EX-4.8 3 exhibit_4-8.htm EXHIBIT 4.8

EXHIBIT 4.8
THE SECURITY REPRESENTED BY THIS INSTRUMENT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). ACCORDINGLY, THIS SECURITY MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THE TRANSFER OF THIS SECURITY IS ALSO SUBJECT TO THE CONDITIONS SPECIFIED IN THE SECURITIES PURCHASE AGREEMENT, DATED AS OF FEBRUARY 14, 2022, AS AMENDED AND MODIFIED FROM TIME TO TIME, BETWEEN ALLOT LTD. (THE “COMPANY”) AND THE HOLDER PARTY THERETO. THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITY UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER.
ALLOT LTD.
CONVERTIBLE PROMISSORY NOTE

February 17, 2022 | $40,000,000.00

ALLOT LTD., a company limited by shares organized under the laws of the State of Israel (the “Company”), hereby promises to pay to Lynrock Lake Master Fund LP, a Cayman Islands Exempted Limited Partnership (the “Purchaser” and together with its registered assigns, collectively in the singular, the “Holder”) or its registered assigns, the principal amount of Forty Million and 00/100 Dollars ($40,000,000.00) (the “Principal Amount”). This Note is being issued pursuant to a Securities Purchase Agreement, dated as of February 14, 2022 (the “Purchase Agreement”), between the Company and Purchaser. The Purchase Agreement contains terms governing the rights of the Holder of this Note, and all provisions of the Purchase Agreement are hereby incorporated herein in full by reference. Unless otherwise indicated herein, capitalized terms used in this Note have the same meanings set forth in the Purchase Agreement.
ARTICLE I
DEFINED TERMS
The terms defined in this Article I (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Note shall have the respective meanings specified in this Article I. The words “herein,” “hereof,” “hereunder” and words of similar import refer to this Note as a whole and not to any particular Article, Section or other subdivision. The terms defined in this Article I include the plural as well as the singular.
“Affiliate” shall have the meaning specified in Rule 501(b) of Regulation D under the Securities Act.

