus as the plan administrator. The plan administrator
may interpret the 2000 Plan and may prescribe, amend and rescind rules and make
all other determinations necessary or desirable for the administration of the
2000 Plan. The 2000 Plan permits the plan administrator to select the officers,
directors, employees, advisors and consultants, including directors who are also
employees, who will receive awards and generally to determine the terms and
conditions of those awards.

We may issue two types of stock options under the 2000 Plan: incentive stock
options which are intended to qualify under the Internal Revenue Code, and
non-qualified stock options. The option price of each incentive stock option
granted under the 2000 Plan must be at least equal to the fair market value of a
share of common stock on the date the incentive stock option is granted.

Stock appreciation rights and limited stock appreciation rights may be
granted under the 2000 Plan either alone or in conjunction with all or part of
any stock option granted under the 2000 Plan. A stock appreciation right granted
under the 2000 Plan entitles its holder to receive, at the time of exercise, an
amount per share equal to the excess of the fair market value at the date of
exercise of a share of common stock over a specified price fixed by the plan
administrator. A limited stock appreciation right granted under the 2000 Plan
entitles its holder to receive, at the time of exercise, an amount per share
equal to the excess of the change in control price of a share of common stock
over a specified price fixed by the plan administrator. A limited stock
appreciation right may only be exercised within the 30-day period following a
change in control.

Restricted stock, deferred stock and performance shares may be granted under
the 2000 Plan. The plan administrator will determine the purchase price,
performance period and performance goals, if any, with respect to the grant of
restricted stock, deferred stock and performance shares. Participants with
restricted stock and performance shares generally have all of the rights of a
stockholder. With respect to deferred stock, during the deferral period, subject
to the terms and conditions imposed by the plan administrator, the deferred
stock units may be credited with dividend equivalent rights. If the performance
goals and other restrictions are not

56
<PAGE>
attained, the participant will forfeit his or her shares of restricted stock,
deferred stock and/or performance shares.

In the event we merge or consolidate with another entity in which we are not
the surviving corporation, dissolve or liquidate or sell substantially all of
our assets, outstanding awards under the 2000 Plan may be assumed or replaced by
the successor corporation, if any, or its parent. If the successor corporation
or its parent does not assume outstanding awards or substitute equivalent
awards, such awards will automatically become fully vested and exercisable and
be released from any restrictions on transfer and repurchase or forfeiture
right.

The terms of the 2000 Plan provide that the plan administrator may amend,
suspend or terminate the 2000 Plan at any time, provided, however, that some
amendments require approval of our stockholders. Further, no action may be taken
which adversely affects any rights under outstanding awards without the holder's
consent. The 2000 Plan will terminate in 2010.

1999 EMPLOYEE AND CONSULTANT EQUITY INCENTIVE PLAN. The 1999 Employee and
Consultant Equity Incentive Plan, or 1999 Plan, was adopted by our board of
directors on June 4, 1999 and approved by our stockholders on July 15, 1999 for
the benefit of our officers, directors, employees, advisors and consultants. The
1999 Plan provides for the issuance of stock-based incentive awards, including
stock options, restricted stock and stock bonuses. An aggregate of 2,400,000
shares of common stock has been reserved for issuance under the 1999 Plan. As of
December 31, 1999, options to purchase an aggregate of 1,281,000 shares of
common stock were outstanding under the 1999 Plan with a weighted-average
exercise price of $0.50. We do not intend to grant options pursuant to the 1999
Plan following the offering. The 1999 Plan will automatically terminate in 2009.

The 1999 Plan may be administered by our board of directors or committee of
the board. The board of directors or committee of the board may interpret the
1999 Plan and may prescribe, amend and rescind rules and make all other
determinations necessary or desirable for the administration of the 1999 Plan,
except that some amendments require stockholder approval. In addition, the board
of directors or committee of the board may not take any action which would harm
the rights previously granted under the 1999 Plan without the holders' consent.

If we merge or consolidate with another entity or if we dissolve, liquidate
or sell substantially all of our assets, outstanding awards under the 1999 Plan
may be assumed or replaced by the successor corporation or its parent. If the
successor corporation or its parent does not assume outstanding awards or
substitute equivalent awards, the awards will terminate.

1996 EQUITY INCENTIVE PLAN. The 1996 Equity Incentive Plan, or 1996 Plan,
was adopted by our board of directors on March 25, 1996 and approved by our
stockholders on April 5, 1996 for the benefit of our officers, directors,
employees, advisors and consultants. The 1996 Plan provides for the issuance of
stock-based

57
<PAGE>
incentive awards, including stock options, restricted stock and stock bonuses.
An aggregate of 330,000 shares of common stock was initially reserved for
issuance under the 1996 Plan. On May 13, 1998, our board of directors adopted,
and on June 23, 1998 our stockholders approved, an amendment to the 1996 Plan to
increase the total number of shares reserved for issuance under the plan from
330,000 to 480,000 shares. As of December 31, 1999, options to purchase an
aggregate of 229,151 shares of common stock with a weighted-average exercise
price of $0.33 were outstanding under the 1996 Plan. We do not intend to grant
options pursuant to the 1996 Plan following the offering. The 1996 Plan will
automatically terminate in 2006.

The 1996 Plan may be administered by our board of directors or a committee
of the board. The board of directors or committee of the board may interpret the
1996 Plan and may prescribe, amend and rescind rules and make all other
determinations necessary or desirable for the administration of the 1996 Plan,
except that some amendments require stockholder approval. In addition, the board
of directors or committee of the board may not take any action which would harm
the rights previously granted under the 1996 Plan without the holders' consent.

If we merge or consolidate with another entity or if we dissolve, liquidate
or sell substantially all of our assets, outstanding awards under the 1996 Plan
may be assumed or replaced by the successor corporation or its parent. If the
successor corporation or its parent does not assume outstanding awards or
substitute equivalent awards, the awards will terminate.

2000 EMPLOYEE STOCK PURCHASE PLAN

On February 2, 2000, the board of directors adopted and our stockholders
approved our 2000 Employee Stock Purchase Plan, or Purchase Plan, which allows
eligible employees to purchase our common stock at a discount from fair market
value. A total of 750,000 shares of our common stock, plus an annual increase to
be added automatically on the first day of our fiscal year, commencing in 2001,
equal to the lesser of (a) 300,000 shares or (b) 1% of the number of outstanding
shares on the last trading day of the immediately preceding fiscal year has been
reserved for issuance under the Purchase Plan.

The Purchase Plan will be administered by our board of directors, or a
specifically designated committee of the board of directors. The board or
committee is sometimes referred to in this prospectus as the plan administrator.
The plan administrator may interpret the Purchase Plan and, subject to its
provisions, may prescribe, amend and rescind rules and make all other
determinations necessary or desirable for the administration of the Purchase
Plan.

The Purchase Plan contains consecutive, overlapping 24-month offering
periods. Each offering period includes four purchase periods. The offering
periods generally commence on the first trading day on or after May 15 and
November 15 of each year and end on the last trading day on the date twenty-four
months later; provided,

58
<PAGE>
however, that the first offering period under the Purchase Plan will commence
upon the completion of the offering and end on the last trading day on or before
May 14, 2002.

Employees are eligible to participate if they are employed by us or any
participating subsidiary for at least 20 hours per week and more than five
months in any calendar year. However, an employee may not be granted the right
to purchase stock under the Purchase Plan if the employee (a) immediately after
the grant would own stock possessing 5% or more of the total combined voting
power or value of all classes of our capital stock, or (b) holds rights to
purchase stock under any of our employee stock purchase plans that together
accrue at a rate which exceeds $25,000 worth of stock for each calendar year.
The Purchase Plan permits each employee to purchase common stock through payroll
deductions of up to 15% of the employee's compensation. The maximum number of
shares an employee may purchase during a single offering period is 15,000
shares.

Amounts deducted and accumulated by the employee are used to purchase shares
of common stock at the end of each purchase period. The price of the common
stock offered under the Purchase Plan is an amount equal to 85% of the lower of
the fair market value of the common stock at the beginning of each offering
period or at the end of each purchase period. In the event the fair market value
at the end of a purchase period is less than the fair market value at the
beginning of the corresponding offering period, the participants of the affected
offering period will be withdrawn from such offering period following exercise
of their options and automatically re-enrolled in a new offering period.
Employees may end their participation in the Purchase Plan at any time during an
offering period, in which event, any amounts withheld through payroll deductions
and not otherwise used to purchase shares will be returned to them.
Participation ends automatically upon termination of employment with us.

Rights granted under the Purchase Plan are not transferable by an employee
other than by will or the laws of descent and distribution. The Purchase Plan
provides that, in the event of a merger, consolidation, reorganization,
recapitalization, stock dividend or other change in corporate structure
affecting the number of issued shares of our common stock, the plan
administrator will conclusively determine the appropriate equitable adjustments.
The Purchase Plan will terminate in 2010. Our board of directors has the
authority to amend or terminate the Purchase Plan, except that no amendment or
termination may adversely affect any outstanding rights under the Purchase Plan.

EMPLOYMENT AGREEMENTS

We have entered into employment agreements with each of Messrs. Gilo,
Corwin, Shahar, Pezzola, Pilovsky and Kohavi. Each of the agreements with
Messrs. Gilo, Corwin, Shahar and Pezzola became effective as of January 1, 2000,
and provide for three-year terms that will automatically renew for consecutive
one-year extensions,

59
<PAGE>
unless terminated by either party upon written notice. Mr. Pilovsky's agreement
became effective on January 16, 2000 and provides for a three-year term that
will automatically renew for consecutive one-year extensions, unless terminated
by either party upon written notice.

Under Mr. Gilo's agreement, he is entitled to receive an annual base salary
equal to $350,000 and an annual bonus, payable according to the following
schedule:

- if we meet 80% of our annual business plan, Mr. Gilo's bonus payment will
be equal to 15% of his annual base salary;

- if we meet 100% of our annual business plan, Mr. Gilo's bonus payment will
be equal to 50% of his annual base salary; and

- if we meet 120% of our plan, Mr. Gilo's bonus payment will be equal to 90%
of his annual base salary.

In addition, Mr. Gilo will also be entitled to a discretionary bonus, as
determined by our board of directors or the compensation committee. Mr Gilo is
required to devote at least 30 hours per week to the business of Vyyo under his
employment agreement.

If Mr. Gilo's employment is terminated by us without cause, he will be
entitled to a severance payment equal to the greater of (a) the full amount of
the compensation that he would have been paid under his employment agreement or
(b) 18 months of his then-current base salary. If Mr. Gilo's employment is
terminated by us with cause, in exchange for a release of any claims Mr. Gilo
may have against us, he will be entitled to a severance payment equal to
three months of his then-current base salary. If Mr. Gilo terminates his
employment with us, he will be entitled to a severance payment equal to nine
months of his then-current base salary. If after the initial three-year term Mr.
Gilo's employment is not renewed, he will be entitled to severance payments
equal to 18 months of his then current base salary in exchange for a release of
any claims he may have against us. Mr. Gilo will remain as a full-time employee
during any period he is receiving severance pay and his options will continue to
vest during that period.

Under Mr. Corwin's agreement, he is entitled to receive an annual base
salary equal to $225,000 and an annual bonus, payable according to the following
schedule:

- if we meet 80% of our annual business plan, Mr. Corwin's bonus payment
will be equal to 15% of his annual base salary;

- if we meet 100% of our annual business plan, Mr. Corwin's bonus payment
will be equal to 50% of his annual base salary, with the bonus pro rated
if the plan is met between 80% and 100% or between 100% and 120%; and

- if we meet 120% of our plan, Mr. Corwin's bonus payment will be equal to
90% of his annual base salary.

In addition, Mr. Corwin will also be entitled to a discretionary bonus, as
determined by our board of directors or the compensation committee.

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<PAGE>
If Mr. Corwin's employment is terminated by us without cause, he will be
entitled to a severance payment equal to the greater of (a) the full amount of
the compensation that he would have been paid under his employment agreement or
(b) six months of his then-current base salary. If Mr. Corwin's employment is
terminated by us with cause, in exchange for a release as to any and all claims
Mr. Corwin may have against us, he will be entitled to a severance payment equal
to three months of his then-current base salary. If Mr. Corwin terminates his
employment with us, he will be entitled to a severance payment equal to three
months of his then-current base salary. If after the initial three-year term,
Mr. Corwin's employment is not renewed, he will be entitled to a severance
payment equal to 18 months of his then current base salary in exchange for a
release of any claims he may have against us. Mr. Corwin will remain as a
full-time employee during any period he is receiving severance pay and his
options will continue to vest during that period.

Under Mr. Shahar's agreement, he is entitled to receive a monthly salary
equal to 50,000 NIS, or approximately $12,500, with adjustments every six months
based on increases in the Israeli consumer price index. Mr. Shahar is also
entitled to receive an annual bonus, payable according to the following
schedule:

- if we meet 80% of our annual business plan, Mr. Shahar's bonus payment
will be equal to 15% of his annual base salary;

- if we meet 100% of our annual business plan, Mr. Shahar's bonus payment
will be equal to 50% of his annual base salary, with the bonus pro rated
if the plan is met between 80% and 100% or between 100% and 120%; and

- if we meet 120% of our plan, Mr. Shahar's bonus payment will be equal to
90% of his annual base salary.

In addition, Mr. Shahar will also be entitled to a discretionary bonus, as
determined by our board of directors or the compensation committee.

We also contribute to a "Manager's Insurance" policy on behalf of
Mr. Shahar in an amount equal to 15.83% of his salary and to a continuing
education fund in an amount equal to 7.5% of his salary. If Mr. Shahar's
employment is terminated by us without cause, he is entitled to the amounts
accumulated in his Manager's Insurance policy and education fund. In addition,
if Mr. Shahar's employment is terminated by us without cause, or if after the
initial three year term, Mr. Shahar's employment is not renewed, he will be
entitled to a prior notice payment equal to the greater of (a) the full amount
of the compensation that he would have been paid under his employment agreement
or (b) six months of his then-current base salary. If Mr. Shahar's employment is
terminated by us with cause, in exchange for a release as to any and all claims
Mr. Shahar may have against us, he will be entitled to a prior notice payment
equal to three months of his then-current base salary. If Mr. Shahar terminates
his employment with us, he will not be entitled to any prior notice

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<PAGE>
payment. Mr. Shahar will remain as a consultant during any period he is
receiving prior notice pay.

Under Mr. Pezzola's agreement, he is entitled to receive an annual base
salary equal to $202,500, a bonus in the amount of $25,000 upon the successful
completion of this offering and an annual bonus, payable according to the
following schedule:

- if we meet 80% of our annual business plan, Mr. Pezzola's bonus payment
will be equal to 15% of his annual base salary;

- if we meet 100% of our annual business plan, Mr. Pezzola's bonus payment
will be equal to 50% of his annual base salary; and

- if we meet 120% of our plan, Mr. Pezzola's bonus payment will be equal to
90% of his annual base salary, with the bonus pro rated if the plan is met
between 80% and 100% or between 100% and 120%.

In addition, Mr. Pezzola will also be entitled to a discretionary bonus, as
determined by our board of directors or the compensation committee. Mr. Pezzola
is required to devote at least 30 hours per week to the business of Vyyo under
his employment agreement.

If Mr. Pezzola's employment is terminated by us without cause, he will be
entitled to a severance payment equal to the greater of (a) the full amount of
the compensation that he would have been paid under his employment agreement or
(b) nine months of his then-current base salary. If Mr. Pezzola's employment is
terminated by us with cause, in exchange for a release as to any and all claims
Mr. Pezzola may have against us, he will be entitled to a severance payment
equal to three months of his then-current base salary. If Mr. Pezzola terminates
his employment with us, he will be entitled to a severance payment equal to
three months of his then-current base salary. If after the initial three-year
term, Mr. Pezzola's employment is not renewed, he will be entitled to a
severance payment equal to nine months of his then current base salary in
exchange for a release of any claims he may have against us. Mr. Pezzola will
remain as a full-time employee during any period he is receiving severance pay
and his options will continue to vest during that period.

Under Mr. Pilovsky's agreement, he is entitled to receive an annual base
salary equal to $250,000, and an annual bonus, payable according to the
following schedule:

- if we meet 80% of our annual business plan, Mr. Pilovsky's bonus payment
will be equal to 15% of his annual base salary;

- if we meet 100% of our annual business plan, Mr. Pilovsky's bonus payment
will be equal to 50% of his annual base salary; and

- if we meet 120% of our plan, Mr. Pilovsky's bonus payment will be equal to
90% of his annual base salary, with the bonus prorated if the plan is met
between 80% and 100% or between 100% and 120%.

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<PAGE>
In addition, Mr. Pilovsky will also be entitled to a discretionary bonus, as
determined by our board of directors or the compensation committee.

If Mr. Pilovsky's employment is terminated by us without cause, he will be
entitled to a severance payment equal to the greater of (a) the full amount of
the compensation that he would have been paid under his employment agreement or
(b) six months of his then-current base salary. If Mr. Pilovsky's employment is
terminated by us with cause, in exchange for a release as to any and all claims
Mr. Pilovsky may have against us, he will be entitled to a severance payment
equal to three months of his then-current base salary. If Mr. Pilovsky
terminates his employment with us, he will not be entitled to a severance
payment. If after the initial three-year term, Mr. Pilovsky's employment is not
renewed, he will be entitled to a severance payment equal to six months of his
then current base salary in exchange for a release of any claims he may have
against us. Mr. Pilovsky will remain as a full-time employee during any period
he is receiving severance pay and his options will continue to vest during that
period.

We have also entered into an employment agreement with Mr. Kohavi. His
agreement became effective on November 22, 1999, and provides for an 18 month
term that will automatically renew for consecutive six-month extensions, unless
terminated by either party by written notice. Under Mr. Kohavi's agreement, he
is entitled to receive an annual base salary equal to $155,000 and an annual
bonus, payable according to the following schedule:

- if we meet 80% of our annual business plan, Mr. Kohavi's bonus payment
will be equal to 25% of his annual base salary;

- if we meet 100% of our annual business plan, Mr. Kohavi's bonus payment
will be equal to 75% of his annual base salary; and

- if we meet 120% of our plan, Mr. Kohavi's bonus payment will be equal to
125% of his annual base salary, with the bonus prorated if the plan is met
between 80% and 100% or between 100% and 120%.

In addition, Mr. Kohavi will also be entitled to participate in each bonus plan
adopted by our board of directors.

If Mr. Kohavi's employment is terminated by us without cause, he will be
entitled to a severance payment equal to the lesser of (a) the full amount of
the compensation that he would have been paid under his employment agreement or
(b) six months of his then-current base salary. If after the initial 18-month
term, Mr. Kohavi's employment is not renewed, he will be entitled to a severance
payment equal to six months of his then current base salary in exchange for a
release of any claims he may have against us.

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<PAGE>
LIMITATION OF LIABILITY AND INDEMNIFICATION

Upon completion of this offering, our certificate of incorporation will
limit the liability of our directors to the maximum extent permitted by Delaware
law. Delaware law provides that directors will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except
liability for:

- any breach of their duty of loyalty to the corporation or its
stockholders;

- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

- unlawful payments of dividends or unlawful stock repurchases or
redemptions; or

- any transaction from which the director derived an improper personal
benefit.

This provision will have no effect on any non-monetary remedies that may be
available to us or our stockholders, nor will it relieve us or other officers or
directors from compliance with federal or state securities laws.

Upon completion of this offering, our certificate of incorporation and
bylaws will also generally provide that we will indemnify, to the fullest extent
permitted by Section 145 of the Delaware General Corporation Law, any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit, investigation, administrative hearing or any other
proceeding by reason of the fact that he or she is or was a director or officer
of ours, or is or was serving at our request as a director, officer, employee or
agent of another entity, against expenses incurred by him or her in connection
with that proceeding. An officer or director will not be entitled to
indemnification by us if:

- the officer or director did not act in good faith and in a manner
reasonably believed to be in, or not opposed to, our best interests; or

- with respect to any criminal action or proceeding, the officer or director
had reasonable cause to believe his or her conduct was unlawful.

In addition, we plan to enter into indemnification agreements with our
directors containing provisions which may require us, among other things, to
indemnify our directors against various liabilities that may arise by virtue of
their status or service as directors and to advance their expenses incurred as a
result of any proceeding against them as to which they could be indemnified.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons controlling Vyyo pursuant to the
foregoing provisions or otherwise, Vyyo has been informed that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.

At the present time, there is no pending ligation or proceeding involving
any director, officer, employee or agent of Vyyo which indemnification will be
required or

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<PAGE>
permitted. We are not aware of any threatened litigation or proceeding which may
result in a claim for such indemnification.

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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Since February 1, 1997, there has not been, nor is there currently proposed,
any transaction or series of similar transactions to which we were or are to be
a party in which the amount involved exceeds $60,000 and in which any director,
executive officer or holder of more than 5% of our common stock, or an immediate
family member of any of the foregoing, had or will have a direct or indirect
interest other than:

- compensation arrangements that are described where required under
"Management," and

- the transactions described below.

All references to shares of common stock reflect our 1-for-5 reverse stock
split effected on January 3, 2000 and our 3-for-2 stock split effected on March
14, 2000. Preferred share amounts have not been adjusted for stock splits
because all outstanding shares of preferred stock will be automatically
converted upon the closing of this offering on the basis of 0.6 of a share of
common stock for each share of Series A preferred stock and 0.3 of a share of
common stock for each share of Series B and Series C preferred stock.

SALES OF STOCK

In December 1999, we sold 60,000 shares of common stock at a purchase price
of $0.83 per share in cash, to each of our directors, Lewis Broad, Neill
Brownstein, Avraham Fischer, Davidi Gilo, John Griffin, Samuel Kaplan and Alan
Zimmerman.

On December 28, 1999, we sold 178,571 shares of Series C convertible
preferred stock, at a purchase price of $0.56 per share in cash, to Arnon
Kohavi, our Senior Vice President, Strategic Relations.

On December 27, 1999, we sold 30,000 shares of common stock at $0.50 per
share to Avraham Fischer upon exercise of a warrant.

On August 31, 1999, we sold 9,172,010 shares of Series C convertible
preferred stock at a purchase price of $0.54 per share in cash, to ADC
Telecommunications, Inc., a principal stockholder of Vyyo.

On May 31, 1999, we sold 8,929,656 shares of common stock, at a purchase
price of $0.50 per share, to the Gilo Family Partnership, of which 2,929,656
shares were purchased in exchange for the cancellation of promissory notes
issued by us to the partnership, in the aggregate principal amount of $1,435,000
plus accrued interest, and 6,000,000 shares were purchased in exchange for the
issuance by the partnership of a promissory note in the principal amount of
$3,000,000. The note was due on the earlier of demand or April 22, 2000, and
bore interest at a rate of 9% per annum. The note was secured by the purchased
shares. The note was repaid in full and cancelled in February 2000.

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<PAGE>
On May 31, 1999, we sold 50,001 shares of common stock, at a purchase price
of $0.50 per share in cash, to the Samuel Kaplan/Ralph Strangis Investment
Partnership, an affiliate of Samuel L. Kaplan.

On December 1, 1998, we sold shares of Series B preferred stock, at a
purchase price of $1.00 per share in cash, to the following investors, among
others:

<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
- ---- -----------------
<S> <C>
Gilo Family Partnership................... 50,000
Adi, Elad and Yael Gilo DSP Tel Trusts.... 150,000
Kaplan/Strangis Investment Partnership.... 7,632
Michael Corwin............................ 8,104
Pezzola-Foster Trust...................... 4,000
Alan Zimmerman............................ 12,000
</TABLE>

In connection with this offering, we issued warrants to purchase up to the
number of shares of common stock equal to the sum of the number of shares of
Series B preferred stock each of these investors purchased multiplied by 0.6.
These warrants have terminated in accordance with their terms.

On September 28, 1998, we sold common stock, at a purchase price of $0.67
per share in cash, to the following investors, among others:

<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
- ---- -----------------
<S> <C>
Pezzola-Foster Trust...................... 11,250
Alan Zimmerman............................ 30,000
</TABLE>

On September 28, 1998, we sold 1,517,741 shares of common stock, at a
purchase price of $0.67 per share, to the Gilo Family Partnership. All of this
common stock was purchased in exchange for cancellation of promissory notes
issued by us to the partnership.

In March and April 1997, we sold shares of common stock at a price of $1.63
per share in cash, and Series A preferred stock at a price of $8.97 in cash, to
the following persons.

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
NAME COMMON SHARES PREFERRED SHARES
- ---- --------------- ----------------
<S> <C> <C>
The Davidi and Shamaya Gilo
Trust.................... 1,556 2,593
Pezzola-Foster Trust....... 1,500 2,500
PhaseCom Investor Group
Limited Partnership
No. 2.................... 79,749 132,913
Avraham Fischer............ 2,250 3,750
</TABLE>

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<PAGE>
CONVERTIBLE NOTE AND WARRANT FINANCINGS

On June 30, 1998, we issued unsecured promissory notes, which were
convertible into shares of common stock, and warrants to purchase common stock,
to the following investors, among others. The notes were due on June 30, 1999
and bore interest at a rate of 8% per annum. The notes were convertible into
shares of common stock at a conversion price equal to $5.00 if the note
converted before September 15, 1998, or if converted after September 15, 1998,
the greater of $5.00 or one third of the per share price of our common stock
resulting from either an initial public offering of our common stock or a merger
with another entity. In August 1999, we amended these notes so that they became
convertible into common stock at $0.83 per share. The warrants were originally
convertible into the number of shares of common stock equal to the sum of the
principal amount of the noteholder's note that we issued to it on June 30, 1998
multiplied by .35 divided by the conversion price of the note. In
November 1999, the warrants were amended to fix the exercise price at $5.00 per
share and to fix the number of shares for which the warrants were exercisable
into the number of shares set forth below. In December 1999, the warrants were
amended to reduce the exercise price to $1.87 per share.

In consideration for the note issued to the Gilo Family Partnership, the
Partnership paid us $500,000 in cash, and we canceled the promissory notes dated
September 30, 1997, April 3, 1998 and May 8, 1998 in the aggregate principal
amount of $1,799,117, previously issued by us to the Partnership.

<TABLE>
<CAPTION>
NAME PRINCIPAL AMOUNT OF NOTE WARRANT SHARES
- ---- ------------------------ --------------
<S> <C> <C>
Gilo Family Partnership............. $2,875,556 201,290
Samuel Kaplan/Ralph Strangis
Investment Partnership............ $ 34,201 2,394
Alan Zimmerman...................... $ 26,052 1,824
Michael Corwin...................... $ 36,772 2,574
Pezzola-Foster Trust................ $ 15,000 1,050
Avraham Fischer..................... $ 21,723 1,521
</TABLE>

In November 1999, all of these notes were converted into an aggregate of
3,611,162 shares of common stock at a conversion rate of $0.83 per share. In
December 1999, all of these warrants were exercised for a total of 210,651
shares of common stock at an exercise price of $1.87 per share.

On February 26, 1998, we issued unsecured promissory notes, which were
convertible into shares of Series A preferred stock at $15.00 per share, and
warrants to purchase common stock at an exercise price of $9.50 per share, to
the following investors, among others. The notes were due on February 26, 1999
and bore interest at a rate of 8% per annum. In November 1999, these notes were
amended such that they were convertible into shares of common stock at a
conversion rate of $0.83 per share. In December 1999, these warrants were
amended to have an exercise price of $1.87 per share.

67
<PAGE>

<TABLE>
<CAPTION>
NAME PRINCIPAL AMOUNT OF NOTE WARRANT SHARES
- ---- ------------------------ --------------
<S> <C> <C>
Gilo Family Partnership............. $417,600 64,800
Adi, Elad and Yael Gilo DSP Tel
Trusts............................ $ 83,520 12,960
Samuel Kaplan/Ralph Strangis
Investment Partnership............ $ 27,840 4,320
Alan Zimmerman...................... $ 27,840 4,320
Michael Corwin...................... $ 27,840 4,320
Neill Brownstein.................... $ 55,680 8,640
Pezzola-Foster Trust................ $ 9,280 1,440
</TABLE>

In November 1999, all of these notes were converted into an aggregate of
779,520 shares of common stock at a conversion rate of $0.83 per share. In
December 1999, all of these warrants were exercised for a total of 100,800
shares of common stock at an exercise price of $1.87 per share.

On February 3, 1998, we issued promissory notes, which were convertible into
shares of Series A preferred stock at $15.00 per share, and warrants to purchase
common stock at an exercise price of $9.50 per share, to the following
investors, among others. The notes bore interest at a rate of 8% per annum and
were due on January 31, 1999. In November 1999, these notes were amended such
that they were convertible into shares of common stock at a conversion rate of
$0.83 per share. In December 1999, these warrants were amended to have an
exercise price of $1.87 per share.

<TABLE>
<CAPTION>
NAME PRINCIPAL AMOUNT OF NOTE WARRANT SHARES
- ---- ------------------------ --------------
<S> <C> <C>
Gilo Family Partnership............. $129,920 20,160
Adi, Elad and Yael Gilo DSP Tel
Trusts............................ $ 27,840 4,320
Samuel Kaplan/Ralph Strangis
Investment Partnership............ $ 9,280 1,440
Alan Zimmerman...................... $ 9,280 1,440
Michael Corwin...................... $ 9,280 1,440
Neill Brownstein.................... $ 37,120 5,760
Pezzola-Foster Trust................ $ 9,280 1,440
</TABLE>

In November 1999, all of these notes were converted into an aggregate of
278,400 shares of common stock at a conversion rate of $0.83 per share. In
December 1999, all of these warrants were exercised for a total of 36,000 shares
of common stock at an exercise price of $1.87 per share.

On December 29, 1997, we issued promissory notes, which were convertible
into shares of Series A preferred stock at $15.00 per share, and warrants to
purchase common stock at an exercise price of $9.50 per share, to the following
investors, among others. The notes bore interest at a rate of 8% per annum and
were due on December 31, 1998. In November 1999, these notes were amended such
that they

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<PAGE>
were convertible into shares of common stock at a conversion rate of $0.83 per
share. In December 1999, these warrants were amended to have an exercise price
of $1.87 per share.

<TABLE>
<CAPTION>
NAME PRINCIPAL AMOUNT OF NOTE WARRANT SHARES
- ---- ------------------------ --------------
<S> <C> <C>
Gilo Family Partnership............. $148,480 23,040
Adi, Elad and Yael Gilo DSP Tel
Trusts............................ $ 27,840 4,320
Samuel Kaplan/Ralph Strangis
Investment Partnership............ $ 9,280 1,440
Alan Zimmerman...................... $ 9,280 1,440
Michael Corwin...................... $ 9,280 1,440
Avraham Fischer..................... $ 9,280 1,440
</TABLE>

In November 1999, all of these notes were converted into an aggregate of
256,128 shares of common stock at a conversion rate of $0.83 per share. In
December 1999, all of these warrants were exercised for a total of 33,120 shares
of common stock at an exercise price of $1.87 per share.

On April 9, 1997, we issued a warrant to purchase 30,750 shares of common
stock, at an exercise price of $1.63 per share, to the Gilo Family Partnership.

GRANTS OF OPTIONS

We have granted the following options to our officers and directors:

<TABLE>
<CAPTION>
NAME NUMBER OF OPTIONS EXERCISE PRICE DATE OF GRANT
- ---- ------------------ -------------- -------------
<S> <C> <C> <C>
Michael Corwin............... 240,000 $0.50 06/99
120,000 $0.83 11/99
Menashe Shahar............... 12,000 $2.09* 11/97
30,000 $0.33 12/98
3,000 $1.63* 07/97
Eran Pilovsky................ 300,000 $0.83 01/00
Arnon Kohavi................. 240,000 $0.83 11/99
Stephen Pezzola.............. 22,500 $0.33 10/98
24,000 $1.00* 02/97
Avraham Fischer.............. 24,000 $1.00* 02/97
</TABLE>

- ---------------------

* In October 1998, these options were repriced to have an exercise price of
$0.33 per share.

GILO-RELATED TRANSACTIONS

In March 1997, the Gilo Family Partnership loaned $250,000 to us. The loan
was evidenced by an unsecured demand promissory note bearing interest at a rate
of 9% per annum. This note was paid in full on April 15, 1997.

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<PAGE>
On June 25, 1997, the Gilo Family Partnership loaned $200,000 to us. The
loan was evidenced by an unsecured demand promissory note bearing interest at
rate of 9% per annum.

On July 9, 1997, the Gilo Family Partnership loaned $200,000 to us. The loan
was evidenced by an unsecured demand promissory note bearing interest at rate of
9% per annum.

On July 28, 1997, the Gilo Family Partnership loaned $200,000 to us. The
loan was evidenced by an unsecured demand promissory note bearing interest at
rate of 9% per annum

On August 14, 1997, the Gilo Family Partnership loaned $200,000 to us. The
loan was evidenced by an unsecured demand promissory note bearing interest at
rate of 9% per annum.

On September 30, 1997, the demand promissory notes dated June 25, 1997,
July 9, 1997, July 28, 1997 and August 14, 1997, were canceled in exchange for
(i) an unsecured promissory note in the principal amount of $799,117, bearing
interest at a rate of 9% per annum and due on March 31, 1998, and (ii) a warrant
to purchase 158,400 shares of our Common Stock at an exercise price of $7.92 per
share. On June 30, 1998, the September 30, 1997 promissory note was canceled as
partial payment for issuance of an unsecured promissory note in the principal
amount of $2,875,555.50, as described above in this prospectus. In
December 1999, this warrant was amended to have an exercise price of $1.87 per
share. This warrant was exercised in December 1999.

On April 3, 1998, the Gilo Family Partnership loaned $500,000 to us. The
loan was evidenced by an unsecured demand promissory note bearing interest at a
rate of 8% per annum. On June 30, 1998, this promissory note was canceled as
partial payment for issuance of the $2,875,555.50 note.

On May 8, 1998, the Gilo Family Partnership loaned $500,000 to us. The loan
was evidenced by an unsecured demand promissory note bearing interest at a rate
of 8% per annum. On June 30, 1998, this note was canceled as partial payment for
issuance of the $2,875,555.50 note.

On August 4, 1998, the Gilo Family Partnership loaned $500,000 to us. The
loan was evidenced by an unsecured demand promissory note bearing interest at a
rate of 8% per annum. On September 28, 1998, this note was canceled in exchange
for 758,871 shares of our common stock at a price of $0.67 per share.

On August 28, 1998, the Gilo Family Partnership loaned $500,000 to us. The
loan was evidenced by an unsecured demand promissory note bearing interest at a
rate of 8% per annum. On September 28, 1998, this note was canceled in exchange
for 758,871 shares of our common stock at a price of $0.67 per share.

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<PAGE>
On November 12, 1998, the Gilo Family Partnership loaned $100,000 to us. The
loan was evidenced by an unsecured demand promissory note bearing interest at a
rate of 8.5% per annum.

On November 24, 1998, the Gilo Family Partnership loaned $50,000 to us. The
loan was evidenced by an unsecured demand promissory note bearing interest at a
rate of 8.5% per annum.

On December 1, 1998, the promissory notes dated November 12, 1998 and
November 24, 1998, in the aggregate principal amount of $150,000, plus accrued
interest, were canceled in exchange for the issuance of 150,404 shares of our
Series B preferred stock at a price of $1.00 per share.

On December 4, 1998, the Gilo Family Partnership loaned $50,000 to us. The
loan was evidenced by an unsecured demand promissory note bearing interest at a
rate of 8.5% per annum.

On January 5, 1999, the Gilo Family Partnership loaned $250,000 to us. The
loan was evidenced by an unsecured demand promissory note bearing interest at a
rate of 8.5% per annum.

On January 25, 1999, the Gilo Family Partnership loaned $50,000 to us. The
loan was evidenced by an unsecured demand promissory note bearing interest at a
rate of 8.5% per annum.

On February 12, 1999, the Gilo Family Partnership loaned $100,000 to us. The
loan was evidenced by an unsecured demand promissory note bearing interest at a
rate of 8.5% per annum.

On February 28, 1999, the Gilo Family Partnership loaned $60,000 to us. The
loan was evidenced by an unsecured demand promissory note bearing interest at a
rate of 8.5% per annum.

On March 1, 1999, the Gilo Family Partnership loaned $225,000 to us. The
loan was evidenced by an unsecured demand promissory note bearing interest at a
rate of 8.5% per annum.

On March 11, 1999, the Gilo Family Partnership loaned $150,000 to us. The
loan was evidenced by an unsecured demand promissory note bearing interest at a
rate of 8.5% per annum.

On March 31, 1999, the Gilo Family Partnership loaned $300,000 to us. The
loan was evidenced by an unsecured demand promissory note bearing interest at a
rate of 8.5% per annum.

On April 8, 1999, the Gilo Family Partnership loaned $50,000 to us. The loan
was evidenced by an unsecured demand promissory note bearing interest at a rate
of 8.5% per annum.

On April 15, 1999, the Gilo Family Partnership loaned $200,000 to us. The
loan was evidenced by an unsecured demand promissory note bearing interest at a
rate of 8.5% per annum.

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<PAGE>
On May 31, 1999, the promissory notes dated December 4, 1998, January 5,
1999, January 25, 1999, February 12, 1999, February 28, 1999, March 1, 1999,
March 11, 1999, March 31, 1999, April 8, 1999 and April 15, 1999, in the
aggregate principal amount of $1,435,000, plus accrued interest, were canceled
in exchange for 2,929,656 shares of our common stock at a price of $0.50 per
share.

OTHER

Avraham Fischer is a senior partner of the law firm of Fischer, Behar,
Chen & Co., which represents us on matters relating to Israeli law. We paid
approximately $109,500 in legal fees to this firm in 1999.

In January 2000, in connection with an exercise of options to purchase
common stock, we loaned $249,980 to Eran Pilovsky. Mr. Pilovsky issued a
full-recourse promissory note to us. This note is due on the earlier of
January 16, 2003 or the time at which Mr. Pilovsky sells the shares or leaves
Vyyo and bears interest at rate of 6% per annum. The note is secured by the
purchased shares.

We sublease our headquarters in Cupertino, California from Zen
Research, Inc. on a month-to-month basis. Zen Research is a wholly owned
subsidiary of a corporation of which Mr. Gilo is a controlling shareholder and a
director. In addition, Mr. Pezzola is the Chairman of the Board of Zen
Research's parent corporation. The monthly rent under our sublease is $12,000.

72
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table indicates information as of December 31, 1999 regarding
the beneficial ownership of our common stock by:

- each person known to the board of directors to own beneficially 5% or more
of our common stock;

- each of our directors;

- the named executive officers; and

- all of our directors and executive officers as a group.

Information with respect to beneficial ownership has been furnished by each
director, officer or 5% or more stockholder, as the case may be. Except as
otherwise noted below, the address for each person listed on the table is c/o
Vyyo Inc., 20400 Stevens Creek Boulevard, 8(th) Floor, Cupertino, California
95014.

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission which generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power or
investment power with respect to those securities and includes shares of common
stock issuable pursuant to the exercise of stock options or warrants that are
immediately exercisable or exercisable within 60 days. Unless otherwise
indicated, the persons or entities identified in this table have sole voting and
investment power with respect to all shares shown as beneficially owned by them,
subject to applicable community property laws.

Percentage ownership calculations are based on 26,947,286 shares of common
stock outstanding as of December 31, 1999, which number includes shares of
common stock that will be outstanding upon the conversion of outstanding shares
of preferred stock upon the closing of this offering. To the extent that any
shares are issued upon exercise of options, warrants or other rights to acquire
our capital stock that are presently outstanding or granted in the future or
reserved for future issuance under our stock plans, there will be further
dilution to new public investors.

73
<PAGE>

<TABLE>
<CAPTION>
PERCENT OF SHARES
OUTSTANDING
NUMBER OF ---------------------------
SHARES BENEFICIALLY BEFORE AFTER
NAME OWNED THE OFFERING THE OFFERING
- ---- ------------------- ------------ ------------
<S> <C> <C> <C>
Davidi Gilo(1).................. 16,525,347 61.3% 49.1%
ADC Telecommunications, Inc..... 2,751,603 10.2 8.2
P. O. Box 1101
Minneapolis, MN 55440
Stephen P. Pezzola(2)........... 245,205 * *
Lewis S. Broad(3)............... 98,541 * *
Neill H. Brownstein(4).......... 223,260 * *
Avraham Fischer(5).............. 369,588 1.4 1.1
John Griffin(6)................. 2,834,103 10.5 8.4
Samuel Kaplan(7)................ 241,496 * *
Alan Zimmerman(8)............... 287,586 1.1 *
Shaul Berger(9)................. 136,523 * *
Menashe Shahar(10).............. 34,986 * *
All directors and executive
officers
As a group
(12 persons)(11)............ 21,373,257 77.5% 62.5%
</TABLE>

- ---------------------

* Less than 1% of the outstanding shares of common stock.

(1) Includes (a) 14,491,176 shares held by The Gilo Family Trust, of which
Davidi Gilo is a trustee, (b) 829,248 shares held by the PhaseCom Investor
Group Limited Partnership, of which Harmony Management, Inc. is the general
partner, (c) 7,314 shares of common stock issuable pursuant to warrants held
by the PhaseCom Investor Group Limited Partnership, (d) 159,497 shares held
by the PhaseCom Investor Group Limited Partnership No. 2, of which the
general partner is Gilo Group, LLC, a limited liability company of which
Mr. Gilo is a principal owner, and (e) 3,113 shares held in the Davidi and
Shamaya Gilo Trust, of which Davidi and Shamaya Gilo are the trustees.
Excludes 237,998 shares held in three trusts for the benefit of Mr. Gilo's
children, Adi, Elad and Yael Gilo, as to which Mr. Gilo has no voting or
investment power. Mr. Gilo disclaims beneficial ownership of such shares.

(2) Includes 47,207 shares held in the Pezzola-Foster Trust, of which Stephen
Pezzola and Twila Foster are the trustees. Also includes 73,500 shares of
common stock issuable pursuant to stock options exercisable within 60 days
of March 1, 2000. Excludes 42,000 shares held in two trusts for the benefit
of Mr. Pezzola's children, Genevieve and David Pezzola, as to which
Mr. Pezzola has no voting or investment power. Mr. Pezzola disclaims
beneficial ownership of such shares. Also excludes 3,128 shares held by the
PhaseCom Investor Group Limited Partnership, of which the Pezzola-Foster
Trust is a limited partner and as to which Mr. Pezzola has no voting or
investment power.

74
<PAGE>
(3) Includes 37,500 shares of common stock issuable pursuant to stock options
exercisable within 60 days of March 1, 2000. Excludes 25,008 shares held by
the PhaseCom Investor Group Limited Partnership and 5,157 shares held by the
PhaseCom Investor Group Limited Partnership No. 2, of which Mr. Broad is a
limited partner and as to which Mr. Broad has no voting or investment power.

(4) Includes 37,500 shares of common stock issuable pursuant to stock options
exercisable within 60 days of March 1, 2000. Excludes 3,386 shares held by
the PhaseCom Investor Group Limited Partnership No. 2, of which
Mr. Brownstein is a limited partner and as to which Mr. Brownstein has no
voting or investment power.

(5) Includes 247,500 shares of common stock issuable pursuant to stock options
exercisable within 60 days of March 1, 2000. Excludes shares held by I.
Fischer & Co. as trustee, or Fischer, Behar & Co., as trustee, on behalf of
stockholders of Vyyo that are residents of Israel.

(6) Includes 22,500 shares of common stock issuable pursuant to stock options
exercisable within 60 days of March 1, 2000. Also includes 2,751,603 shares
held by ADC Telecommunications. Mr. Griffin is an officer of ADC
Telecommunications and may be deemed to share voting and investment power
will respect to the shares held by ADC Communications. Mr. Griffin disclaims
beneficial ownership of these shares.

(7) Includes 22,500 shares of common stock issuable pursuant to stock options
exercisable within 60 days of March 1, 2000. Also includes 158,606 shares
held by the Samuel Kaplan/Ralph Strangis Investment Partnership, of which
Samuel Kaplan is a general partner. Mr. Kaplan disclaims beneficial
ownership of these shares, except to the extent of his pecuniary interest
arising from his interest in this entity. Excludes 9,378 shares held by the
PhaseCom Investor Group Limited Partnership and 3,872 shares held by the
PhaseCom Investor Group Limited Partnership No. 2, of which Mr. Kaplan is a
limited partner and as to which Mr. Kaplan has no voting or investment
power.

(8) Includes 97,500 shares of common stock issuable pursuant to stock options
exercisable within 60 days of March 1, 2000. Excludes 12,504 shares held by
the PhaseCom Investor Group Limited Partnership and 2,574 shares held by the
PhaseCom Investor Group Limited Partnership No. 2, of which Mr. Zimmerman is
a limited partner and as to which Mr. Zimmerman has no voting or investment
power.

(9) Includes 392 shares of common stock issuable pursuant to warrants.

(10) Includes 34,187 shares of common stock issuable pursuant to stock options
exercisable within 60 days of March 1, 2000.

(11) Includes 497,687 shares of common stock issuable pursuant to stock options
exercisable within 60 days of March 1, 2000.

75
<PAGE>
DESCRIPTION OF CAPITAL STOCK

The following description summarizes information regarding our capital
stock. This information is subject in all respects to the applicable provisions
of the Delaware General Corporation Law, our amended and restated certificate of
incorporation and bylaws.

Immediately following the closing of this offering, the authorized capital
stock of Vyyo will consist of 200,000,000 shares of common stock, $0.0001 par
value per share, and 5,000,000 shares of preferred stock, $0.001 par value per
share.

COMMON STOCK

VOTING RIGHTS. Each outstanding share of common stock is entitled to one
vote on all matters submitted to a vote of Vyyo's stockholders, including the
election of directors. There are no cumulative voting rights, and therefore the
holders of a plurality of the shares of common stock voting for the election of
directors may elect all of Vyyo's directors standing for election.

DIVIDENDS. Holders of common stock are entitled to receive dividends at the
same rate if and when dividends are declared by our board of directors out of
assets legally available for the payment of dividends, subject to preferential
rights of any outstanding shares of preferred stock. Through our subsidiary,
Vyyo Ltd., we participate in the "alternative benefits program" under the
Israeli law for the Encouragement of Capital Investments, 1959, under which we
realize certain tax exemptions. If Vyyo Ltd. distributes a cash dividend to Vyyo
Inc. from income which is tax exempt, it would have to pay corporate tax at the
rate of up to 25% on an amount equal to the amount distributed and the corporate
tax which would have been due in the absence of the tax exemption.

LIQUIDATION. In the event of a liquidation, dissolution or winding up of
the affairs of Vyyo, whether voluntary or involuntary, after payment of the
debts and other liabilities of Vyyo and making provisions for the holders of any
outstanding shares of preferred stock, the remaining assets of Vyyo will be
distributed ratably among the holders of shares of common stock.

RIGHTS AND PREFERENCES. The common stock has no preemptive, redemption,
conversion or subscription rights. The rights, powers, references and privileges
of holders of common stock and subject to, and may be adversely affected by, the
rights of the holders of shares of any series of preferred took that we any
designate and issue in the future.

PREFERRED STOCK

Upon the closing of this offering, all outstanding shares of preferred stock
will be automatically converted into shares of common stock. See note 8 to our
financial statements for a description of the preferred stock.

76
<PAGE>
The board of directors has the authority, without action by the
stockholders, to provide for the issuance of preferred stock in one or more
classes or series and to designate the rights, preferences and privileges of
each such class or series, which may be greater than the rights of the common
stock. We cannot predict the effect of the issuance of any shares of preferred
stock upon the rights of holders of the common stock until the board of
directors determines the specific rights of the holders of the preferred stock.
However, the effects could include one or more of the following:

- restricting dividends on the common stock;

- diluting the voting power of the common stock;

- impairing the liquidation rights of the common stock; or

- delaying or preventing a change in control of us without further action by
the stockholders.

We have no present plans to issue any shares of preferred stock.

REGISTRATION RIGHTS

Upon completion of the offering, the holders of an aggregate of
approximately 6,707,433 shares of common stock will be entitled to rights with
respect to the registration of these shares under the Securities Act of 1933, as
amended, or the Securities Act. Under the terms of the registration rights
agreements, if Vyyo proposes to register any of its securities under the
Securities Act, either for its own account or for the account of other security
holders exercising registration rights, these holders are entitled to notice of
this registration and are entitled to include shares of common stock in the
registration. The rights are subject to conditions and limitations, among them
the right of the underwriters of an offering subject to the registration to
limit the number of shares included in the registration. These registration
rights have been waived with respect to this offering. Holders of these rights
may also require Vyyo to file a registration statement under the Securities Act
at its expense with respect to their shares of common stock, and Vyyo is
required to use its best efforts to effect this registration, subject to
conditions and limitations. Furthermore, stockholders with registration rights
may require Vyyo to file additional registration statements on Form S-3, subject
to conditions and limitations.

DELAWARE ANTI-TAKEOVER LAW

We are subject to Section 203 of the Delaware General Corporation Law, an
anti-takeover law. Generally, Section 203 of the Delaware General Corporation
Law prohibits a publicly held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless:

- prior to the date of the business combination, the transaction is approved
by the board of directors of the corporation;

77
<PAGE>
- upon consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owns at
least 85% of the outstanding voting stock of the corporation; or

- on or after the date of the business combination, such business
combination is approved by the board of directors of the corporation and
by the affirmative vote of at least 66 2/3% of the outstanding voting
stock which is not owned by the interested stockholder.

A "business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the stockholder. An "interested stockholder"
is a person who, together with affiliates and associates, owns (or within the
three-year period immediately prior to the relevant date, did own) 15% or more
of the corporation's outstanding voting stock. The existence of this provision
would be expected to have an anti-takeover effect with respect to transactions
not approved in advance by our board of directors, including discouraging
attempts that might result in a premium over the market price for the shares of
common stock held by stockholders.