“Beneficial Ownership Limitation” shall have the meaning specified in Section 5.1(g).
“Board of Directors” shall have the meaning specified in Section 5.3(a).
“Business Day” shall have the meaning set forth in the Purchase Agreement.
“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP; provided that Capital Lease Obligations shall exclude any leases that would have been treated as operating leases under GAAP prior to the adoption of Accounting Standards Codification 842, Leases.
“Change of Control” shall mean the occurrence, directly or indirectly, of one or more of the following events (whether in one transaction or a series of related transactions):
(1) any sale, exchange, assignment, conveyance, transfer or other disposition of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any person or group of related persons for purposes of Sections 13(d) and 14(d) of the Exchange Act (a “Group”); or
(2) any consolidation, merger or combination involving the Company after which (a) any person or Group is or becomes the beneficial owner, directly or indirectly, of Ordinary Shares representing more than 50% of the total ordinary voting power represented by the issued and outstanding Ordinary Shares of the Company or (b) the Company is not the surviving Person; or
(3) the Company becomes aware that any person or Group is or becomes the beneficial owner, directly or indirectly, of Ordinary Shares representing more than 50% of the total ordinary voting power represented by the issued and outstanding Ordinary Shares of the Company; or
(4) a Delisting Event; or
(5) the shareholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company.
“Change of Control Amount” means the amount in cash payable on an Optional Conversion/Redemption Date pursuant to Section 6.2(ii) or Section 6.3(ii).
“Change of Control Notice” shall have the meaning specified in Section 6.1(b).
“Closing Sale Price” shall have the meaning specified in Section 5.1(d).
“Company” shall have the meaning specified in the preamble.
“Concert Parties” shall have the meaning specified in Section 5.1(g).
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“Conversion Date” shall have the meaning specified in Section 5.1(b).
“Conversion Notice” shall have the meaning specified in Section 5.1(b).
“Conversion Price” shall mean, as of any time, $1,000 divided by the Conversion Rate as of such time.
“Conversion Rate” shall have the meaning specified in Section 5.2.
“Delisting Event” means the Ordinary Shares cease to be listed or quoted on any of The New York Stock Exchange, The Nasdaq Global Market or The Nasdaq Global Select Market (or any of their respective successors).
“Demand” shall have the meaning specified in Section 7.2(b).
“Distributed Assets” shall have the meaning specified in Section 5.3(d).
“DTC” shall have the meaning specified in Section 5.1(c)(iii).
“Event of Default” shall have the meaning specified in Section 4.1.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Expiration Date” shall have the meaning specified in Section 5.3(f).
“Expiration Time” shall have the meaning specified in Section 5.3(f).
“Holder” shall have the meaning specified in the preamble.
“Holder Optional Conversion/Redemption Notice” shall have the meaning specified in Section 6.1(c).
“First Extension” shall have the meaning specified in the definition of “Maturity Date.”
“Group” shall heave the meaning specified in the definition of “Change of Control.”
“Independent Financial Advisor” shall mean an investment banking or accounting firm of international standing.
“Lynrock” shall have the meaning set forth in the Purchase Agreement.
“Maturity Date” means February 14, 2025; provided that the Company, in its sole discretion, may irrevocably elect to extend the Maturity Date to February 14, 2026 by providing written notice to the Holder no later than November 16, 2024 (the “First Extension”); provided, further that the Company, in its sole discretion, may make one additional irrevocable election to extend the Maturity Date to February 14, 2027 by providing written notice to the Holder no later than November 16, 2025 (the “Second Extension”), provided, further neither of the First Extension nor Second Extension shall be effective unless (i) the Company’s notice of such extension is made to the Holder 4:30 p.m. or later, New York City time, on a Business Day and (ii) the Company publicly announces such extension prior to 9:00 a.m., New York City time on the immediately subsequent Business Day.
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“Optional Conversion” shall have the meaning specified in Section 6.1(c).
“Optional Conversion/Redemption Date” shall have the meaning specified in Section 6.1(a).
“Optional Redemption” shall have the meaning specified in Section 6.1(c).
“Ordinary Shares” shall have the meaning specified in Section 3.2.
“Organic Change” shall have the meaning specified in Section 5.3(l).
“Permitted Refinancing Indebtedness” shall mean, with respect to this Note, indebtedness issued or incurred in exchange for, or the net proceeds of which are used to modify, extend, refinance, renew, replace or refund in full this Note; provided that, (i) such indebtedness is incurred on the Maturity Date or not more than 60 days prior to the Maturity Date and (ii) immediately upon the issuance or incurrence of such indebtedness, (a) the indebtedness evidenced by this Note is fully and indefeasibly repaid or (b) the proceeds of such indebtedness are placed into a third-party escrow account reasonably acceptable to Holder for the purpose of full, indefeasible repayment of this Note at maturity.
“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.
“Principal Amount” shall have the meaning specified in the preamble.
“Purchase Agreement” shall have the meaning specified in the preamble.
“Purchaser” shall have the meaning specified in the preamble.
“Reference Property” shall have the meaning specified in Section 5.3(l).
“Second Extension” shall have the meaning specified in the definition of “Maturity Date.”
“Securities Act” shall have the meaning specified in the legend above.
“Spin-Off” shall have the meaning specified in Section 5.3(d).
“Spin-Off Valuation Period” shall have the meaning specified in Section 5.3(d).
“Subsidiary” shall have the meaning set forth in the Purchase Agreement.
“Successor Company” shall have the meaning specified in Section 8.1(a).
“Trading Day” shall have the meaning set forth in the Purchase Agreement.
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“Transaction Documents” shall mean collectively, this Note, the Purchase Agreement, the Registration Rights Agreement and the other documents and agreements entered into, or to be entered into, in connection with the transactions contemplated hereby and thereby.
“Transfer Agent” shall mean American Stock Transfer & Trust Company or any successor thereto appointed by the Company.
“Trigger Event” shall have the meaning specified in Section 5.3(d).
“Underlying Shares” shall have the meaning specified in Section 5.1(c)(i).
ARTICLE II
PAYMENT OF INTEREST
This Note will not bear regular interest. Upon the occurrence and during the continuance of an Event of Default, this Note will bear default interest at a rate of 6% per annum, payable in cash quarterly in arrears on each March 31, June 30, September 30 and December 31 for which interest is owed.
ARTICLE III
PAYMENT OF PRINCIPAL ON NOTE
Section 3.1 Scheduled Payment. Unless converted or redeemed as set forth below, the Principal Amount of this Note shall be due and payable in cash on the Maturity Date.
Section 3.2 Conversion. Notwithstanding any provision contained in this Article III, the Holder of this Note may convert all or any portion of the Principal Amount of this Note into ordinary shares of the Company, par value NIS 0.10 per share (“Ordinary Shares”), in accordance with Article V, until the time as such Principal Amount of this Note has been paid in full.
Section 3.3 Optional Conversion or Conversion upon a Change of Control. Notwithstanding any provision contained in this Article III, if a Change of Control occurs at any time prior to the payment of this Note in full, the Holder of this Note shall have the right, in its sole discretion, to require that the Company convert the Note to Ordinary Shares or redeem all (but not less than all) of the outstanding Principal Amount of the Note, in accordance with Article VI.
ARTICLE IV
EVENTS OF DEFAULT; REMEDIES ON DEFAULT
Section 4.1 Event of Default. An “Event of Default” shall exist if any of the following conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of the Principal Amount or Change of Control Amount on the Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise (including pursuant to Article VI) and such failure to pay is not cured within three Business Days after the occurrence thereof;
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(b) the Company’s failure to deliver, when required by this Note, a Change of Control Notice or notice of a Change of Control or an Organic Change pursuant to Section 5.4(c);
(c) a default in the Company’s obligation to convert this Note in accordance with Article V upon the exercise of the conversion right with respect thereto, if such default is not cured within five Business Days after its occurrence;
(d) the Company defaults in the performance of, or compliance with, any material term contained in any Transaction Document and the default is not remedied within 30 days after the Company receives written notice of the default from Holder (any such written notice to be identified as a “notice of default” and to refer specifically to this Section 4.1(d));
(e) the Company (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) is subject to involuntary proceedings or an involuntary petition shall be filed seeking liquidation, reorganization, winding up, suspension of payments, dissolution, administration or other relief in respect of the Company, any Subsidiary of the Company or any of the Company’s or its Subsidiaries’ Affiliates, or of all or a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar law, (iv) is subject to the involuntary appointment of a receiver, interim receiver, receiver-manager, trustee, custodian, conservator, liquidator, administrative receiver, administrator, compulsory manager or similar official for the Company or any of the Company’s or its Subsidiaries’ Affiliates, or of all or a substantial part of its assets, (v) makes an assignment for the benefit of its creditors, (vi) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property or (vii) is adjudicated as insolvent or to be liquidated;
(f) any representation, warranty or certification made herein or pursuant to any Transaction Document by the Company was not true or correct in any material respect as of the time made;
(g) the Company, any Subsidiary of the Company or any of their respective Affiliates fails to pay principal when due (whether at stated maturity or otherwise) or an uncured default exists that results in the acceleration of maturity of any indebtedness of the Company, any Subsidiary of the Company or any of their respective Affiliates in an aggregate amount in excess of $10,000,000 (or its foreign currency equivalent), unless such indebtedness is discharged, or such acceleration is rescinded, stayed or annulled, within any applicable cure period set forth in the relevant agreement or instrument;
(h) one or more final non-appealable judgments for the payment of money in any aggregate amount in excess of $10,000,000 shall be rendered against the Company, any Subsidiary of the Company or any of their respective Affiliates, or any combination thereof, and the same shall remain undischarged for a period of 60 days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to levy upon assets or properties of the Company, any Subsidiary of the Company or any of their respective Affiliates to enforce any such judgment;
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(i) an Event of Default under any other Note issued pursuant to the Purchase Agreement; or
(j) a court or governmental authority of competent jurisdiction enters an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of the Company, or any such petition shall be filed against the Company and such petition shall not be dismissed within 60 days.
Section 4.2 Acceleration.
(a) If an Event of Default with respect to the Company described in subsection (e) or (j) of Section 4.1 has occurred, the Note shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, the Holder of the Note may, at any time, at its option, by notice to the Company, declare the Note to be immediately due and payable.
(c) Upon the Note becoming due and payable under this Section 4.2, whether automatically or by declaration, the Note will forthwith mature and the entire unpaid Principal Amount, together with any accrued and unpaid default interest and, if applicable, any Change of Control Amount, shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived.
Section 4.3 Other Remedies. If any Event of Default has occurred and is continuing, and irrespective of whether the Note has become or has been declared immediately due and payable under Section 4.2, the Holder of the Note may proceed to protect and enforce the rights of such Holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein, for an injunction against a violation of any of the terms hereof or thereof or in aid of the exercise of any power granted hereby or thereby or by law or otherwise.