TRANSFER AGENT AND REGISTRAR

EquiServe Trust Company will serve as Transfer Agent and Registrar for our
common stock. Its telephone number is (781) 575-2000.

LISTING

We have applied to have our common stock approved for quotation on the
Nasdaq National Market under the trading symbol "VYYO."

78
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

<TABLE>
<CAPTION>
NUMBER OF
DATE OF AVAILABILITY FOR SALE SHARES
- ----------------------------- ----------------
<S> <C>
As of the date of the prospectus........................... 95,064
September 27, 2000......................................... 24,251,729
At various times afterwards upon expiration of applicable
holding periods.......................................... 2,600,493
</TABLE>

Banc of America Securities LLC may release all or a portion of the shares
subject to this lockup agreement at any time without notice. See "Underwriting."

In general, under Rule 144, as currently in effect, a person who has
beneficially owned shares of our common stock for at least one year would be
entitled to sell within any three-month period a number of shares that does not
exceed the greater of:

- 1% of the number of shares of common stock then outstanding, which will
equal approximately 336,973 shares immediately after this offering; or

- the average weekly trading volume of the common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to the sale.

Sales under Rule 144 are also subject to manner of sales provisions and
notice requirements and to the availability of current public information about
us.

Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an affiliate, is
entitled to sell the shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144.

Rule 701, as currently in effect, permits resales of shares in reliance upon
Rule 144 but without compliance with certain restrictions, including the holding

79
<PAGE>
period requirement, of Rule 144. Any of our employees, officers, directors or
consultants who purchased shares under a written compensatory plan or contract
may be entitled to rely on the resale provisions of Rule 701. Rule 701 permits
affiliates to sell their Rule 701 shares under Rule 144 without complying with
the holding period requirements of Rule 144. Rule 701 further provides that
non-affiliates may sell their shares in reliance on Rule 144 without having to
comply with the holding period, public information, volume limitation or notice
provisions of Rule 144. All holders of Rule 701 shares are required to wait
until 90 days after the date of this prospectus before selling their shares.
However, substantially all Rule 701 shares are subject to lock-up agreements and
will only become eligible for sale at the earlier of the expiration of the
180-day lock-up agreements or no sooner than 90 days after the offering upon
obtaining the prior written consent of Banc of America Securities LLC.

We intend to file a registration statement registering shares of common
stock subject to outstanding options or reserved for future issuance under our
stock plans. As of February 29, 2000, options to purchase a total of 4,161,195
shares were outstanding under our stock option plans of which 390,000 are issued
shares that are subject to a right of repurchase held by Vyyo. Common stock
issued upon exercise of outstanding vested options, other than common stock
issued to our affiliates, is available for immediate resale in the open market.

80
<PAGE>
UNDERWRITING

We are offering the shares of common stock described in this prospectus
through a number of underwriters. Banc of America Securities LLC, CIBC World
Markets Corp., Dain Rauscher Incorporated and W.R. Hambrecht + Co., LLC are the
representatives of the underwriters. We have entered into an underwriting
agreement with the representatives. According to the terms and conditions of the
underwriting agreement, we have agreed to sell to the underwriters, and each of
the underwriters has agreed to purchase, the number of shares of common stock
listed net to its name in the following table:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ----------- ----------
<S> <C>
Banc of America Securities LLC...................
CIBC World Markets Corp..........................
Dain Rauscher Incorporated.......................
W.R. Hambrecht + Co., LLC........................

---------
Total........................................ 6,750,000
=========
</TABLE>

The underwriters initially will offer shares to the public at the price
specified on the cover page of this prospectus. The underwriters may allow to
some dealers a concession of not more than $ per share. The underwriters
also may allow, and any other dealers may reallow, a concession of not more than
$ per share to some other dealers. If all the shares are not sold at the
initial public offering price, the underwriters may change the offering price
and the other selling terms. The common stock is offered under a number of
conditions, including:

- receipt and acceptance of our common stock by the underwriters, and

- the right to reject orders in whole or in part.

We have granted an option to the underwriters to buy up to 1,012,500
additional shares of common stock. These additional shares would cover sales of
shares by the underwriters which exceed the number of shares specified in the
table above. The underwriters have 30 days to exercise this option. If the
underwriters exercise this option, they will each purchase additional shares
approximately in proportion to the amounts specified in the table above.

The expenses of the offering that are payable by us are estimated to be
$1,600,000.

81
<PAGE>
We, all our stockholders and all of our officers and directors have entered
into lock-up agreements with the underwriters. Under those agreements, we and
those holders of stock and options may not dispose of or hedge any common stock
or securities convertible into or exchangeable for shares of common stock. These
restrictions will be in effect for a period of 180 days after the date of this
prospectus. At any time and without notice, Banc of America Securities LLC may,
in its sole discretion, release all or some of the securities from these lock-up
agreements.

We will indemnify the underwriters against some liabilities, including some
liabilities under the Securities Act. If we are unable to provide this
indemnification, we will contribute to payments the underwriters may be required
to make in respect of those liabilities.

We have applied to have the shares of common stock approved for listing on
the Nasdaq National Market under the symbol "VYYO."

In connection with this offering, the underwriters may purchase and sell
shares of common stock in the open market. These transactions may include:

- short sales,

- stabilizing transactions, and

- purchase to cover positions created by short sales.

Short sales involve the sale by the underwriters of a greater number of
shares than they are required to purchase in this offering. Stabilizing
transactions consist of bids or purchases made for the purpose of preventing or
retarding a decline in the market price of the common stock while this offering
is in progress.

The underwriters also may impose a penalty bid. This means that if the
representatives purchase shares in the open market in stabilizing transactions
or to cover short sales, the representatives can require the underwriters that
sold those shares as part of this offering to repay the underwriting discount
received by them.

The underwriters may engage in activities that stabilize, maintain or
otherwise affect the price of the common stock, including:

- over-allotment,

- stabilization,

- syndicate covering transactions, and

- imposition of penalty bids.

As a result of these activities, the price of the common stock may be higher
than the price that otherwise might exist in the open market. If the
underwriters commence these activities, they may discontinue them at any time.
The underwriters may carry out these transactions on the Nasdaq National Market,
in the over-the-counter market or otherwise.

82
<PAGE>
The underwriters do not expect sales to discretionary accounts to exceed 5%
of the total number of shares of common stock offered by this prospectus.

Prior to this offering, there has been no public market for our common
stock. The initial public offering price was negotiated between us and the
underwriters. Among the factors that will be considered in the negotiations are:

- our history and prospects, and the history and prospects of the industry
in which we compete,

- our past and present financial performance,

- an assessment of our management,

- the present state of our development,

- our prospects for future earnings,

- the prevailing market conditions of the applicable U.S. securities market
at the time of this offer,

- market valuations of publicly traded companies that we and the
underwriters believe to be comparable to US.

The underwriters have reserved up to 337,500 shares of the common stock to
be sold in this offering for sale to some of our employees, directors and their
associates, and to other individuals or companies who have commercial
arrangements or personal relationships with us. Through this directed share
program, we intend to ensure that those individuals and companies that have
supported us, or who are in a position to support us in the future, have the
opportunity to purchase our common stock at the same price that we are offering
our shares to the general public. We do not currently expect that more than
approximately 300 individuals (including our employees, directors and their
associates) and companies will participate in the directed share program.
Prospective participants will not receive any investment materials other than a
copy of this prospectus, and will be permitted to participate in this offering
at the initial public offering price presented on the cover page of this
prospectus. No commitment to purchase shares by any participant in the directed
share program will be accepted until after the registration statement of which
this prospectus is a part is effective and an initial public offering price has
been established. The number of shares available for sale to the general public
will be reduced by the number of shares sold through the directed share program.

A limited number of shares allocated to W.R. Hambrecht + Co., LLC will be
distributed in this offering through the use of the Internet. W.R. Hambrecht +
Co., LLC will post on its Web site (www.wrhambrecht.com) a brief description of
the offering. Visitors to this Web site will have access to the preliminary
prospectus by links on the Web site. W.R. Hambrecht + Co., LLC will accept
conditional offers to purchase shares from account holders that are determined
eligible to participate. In the event that the demand for shares exceeds the
amount of shares allocated to it,

83
<PAGE>
W.R. Hambrecht + Co., LLC will allocate shares to individual and institutional
account holders, considering the following criteria: trading history of the
account with respect to initial public offerings, post-offering activity in
previous offerings and tenure of the account.

W.R. Hambrecht + Co., LLC is an investment banking firm formed as a limited
liability company in February 1998. In addition to this offering,
W.R. Hambrecht + Co., LLC has engaged in the business of public and private
equity investing and financial advisory services since its inception. The
chairman and chief executive officer of W.R. Hambrecht + Co., LLC, William R.
Hambrecht, has 40 years of experience in the securities industry.

From time to time, Banc of America Securities LLC has provided financial
advisory services to Vyyo and may continue to do so in the future.

84
<PAGE>
LEGAL MATTERS

The validity of the shares of common stock being offered will be passed upon
for us by Skadden, Arps, Slate, Meagher & Flom LLP, Palo Alto, California. A
partner at Skadden, Arps beneficially owns 65,342 shares of common stock.
Certain other legal matters in connection with this offering will be passed upon
for us by Bay Venture Counsel, LLP. Three partners and one of counsel at Bay
Venture Counsel beneficially own an aggregate of 206,828 shares of common stock.
Certain matters of Israeli law will be passed upon for us by Fischer, Behar,
Chen & Co., Tel Aviv, Israel. Avraham Fischer, a partner at Fischer, Behar, Chen
and a director of Vyyo, beneficially owns 394,740 shares of common stock.
Certain legal matters in connection with this offering will be passed upon for
the underwriters by Brobeck, Phleger & Harrison LLP, San Francisco, California.

EXPERTS

Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements at December 31, 1998 and 1999, and for the three years in
the period ended December 31, 1999, as set forth in their report. We have
included our financial statements in the prospectus and elsewhere in the
registration statement in reliance on Ernst & Young LLP's report, given upon the
authority of such firm as experts in accounting and auditing.

AVAILABLE INFORMATION

We filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act with respect to the shares of
common stock being offered. This prospectus does not contain all of the
information described in the registration statement and the related exhibits and
schedules. For further information with respect to Vyyo and the common stock
being offered, reference is made to the registration statement and the related
exhibits and schedule. A copy of the registration statement and the related
exhibits and schedule may be inspected without charge at the public reference
facilities maintained by the Commission in Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at the
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10048, and copies of all or any part of the registration statement may be
obtained from these offices upon the payment of the fees prescribed by the
Commission. Information on the operation of the Public Reference Room may be
obtained by calling the Commission at 1-800-SEC-0330. The Commission maintains a
World Wide Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. The address of the site is http://www.sec.gov.

Vyyo intends to provide its stockholders with annual reports containing
combined financial statements audited by an independent accounting firm and
quarterly reports containing unaudited combined financial data for the first
three quarters of each year.

85
<PAGE>
VYYO INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<S> <C>
Report of Ernst & Young LLP, Independent Auditors........... F-2
Consolidated Balance Sheets as of December 31, 1998 and
1999...................................................... F-3
Consolidated Statements of Operations for the years ended
December 31, 1997, 1998 and 1999.......................... F-4
Consolidated Statements of Stockholders' Equity (Net Capital
Deficiency) for the years ended December 31, 1997, 1998
and 1999.................................................. F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1998 and 1999.......................... F-6
Notes to Consolidated Financial Statments................... F-7
</TABLE>

F-1
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders

Vyyo Inc.

We have audited the accompanying consolidated balance sheets of Vyyo Inc. as
of December 31, 1998 and 1999, and the related consolidated statements of
operations, stockholders' equity (net capital deficiency) and cash flows for
each of the three years in the period ended December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Vyyo Inc. at
December 31, 1998 and 1999, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
1999, in conformity with generally accepted accounting principles in the United
States.

Ernst & Young LLP

San Jose, California
January 28, 2000

F-2
<PAGE>
VYYO INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31, STOCKHOLDERS'
------------------- EQUITY AT
1998 1999 DECEMBER 31, 1999
-------- -------- -----------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................ $ 131 $ 5,036
Accounts receivable (including a related party customer
balance of $237 in 1999), net of allowance for doubtful
accounts of $187 and $176 in 1998 and 1999,
respectively........................................... 247 583
Inventory................................................ 1,644 1,132
Other.................................................... 348 517
-------- --------
Total current assets..................................... 2,370 7,268
Property and equipment, net.............................. 1,010 1,095
-------- --------
$ 3,380 $ 8,363
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
Current liabilities:
Bank line of credit...................................... $ 1,970 $ 2,280
Accounts payable......................................... 1,219 895
Accrued liabilities...................................... 2,313 3,153
Notes payable to stockholders............................ 6,882 --
Deferred income.......................................... 140 639
Equipment financing obligations.......................... 427 91
-------- --------
Total current liabilities................................ 12,951 7,058

Commitments and contingencies

Stockholders' equity (net capital deficiency):
Convertible preferred stock, $0.001 par value at amounts
paid in; 100,000,000 shares authorized at December 31,
1999; 2,213,688 and 11,564,269 shares issued and
outstanding at December 31, 1998 and 1999 convertible
into 3,944,553 shares of common stock at December 31,
1999; aggregate liquidation preference of $14,243 at
December 31, 1999...................................... 10,335 15,369 $ --
Common stock, $0.0001 par value at amounts paid in;
200,000,000 shares authorized at December 31, 1998 and
1999; 2,718,903 and 23,002,733 shares issued and
outstanding at December 31, 1998 and 1999,
respectively; 26,947,286 shares issued and outstanding
pro forma.............................................. 2,649 66,412 81,781
Note receivable from stockholder......................... -- (920) (920)
Deferred stock compensation.............................. -- (13,400) (13,400)
Accumulated deficit...................................... (22,555) (66,156) (66,156)
-------- -------- --------
Total stockholders' equity (net capital deficiency)...... (9,571) 1,305 $ 1,305
-------- -------- ========
$ 3,380 $ 8,363
======== ========
</TABLE>

See accompanying notes

F-3
<PAGE>
VYYO INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Net revenues(1)............................................. $ 1,537 $ 2,449 $ 4,230
Cost of revenues............................................ 1,556 2,568 4,316
-------- -------- --------
Gross loss................................................ (19) (119) (86)
Operating expenses:
Research and development(2)............................... 2,398 3,252 3,678
Sales and marketing(3).................................... 1,484 2,413 1,972
General and administrative(4)............................. 1,200 1,363 2,148
Amortization of deferred stock compensation............... -- -- 9,300
-------- -------- --------
Total operating expenses.................................... 5,082 7,028 17,098
-------- -------- --------
Operating loss.............................................. (5,101) (7,147) (17,184)
Charge for amended financing arrangements................... -- -- (25,700)
Interest income............................................. 41 10 36
Interest expense and other.................................. (285) (534) (753)
-------- -------- --------
Net loss.................................................... $ (5,345) $ (7,671) $(43,601)
======== ======== ========
Net loss per share:
Basic and diluted......................................... $ (5.91) $ (5.43) $ (5.40)
======== ======== ========
Number of shares used in per share computation:
Basic and diluted......................................... 905 1,412 8,078
======== ======== ========
</TABLE>

- ------------------------

(1) Includes $654 of 1999 revenues from a related party customer. See Note 1.

(2) Excludes $100 in amortization of deferred stock compensation in 1999.

(3) Excludes $300 in amortization of deferred stock compensation in 1999.

(4) Excludes $8,900 in amortization of deferred stock compensation in 1999.

See accompanying notes.

F-4
<PAGE>
VYYO INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(NET CAPITAL DEFICIENCY)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>

CONVERTIBLE NOTE
PREFERRED STOCK COMMON STOCK RECEIVABLE DEFERRED
--------------------- --------------------- FROM STOCK ACCUMULATED
SHARES AMOUNT SHARES AMOUNT STOCKHOLDER COMPENSATION DEFICIT
---------- -------- ---------- -------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1996..................... 1,380,851 $ 7,996 828,510 $ 983 -- -- $ (9,539)
Exchange of stock for
subsidiary............... 1,092 -- 656 -- -- -- --
Issuance of preferred and
common shares for cash,
net of issuance costs.... 202,167 1,736 121,300 193 -- -- --
Issuance of warrants to
purchase common stock.... -- -- -- 165 -- -- --
Net loss................... -- -- -- -- -- -- (5,345)
---------- ------- ---------- ------- -------- -------- ----------
Balance at December 31,
1997..................... 1,584,110 9,732 950,466 1,341 -- -- (14,884)
Issuance of common stock
net of issuance costs.... -- -- 263,292 171 -- -- --
Issuance of Series A
preferred stock net of
issuance costs........... 21,123 15 -- -- -- -- --
Issuance of Series B
preferred stock net of
issuance costs........... 629,447 603 -- -- -- -- --
Conversion of notes payable
to stockholders into
common stock............. -- -- 1,517,741 1,012 -- -- --
Repurchase of preferred
stock and common stock... (20,992) (15) (12,596) (5) -- -- --
Issuance of warrants to
purchase common stock.... -- -- -- 130 -- -- --
Net loss................... -- -- -- -- -- -- (7,671)
---------- ------- ---------- ------- -------- -------- ----------
Balance at December 31,
1998..................... 2,213,688 10,335 2,718,903 2,649 -- -- (22,555)
Issuance of common stock,
net of issuance costs.... -- -- 6,626,000 3,481 $ (920) -- --
Issuance of Series C
preferred stock, net of
issuance costs........... 9,350,581 5,034 -- -- -- -- --
Issuance of common stock
upon exercise of
warrants, net of issuance
costs.................... -- -- 1,091,921 1,947 -- -- --
Conversion of notes payable
to shareholders into
common stock............. -- -- 11,128,254 9,090 -- -- --
Issuance of common stock
upon exercise of
options.................. -- -- 1,437,655 845 -- -- --
Deferred stock
compensation............. -- -- -- 22,700 -- (22,700) --
Amortization of deferred
stock compensation....... -- -- -- -- -- 9,300 --
Charge for amended
financing arrangements... -- -- -- 25,700 -- -- --
Net loss................... -- -- -- -- -- -- (43,601)
---------- ------- ---------- ------- -------- -------- ----------
Balance at December 31,
1999..................... 11,564,269 $15,369 23,002,733 $66,412 $ (920) $(13,400) $ (66,156)
========== ======= ========== ======= ======== ======== ==========

<CAPTION>
TOTAL
STOCKHOLDERS'
EQUITY
(NET CAPITAL
DEFICIENCY)
-------------
<S> <C>
Balance at December 31,
1996..................... $ (560)
Exchange of stock for
subsidiary............... --
Issuance of preferred and
common shares for cash,
net of issuance costs.... 1,929
Issuance of warrants to
purchase common stock.... 165
Net loss................... (5,345)
----------
Balance at December 31,
1997..................... (3,811)
Issuance of common stock
net of issuance costs.... 171
Issuance of Series A
preferred stock net of
issuance costs........... 15
Issuance of Series B
preferred stock net of
issuance costs........... 603
Conversion of notes payable
to stockholders into
common stock............. 1,012
Repurchase of preferred
stock and common stock... (20)
Issuance of warrants to
purchase common stock.... 130
Net loss................... (7,671)
----------
Balance at December 31,
1998..................... (9,571)
Issuance of common stock,
net of issuance costs.... 2,561
Issuance of Series C
preferred stock, net of
issuance costs........... 5,034
Issuance of common stock
upon exercise of
warrants, net of issuance
costs.................... 1,947
Conversion of notes payable
to shareholders into
common stock............. 9,090
Issuance of common stock
upon exercise of
options.................. 845
Deferred stock
compensation............. --
Amortization of deferred
stock compensation....... 9,300
Charge for amended
financing arrangements... 25,700
Net loss................... (43,601)
----------
Balance at December 31,
1999..................... $ 1,305
==========
</TABLE>

See accompanying notes.

F-5
<PAGE>
VYYO INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss.................................................... $(5,345) $(7,671) $(43,601)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and other.................................... 343 368 454
Amortization of deferred stock compensation............... -- -- 9,300
Charge for amended financing arrangements................. -- -- 25,700
Changes in assets and liabilities:
Accounts receivable..................................... (132) (8) (336)
Prepaid expenses and other current assets............... 17 34 (169)
Inventory............................................... (639) (638) 512
Other assets............................................ 4 7 --
Accounts payable........................................ 287 636 (246)
Accrued liabilities..................................... 813 455 1,663
Deferred income......................................... -- 140 499
------- ------- --------
Net cash used in operating activities....................... (4,652) (6,677) (6,224)
------- ------- --------
INVESTING ACTIVITIES
Purchases of property and equipment......................... (430) (305) (581)
Proceeds from sales of property and equipment............... -- -- 42
------- ------- --------
Net cash used in investing activities....................... (430) (305) (539)
------- ------- --------

FINANCING ACTIVITIES
Proceeds from notes payable to stockholders................. 2,126 5,834 1,385
Proceeds from note receivable from stockholders............. -- -- 2,080
Proceeds from debt.......................................... 300 1,970 310
Repayments of capital lease obligations..................... -- -- (336)
Repayments of debt and capital lease obligations............ (321) (2,100) --
Repurchase of preferred stock and common stock.............. -- (20) --
Issuance of preferred stock and common stock................ 1,929 789 8,229
Issuance of warrants to purchase common stock............... 99 130 --
------- ------- --------
Net cash provided by financing activities................... 4,133 6,603 11,668
------- ------- --------
Increase (decrease) in cash and cash equivalents............ (949) (379) 4,905
Cash and cash equivalents at beginning of period.......... 1,459 510 131
------- ------- --------
Cash and cash equivalents at end of period.................. $ 510 $ 131 $ 5,036
======= ======= ========
NONCASH FINANCING ACTIVITIES
Conversion of loan from stockholder into warrant to purchase
common stock.............................................. $ 66 $ -- --
======= ======= ========
Conversion of stockholders' notes into common stock......... $ -- $ 1,012 $ 9,090
======= ======= ========
Issuance of common stock for note receivable................ $ 3,000
======= ======= ========
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid............................................... $ 158 $ 143 $ 141
======= ======= ========
</TABLE>

See accompanying notes.

F-6
<PAGE>
VYYO INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1999

1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BASIS OF PRESENTATION

Vyyo Inc. was incorporated as a Delaware corporation in 1996. In
January 2000, the Company changed its name from PhaseCom, Inc. to Vyyo Inc. and
its subsidiary (collectively, "Vyyo" or the "Company") is a global provider of
broadband wireless access systems used by telecommunications service providers
to deliver wireless high-speed data connections to businesses and residential
subscribers. The Company sells its products directly to service providers and to
system integrators. The majority of the Company's revenues are generated from
sales to customers in North America.

The Company's consolidated financial statements reflect the operations of
Vyyo Inc. and its wholly owned Israeli subsidiary, Vyyo Ltd. All significant
intercompany transactions and balances have been eliminated in consolidation.

REVENUE RECOGNITION

Net revenues include product revenues and in 1999 also include $480,000 of
technology development revenues. Product revenues are derived primarily from
sales of hubs and modems to telecommunications service providers and to system
integrators. Product revenues are generally recorded when products are shipped,
provided there are no customer acceptance requirements and the Company has no
additional performance obligations. The Company accrues for estimated sales
returns and exchanges and product warranty and liability costs upon recognition
of product revenues.

Technology development revenues are related to a best efforts arrangement
with a customer. Due to technology risk factors, the costs of the technology
development efforts are expensed when incurred and the revenues are recognized
when the applicable customer milestones are met, including deliverables, but not
in excess of the estimated amount that would be recognized using the
percentage-of completion method. We expect to complete this arrangement in
fiscal year 2000.

Deferred revenues represent amounts received from customers for products
subject to return or exchange and payments on technology development contracts
not yet recognized as revenue.

RISK FACTORS AND CONCENTRATIONS

The Company is subject to various risks similar to other companies in a
comparable stage of growth, including dependence on key individuals, competition
from substitute products and larger companies, the need to obtain additional
financing, and the continued successful development and marketing of its
products.

F-7
<PAGE>
VYYO INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999

The Company used over $17 million in operating activities in 1997, 1998 and
1999. The Company will require additional financing to continue its operations
and execute its business plan. The Company believes adequate additional debt or
equity financing is available to fund planned operations through fiscal 2000.

Financial instruments that subject the Company to credit risk consist
primarily of uninsured cash and cash equivalents, most of which is held at
high-quality financial institutions in the United States and trade receivables.
The Company performs ongoing credit evaluations of its customers and generally
does not require collateral. The Company provides reserves for estimated credit
losses. Provisions for bad debts in 1997, 1998 and 1999 were $0, $11,000 and
$198,000, respectively. Write-offs of uncollectible accounts in 1999 was
$209,000 and none in 1997 and 1998.

Sales to one customer represented 12%, 31% and 20% of total revenues for the
years ended December 31, 1997, 1998 and 1999. Sales to two other customers
represented 11% and 27% of total revenues for the year ended December 31, 1997.
Sales to another customer represented 15% and 13% of total revenues for the
years ended 1998 and 1999. Sales to two other customers represented 14% and 12%,
respectively, of total revenues for the year ended December 31, 1999. Sales to
one other customer represented 23% of revenues for the year ended December 31,
1998.

In August 1999, ADC Telecommunications, Inc. ("ADC"), one of the Company's
major customers made an approximately 10% equity investment in the Company.
Revenues from ADC for the period from August 1999 through fiscal year end 1999
amounted to $654,000.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates.

RESEARCH AND DEVELOPMENT

Research and development costs are expensed as incurred and consist
primarily of personnel, facilities, equipment and supplies for our research and
development activities.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation and amortization
are provided using the straight-line method over the estimated useful lives of
the assets (generally from three to five years), or the life of the lease,
whichever is shorter.

F-8
<PAGE>
VYYO INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999

FOREIGN CURRENCY TRANSACTIONS

The U.S. dollar is the functional currency for the Company's foreign
subsidiary operations. Substantially all of the Company's foreign subsidiary's
sales are made in U.S. dollars. In addition, a substantial portion of the
foreign subsidiary's costs are incurred in U.S. dollars. Since the U.S. dollar
is the primary currency in the economic environment in which the foreign
subsidiary operates, and, accordingly, monetary accounts maintained in
currencies other than the U.S. dollar (principally cash and liabilities) are
remeasured using the foreign exchange rate at the balance sheet date.
Operational accounts and nonmonetary balance sheet accounts are measured and
recorded at the rate in effect at the date of the transaction. The effects of
foreign currency remeasurement are reported in current operations and have not
been material to date.

CASH EQUIVALENTS

The Company considers all highly liquid investments with maturity of three
months or less, at the date of purchase, to be cash equivalents.

NET LOSS PER SHARE

Basic and diluted net loss per share are presented in accordance with SFAS
No. 128, "Earnings per Share" ("SFAS 128"), for all periods presented. Pursuant
to the Securities and Exchange Commission Staff Accounting Bulletin No. 98,
common shares and convertible preferred shares issued or granted for nominal
consideration prior to the anticipated effective date of the Company's initial
public offering (the "Offering", see Note 12) must be included in the
calculation of basic and diluted net loss per share as if they had been
outstanding for all periods presented. To date, the Company has not had any
issuances or grants for nominal consideration.

Pro forma basic and diluted net loss per share have been computed using the
weighted-average number of common shares outstanding during the period. Pro
forma basic and diluted pro forma net loss per share, as presented in the
statements of operations, have been computed as described above and also give
effect to the conversion of all preferred shares that will convert automatically
upon completion of the Offering (using the as-if converted method) from original
date of issuance.

SHARE AND PER SHARE DATA

On January 3, 2000 and March 14, 2000, the Company effected a 1-for-5
reverse stock split and a 3-for-2 stock split of its common stock, respectively.
Common share, per common share data, and the preferred stock conversion rates
retroactively reflect the stock splits. As a result of the stock split, the
preferred stock is convertible to

F-9
<PAGE>
VYYO INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999

common stock at the following ratios: Series A at 1 for 0.6, Series B at 1 for
0.3, and Series C at 1 for 0.3.

UNAUDITED PRO FORMA STOCKHOLDERS' EQUITY

All of the preferred shares will automatically be converted into common
shares upon completion of the Offering (see Note 8). The preferred stock is
convertible to common stock at the following split-adjusted ratios: Series A at
1 for 0.6, Series B at 1 for 0.3, and Series C at 1 for 0.3. Unaudited pro forma
stockholders' equity at December 31, 1999, as adjusted for the assumed
conversion of such shares, is disclosed on the balance sheet.

ACCOUNTING FOR STOCK-BASED COMPENSATION

The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and related
interpretations in accounting for its employee stock options because the
alternative fair value accounting provided for under the Financial Accounting
Standards Board ("FASB") Statement No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123") requires use of option valuation models that were not
developed for use in valuing employee stock options. Under APB 25, when the
exercise price of the Company's employee stock or options equals the market
price of the underlying stock on the date of the grant, no compensation expense
is recognized.

During 1999, in connection with the grant of certain stock options and the
issuance of certain shares, the Company recorded deferred compensation expense
representing the difference between the option exercise price or the share
purchase price and the deemed fair value of the Company's common stock on the
date of grant. The deferred compensation costs are being amortized based on the
graded vesting method over the vesting period of the options.

NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standard Board (FASB) issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS No. 133) which establishes accounting and reporting standard
for derivatives instruments and hedging activities. The statement requires
recognition of all derivatives at fair value in the financial statements. FASB
Statement No. 137 "Accounting for Derivative Instruments and Hedging Activities
Deferral of the Effective Date of FASB Statement No. 133" an amendment of FASB
Statement No. 133, defers implementation of SFAS No. 133 until fiscal years
beginning after

F-10
<PAGE>
VYYO INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999

June 15, 2000. The Company believes that, upon implementation, the standard will
not have a significant effect on its financial condition or results of
operations.

2. INVENTORY

Inventory is stated at the lower of weighted-average actual cost or market.
Inventory is comprised of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Raw materials............................................... $ 516 $ 631
Work in process............................................. 774 351
Finished goods.............................................. 354 150
------ ------
$1,644 $1,132
====== ======
</TABLE>

3. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Machinery and equipment.................................... $ 939 $1,101
Computers.................................................. 729 1,084
Furniture and fixtures..................................... 240 259
Vehicles and other......................................... 156 91
------- ------
2,064 2,535

Accumulated depreciation and amortization.................. (1,054) (1,440)
------- ------
Property and equipment, net................................ $ 1,010 $1,095
======= ======
Property and equipment under lease:
Cost..................................................... $ 524 502
Accumulated depreciation and amortization................ (370) (418)
------- ------
Property and equipment under lease (net):.................. $ 154 $ 84
======= ======
</TABLE>

F-11
<PAGE>
VYYO INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999

4. ACCRUED LIABILITIES

Accrued liabilities consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Compensation and benefits................................... $ 749 $1,192
Warranty.................................................... 250 475
Withholding tax............................................. 78 370
Other....................................................... 1,236 1,116
------ ------
$2,313 $3,153
====== ======
</TABLE>

5. BANK LINE OF CREDIT

The Company has a line of credit arrangement with a bank for an aggregate
amount of $2,500,000. The loans under the line of credit bear interest at a rate
of LIBOR plus 1.5% (7.25% at December 31, 1999). Borrowings and bank guarantees
under the line of credit amounted to $2,280,000 and $220,000, respectively, at
December 31, 1999.

As of December 31, 1999, all assets of the Company's Israeli subsidiary are
subject to fixed and floating liens pursuant to certain loan agreements. Also,
the Company's property and equipment are subject to floating liens in connection
with investment grants received from the Israeli government and the borrowings
under the line of credit.

6. NOTES PAYABLE TO STOCKHOLDERS

Notes payable to stockholders were issued in 1997 through 1999. The notes
bore interest at rates varying from 8% to 9% and, in accordance with their
amended terms were due in various dates through 1999. The Convertible Notes
Payable and related accrued interest in the aggregate amount of $10.1 million
were converted in accordance with their amended terms into 1,517,741 and
11,128,254 shares of the Company's common stock in 1998 and 1999, respectively.
Financing conversion charge recorded in 1999, represents the aggregate
differences between the amended notes payable conversion price per share or the
related amended warrants exercise price and the deemed fair market value of the
common stock at the date of the amendment.

F-12
<PAGE>
VYYO INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999

7. COMMITMENTS AND CONTINGENCIES

PURCHASE COMMITMENTS

From time to time, the Company enters into short term supply agreements with
its vendors. Pursuant to these agreements, the Company may be subject to
penalties and charges for quantities not purchased by agreed-upon dates.

OPERATING LEASES

The Company leases its operating facility in Israel under a noncancelable
operating lease that expires in 2003. As of December 31, 1999, future minimum
lease payments under operating leases were $422,000, $392,000, $370,000 and
$370,000 for 2000, 2001, 2002 and 2003 respectively. The Company's headquarters
facility in California is leased month-to-month from a company under common
control of a major stockholder. Rent and related payments to this company
amounted to $44,000 and $343,000 in 1998 and 1999, respectively.

The gross rental payments under all operating leases were $251,000, $381,000
and $494,000 for the years ended December 31, 1997, 1998 and 1999, respectively.
Rental expense, net of reimbursements from subleases, was $33,000, $127,000 and
$434,000 for the years ended December 31, 1997, 1998 and 1999, respectively.
Aggregate future minimum rentals to be received under noncancelable subleases
are $86,000 as of December 31, 1999.

ACCRUED SEVERANCE LIABILITIES

The Company's liability for severance pay pursuant to Israeli law is covered
by deposits with financial institutions and by accrual. The accrued severance
pay liability included in accrued compensation and benefits and the amount
funded included in other current assets is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Accrued severance pay....................................... $ 330 $ 348
Less amount funded.......................................... (241) (202)
----- -----
Unfunded portion, net accrued severance pay................. $ 89 $ 146
===== =====
</TABLE>

CUSTOMER CLAIM

In 1997, a customer filed a claim against the Company in the amount of
approximately $300,000 alleging damages resulting from certain products being
delivered which did not meet product specifications. The Company no longer sells
or

F-13
<PAGE>
VYYO INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999

supports these products. The Company believes it has meritorious defenses
against these allegations and it plans to vigorously defend against them.

PATENT MATTER

In early 1999, the Company received a written notice from Hybrid Networks,
Inc. ("Hybrid"), a competitor, in which Hybrid claimed to have patent rights in
certain technology and requested that the Company review its products in light
of six of Hybrid's issued patents. The Company, with the advice of counsel,
believes the patents are invalid or are not infringed by the Company's products.
However, Hybrid may pursue litigation with respect to these or other claims. The
results of any litigation are inherently uncertain. Any successful infringement
claim or litigation against the Company could have a significant adverse impact
on operating results and financial condition.

RESEARCH GRANTS

Prior to 1997, the Company participated in the following research and
development incentive programs:

a. The Office of the Chief Scientist in the Israeli Ministry of Industry and
Trade (the "Chief Scientist)
The Company has obtained grants from the Chief Scientist totaling
approximately $2 million. These grants were received through 1996. The
terms of the grants from the Chief Scientist prohibit the transfer of
technology developed pursuant to the terms of these grants to any person,
without prior written consent of the Chief Scientist. These grants are
repayable to the Chief Scientist generally at the rate of 3% of the sales
of the products developed out of the projects funded, up to an amount
equal to 100% of the grant received.

b. Binational Industrial Research and Development Foundation (the "BIRD
Foundation")
The Company has participated in programs sponsored by the BIRD Foundation,
which funds joint US-Israeli teams in the development of technological
products. The Company received grants totaling approximately
$1.7 million from the BIRD Foundation for various projects. Grants
received from the BIRD Foundation are paid back at the rate of 2.5% to 5%
of revenues shown from the projects funded, up to a maximum amount equal
to 150% of the grants received.

As of December 31, 1999, the Company has repaid or provided for the
repayment of grants amounting to $651,000.

F-14
<PAGE>
VYYO INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999

8. STOCKHOLDERS' EQUITY

PREFERRED STOCK

As of December 31, 1999, the board of directors had the authority, without
any further vote or action by the stockholders, to provide for the issuance of
up to 100,000,000 shares of preferred stock from time to time in one or more
series with such designations, rights, preferences, and limitations as the board
of directors may determine, including the consideration received therefore, the
number of shares comprising such series, dividend rights, redemption provisions,
liquidation preferences, redemption fund provisions, conversion rights, and
voting rights.

<TABLE>
<CAPTION>
SHARES ISSUED COMMON SHARES
SHARES AUTHORIZED AND OUTSTANDING DESIGNATED FOR CONVERSION
------------------------ ---------------------- -------------------------
1998 1999 1998 1999 1998 1999
---------- ----------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Series A............... 6,000,000 6,000,000 1,584,241 1,584,241 950,546 950,546
Series B............... 15,000,000 40,000,000 629,447 629,447 188,833 188,833
Series C............... -- 40,000,000 -- 9,350,581 -- 2,805,174
Undesignated........... 14,000,000 14,000,000 -- -- -- --
---------- ----------- --------- ---------- --------- ---------
35,000,000 100,000,000 2,213,688 11,564,269 1,139,379 3,944,553
========== =========== ========= ========== ========= =========
</TABLE>

The holders of Series A, B, and C preferred stock are entitled to receive,
when and if declared by the board of directors, noncumulative dividends at the
annual rate of $0.0432, $0.08 and $0.0216 per share, respectively, and in that
order of preference, in preference to payment of dividends on common stock. No
dividends have been declared to date.

Each share of Series A, B, and C preferred stock is convertible, at the
holders' option or automatically as set forth below, into 0.6 share, 0.3 share
and 0.3 share, respectively, of common stock (as adjusted from time to time for
stock splits, stock dividends, and like events). Each share of Series A, B and C
preferred stock will automatically be converted into shares of common stock upon
either (i) the closing of an underwritten public offering of the Company's
common stock resulting in aggregate gross proceeds in excess of $12,500,000 with
a common stock per share purchase price of at least $3.33, or (ii) in a business
combination in which the common stock equivalent value of the Company's stock as
a result of such event is $3.33 or more per share (as adjusted from time to time
for stock splits, stock dividends, and like events). The holders of preferred
stock are entitled to one vote for each share of common stock into which such
preferred shares can be converted.

In the event of any liquidation, dissolution, or winding up of the Company
("Liquidation Event"), the holders of Series B preferred stock are entitled to
receive, in preference to holders of Series A preferred stock, Series C
preferred stock and

F-15
<PAGE>
VYYO INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999

common stock, the amount of $1.50 per share plus any declared but unpaid
dividends. Before the payment of any portion of the Series A liquidation
preference price, the holders of Series C preferred stock are entitled to
receive $0.54 per share plus cumulative dividends of four percent per year in
excess of dividends actually paid or (ii) declared and unpaid dividends. Before
payment of any portion of the Series A liquidation preference price and after
payment of the Series B liquidation preference price and the Series C
liquidation preference price, in the event of a Liquidation Event, the holders
of Series A and Series B preferred stock and common stock are entitled to
receive an amount of $0.40 per share ("Series B to Common Stock Liquidation
Price"). After payment of the Series B to Common Stock Liquidation Price, the
holders of Series A preferred stock are entitled to receive, in preference to
holders of common stock, the amount of $4.60 per share plus any declared but
unpaid dividends.

WARRANTS

From 1997 through 1998, the Company issued warrants to purchase an aggregate
of 1,746,447 shares of common stock to investors in connection with equity and
convertible note financing transactions. As of December 31, 1999, 187,785
warrants remained outstanding with an average exercise price of $1.26 per share.
These warrants are exercisable through March 2002.

COMMON STOCK

As of December 31, 1999, the Company has reserved approximately 4,133,000
shares of common stock for issuance on the conversion of the Series A, B and C
convertible preferred stock and the warrants and 5,492,000 shares of common
stock for issuance of options granted under the stock-based compensation plan.

STOCK OPTION PLANS

The Company has the following stock option plans: (i) 1996 Equity Incentive
Plan, (ii) 1999 Employee and Consultant Equity Incentive Plan and (iii) 2000
Employee and Consultant Equity Incentive ("the Plans"). The plans as amended
provide for the grant to employees of incentive stock options ("ISOs"), the
grant to employees, directors, and consultants of nonstatutory stock options,
and the grant of stock options which comply with the applicable requirements of
Israeli law to the extent granted to persons who may be subject to income tax in
Israel. The Plans also provide for the awards of restricted stock and stock
bonuses.

ISOs granted under the Plans have an exercise price equal to the fair value
as determined by the board of directors of the common stock on the date of
grant.

F-16
<PAGE>
VYYO INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999

Nonstatutory stock options may not be granted with an exercise price less than
85% of the fair value as determined by the board of directors of the common
stock on the date of grant. The period within which the option may be exercised
is determined at the time of grant, provided that no term is longer than ten
years. Options generally vest over a four-year period.

In October 1998, the Company adopted an option exchange program to allow
employees to exchange their options for new options with an exercise price of
$0.33. The program resulted in a total of approximately 295,800 options with
exercise price ranging from $1.00 to $2.10 being exchanged for the new options.
The terms of the repriced options remain the same.

A summary of stock option activity, and related information, under the Plans
for the years ended December 31, 1997, 1998 and 1999 is as follows (in
thousands, except per share data):

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------- -------------------------------
WEIGHTED WEIGHTED WEIGHTED
SHARES AVERAGE AVERAGE AVERAGE
AVAILABLE NUMBER EXERCISE FAIR NUMBER EXERCISE
FOR GRANT OF SHARES PRICE VALUE OF SHARES PRICE
--------- --------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996.......... 285 44 $1.00
Granted............................. (280) 280 $1.63
------- ------ -----
Balance at December 31, 1997.......... 5 324 $1.57 0.35
------- ------ -----
Authorized.......................... 149 -- --
Granted............................. (512) 512 $0.33
Canceled............................ 299 (299) $1.43
------- ------ -----
Balance at December 31, 1998.......... (59) 537 $0.53 0.05
Authorized.......................... 6,451 -- --
Granted............................. (4,727) 4,727 $0.70
Exercised........................... -- (1,437) $0.60
Canceled............................ 153 (153) $1.03
------- ------ -----
Balance at December 31, 1999 1,818 3,674 $0.69 0.09 727 $0.55
======= ====== ===== ===== ===== =====
</TABLE>

The weighted-average remaining contractual life of those options is 5.21
years.

Pro forma information regarding net loss is required by SFAS 123 and has
been determined as if the Company had accounted for its stock options under the
fair value method of SFAS 123. The fair value for the stock options was
estimated at the date of grant using a minimum value pricing model and a graded
vesting approach with the following weighted-average assumptions for 1997, 1998
and 1999: risk-free interest rate of 6.5%, 6.5% and 6.0%; dividend yields of
zero; and a weighted-average expected life of the option of approximately 3.6,
2.79 and 2.46 years.

F-17
<PAGE>
VYYO INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999

Option valuation models require the input of highly subjective assumptions.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

For purposes of pro forma SFAS 123 disclosures, the estimated fair value of
the options is amortized to expense over the option vesting periods.

The Company pro forma information follows:

<TABLE>
<CAPTION>
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Net loss
As reported............................................... $ (5,345) $ (7,671) $(43,601)
Pro forma................................................. $ (5,369) $ (7,731) $(43,691)
Basic and diluted loss per share
As reported............................................... $ (5.91) $ (5.43) $ (5.40)
Pro forma................................................. $ (5.93) $ (5.48) $ (5.41)
</TABLE>

9. NET LOSS PER SHARE

The following table presents the calculation of basic and diluted and pro
forma basic and diluted net loss per share (in thousands, except per share
data):

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1999
------------
<S> <C>
Net loss.................................................... $ (43,601)
==========

Shares used in computing basic and diluted net loss per
share..................................................... 8,078
==========

Basic and diluted net loss per share........................ $ (5.40)
==========

Pro forma
Shares used above......................................... 8,078
Pro forma adjustment to reflect weighted effect of assumed
conversion of convertible preferred stock (unaudited)... 2,059
----------
Shares used in computing pro forma basic and diluted net
loss per share (unaudited).............................. 10,137
----------
Pro forma basic and diluted net loss per share
(unaudited)............................................. $ (4.30)
==========
</TABLE>

F-18
<PAGE>
VYYO INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999

All preferred stock, outstanding stock options, and warrants have been
excluded from the calculation of the diluted loss per common share because all
such securities are antidilutive for all periods presented. The total number of
common shares related to preferred stock, outstanding options and warrants
excluded from the calculations of diluted net loss per share were 2,381,466,
2,776,391, and 7,806,387 for the years ended December 31, 1997, 1998 and 1999.

10. INCOME TAXES

U.S. INCOME TAXES

As of December 31, 1999, the Company has U.S. federal and state net
operating loss carryforwards of approximately $19 million. The net operating
loss carryforwards will expire beginning in 2004 through 2019, if not utilized.
The utilization of net operating loss carryforwards may be subject to
substantial annual limitations if there has been a significant "change in
ownership." Such a "change in ownership," as described in Section 382 of the
Internal Revenue Code, may substantially limit the Company's utilization of the
net operating loss carryforwards.

ISRAELI INCOME TAXES

The Company's Israeli subsidiary has been granted "Approved Enterprise"
status for several investment programs, of which two are currently in effect.
Benefits pursuant to such investment plans include grants on a portion of the
costs of fixed assets, reduced tax rates, and, in certain cases, a full tax
exemption for certain periods. The entitlement to these benefits is conditional
upon the Company's fulfilling the conditions stipulated by the Investment Law,
regulations published thereunder, and the instruments of approval for the
specific investments in Approved Enterprises. In the event of a failure to
comply with these conditions, the benefits may be canceled and the Company may
be required to refund the amount of the benefits, in whole or in part, with the
addition of inflation adjustment differences and interest. The 1988 Investment
Plan will expire in 2001 and no benefits are expected to be realized under this
Plan. The 1996 Investment Plan entitles the Israeli subsidiary to a full tax
exemption ending 6 years after the year in which it utilizes its remaining
operating loss carryforwards and a reduced corporate tax rate of 10% to 15% for
the remaining period of the Plan's benefits, which will expire in 2009.

As of December 31, 1999, the Company has Israeli net operating loss
carryforwards of approximately $19 million. The Israeli loss carryforwards have
no expiration date and are expected to offset certain future Israeli subsidiary
earnings

F-19
<PAGE>
VYYO INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999

during the tax exempt period. Management intends to re-evaluate its tax holiday
status and related tax asset at each balance sheet date.

Pretax losses from foreign (Israeli) operations was approximately
$5 million and $6 million for the years ended December 31, 1998 and 1999,
respectively.

DEFERRED INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.......................... $ 2,000 $ 15,500

Valuation allowance......................................... (2,000) (15,500)
------- --------
Net deferred tax assets..................................... $ -- $ --
======= ========
</TABLE>

The valuation allowance increased by $13.5 million for the year ended
December 31, 1999.

FASB Statement No. 109 provides for the recognition of deferred tax assets
if realization of such assets is more likely than not. Based upon the weight of
available evidence, which includes our historical operating performance and the
reported cumulative net losses in all prior years, we have provided a full
valuation allowance against our net deferred tax assets as the future
realization of the tax benefit is not sufficiently assured.

F-20
<PAGE>
VYYO INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999

11. SEGMENTS AND GEOGRAPHIC INFORMATION

Vyyo operates in one industry segment, the design and marketing of broadband
wireless access systems. The following is a summary of operations within
geographic areas based on the location of the entity purchasing the products:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Revenues from sales to unaffiliated customers:
North America............................................. $ 295 $1,102 $2,587
Europe.................................................... 560 533 919
Asia...................................................... 613 731 552
Rest of the world......................................... 69 83 172
------ ------ ------
$1,537 $2,449 $4,230
====== ====== ======
Property and Equipment, Net
Israel.................................................... $ 914 $ 992
United States............................................. 96 103
------ ------
$1,010 $1,095
====== ======
</TABLE>

12. SUBSEQUENT EVENTS (UNAUDITED)

On February 2, 2000, the board of directors authorized the Company to file a
registration statement with the U.S. Securities and Exchange Commission for an
initial public offering of its common shares. Also on February 2, 2000, the
board of directors approved the following: (1) an amendment to the 2000 option
plan to increase the number of shares reserved for issuance under the plan by
3,450,000 shares; (2) an automatic annual increase to the shares reserved under
the plan equal to the lesser of 1,350,000 shares or 5% of the outstanding
shares; (3) the adoption of the 2000 Employee Stock Purchase Plan, under which
750,000 shares have been reserved.

On February 2, 2000, the note from shareholders in the amount of $920,000
has been repaid.

F-21
<PAGE>
- ------------------------------------------------------------
- ------------------------------------------------------------

6,750,000 SHARES

[VYYO LOGO]

---------------------

Prospectus
, 2000

---------------------

BANC OF AMERICA SECURITIES LLC
CIBC WORLD MARKETS
DAIN RAUSCHER WESSELS
WR HAMBRECHT + CO

Until , 2000 (25 days after the date of this offering), all
dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This is
in addition to a dealer's obligation to deliver a prospectus when acting as an
underwriter and with respect to unsold allotments or subscriptions.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
[INFORMATION NOT REQUIRED IN PROSPECTUS]

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table indicates the expenses to be incurred in connection with
the offering described in this Registration Statement, all of which will be paid
by Vyyo. All amounts are estimates, other than the registration fee, the NASD
filing fee, and the Nasdaq National Market listing fee.