Section 4.4 No Waivers or Election of Remedies; Expenses. No course of dealing and no delay on the part of the Holder of the Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such Holder’s rights, powers or remedies. The Company shall pay the Principal Amount, default interest and Change of Control Amount of the Note without any deduction for any setoff or counterclaim. No right, power or remedy conferred by the Purchase Agreement or by the Note upon the Holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. The Company will pay to the Holder of the Note on demand such further amount as shall be sufficient to cover all reasonable costs and expenses of such Holder incurred in any enforcement or collection under this Article IV, including, without limitation, reasonable attorneys’ fees, expenses and disbursements.
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Section 4.5 Waiver of Demand. The Company hereby waives diligence, presentment, protest and demand and notice of protest and demand, dishonor and nonpayment of this Note, and expressly agrees that the Holder hereof may accept security for this Note or release security for this Note, all without in any way affecting the liability of the Company hereunder.
ARTICLE V
CONVERSION
Section 5.1 Conversion Procedure.
(a) At any time prior to the payment of the Principal Amount of this Note in full, the Holder of this Note may convert all of the outstanding Principal Amount of this Note or any portion thereof that is equal to $1,000 or an integral multiple of $1,000 in excess thereof, into a number of Ordinary Shares determined by the following calculation: (i) the portion of the Principal Amount of the Note designated by such Holder to be converted, divided by (ii) $1,000, multiplied by (iii) the Conversion Rate (as defined below) then in effect.
(b) Except as otherwise expressly provided herein, each conversion of this Note shall be deemed to have been effected as of the close of business on the date (the “Conversion Date”) on which the Holder of this Note has completed, signed and delivered to the Company an irrevocable conversion notice in the form attached to this Note as Attachment 1 (the “Conversion Notice”). At such time as such conversion has been effected, the rights of the Holder of this Note as such Holder to the extent of the conversion (except the right to receive in cash any unpaid Change of Control Amount) shall cease, and the Person or Persons in whose name or names the Ordinary Shares are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the Ordinary Shares represented thereby.
(c) As soon as possible after a conversion has been effected (but in any event within two Business Days in the case of clause (i) below), the Company shall do the following:
(i) register the issuance to the converting Holder of the number of Ordinary Shares issuable upon conversion (in whole or in part) of this Note (the “Underlying Shares”) in the Company’s share transfer registry;
(ii) issue the Underlying Shares and deposit such Underlying Shares with the Transfer Agent, in the name and on behalf of the Holder of the Note;
(iii) cause the Transfer Agent to issue and deliver to the converting Holder certificates or a book-entry transfer for the relevant number of Ordinary Shares to Holder; provided, that, if (y) either (A) the Transaction Shelf Registration Statement or any replacement Registration Statement (each as defined in the Registration Rights Agreement) pursuant to Section 1.1(b) of the Registration Rights Agreement is effective and available or (B) the Underlying Shares would be eligible for resale pursuant to Rule 144 by the Holder, without any requirements as to volume, manner of sale, availability of current public information or notice under the Securities Act, and (x) the Holder elects in the applicable Conversion Notice to receive such Underlying Shares through the Depository Trust Company (“DTC”), the Company shall credit such aggregate number of Underlying Shares to which the Holder shall be entitled to the Holder’s or its designee’s balance account with DTC through DTC’s Deposit/Withdrawal at Custodian (DWAC) system; and
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(iv) if the Holder has surrendered this Note in connection with such conversion, except where the entire Principal Amount is converted in full, deliver to the Holder a new Note representing the portion of the Principal Amount which was not converted.
The Holder shall cooperate with the Company and the Transfer Agent to facilitate the process outlined above, including through the execution of the Conversion Notice. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless all of the Principal Amount is being converted. The Holder and the Company shall maintain records showing the Principal Amount converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon any such partial conversion. The Holder and any transferee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of any portion of this Note, the Principal Amount of this Note may be less than the principal amount stated on the face hereof.
(d) If a fractional Ordinary Share would, except for the provisions hereof, be deliverable upon conversion of this Note, the Company, in lieu of delivering such fractional share, shall in the event the conversion is being consummated in connection with repayment in full of the Note, pay in cash an amount equal to the market price of such fractional share based on the closing price (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) of the Ordinary Shares as reported in composite transactions for the principal U.S. national or regional securities exchange on which the Ordinary Shares are traded (the “Closing Sale Price”) on the Conversion Date; provided, that if the Ordinary Shares are not listed for trading on a U.S. national or regional securities exchange on the relevant date, the “Closing Sale Price” shall be the last quoted bid price for per Ordinary Share in the over-the-counter market on the relevant date as reported by OTC Markets Group Inc. or a similar organization; provided, further that if the Ordinary Shares are not so quoted, the “Closing Sale Price” shall be the average of the mid-point of the last bid and ask prices per Ordinary Share on the relevant date from a nationally recognized independent investment banking firm selected by the Holder for this purpose.
(e) The issuance of the Underlying Shares upon conversion of this Note shall be made without charge to the Holder hereof for any issuance tax in respect thereof or other cost incurred by the Company in connection with such conversion and the related issuance of Underlying Shares, unless the tax is due because the Holder requests such Underlying Shares be issued in a name other than the Holder’s name, in which case the Holder shall pay the tax. Upon conversion of this Note, the Ordinary Shares issuable upon such conversion shall be, and the Company shall take all such actions as are necessary in order to ensure that the Ordinary Shares issuable upon such conversion shall be validly issued, fully paid and nonassessable.
(f) The Company shall not close its books against the transfer of Ordinary Shares issued or issuable upon conversion of this Note in any manner which interferes with the timely conversion of this Note.
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(g) The Company shall not effect the conversion of all or a portion of the Note to the extent that, after giving effect to such issuance after conversion, Holder (together with its Affiliates and any other person or entity acting as a group together with Holder or any of its Affiliates (collectively, the “Concert Parties”)), would beneficially own Ordinary Shares in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of Ordinary Shares beneficially owned by Holder and its Concert Parties shall include the number of Ordinary Shares beneficially owned by Holder and such Ordinary Shares issuable upon conversion of the portion of the Note with respect to which such determination is being made, but shall exclude the number of Ordinary Shares which would be issuable upon (i) conversion of the remaining portion of the Note beneficially owned by Holder and (ii) conversion or exercise of the unexercised or unconverted portion of any loan to or securities of the Company (or any successor thereto) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by Holder or any of its Concert Parties. Except as set forth in the preceding sentence, for purposes of this Section 5.1(g), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by Holder that the Company is not representing to Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 5.1(g) applies, the determination of whether and the extent to which a Note may be converted (in relation to other loans or securities owned by Holder together with any Affiliates) shall be made in good faith by Holder holding such Note in consultation with its own counsel. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 5.1(g), in determining the number of outstanding Ordinary Shares, Holder may rely on the number of outstanding Ordinary Shares as reflected in (x) the Company’s (or its successor’s) most recent periodic or annual report, as the case may be, filed with the SEC, (y) a more recent public announcement by the Company (or its successor) or (z) any other notice by the Company or the Transfer Agent (or its successor or successor’s transfer agent) setting forth the number of Ordinary Shares outstanding. Upon the written or oral request of Holder, the Company shall within two Business Days confirm orally and in writing to Holder the number of Ordinary Shares then outstanding. In any case, the number of Ordinary Shares outstanding shall be determined after giving effect to the conversion or exercise of loans or securities of the Company, including the Note, by Holder or its Concert Parties since the date as of which such number of outstanding Ordinary Shares was reported. The “Beneficial Ownership Limitation” shall initially be 19.99% of the number of Ordinary Shares outstanding immediately after giving effect to the issuance of the Conversion Shares issuable upon conversion of the applicable portion of the Note; provided, that with respect to any Holder other than the Purchaser and its Affiliates, the “Beneficial Ownership Limitation” shall be 9.99% of the number of Ordinary Shares outstanding immediately after giving effect to the issuance of the Conversion Shares issuable upon conversion of the applicable portion of the Note. The Purchaser (or any Affiliate of the Purchaser that is the Holder), upon written notice to the Company, may increase or decrease the Beneficial Ownership Limitation applicable to it, provided that the Beneficial Ownership Limitation in no event exceeds 24.99% of the number of Ordinary Shares outstanding immediately after giving effect to the issuance of Conversion Shares issuable upon conversion of the applicable portion of the Note. Any decrease in the Beneficial Ownership Limitation will become effective immediately, and any increase in the Beneficial Ownership Limitation applicable to the Purchaser will become effective on the 61st day after such written notice is delivered to the Company. If any Ordinary Shares otherwise due upon the conversion of the Note are not delivered as a result of this Section 5.1(g), then the Company’s obligation to deliver such Ordinary Shares will not be extinguished, and the Company will deliver such Ordinary Shares as soon as reasonably practicable after the applicable Holder provides written confirmation to the reasonable satisfaction of the Company that such delivery will not contravene the Beneficial Ownership Limitation. Any purported delivery of Ordinary Shares upon conversion of the Note will be void and have no effect to the extent, and only to the extent, that such delivery would contravene the Beneficial Ownership Limitation. The provisions of this Section 5.1(g) shall be construed and implemented in a manner otherwise than in strict conformity with the terms hereof in order to correct such terms (or any portion thereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained, which intention shall include, among other things, that Section 328 to the Israeli Companies Law, 1999, shall not apply to any of the transactions contemplated under this Note, or to make changes or supplements necessary or desirable to properly give effect to such limitation.
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Section 5.2 Conversion Rate. The Principal Amount of this Note shall be convertible into Ordinary Shares at a rate (subject to adjustment as provided in this Article V, the “Conversion Rate”) initially equal to 97.0874 per $1,000 Principal Amount of the Note. In the event that the Company exercises the First Extension, effective on February 15, 2025, the Conversion Rate shall be increased to equal the Conversion Rate then in effect multiplied by 110.8%. In the event that the Company exercises the Second Extension, effective on February 15, 2026, the Conversion Rate shall be further increased to equal the Conversion Rate then in effect multiplied by 112.0%. To address dilution of the conversion rights granted under this Note, the Conversion Rate shall be subject to adjustment from time to time pursuant to Section 5.3.
Section 5.3 Adjustments to Conversion Rate. The Conversion Rate shall be adjusted from time to time by the Company if any of the following events occurs:
(a) In case the Company shall, at any time or from time to time while the Note is outstanding, pay a dividend in Ordinary Shares or make a distribution in Ordinary Shares to all or substantially all holders of Ordinary Shares, then the Conversion Rate shall be increased based on the following formula:

CR1 = CR0 × | OS1 |
OS0 |

where

CR0 | = | the Conversion Rate in effect at 5:00 p.m., New York City time, on the Trading Day immediately preceding the ex-dividend date for such dividend or distribution;
CR1 | = | the Conversion Rate in effect on the ex-dividend date for such dividend or distribution;
OS0 | = | the number of Ordinary Shares outstanding at 5:00 p.m., New York City time, on the Trading Day immediately preceding the ex-dividend date for such dividend or distribution; and
OS1 | = | the number of Ordinary Shares that would be outstanding immediately after, and solely as a result of, giving effect to such dividend or distribution.

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Any adjustment made pursuant to this Section 5.3(a) shall become effective immediately prior to 9:00 a.m., New York City time, on the ex-dividend date for such dividend or distribution. If any dividend or distribution that is the subject of this Section 5.3(a) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the board of directors of the Company (the “Board of Directors”) publicly announces its decision not to pay or make such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.
(b) In case outstanding Ordinary Shares shall be subdivided or split into a greater number of Ordinary Shares or combined or reverse split into a smaller number of Ordinary Shares, the Conversion Rate shall be adjusted based on the following formula:

CR1 = CR0 × | OS1 |
OS0 |

where

CR0 | = | the Conversion Rate in effect at 5:00 p.m., New York City time, on the Trading Day immediately preceding the effective date of such subdivision or combination;
CR1 | = | the Conversion Rate in effect on the effective date of such subdivision or combination;
OS0 | = | the number of Ordinary Shares outstanding at 5:00 p.m., New York City time, on the Trading Day immediately preceding the effective date of such subdivision or combination; and
OS1 | = | the number of Ordinary Shares that would be outstanding immediately after, and solely as a result of, giving effect to such subdivision or combination.

Any adjustment made pursuant to this Section 5.3(b) shall become effective immediately prior to 9:00 a.m., New York City time, on the effective date of such subdivision or combination.
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(c) In case the Company shall issue rights (other than rights issued pursuant to a shareholders’ rights plan or a dividend or distribution on Ordinary Shares in Ordinary Shares as set forth in Section 5.3(a) above) or warrants to all or substantially all holders of its Ordinary Shares entitling them to purchase, for a period expiring within 45 calendar days of the date of issuance, Ordinary Shares at a price per Ordinary Share less than the average of the Closing Sale Prices of the Ordinary Shares during the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the ex-dividend date for the distribution, the Conversion Rate shall be increased based on the following formula:

CR1 = CR0 × | OS0+X |
OS0+Y |

where

CR0 | = | the Conversion Rate in effect at 5:00 p.m., New York City time, on the Trading Day immediately preceding the ex-dividend date for such issuance;
CR1 | = | the Conversion Rate in effect on the ex-dividend date for such issuance;
OS0 | = | the number of Ordinary Shares outstanding at 5:00 p.m., New York City time, on the Trading Day immediately preceding the ex-dividend date for such issuance;
X | = | the total number of Ordinary Shares issuable pursuant to such rights or warrants; and
Y | = | the number of Ordinary Shares equal to the quotient of (x) aggregate price payable to exercise such rights or warrants, divided by the average of the Closing Sale Prices of the Ordinary Shares during the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the ex-dividend date for such issuance.