<TABLE>
<S> <C>
SEC Registration fee........................................ $ 30,360
NASD Filing fee............................................. 12,144
Nasdaq National Market listing fee.......................... 95,000
Accounting fees and expenses................................ 450,000
Legal fees and expenses..................................... 700,000
Printing and engraving expenses............................. 175,000
Transfer agent fees and expenses............................ 10,000
Blue sky fees and expenses.................................. 3,000
Miscellaneous fees and expenses............................. 124,496
----------
Total..................................................... $1,600,000
==========
</TABLE>

- ------------------------

* To be completed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 102 of the Delaware General Corporation Law, or the DGCL, as
amended, allows a corporation to eliminate the personal liability of directors
of a corporation to the corporation or its stockholders for monetary damages for
a breach of fiduciary duty as a director, except where the director breached his
duty of loyalty, failed to act in good faith, engaged in intentional misconduct
or knowingly violated a law, authorized the payment of a dividend or approved a
stock repurchase in violation of Delaware corporate law or obtained an improper
personal benefit.

Section 145 of the DGCL provides, among other things, that we may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (other than an
action by or in the right of Vyyo) by reason of the fact that the person is or
was a director, officer, agent or employee of Vyyo or is or was serving at our
request as a director, officer, agent, or employee of another corporation,
partnership, joint venture, trust or other enterprise, against expenses,
including attorneys' ties, judgment, fines and amounts paid in settlement
actually and reasonably incurred by the person in connection with the action,
suit or proceeding. The power to indemnify applies (a) if the person is
successful on the merits or otherwise in defense of any action, suit or
proceeding, or (b) if the person acted in good faith and in a manner he
reasonably believed to be in the best interest, or not opposed to the best
interest, of Vyyo, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The power to indemnify
applies to actions brought by or in the right of Vyyo as well, but only to the
extent of defense expenses (including attorneys' fees but excluding amounts paid
in settlement) actually and reasonably incurred and not to any satisfaction of
judgment or settlement of the claim itself, and with the further limitation that
in these actions no indemnification shall be made in the event of any
adjudication of negligence or misconduct in the performance of his duties to
Vyyo, unless the court believes that in light of all the circumstances
indemnification should apply.

II-1
<PAGE>
Section 174 of the DGCL provides, among other things, that a director, who
willfully or negligently approves of an unlawful payment of dividends or an
unlawful stock purchase or redemption, may be held liable for these actions. A
director who was either absent when the unlawful actions were approved or
dissented at the time, may avoid liability by causing his or her dissent to
these actions to be entered in the books containing the minutes of the meetings
of the board of directors at the time the action occurred or immediately after
the absent director receives notice of the unlawful acts.

Our certificate of incorporation includes a provision that eliminates the
personal liability of its directors for monetary damages for breach of fiduciary
duty as a director, except for liability:

- for any breach of the director's duty of loyalty to Vyyo or its
stockholders;

- for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;

- under the section 174 of the DGCL regarding unlawful dividends and stock
purchases; or

- for any transaction from which the director derived an improper personal
benefit.

These provisions are permitted under Delaware law.

Our bylaws provide that:

- we must indemnify our directors and officers to the fullest extent
permitted by Delaware law;

- we may indemnify our other employees and agents to the same extent that we
indemnified our officers and directors, unless otherwise determined by our
board of directors; and

- we must advance expenses, as incurred, to our directors and executive
officers in connection with a legal proceeding to the fullest extent
permitted by Delaware Law.

The indemnification provisions contained in our certificate of incorporation
and bylaws are not exclusive of any other rights to which a person may be
entitled by law, agreement, vote of stockholders or disinterested directors or
otherwise. In addition, we maintain insurance on behalf of our directors and
executive officers insuring them against any liability asserted against them in
their capacities as directors or officers or arising out of this status.

We intend to enter into agreements to indemnify our directors and executive
officers, in addition to indemnification provided for in our bylaws. These
agreements, among other things, will provide for indemnification of our
directors and executive officers for expenses, judgments, fines and settlement
amounts incurred by any such person in any action or proceeding arising out of
the person's services as a director or executive officer or at our request. We
believe that these provisions and agreements are necessary to attract and retain
qualified persons as directors and executive officers.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Since February 1, 1997, the Registrant has sold and issued the following
unregistered securities. The share numbers and per share prices below reflect
(1) the two-for-one stock split of the outstanding common stock effected on
February 13, 1998, (2) the one-for-five reverse stock split of the outstanding
common stock effected on January 3, 2000, and (3) the three-for-two stock split
of the outstanding common stock effected on March 14, 2000:

(1) Between February 1, 1997 and October 26, 1998, the Registrant granted stock
options under the Registrant's 1996 Equity Incentive Plan to a total of 45
officers, employees, directors and consultants of the Registrant, to
purchase an aggregate of 282,216 shares of common stock, at a weighted
average exercise price of $1.64 per share. On October 27, 1998, the
Registrant amended these options to have an exercise price of $0.33 per
share. Since October 27, 1998, the Registrant granted stock options under
the Registrant's 1996 Equity Incentive Plan to a total of 38 officers,

II-2
<PAGE>

employees, directors and consultants of the Registrant, to purchase an
aggregate of 218,209 shares of common stock, at a weighted average exercise
price of $0.33 per share.

(2) Since February 1, 1997, the Registrant has granted stock options under the
Registrant's 1999 Employee and Consultant Equity Incentive Plan to a total
of 26 officers, employees, directors and consultants of the Registrant, to
purchase an aggregate of 2,079,000 shares of common stock, at a weighted
average exercise price of $0.50 per share.

(3) Since February 1, 1997, the Registrant has granted stock options under the
Registrant's 2000 Employee and Consultant Equity Incentive Plan to a total
of 118 officers, employees, directors and consultants of the Registrant, to
purchase an aggregate of 3,546,899 shares of common stock, at a weighted
average exercise price of $1.02 per share.

(4) At various times from March 31, 1997 through July 17, 1997, the Registrant
sold and issued 85,395 shares of common stock at $1.63 per share for an
aggregate cash consideration of $139,478.50, and 142,325 shares of
Series A Convertible Preferred Stock at $8.79 per share for an aggregate
cash consideration of $1,251,036.75, to the PhaseCom Investor Group Limited
Partnership No. 2, the Davidi and Shamaya Gilo Trust, the Pezzola-Foster
Trust and Shaul Berger.

(5) At various times from April 1, 1997 through August 28, 1997, the Registrant
sold and issued 35,904 shares of common stock at $1.63 per share for an
aggregate cash consideration of $58,645.16, and 59,842 shares of Series A
Convertible Preferred Stock at $8.79 per share for an aggregate cash
consideration of $526,011.18, to the following persons: Galran
Properties (1993) Ltd., Tom Holdings and Properties (1993) Ltd., Eichut
Capital Markets & Investments Ltd., Itzhak and Esther Hoffi,
Chim-Nir Ltd., Harel-Hamishmar Investments Ltd., Reuven and Naomi
Ashkenazy, Al-Ben Ltd., Miri Lent, Ilan Selah, Aryeh and Yval Ezyoni,
Mordechai Gazit and Avraham Fischer.

(6) From April 9, 1997 through April 16, 1997, the Registrant sold and issued
warrants to purchase an aggregate of 61,500 shares of common stock (the
"1997 Warrants") to the Davidi and Shamaya Gilo Trust and Suzon
Financial, S.A. at an exercise price of $1.63 with an aggregate exercise
price of $100,450.

(7) On June 17, 1997, the Registrant sold and issued 510 shares of common stock
and 850 shares of Series A Convertible Preferred Stock to Joseph Gorodnick
in exchange for all of his ordinary shares in Vyyo Ltd.

(8) From September 30, 1997 through November 10, 1997, the Registrant sold and
issued warrants to purchase an aggregate of 367,346 shares of common stock
(the "1997 Warrants") to the Gilo Family Partnership, David Fox, Misha
Renclair, Eichut Capital Markets and Investments (1993) Ltd., Galran
Properties (1993) Ltd. and Tom Holdings and Properties (1993) Ltd. at an
exercise price of $7.92 with an aggregate exercise price of $2,908,154.25

(9) On November 18, 1997, the Registrant sold and issued an aggregate of 146
shares of common stock and 242 shares of Series A Convertible Preferred
Stock to for Y.Atai Investments Ltd., Galran Properties (1993) Ltd., Tom
Holdings and Properties (1993) Ltd. and Eichut Capital Markets and
Investments (1993) Ltd. in exchange for all of their ordinary shares in
Vyyo Ltd.

(10) On December 29, 1997, the Registrant sold and issued 1997 Series A-2
Promissory Notes (the "Registrant 1997 Series A-2 Notes") in the aggregate
principal amount of $278,400, which were convertible into 18,560 shares of
Series A Convertible Preferred Stock at a conversion price of $15.00 per
share, to the following persons: Maurice Filister 1996 Trust for the
benefit of Darlene Stillpass, Maurice Filister 1996 Trust for the benefit
of Harvey Filister, Samuel Kaplan/Ralph Strangis Investment Partnership,
Alan Zimmerman, David Fox, ARC Investors, Yael Gilo DSP Tel

II-3
<PAGE>
Trust, Adi Gilo DSP Tel Trust, Elad Gilo DSP Tel Trust, M.S.I.
Investments Ltd., Robert Melamed, Michael Corwin and Gilo Family
Partnership.

(11) On December 29, 1997, Vyyo Ltd sold and issued 1997 Series A-2 Promissory
Notes (the "Ltd 1997 Series A-2 Notes" to Chim-Nir Ltd., Eichut Capital
Markets and Investments (1993) Ltd., Galran Properties (1993) Ltd.,
Harel-Hamishar Investments Ltd., Avraham Fischer and Tom Holdings and
Properties (1993) Ltd. in the aggregate principal amount of $176,320, which
were convertible into 11,754 shares of Registrant's Series A Convertible
Preferred Stock at a conversion price of $15.00 per share.

(12) On December 22, 1997, the Registrant sold and issued 1997 Series A-2
Warrants (the "1997 Series A-2 Warrants") to purchase an aggregate of
72,000 shares of Common stock to the purchasers of the 1997 Series A-2
Notes at an exercise price of $9.50 with an aggregate exercise price of
$684,000.

(13) On February 3, 1998, the Registrant sold and issued 1998 Series A-1
Promissory Notes (the "Registrant 1998 Series A-1 Notes") in the aggregate
principal amount of $259,840, which were convertible into 17,322 shares of
Series A Convertible Preferred Stock at a conversion price of $15.00 per
share, to the following persons: Maurice Filister 1996 Trust for the
benefit of Darlene Stillpass, Maurice Filister 1996 Trust for the benefit
of Harvey Filister, Samuel Kaplan/Ralph Strangis Investment Partnership,
Eli David, Alan Zimmerman, ARC Investors, Yael Gilo DSP Tel Trust, Adi Gilo
DSP Tel Trust, Elad Gilo DSP Tel Trust, Robert Melamed, Michael Corwin,
Gilo Family Partnership and Neill & Linda Brownstein.

(14) On February 3, 1998, Vyyo Ltd sold and issued 1998 Series A-1 Promissory
Notes (the "Ltd 1998 Series A-1 Notes") to Chim-Nir Ltd., Eichut Capital
Markets and Investments (1993) Ltd., Galran Properties (1993) Ltd.,
Harel-Hamishar Investments Ltd., Reshifa Management Holdings, Ltd. and Tom
Holdings and Properties (1993) Ltd. in the aggregate principal amount of
$157,760, which were convertible into 10,517 shares of Registrant's
Series A Convertible Preferred Stock at a conversion price of $15.00 per
share.

(15) On February 3, 1998, the Registrant sold and issued 1998 Series A-1
Warrants (the "1998 Series A-1 Warrants") to purchase an aggregate of
64,800 shares of Common stock to the purchasers of the 1998 Series A-1
Notes at an exercise price of $9.50 with an aggregate exercise price of
$615,600.

(16) On February 6, 1998, pursuant to a settlement agreement, the Registrant
sold and issued 12,447 shares of common stock and 20,744 of Series A
Convertible Preferred Stock to Yotam Financing Technological Ventures Ltd.
for an aggregate cash consideration of $20,744.

(17) On February 26, 1998, the Registrant sold and issued 1998 Series A-2
Promissory Notes (the "Registrant 1998 Series A-2 Notes") in the aggregate
principal amount of $765,600, which were convertible into 51,040 shares of
Series A Convertible Preferred Stock at a conversion price of $15.00 per
share, to the following persons: Maurice Filister 1996 Trust for the
benefit of Darlene Stillpass, Maurice Filister 1996 Trust for the benefit
of Harvey Filister, Samuel Kaplan/Ralph Strangis Investment Partnership,
Eli David, Alan Zimmerman, ARC Investors, Yael Gilo DSP Tel Trust, Adi Gilo
DSP Tel Trust, Elad Gilo DSP Tel Trust, Michael Corwin, Gilo Family
Partnership, Neill & Linda Brownstein, Pezzola-Foster Trust U/T/D 4/3/87,
Donald C. Reinke and Dean Witter Reynolds, Custodian for Bruce A. Mann
Rollover IRA.

(18) On February 26, 1998, Vyyo Ltd sold and issued 1998 Series A-2 Promissory
Notes (the "Ltd 1998 Series A-2 Notes") to Chim-Nir Ltd., Eichut Capital
Markets and Investments (1993) Ltd., Galran Properties (1993) Ltd.,
Marel-Hamishar Investments Ltd., Reshifa Management Holdings, Ltd. and Tom
Holdings and Properties (1993) Ltd. in the aggregate principal amount of
$473,280,

II-4
<PAGE>
which were convertible into 31,552 shares of Registrant's Series A
Convertible Preferred Stock at a conversion price of $15.00 per share.

(19) On February 26, 1998, the Registrant sold and issued 1998 Series A-2
Warrants (the "1998 Series A-2 Warrants") to purchase an aggregate of
192,240 shares of Common stock to the purchasers of the 1998 Series A-2
Notes at an exercise price of $9.50 with an aggregate exercise price of
$1,826,280.

(20) On June 30, 1998, the Registrant sold and issued 1998 Series B-1 Promissory
Notes (the "Registrant 1998 Series B-1 Notes") in the aggregate principal
amount of $3,679,329.09, to the following persons: Maiss Family
Partnership, Alan Zimmerman, Andrew Schonzeit, ARC Investors, Darlene
Stillpass, David Fox, David Jaroslawicz, Dean Witter Reynolds, Custodian
for Bruce A. Mann Rollover IRA, Donald C. Reinke, Gilo Family Partnership,
Hargrave Houston Holdings Limited, Harvey Filister, Herbert Drower, Hindy
Taub, Irwin Zalcberg, M.S.I. Investments Ltd., Maurice Filister, Maurice
Filister 1996 Trust for the benefit of Darlene Stillpass, Maurice Filister
1996 Trust for the benefit of Harvey Filister, Michael & Merlyn Corwin,
Misha Renclair, Pezzola-Foster Trust, Pezzola & Foster, Trustees, Samuel
Kaplan/Ralph Strangis Investment Partnership, Selawi Business S.A., Shaul
Berger, Shoham Investments Ltd. and Victor Halpert. These notes were
convertible into shares of Common stock at a conversion price equal to
$5.00 if the notes convert before September 15, 1998, or after
September 15, 1998 the greater of $5.00 or one third of the per share price
of Registrant's Common stock resulting from either an initial public
offering of its common stock or a merger of Registrant with another entity.

(21) On June 30, 1998, Vyyo Ltd. sold and issued 1998 Series B-1 Promissory
Notes (the "Ltd 1998 Series B-1 Notes") to Avraham Fischer, Ilan Selah,
Aryeh and Yuval Ezyoni, Chim-Nir Ltd. Eichut Capital Markets and
Investments (1993) Ltd., Galran Properties (1993) Ltd. and Tom Holdings and
Investments (1993) Ltd. in the aggregate principal amount of $1,032,355.20.
These notes were convertible into shares of Registrant's common stock at a
conversion price equal to $5.00 if the notes convert before September 15,
1998, or after September 15, 1998 the greater of $5.00 or one third of the
per share price of Registrant's common stock resulting from either an
initial public offering of Registrant's common stock or a merger of
Registrant with another entity.

(22) On June 30, 1998, the Registrant sold and issued 1998 Series B-1 Warrants
(the "1998 Series B-1 Warrants") to the purchasers of the 1998 Series B-1
Notes to purchase the number of shares of common stock equal to the sum of
the principal amount of each investor's Registrant 1998 Series B-1 Note
or Ltd 1998 Series B-1 Note multiplied by .35 divided by the conversion
price of each investors applicable 1998 Series B-1 Note.

(23) On September 28, 1998, the Registrant sold and issued 1,798,359 shares of
common stock at $0.67 per share to the Bruce Mann IRA, the Maiss Family
Partnership, L.P., Selawi Business, S.A., the Yost Family Trust, Gilo
Family Partnership, the Pezzola Foster Trust and Alan Zimmerman for an
aggregate cash consideration of $1,198,906.

(24) On November 11, 1998, the Registrant sold and issued 228 shares of common
stock and 379 shares of Series A Convertible Preferred Stock to Shlomo
Rachiv in exchange for all of his ordinary shares in Vyyo Ltd.

(25) On December 1, 1998, the Registrant sold and issued 629,447 shares of
Series B Convertible Preferred Stock at $1.00 per share for an aggregate
cash consideration of $629,447, to the following persons: ARC Investors,
Shaul Berger, Michael and Merlyn Corwin, Dean Witter Reynolds, Custodian
for Bruce Mann Rollover IRA, Harvey Filister, Maurice Filister 1996 Trust
for the benefit of Harvey Filister, Maurice Filister, Gilo Family
Partnership, The Adi Gilo DSP Tel Trust, The Elad Gilo DSP Tel Trust, The
Yael Gilo DSP Tel Trust, Mark Gross, David Jaroslawicz, Kaplan/Strangis
Investment Partnership, Maiss Family Partnership, Robert L. Melamed, M.S.I.

II-5
<PAGE>
Investments Ltd., Pezzola-Foster Trust U/T/D 4/3/87, Andrew W. Schonzeit,
Shoham Investments Ltd., Darlene Stillpass, Maurice Filister 1996 Trust for
the benefit of Darlene Stillpass, Hindy Taub, Yost Family Trust and Alan
Zimmerman.

(26) On December 1, 1998, the Registrant sold and issued 1998 Series B-3
Warrants (the "1998 Series B-3 Warrants") to the purchasers of the
Series B Convertible Preferred Stock to purchase up to the number of shares
of common stock equal to the sum of the number of shares of Series B
Convertible Preferred Stock each investor purchased multiplied by 0.6. The
1998 Series B-3 Warrants would not be exercisable for any shares if the
Registrant obtained financing in the amount of $2,000,000 on or before
June 30, 1999.

(27) On December 1, 1998, the Registrant amended the 1997 Series A-2 Notes, 1998
Series A-1 Notes, 1998 Series A-2 Notes and 1998 Series B-1 Notes in the
aggregate principal amount of $4,477,369.77 held by 23 of the purchasers of
the Series B Convertible Preferred Stock such that these notes became
convertible into an aggregate of 4,477,369 shares of Series B Convertible
Preferred Stock at a conversion price of $1.00 per share at the election of
the purchasers (the "1998 Amended Notes").

(28) On May 31, 1999, the Registrant sold and issued 8,979,656 shares of common
stock at $0.50 per share to the Gilo Family Partnership and the Sam
Kaplan/Ralph Strangis Investment Partnership for an aggregate cash
consideration of $4,489,828.05.

(29) On June 2, 1999, the Registrant sold and issued a warrant to purchase an
aggregate of 127,500 shares of common stock to Biblica Investment Limited
at an exercise price of $0.50 per share with an aggregate exercise price of
$63,750.

(30) On July 1, 1999, the Registrant sold and issued 96,000 shares of common
stock at $0.83 per share to Pezzola & Reinke, APC for the cancellation of
debt in the aggregate amount of $80,000.

(31) On August 31, 1999, the Registrant sold and issued 9,172,010 shares of
Series C Convertible Preferred Stock at $0.54 per share to ADC
Telecommunications, Inc. for an aggregate cash consideration of $4,950,000.

(32) On November 19, 1999, the Registrant amended the 1998 Amended Notes such
that they became convertible into an aggregate of 5,372,843 shares of
common stock at a conversion price of $0.83 per share at the election of
the holders of the notes.

(33) On December 6, 1999 the Registrant amended for a limited period of time the
exercise price of the 1997 Warrants, 1997 Series A-2 Warrants, 1998
Series A-1 Warrants, 1998 Series A-2 Warrants and 1998 Series B-1 Warrants
to $1.87 per share.

(34) At various times from December 28, 1999 through January 31, 2000, the
Registrant sold and issued 1,100,049 shares of common stock to 58 warrant
holders of the Registrant upon exercise of warrants at a weighted average
exercise price of $1.79 per share.

(35) On December 28, 1999, the Registrant sold and issued 8,187,461 shares of
common stock to 42 note holders of the Registrant upon conversion of an
aggregate principal amount of $6,822,884.29 of promissory notes at a
conversion price of $0.83 per share.

(36) On December 27, 1999, the Registrant sold and issued 178,571 shares of
Series C Convertible Preferred Stock at $0.56 per share to Arnon Kohavi for
an aggregate cash consideration of $100,000.

(37) On December 28, 1999, the Registrant sold and issued a total of 480,000
shares of common stock at $0.83 per share to John Fredericks and each of
the seven directors of the Registrant for an aggregate cash consideration
of $400,000.

II-6
<PAGE>
The sales of the above securities were deemed to be exempt from registration
under the Securities Act of 1933, as amended (the "Act") in reliance on
Section 4(2) of the Act, Regulation D promulgated under the Act, Regulation S
promulgated under the Act, or Rule 701 promulgated under Section 3(b) of the
Act. In each such transaction, the recipients of securities represented their
intentions to acquire the securities for investment only and not with a view to
or for sale in connection with any distribution thereof, and appropriate legends
were affixed to the securities issued in such transactions.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

a. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- ------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement

3.1** Third Amended and Restated Certificate of Incorporation of
the Registrant

3.2** Amended and Restated Bylaws of the Registrant

4.1 Specimen common stock certificate

5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP

10.1** Form of Indemnification Agreement

10.2** 1996 Equity Incentive Plan

10.3** 1999 Employee and Consultant Equity Incentive Plan

10.4 Amended and Restated 2000 Employee and Consultant Equity
Incentive Plan

10.5** 2000 Employee Stock Purchase Plan

10.6** Form of Stock Purchase Agreement, dated as of December 28,
1999, by and between the Registrant and each of Lewis Broad,
Neill Brownstein, Avraham Fischer, Davidi Gilo, John
Griffin, Samuel Kaplan, Alan Zimmerman

10.7** Form of D97 Series A Preferred Stock Purchase Agreement by
and between the Registrant and each of the purchasers of the
Series A Preferred Stock.

10.8** Form of D98 Series B Preferred Stock Purchase Agreement by
and between the Registrant and each of the purchasers of the
Series B Preferred Stock

10.9** Series C Preferred Stock Purchase Agreement, dated as of
August 13, 1999, by and between the Registrant and ADC
Telecommunications, Inc.

10.10** Series C Preferred Stock Purchase Agreement, dated as of
December 27, 1999, by and between the Registrant and Arnon
Kohavi

10.11** Registration Rights and Lock-Up Agreement dated as of
April 21, 1996, by and among the Registrant and certain
holders of the Series A Preferred Stock and Series C
Preferred Stock
</TABLE>

II-7
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- ------------------------------------------------------------
<C> <S>
10.12** Amendment to Registration Rights and Lock-Up Agreement,
dated as of August 13, 1999, by and among the Registrant and
certain holders of the Series A Preferred Stock and
Series C Preferred Stock

10.13** Employment Agreement with Davidi Gilo

10.14** Employment Agreement with Eran Pilovsky

10.15** Employment Agreement with Stephen P. Pezzola

10.16** Employment Agreement with Michael Corwin

10.17** Employment Agreement with Arnon Kohavi

10.18** Unprotected Lease Agreement, dated as of March 7, 1999
between Vyyo Ltd. and Ayalot Investments in Properties (Har
Hotzvim) 1994 Ltd.

10.19+ Collaboration Agreement, dated August 6, 1999, between Vyyo
Ltd. and ADC Telecommunications, Inc.

10.20+ License and Development Agreement, dated as of December
1999, by and between Philips Semiconductor, Inc., Vyyo Ltd.,
and the Registrant

10.21** Secured Promissory Note, dated January 16, 2000, of Eran
Pilovsky for the benefit of the Registrant

10.22 Employment Agreement with Menashe Shahar

10.23 Amendment No. 2 to Registration Rights and Lock-Up Agreement
dated as of February 4, 2000, by and among the Registrant
and certain holders of the Series A Preferred Stock and
Series C Preferred Stock.

21.1** Subsidiaries of the Registrant

23.1 Consent of Ernst & Young LLP, Independent Auditors

23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5.1)

24.1** Power of Attorney

27.1** Financial Data Schedule
</TABLE>

- ------------------------

** Previously filed.

+ We have sought confidential treatment from the Commission for selected
portions of this exhibit. The omitted portions will be separately filed with
the Commission.

b. FINANCIAL STATEMENT SCHEDULES

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the provisions described in Item 14, or otherwise, the
registrant has been informed that in the opinion of the Securities and

II-8
<PAGE>
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

THE UNDERSIGNED REGISTRANT HEREBY UNDERTAKES THAT:

(1) For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant under Rule 424(b) (1) or (4) or 497
(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bonafide offering thereof.

II-9
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 4 to the registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Cupertino, State of California, on March 31, 2000.

<TABLE>
<S> <C> <C>
VYYO INC.

BY: /S/ DAVIDI GILO
-----------------------------------------
Davidi Gilo
Chief Executive Officer
and Chairman of the Board
</TABLE>

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 4 to the registration statement has been signed by the following persons in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DAVIDI GILO* Chief Executive Officer and Chairman
------------------------------------ of the Board March 31, 2000
Davidi Gilo (Principal Executive Officer)

Vice President, Finance and
/s/ ERAN PILOVSKY* Chief Financial Officer
------------------------------------ (Principal Financial and March 31, 2000
Eran Pilovsky Accounting Officer)

/s/ LEWIS S. BROAD* Director
------------------------------------ March 31, 2000
Lewis S. Broad

/s/ NEILL H. BROWNSTEIN* Director
------------------------------------ March 31, 2000
Neill H. Brownstein

/s/ JOHN P. GRIFFIN* Director
------------------------------------ March 31, 2000
John P. Griffin

/s/ AVRAHAM FISCHER* Director
------------------------------------ March 31, 2000
Avraham Fischer

/s/ SAMUEL L. KAPLAN* Director
------------------------------------ March 31, 2000
Samuel L. Kaplan
</TABLE>

II-10
<PAGE>

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ ALAN L. ZIMMERMAN* Director
------------------------------------ March 31, 2000
Alan L. Zimmerman
</TABLE>

<TABLE>
<S> <C> <C> <C>
*By: /s/ DAVIDI GILO
--------------------------------------
Davidi Gilo
(ATTORNEY-IN-FACT)
</TABLE>

II-11
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- ------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement

3.1** Third Amended and Restated Certificate of Incorporation of
the Registrant

3.2** Amended and Restated Bylaws of the Registrant

4.1 Specimen common stock certificate

5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP

10.1** Form of Indemnification Agreement

10.2** 1996 Equity Incentive Plan

10.3** 1999 Employee and Consultant Equity Incentive Plan

10.4 Amended and Restated 2000 Employee and Consultant Equity
Incentive Plan

10.5** 2000 Employee Stock Purchase Plan

10.7** Form of D97 Series A Preferred Stock Purchase Agreement by
and between the Registrant and each of the purchasers of the
Series A Preferred Stock.

10.8** Form of D98 Series B Preferred Stock Purchase Agreement by
and between the Registrant and each of the purchasers of the
Series B Preferred Stock

10.9** Series C Preferred Stock Purchase Agreement, dated as of
August 13, 1999, by and between the Registrant and ADC
Telecommunications, Inc.

10.10** Series C Preferred Stock Purchase Agreement, dated as of
December 27, 1999, by and between the Registrant and Arnon
Kohavi

10.11** Registration Rights and Lock-Up Agreement dated as of
April 21, 1996, by and among the Registrant and certain
holders of the Series A Preferred Stock and Series C
Preferred Stock

10.12** Amendment to Registration Rights and Lock-Up Agreement,
dated as of August 13, 1999, by and among the Registrant and
certain holders of the Series A Preferred Stock and
Series C Preferred Stock

10.13** Employment Agreement with Davidi Gilo

10.14** Employment Agreement with Eran Pilovsky

10.15** Employment Agreement with Stephen P. Pezzola

10.16** Employment Agreement with Michael Corwin

10.17** Employment Agreement with Arnon Kohavi
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- ------------------------------------------------------------
<C> <S>
10.18** Unprotected Lease Agreement, dated as of March 7, 1999
between Vyyo Ltd. and Ayalot Investments in Properties (Har
Hotzvim) 1994 Ltd.

10.19+ Collaboration Agreement, dated August 6, 1999, between Vyyo
Ltd. and ADC Telecommunications, Inc.

10.20+ License and Development Agreement, dated as of December
1999, by and between Philips Semiconductor, Inc., Vyyo Ltd.,
and the Registrant

10.21** Secured Promissory Note, dated January 16, 2000, of Eran
Pilovsky for the benefit of the Registrant

10.22 Employment Agreement with Menashe Shahar

21.1** Subsidiaries of the Registrant

23.1 Consent of Ernst & Young LLP, Independent Auditors

23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5.1)

24.1** Power of Attorney

27.1** Financial Data Schedule
</TABLE>

- ------------------------

** Previously filed.

+ We have sought confidential treatment from the Commission for selected
portions of this exhibit. The omitted portions will be separately filed with
the Commission.

<PAGE>
Exhibit 1.1

BANC OF AMERICA SECURITIES LLC
FORM UNDERWRITING AGREEMENT

_______________ SHARES

VYYO INC.

COMMON STOCK

UNDERWRITING AGREEMENT

DATED APRIL __, 2000

<PAGE>

TABLE OF CONTENTS

<TABLE>

<S> <C>
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................2
A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................................2
(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS..........................................................2
(b) OFFERING MATERIALS FURNISHED TO UNDERWRITERS.......................................................3
(c) DISTRIBUTION OF OFFERING MATERIAL BY THE COMPANY...................................................3
(d) THE UNDERWRITING AGREEMENT.........................................................................3
(e) AUTHORIZATION OF THE COMMON SHARES.................................................................3
(f) NO APPLICABLE REGISTRATION OR OTHER SIMILAR RIGHTS.................................................3
(g) NO MATERIAL ADVERSE CHANGE.........................................................................3
(h) INDEPENDENT ACCOUNTANTS............................................................................3
(i) PREPARATION OF THE FINANCIAL STATEMENTS............................................................4
(j) INCORPORATION AND GOOD STANDING OF THE COMPANY AND ITS SUBSIDIARY..................................4
(k) CAPITALIZATION AND OTHER CAPITAL STOCK MATTERS.....................................................4
(l) STOCK EXCHANGE LISTING.............................................................................5
(m) NON-CONTRAVENTION OF EXISTING INSTRUMENTS; NO FURTHER AUTHORIZATIONS OR APPROVALS
REQUIRED...........................................................................................5
(n) NO MATERIAL ACTIONS OR PROCEEDINGS.................................................................5
(o) INTELLECTUAL PROPERTY RIGHTS.......................................................................6
(p) ALL NECESSARY PERMITS, ETC.........................................................................6
(q) TITLE TO PROPERTIES................................................................................6
(r) TAX LAW COMPLIANCE.................................................................................6
(s) COMPANY NOT AN "INVESTMENT COMPANY."...............................................................6
(t) INSURANCE..........................................................................................7
(u) LABOR MATTERS......................................................................................7
(v) RELATED PARTY TRANSACTIONS.........................................................................7
(w) NO UNLAWFUL CONTRIBUTIONS OR OTHER PAYMENTS........................................................7
(x) COMPANY'S ACCOUNTING SYSTEM........................................................................7
(y) COMPLIANCE WITH ENVIRONMENTAL LAWS.................................................................7
(z) ERISA COMPLIANCE...................................................................................8
(aa) OFFICE OF CHIEF SCIENTIST..........................................................................9
(bb) ISRAELI EMPLOYMENT AGREEMENTS......................................................................9
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES................................................9
(a) THE FIRM COMMON SHARES.............................................................................9
(b) THE FIRST CLOSING DATE.............................................................................9
(c) THE OPTIONAL COMMON SHARES; THE SECOND CLOSING DATE...............................................10
(d) PUBLIC OFFERING OF THE COMMON SHARES..............................................................10
(e) PAYMENT FOR THE COMMON SHARES.....................................................................10
(f) DELIVERY OF THE COMMON SHARES.....................................................................11
(g) DELIVERY OF PROSPECTUS TO THE UNDERWRITERS........................................................11
SECTION 3. ADDITIONAL COVENANTS OF THE COMPANY............................................................11
A. COVENANTS OF THE COMPANY...........................................................................11
(a) REPRESENTATIVES' REVIEW OF PROPOSED AMENDMENTS AND SUPPLEMENTS....................................11
(b) SECURITIES ACT COMPLIANCE.........................................................................11
</TABLE>

<PAGE>

<TABLE>

<S> <C>
(c) AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS AND OTHER SECURITIES ACT MATTERS.....................12
(d) COPIES OF ANY AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS........................................12
(e) BLUE SKY COMPLIANCE...............................................................................12
(f) USE OF PROCEEDS...................................................................................13
(g) TRANSFER AGENT....................................................................................13
(h) EARNINGS STATEMENT................................................................................13
(i) PERIODIC REPORTING OBLIGATIONS....................................................................13
(j) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES..............................................13
(k) FUTURE REPORTS TO THE REPRESENTATIVES.............................................................13
SECTION 4. PAYMENT OF EXPENSES............................................................................14
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS..............................................14
(a) ACCOUNTANTS' COMFORT LETTER.......................................................................14
(b) COMPLIANCE WITH REGISTRATION REQUIREMENTS; NO STOP ORDER; NO OBJECTION FROM NASD..................15
(c) NO MATERIAL ADVERSE CHANGE OR RATINGS AGENCY CHANGE...............................................15
(d) OPINION OF COUNSEL FOR THE COMPANY................................................................15
(e) OPINION OF FOREIGN COUNSEL FOR THE COMPANY........................................................15
(f) OPINION OF PATENT COUNSEL FOR THE COMPANY.........................................................16
(g) OPINION OF COUNSEL FOR THE UNDERWRITERS...........................................................16
(h) OFFICERS'CERTIFICATE..............................................................................16
(i) BRING-DOWN COMFORT LETTER.........................................................................17
(j) LOCK-UP AGREEMENT.................................................................................17
(k) ADDITIONAL DOCUMENTS..............................................................................17
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES........................................................18
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT................................................................18
SECTION 8. INDEMNIFICATION................................................................................18
(a) INDEMNIFICATION OF THE UNDERWRITERS...............................................................18
(b) INDEMNIFICATION OF THE COMPANY, ITS DIRECTORS AND OFFICERS........................................19
(c) NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES................................................20
(d) SETTLEMENTS.......................................................................................21
SECTION 9. CONTRIBUTION...................................................................................21
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS.............................................23
SECTION 11. TERMINATION OF THIS AGREEMENT..................................................................24
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY............................................24
SECTION 13. NOTICES........................................................................................24
SECTION 14. SUCCESSORS.....................................................................................25
SECTION 15. PARTIAL UNENFORCEABILITY.......................................................................25
SECTION 16. (a)............................................................................................25
(a) GOVERNING LAW PROVISIONS..........................................................................25
(b) CONSENT TO JURISDICTION...........................................................................25
(c) WAIVER OF IMMUNITY................................................................................26
SECTION 17. GENERAL PROVISIONS.............................................................................26
</TABLE>

ii.

<PAGE>

UNDERWRITING AGREEMENT

__________, 2000

BANC OF AMERICA SECURITIES LLC
CIBC WORLD MARKETS CORP.
DAIN RAUSCHER INCORPORATED
W.R. HAMBRECHT & CO., LLC
As Representatives of the several Underwriters
c/o BANC OF AMERICA SECURITIES LLC
600 Montgomery Street
San Francisco, California 94111

Ladies and Gentlemen:

INTRODUCTORY. Vyyo Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the several underwriters named in
SCHEDULE A (the "Underwriters") an aggregate of [___] shares (the "Firm Common
Shares") of its Common Stock, par value $0.0001 per share (the "Common Stock").
In addition, the Company has granted to the Underwriters an option to purchase
up to an additional [___] shares (the "Optional Common Shares") of Common Stock,
as provided in Section 2. The Firm Common Shares and, if and to the extent such
option is exercised, the Optional Common Shares are collectively called the
"Common Shares." Banc of America Securities LLC ("BAS"), Dain Rauscher Wessels
and CIBC Oppenheimer Corp. have agreed to act as representatives of the several
Underwriters (in such capacity, the "Representatives") in connection with the
offering and sale of the Common Shares.

The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-1
(File No. 333-[96129]), which contains a form of prospectus to be used in
connection with the public offering and sale of the Common Shares. Such
registration statement, as amended, including the financial statements, exhibits
and schedules thereto, in the form in which it was declared effective by the
Commission under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (collectively, the "Securities Act"),
including any information deemed to be a part thereof at the time of
effectiveness pursuant to Rule 430A or Rule 434 under the Securities Act, is
called the "Registration Statement." Any registration statement filed by the
Company pursuant to Rule 462(b) under the Securities Act is called the "Rule
462(b) Registration Statement," and from and after the date and time of filing
of the Rule 462(b) Registration Statement the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. Such prospectus, in the
form first used by the Underwriters to confirm sales of the Common Shares, is
called the "Prospectus;" PROVIDED, HOWEVER, if the Company has, with the consent
of BAS, elected to rely upon Rule 434 under the Securities Act, the term
"Prospectus" shall mean the Company's prospectus subject to completion (each, a
"preliminary prospectus") dated [___] (such preliminary prospectus is called the
"Rule 434 preliminary

<PAGE>

prospectus"), together with the applicable term sheet (the "Term Sheet")
prepared and filed by the Company with the Commission under Rules 434 and
424(b) under the Securities Act and all references in this Agreement to the
date of the Prospectus shall mean the date of the Term Sheet. All references
in this Agreement to (i) the Registration Statement, the Rule 462(b)
Registration Statement, a preliminary prospectus, the Prospectus or the Term
Sheet, or any amendments or supplements to any of the foregoing, shall
include any copy thereof filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval System ("EDGAR").

The Company hereby confirms its agreements with the
Underwriters as follows:

SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents, warrants and covenants to each Underwriter as follows:

(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The
Registration Statement and any Rule 462(b) Registration Statement have
been declared effective by the Commission under the Securities Act. No
stop order suspending the effectiveness of the Registration Statement
or any Rule 462(b) Registration Statement is in effect and no
proceedings for such purpose have been instituted or are pending or, to
the best knowledge of the Company, are contemplated or threatened by
the Commission.

Each preliminary prospectus and the Prospectus when filed
complied in all material respects with the Securities Act and, if filed
by electronic transmission pursuant to EDGAR (except as may be
permitted by Regulation S-T under the Securities Act), was identical to
the copy thereof delivered to the Underwriters for use in connection
with the offer and sale of the Common Shares. Each of the Registration
Statement, any Rule 462(b) Registration Statement and any
post-effective amendment thereto, at the time it became effective and
at all subsequent times, complied and will comply in all material
respects with the Securities Act and did not and will 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 not misleading. The Prospectus, as amended or supplemented, as
of its date and at all subsequent times, did not and will not contain
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The
representations and warranties set forth in the two immediately
preceding sentences do not apply to statements in or omissions from the
Registration Statement, any Rule 462(b) Registration Statement, or any
post-effective amendment thereto, or the Prospectus, or any amendments
or supplements thereto, made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in
writing by the Representatives expressly for use therein. There are no
contracts or other documents required to be described in the Prospectus
or to be filed as exhibits to the Registration Statement which have not
been described or filed as required.

(b) OFFERING MATERIALS FURNISHED TO UNDERWRITERS. The Company
has delivered to the Representatives a manually signed copy of the
Registration Statement and of each

<PAGE>

consent and certificate of experts filed as a part thereof, and
conformed copies of the Registration Statement (without exhibits)
and preliminary prospectuses and the Prospectus, as amended or
supplemented, in such quantities and at such places as the
Representatives has reasonably requested for each of the
Underwriters.

(c) DISTRIBUTION OF OFFERING MATERIAL BY THE COMPANY. The
Company has not distributed and will not distribute, prior to the later
of the Second Closing Date (as defined below) and the completion of the
Underwriters' distribution of the Common Shares, any offering material
in connection with the offering and sale of the Common Shares other
than a preliminary prospectus, the Prospectus or the Registration
Statement.

(d) THE UNDERWRITING AGREEMENT. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding
agreement of the Company, enforceable in accordance with its terms,
except as rights to indemnification hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights and remedies of creditors or
by general equitable principles.

(e) AUTHORIZATION OF THE COMMON SHARES. The Common Shares to
be purchased by the Underwriters from the Company have been duly
authorized for issuance and sale pursuant to this Agreement and, when
issued and delivered by the Company and paid for by the Underwriters
pursuant to this Agreement, will be validly issued, fully paid and
nonassessable.

(f) NO APPLICABLE REGISTRATION OR OTHER SIMILAR RIGHTS. There
are no persons with registration or other similar rights to have any
equity or debt securities registered for sale under the Registration
Statement or included in the offering contemplated by this Agreement,
except for such rights as have been duly waived.

(g) NO MATERIAL ADVERSE CHANGE. Except as otherwise disclosed
in the Prospectus, subsequent to the respective dates as of which
information is given in the Prospectus: (i) there has been no material
adverse change, or any development that would reasonably be expected to
result in a material adverse change, in the condition, financial or
otherwise, or in the earnings, business, operations or prospects,
whether or not arising from transactions in the ordinary course of
business, of the Company and its subsidiary, considered as one entity
(any such change is called a "Material Adverse Change"); (ii) the
Company and its subsidiary, considered as one entity, have not incurred
any material liability or obligation, indirect, direct or contingent,
not in the ordinary course of business nor entered into any material
transaction or agreement not in the ordinary course of business; and
(iii) there has been no dividend or distribution of any kind declared,
paid or made by the Company or, except for dividends paid to the
Company or other subsidiary, its subsidiary on any class of capital
stock or repurchase or redemption by the Company or its subsidiary of
any class of capital stock.

(h) INDEPENDENT ACCOUNTANTS. Ernst & Young LLP, who have
expressed their opinion with respect to the financial statements (which
term as used in this Agreement includes the related notes thereto) and
supporting schedules filed with the Commission as

<PAGE>

a part of the Registration Statement and included in the Prospectus,
are independent public or certified public accountants as required
by the Securities Act.

(i) PREPARATION OF THE FINANCIAL STATEMENTS. The financial
statements filed with the Commission as a part of the Registration
Statement and included in the Prospectus present fairly in all material
respects the consolidated financial position of the Company and its
subsidiary as of and at the dates indicated and the results of their
operations and cash flows for the periods specified. Such financial
statements have been prepared in conformity with generally accepted
accounting principles in the United States applied on a consistent
basis throughout the periods involved. No other financial statements
are required to be included in the Registration Statement. The
financial data set forth in the Prospectus under the captions
"Prospectus Summary--Summary Consolidated Financial Data," "Selected
Consolidated Financial Data" and "Capitalization" fairly present in all
material respects the information set forth therein on a basis
consistent with that of the audited financial statements contained in
the Registration Statement.

(j) INCORPORATION AND GOOD STANDING OF THE COMPANY AND ITS
SUBSIDIARY. Each of the Company and its subsidiary has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation and has
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus and, in the
case of the Company, to enter into and perform its obligations under
this Agreement. Each of the Company and each subsidiary is duly
qualified as a foreign corporation to transact business and is in good
standing in the State of California and each other jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except for
such jurisdictions (other than the State of California) where the
failure to so qualify or to be in good standing would not, individually
or in the aggregate, result in a Material Adverse Change. All of the
issued and outstanding capital stock of each subsidiary has been duly
authorized and validly issued, is fully paid and nonassessable and is
owned by the Company, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or claim. The Company does not own
or control, directly or indirectly, any corporation, association or
other entity other than the subsidiary listed in Exhibit 21 to the
Registration Statement.

(k) CAPITALIZATION AND OTHER CAPITAL STOCK MATTERS. The
authorized, issued and outstanding capital stock of the Company is as
set forth in the Prospectus under the caption "Capitalization" (other
than for subsequent issuances, if any, pursuant to employee benefit
plans described in the Prospectus or upon exercise of outstanding
options or warrants described in the Prospectus). The Common Stock
(including the Common Shares) conforms in all material respects to the
description thereof contained in the Prospectus. All of the issued and
outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable and have been
issued in compliance with federal securities laws. None of the
outstanding shares of Common Stock were issued in violation of any
preemptive rights, rights of first refusal or other similar rights to
subscribe for or purchase securities of the Company. There are no
authorized or outstanding options, warrants, preemptive rights, rights
of first refusal or other rights to purchase, or equity or debt
securities convertible into or exchangeable or

<PAGE>

exercisable for, any capital stock of the Company or its subsidiary
other than those described in the Prospectus. The description of the
Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted thereunder,
set forth in the Prospectus accurately and fairly presents in all
material respects the information required to be disclosed with
respect to such plans, arrangements, options and rights.

(l) STOCK EXCHANGE LISTING. The Common Shares have been
approved for listing on the Nasdaq National Market, subject only to
official notice of issuance.

(m) NON-CONTRAVENTION OF EXISTING INSTRUMENTS; NO FURTHER
AUTHORIZATIONS OR APPROVALS REQUIRED. Neither the Company nor its
subsidiary is in violation of its charter or by-laws or is in default
(or, with the giving of notice or lapse of time, would be in default)
("Default") under any indenture, mortgage, loan or credit agreement,
note, contract, franchise, lease or other instrument to which the
Company or its subsidiary is a party or by which it or any of them may
be bound, or to which any of the property or assets of the Company or
its subsidiary is subject (each, an "Existing Instrument"), except for
such Defaults as would not, individually or in the aggregate, result in
a Material Adverse Change. The Company's execution, delivery and
performance of this Agreement and consummation of the transactions
contemplated hereby and by the Prospectus (i) have been duly authorized
by all necessary corporate action and will not result in any violation
of the provisions of the charter or by-laws of the Company or its
subsidiary, (ii) will not conflict with or constitute a breach of, or
Default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or its
subsidiary pursuant to, or require the consent of any other party to,
any Existing Instrument, except for such conflicts, breaches, Defaults,
liens, charges or encumbrances as would not, individually or in the
aggregate, result in a Material Adverse Change and (iii) will not
result in any violation of any law, administrative regulation or
administrative or court decree applicable to the Company or its
subsidiary, except for any violations that would not, individually or
in the aggregate, result in a Material Adverse Change. No consent,
approval, authorization or other order of, or registration or filing
with, any court or other governmental or regulatory authority or
agency, is required for the Company's execution, delivery and
performance of this Agreement and consummation of the transactions
contemplated hereby and by the Prospectus, except such as have been
obtained or made by the Company and are in full force and effect under
the Securities Act, applicable state securities or blue sky laws and
from the National Association of Securities Dealers, Inc. (the "NASD").

(n) NO MATERIAL ACTIONS OR PROCEEDINGS. Except as disclosed in
the Prospectus, there are no legal or governmental actions, suits or
proceedings pending or, to the best of the Company's knowledge,
threatened (i) against or affecting the Company or its subsidiary, (ii)
which has as the subject thereof any officer or director of, or
property owned or leased by, the Company or its subsidiary or (iii)
relating to environmental or discrimination matters, where in any such
case (A) there is a reasonable possibility that such action, suit or
proceeding might be determined adversely to the Company or such
subsidiary and (B) any such action, suit or proceeding, if so
determined adversely, would reasonably be expected to result in a
Material Adverse Change or to materially and

<PAGE>

adversely affect the ability of the Company to consummate the
transactions contemplated by this Agreement.

(o) INTELLECTUAL PROPERTY RIGHTS. Except as disclosed in the
Prospectus, the Company and its subsidiary own or possess sufficient
trademarks, trade names, patent rights, copyrights, licenses,
approvals, trade secrets and other similar rights (collectively,
"Intellectual Property Rights") reasonably necessary to conduct their
businesses as now conducted; and the expected expiration of any of such
Intellectual Property Rights would not result in a Material Adverse
Change. Except as disclosed in the Prospectus, neither the Company nor
its subsidiary has received any notice of infringement or conflict with
asserted Intellectual Property Rights of others, which infringement or
conflict, if the subject of an unfavorable decision, would result in a
Material Adverse Change.

(p) ALL NECESSARY PERMITS, ETC. Except as disclosed in the
Prospectus, the Company and each subsidiary possess such valid and
current certificates, authorizations or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies
necessary to conduct their respective businesses, and neither the
Company nor any subsidiary has received any notice of proceedings
relating to the revocation or modification of, or non-compliance with,
any such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, could result in a Material Adverse Change.

(q) TITLE TO PROPERTIES. Except as disclosed in the
Prospectus, the Company and each of its subsidiary has good and
marketable title to all the properties and assets reflected as owned in
the financial statements referred to in Section 1(A) (i) above, in each
case free and clear of any security interests, mortgages, liens,
encumbrances, equities, claims and other defects, except such as do not
materially and adversely affect the value of such property and do not
materially interfere with the use made or proposed to be made of such
property by the Company or such subsidiary. Except as disclosed in the
Prospectus, the real property, improvements, equipment and personal
property held under lease by the Company or any subsidiary are held
under valid and enforceable leases, with such exceptions as are not
material and do not materially interfere with the use made or proposed
to be made of such real property, improvements, equipment or personal
property by the Company or such subsidiary.

(r) TAX LAW COMPLIANCE. The Company and its consolidated
subsidiary have filed all necessary federal, state and foreign income
and franchise tax returns and have paid all taxes required to be paid
by any of them and, if due and payable, any related or similar
assessment, fine or penalty levied against any of them. The Company has
made adequate charges, accruals and reserves in the applicable
financial statements referred to in Section 1 [(A)] (i) above in
respect of all federal, state and foreign income and franchise taxes
for all periods as to which the tax liability of the Company or any of
its consolidated subsidiary has not been finally determined.

(s) COMPANY NOT AN "INVESTMENT COMPANY." The Company has been
advised of the rules and requirements under the Investment Company Act
of 1940, as amended (the "Investment Company Act"). The Company is not,
and after receipt of payment for the

<PAGE>

Common Shares will not be, an "investment company" within the
meaning of the Investment Company Act and will conduct its business
in a manner so that it will not become subject to the Investment
Company Act.

(t) INSURANCE. Each of the Company and its subsidiary are
insured by recognized, financially sound and reputable institutions
with policies in such amounts and with such deductibles and covering
such risks as are generally deemed adequate and customary for their
businesses including, but not limited to, policies covering real and
personal property owned or leased by the Company and its subsidiary
against theft, damage, destruction, acts of vandalism and earthquakes.
The Company has no reason to believe that it or any subsidiary will not
be able (i) to renew its existing insurance coverage as and when such
policies expire or (ii) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business
as now conducted and at a cost that would not result in a Material
Adverse Change. Neither of the Company nor any subsidiary has been
denied any insurance coverage which it has sought or for which it has
applied.

(u) LABOR MATTERS. To the best of the Company's knowledge, no
labor disturbance by the employees of the Company or its subsidiary
exists or is imminent; and, to the Company's knowledge, there are no
existing or imminent labor disturbance by the employees of any of its
principal suppliers, subassemblers, value added resellers,
subcontractors, original equipment manufacturers, authorized dealers or
international distributors that might be expected to result in a
Material Adverse Change.

(v) RELATED PARTY TRANSACTIONS. There are no business
relationships or related-party transactions involving the Company or
any subsidiary or any other person required to be described in the
Prospectus which have not been described as required.

(w) NO UNLAWFUL CONTRIBUTIONS OR OTHER PAYMENTS. Neither the
Company nor its subsidiary nor, to the best of the Company's knowledge,
any employee or agent of the Company or any subsidiary, has made any
contribution or other payment to any official of, or candidate for, any
federal, state or foreign office in violation of any law or of the
character required to be disclosed in the Prospectus.

(x) COMPANY'S ACCOUNTING SYSTEM. The Company maintains a
system of accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles in the United
States and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets
is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.

(y) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as would not,
individually or in the aggregate, result in a Material Adverse Change
(i) neither the Company nor its subsidiary is in violation of any
federal, state, local or foreign law or regulation relating

<PAGE>

to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife,
including without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum and petroleum products (collectively,
"Materials of Environmental Concern"), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environment Concern
(collectively, "Environmental Laws"), which violation includes, but
is not limited to, noncompliance with any permits or other
governmental authorizations required for the operation of the
business of the Company or its subsidiary under applicable
Environmental Laws, or noncompliance with the terms and conditions
thereof, nor has the Company or its subsidiary received any written
communication, whether from a governmental authority, citizens
group, employee or otherwise, that alleges that the Company or its
subsidiary is in violation of any Environmental Law; (ii) there is
no claim, action or cause of action filed with a court or
governmental authority, no investigation with respect to which the
Company has received written notice, and no written notice by any
person or entity alleging potential liability for investigatory
costs, cleanup costs, governmental responses costs, natural
resources damages, property damages, personal injuries, attorneys'
fees or penalties arising out of, based on or resulting from the
presence, or release into the environment, of any Material of
Environmental Concern at any location owned, leased or operated by
the Company or its subsidiary, now or in the past (collectively,
"Environmental Claims"), pending or, to the best of the Company's
knowledge, threatened against the Company or its subsidiary or any
person or entity whose liability for any Environmental Claim the
Company or its subsidiary has retained or assumed either
contractually or by operation of law; and (iii) to the best of the
Company's knowledge, there are no past or present actions,
activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge,
presence or disposal of any Material of Environmental Concern, that
reasonably could result in a violation of any Environmental Law or
form the basis of a potential Environmental Claim against the
Company or its subsidiary or against any person or entity whose
liability for any Environmental Claim the Company or its subsidiary
has retained or assumed either contractually or by operation of law.

(z) ERISA COMPLIANCE. The Company and its subsidiary and any
"employee benefit plan" (as defined under the Employee Retirement
Income Security Act of 1974, as amended, and the regulations and
published interpretations thereunder (collectively, "ERISA"))
established or maintained by the Company, its subsidiary or their
"ERISA Affiliates" (as defined below) are in compliance in all material
respects with ERISA. "ERISA Affiliate" means, with respect to the
Company or a subsidiary, any member of any group of organizations
described in Sections 414(b),(c),(m) or (o) of the Internal Revenue
Code of 1986, as amended, and the regulations and published
interpretations thereunder (the "Code") of which the Company or such
subsidiary is a member. No "reportable event" (as defined under ERISA)
has occurred or is reasonably expected to occur with respect to any
"employee benefit plan" established or maintained by the Company, its
subsidiary or any of their ERISA Affiliates. No "employee benefit plan"
established or maintained by the Company, its subsidiary or any of
their ERISA Affiliates, if such "employee benefit plan" were
terminated, would have any "amount of

<PAGE>

unfunded benefit liabilities" (as defined under ERISA). Neither the
Company, its subsidiary nor any of their ERISA Affiliates has
incurred or reasonably expects to incur any liability under (i)
Title IV of ERISA with respect to termination of, or withdrawal
from, any "employee benefit plan" or (ii) Sections 412, 4971, 4975
or 4980B of the Code. Each "employee benefit plan" established or
maintained by the Company, its subsidiary or any of their ERISA
Affiliates that is intended to be qualified under Section 401(a) of
the Code is so qualified and nothing has occurred, whether by action
or failure to act, which would cause the loss of such qualification.

(aa) OFFICE OF CHIEF SCIENTIST. Except as described in the
Prospectus, the Company is not in material violation of any conditions
or requirements stipulated by the instruments of approval granted to
any of them by the Office of Chief Scientist in the Ministry of
Industry & Trade and any applicable laws and regulations, with respect
to any research and development grants given to it by such office,
which violation, individually or in the aggregate, could have a
Material Adverse Effect. All information supplied by the Company with
respect to such applications was true, correct and complete in all
material respects when supplied to the appropriate authorities.

(bb) ISRAELI EMPLOYMENT AGREEMENTS. The Company's employment
agreements in Israel do not differentiate between compensation paid to
employees for a 43 hour work week or for maximum daily hours, and
compensation for overtime work. The Company believes that it does not
have any material exposure by reason of claims by the employees due to
(i) the fact that most of the employees of the Company are in a
position of "special trust," (ii) the agreement by the employees to be
compensated on a fixed basis, (iii) the payment by the Company of
higher salaries, which take into account payments for additional hours,
(iv) the distribution of bonuses and stock options by the Company,
which come in part as compensation for additional hours, (v) the fact
that a non-material number of overtime hours has been reported, and
(vi) the fact that most employees sign a "waiver of claims" letter upon
termination of employment.

SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES.

(a) THE FIRM COMMON SHARES. The Company agrees to issue and
sell to the several Underwriters the Firm Common Shares upon the terms herein
set forth. On the basis of the representations, warranties and agreements herein
contained, and upon the terms but subject to the conditions herein set forth,
the Underwriters agree, severally and not jointly, to purchase from the Company
the respective number of Firm Common Shares set forth opposite their names on
Schedule A. The purchase price per Firm Common Share to be paid by the several
Underwriters to the Company shall be $[___] per share.

(b) THE FIRST CLOSING DATE. Delivery of certificates for the
Firm Common Shares to be purchased by the Underwriters and payment therefor
shall be made at the offices of BAS, 600 Montgomery Street, San Francisco,
California (or such other place as may be agreed to by the Company and the
Representatives) at 8:00 a.m. San Francisco time, on [___], or such other time
and date not later than 10:30 a.m. San Francisco time, on [___] as the
Representatives shall designate by notice to the Company (the time and date of
such closing are called the "First Closing Date"). The Company hereby
acknowledges that circumstances under which the

<PAGE>

Representatives may provide notice to postpone the First Closing Date as
originally scheduled include, but are in no way limited to, any determination
by the Company or the Representatives to recirculate to the public copies of
an amended or supplemented Prospectus or a delay as contemplated by the
provisions of Section 10.

(c) THE OPTIONAL COMMON SHARES; THE SECOND CLOSING DATE. In
addition, on the basis of the representations, warranties and agreements herein
contained, and upon the terms but subject to the conditions herein set forth,
the Company hereby grants an option to the several Underwriters to purchase,
severally and not jointly, up to an aggregate of [___] Optional Common Shares
from the Company at the purchase price per share to be paid by the Underwriters
for the Firm Common Shares. The option granted hereunder is for use by the
Underwriters solely in covering any over-allotments in connection with the sale
and distribution of the Firm Common Shares. The option granted hereunder may be
exercised at any time (but not more than once) upon notice by the
Representatives to the Company, which notice may be given at any time within 30
days from the date of this Agreement. Such notice shall set forth (i) the
aggregate number of Optional Common Shares as to which the Underwriters are
exercising the option, (ii) the names and denominations in which the
certificates for the Optional Common Shares are to be registered and (iii) the
time, date and place at which such certificates will be delivered (which time
and date may be simultaneous with, but not earlier than, the First Closing Date;
and in such case the term "First Closing Date" shall refer to the time and date
of delivery of certificates for the Firm Common Shares and the Optional Common
Shares). Such time and date of delivery, if subsequent to the First Closing
Date, is called the "Second Closing Date" and shall be determined by the
Representatives and shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. If any Optional Common
Shares are to be purchased, each Underwriter agrees, severally and not jointly,
to purchase the number of Optional Common Shares (subject to such adjustments to
eliminate fractional shares as the Representatives may determine) that bears the
same proportion to the total number of Optional Common Shares to be purchased as
the number of Firm Common Shares set forth on Schedule A opposite the name of
such Underwriter bears to the total number of Firm Common Shares. The
Representatives may cancel the option at any time prior to its expiration by
giving written notice of such cancellation to the Company.

(d) PUBLIC OFFERING OF THE COMMON SHARES. The Representatives
hereby advise the Company that the Underwriters intend to offer for sale to the
public, as described in the Prospectus, their respective portions of the Common
Shares as soon after this Agreement has been executed and the Registration
Statement has been declared effective as the Representatives, in its sole
judgment, has determined is advisable and practicable.

(e) PAYMENT FOR THE COMMON SHARES. Payment for the Common
Shares shall be made at the First Closing Date (and, if applicable, at the
Second Closing Date) by wire transfer of immediately available funds to the
order of the Company.

It is understood that the Representatives have been
authorized, for their own account and the accounts of the several Underwriters,
to accept delivery of and receipt for, and make payment of the purchase price
for, the Firm Common Shares and any Optional Common Shares the Underwriters have
agreed to purchase. BAS, individually and not as the Representatives of the
Underwriters, may (but shall not be obligated to) make payment for any

10.

<PAGE>

Common Shares to be purchased by any Underwriter whose funds shall not have
been received by the Representatives by the First Closing Date or the Second
Closing Date, as the case may be, for the account of such Underwriter, but
any such payment shall not relieve such Underwriter from any of its
obligations under this Agreement.

(f) DELIVERY OF THE COMMON SHARES. The Company shall deliver,
or cause to be delivered, to the Representatives for the accounts of the several
Underwriters certificates for the Firm Common Shares at the First Closing Date,
against the irrevocable release of a wire transfer of immediately available
funds for the amount of the purchase price therefor. The Company shall also
deliver, or cause to be delivered, to the Representatives for the accounts of
the several Underwriters, certificates for the Optional Common Shares the
Underwriters have agreed to purchase at the First Closing Date or the Second
Closing Date, as the case may be, against the irrevocable release of a wire
transfer of immediately available funds for the amount of the purchase price
therefor. The certificates for the Common Shares shall be in definitive form and
registered in such names and denominations as the Representatives shall have
requested at least two full business days prior to the First Closing Date (or
the Second Closing Date, as the case may be) and shall be made available for
inspection on the business day preceding the First Closing Date (or the Second
Closing Date, as the case may be) at a location in New York City as the
Representatives may designate. Time shall be of the essence, and delivery at the
time and place specified in this Agreement is a further condition to the
obligations of the Underwriters.

(g) DELIVERY OF PROSPECTUS TO THE UNDERWRITERS. Not later than
12:00 p.m. on the second business day following the date the Common Shares are
first released by the Underwriters for sale to the public, the Company shall
deliver or cause to be delivered, copies of the Prospectus in such quantities
and at such places as the Representatives shall reasonably request.

SECTION 3. ADDITIONAL COVENANTS OF THE COMPANY.

A. COVENANTS OF THE COMPANY. The Company further covenants and agrees
with each Underwriter as follows:

(a) REPRESENTATIVES' REVIEW OF PROPOSED AMENDMENTS AND
SUPPLEMENTS. During such period beginning on the date hereof and ending
on the later of the First Closing Date or such date, as in the opinion
of counsel for the Underwriters, the Prospectus is no longer required
by law to be delivered in connection with sales by an Underwriter or
dealer (the "Prospectus Delivery Period"), prior to amending or
supplementing the Registration Statement (including any registration
statement filed under Rule 462(b) under the Securities Act) or the
Prospectus, the Company shall furnish to the Representatives for review
a copy of each such proposed amendment or supplement, and the Company
shall not file any such proposed amendment or supplement to which the
Representatives reasonably objects.

(b) SECURITIES ACT COMPLIANCE. After the date of this
Agreement, the Company shall promptly advise the Representatives in
writing (i) of the receipt of any comments of, or requests for
additional or supplemental information from, the Commission, (ii) of
the time and date of any filing of any post-effective amendment to the
Registration

11.

<PAGE>

Statement or any amendment or supplement to any preliminary
prospectus or the Prospectus, (iii) of the time and date that any
post-effective amendment to the Registration Statement becomes
effective and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or
any post-effective amendment thereto or of any order preventing or
suspending the use of any preliminary prospectus or the Prospectus,
or of any proceedings to remove, suspend or terminate from listing
or quotation the Common Stock from any securities exchange upon
which it is listed for trading or included or designated for
quotation, or of the threatening or initiation of any proceedings
for any of such purposes. If the Commission shall enter any such
stop order at any time, the Company will use its best efforts to
obtain the lifting of such order at the earliest possible moment.
Additionally, the Company agrees that it shall comply with the
provisions of Rules 424(b), 430A and 434, as applicable, under the
Securities Act and will use its reasonable efforts to confirm that
any filings made by the Company under such Rule 424(b) were received
in a timely manner by the Commission.

(c) AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS AND OTHER
SECURITIES ACT MATTERS. If, during the Prospectus Delivery Period, any
event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if in the
reasonable opinion of the Representatives or counsel for the
Underwriters it is otherwise necessary to amend or supplement the
Prospectus to comply with law, the Company agrees to promptly prepare,
file with the Commission and furnish at its own expense to the
Underwriters and to dealers, amendments or supplements to the
Prospectus so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.

(d) COPIES OF ANY AMENDMENTS AND SUPPLEMENTS TO THE
PROSPECTUS. The Company agrees to furnish the Representatives, without
charge, during the Prospectus Delivery Period, as many copies of the
Prospectus and any amendments and supplements thereto as the
Representatives may reasonably request.

(e) BLUE SKY COMPLIANCE. The Company shall cooperate with the
Representatives and counsel for the Underwriters to qualify or register
the Common Shares for sale under (or obtain exemptions from the
application of) the state securities or blue sky laws or Canadian
provincial Securities laws of those jurisdictions designated by the
Representatives, shall comply with such laws and shall continue such
qualifications, registrations and exemptions in effect so long as
required for the distribution of the Common Shares. The Company shall
not be required to qualify as a foreign corporation or to take any
action that would subject it to general service of process in any such
jurisdiction where it is not presently qualified or where it would be
subject to taxation as a foreign corporation. The Company will advise
the Representatives promptly of the suspension of the qualification or
registration of (or any such exemption relating to) the Common Shares
for offering, sale or trading in any jurisdiction or any initiation or
threat of any proceeding for any such purpose, and in the event of the
issuance of any order

12.

<PAGE>

suspending such qualification, registration or exemption, the
Company shall use its best efforts to obtain the withdrawal thereof
at the earliest possible moment.

(f) USE OF PROCEEDS. The Company shall apply the net proceeds
from the sale of the Common Shares sold by it in the manner described
under the caption "Use of Proceeds" in the Prospectus.

(g) TRANSFER AGENT. The Company shall engage and maintain, at
its expense, a registrar and transfer agent for the Common Stock.

(h) EARNINGS STATEMENT. As soon as practicable, the Company
will make generally available to its security holders and to the
Representatives an earnings statement (which need not be audited)
covering the twelve-month period ending [___] that satisfies the
provisions of Section 11(a) of the Securities Act.

(i) PERIODIC REPORTING OBLIGATIONS. During the Prospectus
Delivery Period the Company shall file, on a timely basis, with the
Commission and the Nasdaq National Market all reports and documents
required to be filed under the Exchange Act. Additionally, the Company
shall report the use of proceeds from the issuance of the Common Shares
as may be required under Rule 463 under the Securities Act.

(j) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES.
During the period of 180 days following the date of the Prospectus, the
Company will not, without the prior written consent of BAS (which
consent may be withheld at the sole discretion of BAS), directly or
indirectly, sell, offer, contract or grant any option to sell, pledge,
transfer or establish an open "put equivalent position" within the
meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose
of or transfer, or announce the offering of, or file any registration
statement under the Securities Act in respect of, any shares of Common
Stock, options or warrants to acquire shares of the Common Stock or
securities exchangeable or exercisable for or convertible into shares
of Common Stock (other than as contemplated by this Agreement with
respect to the Common Shares); PROVIDED, HOWEVER, that the Company may
issue shares of its Common Stock or options to purchase its Common
Stock, or Common Stock upon exercise of options, pursuant to any stock
option, stock bonus or other stock plan or arrangement described in the
Prospectus, but only if the holders of such shares, options, or shares
issued upon exercise of such options, agree in writing not to sell,
offer, dispose of or otherwise transfer any such shares or options
during such 180 day period without the prior written consent of BAS
(which consent may be withheld at the sole discretion of the BAS).

(k) FUTURE REPORTS TO THE REPRESENTATIVES. During the period
of five years hereafter the Company will furnish to the Representatives
at 600 Montgomery Street, San Francisco, CA 94111: (i) as soon as
practicable after the end of each fiscal year, copies of the Annual
Report of the Company containing the balance sheet of the Company as of
the close of such fiscal year and statements of income, stockholders'
equity and cash flows for the year then ended and the opinion thereon
of the Company's independent public or certified public accountants;
(ii) as soon as practicable after the filing thereof, copies of each
proxy statement, Annual Report on Form 10-K, Quarterly Report on Form
10-Q,

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<PAGE>

Current Report on Form 8-K or other report filed by the Company with
the Commission, the NASD or any securities exchange; and (iii) as
soon as available, copies of any report or communication of the
Company mailed generally to holders of its capital stock.

BAS, on behalf of the several Underwriters, may, in its sole
discretion, waive in writing the performance by the Company of any one or more
of the foregoing covenants or extend the time for their performance.

SECTION 4. PAYMENT OF EXPENSES. The Company agrees to pay all costs,
fees and expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby, including
without limitation (i) all expenses incident to the issuance and delivery of the
Common Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Common Stock, (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Common Shares to the Underwriters, (iv) all fees and expenses of
the Company's counsel, independent public or certified public accountants and
other advisors, (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration
Statement (including financial statements, exhibits, schedules, consents and
certificates of experts), each preliminary prospectus and the Prospectus, and
all amendments and supplements thereto, and this Agreement, (vi) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriters
in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Common Shares for offer
and sale under the state securities or blue sky laws or the provincial
securities laws of Canada, and, if requested by the Representatives, preparing
and printing a "Blue Sky Survey" or memorandum, and any supplements thereto,
advising the Underwriters of such qualifications, registrations and exemptions,
(vii) the filing fees incident to, and the reasonable fees and expenses of
counsel for the Underwriters in connection with, the NASD's review and approval
of the Underwriters' participation in the offering and distribution of the
Common Shares, (viii) the fees and expenses associated with listing the Common
Shares on the Nasdaq National Market, and (ix) all other fees, costs and
expenses referred to in Item 13 of Part II of the Registration Statement. Except
as provided in this Section 4, Section 6, Section 8 and Section 9 hereof, the
Underwriters shall pay their own expenses, including the fees and disbursements
of their counsel.

SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Common
Shares as provided herein on the First Closing Date and, with respect to the
Optional Common Shares, the Second Closing Date, shall be subject to the
accuracy of the representations and warranties on the part of the Company set
forth in Section 1 hereof as of the date hereof and as of the First Closing Date
as though then made and, with respect to the Optional Common Shares, as of the
Second Closing Date as though then made, to the timely performance by the
Company of its covenants and other obligations hereunder, and to each of the
following additional conditions:

(a) ACCOUNTANTS' COMFORT LETTER. On the date hereof, the
Representatives shall have received from Ernst & Young LLP, independent
public or certified public accountants for the Company, a letter dated
the date hereof addressed to the Underwriters and the Board of
Directors of the Company, in form and substance reasonably

14.

<PAGE>

satisfactory to the Representatives, containing statements and
information of the type ordinarily included in accountant's "comfort
letters" to underwriters, delivered according to Statement of
Auditing Standards No. 72 (or any successor bulletin), with respect
to the audited and unaudited financial statements and certain
financial information contained in the Registration Statement and
the Prospectus (and the Representatives shall have received an
additional 2 conformed copies of such accountants' letter).

(b) COMPLIANCE WITH REGISTRATION REQUIREMENTS; NO STOP ORDER;
NO OBJECTION FROM NASD. For the period from and after effectiveness of
this Agreement and prior to the First Closing Date and, with respect to
the Optional Common Shares, the Second Closing Date:

(i) the Company shall have filed the Prospectus with
the Commission (including the information required by Rule
430A under the Securities Act) in the manner and within the
time period required by Rule 424(b) under the Securities Act;
or the Company shall have filed a post-effective amendment to
the Registration Statement containing the information required
by such Rule 430A, and such post-effective amendment shall
have become effective; or, if the Company elected to rely upon
Rule 434 under the Securities Act and obtained the
Representative's consent thereto, the Company shall have filed
a Term Sheet with the Commission in the manner and within the
time period required by such Rule 424(b);

(ii) no stop order suspending the effectiveness of
the Registration Statement, any Rule 462(b) Registration
Statement, or any post-effective amendment to the Registration
Statement, shall be in effect and no proceedings for such
purpose shall have been instituted or, to the knowledge of the
Company and the Representatives, threatened by the Commission;
and

(iii) the NASD shall have raised no objection to the
fairness and reasonableness of the underwriting terms and
arrangements.

(c) NO MATERIAL ADVERSE CHANGE OR RATINGS AGENCY CHANGE. For
the period from and after the date of this Agreement and prior to the
First Closing Date and, with respect to the Optional Common Shares, the
Second Closing Date:

(i) in the reasonable judgment of the Representatives
there shall not have occurred any Material Adverse Change.

(d) OPINION OF COUNSEL FOR THE COMPANY. On each of the First
Closing Date and the Second Closing Date the Representatives shall have
received an opinion of each of Skadden, Arps, Slate, Meagher & Flom LLP
and Bay Venture Counsel, counsel for the Company, dated as of such
Closing Date, substantially in the form attached as Exhibit A and
Exhibit B, respectively (and the Representatives shall have received an
additional 2 conformed copies of such counsel's legal opinion).

(e) OPINION OF FOREIGN COUNSEL FOR THE COMPANY. On each of the
First Closing Date and the Second Closing Date, the Representatives
shall have received the favorable

15.

<PAGE>

opinion of Fischer, Behar & Co., foreign counsel for the Company,
dated as of such Closing Date, to the effect that:

(i) Vyyo Limited has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own or
lease, as the case may be, and to operate its properties and
conduct its business as described in the Prospectus, and has
all necessary authorizations in Israel to enable it to do
business as a foreign corporation in those jurisdictions in
which it conducts business and which are described in the
Prospectus; and

(ii) All the outstanding shares of capital stock of
Vyyo Limited have been duly and validly authorized and issued
and are fully paid and nonassessable, and, except as otherwise
set forth in the Prospectus, all outstanding shares of capital
stock of Vyyo Limited are owned by the Company either directly
or through wholly owned subsidiary free and clear of any
perfected security interest and, to the knowledge of such
counsel, after due inquiry, any other security interest,
claim, lien or encumbrance.

(f) OPINION OF PATENT COUNSEL FOR THE COMPANY. On each of the
First Closing Date and the Second Closing Date, the Representatives
shall have received the favorable opinion of Crosby, Heafy, Roach &
May, patent counsel for the Company, dated as of such Closing Date, the
form of which is attached as EXHIBIT B (and the Representatives shall
have received an additional 2 conformed copies of such counsel's legal
opinion).

(g) OPINION OF COUNSEL FOR THE UNDERWRITERS. On each of the
First Closing Date and the Second Closing Date the Representatives
shall have received the favorable opinion of Brobeck, Phleger &
Harrison LLP, counsel for the Underwriters, dated as of such Closing
Date, with respect to the matters set forth in paragraphs (i), (vii)
(with respect to subparagraph (i) only, (viii), (ix), (x) (xi) and
(xiii) (with respect to the captions "Description of Capital Stock" and
"Underwriting" under subparagraph (i) only), (xii), and the
next-to-last paragraph of Exhibit A (and the Representatives shall have
received an additional 2 conformed copies of such counsel's legal
opinion).

(h) OFFICERS' CERTIFICATE. On each of the First Closing Date
and the Second Closing Date, the Representatives shall have received a
written certificate executed by the Chairman of the Board, Chief
Executive Officer or President of the Company and the Chief Financial
Officer or Chief Accounting Officer of the Company, dated as of such
Closing Date, to the effect set forth in subsections (b)(ii) of this
Section 5, and further to the effect that, to their knowledge:

(i) for the period from and after the date of this
Agreement and prior to such Closing Date, there has not
occurred any Material Adverse Change;

(ii) the representations, warranties and covenants of
the Company set forth in Section 1(A) of this Agreement are
true and correct in all material

16.

<PAGE>

respects with the same force and effect as though expressly
made on and as of such Closing Date, and

(iii) the Company has complied in all material
respects with all the agreements hereunder and satisfied all
the conditions on its part to be performed or satisfied
hereunder at or prior to such Closing Date.

(i) BRING-DOWN COMFORT LETTER. On each of the First Closing
Date and the Second Closing Date, the Representatives shall have
received from Ernst & Young LLP, independent public or certified public
accountants for the Company, a letter dated such date, in form and
substance reasonably satisfactory to the Representatives, to the effect
that they reaffirm the statements made in the letter furnished by them
pursuant to subsection (a) of this Section 5, except that the specified
date referred to therein for the carrying out of procedures shall be no
more than three business days prior to the First Closing Date or Second
Closing Date, as the case may be (and the Representatives shall have
received an additional [2] conformed copies of such accountants'
letter).

(j) LOCK-UP AGREEMENT. On the date hereof, the Company shall
have furnished to the Representatives an agreement in the form of
Exhibit hereto from "each director, officer and each beneficial owner
of Common Stock" (as defined and determined according to Rule 13d-3
under the Exchange Act, except that a one hundred eighty day period
shall be used rather than the sixty day period set forth therein)
listed on Exhibit D hereto, and such agreement shall be in full force
and effect on each of the First Closing Date and the Second Closing
Date.

(k) ADDITIONAL DOCUMENTS. On or before each of the First
Closing Date and the Second Closing Date, the Representatives and
counsel for the Underwriters shall have received such information,
documents and opinions as they may reasonably require for the purposes
of enabling them to pass upon the issuance and sale of the Common
Shares as contemplated herein, or in order to evidence the accuracy of
any of the representations and warranties, or the satisfaction of any
of the conditions or agreements, herein contained.

If any condition specified in this Section 5 is not satisfied
when and as required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company at any time on or prior to the First
Closing Date and, with respect to the Optional Common Shares, at any time prior
to the Second Closing Date, which termination shall be without liability on the
part of any party to any other party, except that Section 4, Section 6, Section
8 and Section 9 shall at all times be effective and shall survive such
termination.

17.

<PAGE>

SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If this Agreement
is terminated by the Representatives pursuant to Section 5, Section 7, Section
10 or Section 11, or if the sale to the Underwriters of the Common Shares on the
First Closing Date is not consummated because of any refusal, inability or
failure on the part of the Company to perform any agreement herein or to comply
with any provision hereof, the Company agrees to reimburse the Representatives
and the other Underwriters (or such Underwriters as have terminated this
Agreement with respect to themselves), severally, upon demand for all
out-of-pocket expenses that shall have been reasonably incurred by the
Representatives and the Underwriters in connection with the proposed purchase
and the offering and sale of the Common Shares, including but not limited to the
reasonable fees and disbursements of counsel, printing expenses, travel
expenses, postage, facsimile and telephone charges.

SECTION 7. EFFECTIVENESS OF THIS AGREEMENT.

This Agreement shall not become effective until the later of
(i) the execution of this Agreement by the parties hereto and (ii) notification
by the Commission to the Company and the Representatives of the effectiveness of
the Registration Statement under the Securities Act.

Prior to such effectiveness, this Agreement may be terminated
by any party by notice to each of the other parties hereto, and any such
termination shall be without liability on the part of (a) the Company to any
Underwriter, except that the Company shall be obligated to reimburse the
expenses of the Representatives and the Underwriters pursuant to Sections 4 and
6 hereof, (b) any Underwriter to the Company, or (c) any party hereto to any
other party except that the provisions of Section 8 and Section 9 shall at all
times be effective and shall survive such termination.

SECTION 8. INDEMNIFICATION.

(a) INDEMNIFICATION OF THE UNDERWRITERS. The Company agrees to
indemnify and hold harmless each Underwriter, its officers and
employees, and each person, if any, who controls any Underwriter within
the meaning of the Securities Act and the Exchange Act against any
loss, claim, damage, liability or expense, as incurred, to which such
Underwriter or such controlling person may become subject, under the
Securities Act, the Exchange Act or other federal or state statutory
law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the
written consent of the Company), insofar as such loss, claim, damage,
liability or expense (or actions in respect thereof as contemplated
below) arises out of or is based (i) upon any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereto, including any
information deemed to be a part thereof pursuant to Rule 430A or Rule
434 under the Securities Act, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading; or (ii) upon any untrue
statement or alleged untrue statement of a material fact contained in
any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
and to reimburse each Underwriter and each such controlling person for
any and all

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expenses reasonably incurred (including the reasonable fees and
disbursements of counsel chosen by BAS) as such expenses are
reasonably incurred by such Underwriter or such controlling person
in connection with investigating, defending, settling, compromising
or paying any such loss, claim, damage, liability, expense or
action; PROVIDED, HOWEVER, that the foregoing indemnity agreement
shall not apply to any loss, claim, damage, liability or expense to
the extent, but only to the extent, arising out of or based upon any
untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written
information furnished to the Company by the Representatives
expressly for use in the Registration Statement, any preliminary
prospectus or the Prospectus (or any amendment or supplement
thereto); and provided, further, that with respect to any
preliminary prospectus, the foregoing indemnity agreement shall not
inure to the benefit of any Underwriter from whom the person
asserting any loss, claim, damage, liability or expense purchased
Common Shares, or any person controlling such Underwriter, if copies
of the Prospectus were timely delivered to the Underwriter pursuant
to Section 2 and a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of
the Common Shares to such person, and if the Prospectus (as so
amended or supplemented) would have cured the defect giving rise to
such loss, claim, damage, liability or expense. The indemnity
agreement set forth in this Section 8(a) shall be in addition to any
liabilities that the Company may otherwise have.

(b) INDEMNIFICATION OF THE COMPANY, ITS DIRECTORS AND
OFFICERS. Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each of its directors, each of
its officers who signed the Registration Statement and each person, if
any, who controls the Company within the meaning of the Securities Act
or the Exchange Act, against any loss, claim, damage, liability or
expense, as incurred, to which the Company, or any such director,
officer or controlling person may become subject, under the Securities
Act, the Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of
any litigation, if such settlement is effected with the written consent
of such Underwriter), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises
out of or is based upon any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto),
or arises out of or is based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
the Registration Statement, any preliminary prospectus, the Prospectus
(or any amendment or supplement thereto), in reliance upon and in
conformity with written information furnished to the Company by the
Representatives expressly for use therein; and to reimburse the
Company, or any such director, officer or controlling person for any
legal and other expense reasonably incurred by the Company, or any such
director, officer or controlling person in connection with
investigating, defending, settling, compromising or paying any such
loss, claim, damage, liability, expense or action. The Company hereby

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<PAGE>

acknowledges that the only information that the Underwriters have
furnished to the Company expressly for use in the Registration
Statement, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) are the statements set forth (A) as
the last paragraphs on the inside front cover page of the Prospectus
concerning stabilization and passive market making by the Underwriters
and (B) in the table in the first paragraph and as the second paragraph
second and [_] paragraphs under the caption "Underwriting" in the
Prospectus; and the Underwriters confirm that such statements are
correct. The indemnity agreement set forth in this Section 8(b) shall
be in addition to any liabilities that each Underwriter may otherwise
have.

(c) NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES.
Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying
party under this Section 8, notify the indemnifying party in writing of
the commencement thereof, but the omission so to notify the
indemnifying party will not relieve it from any liability which it may
have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 8 or to the extent it
is not prejudiced as a proximate result of such failure. In case any
such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it shall elect, jointly with
all other indemnifying parties similarly notified, by written notice
delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party;
PROVIDED, HOWEVER, if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified
party shall have reasonably concluded that a conflict may arise between
the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal
defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select
separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified
party or parties. Upon receipt of notice from the indemnifying party to
such indemnified party of such indemnifying party's election so to
assume the defense of such action and approval by the indemnified party
of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel
(together with local counsel), approved by the indemnifying party (BAS
in the case of Section 8(b) and Section 9), representing the
indemnified parties who are parties to such action) or (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a
reasonable time after notice of commencement of the action, in each of
which cases the fees and expenses of counsel shall be at the expense of
the indemnifying party.

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(d) SETTLEMENTS. The indemnifying party under this Section
8 shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party
agrees to indemnify the indemnified party against any loss, claim,
damage, liability or expense by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as
contemplated by Section 8(c) hereof, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with
such request prior to the date of such settlement. No indemnifying
party shall, without the prior written consent of the indemnified
party, effect any settlement, compromise or consent to the entry of
judgment in any pending or threatened action, suit or proceeding in
respect of which any indemnified party is or could have been a party
and indemnity was or could have been sought hereunder by such
indemnified party, unless such settlement, compromise or consent
includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit
or proceeding and (ii) does not include a statement as to, or an
admission of, fault, culpability or a failure to act by or on behalf
of an indemnified party.

SECTION 9. CONTRIBUTION.

If the indemnification provided for in Section 8 is for any
reason held to be unavailable to or otherwise insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount paid or payable by such indemnified party, as incurred, as
a result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Underwriters, on the
other hand, from the offering of the Common Shares pursuant to this Agreement or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, on the one hand, and the Underwriters, on the other hand, in
connection with the statements or omissions or inaccuracies in the
representations and warranties herein which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and the Underwriters, on the other hand, in connection with the offering of the
Common Shares pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the Common
Shares pursuant to this Agreement (before deducting expenses) received by the
Company, and the total underwriting discount received by the Underwriters, in
each case as set forth on the front cover page of the Prospectus (or, if Rule
434 under the Securities Act is used, the corresponding location on the Term
Sheet) bear to the aggregate initial public offering price of the Common Shares
as set forth on such cover. The relative fault of the Company, on the one hand,
and the Underwriters, on the other hand, shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company, on the

21.

<PAGE>

one hand, or the Underwriters, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in Section 8(c), any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth in
Section 8(c) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 9; PROVIDED, HOWEVER,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 8(c) for purposes of indemnification.

The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in this Section 9.

Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount in excess of the
underwriting commissions received by such Underwriter in connection with the
Common Shares underwritten by it and distributed to the public. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 9 are several, and not joint, in proportion
to their respective underwriting commitments as set forth opposite their names
in Schedule A. For purposes of this Section 9, each officer and employee of an
Underwriter and each person, if any, who controls an Underwriter within the
meaning of the Securities Act and the Exchange Act shall have the same rights to
contribution as such Underwriter, and each director of the Company, each officer
of the Company who signed the Registration Statement, and each person, if any,
who controls the Company with the meaning of the Securities Act and the Exchange
Act shall have the same rights to contribution as the Company.

22.

<PAGE>

SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS. If, on
the First Closing Date or the Second Closing Date, as the case may be, any one
or more of the several Underwriters shall fail or refuse to purchase Common
Shares that it or they have agreed to purchase hereunder on such date, and the
aggregate number of Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate number of the Common Shares to be purchased on such date, the other
Underwriters shall be obligated, severally, in the proportions that the number
of Firm Common Shares set forth opposite their respective names on Schedule A
bears to the aggregate number of Firm Common Shares set forth opposite the names
of all such non-defaulting Underwriters, or in such other proportions as may be
specified by the Representatives with the consent of the non-defaulting
Underwriters, to purchase the Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date. If, on the
First Closing Date or the Second Closing Date, as the case may be, any one or
more of the Underwriters shall fail or refuse to purchase Common Shares and the
aggregate number of Common Shares with respect to which such default occurs
exceeds 10% of the aggregate number of Common Shares to be purchased on such
date, and arrangements satisfactory to the Representatives and the Company for
the purchase of such Common Shares are not made within 48 hours after such
default, this Agreement shall terminate without liability of any party to any
other party except that the provisions of Section 4, Section 6, Section 8 and
Section 9 shall at all times be effective and shall survive such termination. In
any such case either the Representatives or the Company shall have the right to
postpone the First Closing Date or the Second Closing Date, as the case may be,
but in no event for longer than seven days in order that the required changes,
if any, to the Registration Statement and the Prospectus or any other documents
or arrangements may be effected.

As used in this Agreement, the term "Underwriter" shall be
deemed to include any person substituted for a defaulting Underwriter under this
Section 10. Any action taken under this Section 10 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.

23.

<PAGE>

SECTION 11. TERMINATION OF THIS AGREEMENT. Prior to the First Closing
Date this Agreement may be terminated by the Representatives by notice given to
the Company if at any time (i) trading or quotation in any of the Company's
securities shall have been suspended or limited by the Commission or by the
Nasdaq National Market, or trading in securities generally on either the Nasdaq
Stock Market or the New York Stock Exchange shall have been suspended or
limited, or minimum or maximum prices shall have been generally established on
any of such stock exchanges by the Commission or the NASD; (ii) a general
banking moratorium shall have been declared by any of federal, New York,
Delaware or California authorities; (iii) there shall have occurred any outbreak
or escalation of national or international hostilities or any crisis or
calamity, or any change in the United States or international financial markets,
or any substantial change or development involving a prospective substantial
change in United States' or international political, financial or economic
conditions, as in the judgment of the Representatives is material and adverse
and makes it impracticable to market the Common Shares in the manner and on the
terms described in the Prospectus or to enforce contracts for the sale of
securities; (iv) in the judgment of the Representatives there shall have
occurred any Material Adverse Change; or (v) the Company shall have sustained a
loss by strike, fire, flood, earthquake, accident or other calamity of such
character as in the judgment of the Representatives may interfere materially
with the conduct of the business and operations of the Company regardless of
whether or not such loss shall have been insured. Any termination pursuant to
this Section 11 shall be without liability on the part of (a) the Company to any
Underwriter, except that the Company shall be obligated to reimburse the
expenses of the Representatives and the Underwriters pursuant to Sections 4 and
6 hereof, (b) any Underwriter to the Company, or (c) of any party hereto to any
other party except that the provisions of Section 8 and Section 9 shall at all
times be effective and shall survive such termination.

SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter
or the Company or any of its or their partners, officers or directors or any
controlling person, as the case may be, and will survive delivery of and payment
for the Common Shares sold hereunder and any termination of this Agreement.

SECTION 13. NOTICES. All communications hereunder shall be in writing
and shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:

If to the Representatives:

Banc of America Securities LLC
600 Montgomery Street
San Francisco, California 94111
Facsimile: 415-913-5558
Attention: Richard A. Smith

24.

<PAGE>

with a copy to:

Banc of America Securities LLC
600 Montgomery Street
San Francisco, California 94111
Facsimile: (415) 913-5553
Attention: Jeffrey R. Lapic, Esq.

If to the Company:

Vyyo Inc.
20400 Stevens Creek Blvd., 8th Floor
Cupertino, CA 95014
Facsimile: [___]
Attention: [___]

With a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP
525 University Ave., Suite 220
Palo Alto, CA 94301
Facsimile: (650) 470-4570
Attention: Gregory C. Smith, Esq.

Any party hereto may change the address for receipt of communications by giving
written notice to the others.

SECTION 14. SUCCESSORS. This Agreement will inure to the benefit of and
be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 10 hereof, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 8 and Section 9, and in
each case their respective successors, and no other person will have any right
or obligation hereunder. The term "successors" shall not include any purchaser
of the Common Shares as such from any of the Underwriters merely by reason of
such purchase.

SECTION 15. PARTIAL UNENFORCEABILITY. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.

SECTION 16. (a) GOVERNING LAW PROVISIONS. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.

(b) CONSENT TO JURISDICTION. Any legal suit, action or
proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby ("Related

25.

<PAGE>

Proceedings") may be instituted in the federal courts of the United
States of America located in the City and County of San Francisco or
the courts of the State of California in each case located in the
City and County of San Francisco (collectively, the "Specified
Courts"), and each party irrevocably submits to the exclusive
jurisdiction (except for proceedings instituted in regard to the
enforcement of a judgment of any such court (a "Related Judgment"),
as to which such jurisdiction is non-exclusive) of such courts in
any such suit, action or proceeding. Service of any process,
summons, notice or document by mail to such party's address set
forth above shall be effective service of process for any suit,
action or other proceeding brought in any such court. The parties
irrevocably and unconditionally waive any objection to the laying of
venue of any suit, action or other proceeding in the Specified
Courts and irrevocably and unconditionally waive and agree not to
plead or claim in any such court that any such suit, action or other
proceeding brought in any such court has been brought in an
inconvenient forum.

(c) WAIVER OF IMMUNITY. With respect to any Related
Proceeding, each party irrevocably waives, to the fullest extent
permitted by applicable law, all immunity (whether on the basis of
sovereignty or otherwise) from jurisdiction, service of process,
attachment (both before and after judgment) and execution to which it
might otherwise be entitled in the Specified Courts, and with respect
to any Related Judgment, each party waives any such immunity in the
Specified Courts or any other court of competent jurisdiction, and will
not raise or claim or cause to be pleaded any such immunity at or in
respect of any such Related Proceeding or Related Judgment, including,
without limitation, any immunity pursuant to the United States Foreign
Sovereign Immunities Act of 1976, as amended.

SECTION 17. GENERAL PROVISIONS. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement may not be amended or modified unless in writing by all of the
parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit.
The Table of Contents and the Section headings herein are for the convenience of
the parties only and shall not affect the construction or interpretation of this
Agreement.

Each of the parties hereto acknowledges that it is a
sophisticated business person who was adequately represented by counsel during
negotiations regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties
hereto further acknowledges that the provisions of Sections 8 and 9 hereto
fairly allocate the risks in light of the ability of the parties to investigate
the Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement, any preliminary
prospectus and the Prospectus (and any amendments and supplements thereto), as
required by the Securities Act and the Exchange Act.

26.

<PAGE>

If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.

Very truly yours,

VYYO INC.

By:
----------------------------------------
[Title]

The foregoing Underwriting Agreement is hereby confirmed and
accepted by the Representatives in San Francisco, California as of the date
first above written.

BANC OF AMERICA SECURITIES LLC
CIBC WORLD MARKETS CORP
DAIN RAUSCHER INCORPORATED
W.R. HAMBRECHT & CO., LLC

Acting as Representatives of the
several Underwriters named in
the attached Schedule A.

BANC OF AMERICA SECURITIES LLC

By:
---------------------------

27.

<PAGE>

SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF FIRM
COMMON SHARES TO
UNDERWRITERS BE PURCHASED
<S> <C>

Banc of America Securities LLC.............................................. [___]
[___]....................................................................... [___]
[___]....................................................................... [___]
[___]....................................................................... [___]
[___]....................................................................... [___]

Total..................................................... [___]
</TABLE>

<PAGE>

Exhibit 4.1

COMMON SHARES

VYYO INC.

INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE THIS
CERTIFICATE IS TRANSFERABLE IN BOSTON, MA AND NEW YORK, NY

CUSIP 918458 10 0

SEE REVERSE FOR CERTAIN DEFINITIONS

This Certifies that

is the record holder of

FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, PAR VALUE $0.0001
PER SHARE, OF VYYO INC. transferable only on the books of the Corporation by
the holder hereof in person or by duly authorized Attorney upon surrender of
this Certificate properly endorsed. This Certificate is not valid unless
countersigned and registered by the Transfer Agent and Registrar.

In Witness Whereof, the Corporation has caused this Certificate to be
executed and attested to by the manual or facsimile signatures of its duly
authorized officers, under a facsimile of its corporate seal to be affixed
hereto.

Dated: _______________________

________________________
SECRETARY
CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD

COUNTERSIGNED AND REGISTERED:

_________________________
EQUISERVE TRUST COMPANY, N.A.
TRANSFER AGENT AND REGISTRAR

BY ____________________________
AUTHORIZED SIGNATURE

Page 1

<PAGE>

VYYO INC.

Upon request the Corporation will furnish any holder of shares of Common Stock
of the Corporation, without charge, with a full statement of the powers,
designations, preferences, and relative, participating, optional or other
special rights of any class or series of capital stock of the Corporation, and
the qualifications, limitations or restrictions of such preferences and/or
rights.

The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM as tenants in common
TEN ENT as tenants by the entireties
JT TEN as joint tenants with right of
survivorship and not as tenants
in common

UNIF GIFT MIN ACT

......................... Custodian .........................
(Cust) (Minor)

under Uniform Gifts to Minors Act

..............................................................
(State)

Additional abbreviations may also be used though not in the above list.

For value received, ___________________________________________

hereby sell, assign and transfer unto

______________________________________
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

____________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)

Page 1

<PAGE>

Shares of Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _________________________________________
Attorney to transfer the said stock on the books of the within named
Corporation with full power of substitution in the premises.

Dated
---------------------------------------

In presence of X
------------------------------

NOTICE: X
-------------------------------------

THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.

Signature(s) Guaranteed

By ______________________________________

THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
SEC RULE 17Ad-15.

Page 2

<PAGE>

Exhibit 5.1

[LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP]

March 31, 2000

Vyyo Inc.
20400 Stevens Creek Boulevard, 8th Floor
Cupertino, California 95014

Ladies and Gentlemen:

This opinion is rendered in connection with the filing by Vyyo Inc., a
Delaware corporation (the "Company"), of its Registration Statement on Form
S-1 (the "Registration Statement") with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Act"), with
respect to the offer and sale by the Company (the "Offering") of up to
7,762,500 shares (including 1,012,500 shares subject to an over-allotment
option) of the Company's common stock, par value $.0001 per share (the
"Registered Common Stock"), and any subsequent registration statement the
Company may hereafter file with the Commission pursuant to Rule 462(b)
under the Act to register additional shares of the Company's common stock,
par value $.0001 per share, in connection with the Offering (such additional
shares, together with the Registered Common Stock, the "Shares"). We have
acted as special counsel to the Company in connection with the preparation of
the Registration Statement.

In our capacity as such counsel, we are familiar with the proceedings
taken and to be taken by the Company in connection with the authorization,
issuance and sale of the Shares. In addition, we have made such legal and
factual examinations and inquiries, including and examination of originals
(or copies certified or otherwise identified to our satisfaction as being
true reproductions of originals) or such documents, corporate records and
other instruments, and have obtained from officers of the Company and agents
thereof such certificates and other representations and assurances, as we
have deemed necessary or appropriate for the purposes of this opinion.

In such examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, the legal
capacity of natural persons executing such documents and the authenticity and
conformity to original documents of documents submitted to us as certified or
photostatic copies.

We are opining herein as to the effect on the subject transaction only of
the General Corporation Law of the State of Delaware, including statutory and
reported decisional law thereunder, and we express no opinion with respect to
the applicability thereto, or the effect thereon, of the laws of any other
jurisdiction or, in the case of Delaware, any other laws, or as to any
matters of municipal law of the laws of any local agencies within any state.

Subject to the foregoing and the other qualifications set forth herein,
it is our opinion that, as of the date hereof, based on the foregoing and the
proceedings to be taken by the Company as referred to above, the Shares have
been duly authorized, and upon issuance, delivery and payment therefor in the
manner described in the Registration Statement, such Shares will be validly
issued, fully paid and nonassesable.

We consent to your filing this opinion as an exhibit to the Registration
Statement and to the reference to our firm contained under the heading "Legal
Matters" of the prospectus included therein, and to the incorporation by
reference of this opinion and consent into a registration statement filed
with the Commission pursuant to Rule 462(b) under the Act relating to the
Offering.