Any adjustment made pursuant to this Section 5.3(c) shall become effective immediately prior to 9:00 a.m., New York City time, on the ex-dividend date for such issuance. If any rights or warrants described in this Section 5.3(c) are not so issued, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors publicly announces its decision not to issue such rights or warrants, to the Conversion Rate that would then be in effect if such issuance had not been declared. To the extent that such rights or warrants are not exercised prior to their expiration or Ordinary Shares are otherwise not delivered pursuant to such rights or warrants upon the exercise of such rights or warrants, the Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of delivery of only the number of Ordinary Shares actually delivered. In determining the aggregate price payable to exercise such rights and warrants, there shall be taken into account any consideration received by the Company for such rights or warrants and the value of such consideration (if other than cash, to be determined in good faith by the Board of Directors).
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(d) In case the Company shall, by dividend or otherwise, distribute to all or substantially all holders of its outstanding Ordinary Shares of any class of share capital of the Company or evidences of its indebtedness or assets (including securities, but excluding (i) any dividends or distributions referred to in Section 5.3(a), (ii) any rights or warrants referred to in Section 5.3(c), (iii) any dividends or distributions referred to in Section 5.3(e), (iv) any dividends or distributions in connection with an Organic Change to which Section 5.3(e) applies, or (v) any Spin-Offs to which the provisions set forth below in this Section 5.3(d) applies) (any of the foregoing hereinafter in this Section 5.3(d) called the “Distributed Assets”), then, in each such case, the Conversion Rate shall be increased based on the following formula:

CR1 = CR0 × | SP0 |
SP0 – FMV |

where

CR0 | = | the Conversion Rate in effect at 5:00 p.m., New York City time, on the Trading Day immediately preceding the ex-dividend date for such distribution;
CR1 | = | the Conversion Rate in effect on the ex-dividend date for such distribution;
SP0 | = | the average of the Closing Sale Prices of the Ordinary Shares during the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the ex-dividend date for such distribution; and
FMV | = | the fair market value on the ex-dividend date for such distribution of the Distributed Assets so distributed applicable to one Ordinary Share, as determined in good faith by the Board of Directors.

In the event where there has been a payment of a dividend or other distribution on the Ordinary Shares consisting of shares of capital stock of any class or series, or similar equity interest, of or relating to a Subsidiary or other business unit of the Company (a “Spin-Off”) that are, or when issued, will be, traded or listed on the New York Stock Exchange, the Nasdaq Global Market, the Nasdaq Global Select Market or any other U.S. national securities exchange or market, then the Conversion Rate shall instead be increased based on the following formula:

CR1 = CR0 × | FMV0 + MP0 |
MP0 |

where

CR0 | = | the Conversion Rate in effect at 5:00 p.m., New York City time, on the Trading Day immediately preceding the ex-dividend date for such distribution;
CR1 | = | the Conversion Rate in effect on the ex-dividend date for such distribution;
FMV0 | = | the average of the Closing Sale Prices of the Distributed Assets applicable to one Ordinary Share during the ten consecutive Trading Day period commencing on and including the effective date of the Spin-Off (the “Spin-Off Valuation Period”); and
MP0 | = | the average of the Closing Sale Prices of the Ordinary Shares during the Spin-Off Valuation Period.

The increase to the Conversion Rate under the preceding paragraph shall occur on the earlier of (x) the date that is immediately after the end of the Spin-Off Valuation Period or (y) the Conversion Date; provided that in the event of any conversion during the Spin-Off Valuation Period, references to “10” in the preceding paragraph shall be deemed to be replaced with such lesser number of Trading Days as have elapsed from, and including, the effective date of such Spin-Off to, and including, the Conversion Date.
Any adjustment made pursuant to this Section 5.3(d) shall become effective immediately prior to 9:00 a.m., New York City time, on the ex-dividend date for such distribution. If any dividend or distribution of the type described in this Section 5.3(d) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors publicly announces its decision not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.
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Rights or warrants distributed by the Company to all holders of Ordinary Shares entitling the holders thereof to subscribe for or purchase shares of the Company’s share capital (either initially or under certain circumstances), which rights or warrants, until the occurrence of a specified event or events (“Trigger Event”): (i) are deemed to be transferred with such Ordinary Shares; (ii) are not exercisable; and (iii) are also issued in respect of future issuances of Ordinary Shares, shall be deemed not to have been distributed for purposes of this Section 5.3 (and no adjustment to the Conversion Rate under this Section 5.3 will be required) until the occurrence of the earliest Trigger Event, whereupon such rights and warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Conversion Rate shall be made under this Section 5.3(d). If any such right or warrant, including any such existing rights or warrants distributed prior to the date of this Note, are subject to events, upon the occurrence of which such rights or warrants become exercisable to purchase different securities, evidences of indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and record date with respect to new rights or warrants with such rights. In addition, in the event of any distribution (or deemed distribution) of rights or warrants, or any Trigger Event or other event (of the type described in the preceding sentence) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Rate under this Section 5.3 was made, (A) in the case of any such rights or warrants that shall all have been redeemed or repurchased without exercise by any holders thereof, the Conversion Rate shall be readjusted upon such final redemption or repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or repurchase price received by a holder or holders of Ordinary Shares with respect to such rights or warrants (assuming such holder had retained such rights or warrants), made to all holders of Ordinary Shares as of the date of such redemption or repurchase and (B) in the case of such rights or warrants that shall have expired or been terminated without exercise by any holders thereof, the Conversion Rate shall be readjusted as if such rights and warrants had not been issued.
No adjustment of the Conversion Rate shall be made pursuant to this Section 5.3(d) in respect of rights or warrants distributed or deemed distributed on any Trigger Event to the extent that such rights or warrants are actually distributed to the Holder of this Note upon conversion by such Holder of this Note.
(e) In case the Company shall pay a dividend or otherwise distribute to all or substantially all holders of its Ordinary Shares a dividend or other distribution of exclusively cash excluding any dividend or distribution in connection with the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, then the Conversion Rate shall be increased based on the following formula:

CR1 = CR0 × | SP0 |
SP0 – DIV |

where

CR0 | = | the Conversion Rate in effect at 5:00 p.m., New York City time, on the Trading Day immediately preceding the ex-dividend date for such dividend or distribution;
CR1 | = | the Conversion Rate in effect on the ex-dividend date for such dividend or distribution;
SP0 | = | the Closing Sale Price of the Ordinary Shares during the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the ex-dividend date for such dividend or distribution; and
DIV | = | the amount in cash per Ordinary Share the Company distributes to holders of its Ordinary Shares.