Very truly yours,

/s/ SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP

<PAGE>

Exhibit 10.4

VYYO INC.
AMENDED AND RESTATED
2000 EMPLOYEE AND CONSULTANT EQUITY INCENTIVE PLAN

1. SECTION GENERAL PURPOSE OF PLAN; DEFINITIONS.

The name of this plan is the Vyyo Inc. Amended and Restated
2000 Employee and Consultant Equity Incentive Plan (the "Plan"). The Plan was
adopted by the Board (defined below) and approved by the stockholders of the
Company (defined below) on November 22, 1999. The Board subsequently amended
and restated Plan in its entirety on February 2, 2000 (the "Amendment"), and
such Amendment was approved by the stockholders of the Company on the same
date. The purpose of the Plan is to enable the Company to attract and retain
highly qualified personnel who will contribute to the Company's success and
to provide incentives to Participants (defined below) that are linked
directly to increases in stockholder value and will therefore inure to the
benefit of all stockholders of the Company. The Company wishes the issuance
of Awards (defined below) to its employees in Israel to conform with the
requirements of Section 3(9) of the Israeli Income Tax Ordinance, and for
this purpose the appended document Annex A amends this Plan to so conform.

For purposes of the Plan, the following terms shall be
defined as set forth below:

(a) "ADMINISTRATOR" means the Board, or if and to the
extent the Board does not administer the Plan, the Committee in accordance
with Section 2 below.

(b) "AFFILIATE" means any corporation that directly, or
indirectly through one or more intermediaries, controls or is controlled by,
or is under common control with, another corporation, where "control"
(including the terms "controlled by" and "under common control with") means
the possession, direct or indirect, of the power to cause the direction of
the management and policies of the corporation, whether through the ownership
of voting securities, by contract or otherwise.

<PAGE>

(d) "AWARD AGREEMENT" means, with respect to each Award,
the signed written agreement between the Company and the Participant setting
forth the terms and conditions of the Award.

(e) "BOARD" means the Board of Directors of the Company.

(f) "CODE" means the Internal Revenue Code of 1986, as
amended from time to time, or any successor thereto.

(g) "COMMITTEE" means any committee the Board may appoint
to administer the Plan. To the extent necessary and desirable, the Committee
shall be composed entirely of individuals who meet the qualifications
referred to in Section 162(m) of the Code and Rule 16b-3 under the Exchange
Act. If at any time or to any extent the Board shall not administer the Plan,
then the functions of the Board specified in the Plan shall be exercised by
the Committee.

(h) "COMMON STOCK" means the common stock, par value
$0.0001 per share, of the Company.

(i) "COMPANY" means Vyyo Inc., a Delaware corporation (or
any successor corporation).

(j) "DEFERRED STOCK" means the right to receive Shares at
the end of a specified deferral period granted pursuant to Section 8 below.

(k) "DISABILITY" means the inability of a Participant to
perform substantially his or her duties and responsibilities to the Company
or to any Parent or Subsidiary by reason of a physical or mental disability
or infirmity (i) for a continuous period of six months, or (ii) at such
earlier time as the Participant submits medical evidence satisfactory to the
Administrator that the Participant has a physical or mental disability or
infirmity that will likely prevent the Participant from returning to the
performance of the Participant's work duties for six months or longer. The
date of such Disability shall be the last day of such six-month period or the
day on which the Participant submits such satisfactory medical evidence, as
the case may be.

(l) "ELIGIBLE RECIPIENT" means an officer, director,
employee, consultant or advisor of the Company or of any Parent or Subsidiary.

<PAGE>

(m) "EMPLOYEE DIRECTOR" means any director of the Company
who is also an employee of the Company or of any Parent or Subsidiary.

(n) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended from time to time.

(o) "EXERCISE PRICE" means the per share price at which a
holder of an Award may purchase the Shares issuable upon exercise of the
Award.

(p) "FAIR MARKET VALUE" as of a particular date shall mean
the fair market value of a share of Common Stock as determined by the
Administrator in its sole discretion; PROVIDED, HOWEVER, that (i) if the
Common Stock is admitted to trading on a national securities exchange, fair
market value of a share of Common Stock on any date shall be the closing sale
price reported for such share on such exchange on such date or, if no sale
was reported on such date, on the last date preceding such date on which a
sale was reported, (ii) if the Common Stock is admitted to quotation on the
National Association of Securities Dealers Automated Quotation ("Nasdaq")
System or other comparable quotation system and has been designated as a
National Market System ("NMS") security, fair market value of a share of
Common Stock on any date shall be the closing sale price reported for such
share on such system on such date or, if no sale was reported on such date,
on the last date preceding such date on which a sale was reported, (iii) if
the Common Stock is admitted to quotation on the Nasdaq System but has not
been designated as an NMS security, fair market value of a share of Common
Stock on any date shall be the average of the highest bid and lowest asked
prices of such share on such system on such date or, if no bid and ask prices
were reported on such date, on the last date preceding such date on which
both bid and ask prices were reported; (iv) in the case of a Limited Stock
Appreciation Right, the fair market value of a share of Common Stock shall be
the "Change in Control Price" (as defined in the Award Agreement evidencing
such Limited Stock Appreciation Right) of a share of Common Stock as of the
date of exercise.

(q) "INCENTIVE STOCK OPTION" means any Option intended to
be designated as an "incentive stock option" within the meaning of Section
422 of the Code.

<PAGE>

(r) "LIMITED STOCK APPRECIATION RIGHT" means a Stock
Appreciation Right that can be exercised only in the event of a "Change in
Control" (as defined in the Award Agreement evidencing such Limited Stock
Appreciation Right).

(s) "NON-EMPLOYEE DIRECTOR" means a director of the Company
who is not an employee of the Company or of any Parent or Subsidiary.

(t) "NON-QUALIFIED STOCK OPTION" means any Option that is
not an Incentive Stock Option, including any Option that provides (as of the
time such Option is granted) that it will not be treated as an Incentive
Stock Option.

(u) "OPTION" means an option to purchase Shares granted
pursuant to Section 6 below.

(v) "PARENT" means any corporation (other than the Company)
in an unbroken chain of corporations ending with the Company, if each of the
corporations in the chain (other than the Company) owns stock possessing 50%
or more of the combined voting power of all classes of stock in one of the
other corporations in the chain.

(w) "PARTICIPANT" means (i) any Eligible Recipient selected
by the Administrator, pursuant to the Administrator's authority in Section 2
below, to receive grants of Options, Stock Appreciation Rights, Limited Stock
Appreciation Rights, awards of Restricted Stock, Deferred Stock, or
Performance Shares or any combination of the foregoing, or (ii) any
Non-Employee Director who is eligible to receive grants of Options pursuant
to Section 6(i) below.

(x) "PERFORMANCE SHARES" means Shares that are subject to
restrictions based upon the attainment of specified performance objectives
granted pursuant to Section 8 below.

(y) "REGISTRATION STATEMENT" means the registration
statement on Form S-1 filed with the Securities and Exchange Commission for
the initial underwritten public offering of the Common Stock.

(z) "RESTRICTED STOCK" means Shares subject to certain
restrictions granted pursuant to Section 8 below.

<PAGE>

(aa) "SHARES" means shares of Common Stock reserved for
issuance under the Plan, as adjusted pursuant to Sections 3 and 4, and any
successor security.

(bb) "STOCK APPRECIATION RIGHT" means the right pursuant to
an Award granted under Section 7 below to receive an amount equal to the
excess, if any, of (i) the Fair Market Value, as of the date such Stock
Appreciation Right or portion thereof is surrendered, of the Shares covered
by such right or such portion thereof, over (ii) the aggregate Exercise Price
of such right or such portion thereof.

(cc) "SUBSIDIARY" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company, if
each of the corporations (other than the last corporation) in the unbroken
chain owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in the chain.

2. SECTION ADMINISTRATION.

The Plan shall be administered in accordance with the
requirements of Section 162(m) of the Code (but only to the extent necessary
and desirable to maintain qualification of Awards under the Plan under
Section 162(m) of the Code) and, to the extent applicable, Rule 16b-3 under
the Exchange Act ("Rule 16b-3"), by the Board or, at the Board's sole
discretion, by the Committee, which shall be appointed by the Board, and
which shall serve at the pleasure of the Board.

Pursuant to the terms of the Plan, the Administrator shall
have the power and authority to grant to Eligible Recipients Options, Stock
Appreciation Rights or Limited Stock Appreciation Rights, Awards of
Restricted Stock, Deferred Stock or Performance Shares or any combination of
the foregoing; PROVIDED, HOWEVER, that automatic, nondiscretionary grants of
Options shall be made to Non-Employee Directors pursuant to and in accordance
with the terms of Section 6(i) below. Except as otherwise provided in Section
6(i) below, the Administrator shall have the authority:

(a) to select those Eligible Recipients who shall be
Participants;

(b) to determine whether and to what extent Options, Stock
Appreciation Rights, Limited Stock Appreciation Rights, Awards of Restricted
Stock,

<PAGE>

Deferred Stock or Performance Shares or a combination of any of the
foregoing, are to be granted hereunder to Participants;

(d) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of each Award granted hereunder (including, but
not limited to, (x) the restrictions applicable to Awards of Restricted Stock
or Deferred Stock and the conditions under which restrictions applicable to
such Awards of Restricted Stock or Deferred Stock shall lapse, and (ii) the
performance goals and periods applicable to Awards of Performance Shares);

(e) to determine the terms and conditions, not inconsistent
with the terms of the Plan, which shall govern all written instruments
evidencing Options, Stock Appreciation Rights, Limited Stock Appreciation
Rights, Awards of Restricted Stock, Deferred Stock or Performance Shares or
any combination of the foregoing granted hereunder;

(f) to reduce the Exercise Price of any Option to the then
current Fair Market Value if the Fair Market Value of the Shares covered by
such Option has declined since the date such Option was granted; and

(g) the Committee may, at any time or from time to time,
authorize the Company, with the consent of the respective Participants, to
issue new Awards in exchange for the surrender and cancellation of any or all
outstanding Awards. The Committee may at any time buy from a Participant an
Award previously granted with payment in cash, Shares (including Restricted
Stock) or other consideration, based on such terms and conditions as the
Committee and the Participant shall agree.

(h) The Administrator shall have the authority, in its sole
discretion, to adopt, alter and repeal such administrative rules, guidelines
and practices governing the Plan as it shall from time to time deem
advisable; to interpret the terms and provisions of the Plan and any Award
issued under the Plan (and any Award Agreement relating thereto); and to
otherwise supervise the administration of the Plan.

<PAGE>

(i) All decisions made by the Administrator pursuant to the
provisions of the Plan shall be final, conclusive and binding on all persons,
including the Company and the Participants.

3. SECTION SHARES SUBJECT TO PLAN.

(a) The total number of shares of Common Stock reserved and
available for issuance under the Plan shall be 7,500,000 shares, plus an
annual increase to be added on the first day of the Company's fiscal year
(beginning 2001) equal to the lesser of (i) 1,350,000 shares or (ii) five
percent (5%) of the number of outstanding shares of Common Stock on the last
day of the immediately preceding fiscal year. Such shares may consist, in
whole or in part, of authorized and unissued shares or treasury shares. The
aggregate number of Shares as to which Options, Stock Appreciation Rights,
and Awards of Restricted Stock, Deferred Stock and Performance Shares may be
granted to any Participant during any calendar year may not, subject to
adjustment as provided in this Section 3, exceed 80% of the Shares reserved
for the purposes of the Plan.

(b) Consistent with the provisions of Section 162(m) of the
Code, as from time to time applicable, to the extent that (i) an Option
expires or is otherwise terminated without being exercised, or (ii) any
Shares subject to any Award of Restricted Stock, Deferred Stock or
Performance Shares granted hereunder are forfeited, such Shares shall again
be available for issuance in connection with future Awards granted under the
Plan. If any Shares have been pledged as collateral for indebtedness incurred
by a Participant in connection with the exercise of an Option and such Shares
are returned to the Company in satisfaction of such indebtedness, such Shares
shall again be available for issuance in connection with future Awards
granted under the Plan.

(c) In the event of any stock dividend, recapitalization,
stock split, reverse stock split, subdivision, combination, reclassification
or similar change in the capital structure of the Company without
consideration, an equitable substitution or proportionate adjustment shall be
made in (i) the aggregate number of Shares reserved for issuance under the
Plan, (ii) the kind, number and Exercise Prices of Shares subject to
outstanding Options, and (iii) the kind, number and Exercise Prices of Shares
subject to outstanding Awards of Restricted Stock, Deferred Stock and
Performance Shares, in each case as may be determined by the Administrator,
in its sole discretion, subject to any required action by the Board or the
stockhold-

<PAGE>

ers of the Company and in compliance with applicable securities laws;
PROVIDED, HOWEVER, that fractions of a Share shall not be issued but shall
either be paid in cash at Fair Market Value or shall be rounded up to the
nearest whole share, as determined by the Committee. An adjusted Exercise
Price shall also be used to determine the amount payable by the Company upon
the exercise of any Stock Appreciation Right or Limited Stock Appreciation
Right related to any Option.

4. SECTION CORPORATE TRANSACTIONS

(a) ASSUMPTION OR REPLACEMENT OF AWARDS BY SUCCESSOR. In
the event of (i) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a
wholly-owned subsidiary, a reincorporation of the Company in a different
jurisdiction, or other transaction in which there is no substantial change in
the stockholders of the Company and the Awards granted under the Plan are
assumed or replaced by the successor corporation, which assumption shall be
binding on all Participants); (ii) a dissolution or liquidation of the
Company; (iii) the sale of substantially all of the assets of the Company; or
(iv) any other transaction which qualifies as a "corporate transaction" under
Section 424(a) of the Code wherein the stockholders of the Company give up
all of their equity interest in the Company (EXCEPT for the acquisition, sale
or transfer of all or substantially all of the outstanding shares of the
Company), any or all outstanding Awards may be assumed or replaced by the
successor corporation (if any) or Parent thereof, which assumption or
replacement shall be binding on all Participants. In the alternative, the
successor corporation or Parent thereof may substitute equivalent awards or
provide substantially similar consideration to Participants as was provided
to stockholders of the Company (after taking into account the existing
provisions of the Awards). The successor corporation or Parent thereof may
also issue, in place of outstanding shares of the Company held by the
Participant, substantially similar shares or other property subject to
repurchase restrictions no less favorable to the Participant. In the event
such successor corporation (if any) or Parent thereof does not assume or
substitute awards, as provided above, pursuant to a transaction described in
this Section 4(a), such Awards shall automatically become fully vested and
exercisable and be released from any restrictions on transfer and repurchase
or forfeiture rights, immediately prior to the specified effective date of
such transaction, for all the Shares at the time represented by such Awards.
In such event, effective upon the consummation of the transaction, or at such
other time and on such conditions as the Board shall determine, all
outstanding Awards under the Plan shall terminate and cease to remain

<PAGE>

outstanding, except to the extent assumed by the successor corporation or its
Parent.

(b) OTHER TREATMENT OF AWARDS. Subject to any greater
rights granted to Participants under the foregoing provisions of this Section
4, in the event of the occurrence of any transaction described in Section
4(a), any outstanding Awards shall be treated as provided in the applicable
Award Agreement or plan of merger, consolidation, dissolution, liquidation,
sale of assets or other "corporate transaction."

(c) ASSUMPTION OF AWARDS BY THE COMPANY. The Company, from
time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other
company or otherwise, by either (i) granting an Award under the Plan in
substitution of such other company's award; or (ii) assuming such award as if
it had been granted under the Plan if the terms of such assumed award could
be applied to an award granted under the Plan. Such substitution or
assumption shall be permissible if the holder of the substituted or assumed
award would have been eligible to be granted an Award under the Plan if the
other company had applied the rules of the Plan to such grant. In the event
the Company assumes an award granted by another company, the terms and
conditions of such award shall remain unchanged (EXCEPT that the exercise
price and the number and nature of Shares issuable upon exercise of any such
option will be adjusted approximately pursuant to Section 424(a) of the
Code). In the event the Company elects to grant a new Option rather than
assuming an existing option, such new Option may be granted with a similarly
adjusted Exercise Price.

5. SECTION ELIGIBILITY.

Eligible Recipients shall be eligible to be granted
Options, Stock Appreciation Rights, Limited Stock Appreciation Rights, Awards
of Restricted Stock, Deferred Stock or Performance Shares or any combination
of the foregoing hereunder. The Participants under the Plan shall be selected
from time to time by the Administrator, in its sole discretion, from among
the Eligible Recipients, and the Administrator shall determine, in its sole
discretion, the number of Shares covered by each such Award.

<PAGE>

6. SECTION OPTIONS.

Options may be granted alone or in addition to other Awards
granted under the Plan. Any Option granted under the Plan shall be in such
form as the Administrator may from time to time approve, and the provisions
of each Option need not be the same with respect to each Participant.
Participants who are granted Options shall enter into an Award Agreement with
the Company, in such form as the Administrator shall determine, which Award
Agreement shall set forth, among other things, the Exercise Price of the
Option, the term of the Option and provisions regarding exercisability of the
Option granted thereunder.

The Options granted under the Plan may be of two types: (i)
Incentive Stock Options and (ii) Non-Qualified Stock Options.

The Administrator shall have the authority to grant to any
officer or employee of the Company or of any Parent or Subsidiary (including
directors who are also officers of the Company) Incentive Stock Options,
Non-Qualified Stock Options, or both types of Options (in each case with or
without Stock Appreciation Rights or Limited Stock Appreciation Rights).
Directors who are not also officers of the Company or of any Parent or
Subsidiary, consultants or advisors to the Company or to any Parent or
Subsidiary may only be granted Non-Qualified Stock Options (with or without
Stock Appreciation Rights or Limited Stock Appreciation Rights). To the
extent that any Option does not qualify as an Incentive Stock Option, it
shall constitute a separate Non-Qualified Stock Option. More than one Option
may be granted to the same Participant and be outstanding concurrently
hereunder.

Options granted under the Plan shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Administrator
shall deem desirable:

(a) OPTION EXERCISE PRICE. The per share Exercise Price of
Shares purchasable under an Option shall be determined by the Administrator in
its sole discretion at the time of grant but shall not, (i) in the case of
Incentive Stock Options, be less than 100% of the Fair Market Value of the
Common Stock on such date, (ii) in the case of Non-Qualified Stock Options
intended to qualify as "performance-based compensation" within the meaning of
Section 162(m) of the Code, be less than 100% of the Fair Market Value of the
Common Stock on such date

<PAGE>

and (iii) in any event, be less than the par value (if any) of the Common
Stock. If a Participant owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d) of the Code) more than 10%
of the combined voting power of all classes of stock of the Company or of any
Parent or Subsidiary and an Incentive Stock Option is granted to such
Participant, the per share Exercise Price of such Incentive Stock Option (to
the extent required at the time of grant by the Code shall be no less than
110% of the Fair Market Value of the Common Stock on the date such Incentive
Stock Option is granted.

(b) OPTION TERM. The term of each Option shall be fixed by
the Administrator, but no Option shall be exercisable more than ten years
after the date such Option is granted; PROVIDED, HOWEVER, that if an employee
owns or is deemed to own (by reason of the attribution rules of Section
424(d) of the Code) more than 10% of the combined voting power of all classes
of stock of the Company or of any Parent or Subsidiary and an Incentive Stock
Option is granted to such employee, the term of such Incentive Stock Option
(to the extent required by the Code at the time of grant) shall be no more
than five years from the date of grant.

(c) EXERCISABILITY. Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be determined
by the Administrator at or after the time of grant. The Administrator may
provide at the time of grant, in its sole discretion, that any Option shall
be exercisable only in installments, and the Administrator may waive such
installment exercise provisions at any time, in whole or in part, based on
such factors as the Administrator may determine, in its sole discretion,
including but not limited to in connection with any "change in control" of
the Company (as defined in the Award Agreement evidencing such Option).

(d) METHOD OF EXERCISE. Subject to Section 6(c), Options
may be exercised in whole or in part at any time during the Option period, by
giving written notice of exercise to the Company specifying the number of
Shares to be purchased, accompanied by payment in full of the aggregate
Exercise Price of the Shares so purchased in cash or its equivalent, as
determined by the Administrator. In addition, payment for Shares purchased
pursuant to the Plan may be made, where expressly approved for the
Participant by the Committee and where permitted by law:

<PAGE>

(i) by cancellation of indebtedness of the Company to
the Participant;

(ii) by surrender of shares of Common Stock that
either (1) have been owned by Participant for more than six
(6) months and have been paid for within the meaning of SEC
Rule 144 (and, if such shares were purchased from the Company
by use of a promissory note, such note has been fully paid
with respect to such Shares); or (2) were obtained by
Participant in the public market;

(iii) by waiver of compensation due or accrued to
Participant for services rendered;

(iv) by tender of property;

(v) with respect only to purchases upon exercise of
an Option, and provided that a public market for the Common
Stock exists: (i) through a "same day sale" commitment from
Participant and a broker-dealer that is a member of the
National Association of Securities Dealers (an "NASD Dealer")
whereby the Participant irrevocably elects to exercise the
Option and to sell a portion of the Shares so purchased to pay
for the aggregate Exercise Price of the Shares so purchased,
and whereby the NASD Dealer irrevocably commits upon receipt
of such Shares to forward such Exercise Price directly to the
Company; or (ii) through a "margin" commitment from
Participant and an NASD Dealer whereby Participant irrevocably
elects to exercise the Option and to pledge the Shares so
purchased to the NASD Dealer in a margin account as security
for a loan from the NASD Dealer in the amount of the aggregate
Exercise Price of the Shares so purchased, and whereby the
NASD Dealer irrevocably commits upon receipt of such Shares to
forward such Exercise Price directly to the Company;

(vi) in the case of the exercise of a Non-Qualified
Stock Option, in the form of Restricted Stock or Performance
Shares subject to an Award hereunder (based, in each case, on
the Fair Market Value of the Common Stock on the date the
Option is exercised); PROVIDED, HOWEVER, that in the case of
an Incentive Stock Option, the right to make payment in the
form of already owned shares of

<PAGE>

Common Stock may be authorized only at the time of grant.
If payment of the Exercise Price of a Non-Qualified Stock
Option is made in whole or in part in the form of
Restricted Stock or Performance Shares, the Shares received
upon the exercise of such Option shall be restricted in
accordance with the original terms of the Restricted Stock
Award or Performance Shares Award in question, except that
the Administrator may direct that such restrictions shall
apply only to that number of Shares equal to the number of
shares surrendered upon the exercise of such Option.

(vii) by any combination of the foregoing or

(viii) by any other form of consideration permitted
by applicable law.

A Participant shall generally have the rights to dividends
and any other rights of a stockholder with respect to the Shares subject to
the Option only after the Participant has given written notice of exercise,
has paid in full for such Shares, and, if requested, has given the
representation described in Section 11(b).

The Administrator may require the surrender of all or a
portion of any Option granted under the Plan as a condition precedent to the
grant of a new Option. Subject to the provisions of the Plan, such new Option
shall be exercisable at the Exercise Price, during such period and on such
other terms and conditions as are specified by the Administrator at the time
the new Option is granted. Consistent with the provisions of Section 162(m),
to the extent applicable, upon their surrender, Options shall be canceled and
the Shares previously subject to such canceled Options shall again be
available for future grants of Options and other Awards hereunder.

(e) LOANS. The Company or any Parent or Subsidiary may make
loans available to Option holders in connection with the exercise of
outstanding Options, as the Administrator, in its sole discretion, may
determine. Such loans shall (i) be evidenced by promissory notes entered into
by the Option holders in favor of the Company or any Parent or Subsidiary,
(ii) be subject to the terms and conditions set forth in this Section 6(e)
and such other terms and conditions, not inconsistent with the Plan, as the
Administrator shall determine, (iii) bear interest at the applicable Federal
interest rate or such other rate as the Administrator shall

<PAGE>

determine, and (iv) be subject to Board approval (or to approval by the
Administrator to the extent the Board may delegate such authority). In no
event may the principal amount of any such loan exceed the sum of (x) the
aggregate Exercise Price less the par value (if any) of the Shares covered by
the Option, or portion thereof, exercised by the holder, and (y) any Federal,
state, and local income tax attributable to such exercise. The initial term
of the loan, the schedule of payments of principal and interest under the
loan, the extent to which the loan is to be with or without recourse against
the holder with respect to principal and/or interest and the conditions upon
which the loan will become payable in the event of the holder's termination
of service to the Company or to any Parent or Subsidiary shall be determined
by the Administrator. Unless the Administrator determines otherwise, when a
loan is made, Shares having an aggregate Fair Market Value at least equal to
the principal amount of the loan shall be pledged by the holder to the
Company as security for payment of the unpaid balance of the loan, and such
pledge shall be evidenced by a pledge agreement, the terms of which shall be
determined by the Administrator, in its sole discretion; PROVIDED, HOWEVER,
that each loan shall comply with all applicable laws, regulations and rules
of the Board of Governors of the Federal Reserve System and any other
governmental agency having jurisdiction.

(f) NON-TRANSFERABILITY OF OPTIONS. Except under the laws
of descent and distribution, the Participant shall not be permitted to sell,
transfer, pledge or assign any Option, and all Options shall be exercisable,
during the Participant's lifetime, only by the Participant; PROVIDED,
HOWEVER, that the Participant shall be permitted to transfer one or more
Non-Qualified Stock Options to a trust controlled by the Participant during
the Participant's lifetime for estate planning purposes.

(g) TERMINATION OF EMPLOYMENT OR SERVICE. If a
Participant's employment with or service as a director, consultant or advisor
to the Company or to any Parent or Subsidiary terminates by reason of his or
her death, Disability or for any other reason, the Option may thereafter be
exercised to the extent provided in the Award Agreement evidencing such
Option, or as otherwise determined by the Administrator.

(h) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. To the extent
that the aggregate Fair Market Value (determined as of the date the Incentive
Stock Option is granted) of Shares with respect to which Incentive Stock
Options granted to a Participant under this Plan and all other option plans
of the Company or of any Parent or Subsidiary become exercisable for the
first time by the Participant during

<PAGE>

any calendar year exceeds $100,000 (as determined in accordance with Section
422(d) of the Code), the portion of such Incentive Stock Options in excess of
$100,000 shall be treated as Non-Qualified Stock Options.

(i) AUTOMATIC GRANTS OF OPTIONS TO NON-EMPLOYEE DIRECTORS.
The Company shall grant Non-Qualified Stock Options to Non-Employee Directors
pursuant to this Section 6(i), which grants shall be automatic and
nondiscretionary and otherwise subject to the terms and conditions set forth
in this subsection (i) and the terms of the Plan (the "Automatic Non-Employee
Director Options"). Each Non-Employee Director who first becomes a director
of the Company following the Effective Date (as defined in Section 12) shall
be automatically granted a Non-Qualified Stock Option to purchase 75,000
Shares (an "Initial Option"). Each Non-Employee Director shall be
automatically granted a Non-Qualified Stock Option to purchase 22,500 Shares
(the "Annual Options") on the date immediately following the Company's annual
meeting of stockholders; PROVIDED, HOWEVER, that he or she is then a director
of the Company and, PROVIDED, FURTHER, that as of such date, such director
shall have served on the Board for at least the preceding six (6) months.

(j) The term of each Automatic Non-Employee Director Option
shall be ten (10) years, and the Exercise Price purchasable under an
Automatic Non-Employee Director Option shall be no less than 100% of the Fair
Market Value of the Common Stock on the date of grant, PROVIDED, HOWEVER, in
no event shall the Exercise Price purchasable under an Automatic Non-Employee
Director Option be less than the par value (if any) of the Common Stock. The
Initial Options shall vest and become exercisable in four equal annual
installments on each of the first four anniversaries of the date of grant.
The Annual Options shall be 100% vested and fully exercisable as of the date
of grant.

(k) In the event that the number of Shares available for
grant under the Plan is not sufficient to accommodate the Automatic
Non-Employee Director Options, then the remaining Shares available for
Automatic Non-Employee Director Options shall be granted to Non-Employee
Directors on a pro-rata basis. No further grants shall be made until such
time, if any, as additional Shares become available for grant under the Plan
through action of the Board and/or the stockholders of the Company to
increase the number of Shares that may be issued under the Plan or through
cancellation or expiration of Awards previously granted hereunder.

<PAGE>

7. SECTION STOCK APPRECIATION RIGHTS AND LIMITED STOCK APPRECIATION RIGHTS.

Stock Appreciation Rights and Limited Stock Appreciation
Rights may be granted either alone ("Free Standing Rights") or in conjunction
with all or part of any Option granted under the Plan ("Related Rights"). In
the case of a Non-Qualified Stock Option, Related Rights may be granted
either at or after the time of the grant of such Option. In the case of an
Incentive Stock Option, Related Rights may be granted only at the time of the
grant of the Incentive Stock Option. The Administrator shall determine the
Eligible Recipients to whom, and the time or times at which, grants of Stock
Appreciation Rights or Limited Stock Appreciation Rights shall be made; the
number of Shares to be awarded, the Exercise Price (or, in the case of a
Limited Stock Appreciation Right, the "Change in Control" price), and all
other conditions of Stock Appreciation Rights and Limited Stock Appreciation
Rights. The provisions of Stock Appreciation Rights and Limited Stock
Appreciation Rights need not be the same with respect to each Participant.

Stock Appreciation Rights and Limited Stock Appreciation
Rights granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Administrator shall deem
desirable:

(a) AWARDS. The prospective recipient of a Stock
Appreciation Right or Limited Stock Appreciation Right shall not have any
rights with respect to such Award, unless and until such recipient has
executed an Award Agreement evidencing the Award (a "Stock Appreciation Right
Agreement" or "Limited Stock Appreciation Right Agreement," as appropriate)
and delivered a fully executed copy thereof to the Company, within a period
of sixty days (or such other period as the Administrator may specify) after
the award date. Participants who are granted Stock Appreciation Rights or
Limited Stock Appreciation Rights shall have no rights as stockholders of the
Company with respect to the grant or exercise of such rights.

(b) EXERCISABILITY.

(i) Stock Appreciation Rights that are Free Standing
Rights ("Free Standing Stock Appreciation Rights") shall be
exercisable at such time or times and subject to such terms
and conditions

<PAGE>

as shall be determined by the Administrator at or after
grant; PROVIDED, HOWEVER, that no Free Standing Stock
Appreciation Right shall be exercisable during the first
six months of its term, except that this additional
limitation shall not apply in the event of a Participant's
death or Disability prior to the expiration of such
six-month period.

(ii) Stock Appreciation Rights that are Related
Rights ("Related Stock Appreciation Rights") shall be
exercisable only at such time or times and to the extent that
the Options to which they relate shall be exercisable in
accordance with the provisions of Section 6 above and this
Section 7 of the Plan; PROVIDED, HOWEVER, that a Related Stock
Appreciation Right granted in connection with an Incentive
Stock Option shall be exercisable only if and when the Fair
Market Value of the Common Stock subject to the Incentive
Stock Option exceeds the Exercise Price of such Option;
PROVIDED, FURTHER, that no Related Stock Appreciation Right
shall be exercisable during the first six months of its term,
except that this additional limitation shall not apply in the
event of a Participant's death or Disability prior to the
expiration of such six-month period.

(iii) Limited Stock Appreciation Rights shall only be
exercised within the 30-day period following a "Change in
Control" (as defined by the Administrator in the Limited Stock
Appreciation Right Agreement evidencing such right) and, with
respect to Limited Stock Appreciation Rights that are Related
Rights ("Related Limited Stock Appreciation Rights"), only to
the extent that the Options to which they relate shall be
exercisable in accordance with the provisions of Section 6
above and this Section 7 of the Plan.

(i) Upon the exercise of a Free Standing Stock
Appreciation Right, the Participant shall be entitled to
receive up to, but not more than, an amount in cash or that
number of Shares (or any combination of cash and Shares) equal
in value to the excess of the Fair Market Value as of the date
of exercise over the per share Exercise Price specified in the
Free Standing Stock Appreciation Right

<PAGE>

(which Exercise Price shall be no less than 100% of the
Fair Market Value of the Common Stock on the date of grant)
multiplied by the number of Shares in respect of which the
Free Standing Stock Appreciation Right is being exercised,
with the Administrator having the right to determine the
form of payment.

(ii) A Related Right may be exercised by a
Participant by surrendering the applicable portion of the
related Option. Upon such exercise and surrender, the
Participant shall be entitled to receive up to, but not more
than, an amount in cash or that number of Shares (or any
combination of cash and Shares) equal in value to the excess
of the Fair Market Value as of the date of exercise over the
per share Exercise Price specified in the related Option
multiplied by the number of Shares in respect of which the
Related Stock Appreciation Right is being exercised, with the
Administrator having the right to determine the form of
payment. Options which have been so surrendered, in whole or
in part, shall no longer be exercisable to the extent the
Related Rights have been so exercised.

(iii) Upon the exercise of a Limited Stock
Appreciation Right, the Participant shall be entitled to
receive an amount in cash equal in value to the excess of the
"Change in Control Price" (as defined in the Award Agreement
evidencing such Limited Stock Appreciation Right) of a share
of Common Stock Share as of the date of exercise over (A) the
per share Exercise Price specified in the related Option, or
(B) in the case of a Limited Stock Appreciation Right which is
a Free Standing Stock Appreciation Right, the per share
Exercise Price specified in the Free Standing Stock
Appreciation Right, such excess to be multiplied by the number
of Shares in respect of which the Limited Stock Appreciation
Right shall have been exercised.

(d) NON-TRANSFERABILITY.

(i) Free Standing Stock Appreciation Rights shall be
transferable only when and to the extent that an Option would
be transferable under Section 6(f) of the Plan.

<PAGE>

(ii) Related Stock Appreciation Rights shall be
transferable only when and to the extent that the underlying
Option would be transferable under Section 6(f) of the Plan.

(iii) Limited Stock Appreciation Rights shall be
transferable only when and to the extent that an Option would
be transferable under Section 6(f) of the Plan.

(e) TERMINATION OF EMPLOYMENT OR SERVICE

(i) In the event of the termination of employment or
service of a Participant who has been granted one or more Free
Standing Stock Appreciation Rights, such rights shall be
exercisable at such time or times and subject to such terms
and conditions as shall be determined by the Administrator at
or after grant.

(ii) In the event of the termination of employment or
service of a Participant who has been granted one or more
Related Stock Appreciation Rights, such rights shall be
exercisable at such time or times and subject to such terms
and conditions as set forth in the related Options.

(iii) In the event of the termination of employment
or service of a Participant who has been granted one or more
Limited Stock Appreciation Rights, such rights shall be
exercisable at such time or times and subject to such terms
and conditions as shall be determined by the Administrator at
or after grant.

(f) TERM.

(i) The term of each Free Standing Stock
Appreciation Right shall be fixed by the Administrator, but
no Free Standing Stock Appreciation Right shall be
exercisable more than ten years after the date such right
is granted.

(ii) The term of each Related Stock Appreciation
Right shall be the term of the Option to which it relates, but
no Related

<PAGE>

Stock Appreciation Right shall be exercisable more than ten
years after the date such right is granted.

(iii) The term of each Limited Stock Appreciation
Right shall be fixed by the Administrator, but no Limited
Stock Appreciation Right shall be exercisable more than ten
years after the date such right is granted.

8. SECTION RESTRICTED STOCK, DEFERRED STOCK AND PERFORMANCE SHARES.

Awards of Restricted Stock, Deferred Stock or Performance
Shares may be issued either alone or in addition to other Awards granted
under the Plan. The Administrator shall determine the Eligible Recipients to
whom, and the time or times at which, Awards of Restricted Stock, Deferred
Stock or Performance Shares shall be made; the number of Shares to be
awarded; the Exercise Price, if any, to be paid by the Participant for the
acquisition of Restricted Stock, Deferred Stock or Performance Shares; the
Restricted Period (as defined in Section 8(b)) applicable to Awards of
Restricted Stock or Deferred Stock; the performance objectives applicable to
Awards of Deferred Stock or Performance Shares; and all other conditions of
the Awards of Restricted Stock, Deferred Stock and Performance Shares.
Subject to the requirements of Section 162(m) of the Code, as applicable, the
Administrator may also condition the grant of the Award of Restricted Stock,
Deferred Stock or Performance Shares upon the exercise of Options, or upon
such other criteria as the Administrator may determine, in its sole
discretion. The provisions of the Awards of Restricted Stock, Deferred Stock
or Performance Shares need not be the same with respect to each Participant.
In the sole discretion of the Administrator, loans may be made to
Participants in connection with the purchase of Restricted Stock under
substantially the same terms and conditions as provided in Section 6(e) of
the Plan with respect to the exercise of Options.

(a) AWARDS AND CERTIFICATES. The prospective recipient of
Awards of Restricted Stock, Deferred Stock or Performance Shares shall not
have any rights with respect to any such Award, unless and until such
recipient has executed an Award Agreement evidencing the Award (a "Restricted
Stock Award Agreement," "Deferred Stock Award Agreement" or "Performance
Shares Award Agreement," as appropriate) and delivered a fully executed copy
thereof to the Company, within a period of sixty days (or such other period
as the Administrator may specify) after the award date. Except as otherwise
provided below in Section

<PAGE>

8(b), (i) each Participant who is granted an Award of Restricted Stock or
Performance Shares shall be issued a stock certificate in respect of such
shares of Restricted Stock or Performance Shares; and (ii) such certificate
shall be registered in the name of the Participant, and shall bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to any such Award.

(b) The Company may require that the stock certificates
evidencing Restricted Stock or Performance Shares granted hereunder be held
in the custody of the Company until the restrictions thereon shall have
lapsed, and that, as a condition of any Award of Restricted Stock or
Performance Shares, the Participant shall have delivered a stock power,
endorsed in blank, relating to the Shares covered by such Award.

(c) With respect to Awards of Deferred Stock, at the
expiration of the Restricted Period, stock certificates in respect of such
Shares of Deferred Stock shall be delivered to the Participant, or his legal
representative, in a number equal to the number of Shares covered by the
Deferred Stock Award.

(d) RESTRICTIONS AND CONDITIONS. The Awards of Restricted
Stock, Deferred Stock and Performance Shares granted pursuant to this Section
8 shall be subject to the following restrictions and conditions:

(i) Subject to the provisions of the Plan and the
Restricted Stock Award Agreement, Deferred Stock Award
Agreement or Performance Shares Award Agreement, as
appropriate, governing any such Award, during such period as
may be set by the Administrator commencing on the date of
grant (the "Restricted Period"), the Participant shall not be
permitted to sell, transfer, pledge or assign shares of
Restricted Stock, Deferred Stock or Performance Shares awarded
under the Plan; PROVIDED, HOWEVER, that the Administrator may,
in its sole discretion, provide for the lapse of such
restrictions in installments and may accelerate or waive such
restrictions in whole or in part based on such factors and
such circumstances as the Administrator may determine, in its
sole discretion, including, but not limited to, the attainment
of certain performance related goals, the Participant's
termination of employment or service as a director, consultant
or advisor to the Company or any Parent or Subsidiary, the
Participant's death or Disability or the occurrence of a
"change in control" as defined in the Restricted Stock Award
Agreement,

<PAGE>

Deferred Stock Award Agreement or Performance Shares Award
Agreement, as appropriate, evidencing such Award.

(ii) Except as provided in Section 8(c)(i), the
Participant shall generally have the rights of a stockholder
of the Company with respect to Restricted Stock or Performance
Shares during the Restricted Period. The Participant shall
generally not have the rights of a stockholder with respect to
Shares subject to Awards of Deferred Stock during the
Restricted Period; PROVIDED, HOWEVER, that dividends declared
during the Restricted Period with respect to the number of
Shares covered by Awards of Deferred Stock shall be paid to
the Participant. Certificates for unrestricted Shares shall be
delivered to the Participant promptly after, and only after,
the Restricted Period shall expire without forfeiture in
respect of such Awards of Restricted Stock, Deferred Stock or
Performance Shares except as the Administrator, in its sole
discretion, shall otherwise determine.

(iii) The rights of Participants granted Awards of
Restricted Stock, Deferred Stock or Performance Shares upon
termination of employment or service as a director, consultant
or advisor to the Company or to any Parent or Subsidiary
terminates for any reason during the Restricted Period shall
be set forth in the Restricted Stock Award Agreement, Deferred
Stock Award Agreement or Performance Shares Award Agreement,
as appropriate, governing such Awards.

9. SECTION AMENDMENT AND TERMINATION.

The Board may amend, alter or discontinue the Plan, but no
amendment, alteration, or discontinuation shall be made that would impair the
rights of a Participant under any Award theretofore granted without such
Participant's consent, or that, without the approval of the stockholders (as
described below), would:

(a) except as provided in Section 3 of the Plan, increase
the total number of Shares reserved for issuance under the Plan;

<PAGE>

(b) change the class of officers, directors, employees,
consultants and advisors eligible to participate in the Plan; or

(d) Notwithstanding the foregoing, stockholder approval
under this Section 9 shall only be required at such time and under such
circumstances as stockholder approval would be required under Section 162(m)
of the Code or other applicable law, rule or regulation with respect to any
material amendment to an employee benefit plan of the Company.

(e) The Administrator may amend the terms of any Award
theretofore granted, prospectively or retroactively, but, subject to Section
3 of Plan, no such amendment shall impair the rights of any Participant
without his or her consent.

10. SECTION UNFUNDED STATUS OF PLAN.

The Plan is intended to constitute an "unfunded" plan for
incentive compensation. With respect to any payments not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of
the Company.

11. SECTION GENERAL PROVISIONS.

(a) Shares shall not be issued pursuant to the exercise of
any Award granted hereunder unless the exercise of such Award and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act
of 1933, as amended, the Exchange Act and the requirements of any stock
exchange upon which the Common Stock may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

(b) The Administrator may require each person acquiring
Shares to represent to and agree with the Company in writing that such person
is acquiring the Shares without a view to distribution thereof. The
certificates for such Shares may include any legend which the Administrator
deems appropriate to reflect any restrictions on transfer.

<PAGE>

(c) All certificates for Shares delivered under the Plan
shall be subject to such stock-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange
upon which the Common Stock is then listed, and any applicable Federal or
state securities law, and the Administrator may cause a legend or legends to
be placed on any such certificates to make appropriate reference to such
restrictions.

(d) Nothing contained in the Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
stockholder approval, if such approval is required; and such arrangements may
be either generally applicable or applicable only in specific cases. The
adoption of the Plan shall not confer upon any Eligible Recipient any right
to continued employment or service with the Company or any Parent or
Subsidiary, as the case may be, nor shall it interfere in any way with the
right of the Company or any Parent or Subsidiary to terminate the employment
or service of any of its Eligible Recipients at any time.

(e) Each Participant shall, no later than the date as of
which the value of an Award first becomes includible in the gross income of
the Participant for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Administrator regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld
with respect to such Award. The obligations of the Company under the Plan
shall be conditional on the making of such payments or arrangements, and the
Company shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the Participant.

(f) No member of the Board or the Administrator, nor any
officer or employee of the Company acting on behalf of the Board or the
Administrator, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Administrator and each and any officer or
employee of the Company acting on their behalf shall, to the extent permitted
by law, be fully indemnified and protected by the Company in respect of any
such action, determination or interpretation.

<PAGE>

12. SECTION STOCKHOLDER APPROVAL; EFFECTIVE DATE OF PLAN; EFFECTIVE DATE OF
AMENDMENTS.

(a) The grant of any Award hereunder shall be contingent
upon stockholder approval of the Plan being obtained within 12 months before
or after the date the Board adopts the Plan.

(b) Subject to the approval of the Plan by the stockholders
of the Company within twelve (12) months before or after the date the Plan is
adopted by the Board, the Plan shall be effective as of November 22, 1999.

(c) Subject to the approval of the Amendments by the
stockholders of the Company within twelve (12) months before or after the
date the Amendments are adopted by the Board, the Amendments to the Plan
shall be effective as of the first trading day on or after the date on which
the Securities and Exchange Commission declares the Company's Registration
Statement effective (the "Effective Date").

13. SECTION TERM OF PLAN.

No Option, Stock Appreciation Right, Limited Stock
Appreciation Right, or Awards of Restricted Stock, Deferred Stock or
Performance Shares shall be granted pursuant to the Plan on or after November
22, 2009, but Awards theretofore granted may extend beyond that date.

<PAGE>

ANNEX A TO

VYYO INC. AMENDED AND RESTATED 2000 EMPLOYEE AND CONSULTANT
EQUITY INCENTIVE PLAN

ISRAELI SECTION 3(9) EQUITY INCENTIVE PLAN

1. DESIGNATION AND PURPOSE OF THE ISRAELI PLAN

This Annex A to the Vyyo Inc. Amended and Restated 2000 Employee and
Consultant Equity Incentive Plan (the "General Plan"), is the Israeli
Section 3(9) Equity Incentive Plan for key employees (including directors
who are employees) and consultants of Vyyo Ltd. ("Vyyo Ltd."), a
wholly-owned Israeli subsidiary of Vyyo Inc. (the "Company") in
accordance with the terms and conditions set forth below. For the
purposes of this Annex A, the Israeli Section 3(9) Equity Incentive Plan
shall be referred to as such, or as the "Israeli Plan."

The Israeli Plan is being instituted in order to ensure that all
issuances of options by the Company to employees, officers and
consultants of Vyyo Ltd. conform with the provisions of Section 3(9) of
the Israeli Income Tax Ordinance [New Version], 1961, the rules and
regulations promulgated thereunder, from time to time ("Section 3(9)")
and the Israeli Tax Authorities (the "Tax Authority") authorization,
received on June 14, 1998, to impose taxes on the options when exercised
(the "Tax Ruling"), a copy of which is attached as Exhibit 1.

2. GENERAL PLAN INCORPORATED BY REFERENCE

The provisions of the General Plan shall apply to the Israeli Plan,
MUTATIS MUTANDIS, except that the General Plan shall be deemed amended to
incorporate the provisions herein and shall be interpreted in such a way
as to ensure conformity with Section 3(9). Any provisions of the General
Plan which are in violation of Section 3(9) shall not apply to the
Israeli Plan. In the event of any conflicting provisions between the law
applicable to the General Plan and the Israeli Law which is applicable to
this Israeli Plan, the provisions of the Israeli Law shall prevail. In
respect of issuances of Options under the Israeli Plan (as annexed to the
General Plan), the Committee need not determine whether the issuances
hereunder are "Incentive Stock Options" within the meaning of the US
Federal Income Tax Code or "Non-Qualified Stock Options".

In the event of any conflict between the Israeli Plan and the General
Plan, then the provisions of the Israeli Plan shall prevail. Subject to
the provisions of this Israeli Plan, the provisions of the General Plan
shall continue to be in full force and effect.

<PAGE>

All capitalized terms used in this Israeli Plan shall have the meanings
designated in the General Plan, unless otherwise defined in this Israeli
Plan.

3. ELIGIBILITY

Options may be granted only to employees (including directors who are
employees) and consultants of Vyyo Ltd.

4. DEFINITIONS

The following definitions shall be applicable to the terms used in the
Israeli Plan:

4.1. "Trust Agreement" means the agreement between the Company, Vyyo
Ltd. and the Trustee as may be in effect from time to time
specifying the duties and authority of the Trustee.

4.2. "Trust Assets" means the Options or shares held by the Trustee
under the Trust Agreement for the benefit of the Participants
pursuant to the Israeli Plan and the Trust Agreement.

4.3. "Trustee" means the Trustee (and any successor Trustee) appointed
by the Board of Directors of the Company to hold the Trust Assets.

5. GRANT OF OPTIONS

Each Option granted for the benefit of a Participant under the Israeli
Plan shall be evidenced by a Stock Option Agreement, to be entered into
by and between the Company, Vyyo Ltd. and such Participant, in form and
substance as may be from time to time approved by the Committee, which
shall incorporate the provisions of the General Plan, as amended hereby,
and the Trust Agreement by reference. In the event of any conflict
between the terms and conditions of a Stock Option Agreement and the
terms hereof, the terms hereof shall control.

6. GRANT OF OPTIONS TO BE HELD BY TRUSTEE; DIVIDEND AND VOTING RIGHTS

6.1. GRANT OF OPTIONS TO BE HELD BY TRUSTEE

6.1.1. Each Option shall be issued, or transferred, to the Trustee
to be held in trust for the benefit of the Participant. All
certificates representing Options shall be issued in the
name of the Trustee under the Israeli Plan, shall be
deposited with the Trustee, and shall be held by the
Trustee until such time that such Option is released.

6.1.2. Subject to the terms hereof and to the terms in the Stock
Option Agreement, each Participant may, after exercising
the Options or any part thereof, require the Company to
cause the Trustee to release the shares issued

<PAGE>

pursuant to the exercise of such Options, provided that
no Option shall be exercised by the Participant unless
and until such Participant shall have deposited with the
Trustee an amount of money which, in the Trustee's sole
judgment, is sufficient and necessary to satisfy Israeli
withholding tax requirements. In any case, the
Participant will be responsible for payment of
Participant's tax liability in full and shall indemnify
the Company or Trustee in respect of any liability
thereof.

6.2 DIVIDEND AND VOTING. No Participant shall have any of the rights
of a shareholder of the Company with respect to any Options or
Shares which are to derive from the exercise of any Options, until
such time as the Options are duly exercised and the shares are
issued to the trustee or the Participant. If upon the exercise of
any Option, Shares are issued hereunder to the Trustee, the
relevant Participant shall be entitled to receive (i) a proxy from
the Trustee to vote the Shares that the Trustee holds for
Participant's benefit and (ii) any cash dividends paid with
respect to such Shares.

7. MAINTENANCE OF ASSETS BY TRUSTEE

The Trustee shall maintain records of the Options held for the benefit of
each Participant.

8. METHOD OF EXERCISE OF OPTION

Subject to the terms of the General Plan and the terms in the Stock
Option Agreement, an Option shall be exercisable, in whole or in part,
during the Option Period, upon delivery by the Participant to each of the
Trustee and the Company of a duly executed copy of the relevant notice of
exercise in the prescribed form, specifying the number of Shares as to
which such Option is being exercised. The notice to the Company shall be
accompanied by full payment of the option exercise price thereof (the
"Option Exercise Price") in NIS or in such currency as may be required by
the Company. If the exercise price is paid in any currency other than
United States Dollars, the exchange rate shall be that reasonably
specified by the Company at the time of exercise. The shares issued
pursuant to exercise of the Options shall be delivered by the Company to
the Trustee pursuant to the provisions of Paragraph 6.1 above, or
upon the Trustee's confirmation that the Trustee has received an amount
sufficient to pay the full withholding tax liability in accordance with
Paragraph 6 above, the Company shall deliver the shares directly to the
Participant, or the Participant's nominee.

9. ADMINISTRATION, AMENDMENT AND TERMINATION OF THE ISRAELI PLAN

The Board and the Committee shall have all power and authority with
respect to the administration, amendment and termination of the Israeli
Plan as they hold in respect of the

<PAGE>

General Plan, except that no discretion or authority is hereby granted
to the Board or the Committee so as to disqualify the Israeli Plan
under Section 3(9).

10. GOVERNING LAW

This Israeli Plan, and any dispute, controversy or claim arising out of,
or relating to, any tax issue regarding the General Plan which might
arise between (i) the Company, Vyyo Ltd., or the Trustee, and (ii) a
Participant who was granted an Option pursuant to this Israeli Plan,
shall be governed and interpreted in accordance with the laws of the
State of Israel.

<PAGE>
Exhibit 10.19

COLLABORATION AGREEMENT

OEM AGREEMENT (the "Agreement") dated August 6, 1999, between Phasecom
Ltd., an Israeli company having its principal address at 11, Kiryat Hamada
Street, Har Hotzvim, P. O. Box 45017, Jerusalem 91450, Israel, ("Phasecom") and
ADC Telecommunications, Inc., a Minnesota corporation having its principal
address at P. O. Box 1101, Minneapolis, Minnesota 55440-1101, USA ("Buyer" or
"ADC").

WHEREAS, the Parties wish to collaborate with each other with respect to
the development, manufacture, and marketing of certain Products (as defined
herein) on the terms and condition set forth in this Agreement and in its
various Exhibits, which are as follows:

Exhibit A: Products and Pricing
Exhibit B: Specifications
Exhibit C : Product Developments
Exhibit D : Statement of Work
Exhibit E : Marketing
Exhibit F: Change Procedures
Exhibit G: Product Qualification and Regulatory Approvals Process
Exhibit H: Terms and Conditions of Sale
Exhibit I: Training
Exhibit J: Quality and Inspection
Exhibit K: Packaging Standards
Exhibit L: Form of Escrow Agreement
Exhibit M: Support of Products; Problem Escalation
Exhibit N: MAC License and Supply Agreement
Exhibit O: IP Disclosure

WHEREAS, ADC and Phasecom wish to collaborate in connection with the
development, supply, and marketing of the Products (defined below) covered by
this Agreement;

WHEREAS, Phasecom intends to devote sufficient energy and resource to the
development and supply of the Products (defined below) to achieve commercial
success of the collaboration; and

WHEREAS, ADC intends to devote sufficient energy and resource to the
marketing of the Products to achieve commercial success of the collaboration.

NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:

1. COLLABORATION.

a. The parties agree to collaborate with each other with respect to the
development, production and marketing of the products specified in Part I of
Exhibit A and any new products made subject hereto pursuant to Section 2, below
(collectively the "Products") in accordance with the terms of this Agreement. In
addition, the parties intend to enter into future

COLLABORATION AGREEMENT PAGE 1
<PAGE>

negotiations to expand their collaboration to wireless LMDS products, either via
amendment to this Agreement or via a separate agreement.

b. Phasecom hereby grants to Buyer the right to purchase the Products
(as they are and become available) for resale and distribution to Buyer's
customers ("Customers") worldwide (subject to those exceptions, if any, set
forth in Exhibit E) and for internal, evaluation, demonstration, and marketing
uses incident thereto; and to service and maintain the Products for such
Customers subject to the terms and conditions set forth in this Agreement. It is
understood that Buyer's subsidiaries and affiliates will have the same right as
Buyer to purchase the Products under the terms of this Agreement; provided, that
Buyer will guaranty payment for any purchases of Product made by any such
subsidiary or affiliate.

c. The foregoing rights granted to Buyer will be subject to the
exclusivity and non-exclusivity provisions of Exhibit E.

d. Buyer is fully familiar with the existing Products and will assume
responsibility for the marketing of the Products to the Customers as a
value-added reseller and will provide the level of after-sales technical support
normally associated with value-added resellers.

e. Each party shall at all times act as an independent contractor in
fulfilling its obligations in accordance with the terms of this Agreement.
Nothing in this Agreement shall constitute or be deemed to create an agency or
partnership or employment relationship between the parties hereto for any
purpose whatsoever. Neither party shall have any authority or power to bind the
other, to give any representation, warranty or other commitment except as
expressly authorized in writing by the other party.

f. This Collaboration Agreement shall be effective and binding on the
parties on and after the date that the purchase of shares contemplated under the
terms of that certain Series C Preferred Stock Purchase Agreement closes.

2. PRODUCT SPECIFICATIONS, NEW PRODUCTS, QUALIFICATION; APPROVALS

a. The functional requirements and performance specifications for the
Products will be as set out in Exhibit B to this Agreement (the
"Specifications"). Once established and made a part of Exhibit B, such
Specifications will not be changed other than through the engineering change
procedures set out in Exhibit F hereto. The parties may, by mutual agreement,
add new Products to the scope of this Agreement on the basis described in
Exhibit C. For new Products thus added to this Agreement, the Parties will
negotiate in good faith to establish separate Specifications to be included as
part of Exhibit B. For Products which are not yet fully developed, Phasecom will
develop such Products in accordance with the provisions of Exhibits C and D to
comply with all applicable Specifications for such Products. The ownership of
intellectual properties arising out of such developments will be as set out in
Exhibit C.

b. The allocation of responsibilities and the processes to be used for
qualifying each Product covered by this Agreement are set out in the attached
Exhibit G.

c. The allocation of responsibilities and the processes to be used for
obtaining applicable regulatory approvals for each Product covered by this
Agreement are set out in the attached Exhibit G.

COLLABORATION AGREEMENT PAGE 2
<PAGE>

3.BUYER'S PURCHASE AND PAYMENT.

a. Phasecom agrees to sell Buyer the Products in accordance with
purchase orders placed by Buyer and accepted by Phasecom pursuant to this
agreement. All purchase orders submitted by Buyer to Phasecom shall: (i) specify
a delivery date no sooner than thirty (30) days from the date of the purchase
order; (ii) contain definitive list prices, Product numbers, quantities and
discounts to the extent applicable; and (iii) shall be signed and dated by an
authorized representative of Buyer. Purchase orders shall be binding on Phasecom
only when accepted in writing by Phasecom. Phasecom shall accept all Buyer
orders which conform to the above requirements and are consistent with Buyer's
forecasts. Phasecom will use all reasonable commercial endeavors to accept and
fill orders which differ from Buyer's forecasts. Phasecom will confirm each
order by Buyer and notify Buyer of the date of delivery within seven (7) days of
receipt of the order. All purchase orders will be subject to the terms and
conditions of sale set out in Exhibit H to this Agreement, as such may be from
time-to-time amended by written agreement between the parties.

b. For any Product, the Purchase Price will be as set forth in Part II
of Exhibit A. New or customized versions of the Products will be sold at prices
and discounts to be negotiated by Phasecom and Buyer consistent with the pricing
principles underlying the pricing described in Part II of Exhibit A.

c. Buyer's Purchase Price does not include any excise, sales, use,
value added or other taxes, tariffs, duties or fees that may be applicable to
the Products which amounts shall be paid by Buyer.

d. Buyer will be entitled to "most favored customer" (MFC) status
for wireless applications of the Product, meaning that:

(1) if Phasecom makes a Product (or substantially similar
Product) [***] then Phasecom shall notify Buyer [***]; and

(2) if such other Phasecom [***] is an [***], rather than a
[***] will be understood to mean [***].

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

e. The parties contemplate that during the term of this Agreement, ADC
may become a supplier to Phasecom of wireless modems which incorporate the
Phasecom MAC Product (as defined in Exhibit N). In that event, it is the
intention of the Parties that Phasecom

COLLABORATION AGREEMENT PAGE 3
<PAGE>

would be extended comparable MFC status for its purchases of such wireless
modems from ADC.

f. In order to assist Phasecom in planning its production, Buyer
shall provide Phasecom with twelve (12) month rolling forecasts of its
anticipated purchases of Products. The first such forecast shall be provided
within five (5) days after execution of this Agreement. Thereafter,
subsequent forecasts will be provided on a monthly basis. The first two
months of any forecast will be considered to be a binding forecast. The third
and fourth months of the forecast will be subject to change in the subsequent
forecast provided that for each month, the forecast may not be less than [***]
of the preceding value and not more than [***] greater than the preceding
value. The fifth and subsequent months of the forecast will be subject to
change without restriction. Phasecom will not be obligated to accept orders
which exceed the forecast quantities for the most current (i.e. binding)
month, but will use all reasonable endeavors to accommodate such orders.

g. Buyer shall pay for all Products ordered in US dollars (to one or
more US depository accounts designated in writing by Phasecom) by paying the
Purchase Price [***] days after confirmed receipt of conforming goods (per
Exhibit B) by Buyer, or [***] after Phasecom's invoice date, whichever is
later (the "Payment Terms"). Receipt of goods will be confirmed via dock
receipt or equivalent documentation. Payment according to the Payment Terms
is subject to credit approval by Phasecom prior to delivery of Products. If
Phasecom does not approve Buyer's credit, Buyer shall pay the Purchase Price
cash on delivery (COD) for all Products. At Buyer's request and expense,
Phasecom shall re-evaluate Buyer's credit for approval by Phasecom. If upon
such review Phasecom approves Buyer's credit, then Buyer may (as long as
Buyer's credit remains approved by Phasecom) pay Phasecom according to the
Payment Terms for all purchase orders submitted after the date of such
approval . Past due balances shall be subject to a late fee of [***] per
month computed from the due date of each invoice previously issued, or the
maximum legal rate, whichever is lower. If Buyer remains delinquent with
regard to the payment of any invoice due more than [***] days after receipt
of written notice, Phasecom may terminate this Agreement for material breach.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

h. Buyer agrees to pay the cancellation charges specified below in the
event Buyer cancels any purchase order. The cancellation charges are as follows
(days referred to are days between Phasecom's receipt of the written
cancellation and Phasecom's scheduled delivery date):

Cancellation Fee
Days Prior to Scheduled Delivery as a Percentage of List Price
-------------------------------- -----------------------------
<S> <C>
[***] [***]
</TABLE>

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

The parties agree that it would be extremely difficult to determine the exact
damages incurred by Phasecom from Buyer's cancellation of a purchase order. The
parties agree that the foregoing amounts represent the parties' best estimates
of such damages, and that the amounts to be paid as cancellation fees as
specified above are fair and reasonable, and will be the exclusive remedy
available to Phasecom for cancellation.

COLLABORATION AGREEMENT PAGE 4
<PAGE>

i. ADC may not reschedule any orders less than [***] prior to the
scheduled delivery date. At least [***] prior to the scheduled delivery date
for an order, ADC may reschedule the delivery of the order for a period not
to exceed [***]; provided that ADC may reschedule any order only one time.

j. In the case where Phasecom makes a change to any Product which
enhances product safety or corrects a product safety defect in any way, Phasecom
shall notify Buyer and afford Buyer a right to return any of its stock of the
affected Product for an equal and offsetting quantity of the improved Product,
at no charge to Buyer other than the cost of return freight to a US destination.

k. Phasecom will negotiate in good faith with ADC on a case-by-case
basis to make such changes in the terms of this Agreement (e.g. - warranty and
delivery terms) as may reasonably be necessary for ADC to win business with its
Customers and prospects while maintaining reasonable margins for Phasecom and
ADC. When agreed in advance by the parties before a Customer contract is made by
ADC, back-to-back provisions from the Customer contract will supersede
inconsistent portions of these standard terms and conditions. Likewise, when
warranted by the circumstances and agreed in advance in writing by the parties,
the "first deliveries" of a particular product will be subject to the same
acceptance procedures as specified in the corresponding Customer contract,
whereby acceptance of the Product will take place upon acceptance by the
Customer of such Product.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

4. DELIVERY AND SHIPPING.

a. All deliveries will be [***] Phasecom's shipping locations,
provided however, if for any calendar quarter, the shipping and other costs
associated with a shipping location exceed those from [***] by more than [***],
the incremental costs are to be borne by Phasecom. In this Agreement, the
term [***] will be as defined in the [***] published by the [***]. With the
exception of [***], Buyer will have [***].

b. All Products shipped to Buyer shall contain at least one packing
slip for each order, which shall state the quantity, Product numbers, country of
origin, applicable purchase order number, Buyer's name as importer and Buyer's
address.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

5. DUTIES OF BUYER.

a. Buyer shall not acquire any rights in respect of Phasecom's name or
marks, including without limitation "Phasecom"; provided, however, that Buyer
may represent itself as an authorized reseller of the Products during the term
of this Agreement. After the termination of this Agreement, Buyer will not use
names or marks of Phasecom or any words so similar to such names or marks as to
be likely to cause confusion or deception.

b. Except as permitted by Section 12, Buyer agrees not to reverse
engineer, reverse assemble, reverse compile, copy, modify or remanufacture any
Product or any part

COLLABORATION AGREEMENT PAGE 5
<PAGE>

thereof. Buyer agrees that all mask sets, design types, processing information
and other intellectual property of Phasecom shall be and remain the sole
property of Phasecom.

c. Buyer will demonstrate, sell and support Phasecom's Products
purchased or licensed under this Agreement and will provide first tier
maintenance for those Products. Buyer shall employ, train, and maintain
sufficient personnel with technical skill and sales experience to demonstrate,
sell and support such Products and to provide such first tier maintenance.
Except as may be otherwise specified in Exhibit M, "first tier maintenance" will
mean basic customer support and diagnostics relative to claimed Product
problems. For modem units, first tier maintenance will not include any
diagnostics or repairs which require opening the housing. For MTS Products,
first tier maintenance will include board replacements, software/firmware
upgrades and replacements, but will not include any lower-level repairs or
component changes.

d. Buyer shall at all times during the term of this Agreement use all
reasonable commercial efforts in the promotion of the Product consistent with
good business ethics and in a manner that will reflect favorably on Phasecom's
Products and on the good will and reputation of Phasecom. During the term of
this Agreement, Buyer will not supply any wireless data-only modem products
(other than the Products or Products manufactured by ADC under the terms of this
Agreement) to any account which remains "exclusive" to ADC in accordance with
the terms of Exhibit E.

e. Regardless of any disclosure made by Buyer to Phasecom of an
ultimate destination of the Product, Buyer agrees not to export, either directly
or indirectly, any Product without first obtaining a license to export or
re-export from the United States Government, as may be required, and to comply
with the United States Government Export Regulations, as applicable.

f. Buyer shall comply with all applicable legal requirements respecting
the Products and this Agreement and shall refrain from engaging in any illegal
trade practices with respect to the Products.

6. DUTIES OF PHASECOM.

a. In furtherance of the distribution of the Products pursuant to this
Agreement, Phasecom shall, at its expense unless otherwise specified:

i. provide for training relative to the Products on the basis set
out in Exhibit I. Training shall be provided at Buyer's facilities at times to
be mutually agreed upon.

ii. promptly provide Buyer with copies of all internal Phasecom
problem reports respecting issues affecting the safety, performance, or
reliability of the Products covered by this Agreement.

iii. notify Buyer of changes to the Products in accordance with
Exhibit F. In the event Phasecom decides to discontinue any Product, it shall
provide Buyer with [***] and afford Buyer an opportunity to make a last time
buy of the Products.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

COLLABORATION AGREEMENT PAGE 6
<PAGE>

iv. supply technical support and spare parts for the Products
at charges to be set in the reasonable discretion of Phasecom for [***] from
the date of supply, or, if any of the Products are discontinued, for [***]
from the date of discontinuance.

v. make available to Buyer for distribution hereunder such new
Products, upgrades and fixes, if any, as Phasecom may introduce to supplement or
replace the Products. Unless otherwise agreed in writing by the parties, the
discounts and terms for such Products will be those set out in this Agreement.

vi. promptly provide Buyer with all applicable product manuals,
brochures, and other reseller and user documentation, in electronic format, as
such is developed and released by Phasecom to its resellers and customers.

b. Phasecom agrees to deliver Products having Buyer's trademarks and
logos as directed by Buyer. Phasecom shall not use any names or trademarks of
Buyer in any way without the prior written consent of Buyer and shall not
acquire any rights in respect of Buyer's name or trade marks; provided, however
that upon receipt of prior written approval from Buyer, Phasecom may state that
it is manufacturing the Products for Buyer during the term of Agreement. After
the termination of this Agreement, Phasecom will not use names or marks of
Buyer.

c. Phasecom shall comply with all applicable legal requirements
respecting the Products and this Agreement and shall refrain from engaging in
any illegal trade practices with respect to the Products.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

7. MAINTENANCE AND BACK UP SUPPORT.

a. Buyer shall be responsible for providing ongoing after-sales
technical support to its Customers for the Products.

b. In addition to the repair of Products in accordance with the
warranty contained in Section 9, Phasecom will make available to Buyer, upon
request, any technical information or assistance that Buyer may reasonably
require to meet its obligations under Section 5.c., above.

8. QUALITY; INSPECTION TESTING.

a. Phasecom will provide all Products to Buyer in accordance with
Buyer's Quality Control Procedures, attached hereto as Exhibit J.

b. Phasecom will use its best efforts to achieve certification by
the International Standards Organization (ISO) by [***]. All Products
supplied by Phasecom will be designed and manufactured in accordance with all
applicable ISO 9001 standards and processes following Phasecom's ISO
certification.

c. Phasecom shall operate and maintain a quality system of documented
processes and procedures and shall endeavor to achieve zero defects in
connection with the Products.

COLLABORATION AGREEMENT PAGE 7
<PAGE>

d. Following the execution of this Agreement and semi-annually
thereafter, Buyer shall have the right to perform an audit of the quality
processes and procedures of Phasecom and its vendors (to the extent permitted by
such vendors). Buyer shall provide Phasecom with at least fifteen days prior
notice of such audit and shall conduct the audit in a manner that avoids
unnecessary disruption to Phasecom's business activities. Any third party
auditors engaged by ADC to perform the auditing function will be bound by
confidentiality provisions consistent with those set out in Section 13.

e. Phasecom will inspect all Products prior to shipment in accordance
with the Joint Test Plan set out in Exhibit J, or such higher standards as
Phasecom normally applies to its own products.

f. Phasecom will support the initial Product qualification testing
process (described in Exhibit G) at a designated Buyer facility. Reasonable
travel, board, and living expenses for the supporting Phasecom team and any
transportation cost for material/equipment used in the testing shall be at
Buyer's expense.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

9. LIMITED WARRANTY, DISCLAIMER AND LIMITATION OF LIABILITY.

a. Phasecom warrants that the Products are free from defects in
material and workmanship for a period of [***] from delivery date of Product
to Buyer at the FCA point, or [***] from the date of Buyer's invoice to its
Customer, whichever occurs first (provided, however, that for any system sold
by ADC, the warranty on the Products included in the system will not extend
beyond the warranty term for other hardware components of the system.) This
warranty period may be extended by negotiated agreement of the parties, and
Phasecom will in good faith negotiate with ADC with respect to any longer
warranty periods reasonably required by ADC Customers. During the warranty
period, Phasecom will repair or replace any defective Product or component of
Product which is promptly reported or sent to Phasecom. Buyer will pay
transportation and insurance costs to ship the Product to the repair depot.
Phasecom will pay the transportation cost of returning Product to Buyer if
the Product, or a component of Product, was defective. If the Product is
determined to be out of warranty or not defective, Phasecom will promptly
advise Buyer and offer to repair the Product at standard out-of-warranty
rates.

b. The warranty does not cover repair of damage attributable to (i)
alterations to the Product made by a person other than Phasecom; (ii) accidents,
misuse, negligence or failure of Buyer or an end-user to follow instructions for
proper use, care and cleaning of Product; (iii) external factors (e.g., failure
or fluctuation of electrical power, fire, flood, or other act of God); (iv)
failure of Buyer or end-user to comply with the environmental specifications
contained in the Phasecom manual; or (v) wear and tear.

c. The warranty does not cover any indirect damage and/or any damage
caused to people, animals, equipment and property.

COLLABORATION AGREEMENT PAGE 8
<PAGE>

d. Phasecom further warrants that any services provided by Phasecom
under this agreement shall be performed in a fully workmanlike manner and in
accordance with the prevailing professional standards of Phasecom's industry.
Any repaired Product shall have the benefit of the remaining period of the
warranty [***] which shall begin upon Buyer's receipt of such repaired period.

e. Phasecom is not responsible for the accuracy of any content supplied
as part of the Products, or for the validity of any links or cross references
provided to the end-user as part of the Product.

f. Phasecom has taken commercially reasonable measures to verify that
the Products are "Year 2000 Compliant," which means that such measures have been
taken to verify that the Products are designed to:

1. Correctly and unambiguously handle and process date information
before, during and after 1 January 2000.

2. Correctly process functions that are programmed to commence
and/or end at a particular date, including month-end, year-end, leap year and
any combination thereof, irrespective of the change in the century identifier.

3. Function accurately and without interruption before, during,
and after 1 January 2000 without any change in operations and/or parameters
associated with the advent of the new century.

4. Respond to two-digit year input in a way that resolves the
ambiguity as to the century, and to store and provide output of date information
in ways that are unambiguous as to the century.

Provided, however, that PhaseCom does not makes any representations as to the
ability of the product to be Year 2000 compliant when used or interfaced with
non-Phasecom system(s), software, hardware, data or equipment which is not Year
2000 Compliant or which does not properly exchange date-related data.
Furthermore, the above representations shall not apply in the event that
applicable hardware/operating system platform or any module of the Product is
altered, modified or adjusted in any manner by any party without Phasecom's
prior written authorization.

g. THE ABOVE WARRANTIES AND REMEDIES ARE EXCLUSIVE AND ARE EXPRESSLY IN
LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED. PHASECOM SPECIFICALLY
DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE AND MAKES NO REPRESENTATIONS REGARDING SUITABILITY FOR USE OR
PERFORMANCE NOT CONTAINED IN THIS AGREEMENT. THE PARTIES' LIABILITIES ARE
FURTHER LIMITED BY SECTION 19, BELOW.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

COLLABORATION AGREEMENT PAGE 9
<PAGE>

10. PACKAGING

All Products will be packed or packaged for U.S. shipment in accordance with the
packaging standards specified in Exhibit K.

11. SOFTWARE LICENSE.

a. Subject to the terms and conditions contained herein, Phasecom
grants Buyer a nontransferable, nonexclusive license solely to use (i) the
embedded software only in connection with the use of the Products (or with other
wireless modem products, herein called the "MAC Products," which are
manufactured by or for ADC and sold by ADC and which contain the MAC Products
provided by Phasecom); (ii) the non-embedded Phasecom software provided with the
Products or the MAC Products, which shall be in machine readable object code
form, and (iii) all Related Documentation (collectively, the "Software"). This
grant shall be limited to use with Products listed in Part I of Exhibit A, as
such is amended to include new Products in accordance with Section 2.b., and
with the MAC Products. This license shall continue during the useful life of the
Products (or MAC Products, as the case may be), or until the license is
terminated in accordance with the Agreement, whichever is sooner.

b. Buyer shall not sublicense the software or otherwise transfer any of
its rights in the software, except as provided in the Agreement. Buyer may grant
sublicenses to its Customers and end-users of the Products and of the MAC
Products; solely for their use of the software in connection with the use of the
Products or the MAC Products, as the case may be. Such sublicenses will survive
termination of this Agreement.

c. Buyer may not modify or copy the software without the prior written
consent of Phasecom. Buyer agrees to refrain from taking any steps, including
without limitation reverse engineering, reverse assembly or reverse compilation,
to obtain or develop a source code equivalent of the software.

d. Unless otherwise agreed in writing, all Software supplied in
whatever form is supplied under license and not by way of sale, and will be the
Software release current at the time of offer.

e. Buyer hereby acknowledges that copyright and all other intellectual
property rights and patent ownership in the software and all connected,
modified, improved or enhanced versions or derivatives thereof and the relevant
documentation is owned by and will remain vested in Phasecom. Title and all
intellectual property rights in or relating to the Product and the Products
documentation are and shall remain owned by Phasecom. Buyer shall include
Phasecom's copyright and/or trade secret notices on all copies and authorized
adaptations in any form of the software contained in the Products.

f. Except as otherwise provided in Section 17(b), if Buyer fails to
comply with its license obligations hereunder and does not cure such default
within ten (10) days after receipt of notice from Phasecom, then Phasecom may
terminate such license grant and require the immediate return to Phasecom of all
Products containing the software. Upon request by

COLLABORATION AGREEMENT PAGE 10
<PAGE>

Phasecom, Buyer shall certify, in writing, that it has returned all copies of
the software and Product.

g. During the term of this Agreement, Phasecom will promptly notify
Buyer of the planned availability of any upgrades and/or enhancements to the
Products and to new products which are based on the Products and will make all
such upgrades, enhancements, and new products available to Buyer under the terms
of this Agreement.

12. LICENSING AND ESCROW; OTHER ADC RECOURSE.

a. ESCROW. Within thirty (30) days after the execution of this
Agreement, the parties shall negotiate and execute an Escrow Agreement in
substantially the form set out in Exhibit L among themselves and an independent
third party escrow agent. The Escrow Agreement will require Phasecom to place on
deposit with the escrow agent complete engineering design and manufacturing
documentation and any vendor authorizations (such materials collectively called
the "Documentation") reasonably required for Buyer to acquire tooling and
components and to manufacture the Products and the MAC Product with minimal
delay.

b. CONTINGENT LICENSE. In the event Phasecom ceases to generate any net
revenue from the sale of any wireless product for any three consecutive calendar
months, then Buyer may immediately upon notice invoke a perpetual, royalty-free,
fully-paid license under all Phasecom intellectual properties (other than
trademarks) to develop, have developed, manufacture, have manufactured, use and
sell Products (and derivatives thereof) and, if ADC's access to the MAC Product
is affected by the event giving rise to the license, the right to source the
chip for the MAC Product from Phasecom's chip vendor.

c. RELEASE OF ESCROW. At the time Buyer invokes a license under this
Section 12, Buyer may instruct the escrow agent to release all of the
Documentation to Buyer on the basis described in the Escrow Agreement.

d. DELIVERY, QUALITY, OTHER PROBLEMS. In the event that:

(1) in any calendar quarter, deliveries representing more than
[***]of Products to be delivered by Phasecom during that quarter are at least
[*] weeks late and Phasecom cannot reasonably demonstrate that the lateness is
not caused by Phasecom's gross negligence or willful misconduct, or

(2) for [***] consecutive calendar quarters, ADC experiences any
of the following chronic quality problems:

(a) the return rate [i.e. the number of Products returned in
a quarter divided by the number of Products shipped in that quarter] for each
quarter exceeds [***],

(b) the "dead on arrival" rate [i.e. for any quarter, the
number of Products which fail to operate at all when first powered during that
quarter] for each quarter exceeds [***], or

COLLABORATION AGREEMENT PAGE 11
<PAGE>

provided that within [***] business days after the end of the first such
quarter, ADC has provided Phasecom with notice of such quality problem; or

(3) any other material breach of this Agreement remains uncured
more than [***] after notice hereunder by ADC;

then, in addition to any other remedies ADC may have, ADC may demand the
opportunity to work with Phasecom to correct the subject problem and Phasecom
will be obligated to pay all reasonable and documented expenses ADC incurs in
connection with such corrective actions. Phasecom will cooperate fully and in
good faith with ADC to develop and implement a practical corrective action plan.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

13. CONFIDENTIALITY AND PUBLICITY.

a. "Confidential Information" means any information, technical data, or
know-how, including, but not limited to, that which relates to research,
Products, software, services, development, invention, processes, designs,
drawing, engineering, marketing or finances of either party, or information
obtained in the course of the audit described in Section 8.d.; provided that
such information is transmitted in written or other tangible form and
conspicuously marked as being "Confidential" or "Proprietary." Confidential
Information does not include information, technical data or know-how which (i)
is in the possession of receiving party at the time of disclosure as shown by
written documentation; or (ii) prior to or after the time of disclosure becomes
part of the public knowledge or literature, not as a result of any inaction or
action of the receiving party; or (iii) is disclosed to the receiving party by a
third party who lawfully acquired and has no obligation not to disclose such
information, or (iv) can be shown in written documentation to have been
independently developed by the receiving party without reference to information
provided by the disclosing party.

b. Each party agrees not to use Confidential Information disclosed to
it by the other for purposes other than related to performance of this
agreement. Except as permitted in Subsection 13.c., neither party will disclose
Confidential Information of the other to a third party unless such disclosure is
specifically consented to in writing by the other party. Each party hereby
consents to the disclosure of Confidential Information to affiliates (i.e.
parent corporations, sister corporations, and subsidiaries) which are bound to
comparable obligations of confidentiality.

c. Each party will restrict access of the other's Confidential
Information to those of its employees or independent contractors who require
such access and have agreed in writing to hold the same in confidence and abide
by the terms hereof. Each party agrees that it will take all responsible steps
to protect the security of and avoid the unauthorized disclosure and use of
Confidential Information of the other to prevent it from falling into public
domain or the possession of unauthorized persons. Each party agrees to notify
the other in writing of any misuse or misappropriation of Confidential
Information of the other that may come to its attention.

COLLABORATION AGREEMENT PAGE 12
<PAGE>

d. These non-disclosure and non use obligations shall survive
termination of this agreement for a period of three (3) years. Any Confidential
Information disclosed under any confidentiality agreement previously signed by
the parties shall be deemed Confidential Information under this Section 13.

e. The parties acknowledge that the unauthorized use, disclosure or
transfer of Confidential Information will (i) substantially diminish the value
to the other party of the Confidential Information; (ii) render the injured
party's remedy at law for such unauthorized use, disclosure or transfer
inadequate; and (iii) cause irreparable injury in a short period of time.

f. If either party breaches any of its obligations with respect to the
use or confidentiality of the Confidential Information, then the other party
shall be entitled to equitable relief to protect its interests therein,
including, but not limited to, preliminary and permanent injunctive relief.

g. The parties will treat the terms of this Agreement as Confidential
Information and will not issue any press release or other public disclosure
relative to the content of this Agreement without the prior written consent of
the other party.

h. For the avoidance of doubt, the parties acknowledge that there are
no implied licenses granted hereunder other than the limited right to use
confidential information in connection with this agreement. Specifically,
neither party will have any implied license under the patents or patent
applications of the other party except for the purposes of providing products
under this agreement.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

14. INTELLECTUAL PROPERTY; INDEMNIFICATION.

a. Phasecom represents and warrants that it is the sole owner of all
intellectual property incorporated into the Products, free and clear of all
liens or adverse claims by third parties. Except as disclosed to ADC in the
attached Exhibit O, Phasecom is unaware of any claim by any third party upon the
basis of which Phasecom has any reason to believe that ADC's use of any of the
Products will infringe or misappropriate any patent, trade secret or other
intellectual property rights of a third party except as are later proved to be
technically necessary to implement DOCSIS or other recognized industry standards
and Phasecom is unaware that ADC's use of any of the Products will infringe or
misappropriate any patent, trade secret or other intellectual property right of
a third party, except as are later proved to be technically necessary to
implement DOCSIS or other recognized industry standards. Phasecom will keep ADC
informed relative to material developments relative the matters disclosed in
Exhibit O.

b. Subject to subsection (c) below, Phasecom agrees to defend Buyer
against any proceeding or action to the extent the proceeding or action alleges
that any Product sold to Buyer hereunder directly infringes any patent,
copyright, mask work right, or other intellectual property right, and Phasecom
will indemnify Buyer against all liabilities, damages, costs and expenses,
including negotiated royalties payable and reasonable attorneys fees in
connection therewith, provided that (i) Buyer provides Phasecom written notice
of the proceeding or action

COLLABORATION AGREEMENT PAGE 13
<PAGE>

within ten (10) business days of receipt by Buyer of such proceeding or action,
(ii) Buyer allows Phasecom to control the defense and the settlement of the
proceeding or action, and (iii) Buyer provides to Phasecom reasonable assistance
in connection therewith, at no charge to Phasecom. In the event Phasecom
resolves any infringement claims or suits with any party made the subject of the
attached Exhibit O and such resolution involves the payment of license fees or
royalties, ADC will in good faith negotiate with Phasecom to share a portion of
the costs of such fees or royalties related to Products sold by ADC hereunder.

c. In the event there is a claim, or Phasecom believes a claim is
likely, alleging intellectual property infringement with respect to any Product
sold to Buyer hereunder, Phasecom shall be entitled, without obligation to do
so, at its option and expense and in full satisfaction of its obligations
hereunder, to (i) modify the Product so it is no longer infringing, (ii) obtain
a license with respect to the applicable intellectual property rights, or (iii)
accept the return of each such Product purchased by Buyer hereunder and in
Buyer's possession and control, and provide to Buyer a refund of the price paid
by Buyer to Phasecom therefor, subject to deductions for damage.

d. Notwithstanding the foregoing, Phasecom will have no liability or
obligation, and buyer shall defend and indemnify Phasecom to the same extent as
Phasecom's defense and indemnity of Buyer in subsection 14(b) above (and not
including the limitations in subsection 14(c)), with respect to any proceeding
or action arising out of (i) modification of the Product other than by Phasecom,
(ii) combination of the Product with any other item (including without
limitation any claim for contributory infringement or inducing infringement), or
(iii) compliance with Buyer's specifications or design.

e. THE FOREGOING SUBSECTIONS 14(A) THROUGH 14(D) STATE PHASECOM'S SOLE
LIABILITY AND OBLIGATION, AND BUYER'S EXCLUSIVE REMEDY, ARISING OUT OF ANY
ACTUAL OR ALLEGED THIRD PARTY INTELLECTUAL PROPERTY INFRINGEMENT OF ANY KIND
THROUGHOUT THE WORLD. In no case will the liability of either party to the other
under this Section exceed the cumulative value of Products sold hereunder prior
to the date of the resolution of the claim.

15. PRODUCT LIABILITY.

a. Phasecom agrees to defend Buyer against any proceeding or action for
products liability based on a claim that any Product provided by Phasecom
hereunder is defective in respect of its design, manufacture, or warnings or
instructions provided by Phasecom, and Phasecom will indemnify Buyer against all
liabilities, damages, costs and expenses, including reasonable attorneys fees in
connection therewith, provided that (i) Buyer provides Phasecom written notice
of the proceeding or action within ten (10) business days of receipt by Buyer of
such proceeding or action, (ii) Buyer allows Phasecom to control the defense and
the settlement of the proceeding or action, and (iii) Buyer provides to Phasecom
reasonable assistance in connection therewith, at no charge to Phasecom.

b. Notwithstanding the foregoing, Phasecom will have no liability or
obligation, and Buyer shall defend and indemnify Phasecom to the same extent as
Phasecom's defense and indemnity of Buyer in subsection 15(a) above (and not
including the limitations in subsection 15(b)), with respect to claims arising
out of (i) modification of the Product other than

COLLABORATION AGREEMENT PAGE 14
<PAGE>

by Phasecom, (ii) representations or warnings supplied by Buyer, to the extent
such differ from those provided by Phasecom, or (iii) compliance with Buyer's
specifications or design.

c. THE FOREGOING SUBSECTIONS 15(A) AND 15(B) STATE PHASECOM'S SOLE
LIABILITY AND OBLIGATION, AND BUYER'S EXCLUSIVE REMEDY, ARISING OUT OF ANY
ACTUAL OR ALLEGED PRODUCT LIABILITY OF ANY KIND THROUGHOUT THE WORLD.

16. TERM OF AGREEMENT.

a. This agreement shall be effective from the date hereof, and continue
for five (5) years thereafter, unless earlier terminated pursuant to subsection
b. hereof (the "Term"). Thereafter, this Agreement may be extended by mutual
consent in writing.

b. This Agreement may be terminated by notice in writing:

i. by either party, in the event of the insolvency, bankruptcy or
liquidation of, or the appointment of a receiver or trustee of the assets or
business of, or the filing for relief under any status providing for such events
by, the other party; or

ii. by Buyer if Phasecom ceases active operation of its business
or discontinues the sale, licensing or maintenance of the Documentation and
related software in material breach of the OEM Agreement or applicable
maintenance agreement; or

iii. by either party, in the event of any material breach of the
terms of this Agreement by the other party, which breach is not remedied within
[***] of written notice from the terminating party, or

iv. by either party, if a new law, new ordinance or new regulation
prevents substantial performance by such party of its obligations hereunder.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

17. RIGHTS AND OBLIGATIONS ON TERMINATION OF AGREEMENT.

a. Upon termination of this Agreement for any reason, each party will
return immediately to the other all Confidential Information of the other that
it has received pursuant to this Agreement and that is not necessary for
performance of obligations continuing after termination.

b. The software license granted by Phasecom to Buyer in Section 11
shall cease except to the extent necessary to enable Buyer to fulfill its
contractual obligations existing at the date of termination and to support
sub-licenses granted by Buyer to its Customers pursuant to this Agreement. All
end user Customer sub-licenses shall continue notwithstanding termination of
this Agreement.

c. Phasecom shall continue to supply to Buyer, and Buyer is obligated
to receive and pay, according to the terms of this agreement, the Products
required to fulfill contractual obligations entered into by Buyer prior to the
termination of the Agreement. In addition, in the event that Buyer fails to pay
any amount due under this Agreement, then Phasecom shall not be

COLLABORATION AGREEMENT PAGE 15
<PAGE>

obligated to deliver any more Product to Buyer. After termination, Phasecom
shall continue to provide Product support in accordance with section 6(a),
section 9 and section 11 at Phasecom's standard prices (unless such Product is
under warranty as provided in Section 9, in which event such support shall be
free of charges).

d. The obligations of the parties pursuant to section 5.a, e, and f;
6.a.(iv), b, and c.; 7, 9, 11.a, b, e and f; 13, 14, 15, 17, 18, 19 and 22, and
all rights to payment previously accrued hereunder, shall survive termination of
this Agreement. All provisions of the Exhibits which are referenced in any of
such sections and which are continuing in nature will also survive termination.

18. GOVERNING LAW, DISPUTES AND ARBITRATION.

a. This Agreement shall be governed by and interpreted in accordance
with the law of the state of [***].

b. The parties shall to the greatest extent possible endeavor to
resolve any technical issues, channel conflicts, and disputes through
executive-level negotiations in accordance with the Problem Escalation
procedures set out in Exhibit M.

c. The parties desire to reduce the cost of any dispute by agreeing
that any dispute between the parties arising out of this Agreement shall be
submitted to final and binding arbitration upon written notification and
demand by one of the parties. If arbitration is invoked by Buyer, the
arbitration shall take place in the [***]. If arbitration is invoked by
Phasecom, the arbitration shall take place in the [***]. Such arbitration
shall be conducted under the rules of the American Arbitration Association.
In making the award, the arbitrator shall award recovery of costs and
expenses of the arbitration and reasonable attorneys' fees to the prevailing
party. Any award may be entered as a judgment in any court of competent
jurisdiction. Notwithstanding the reference to binding arbitration, in the
event a party is exposed to the prospect of irreparable harm as a result of a
material breach by the other party, it may seek appropriate injunctive relief
through the courts. Should judicial proceedings be commenced to enforce or
carry out this provision, or any arbitration award, the prevailing party in
such proceedings shall be entitled to reasonable attorneys' fees and costs in
addition to other relief.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

19. LIMITATION ON DAMAGES.

a. EXCEPT AS OTHERWISE SPECIFIED HEREIN OR IN SECTIONS 14 OR 15,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, DIRECT, INDIRECT OR
CONSEQUENTIAL DAMAGES EXPENSES OR LOSSES OF ANY KIND, INCLUDING BUT NOT LIMITED
TO LOSS OF PROFITS, USE, CONTRACTS, REVENUE OR GOODWILL, OR ANY THIRD PARTY
CLAIM AGAINST THE OTHER NOT SPECIFICALLY INDEMNIFIED AGAINST HEREUNDER, EVEN IF
THE PARTY KNEW OR HAD BEEN ADVISED OF THE POSSIBILITY OF THE OTHER PARTY
INCURRING THE SAME.

b. EXCEPT AS SPECIFIED IN SECTIONS 14 AND 15, NEITHER PARTY SHALL BE
LIABLE TO THE OTHER FOR AN AMOUNT IN EXCESS OF THE AMOUNT PAID BY

COLLABORATION AGREEMENT PAGE 16
<PAGE>

BUYER TO PHASECOM HEREUNDER FOR THE PRODUCT GIVING RISE TO THE LIABILITY.

c. THE PARTIES ACKNOWLEDGE THAT THE PROVISIONS ON LIMITATIONS OF
LIABILITY AND WARRANTIES IN THIS AGREEMENT ALLOCATE THE RISKS BETWEEN THE
PARTIES AND THIS ALLOCATION IS REFLECTED IN THE PRICING OF THE PRODUCTS AND IS
AN ESSENTIAL ELEMENT OF THE BARGAIN BETWEEN THE PARTIES.

d. THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF
ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.

20. FORCE MAJEURE.

a. If the performance by either party to this agreement or of any
obligation arising out of, or in connection with, this Agreement (except for the
payment of money), is prevented, restricted or interfered with by any event of
the force majeure, including, but not limited to, fire, flood, war, civil
disturbance, labor disputes, shipping delays, material shortage, any law, order,
proclamation, regulation, ordinance, demand or requirement having the legal
effect of any government or any judicial authority, or any other event
whatsoever, whether similar or dissimilar to those referred to herein, that is
beyond the responsible control of any party affected, then the party so affected
shall, upon giving prior written notice to the other party, be excused from any
non-performance under this Agreement to the extent of such prevention,
restriction or interference, provided that the parties so affected shall use
best effort to avoid or remove such cause of non-performance under this
Agreement, and shall continue to perform hereunder whenever such cause or causes
are removed or avoided.

b. In the event an event of force majeure continues for a cumulative
period of three (3) months, the other party may terminate this Agreement.

21. ASSIGNMENT. Buyer agrees that Phasecom may assign its rights and duties
hereunder to any related corporation, provided such corporation has the
capability to fully and faithfully discharge all obligations of Phasecom
hereunder. Phasecom shall provide Buyer with prompt notice of any such
assignment, and Phasecom will remain responsible for the performance of the
assignee hereunder.

22. MISCELLANEOUS.

a. Headings are inserted for convenience of reference only and shall
not be used to interpret this Agreement.

b. Where there exists any conflict between this Agreement and the
standard terms and condition of sales shown on either party's purchase order,
invoice form or other standard form, this agreement shall govern.

c. No waiver by any party of any breach by the other hereunder shall be
inferred from any omission or failure to take action; and no express waiver by a
party shall affect any of such party's rights other than with respect to the
breach specified in such wavier shall be

COLLABORATION AGREEMENT PAGE 17
<PAGE>

operative only for the time and to the extent therein stated. Waiver by a party
of any particular breach shall not be construed as a waiver of any subsequent
breach.

d. This Agreement is made and entered solely for the benefit and
protection of the parties hereto and their successors, and no other person or
entity shall have any right or right of action hereunder.

e. The terms of this Agreement shall be binding upon and inure to the
benefit of the successors and permitted assign of the parties hereto. Subject to
Section 21 herein, neither party may, without the prior written consent of the
other party (except to a controlling parent, controlled subsidiary or controlled
affiliate or by way of merger, consolidation, or sale or transfer of all or
substantially all of the assets or outstanding shares of the party), assign any
right or duty under this agreement. Consent to sale, assignment or transfer
shall not be unreasonably withheld. Any assignment without such consent shall be
void.

f. All notices required or contemplated under this Agreement shall be
deemed given ten (10) days after deposition registered or otherwise certified
first class air mail, postage prepaid, addressed to the parties as follows, or
upon telephone confirmation of receipt of a facsimile transmission sent to the
fax number set forth below:

To Phasecom:

Phasecom, Ltd.
11, Kiryat Hamada Street
Har Hotzvim,
P. O. Box 45017
Jerusalem 91450
Israel
Attn: President

Copy to: President and to General Counsel
Phasecom, Inc.
20400 Stephens Creek Blvd.
Cupertino, CA 95014

Copy to: Stephen Pezzola,
1999 Harrison Street
Suite 1300
Oakland, CA 94612

To Buyer:

ADC Telecommunications, Inc.
P. O. Box 1101
Minneapolis, MN 55440-1101
Attn: President, Broadband Wireless Group
Copy to: General Counsel

COLLABORATION AGREEMENT PAGE 18
<PAGE>

A party may change the address at which it will receive notice upon the given,
as provided above, of reasonable notice to the other parties.

g. If any provision of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate or
render unenforceable the entire agreement, but rather the entire agreement shall
be construed as if not containing the particular invalid or unenforceable
provision or provisions, and the rights and obligations of the parties shall be
construed and enforced accordingly.

h. This agreement, including all exhibits hereto which are incorporated
herein by reference and made a part hereof, represent the complete and entire
agreement of the parties hereto, superseding all prior negotiation,
representation and agreements. This agreement may not be amended except by a
writing executed by the parties hereto.

[***]

PAGE 19
<PAGE>

EXHIBIT A

PRODUCTS AND PRICES

I. PRODUCTS

A. In this Agreement, "Products" will be understood to mean Phasecom's
present and future head-end modem termination system ("MTS") products
and user-end modem units ("MU") products, including the following:

1. [***] of Phasecom's MTS and MU products (existing)

a) Proprietary modem termination system (MTS) and related
components and sub-assemblies

b) Proprietary modem unit (MU)

c) Proprietary configuration and network management software
(NMS) for the MTS and MU.

2. [***] of Phasecom's MTS and MU products (to be developed)

a) Proprietary modem termination system (MTS) and related
components and sub-assemblies

b) Proprietary modem unit (MU)

c) Proprietary configuration and network management software
(NMS) for the MTS and MU.

3. [***] of Phasecom's MTS and MU products (to be
developed)

a) Proprietary modem termination system (MTS) and related
components and sub-assemblies

b) Proprietary modem unit (MU)

c) Proprietary configuration and network management software
(NMS) for the MTS and MU.

4. Such new Products as may be added to this Agreement by mutual
agreement of the Parties on the basis specified in Exhibit C.

B. All of the Products are intended to enable end-to-end telephony, data
and video communications between a head end modem termination system
and an customer-premise modem unit.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

II. PRICES

A. Unless otherwise agreed in writing, all Products supplied to Buyer
will be at the prices set out in this Exhibit. For any Head-End
Product (as defined in the following subsection) for [***], the
price will be [***] (1) the price in effect as of

COLLABORATION AGREEMENT PAGE 20
<PAGE>

the effective date of this Agreement or (2) the price determined in
accordance with the following subsection B.

B. PRICING

Prices for Products covered by this Agreement will be based on market
prices (the "Market Prices") to be established by good faith
negotiations between the Parties in accordance with Section C.2. of
this Exhibit. For exclusive accounts (listed in Section I.A.1 of
Exhibit E), the Market Price will be established by ADC in
consultation with Phasecom. The initial Market Prices for
currently-available Products for non-exclusive accounts are as
follows:

Product Market Price
----------------------------------------------- ----------------------
<S> <C>

P2001 - 1.5W Network Ctlr Package w/SNMP [***]

P2001 - 1.5W Network Ctlr Package no SNMP [***]

P2001 - RCVR Single Channel Upstream Card [***]

P2001 - RCVR Dual Channel Upstream Card [***]

P2001 - QoS Quality of Service Module [***]

P200 - EX Speed-Demon Wireless Modem [***]

P200 - SH SOHO Speed-Demon Wireless Modem [***]
</TABLE>

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

The price for a Product to be sold hereunder will be the [***]. The
[***] will depend whether the Product is intended for use on customer
premises (a "CPE Product") or at the head-end of a system (a "Head-End
Product"). The [***] will also depend whether ADC's customer will be
an exclusive account (as listed in Section I.A.1 of Exhibit E) or a
non-exclusive account. The [***] will be determined as follows:

[***]
----------------------------------------------------------------------
----------------------------------------------------------------------
Type of Equipment
--------------------------------------------
Type of Account CPE Product Head-End Product
------------------------ -------------------- ----------------------
<S> <C> <C>
Exclusive [***] [***]

Non-Exclusive [***] [***]
</TABLE>

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

COLLABORATION AGREEMENT PAGE 21
<PAGE>

C. GENERAL

1. All prices will be [***] Phasecom's [***] (per Section 4.a. of
the Agreement), unless mutually agreed upon otherwise in
an applicable negotiated Annex. Although Phasecom may publish
suggested wholesale or retail prices, these are suggestions only
and Buyer will be entirely free to determine the actual prices
and license fees at which the Products will be sold or licensed
to its Customers.

2. Market Prices will be valid until superseded by new Market
Prices. Marked Prices will be subject to [***] on a quarterly
basis, in February, May, August and November, beginning in
November 1999. Key considerations for the establishment of
Market Prices will be (1) those prices charged by Phasecom and
ADC to their respective customers for comparable products, and
(2) competitive pricing in the market. It is acknowledged by
Phasecom that, in general, ADC will endeavor to sell above the
Market Price. [***] Market Prices will be reduced to written
Annexes, which, when signed and dated by both parties, will
serve as an amendment to this Agreement, and will supersede any
earlier Market Price determinations.