Any adjustment made pursuant to this Section 5.3(e) shall become effective immediately prior to 9:00 a.m., New York City time, on the ex-dividend date for such dividend or distribution. If any dividend or distribution of the type described in this Section 5.3(e) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors publicly announces its decision not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.
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(f) In case of purchases of the Ordinary Shares pursuant to a tender offer or exchange offer made by the Company or any Subsidiary of the Company for all or any portion of the Ordinary Shares, to the extent that the fair market value, as determined in good faith by the Board of Directors, of cash and any other consideration included in the payment per Ordinary Share exceeds the Closing Sale Price of the Ordinary Shares on the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender offer or exchange offer (as it may be amended) (the “Expiration Date”), the Conversion Rate shall be increased based on the following formula:

CR1 = CR0 × | FMV + (SP1 x OS1) |
SP1 x OS0 |

where

CR0 | = | the Conversion Rate in effect at 5:00 p.m., New York City time, on the Expiration Date;
CR1 | = | the Conversion Rate in effect immediately after 5:00 p.m., New York City time, on the Expiration Date;
FMV | = | the fair market value, on the Expiration Date, of the aggregate value of all cash and any other consideration paid or payable for Ordinary Shares validly tendered or exchanged and not withdrawn as of the Expiration Date, as determined in good faith by the Board of Directors;
OS1 | = | the number of Ordinary Shares outstanding immediately after the last time tenders or exchanges may be made pursuant to such tender offer or exchange offer (the “Expiration Time”), after giving effect to the purchase of all Ordinary Shares accepted for purchase or exchange in such tender or exchange offer;
OS0 | = | the number of Ordinary Shares outstanding immediately before the Expiration Time; and
SP1 | = | the average of the Closing Sale Prices of the Ordinary Shares during the 10 consecutive Trading Day period commencing on, and including, the Trading Day immediately after the Expiration Date.