3. All prices are subject to the provisions of Section 3.d. of the
Agreement.

4. The parties agree that obtaining accurate information regarding
sales prices charged by the other party will be vital to the
calculation under subsection 2, above. The parties therefore
agree that sales by each party may be audited by the other party
in accordance with reasonable procedures to be agreed upon by the
parties at the time of audit.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

COLLABORATION AGREEMENT PAGE 22
<PAGE>

EXHIBIT B

PRODUCT SPECIFICATIONS

I. GENERAL PRODUCT SPECIFICATION

The Specifications for the initial Products to be covered by this Agreement
are as follows:

Version 1.X Products -- see attached Exhibit B.1

Version 2.X Products -- the parties will negotiate in good faith to
agree on these specifications and to attach them as Exhibit B.2
within 30 days after the date of this Agreement.

Version 3.0 & 3.X Products -- the parties will negotiate in good
faith to agree on these specifications and to attach them as
Exhibit B.3 within 30 days after the date of this Agreement B.3

II. DOCUMENTATION

A. User documentation: Phasecom will supply soft copy (in Microsoft Word
format) of user documentation describing installation, use,
user-configurable options, function and interface.

B. Operation documentation: Phasecom will supply soft copy (in Microsoft
Word format) of operation documentation that describes the theory of
operations, installation and turn-up, problem diagnosis and
resolution, system and functional description, and maintenance.

C. ADC will be responsible for any changes it makes to documentation
supplied by Phasecom. ADC will at its discretion provide Phasecom with
copies of such documentation which ADC has changed to meet customer
requirements.

III. COMMERCIAL OR AGENCY REQUIREMENTS

A. At the request of ADC, Phasecom will assist Buyer with obtaining
certification and homologation of products in countries where Buyer
has rights to sell the Products, as described in Exhibit E.

B. At the request of ADC, Phasecom will assist Buyer with obtaining
Product power supplies that meet homologation requirements of
specified countries.

C. When appropriate, the parties will negotiate on a case-by-case basis
for fees to be paid by ADC to Phasecom for assistance provided under
this section.

IV. MARKING AND LABELLING

A. HARDWARE LABELING.

ADC will provide Phasecom with either (1) artwork and specifications
for labels to be furnished by Phasecom or (2) actual labels to be
applied to the Product bearing ADC's name and logo. Phasecom will
apply the resulting labels in accordance with ADC's written
instructions.

B. SOFTWARE LABELING. Through any of the configuration ports, the
software in the Product will transmit to the configuration device a
start-up screen which shows the

COLLABORATION AGREEMENT PAGE 23
<PAGE>

C. ADC logo and company information (to be provided or approved by ADC)
and makes no references to Phasecom other than a copyright notice.

V. APPEARANCE

A. Buyer will specify Product appearance and supply artwork and color
specifications to Phasecom. Additional costs to implement appearance
changes will be borne by Buyer.

COLLABORATION AGREEMENT PAGE 24
<PAGE>

EXHIBIT C

PRODUCT DEVELOPMENTS

Phasecom hereby agrees to develop or complete the development of the Products
listed in Exhibit A (other than those for which development is already complete)
to comply with the applicable Specifications (set out in Exhibit B), in
accordance with the applicable Statements of Work (attached as Exhibit D), and
in accordance with the terms and conditions set out in this Exhibit.

For any new Product which is to be developed and subsequently added to this
Agreement, the Parties will negotiate in good faith for appropriate
Specifications, test plans, development Schedule, and other requirements
relative to such new Product, and will amend this Agreement accordingly to
include documents reflecting such requirements.

1. DEVELOPMENT. Unless otherwise agreed in writing, Phasecom will perform all
of the development of the Products and will bear its own costs associated
with such development.

2. DELIVERABLES; MILESTONES; SCHEDULE. For each Product to be developed,
Phasecom will be responsible for delivering all Deliverables (f.o.b.
Phasecom's facilities in either the US or Israel) and for achieving all
Milestones in full compliance with the Schedule set out in the applicable
Statement of Work.

3. DEVELOPMENT LIAISONS. In the Statement of Work for each Product to be
developed hereunder, each party hereunder will designate a person to be its
Development Liaison for that Product. A Party may designate a new
Development Liaison by notice to the other Party.

4. MANUALS. Unless otherwise agreed in a Statement of Work, Phasecom will be
responsible for the development of all user, installation and maintenance
manuals (in English) for the subject Products. Master copies of such
manuals will be Deliverables and will be provided in both hard copy and
electronic form. ADC will have a license under Phasecom's copyrights to
translate, reproduce, and make derivative works of any such manuals
provided by Phasecom, provided that ADC makes appropriate copyright
notices, giving proper copyright attribution, and will be fully responsible
for any changes to content made by ADC. ADC grants Phasecom a license under
any ADC copyrights in the resulting derivative works to translate,
reproduce and make further derivative works thereof; provided that Phasecom
makes appropriate copyright notices, giving proper attribution, and will be
fully responsible for any changes to content made by Phasecom.

5. DESIGN REVIEW PROCESS. From time to time, as identified in the applicable
Schedule, the parties will have design review meetings. ADC will be
actively involved in the critical design review for each Product to be
developed hereunder.

COLLABORATION AGREEMENT PAGE 25
<PAGE>

6. DESIGN TEST PLAN AND DESIGN ACCEPTANCE. ADC and Phasecom will collaborate
to develop a mutually agreed design verification test plan for each Product
to be developed hereunder. Phasecom will take the lead in the development
of such plan, but ADC will be actively involved in the development of such
plan. Phasecom will notify and demonstrate to ADC when each designed
Product has successfully passed the verification test plan. ADC will
provide its written acceptance of the Product's design [***] from
such demonstration by Phasecom.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

7. PRODUCTION TEST PLAN AND PRODUCTION ACCEPTANCE. As part of development of
each Product, ADC and Phasecom will collaborate to develop a
mutually-agreed production verification test plan for such Product.
Phasecom will take the lead in the development of such plan but ADC will be
actively involved in the development of such plan. Phasecom will notify and
demonstrate to ADC that such Product has successfully passed the production
verification test plan. ADC will provide its written acceptance of the
Product for production [***] from such demonstration by Phasecom.

8. INTELLECTUAL PROPERTY RIGHTS. For each Product to be developed hereunder,
the parties will specify the ownership of any new intellectual property
rights arising out of the subject development ("Foreground IPR"). In the
event ownership is not so specified, the default rules are as follows: (1)
each Party retains ownership of its own pre-existing intellectual property
rights ("Background IPR"); (2) each party will own whatever Foreground IPR
it develops at its own expense in connection with the development; (3) if
one party pays for a development effort by the other, any intellectual
property arising out of such development will be owned by the funding
party; and (4) intellectual property that is either jointly-developed or
developed by one party with partial funding by the other will be
jointly-owned, and either party may exploit such jointly-owned intellectual
property without obligation or accounting to the other.

9. DESIGN CHANGES; MAINTENANCE; MODIFICATIONS AND ENHANCEMENTS.

Phasecom will work with ADC regarding modifications to the Product
reasonably required to capture business with the exclusive ADC accounts
listed in Exhibit E. Phasecom will be required to maintain prioritized
listing and documentation of maintenance changes, modifications and
enhancements.

10. RIGHTS OF INDEPENDENT ACTIVITY.

Other than as specifically provided by this agreement, each party shall be
free to pursue, either by itself or with third parties, technology or
products in the same field as that pertaining to the Products covered by
this Agreement.

11. PRE-PRODUCTION UPGRADES. It is understood that ADC intends to purchase
reasonable quantities of the pre-production (Alpha release, Beta release,
or other pre-productions units) Products at Market Prices, provided that if
these units cannot later be upgraded to production release specifications,
then Phasecom will replace such units with production release units when
they become available.

COLLABORATION AGREEMENT PAGE 26
<PAGE>

EXHIBIT D

STATEMENT OF WORK

[Statements of Work for all Products to be developed hereunder are to be
negotiated in good faith and added to this Agreement [***] (or such longer
period as the parties may agree in writing) after the execution of this
Agreement]

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

COLLABORATION AGREEMENT PAGE 27
<PAGE>

EXHIBIT E

MARKETING AND EXCLUSIVITY

I. MARKETING RIGHTS

A. [***] Rights.

1. Phasecom hereby grants ADC the [***] right to market, sell, and
otherwise distribute the Products directly and indirectly for resale to the
following Customers (and their majority-owned subsidiaries):

a. [***]

b. [***]

c. [***]

d. [***]

e. [***]

2. For as long as ADC retains [***] with respect to a particular
account:

a. Phasecom will grant ADC the [***] right to market, sell and
otherwise distribute [***] (i.e. those other than the Products covered by
this Agreement, such products herein called "Other Phasecom Products")
directly and indirectly for resale to that account. Except as otherwise
agreed in writing, the terms of this Agreement will apply to Phasecom's
supply of such Other Phasecom Products to ADC; and

b. ADC will employ all reasonable commercial efforts to market and
sell the Other Phasecom Products to that account;

c. In the event ADC declines to sell a particular Other
Phasecom Product to that account, Phasecom may [***] with respect to that
Other Phasecom Product for that account. Phasecom will promptly notify ADC in
writing (in accordance with Section 22(f) of the Agreement when a new
Phasecom wireless product has become available ("New Other Phasecom
Product"). ADC will have 30 days after such notice to decline to sell such
product or to have it included among the Other Phasecom Products. If ADC
fails to provide such notice, ADC will be deemed to have declined the
inclusion of it among the Other Phasecom Products covered under this
Agreement.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

B. Loss of [***]

1. Phasecom will have the option to terminate ADC's [***] with
respect to any such Customer prospect if: (a) the prospect declines to offer
ADC a request for quotation (RFQ), (b) the prospect eliminates ADC from
consideration during the RFQ process; or (c) if ADC ceases to actively bid
and sell Products(s) to such prospect. In any of these instances, ADC may
present a business case for retaining the [***] and Phasecom will give due
consideration to the business case and to any ADC proposals for the retention
of [***].

COLLABORATION AGREEMENT PAGE 28
<PAGE>

2. It is understood that, to address the needs of the [***] accounts
for customer premise equipment ("CPE"), ADC may plan to sell three different
types of products, as follows: (1) Products covered by this Agreement which
are for customer premise applications ("CPE Products"), (2) CPE products
which have different functions and capabilities from the Products covered by
this Agreement ("Complementary CPE Products"), and (3) in certain cases, ADC
may elect to sell CPE products which are not sourced from Phasecom but which
perform the same function and provide essentially the same capabilities as
the CPE Products ("Substitute CPE Products") available hereunder. (It is
understood, however, that in the event Phasecom discontinues selling a
specific CPE Product, CPE products which correspond to the discontinued CPE
Product will not be considered to be "Substitute CPE Products"). For any
calendar quarter, the "Non-Phasecom Percentage" will be determined by
dividing (a) ADC's total sales of both Complementary CPE Products and
Substitute CPE Products to the exclusive accounts during that quarter by (b)
ADC's total sales of CPE Products, Complementary CPE Products and Substitute
CPE Products to the exclusive accounts during that quarter.

Phasecom will have the following rights to modify ADC's [***] if the
Non-Phasecom Percent for any [***] consecutive calendar quarters exceeds a
specified percentage, as follows:

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

Non-Phasecom
Percentage for two
consecutive calendar Phasecom rights to modify [***]
quarters (to be exercised by written notice)
- --------------------------- ---------------------------------------------------------------
<S> <C>
Less than [***] No right to change [***].
At least [***] Phasecom may cancel [***] to the limited extent that it may
market and sell to [***] a CPE product which is comparable
in terms of functions and features to the [***] CPE
Product provided by ADC to [***].
At least [***] Phasecom may cancel ADC's [***] on ALL [***] Products.
At least [***] Phasecom may cancel ADC's [***] on all Products.
</TABLE>

3. If ADC desires to add a new account to the list in Subsection I.A.1
of this Addendum, it may provide Phasecom with a request and a business case for
such addition, and Phasecom will give due consideration to such request and
business case.

4. It is understood that the foregoing [***] will be unaffected by
ADC's invocation of [***] under Section 12.b. of the Agreement.

C. [***] Rights. Phasecom hereby grants ADC the [***] right to market,
sell, and otherwise distribute the Products directly and indirectly for
resale to any other Customers [***] except that ADC shall not have the right
to market, sell or otherwise distribute the Products to [***] (which is an
existing house account for Phasecom) within the [***].

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

D. MARKETING COLLABORATION.

1. For [***] accounts, the Parties will cooperate with each other to
market the Products and to determine which will take the lead for specific
accounts. To the

COLLABORATION AGREEMENT PAGE 29
<PAGE>

greatest extent permitted by law, the parties will use their best efforts to
prevent channel conflicts.

2. During the term of this Agreement, ADC shall keep Phasecom informed
about ADC high-level marketing plans and requirements relating to wireless modem
products.

E.AUDIT RIGHTS. The parties agree that obtaining accurate information
regarding sales made by ADC will be vital to the calculation determination of
the marketing and exclusivity rights under this Exhibit E. The parties therefore
agree that sales by ADC may be audited by Phasecom party in accordance with
reasonable procedures to be agreed upon by the parties at the time of audit.

COLLABORATION AGREEMENT PAGE 30
<PAGE>

EXHIBIT F

CHANGE PROCEDURES

The following change procedure requirements shall apply to Products that are not
in an alpha or beta test stage and have been accepted by ADC as Products that
are ready for final production under the terms of Exhibit C, Sections 6 and 7:

I. Phasecom may, at any time, make changes to the Products or modify the
drawings and specifications relating thereto, or substitute Products of
later design to fill an order (hereinafter referred to as "Product
Change"), provided that any such Product Change, under normal and proper
use, does not affect price, operation, reliability, look, feel, or life
of the Products or the interchangeability and interoperability of the
Products with other Products, and that Phasecom notifies Buyer in
writing thereof [***] days prior to shipment of the planned change. In
the event any Product Change affects price, operation, reliability,
look, feel or life of the Products, or the interchangeability and
interoperability of the Products with other Products, Phasecom shall
notify Buyer in writing thereof [***] days prior to any planned change.
In the event Buyer may reject the planned change and so notifies
Phasecom within thirty (30) days and Phasecom fails to reach agreement
thereon, Buyer shall have the right to terminate any and all orders, in
whole or in part for the Products affected by such change.
Notwithstanding any notice requirement above to the contrary, Phasecom
shall immediately notify Buyer when it determines that a Class A Product
Change (as defined hereinafter) shall be made. Phasecom shall be
authorized to make Class A Product changes as soon as practical. Buyer's
manufacturing process uses Bellcore Generic Requirements for Product
Change Notices (Document GR-209-CORE, Issue 2, January 1996) to
determine classes of Product Change Notices contained herein. Change
class definitions shall be governed by the referenced Bellcore document.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

II. Notwithstanding any notice requirements to the contrary elsewhere in this
Agreement, all Class A Product Change Notices shall be provided, at no
charge, and forwarded in accordance with the section "Notices". All Product
Change Notices for Class A, Class AC, Class C, Class D or Class E (as
hereinafter defined) shall contain a filled-in Product Change Notice (See
attachment), which has detailed reasons of the change, technical
description of the change, supporting user documentation, affect of change
on product line, any compatibility information, and effective date of first
shipment of planned change in addition to the information set forth in
Notices. If Phasecom cancels a Product Change Notice, Phasecom must provide
notification in accordance with clause title "Notices" hereto and state the
reason for cancellation and what action, if any, is to be taken in
locations where the change may already have been implemented. All notices
shall be sent to BUYER Product Management.

III. Phasecom shall determine the classification of any proposed Product Change.
If Buyer disagrees with any classification assigned by Phasecom, Buyer
shall have the right to

COLLABORATION AGREEMENT PAGE 31
<PAGE>

challenge the classification, and Phasecom shall, in good faith,
re-evaluate its classification. In the event that Buyer and Phasecom fail
to reach agreement on any such classification, then Buyer shall have the
right to terminate any or all Orders, in whole or in part, for Products
affected by such Product Change without penalty or obligation of any kind.
Phasecom shall provide Buyer copies of all Product Change Notices and
copies of Phasecom ECOs including the cognizant engineer's name, that
affect products.

A. Class A Product Change - A classification code used to indicate a
product recall for all shipped product.

1. Changes which are:

a) needed to correct conditions which result in safety hazards,

b) conditions which result in safety hazards where the
conditions in (a) or (b) are caused by circuit combinations
or options that exist only on certain hardware;

c) needed to compensate for marginal (worse circuit) cases
where the inoperative or unsatisfactory conditions exist on
certain hardware and cannot be associated with specific
circuit combinations or options. Such changes shall be made
on Product in process and if requested by Buyer on Product
in stock or returned to an authorized repair center.

2. Class A Product changes require immediate action by Phasecom to
correct all affected products, whether in the hands of Phasecom
or Buyer or their Customers including spare Products. In some
cases, however, it may be necessary to make a change to only a
limited number of a particular type or Product. (This occurs when
it is necessary to correct a condition that occurs only in
certain Product combinations or with the use of certain options).
Such conditions shall be described in the Product Change Notice.

3. Phasecom shall, no later than [***] from the date of the
notification of a Class A Product Change, provide a schedule,
acceptable to Buyer, for promptly implementing such changes
with respect to Products in the possession of Buyer or its
Customers. The resulting implementation shall include the
deinstallation, if necessary, of existing Products and the
engineering and installation of replacement or modified
Products or any additional materials. Phasecom will bear the
costs of its own engineering personnel and the costs of
replacement parts and subassemblies associated with the
implementation of the changes.

4. For Class A Product Changes which involve only an exchange of
products, Phasecom may, at Buyer's option, provide such products
and Buyer shall implement such change and invoice Phasecom for
associated costs. Unless otherwise agreed to between the Parties,
Phasecom shall not furnish component parts for Class A Product
Changes to Buyer for Buyer assembly into product.

COLLABORATION AGREEMENT PAGE 32
<PAGE>

5. Notices.

Phasecom shall furnish monthly status reports to BUYER for all
Class A

6. Product Changes of which Phasecom has notified Buyer. This report
shall contain the following information:

a) Product Change Notice number.

b) Identity of the Products.

c) Model or part number and issue.

d) Date Product Change Notice issued.

e) Product ship date.

f) Installation or application responsibility.

g) Locations at which change is to be made (supplied by Buyer).

h) Date completed, by location.

i) Changes on hold at any location.

j) Serial numbers of the affected products.

B. Class AC Product Change -

Class AC Product changes are:

1. needed to correct:

a) inoperative electrical or mechanical conditions,

b) unsatisfactory maintenance or operating conditions,

c) conditions which result in safety hazards, where the
conditions in (a) or (b) are caused by circuit combinations
or options which exist only on certain hardware; and

2. needed to compensate for marginal (worse circuit) cases where the
inoperative or unsatisfactory condition exist on certain hardware
and cannot be associated with specific circuit combinations or
options. Such changes shall be made on Product in process and if
requested by Buyer on Products in stock or returned to an
authorized repair center.

C. Class C Product Change - product upgrade or improvement which is
suggested to be implemented on shipped products.

COLLABORATION AGREEMENT PAGE 33
<PAGE>

1. This would be used when the change would result in better
operation, improved testing and maintenance, longer life, service
improvements, cost reductions to the Customer, and additional new
features. The decision to apply these changes would be the
Customer's responsibility.

2. All products shipped to Buyer after the effective date of any
Class C product Change shall incorporate such change. Any
Products shipped to Buyer prior to such date may be modified by
Buyer at its option and expense.

3. No Class C changes shall affect the interoperability of the
product.

D. Class D Product Change - a product upgrade/improvement which is not
require to be implemented on shipped products

1. The Product Change Notice will be used for notification purposes
only. Class D changes would incorporate minor new features and
design improvements that do not affect existing functionality or
other minor service improvement and test capabilities.

2. No Class D changes shall affect the interoperability of the
product.

E. A Class D Product Change is one in which any single or combination of
the following apply:

1. A changed plug-in product is not bi-directional interchangeable
physically, electrically or functionally with its predecessor.

2. A changed hard-wired Product is substantially different than its
predecessor.

3. Phasecom's part, model, drawing or identification number is
changed for that Product.

4. Phasecom's company name is changed.

5. Phasecom shall furnish in accordance with the "Notices" section a
quarterly report listing all Product Change Notices released
during the previous twelve (12) months. This report will contain
the following information:

a) Product Change Notice Number,

b) Issue date of change,

c) Drawing number,

d) Change classification,

e) Modification expiration date.

Phasecom will provide Buyer a copy of all change notices as soon
as they become available.

COLLABORATION AGREEMENT PAGE 34
<PAGE>

F. Class E Product Changes - indicates a routine product/design
upgrade/improvement which does not impact form, fit or function or
diminish product reliability or quality.

1. No class E changes shall affect the interoperability of the
product.

IV. Support and upgrade

A. This section describes the responsibilities of Phasecom and Buyer with
respect to hardware and software upgrades that are required to resolve
demonstrated problems with the equipment. These are known as "problem
fix upgrades." Hardware and software upgrades whose purpose is to
enhance the functionality of the equipment ("feature upgrades") are
quoted by Phasecom on a case-by-case basis and are not covered in this
Exhibit.

B. For software problems that are reported by Buyer, verified and/or
recreated by Phasecom and which are fixed on a subsequent revision of
software, Phasecom shall provide to Buyer two (2) master copies of the
software revision that incorporates the fix., and the accompanying
Engineering Change Request notification. The software will be
accompanied by a completed "Engineering Change Request (Software" form
which, among other information, stated the severity of the problem
("Class of Change") and a non-binding recommendation to Buyer on the
handling of the change in the field ("Field Effectivity Status"). The
decision on the deployment, if any, of the software fix to one or more
end-users in the field is the responsibility of the Buyer and all
costs associated with that deployment will by borne entirely by Buyer.

C. For hardware problems that are reported by Buyer, verified and/or
recreated by Phasecom and which are fixed by a hardware modification
to the card, module or subsystem, Phasecom shall provide to Buyer a
completed "Engineering Change Request (Hardware)" form which, among
other information, states the severity of the problem ("Class of
Change"). The Class of Change defines Phasecom's responsibilities with
regard to the performance of the hardware upgrade to units that are
already in the field.

1. If assigned as a Class A Product Change, then Phasecom will
perform the required hardware upgrade at no charge to ADC

2. If assigned as a Class AC Product Change, then Phasecom will
perform the required hardware upgrade to affected units at no
charge if Buyer so requests in writing [***] of receipt of
the associated ECR.

3. If assigned as a Class C, D or E Product Change, then Phasecom
will not upgrade any installed units an no charge. At Buyer's
request, Phasecom will quote such upgrades on a case-by-case
basis.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

D. In all instances where the Class of Change obligates Phasecom to
perform no-charge hardware upgrades, Buyer shall request and receive a
Return Authorization and shall promptly return all parts requiring the
upgrade, freight prepaid by Buyer to Phasecom's service department.
Phasecom will use its best efforts to perform the

COLLABORATION AGREEMENT PAGE 35
<PAGE>

E. upgrade and return the part, freight prepaid, to Buyer [***] days
after receipt.

F. For enhancements or new feature upgrades, Buyer may send the Product
to be upgraded freight prepaid to Phasecom's service department. Buyer
must issue a purchase order for the upgrade cost as specified in
Phasecom's then current upgrade price list. A Return Authorization
must be included with the Product sent to Phasecom. The upgraded
product will be returned to Buyer within [***] business days.

G. Advance replacement service. If necessary, Buyer may request an
advance replacement exchange for the unit to be upgraded for those
cases in which Buyer can not wait the standard return period. Buyer
may arrange for this service as follows:

1. Secure a Return Authorization for the product to be exchanged

2. Issue a purchase order for the product required at Buyer's then
current contract price plus the cost of the upgrade.

3. Upon receipt of the proper purchase order, Phasecom will ship to
Buyer an upgrade product for exchange. Upon receipt of the
product Buyer will immediately return the exchanged product in
the same container.

4. Upon receipt of the returned product Phasecom will issue a credit
against Buyers purchase order for the list price of the returned
product.

If the exchanged product is not returned [***], Buyer will be
invoiced for the product shipped at the contract price and Buyer
agrees to pay said invoice due upon receipt.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

COLLABORATION AGREEMENT PAGE 36
<PAGE>

EXHIBIT G

REGULATORY APPROVALS PROCESS

Phasecom will be responsible for the following regulatory certification on all
Products (additional requirements may be contained in Exhibit D):

I. SAFETY

The WMTS shall be certified to:

1. [***]
2. [***]
3. [***]

The WMU shall be certified to:

1. [***]
2. [***]
3. [***]
4. [***]

II. ELECTRO-MAGNETIC CONFORMANCE

The WMTS shall be certified to:

1. [***]
2. [***]
3. [***]
4. [***]
5. [***]

The WMU shall be certified to

1. [***]
2. [***]
3. [***]
4. [***]
5. [***]

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

COLLABORATION AGREEMENT PAGE 37
<PAGE>

EXHIBIT H

TERMS AND CONDITIONS OF SALE

[Note: The parties will negotiate in good faith to reach agreement on this
Exhibit within 30 days after execution of this Agreement.]

COLLABORATION AGREEMENT PAGE 38
<PAGE>

EXHIBIT I

TRAINING

Training curriculum will be in modules consisting of Overview, Products and
Applications, Design and Engineering, Installation and Maintenance.

Each training module is directed toward the user of the information. Buyer
assumes the responsibility for the attendees' ability and background skills
levels to be able to benefit from the curriculum.

Phasecom will provide up to 3 trainer-days of training for each new Product
release. Phasecom will provide such additional training as may be requested by
ADC, but will be entitled to charge for such additional training at reasonable
rates, not to exceed Phasecom's then-current standard training rates.

Training materials will be available as follows:

15 sets Product Overview
15 sets Products & Applications
5 sets Design & Engineering
5 sets Installation & Maintenance

Training shall be at Buyer's provided facility. Reasonable travel, board, and
living expenses for instructor(s) and any transportation cost for
material/equipment used in class shall be at Buyer's expense. Travel and living
expenses for each of Buyer's attendees shall be the responsibility of Buyer.

COLLABORATION AGREEMENT PAGE 39
<PAGE>

EXHIBIT J

QUALITY AND INSPECTION

I. Buyer shall be notified prior to changes in location of Product
manufacture. Buyer has the right to perform an audit of any new
manufacturing locations prior to receiving Product produced from the new
location. Buyer and seller must mutually agree on corrective action if
issue arise out of this audit prior to Product being produced for the
buyer.

II. Buyer shall be notified and allowed to review new Product designs and
major Product revisions for compliance to industry standard design,
quality and workmanship standards.

III. Seller shall, at buyers request, provide a list of recommended test
equipment and procedures to be used for testing of incoming Product and
verification of returned Product.

IV. The Products will meet all applicable quality standards published by the
[***], as such are from time to time amended. These will include, but
not be limited to the following:

[***]

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

COLLABORATION AGREEMENT PAGE 40
<PAGE>

EXHIBIT K

PACKAGING STANDARDS

Products will be packed or packaged for U.S. shipment in accordance with
standard commercial practices in containers bearing labels to be provided or
approved by Buyer.

1.0 BAGS

All product is to be placed in a bag. The type of bag is dependent upon the
assembly to be bagged. Clear polyethylene (3 mil minimum thickness) is
acceptable for those assemblies not being sensitive to Electrostatic Discharge
(ESD).

If the product itself is sensitive to ESD, a static shielding bag should be used
to protect the product. The bag is to be sealed or folded over (closed with a
re-sealable ESD label) so as to complete a faraday cage.

2.0 CUSHIONING MATERIAL

Foam cushioning should be made of expanded polystyrene, polyethylene or a
polyurethane foam. Antistatic versions of the above are required when the
product is sensitive to ESD or is used in an ESD area/facility.

Corrugated cushioning may be constructed of appropriate weight corrugated
material which is required to protect the product during the normal distribution
cycle. Kraft color is acceptable.

3.0 CARTONS

The corrugated carton is to be at a minimum, 200# B or C flute (32 ECT), mottle
white one side. The ADC logo is to be printed in black ink on the carton. On a
standard Regular Slotted Container (RSC), the ADC logo shall be located on the
two length body panels. Current approximate logo sizes are as follows:

1.0" x 4.0"

1.5" x 6.0"

2.0" x 8.0"

3.5" x 16.0"

4.0" x 17.0"

COLLABORATION AGREEMENT PAGE 41
<PAGE>

4.0 PRODUCT/PACKAGE SYSTEM TESTING

Product/package systems shall pass, at a minimum, the International Safe Transit
Association (ISTA) Preshipment Test Procedures (Procedure 1 or 1A). All
product/package systems shall be approved by Buyer prior to use.

5.0 PACKAGE LABELING

The unit carton is to be labeled with the ADC Catalog Number, the quantity per
unit package (usually 1 each), the date code (date product is packaged) and the
serial number of the assembly if it is a serialized product. This information is
to be both human readable and bar coded per the Telecommunications Industry
Forum (TCIF) Product Package Label Specification.

6.0 OVERPACKS

Unit packs are to be overpacked in cartons and on a pallet. Carton weights
should not exceed 40 lb.. Pallet dimensions should be 40" x 48". Pallet loads
are to be stretch wrapped at a minimum to secure load to pallet.

COLLABORATION AGREEMENT PAGE 42
<PAGE>

EXHIBIT L

FORM OF ESCROW AGREEMENT

[NOTE: THE PARTIES WILL NEGOTIATE IN GOOD FAITH TO REACH AGREEMENT ON THIS
EXHIBIT WITHIN 30 DAYS AFTER EXECUTION OF THIS AGREEMENT.]

COLLABORATION AGREEMENT PAGE 43
<PAGE>

EXHIBIT M

SUPPORT OF PRODUCTS; PROBLEM ESCALATION

A. PHASECOM SUPPORT RESPONSIBILITIES

1. Problem Severity Definitions - Buyer will determine the severity level
in conjunction with the end user or service provider.

a. Severity 1 - A "Network Emergency" which is defined as the
failure of a previously operating Phasecom product or system
which renders the product or system inoperable. Further defined
as any problem causing service unavailability or severe
degradation to the lesser of [***] customers or [***] of the
installed base.

b. Severity 2 - Problems resulting in some loss of functionality
and/or some degradation of performance. The system is still
available.

c. Severity 3 - Problems resulting in degraded performance not
deemed significant to the end user or the service provider.
System availability is not affected.

d. Severity 4 - Problems resulting in a nuisance to operations, a
minor feature enhancement or a bug not deemed significant. System
availability is not affected.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

2. Response Levels

Except as otherwise provided in this Exhibit M, PhaseCom shall be
required to respond to service requests within a reasonable time. If
and only if ADC has sold Products in commercial quantities to
exclusive accounts will PhaseCom be required to meet the service
response times set forth in this Section 2.

a. Phasecom will respond to service requests initiated by the Buyer
in the time frames contained in the following table:

<TABLE>
<CAPTION>
--------------------------------------------------------------------
Severity Response Time Targeted Remedy Time
--------------------------------------------------------------------
<S> <C> <C>

1 [***] [***]
2 [***] [***]
3 [***] [***]
4 [***] [***]
</TABLE>

Severity 1 and 2 times are measured in calendar hours 24 hours
per day, 7 days per week. Severity 3 and 4 times correspond with
standard business hours of the respective parties.

b. Subject to Buyer's obligation to provide first-tier maintenance
(as defined in Section 5.c. of the Agreement), Phasecom will,
once a problem has been

COLLABORATION AGREEMENT PAGE 44
<PAGE>

identified as originating with the system or device, respond to
Buyer within the Response Time (see preceding table) and provide
workarounds promptly within the Targeted Remedy Time (see
preceding table). For a Severity 1 (see preceding table) network
emergency, Phasecom will assign a systems engineer to follow
through and report status to Buyer, when information is requested
by Buyer, until the problem is resolved.

Phasecom will report to Buyer's technical support director any
problems received and unresolved by Phasecom according to the
following timeframes:

i. Severity one: [***]
ii. Severity 2: [***]
iii. Severity 3: [***]
iv. Severity 4: [***]

c. Each product change will include a written correction notice to
Buyer and a new issuance of software or hardware, or hardware
repair, and will be accompanied by documentation as outlined in
Exhibit F.

d. Phasecom will provide Buyer access to Phasecom technical support
engineers via a telephone "Hot Line" to assist Buyer with
Severity One and Two Network Emergencies twenty-four (24) hours a
day, seven (7) days a week. Phasecom will provide access to
Phasecom technical support engineers via a telephone "Hot Line"
to assist Buyer with Severity Three and Four problems during
Phasecom's normal business hours.

e. Phasecom will provide reasonable support services to Buyer during
the term of this Agreement at no charge to Buyer.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

B. SUPPORT RESPONSIBILITIES OF BUYER

1. Buyer will maintain a technically competent staff sufficiently
trained to provide direct support for Phasecom Products to the
End User. Problem determination and resolution will be
communicated between Phasecom and Buyer, and not the Phasecom and
the End User, unless mutually agreed otherwise beforehand.

2. Buyer technical support representatives will attend Phasecom
training program prior to the start of any support services
requests.

3. To the extent reasonably required for maintenance, Buyer shall be
responsible for maintaining a database regarding Product
installations, including Product identity, version numbers,
serial numbers and date of installation, and will share this
database with PhaseCom.

C. PROBLEM DISPUTE ESCALATION

1. Disputed problems may occur when the parties' support staffs
disagree as to Buyer's characterization of problem severity,
resolution priority, adequacy of

COLLABORATION AGREEMENT PAGE 45
<PAGE>

Phasecom's response, or other disputes relative to field support
of products. In order to provide minimum levels of customer
service, disputed problems will be escalated to increasingly
senior management levels to achieve resolution.

2. Phasecom will establish problem resolution priorities that are
consistent with the Problem Severity Definitions in section A.1.
of this Exhibit.

3. In the case of Severity 1 problems which Phasecom staff
believes are inappropriately characterized by Buyer, problem
ownership may be referred by the parties' respective staffs to
Buyer's Technical Support Director and Phasecom's Technical
Service Director if no agreement is reached within [***]. If
no agreement is reached between this management level within
an additional [***], problem ownership will be referred to
Buyer's Program Manager or higher level representative, and
Phasecom's Sales Account Manager. If no agreement is reached
at this management level within an additional [***(*)***],
problem ownership is escalated to Buyer's Vice Presidential
level and Phasecom's CEO level.

4. In the case of Severity 2 and lower problems, problem
ownership may be referred by the parties' respective staffs to
Buyer's Technical Support Director and Phasecom's Technical
Service Director if no agreement is reached within [***]. If
no agreement is reached between this management level within
an additional [***], problem ownership will be referred to
Buyer's Program Manager or higher level representative, and
Phasecom's Sales Account Manager. If no agreement is reached
at this management level within an additional [***] hours,
problem ownership is escalated to Buyer's Vice Presidential
level and Phasecom's CEO level.

5. In the event that Phasecom's response to a Severity 1 problem
is judged to be inadequate by Buyer problem ownership may be
referred by the parties' respective staffs to Buyer's
Technical Support Director and Phasecom's Technical Service
Director if no agreement is reached within [***]. If no
agreement is reached between this management level within an
additional [***], problem ownership will be referred to
Buyer's Program Manager or higher level representative, and
Phasecom's Sales Account Manager. If no agreement is reached
at this management level within an additional [***], problem
ownership is escalated to Buyer's Vice Presidential level and
Phasecom's CEO level.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

D. MAINTENANCE FEES

If ADC is able to generate on-going revenue for maintenance of
Products covered by this Agreement, ADC and Phasecom will negotiate in
good faith to equitably divide the revenue based on the level of
support each is providing.

COLLABORATION AGREEMENT PAGE 46
<PAGE>

EXHIBIT N

MAC PRODUCT LICENSE AND SUPPLY AGREEMENT

[NOTE: THE PARTIES WILL NEGOTIATE IN GOOD FAITH TO REACH AGREEMENT ON THIS
EXHIBIT WITHIN 30 DAYS AFTER EXECUTION OF THIS AGREEMENT. THIS EXHIBIT WILL BE A
COMPLETE, STANDALONE AGREEMENT FOR THE SUPPLY AND LICENSING TO ADC OF "MAC
PRODUCTS," TO BE DEFINED TO INCLUDE THE PHASECOM MAC CHIP AND RELATED
TECHNOLOGY. THIS EXHIBIT WILL ALSO PROVIDE, AMONG OTHER THINGS, THAT:

1. UNTIL SUCH TIME AS PHASECOM NO LONGER USES COMMERCIALLY-AVAILABLE MAC CHIPS
IN THE PRODUCTS, PHASECOM WILL PROVIDE ADC WITH ACCESS TO ANY AND ALL
INFORMATION REASONABLY REQUIRED FOR ADC TO DEVELOP ITS OWN CPE PRODUCTS THAT
WILL BE FULLY INTEROPERABLE WITH THE PHASECOM WMTS PRODUCT COVERED BY THIS
AGREEMENT.

2. WHEN PHASECOM HAS COMPLETED THE DEVELOPMENT OF ITS OWN CPE MAC CHIP,
[***].

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

COLLABORATION AGREEMENT PAGE 47
<PAGE>

EXHIBIT O

IP DISCLOSURES

PhaseCom was contacted by [***] in approximately [***] with an offer to
license [***]. PhaseCom has opened a dialog with [***] regarding this license
offer and has undertaken an analysis of [***] to determine whether they are
relevant to PhaseCom products. [***] has offered to forward copies of these
[***] file histories to PhaseCom [***] counsel for analysis. However, such
copies have not yet been received. PhaseCom expects to gain an understanding
of these [***] relevance, if any, to PhaseCom products [***] of the file
history copies from [***]. It is unclear at this time whether PhaseCom's
products or technology does, or will, infringe on any of [***] intellectual
property.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

COLLABORATION AGREEMENT PAGE 48

<PAGE>

Exhibit 10.20

LICENSE AND DEVELOPMENT AGREEMENT

This Software License and Development Agreement (the "Agreement") is
entered into as of this ____ day of December, 1999 (the "Effective Date") by and
between Philips Semiconductors Inc., a Delaware corporation having its principal
place of business at 811 East Arques Avenue, Sunnyvale, CA 94088-3409,
(hereinafter "PHILIPS"), and Phasecom Ltd., an Israeli corporation, having its
principal place of business at 11 Kiriat Hamada Street, Bldg. 6, 1st Floor, Har
Hotzvim 91450, Jerusalem, ISRAEL ("PCOM"), a wholly owned subsidiary of Phasecom
Inc., a Delaware corporation, with its principle place of business at 20400
Stevens Creek Blvd., 8th Floor, Cupertino, CA 95014 ("PHASECOM INC"). (PHILIPS,
PCOM and PHASECOM INC. are occasionally referred to herein individually as a
"Party" and collectively as the "Parties.")

WHEREAS, PCOM has developed a DOCSIS MAC including both hardware and
software (as defined below) that is compliant to the version 1.0 MAC standard;

WHEREAS, PCOM is developing a DOSIS MAC including both hardware and
software that will be compliant to the versions 1.1 MAC standard;

WHEREAS, PHILIPS desires to license such a DOSIS MAC including both
hardware and software from PCOM under the terms and conditions of this Agreement
for use as part of its integrated circuit products;

WHEREAS, PCOM desires to provide and license to PHILIPS such DOCSIS MAC
under the terms and conditions of this Agreement;

WHEREFORE, in consideration of the mutual promises hereinafter set
forth, PHILIPS and PCOM and PHASECOM INC. agree as follows:

1.0 DEFINITIONS.

As used in this Agreement, the following capitalized terms shall have the stated
meanings:

1.1 "Affiliates" of a Party means any corporation, company or other entity
which directly or indirectly controls, is controlled by, or is under
common control with such Party. An entity shall be regarded as in
control of another so long as it owns or controls, directly or
indirectly, more than fifty percent (50%) of the shares entitled to
vote for the election of directors or other person performing similar
functions.

.
1.2 "Application Specific Product" means products whose architecture are
optimized for use in particular applications and whose components may include
both hardware and software.

<PAGE>

1.3 "Customer Specific Product " means products made for a specific
customer or set of customers which may include both hardware and
software and intellectual property from various sources.

1.4 "Derivative Works" means a work based on one or more preexisting works,
such as a translation, arrangement, abridgement, condensation,
expansion, compilation, revision, or any other form in which a work may
be recast, transformed, or adapted, and as further defined by 17 U.S.C.
Sec. 101.

1.5 "DOCSIS MAC" means the Media Access Controller, whose specification is
defined under the DOCSIS standards committee including both hardware
and software, that is provided by PCOM to PHILIPS under this Agreement,
as further defined in Exhibit A and the Statement of Work herein. The
term DOCSIS MAC shall include the PCOM DOCSIS 1.0 MAC, the PCOM DOCSIS
1.1 MAC and, subject to the provisions of Article 4 herein, the PCOM
DOCSIS 1.2 MAC that are provided by PCOM to PHILIPS under this
Agreement.

1.6 "DOCSIS 1.0 MAC" means Media Access Controller whose specifications are
defined under the DOCSIS standards committee for the 1.0 MAC standard.

1.7 "DOCSIS 1.1 MAC" means Media Access Controller whose specifications are
defined under the DOCSIS standards committee for the 1.1 MAC standard.

1.8 "DOCSIS 1.2 MAC" means Media Access Controller whose specifications are
defined under the DOCSIS standards committee for the 1.2 MAC standard.

1.9 "Documentation" means User Documentation and Source Documentation.
"User Documentation" means user manuals and other written works that
are designed to explain for the end user the installation and use of
particular object code. "Source Documentation" means source code
comments and other works describing the internal structure and
operation of particular source code, including, but not limited to all
related specifications, schematics, logic manuals, flow charts, and
principals of operation, related build procedures, test harnesses, test
procedures, bug data base and design documentation, as available.
Documentation may be in tangible form or machine-readable text or
graphic files subject to display or printout.

1.10 "Licensed Rights" means any patents, copyrights, maskwork rights,
know-how and trade secrets or other legally protectable information
which read upon, are embodied in, or otherwise apply to the DOCSIS MAC.

1.11 "PCOM DOCSIS 1.0 MAC" means the DOCSIS 1.0 MAC that is provided by PCOM
to PHILIPS under this Agreement.

1.12 "PCOM DOCSIS 1.1 MAC" means the DOCSIS 1.1 MAC that is provided by PCOM
to PHILIPS under this Agreement.

<PAGE>

1.13 "Product" or "Products" means any integrated circuit product made by or
for PHILIPS and/or its Affiliates, including but not limited to DOCSIS
Customer Specific Products or Application Specific Products for cable
modem and cable set top box applications, provided however the terms
Product and Products shall not include any integrated circuit product
that uses the DOCSIS MAC for a Wireless Communications Application.

1.14 "Source Code" means all source files for both the generation of a
hardware block and for the generation of software used to run the
hardware block.

1.15 "Wireless Communications Application" means an application whose
primary data transfer is accomplished by using "Wireless" medium,
provided, however, the term Wireless Communications Application shall
not include any wireless applications where the primary communications
gateway is provided via cable. By way of example, the term "Wireless
Communication Application" shall not include applications where data is
distributed by wireless means in a local environment after transfer
across a cable.

2.0 DOCSIS MAC DELIVERY.

2.1 Upon the signing of this Agreement PCOM shall deliver to PHILIPS the
PCOM DOCSIS 1.0 MAC Deliverables, as set forth in Exhibit A.

2.2 PCOM agrees to deliver to PHILIPS the PCOM DOCSIS 1.1 MAC Deliverables
in accordance with the Specifications and schedule set forth in Exhibit
B.

3.0 ACCEPTANCE OF DELIVERABLES.

Acceptance of deliverables shall be defined as follows:

3.1 PHILIPS will examine and test each Deliverable upon delivery to
determine whether the Deliverable conforms to the Specifications for
such Deliverable. Within ten (10) business days after such delivery,
PHILIPS shall provide PCOM with written acceptance of such Deliverable
or a written statement of Errors. As used herein, "Errors" means: (i)
defects in the Deliverable which cause it not to operate in conformance
with the Specification: (ii) defects in the documentation which render
it inaccurate, erroneous, or otherwise unreadable; or (iii) any aspect
of any Deliverable which fails to conform to the Specification.

3.2 PCOM shall make all reasonable efforts to promptly correct the Errors
in any Deliverable set forth in the Statement of Errors, and redeliver
the Deliverable to PHILIPS within the specified time, which will be
mutually agreed to by the parties, provided that the dates specified
for items 1 and 6 in the chart under Section 5.2.1 are not exceeded.

<PAGE>

3.3 PHILIPS will within [***] after such redelivery provide PCOM with a
written acceptance or another Statement of Errors. This procedure
set forth in Sections 3.1 through 3.3 will be repeated until PHILIPS
accepts the deliverables or terminates pursuant to Section 3.4
herein.

3.4 Should PHILIPS determine, prior to acceptance, that any Deliverable
fails to meet the Specification, either (i) after the second redelivery
of that Deliverable pursuant to 3.1.2, or (ii) after any delivery or
redelivery which is late, PCOM will be deemed to be in material breach
and PHILIPS may reject that Deliverable and any subsequent Deliverables
and/or the Agreement.

3.5 If PHILIPS fails to provide PCOM with a written statement of Errors
within the applicable [***], PHILIPS shall be deemed to have
accepted the subject Deliverable.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

4.0 LICENSES

4.1 LICENSE FOR DOCSIS 1.0 MAC.

4.1.1 GRANT OF LICENSE. Subject to the terms and conditions of this
Agreement, PCOM grants to PHILIPS and its Affiliates a
non-exclusive, royalty-free, worldwide, perpetual, non-transferable
(except to PHILIPS' Affiliates) right and license, under the License
Rights, to use, make, have made, reproduce, have reproduced,
perform, modify, and prepare Derivative Works of, the PCOM DOCSIS
1.0 MAC, and the Derivative Works thereof, to design, develop, make,
have made Products incorporating or using the PCOM DOSIS 1.0 MAC
and/or Derivative Works thereof by or for PHILIPS and/or its
Affiliates, and to use, distribute, import, offer to sell, and sell
such Products, worldwide.

4.1.2 MODIFICATIONS. PHILIPS' right to modify pursuant to this Section 4.1.l
above, gives PHILIPS the unlimited right to modify or create Derivative
Works of the PCOM DOCSIS 1.0 MAC, including but not limited to
developing a DOCSIS 1.1 and/or DOCSIS 1.2 versions of DOCSIS MAC, for
incorporation or use in Products made by or for PHILIPS and/or its
Affiliates, as granted therein.

4.2 LICENSE FOR DOCSIS 1.1 MAC.

4.2.1 GRANT OF LICENSE. Subject to the terms and conditions of this
Agreement, PCOM grants to PHILIPS and its Affiliates a
non-exclusive, royalty bearing (subject to Sections 5.3 and 5.5),
worldwide, perpetual, non-transferable (except to PHILIPS'
Affiliates) right and license under the License Rights to use, make,
have made, reproduce, have reproduced, perform, modify, and prepare
Derivative Works of, the PCOM DOCSIS 1.1 MAC, and the Derivative
Works thereof, to design, develop, make, have made Products
incorporating or using the PCOM DOSIS 1.1 MAC and/or Derivative
Works thereof by

<PAGE>

or for PHILIPS and/or its Affiliates, and to use, distribute, import,
offer to sell, and sell such Products, worldwide.

4.2.2 MODIFICATIONS. PHILIPS' right to modify pursuant to this Section 4.2.l
above, gives PHILIPS the unlimited right to modify or create Derivative
Works of the PCOM DOCSIS 1.1 MAC, including but not limited to
developing a DOCSIS 1.2 versions of DOCSIS MAC, for incorporation or
use in Products made by or for PHILIPS and/or its Affiliates, as
granted therein.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

5.0 LICENSE FEES

5.1.1 License Fee for the PCOM DOCSIS 1.0 MAC

5.1.2 PHILIPS shall pay PCOM a [***]for the licensing of the PCOM DOCSIS
1.0 MAC.

5.2 License Fee for the PCOM DOCSIS 1.1 MAC.

5.2.1 PHILIPS will pay PCOM [***] for the licensing of the PCOM DOCSIS 1.1
MAC (subject to Section 5.2.2), payable in accordance with the
milestones in the following chart. The Deliverables are described
below for each milestone. The percentage figures listed in the chart
represents the percentage of the total fee of [***] that is to be
paid upon PHILIPS' acceptance of the respective Deliverable for the
milestone.

- ----------------------------------------------------------------------------------------------------------------
Item Date Deliverables and Milestones for delivery and acceptance
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------------------------
1 [***] [***] PS 1.1 MAC/Ethernet VHDL &Simulation Database
- ----------------------------------------------------------------------------------------------------------------
2 [***] PS 1.1 MAC/Ethernet Synthesis for P&R and QT
- ----------------------------------------------------------------------------------------------------------------
3 [***] FPGA Verified MAC/Ethernet w/3930
- ----------------------------------------------------------------------------------------------------------------
4 [***] [***] QT Verification
- ----------------------------------------------------------------------------------------------------------------
5 [***] Post P&R Timing Verification
- ----------------------------------------------------------------------------------------------------------------
6 [***] [***] Full SW
- ----------------------------------------------------------------------------------------------------------------
7 [***] Si Validation
- ----------------------------------------------------------------------------------------------------------------
8 [***] [***] Cable Labs Certification (1.0 or 1.1)
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

5.2.2 With respect to each Deliverable set forth in Section 5.2.1, the
license granted for the PCOM DOCSIS 1.1 MAC under Section 4.2 shall
apply upon payment for that Deliverable. In the event PCOM fails to
deliver the PCOM DOCSIS 1.1 MAC deliverable for any milestone as set
forth in Section 5.2.1 and 5.6, PHILIPS shall not be required to pay
for any of the following deliverables and shall have full license
rights with respect to all PCOM DOCSIS 1.1 MAC Deliverables delivered
to PHILIPS,

<PAGE>

provided that PHILIPS has paid the respective milestone fees for such
Deliverables as set forth in Section 5.2.1, items 1-9..