Any adjustment made pursuant to this Section 5.3(f) shall become effective immediately prior to 9:00 a.m., New York City time, on the Trading Day immediately following the Expiration Date. If the Company, or one of its Subsidiaries, is obligated to purchase Ordinary Shares pursuant to any such tender or exchange offer, but the Company or such Subsidiary is permanently prevented by applicable law from effecting all such purchases or all such purchases are rescinded, the Conversion Rate shall be readjusted to be the Conversion Rate that would then be in effect if such tender or exchange offer had not been made. Except as set forth in the preceding sentence, if the application of this Section 5.3(f) to any tender offer or exchange offer would result in a decrease in the Conversion Rate, no adjustment shall be made for such tender offer or exchange offer under this Section 5.3(f).
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(g) In cases where the fair market value, as determined in good faith by the Board of Directors, of Distributed Assets and cash, including with respect to a Spin-Off, as to which Section 5.3(d) and Section 5.3(e) apply, applicable to one Ordinary Share, distributed to holders of the Ordinary Shares equals or exceeds the average of the Closing Sale Prices of the Ordinary Shares during the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the ex-dividend date for such distribution, then, rather than being entitled to an adjustment in the Conversion Rate, Holder will be entitled to receive upon conversion of each $1,000 of Principal Amount in respect of this Note, in addition to the Conversion Shares, the kind and amount of assets, debt securities or rights, warrants or options comprising the distribution, if any, that Holder would have received if Holder had converted such $1,000 of Principal Amount in respect of this Note immediately prior to the record date for determining the shareholders entitled to receive the distribution.
(h) In addition to those adjustments required by clauses (a)-(g) of this Section 5.3, and to the extent permitted by applicable law and subject to the applicable rules of the Nasdaq Global Select Market and any other securities exchange on which any of the Company’s securities are then listed, the Company from time to time may increase the Conversion Rate by any amount for a period of at least 20 Business Days if the Board of Directors determines that such increase would be in the Company’s best interest, and the Company may (but is not required to) increase the Conversion Rate to avoid or diminish any income tax to holders of the Ordinary Shares or rights to purchase Ordinary Shares in connection with a dividend or distribution of Ordinary Shares or similar event.
(i) All calculations under this Article V shall be made in good faith by the Company in accordance with this Article V, and shall be made to the nearest cent or to the nearest one-ten thousandth (1/10,000) of an Ordinary Share, as the case may be. No adjustment need be made for rights to purchase Ordinary Shares pursuant to a Company plan for reinvestment of dividends or for any issuance of Ordinary Shares or convertible or exchangeable securities or, except as provided in this Section 5.3, rights to purchase Ordinary Shares or convertible or exchangeable securities. The Company shall certify to Holder that all calculations are made in compliance with this Article V, and shall show Holder in detail the facts upon which such calculations and adjustments were made.
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(j) For purposes of this Section 5.3, the number of Ordinary Shares at any time outstanding shall not include Ordinary Shares held in the treasury of the Company. The Company will not pay any dividend or make any distribution on Ordinary Shares held in the treasury of the Company.
(k) Notwithstanding any of the foregoing clauses in this Section 5.3, the applicable Conversion Rate will not be adjusted pursuant to this Section 5.3(k) in the event of a distribution that would otherwise give rise to adjustment pursuant to clause (d) or (e) of this Section 5.3, if (but only if) Holder otherwise participates in such distribution, at the same time such distribution is effected to holders of Ordinary Shares, on an as-converted basis (as if Holder had converted the Principal Amount at the then applicable Conversion Rate) but without the conversion of this Note actually taking place or (ii) solely by reason of the issuance or conversion of any other Note pursuant to the Purchase Agreement.
(l) Organic Change. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company’s assets or other transaction (other than a subdivision or combination solely of Ordinary Shares), which in each case is effected in such a manner that holders of Ordinary Shares are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for or upon conversion of Ordinary Shares is referred to herein as an “Organic Change.” In the event of an Organic Change prior to repayment in full of the Note, then:
(A) at the effective time of the Organic Change, the right to convert each $1,000 Principal Amount of this Note will be changed into the right to convert such Principal Amount of this Note into the kind and amount of shares, other securities or other property or assets (including cash) or any combination thereof that a holder of a number of Ordinary Shares equal to the Conversion Rate immediately prior to such Organic Change would have owned or been entitled to receive upon such Organic Change (the “Reference Property,” with each “unit of Reference Property” meaning the kind and amount of Reference Property that a holder of one Ordinary Share would have owned or been entitled to receive upon such Organic Change); and
(B) at or prior to the effective time of such Organic Change, the Company or Successor Company, as the case may be, and any other issuer of securities constituting Reference Property shall execute and deliver to the Holder a supplement to this Note providing for such change in the right to convert each $1,000 Principal Amount of this Note.
The Company shall not become a party to any Organic Change unless the terms thereof are consistent with this Section 5.3(1).
Such supplement described in the first paragraph of this Section 5.3(1) shall provide for anti-dilution and other adjustments, and covenants for protection of the interests of the Holders of this Note, in respect of the Reference Property (and, if the Reference Property represents underlying securities, such securities) that shall be as nearly equivalent as is practicable to the adjustments and covenants provided for in this Article V in respect of Ordinary Shares. If, in the case of any Organic Change, the Reference Property includes shares of stock, securities or other property or assets (including cash or any combination thereof) of a Person other than the Company or Successor Company, as the case may be, then such supplement shall contain such additional provisions to protect the interests of the Holders as the Board of Directors shall reasonably consider necessary by reason of the foregoing.
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When the Company executes and delivers such supplement to this Note pursuant to the foregoing, the Company shall promptly deliver to the Holder an officer’s certificate briefly stating the reasons therefor, the kind or amount of cash, securities or property or assets that will comprise a unit of Reference Property (and, if the Reference Property represents underlying securities, such securities) after any such Organic Change, any adjustment to be made with respect thereto and that all conditions precedent in this Note to such execution and delivery have been complied with.
None of the foregoing provisions shall affect (i) the right of the Holder of this Note to convert all or any portion of the Principal Amount of this Note into Ordinary Shares prior to the effective time of such Organic Change,(ii) if such Organic Change constitutes a Change of Control, the rights of the Holder of this Note, at its option, to cause redemption or conversion of this Note upon the Optional Conversion/Redemption Date in respect of such Change of Control in accordance with Article VI or (iii) regardless of whether such Organic Change constitutes a Change of Control, the right of the Holder of this Note to continue to hold this Note after consummation of such Organic Change and at any time thereafter prior to the payment of the Principal Amount of this Note in full, to convert this Note into Reference Property.
The above provisions of this Section 5.3(1) shall similarly apply to successive Organic Changes.
Notwithstanding the Conversion Rate adjustment provisions described in Section 5.3(a) through (f), no adjustment to the Conversion Rate shall be made pursuant to such provisions in the event of any dividend, distribution or issuance upon an Organic Change to which the provisions under this Section 5.3(1) apply.
Section 5.4 Notices.
(a) Immediately upon any adjustment of the Conversion Rate, the Company shall send written notice thereof to the Holder of this Note, setting forth in reasonable detail and certifying the calculation of such adjustment.
(b) The Company shall send written notice to the Holder of this Note at least 20 days prior to the date on which the Company closes its books or takes a record (i) with respect to any dividend or distribution upon Ordinary Shares, any subdivision, stock split, reverse stock split or combination, or any tender offer or exchange offer or (ii) with respect to any pro rata subscription offer to holders of Ordinary Shares.
(c) The Company shall also give at least 20 days’ prior written notice to the Holder of this Note of the date on which any Change of Control, Organic Change, dissolution or liquidation shall take place.
Section 5.5 Adjustments of Prices. Whenever any provision of this Note requires the Company to calculate the Closing Sale Prices over a span of multiple days (including the Spin-Off Valuation Period and any other period for determining the Closing Sale Prices for purposes of adjustments to the Conversion Rate pursuant to Section 5.3), the Company shall make any adjustments to each that it reasonably determines to be appropriate to account for any adjustment to the Conversion Rate that becomes effective, or any event requiring an adjustment to the Conversion Rate (or changes to the market price per Ordinary Share resulting from any such event) where the ex-dividend date, effective date or Expiration Time, as the case may be, of the event occurs at any time during the period when such Closing Sale Prices are to be calculated, without duplication of any adjustment made pursuant to Section 5.3. The Company will likewise make appropriate adjustments where a Conversion Rate adjustment otherwise required to be made pursuant to the provisions of Sections 5.3(a) through (f) is not made in accordance with the provisions of Section 5.3(g) that permit participation by Holder in a distribution in lieu of such Conversion Rate adjustment.
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ARTICLE VI
HOLDER’S RIGHTS UPON CHANGE OF CONTROL
Section 6.1 General.