5.2.3 The total fee associated with this Article 5 shall be $1,200,000,
to be paid out in accordance with Section 5.1 for the PCOM DOCSIS
1.0 MAC (for the amount of [***], and Section 5.2 for the PCOM
DOCSIS 1.1 MAC, in accordance with items 1 through 9 of the
milestones for delivery and acceptance matrix (for the amount of
[***], referenced therein.

5.3 Upon full production of a Product that incorporates the DOCSIS MAC
provided by PCOM herein, PHILIPS Semiconductors shall pay to PCOM a
royalty fee of [***] device for each unit sold (excluding any units
sold to PCOM), up to a limitation cap of [***], subject to Section
5.6 (the "Maximum Royalty Amount"). Philips shall not pay any
royalties on any Products sold to PCOM. The Maximum Royalty Amount
is the maximum amount of royalties to be paid under this Agreement,
which shall be [***], unless Section 5.6 applies, in which case the
Maximum Royalty Amount shall be [***]. At the time that the total,
combined royalties paid under this Agreement reaches the Maximum
Royalty Amount, PHILIPS shall have no further obligation or
liability to pay any further royalties on any Products that
incorporate the DOCSIS MAC, and all liability for such royalties
shall cease and the licenses granted under this Agreement shall
remain and continue in effect as royalty-free, fully paid-up
licenses. Should the Maximum Royalty Amount not be reached by
December 31, 2001, PHILIPS Semiconductors shall then pay PCOM the
difference between the sum of all royalties then paid to date and
the applicable Maximum Royalty Amount ([***], or [***] if Section
5.6 applies), and the Maximum Royalty Amount shall be deemed to
have been reached and paid in full. This final payment shall be
made to PCOM in one lump sum payment, due and payable by PHILIPS
net 30 days thereafter.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

5.4 The royalties due under Section 5.3 shall be paid on a [***].
Within [***] after the end of each calendar quarter, PHILIPS shall
deliver to PCOM a royalty statement showing (i) the net number of
units sold during that calendar quarter that are subject to royalty
payment and (ii) the total amount of royalty payments due for that
quarter, along with the payment for the total amount of royalties
due for that calendar quarter. The net number of units sold means
the total number of units sold less any returns.

5.5 For [***] after the end of the relevant reporting period, PHILIPS
shall keep accurate records containing all the data reasonably
required for the computation and verification of the amounts to be
paid for such period and information to be given in the quarterly
statements under Section 5.4. PHILIPS shall, during usual business
hours, permit a national independent certified public accounting
firm selected by PCOM, not more frequently than once per year, at
PCOM's expense and prior arrangement, to inspect the same for the
sole purpose of determining the royalty amounts payable pursuant to
Section 5.3. All such audits shall be conducted following
reasonable prior

<PAGE>

written notice and the auditors shall comply with PHILIPS' normal
safety and security procedures, and shall agree in writing to treat
all information furnished by PHILIPS in the course of such audit as
PHILIPS' Confidential Information. Such auditors shall disclose to
PCOM only the amount of any discrepancy and the basis thereof. In
the event of any underpayment, PHILIPS shall promptly remit to PCOM
all amounts due. In the event that the underpayment is more than
[***] for the period audited, PHILIPS shall remit to PCOM the
reasonable costs of the accounting firm's fee for such audit.

5.6 PCOM acknowledges that the delivery dates specified in the chart
under Section 5.2.1 are critical to the success of the PHILIPS
Products. Accordingly, if the Deliverable for Item 5 is not
delivered on or before [***], PHILIPS shall have the option, at its
sole discretion, to cancel the Agreement, including any further
payments and royalties. In the event Item 7 is not delivered on or
before [***], PHILIPS' sole financial obligation shall be reduced
to [***].

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

6.0 OWNERSHIP

6.1 OWNERSHIP BY PCOM. PCOM shall retain ownership of all proprietary
rights, including patent, copyright, trade secret, trademark and other
proprietary rights, in and to the DOCSIS MAC provided by PCOM to
PHILIPS under this Agreement. This Agreement shall not be construed to
grant any ownership interest to any PCOM patent, copyright, trade
secret, trademark or other proprietary right to PHILIPS.

6.2 TRANSFERS BY PCOM. In the event PCOM and/or PHASECOM INC. ever assigns
or otherwise transfers ownership of any of its proprietary rights in
the DOCSIS MAC, PCOM and PHASECOM INC. shall insure that such third
party assumes the rights and obligations of PCOM and PHASECOM INC. as
set forth in this Agreement. Notwithstanding any transfer or assignment
of this Agreement, the grants of licenses set forth in Section 4 shall
remain in full force and effect.

6.3 OWNERSHIP BY PHILIPS. Subject to PCOM.'s ownership rights under Section
6.1 in the DOCSIS MAC provided by PCOM to PHILIPS, PHILIPS and its
Affiliates shall own all modifications and Derivative Works made to the
DOCSIS MAC by PHILIPS and its Affiliates.

7.0 CONFIDENTIAL INFORMATION

7.1 CONFIDENTIAL INFORMATION. As used herein, "Confidential Information"
means the proprietary or confidential information of either Party which
is disclosed by such Party ("Discloser") to the other Party
("Recipient") pursuant to this Agreement, including semiconductor
technology, computer or data processing programs, electronic and data

<PAGE>

processing applications, routines, subroutines, techniques or systems,
or information concerning the business or financial affairs and methods
of operation or proposed methods of operation, accounts, transaction,
proposed transactions or security procedures of either a Party or its
Affiliates, vendors, or customers. The DOCSIS MAC information shall be
considered PCOM Confidential Information. The PHILIPS Product
information shall be considered PHILIPS Confidential Information. All
Confidential Information that is disclosed in tangible form shall be
marked by the Discloser as confidential or proprietary prior to
disclosure. Confidential Information that is disclosed in non-tangible
form shall be identified by the Discloser at the time of disclosure as
being confidential or proprietary and shall be confirmed in writing
within ten (10) days from its disclosure.

7.2 Confidential Information shall not include information that:
(i) was rightfully in the Recipient's possession prior to receipt from
the Discloser.
(ii) is or becomes a matter of public knowledge through no fault or
breach of the Recipient;
(iii) the Recipient rightfully receives from a third party, who has the
right to so transfer or disclose it, without a duty of confidentiality
on the third party or breach of this Agreement; or
(iv) is independently developed by Recipient without use of the
Discloser's Confidential Information.

7.3 OBLIGATIONS OF CONFIDENTIALITY. Each Party agrees to maintain
Confidential Information received from the Discloser in confidence
and neither use for any purpose apart from this Agreement, nor
disclose Confidential Information to any third party, except
Affiliates, without the prior written approval of the Discloser, or
as is required to comply with any order of a court, or any
applicable rule, regulation or law of any jurisdiction. In the event
that Recipient is required by judicial or administrative process to
disclose Confidential Information of the Discloser, it shall
promptly notify the Discloser and allow the Disclosure a reasonable
time to oppose such process or seek a protective order. Within
PHILIPS and PCOM and their respective Affiliates, Confidential
Information shall be disclosed only on a needs to know basis. The
foregoing obligations for Confidential Information shall remain in
force during the term of the Agreement and [***] following the
expiration or termination of this Agreement.

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

7.4 DEGREE OF CARE. Each Party shall protect Confidential Information by
using the same degree of care, but not less than a reasonable degree of
care, to prevent the unauthorized disclosure or use of Confidential
Information, as that Party uses to protect its own confidential and
proprietary information of like nature and similar importance.

7.5 CONSULTANTS AND CONTRACTORS. Confidential Information may be disclosed
by PHILIPS to its consultants and contractors performing work or
services for PHILIPS in accordance with the scope of this Agreement,
provided that such consultants and contractors are subject to a valid,
binding and enforceable agreement to maintain the obligations of
confidentiality no less restrictive than those set forth in this
Section 7.

<PAGE>

7.6 PHILIPS' CUSTOMERS. Confidential Information may be disclosed by
PHILIPS to its customers as reasonably necessary for the purposes of
designing or developing Products for the customers, provided that such
customers enter into PHILIPS' standard non-disclosure agreement for the
protection of the Confidential Information.

8.0 INDEMNITY

8.1 INDEMNIFICATION BY PCOM. PCOM shall indemnify, hold harmless and defend
PHILIPS from and against any and all liabilities, suits, claims,
losses, damages, judgments, and costs (including reasonable attorneys'
fees) (collectively "Claims") brought by a third party against PHILIPS
for infringement of any patent, copyright. trade secret, trademark or
other legally enforceable proprietary right of any third party to the
extent directly arising out of (i) the DOCSIS MAC, as delivered to
PHILIPS, or the use of the DOCSIS MAC in accordance with the license
rights granted herein; (ii) any services performed by PCOM pursuant to
this Agreement, or (iii) any materials furnished by PCOM hereunder.

8.2 The foregoing obligation is subject to the following conditions:

(i) PCOM shall have the sole right to defend and/or settle any such
Claim;

(ii) PHILIPS shall give PCOM immediate notice of any such asserted
Claim and reasonable assistance required by PCOM in defending or
settling such Claim; and

(iii) PCOM shall have no liability associated with any infringement or
alleged infringement arising out of the combination of the DOCSIS MAC
with other components if such infringement would have been avoided in
the absence of such combination, unless such combination was specified
by PCOM. The foregoing states PCOM's sole and exclusive liability for
intellectual property infringement.

8.3 INDEMNIFICATION BY PHILIPS. PHILIPS shall indemnify, hold harmless and
defend PCOM from and against any and all liabilities, suits, claims,
losses, damages, judgments, and costs (including reasonable attorneys'
fees) (collectively "Claims") brought by a third party against PCOM for
infringement of any patent, copyright. trade secret, trademark or other
legally enforceable proprietary right of any third party to the extent
directly arising out of (i) solely the Product(s) in which a DOCSIS MAC
is incorporated, exclusive of the incorporated DOCSIS MAC; and (ii) any
modifications made to the DOCSIS MAC by Philips and/or its Affiliates
if such infringement would not have occurred in the DOCSIS MAC without
such modification.

<PAGE>

8.4 The obligation set forth in 8.3 is subject to the following conditions:

(i) PHILIPS shall have the sole right to defend and/or settle any such
Claim;

(ii) PCOM shall give PHILIPS immediate notice of any such asserted
Claim and reasonable assistance required by PHILIPS in defending or
settling such Claim; and

(iii) PHILIPS shall have no liability associated with any infringement
or alleged infringement arising out of the DOCSIS MAC as provided by
PCOM to PHILIPS, or out of the combination of the DOCSIS MAC with other
components, except for the Product itself, if such infringement would
have been avoided in absence of such combination.

The foregoing states PHILIP's sole and exclusive liability for intellectual
property infringement.

9.0 WARRANTIES

9.1 OWNERSHIP. PCOM warrants that it is the owner of the DOCSIS MAC as
delivered to PHILIPS and the owner of all intellectual property rights
associated with and/or subsisting in the DOCSIS MAC as delivered to
PHILIPS.

9.2 OPERATION. PCOM warrants that the DOCSIS MAC delivered to PHILIPS shall
operate according to the specifications provided, and that there are no
known defects of which PCOM has not made PHILIPS aware. Notwithstanding
the foregoing, PCOM shall not be liable on account of any breach of
warranty claims asserted by customers or purchasers of PHILIPS. Except
for PCOM's indemnification obligations under Section 8, PHILIPS shall
be responsible for any commercial liabilities arising out of its sale
of its products to PHILIPS' customers.

10.0 LIMITATION OF LIABILITIES

10.1 Neither party shall be liable for any incidental, consequential.
special, or punitive damages arising out of this Agreement or the
breach thereof (including, but not limited to, lost profits), and any
such liabilities are expressly disclaimed.

11.0 SUPPORT SERVICES

11.1 At PHILIPS' request, PCOM shall provide reasonable assistance to
PHILIPS in implementing the DOCSIS MAC into PHILIPS Products. At
PHILIPS' request, PCOM shall use reasonable commercial efforts to
provide PHILIPS with the necessary knowledge and information for,
and otherwise assist PHILIPS in, manufacturing or having made a
PHILIPS Product incorporating the DOCSIS MAC. If PCOM's assistance
in providing engineering support for designs not agreed to in this
Agreement or cable modem reference design, PHILIPS agrees to
compensate PCOM at a rate of [***]. If PCOM's on-site presence is
requested which has not been agreed to in

[***] Denotes language for which Vyyo has requested confidential treatment
pursuant to the rules and regulations of the Securities Act of 1933, as
amended.

10
<PAGE>

this Agreement, PHILIPS agrees to compensate PCOM for all reasonable
travel and lodging expenses, subject to PHILIPS' prior approval.

12.0 TERM AND TERMINATION

12.1 TERM. This Agreement shall continue in effect unless terminated as set
forth herein.

12.2 TERMINATION FOR BREACH. Either party may terminate this Agreement if
the other party materially breaches the Agreement and breaching party
fails to cure such breach within thirty days from receipt of written
notice from the non-breaching party describing the breach.

12.3 TERMINATION FOR NON-PERFORMANCE. PHILIPS may terminate as provided
under Section 5.5, upon thirty (30) days prior written notice.

12.4 TERMINATION UPON BANKRUPTCY. A party may terminate this Agreement if
the other party (i) commences a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect, or (ii) an involuntary bankruptcy
action or other such proceeding is commenced against it, and it is not
dismissed from such involuntary action or proceeding within ninety (90)
days from the commencement of such action or proceeding.

12.5 SURVIVAL AFTER TERMINATION. Except for termination of this Agreement
under Section 12.2 based on PHILIPS' material breach of the Agreement
and failure to cure as set forth in Section 12.2, the all licenses
granted under this Agreement shall survive the termination of this
Agreement.

12.6 MOST FAVORED PRICING. PHILIPS agrees to offer to PCOM the PHILIPS'
Product(s) that incorporate the DOCSIS MAC at PHILIPS' most favored
customer prices for such Product for the same or greater quantities
under similar terms and conditions, provided that PCOM does not offer
such products for resale as a standalone product.

12.7 RIGHT OF FIRST REFUSAL For a period of one year beginning on the
Effective Date of this Agreement, in the event that PHILIPS decides to
purchase from a third party (excluding PHILIPS' Affiliates) a DOCSIS
1.2 MAC for use in cable modem applications, PHILIPS shall provide
written notice to PCOM, and PCOM shall have a first right of refusal to
offer PHILIPS a PCOM DOCSIS 1.2 MAC on identical terms and conditions
offered by such third party. This provision shall not apply and
specifically excludes (i) any DOCSIS 1.2 MAC provided by a customer for
integration into a customer specific integrated circuit; (ii) any case
whereby a customer wishes to incorporate its own DOCSIS 1.2 MAC with
other PHILIPS intellectual property into an applications specific
standard product; and (iii) all other PHILIPS entities and Affiliates
who may wish to purchase a DOCSIS 1.2 MAC for a wireless application.

<PAGE>

13 GENERAL

13.1 ASSIGNMENT. Subject to Section 6.2 and the last sentence of this
Section 15.1, neither party may assign this Agreement nor any right or
obligation hereunder without the prior written consent of the other
party which consent will not be unreasonably withheld. PHILIPS may
assign this Agreement to any Affiliate or wholly-owned subsidiary of
PHILIPS, without the prior written consent of PCOM.

13.2 WAIVER. No delay in exercising, no course of dealing with respect to,
or no partial exercise of any right or remedy hereunder shall
constitute a waiver of any other right or remedy, or future exercise
thereof.

13.3 SEVERABILITY. If any term or provision of this Agreement should be
declared invalid by a court of competent jurisdiction, (i) the
remaining terms and provisions of this Agreement shall be unimpaired,
and (ii) the invalid term or provision shall be replaced by such valid
term or provision as comes closest to the intention underlying the
invalid term or provision. Where the invalid term or provision cannot
be replaced by a valid term or provision which comes closest to the
intention underlying the invalid term or provision, the invalid term or
provision shall be severed from the remaining terms, conditions and
provisions which shall continue to be valid to the fullest extent
permitted by law.

13.4 NOTICE. Written notice by either party to the other shall be deemed to
have been given when received via certified mail by the intended
recipient thereof at its address shown on the first page hereof, or to
such other address as such intended recipient may specify in a written
notice pursuant hereto.

13.5 GOVERNING LAW. This Agreement shall be governed in all respects by the
laws of the United States of America and the State of California,
excluding the application of its conflict of laws rules. This Agreement
shall be considered made and entered into in the State of California.
The parties agree that the United Nations Convention on Contracts for
the International Sale of Goods is specifically excluded from
application to this Agreement. Any lawsuits or other legal actions
brought to enforce this Agreement, or otherwise related to this
Agreement shall be brought exclusively in the federal and state courts
within the State of California.

13.6 ARBITRATION. Any unresolved disputes concerning this Agreement shall be
submitted to arbitration in accordance with the then prevailing rules
of the American Arbitration Association (i) before an arbitrator agreed
upon by the parties or (ii) if the parties cannot agree upon an
arbitrator within thirty (30) days, before three arbitrators selected
pursuant to the rules of the American Arbitration Association. The site
of the arbitration shall be San Francisco, CA. The arbitrator(s) may
award attorneys' fees and cost as part of the award. The award of the
arbitrator shall be binding and may be entered as a judgment in
13.7 any court of competent jurisdiction. Either Party may seek injunctive
relief from a court of competent jurisdiction if to protect the
legitimate interest of the Party seeking such relief.

<PAGE>

13.7 FORCE MAJEURE. Each party shall be excused for failures and delays in
performance caused by war, any laws, proclamations, ordinances, or
regulations, or strikes, lockouts, floods, fires, explosions, acts of
God, or other catastrophes beyond its reasonable control and without
the fault of such party. This prevision shall not, however, release
such party from using its reasonable best efforts to avoid or remove
all such causes, and such party shall continue performance hereunder
with the utmost dispatch whenever such causes are removed. Any party
claiming any such excuse for failure or delay in performance shall give
prompt written notice thereof to the other party, and neither party
shall be required to perform hereunder during the period of such
excused failure or delay in performance except as otherwise provided
herein.

13.8 SURVIVAL. Sections 1, 4, 5, 6, 7, 8, 9, 10, and 13 shall survive the
expiration or termination of the Agreement.

This Agreement together with the Exhibits hereto, constitutes the entire
Agreement between the parties with respect to the subject matter hereof and
supersedes in all respects all prior proposals, negotiations, conversations,
discussions and agreements between the parties. This Agreement may not be
modified or amended except by express written amendment signed by authorized
representatives of both parties

IN WITNESS WHEREOF, the parties hereto, through their duly authorized officers,
have executed this Agreement.

<PAGE>

ACCEPTED AND AGREED TO:

PHASECOM LTD. PHILIPS SEMICONDUCTORS INC,

/s/ Menashe Shahar /s/
- ----------------------------------------- --------------------------------
Signature Signature

Menashe Shahar
- ----------------------------------------- --------------------------------
Name Name

Vice President, Research & Development --------------------------------
Chief Technology Officer Title
- -----------------------------------------
Title
--------------------------------
November 14, 1993 Date
- -----------------------------------------
Date

PHASECOM INC.

/s/ Ilan Judkiewicz
- -----------------------------------------
Signature

Ilan Judkiewicz
- -----------------------------------------
Name

Chief Financial Officer
- -----------------------------------------
Title

December 14, 1999
- -----------------------------------------
Date

<PAGE>

EXHIBIT A

DOCSIS 1.0 MAC SOFTWARE

Upon the signing of the licensing agreement and delivery of DOCSIS MAC 1.0,
including:

a) 1.0 MAC specification excluding BPI with detailed design documentation
on each hardware block
b) VHDL source code
c) The test benches
d) All applications source code for 1.0 cable modem running under Windows
95
e) 1.0 MAC FPGA
f) PCOM cable modem 1.0 prototype
g) 1.0 software sources and 1.0 software documentation as described in
Appendix A.
h) Unit test software for 1.0 software.
i) Engineer visit (1 hardware engineer, 1 software engineers, for 2 weeks
in Sunnyvale)
j) Sign-off of MAC 1.1 feature list
k) Full Architecture Specifications for 1.1 MAC
l) Full software Architecture Specifications and requirements
specification for 1.1 MAC

<PAGE>

EXHIBIT B

SCOPE OF WORK

FOR

DOCSIS 1.1 MAC SOFTWARE

Delivery of PHILIPS DOCSIS MAC 1.1 firmware and VHDL sources, including:

a) Simulation test bench
b) Test vectors (Stimulus and simulation output files)

Delivery of PHILIPS DOCSIS MAC 1.1 Synthesis for P&R and QT

a) Synthesis scripts
b) Scripts for timing driven place and route
c) Gate-level simulated with timing Netlist for P&R
d) List of all critical paths
e) Test vectors for simulation of critical path

The foregoing activity will be performed by PHILIPS and the output files will be
checked by PCOM using PCOM's tools. PHILIPS is required to provide the output
VHDL model of the PHILIPS DOCSIS MAC1.1 (VITAL libraries with SDF).

QT Verification

a) Send an engineer to Sunnyvale for 4 weeks for QT simulation (10/18 to
11/15)

Post P&R and timing verification

a) PCOM will provide telephone support for this activity and will be
ready to send an engineer to Sunnyvale for two (2) weeks (11/15 to
12/1) if reasonably deemed necessary.

Full PHILIPS 1.1 MAC software

a) Test software
b) Full 1.1 MAC and applications source code
c) 1.1 MAC specification with detailed design documentation on each
hardware block
d) 1.1 Software: requirements spec, design spec, test spec, test results,
bug list,
e) Fully tested on PCOM evaluation board all PCOM cable modem application
software.

<PAGE>

Silicon validation

a) 6 weeks on call, at site if needed starting 2/15/00

Cable Labs certification

a) 4 weeks on call targeted for wave 2 (May 2000)

PCOM shall provide to PHILIPS technical support for bug fixes and maintenance
for a one year period after silicon validation

- - on-call support with 24-hour response time and guaranteed engineering
resource allocation , excluding weekends and holidays.

<PAGE>

EXHIBIT 10.22

EMPLOYMENT AGREEMENT

DATED AS OF JANUARY 1, 2000

BY AND BETWEEN

PhaseCom Ltd., company number 51-086689-0, a company having an office and place
of business in Har Hotzvim, Jerusalem, Israel (the "Company")

AND

Menashe Shahar, identity number 5036905 of Qiryati Street 16, Ramat Gan, Israel
(the "Employee")

WHEREAS, the Company desires to employ the Employee as its Vice President of
Engineering and Chief Technical Officer, and to avail itself of the Employee's
talents and abilities; and

WHEREAS, the Employee desires to be employed by the Company, subject to the
terms and conditions set forth below.

NOW, THEREFORE, the parties hereby agree as follows:

1. EMPLOYMENT DUTIES

1.1. Employee shall perform the responsibilities of Vice President of
Engineering and Chief Technical Officer of the Company, and any
responsibilities incidental thereto.

1.2. Employee shall devote his full business time and attention to the
business of the Company, and shall not become engaged in any other
occupation whether for compensation or not while employed
hereunder, without the express written consent of the Company's
Board of Directors.

1.3. Employee's employment with the Company may require travel outside
Israel, and the Employee agrees to such travel as may be necessary
in order to fulfill his duties toward the Company.

1.4. Employee's position is a "senior managerial position", as defined
in the Work and Rest Hours Law, 1951, and requires a high level of
trust. Accordingly, the provisions of said law shall not apply to
Employee and Employee agrees that

<PAGE>

he may be required to work beyond the regular working hours of
the Company, for no additional compensation other than as
specified in this Agreement.

1.5. Employee declares that the fulfillment of the undertakings
pursuant to this Agreement, his employment by the Company and the
use of information in his possession and of his abilities, does
not breach, and will not breach, any other agreement or
undertaking for the preservation of confidentiality and
non-competition to which he is a party. Employee agrees and
undertakes not to perform any act or to omit to perform any act
which may breach his fiduciary duty to the Company or which may
place him in a position of conflict of interest with the
objectives of the Company. In addition, Employee agrees and
undertakes to inform the Company promptly of any such matter which
may place him in such a situation of potential conflict of
interest.

2. TERM

This Employment Agreement commences as of January 1, 2000, and shall
continue for a period of thirty-six (36) months (the "Initial Term"),
unless sooner terminated in accordance with the terms of Section 9 below.
Upon the expiration of the Initial Term, this Employment Agreement shall
automatically renew for successive twelve (12) month periods (each twelve
month period shall be referred to as an "Extended Term"), unless sooner
terminated in accordance with the terms of Section 9 below.

3. COMPENSATION

3.1. FIXED SALARY. Employee shall receive a fixed monthly Gross Salary
of NIS 50,000 (Fifty Thousand New Israeli Shekels) (the "GROSS
SALARY"), payable on the first business day of each month for the
immediately preceding month.

Once every six months, starting July 1, 2000, the Gross Salary shall be
prospectively adjusted (the "Adjustment") to reflect the increases in the
Consumer Price Index published by the Israeli General Bureau of
Statistics (the "CPI") during the six month period preceding each
Adjustment, based on the last known CPI at the time of each Adjustment.
For the purpose hereof, the base CPI shall be the CPI for the month of
January, 2000, published on February 15, 2000. For the avoidance of
doubt, it is hereby clarified that such linkage shall be in lieu of any
other linkage or allowances with respect to the Cost of Living.

3.2. ANNUAL REVIEW. At the end of each calendar year during the Initial
Term and any Extended Term the Company and the Employee shall
conduct good faith negotiations with respect to the Employee's
Gross Salary, taking into account

<PAGE>

the nature of the Employee's position and the Company's business,
economic and financial situation.

3.3. BONUS. During the Initial Term and the Extended Term, Employee
shall participate in each bonus plan adopted by the Board of
Directors of PhaseCom, Inc., the Company's parent corporation
("Parent"). Commencing in 2000, Employee shall be entitled to
receive an annual bonus equal to (i) fifteen percent (15%) of his
annual base salary should Parent meet eighty percent (80%) of its
plan as presented to the Board in January of each year, during the
term of Employee's employment ("Yearly Plan"); (ii) fifty percent
(50%) of his annual base salary should Parent meet its Yearly
Plan; and (iii) ninety percent (90%) of his annual base salary
should Parent meet one hundred twenty percent (120%) of its Yearly
Plan, with the bonus prorated if the Yearly Plan is met between
eighty percent (80%) and one hundred percent (100%); or between
one hundred percent (100%) and one hundred twenty percent (120%).
For purposes of this Section, the meeting of the Yearly Plan shall
be based upon the actual revenues set forth by management and
Parent's Compensation Committee for each applicable year (each
compared to the revenues and other items projected in the Yearly
Plan). Employee shall be entitled to receive an additional annual
bonus based on his performance and that of the Company each year
as determined by the Board of Parent, or Parent's Compensation
Committee. The bonus shall be prorated should Employee's
employment terminate prior to the full calendar year.

3.4. VACATION. Employee shall accrue paid vacation at the rate of
twenty eight (28) days for each twelve (12) months of employment.
Employee may not accumulate his vacation days for more than twenty
four (24) months of employment. Notwithstanding the foregoing, no
later than December 31, 2000, the Company shall pay Employee the
pro-rata amount of the Gross Salary with respect to all vacation
days which were accrued by Employee for more than twenty four (24)
months as of the date of such payment.

3.5. SICK LEAVE. Employee shall be entitled to paid sick leave for up
to 30 days for every calendar year, which shall be accruable for
up to 90 days of paid sick leave.

Employee shall not be entitled to paid sick leave from the Company if
such payment was made as part of the disability insurance stated in
Section 3.6 below.

This sick leave shall not be redeemable, whether in the course of
Employee's employment with the Company or subsequent to the termination
thereof, regardless of reason.

<PAGE>

3.6. BENEFITS. During the term of Employee's employment, Employee shall
be entitled to Manager's Insurance (BITUACH MINHALIM) to be
registered on his name, in an amount equal to 15.83% of the Gross
Salary, which shall be paid monthly to said Manager's Insurance
Plan directly by the Company. The insurance shall be allocated as
follows: (i) 8.33% in respect of severance compensation, (ii) 5%
in respect of pension and (iii) up to 2.5% in respect of
disability. An additional 5% of the Gross Salary shall be deducted
by the Company from the monthly payment of Employee's salary as
Employee's contribution to said Manager's Insurance. Ownership of
the Manager's Insurance policy will be transferred to Employee
upon termination of his employment with the Company.
Notwithstanding the foregoing or anything in this agreement to the
contrary, in the event that the employment relationship between
Employee and the Company is terminated (a) by the Company for
Cause (as defined in Section 9.2 below), or (b) by the Employee,
other than in accordance with Section 9.1 below, Employee shall
immediately transfer and return to the Company the title and any
and all amounts accumulated in the Manager's Insurance on account
of severance pay.

3.7. EDUCATION FUND. The Company shall contribute to a Continuing
Education Fund (KEREN HISHTALMUT), to be chosen by the Company for
the benefit of Employee, in an amount equal to 7.5% of his Gross
Salary per month, subject to Employee's contribution of an
additional 2.5% of his Gross Salary per month. All tax obligations
related to the Education Fund shall be borne by the Employee.

3.8. RECREATION FUNDS. The Company shall provide and pay Employee
Recreation Funds (DMEI HAVRA'AH) at the rate required by law and
regulations.

3.9. AUTOMOBILE. The Company shall provide the Employee with an
automobile in such model and size as shall be determined by the
Board of Directors of the Company. The Company shall pay all
actual maintenance, gas and insurance expenses of the automobile.
All tax obligations related to the automobile shall be borne by
the Company.

3.10. TELEPHONE. The Company shall bear all expenses incurred in
connection with the maintenance of a dedicated telephone line in
the Employee's home, solely for the purpose of enabling the
Employee to conduct business affairs from his home. All tax
obligations related to the maintenance of such telephone line
shall be borne by the Company.

<PAGE>

3.11. MEDICAL EXAMINATION. The Employee shall be entitled to one medical
examination per each calendar year at the Company's cost and
expense, at a medical institution chosen in advance in
coordination with the Company.

4. EXPENSES

The Company shall reimburse Employee for his normal and reasonable
expenses incurred for travel, entertainment and similar items in
promoting and carrying out the business of the Company in accordance with
the Company's general policy, in effect from time to time. As a condition
of reimbursement, Employee agrees to provide the Company with copies of
all available invoices and receipts, and otherwise account to the Company
in sufficient detail to allow the Company to claim an income tax
deduction for such paid item, if item is deductible. Reimbursement shall
be made on a monthly, or more frequent, basis.

5. RESERVE DUTY

Immediately upon receipt of a notice of reserve duty, Employee shall
report such notice to the Company's Board of Directors. Upon Employee's
return from reserve duty, Employee shall deliver to the Company
appropriate confirmation of reserve duty served from his military unit,
against which the Company shall pay Employee his regular compensation
package with respect to the period served.

6. COVENANT NOT TO COMPETE

Employee agrees that he is and shall be in a position of special trust
and confidence and will have access to confidential and proprietary
information about the Company's business and plans. Employee agrees that
he will not directly or indirectly, either as an employee, employer,
consultant, agent, principal, partner, stockholder, corporate officer,
director, or in any similar individual or representative capacity, engage
or participate in any business competitive with the Company's business or
with the Business of any parent of subsidiary of the Company, including
projects under consideration by the Company at the time of termination,
during the term of his employment for a period of twelve (12) months
after the termination of his employment, regardless of the reason for
such termination and regardless of whether such termination was initiated
by the Employee or by the Company.

7. CONFIDENTIALITY AND TRADE SECRETS

7.1. KNOW-HOW AND INTELLECTUAL PROPERTY. It is understood that the
Company has developed or acquired and will continue to develop or
acquire certain products, technology, unique or special methods,
manufacturing and assembly processes and techniques, trade
secrets, written marketing plans and

<PAGE>

customer arrangements, and other proprietary rights and
confidential information which are not in the public domain
(collectively referred to as the "COMPANY PROPERTY"). It is
expected that the Employee will gain knowledge of and utilize
the Company Property during the course and scope of his
employment with the Company, and will be in a position of trust
with respect to the Company Property. All inventions and
developments made by the Employee for the Company in the
context of his employment with the Company, and all
intellectual property rights contained therein, shall be deemed
Company Property. Employee agrees that all rights he has to any
technology, patents, copyrights, ideas in whatever form, and
any other intellectual property rights, which relate to the
Company Property are unconditionally assigned to and owned,
free of any third party rights or encumbrances, by the Company,
and the Employee agrees to cooperate with the Company and to
provide to it all details necessary to carry out any
registration or act, to sign any power of attorney or document
and to carry out any act to enable the Company, and only the
Company, to make use of all the Company Property, to duly
register the same, whether in Israel or abroad, should the
Company desire to do so, and/or to protect the same in any
other manner as the Company shall see fit. The Employee's
covenant to assist the Company in the acquisition and
enforcement of intellectual property rights and protections in
connection with the Company Property shall continue to apply
after he has ceased to be employed by the Company.

7.2. COMPANY PROPERTY. It is hereby stipulated and agreed that the
Company Property shall remain the sole property of the Company. It
is further stipulated and agreed by the parties, as a material
inducement for the Company having entered into this Agreement and
remaining a party hereto (subject to any early termination hereof
by the Company), that Employee shall be bound by the Company's
standard Employee Non-Disclosure Agreement.

7.3. EFFECT OF TERMINATION. In the event that Employee's employment is
terminated, for whatever reason, Employee agrees not to copy, make
known, disclose or use, any of the Company Property, and the
Employee shall continue to observe the provisions of the Employee
Non-Disclosure Agreement, which shall survive such termination.
Without derogating from the Company's rights under the law of
torts, Employee further agrees not to endeavor or attempt in any
way to interfere with or induce a breach of any relationship that
the Company may have with any employee, customer, contractor,
supplier, representative, or distributor for a period of eighteen
(18) months from the date of any termination of Employee's
employment with the

<PAGE>

Company for any reason whatsoever. Employee agrees, upon
termination of employment, to deliver to the Company all
confidential papers, documents, records, lists and notes
(whether prepared by Employee or others), in any media
whatsoever, comprising or containing the Company Property,
without retaining any copies thereof, and any other property of
the Company.

7.4. CONFIDENTIALITY. Employee will sign the Company's standard form of
Employee Non-Disclosure Agreement and Non-competition Agreement
(collectively, the "Confidentiality Agreements").

7.5. MATERIAL BREACH. It is hereby agreed that a breach of Sections 6
or 7 or the Confidentiality Agreements shall be considered as a
material breach of this Agreement.

8. CORPORATE OPPORTUNITIES

In the event that during the Employment Term, any business opportunity
related to the Company's business shall come to Employee's knowledge,
Employee shall promptly notify the Company's Board of Directors of such
opportunity. Employee shall not appropriate for himself or for any other
person other than the Company, any such opportunity, except with the
express written consent of the Board of Directors, in advance. Employee's
duty to notify the Company and to refrain from appropriating all such
opportunities shall neither be limited by, nor shall such duty limit, the
application of the general law of Israel relating to the fiduciary duties
of an agent or employee.

9. TERMINATION OF EMPLOYMENT

9.1. GENERAL. This Agreement may be terminated by either party, at any
time, without cause (during the Initial Term or during the
Extended Term), by giving the other party three (3) months'
advance written notice of its election to terminate this
Agreement.

9.2. TERMINATION FOR CAUSE. Notwithstanding Section 2 and Section 9.1
above, the Company may immediately terminate Employee's employment
at any time for Cause. Termination for Cause shall be effective
from the receipt of written notice thereof to Employee. "Cause"
means: (i) material neglect of his duties or a material breach or
violation of any of the provisions of this Agreement; (ii) fraud,
embezzlement, defalcation or conviction of any felonious offense;
or (iii) intentionally imparting confidential information relating
to the Company or Parent or their business to a third party, other
than in the course of carrying out Employee's duties hereunder.
The Company's exercise of its rights to

<PAGE>

terminate with Cause shall be without prejudice to any other
remedy it may be entitled at law or in equity, or nder this
Agreement.

9.3. TERMINATION UPON DEATH OR DISABILITY. This Agreement shall
automatically terminate upon Employee's death. In addition, if any
disability or incapacity of Employee to perform his duties as a
result of any injury, sickness, or physical, mental, or emotional
condition, continues for a period of thirty (30) business days
(excluding any accrued vacation) out of any one hundred and twenty
(120) calendar day period, the Company may terminate Employee's
employment upon written notice. Payment of salary to Employee
during any sick leave shall only be to the extent that Employee
has accrued sick leave or vacation days.

9.4. PRIOR NOTICE PAYMENT. If this Agreement is terminated by the
Company without cause pursuant to Section 9.1 (above), or if after
the initial three (3) year term it is not renewed, the Company
shall pay Employee a prior notice fee equal to the greater of (a)
the full amount of the compensation that he could have expected
under this Agreement, as and when payable under this Agreement,
without deduction except for tax withholding amounts, through the
end of the term; or (b) six (6) months of his then-current salary
without bonus, subject to tax withholding amounts. If this
Agreement is terminated by the Company for cause, pursuant to
Section 9.2 (above), the Company shall pay to Employee a prior
notice fee equal to three (3) months of his then-current salary
without bonus, subject to tax withholding amounts, in exchange for
a release as to any and all claims Employee may have against the
Company. There shall be no prior notice payment in the event that
this Agreement is terminated voluntarily by Employee. During the
time period that Employee is receiving the prior notice pay, he
shall remain as a non-employee consultant of the Company in a
non-policy making role.

10. MISCELLANEOUS

10.1. NO CONFLICTING AGREEMENTS. Employee declares that he is not bound
by any agreement, understanding or arrangement according to which
the execution of and compliance with this Agreement may constitute
a breach or default.

10.2. HEADINGS. The headings of the Sections and subsections of this
Agreement are for convenience of reference only and shall not
affect the meaning or interpretation of the contents of this
Agreement.

<PAGE>

10.3. SEVERABILITY. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect or limit the validity
or enforceability of the remaining provisions of this Agreement.

10.4. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.

10.5. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and understanding between the parties with respect to the subject
matters herein, and supersedes and replaces any prior agreements
and understandings, whether oral or written between them with
respect to such matters, including but not limited to that certain
Employment Agreement dated May 17, 1994, by and between the
Company and Employee. The provisions of this Agreement may be
waived, altered, amended or repealed in whole or in part only upon
the written consent of both parties to this Agreement.

10.6. NO IMPLIED WAIVERS. The failure of either party at any time to
require performance by the other party of any provision hereof
shall not affect in any way the right to require such performance
at any time thereafter, nor shall the waiver by either party of a
breach of any provision hereof be taken or held to be a waiver of
any subsequent breach of the same provision or any other
provision.

10.7. PERSONAL SERVICES. It is understood that the services to be
performed by the Employee hereunder are personal in nature and the
obligations to perform such services and the conditions and
covenants of this Agreement cannot be assigned by Employee.
Subject to the foregoing and except as otherwise provided herein,
this Agreement shall inure to the benefit of and bind the
successors and assigns of the Company.

10.8. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Israel. In the event
of any controversy or claim arising out of or relating to this
Agreement, or breach thereof, the parties may apply solely to the
court having jurisdiction in Tel Aviv - Jaffa, Israel.

10.9. NOTICES. All notices, requests, demands, instructions or other
communications required or permitted to be given under this
Agreement or related to it shall be in writing and shall be deemed
to have been duly given upon delivery, if delivered personally, or
if given by prepaid telegram, or mailed first-class postage
prepaid, registered or certified mail, return receipt requested,
shall be

<PAGE>

deemed to have been given two (2) days after such delivery, if
addressed to the other party at the addresses as set forth on
the signature page below. Either party hereto may change the
address to which such communications are to be directed by
giving written notice to the other party hereto of such change
in the manner above provided.

10.10. MERGER, TRANSFER OF ASSETS, OR DISSOLUTION OF THE COMPANY. This
Agreement shall not be terminated by any dissolution of the
Company resulting from either (i) merger or consolidation in which
the Company is not the consolidated or surviving Company, or (ii)
a transfer of all or substantially all of the assets of the
Company. In each of such events, the rights, benefits, and
obligations herein shall be assigned to the surviving or resulting
Company, or to the transferee of the assets, as applicable.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

PHASECOM LTD. /s/ Menashe Shahar
--------------------------
MENASHE SHAHAR

BY: /s/ Tal Mundlak-Avnon
-----------------------------------

NAME: Tal Mundlak-Avnon
---------------------------------

TITLE: Vice President, Finance and Administration
------------------------------------------

<PAGE>

EXHIBIT 10.23

VYYO INC.
AMENDMENT NO. 2 TO
REGISTRATION RIGHTS AND
LOCK-UP AGREEMENT

THIS AMENDMENT NO. 2 TO REGISTRATION RIGHTS AND LOCK-UP AGREEMENT (this
"Amendment") is entered into as of this 4th day of February, 2000, by and among
Vyyo Inc., formerly known as PhaseCom, Inc. (the "Company"), and the holders of
shares of the Company's Common Stock, or securities convertible into or
exchangeable or exercisable for Common Stock, that are identified on the
signature page to this Amendment (the "Holders").

WITNESSETH:

WHEREAS, the Company and the Holders are parties to that certain
Registration Rights and Lock-Up Agreement, dated as of April 21, 1996, as
amended on August 13, 1999 (the "Registration Rights Agreement");

WHEREAS, the Company has filed a Registration Statement on Form S-1
(the "Registration Statement") with the Securities and Exchange Commission in
connection with a proposed underwritten initial public offering (the "Offering")
of shares of its common stock, par value $0.0001 per share ("Common Stock");

WHEREAS, each Holder recognizes that the Offering will be of benefit to
such Holder and will benefit the Company by, among other things, raising
additional capital for its operations;

WHEREAS, in connection with the Offering, the parties hereto desire to
amend the Registration Rights Agreement as set forth herein;

WHEREAS, pursuant to Section 3(a) of the Registration Rights Agreement,
the Registration Rights Agreement may be amended upon the written consent of
Holders holding a majority of the then Registrable Securities; and

WHEREAS, the undersigned Holders hold at least a majority of the
currently outstanding Registrable Securities.

1
<PAGE>

NOW, THEREFORE, for and in consideration of the foregoing and the
mutual agreements and covenants contained in this Amendment, the parties hereto
agree as follows:

1. DEFINITIONS. Except as otherwise provided herein, the definitions
set forth in Article 1 of the Registration Rights Agreement shall have the same
meaning in this Amendment as if fully set forth herein.

2. AMENDMENT TO SECTION 2(A)(II)(2). Section 2(a)(ii)(2) of the
Registration Rights Agreement shall be deleted and in its place the following
new Section 2(a)(ii)(2) shall be inserted:

(2) Prior to the earlier of (A) December 1, 2000, or (B)
eighteen (18) months after the effective date of PhaseCom Del's first
registered underwritten offering to the general public of its
securities for its own account;

3. AMENDMENT TO SECTION 2(B)(I). Section 2(b)(i) of the Registration
Rights Agreement shall be deleted and in its place the following new Section
2(b)(i) shall be inserted:

(i) PHASECOM DEL'S OBLIGATION TO REGISTER. If PhaseCom Del at
any time proposes to initiate a registration of its securities under
the Securities Act on its own or upon request of Holders other than
Initiating Holders and thereafter registers any of its securities under
the Securities Act (other than a registration effected (A) solely to
implement an employee benefit plan, a transaction to which Rule 145 of
the Securities Act is applicable or any other form or type of
registration in which Registrable Securities cannot be included
pursuant to Commission rule or practice or (B) in connection with
PhaseCom Del's first registered underwritten offering to the general
public of its securities for its own account), it will give written
notice to all Holders of the outstanding Registrable Securities of its
intention to do so at least twenty (20) days prior to the filing of any
such registration (stating the intended method and terms of disposition
of such securities, including a list of the jurisdictions in which
PhaseCom Del intends to qualify such securities). Upon the written
request from any Holder within fifteen (15) days after receipt of
PhaseCom Del's notice to the Holders, subject to the limits contained
in this Section, PhaseCom Del shall afford each such Holder an
opportunity to include in such registration all or any part of the
Registrable Securities then held by such Holder, all to the extent
requisite to permit such sale or other disposition by such Holders of
the Registrable Securities so registered and to the extent permissible
under applicable securities laws; provided, however, that PhaseCom Del
shall be required to use such best efforts to register said Registrable
Securities under this Section (b) no more than two (2) times.

2
<PAGE>

4. FULL FORCE AND EFFECT. The parties hereto hereby modify and amend
the Registration Rights Agreement in accordance with the provisions of this
Amendment and except as hereby and herein modified and amended, the
Registration Rights Agreement shall remain in full force and effect and
binding upon the parties.

IN WITNESS WHEREOF, the parties have duly executed and delivered this
Amendment as of the date first above written.

VYYO INC. (formerly PhaseCom, Inc.)

By: /s/ Davidi Gilo
-------------------------------------------
Name: Davidi Gilo
Title: Chairman of the Board and CEO

PHASECOM INVESTOR GROUP LIMITED PARTNERSHIP

By: /s/ Davidi Gilo
---------------------------------------------
Name: Davidi Gilo
Title: President of Harmony Management, Inc.,
General Partner

PHASECOM INVESTOR GROUP LIMITED
PARTNERSHIP NO. 2

By: /s/ Davidi Gilo
---------------------------------------------
Name: Davidi Gilo
Title: President of Harmony Management, Inc.,
General Partner

3
<PAGE>

DAVIDI and SHAMAYA GILO TRUST U/T/D 1/18/91

By: /s/ Davidi Gilo
---------------------------------------------
Name: Davidi Gilo, Trustee

GALRAN PROPERTIES (1993) LTD.

By: /s/ Boaz Adini
---------------------------------------------
Name: Boaz Adini
Title: Chairman

EICHOT CAPITAL MARKETS AND
INVESTMENTS (1993) LTD.

By: /s/ Zvi Biran and Koti Gavish
---------------------------------------------
Name: Zvi Biran and Koti Gavish
Title: General Managers

TOM HOLDINGS AND PROPERTIES (1993) LTD.

By: /s/ Zvi Biran
---------------------------------------------
Name: Zvi Biran
Title: Chairman

Y. ATAI INVESTMENTS (1993) LTD.

By: /s/ Yahuda Atai
---------------------------------------------
Name: Yahuda Atai
Title: Director

4
<PAGE>

ADC TELECOMMUNICATIONS, INC.

By: /s/ John Griffin
---------------------------------------------
Name: John Griffin
Title: Vice President

PEZZOLA - FOSTER TRUST U/T/D 4/3/87

By: /s/ Stephen P. Pezzola
---------------------------------------------
Name: Stephen P. Pezzola, Trustee

JOSEPH GORODNICK

------------------------------------------------

ITHZAK and ESTHER HOFFI

/s/ Ithzak Hoffi
------------------------------------------------

/s/ Esther Hoffi
------------------------------------------------

CHIM-NIR LTD.

By: /s/ Ilan Sela and /s/ Arie Etziony
---------------------------------------------
Name: Ilan Sela and Arie Etziony
Title: Director / Director

5
<PAGE>

HAREL-HAMISHMAR INVESTMENTS LTD.

By:
---------------------------------------------
Name:
Title:

AL-BEN LTD.

By: /s/ Josef Paluch
---------------------------------------------
Name: Josef Paluch
Title: CEO

ILAN SELAH

/s/ Ilan Selah
------------------------------------------------

ARYEH and YUVAL EZYONI

/s/ Aryeh Ezyoni
------------------------------------------------

/s/ Yuval Ezyoni
------------------------------------------------

MORDECHAI GAZIT

/s/ M. Gazit
------------------------------------------------

SHAUL BERGER

------------------------------------------------

6
<PAGE>

REUVEN AND NAOMI ASHKENAZY

/s/ Reuven Ashkenazi
------------------------------------------------

------------------------------------------------

AVRAHAM FISCHER

------------------------------------------------

MIRI LENT

------------------------------------------------

I. FISCHER & CO., as Trustee U/A dtd
11/10/97
FBO: The parties identified on Schedule A
hereto

By:
-------------------------------------------
Name:
Title:

VICTOR HALPERT

------------------------------------------------

YOTAM FINANCING TECHNOLOGICAL VENTURES LTD.

By: /s/ Arie Hinkis
---------------------------------------------
Name: Arie Hinkis
Title: President

7
<PAGE>

SCHLOMO RACHIV

------------------------------------------------

8
<PAGE>

SCHEDULE A

I. Fischer & Co., as Trustee U/A dtd 11/10/97

FBO: Y. Azai Investments Ltd.
FBO: Galran Properties (1993) Ltd.
FBO: Tom Holdings and Properties (1993) Ltd.
FBO: Eichot Capital Markets and Investments (1993) Ltd.
FBO: Arie Zimmerman
FBO: Ithzak and Esther Hoffi
FBO: Chim-Nir Ltd.
FBO: MMD Technology Israel Ltd.
FBO: Reger Investment Company Ltd.
FBO: Cham Foods (Israel) Ltd.
FBO: Harel-Hamishmar Investments Ltd.
FBO: Reuven and NaomiAshkenazy
FBO: Al-Ben Ltd.
FBO: Miri Lent
FBO: Ilan Selmo
FBO: Yotam Financing and Technological Ventures Ltd.
FBO: Hananyah and Tamar Amishav
FBO: Phelix Lachman
FOB: Mordechai Gazit
FOB: Michael Barzily, or Successor, as Trustee on behalf of Meir Leiberman
FOB: Michael Barzily, or Successor, as Trustee on behalf of Dudi Gidron
FOB: Michael Barzily, or Successor, as Trustee on behalf of Menashe Shahar

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EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated January 28, 2000 in this Amendment No. 4 to the
Registration Statement (Form S-1) and related Prospectus of Vyyo Inc.

/s/ ERNST & YOUNG LLP

San Jose, California
March 31, 2000