(a) Subject to the terms of this Article VI, if a Change of Control occurs at any time prior to the payment of this Note in full, regardless of whether the Change of Control also constitutes an Organic Change or an Organic Change otherwise occurs, the Holder of this Note shall have the right, in its sole discretion, to require that the Company convert the Note to Ordinary Shares or redeem all (but not less than all) of the outstanding Principal Amount of the Note on the date specified by the Company (the “Optional Conversion/Redemption Date”), that is not less than 20 nor more than 60 days following the date of the Change of Control Notice (as defined below).
(b) On or before the 20th day after the occurrence of a Change of Control, the Company shall provide to the Holder of this Note a written notice (the “Change of Control Notice”) of the occurrence of the Change of Control specifying:
(i) the events causing the Change of Control;
(ii) the effective date of the Change of Control; and
(iii) the Optional Conversion/Redemption Date.
No failure of the Company to give the foregoing notice and no defect therein shall limit the Holder’s right of optional conversion or redemption or affect the validity of the proceedings for the conversion or the redemption of the Note.
(c) Any conversion or redemption of this Note under this Article VI shall be made at the option of the Holder of this Note upon delivery to the Company by the Holder of a written notice (a “Holder Optional Conversion/Redemption Notice”) stating whether it elects to require the Company to convert the Note to Ordinary Shares (an “Optional Conversion”) or to redeem (an “Optional Redemption”) all of the outstanding Principal Amount of the Note.
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Section 6.2 Mechanics of Holder Optional Conversion. If the Holder of this Note delivers a Holder Optional Conversion/Redemption Notice electing an Optional Conversion in accordance with this Article VI, then, on the Optional Conversion/Redemption Date, the Company shall (i) issue to the Holder of this Note a number of Ordinary Shares determined by multiplying (A) the portion of the Principal Amount of the Note designated by such Holder to be converted divided by $1,000, by (B) the Conversion Rate then in effect and (ii) pay to the Holder an amount in cash equal to 6% per annum on the then-outstanding Principal Amount from the Conversion Date of such Optional Conversion through, and including, the Maturity Date (as it may be extended). The Company shall not become a party to any Change of Control unless the terms thereof are consistent with this Section 6.2.
Section 6.3 Mechanics of Holder Optional Redemption. If the Holder of this Note delivers a Holder Optional Conversion/Redemption Notice electing an Optional Redemption in accordance with this Article VI, then, on the Optional Conversion/Redemption Date, the Company shall (i) redeem the Note in cash at a price equal to 100% of the outstanding Principal Amount of the Note and (ii) pay to the Holder an amount in cash equal to 6% per annum on the then-outstanding Principal Amount from the date of such Optional Redemption through, and including, the Maturity Date (as it may be extended).
Section 6.4 No Effect on Holder Conversion Right. None of the foregoing provisions shall affect the right of the Holder of this Note to convert all or any portion of the Principal Amount of this Note into Ordinary Shares prior to or after the effective time of any Change of Control.
ARTICLE VII
CERTAIN COVENANTS OF THE COMPANY
Section 7.1 Limitation on Indebtedness and Liens. Without the consent of a majority in aggregate principal amount of the Note, the Company shall not, and shall not permit any Subsidiary to:
(a) create, incur, assume or be liable for any indebtedness for borrowed money unless:
(i) such indebtedness is intercompany indebtedness or
(ii) the aggregate principal amount of such indebtedness does not exceed $5,000,000;
(b) create, incur, assume or be liable for obligations, whether or not contingent, in respect of equity securities subject to repurchase or redemption (other than obligations to repurchase Ordinary Shares issued pursuant to an employee benefit plan as a result of the applicable employee’s termination, death or disability or in order to satisfy applicable statutory or regulatory obligations);
(c) create, incur, assume or be liable for all obligations owing under any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other hedging or swap agreement or arrangement, in each case (i) entered for speculative purposes and not for hedging purposes, and (ii) if and to the extent such items would appear as a liability upon a balance sheet prepared in accordance with GAAP;
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(d) create, incur, allow or be liable for any guarantee in respect of indebtedness or obligations of the type described in Sections 7.1(a), 7.1(b) or 7.1(c) above; or
(e) create, incur, allow or suffer any lien on (x) all or substantially all of the assets of the Company or its Subsidiaries or (y) any patents, copyrights, trademarks or other intellectual property of the Company or its Subsidiaries.
Notwithstanding the foregoing, Permitted Refinancing Indebtedness shall be permitted and liens securing Permitted Refinancing Indebtedness shall be permitted, provided, that this Note is fully and indefeasibly repaid at the time such liens are created.
Section 7.2 Taxation.
(a) Any and all payments (or deemed payments) to be made (or deemed made) by the Company to the Holder of this Note shall be made without withholding or deduction for or on account of any taxes, duties or similar charges imposed by any taxing authority. If any applicable law requires the deduction or withholding of any taxes, duties or governmental charges from any such payment (or deemed payment), the sum payable (or deemed payable) by the Company to the Holder shall be increased as necessary so that after such withholding or deduction has been made (including such deduction and withholding applicable to additional sums payable under this Section 7.2), the Holder receives an amount equal to what it would have received had no such withholding or deduction been made.
(b) If the Holder receives a demand or notice (a “Demand”) that would reasonably be expected to give rise to a claim for any Israeli taxes payable by the Holder in connection with any payment (or deemed payment) made by the Company to the Holder of this Note, including any penalties, interest and linkage differentials arising therefrom or with respect thereto, the Holder shall, within 30 days after receiving the Demand, notify the Company in writing of such Demand, together with a copy of all papers served with respect to such Demand and any other relevant information known to the Holder (provided that any failure by the Holder to provide such notice to the Company within such period will not relieve the Company of any liability to the Holder under this Agreement, except and only to the extent that the Company demonstrates that it has been materially prejudiced by such failure by the Holder to provide such notice within such period). If the Company gives written notice to the Holder within seven days after the Holder has delivered such written notice, that the Company (i) elects to assume the defense of the Demand (at the Company’s own cost and expense) and (ii) will fully indemnify the Holder against such Demand, including any penalties, interest and linkage differentials arising therefrom or with respect thereto, then the Company shall have the right to defend such Demand by all appropriate proceedings and shall have full control of such proceedings, including any compromise or settlement thereof (provided, however, that the Company shall not have the power to enter into any settlement or compromise that includes any assumption of non-monetary liability by the Holder). If the Company does not give to the Holder such written notice within seven days after the Holder has delivered such written notice, the Company shall fully indemnify the Holder with respect to the Demand, and shall make payment in respect thereof within ten days after demand thereof, for the full amount of any Israeli taxes payable or paid by the Holder in connection with any payment (or deemed payment) made by the Company or the Holder of this Note, including any penalties, interest and linkage differentials arising therefrom or with respect thereto. Notwithstanding the foregoing, the Company shall have no obligation to indemnify the Holder if such Israeli taxes are related to the Holder being (currently or in the past) a tax resident of or having a permanent establishment or an Israeli affiliate in Israel, or as a result of any present or former connection (other than any connection resulting from the transactions contemplated by this Note) between the Holder and the State of Israel.
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(c) All payments (or deemed payments) made by the Company to the Holder of this Note shall be considered exclusive of any value added tax or any other tax of a similar nature, which shall be borne and paid solely by the Company.
ARTICLE VIII
SUCCESSORS
Section 8.1 The Company May Consolidate, Combine, Merge, etc., only on Certain Terms. The Company shall not, in a single transaction or through a series of related transactions, consolidate, combine or merge with or into any other Person, or, directly or indirectly, sell, exchange, assign, convey, transfer, or otherwise dispose of, all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to another Person or group of affiliated Persons (in each case other than to one or more of its Subsidiaries), except that the Company may consolidate, combine or merge with or into, or sell, exchange, assign, convey, transfer, or otherwise dispose of, all or substantially all of its assets to another Person if:
(a) the Company is the surviving Person or the resulting, surviving, transferee or successor Person (the “Successor Company”) (if other than the Company) is a corporation organized or existing under the laws of Canada, the European Union, France, Taiwan, the State of Israel, Japan, the Republic of Korea, the United States, any state of the United States, the District of Columbia, or any province or territory of any of the foregoing jurisdictions, and expressly assumes, by an agreement supplemental hereto, all obligations of the Company under this Note and the other Transaction Documents including payment of the Principal Amount on the Note, and the performance and observance of all of the covenants and conditions of this Note and the other Transaction Documents to be performed by the Company;
(b) immediately after giving effect to such transaction, no Event of Default has occurred and is continuing; and
(c) if such transaction constitutes an Organic Change, the Company or the Successor Company, as applicable, complies with the provisions of Section 5.3(l) and, if the transaction constitutes a Change of Control, Article VI.
Section 8.2 Successor Substituted. Upon any consolidation or combination of the Company with, or merger of the Company with or into, any other Person or any sale, exchange, assignment, conveyance, transfer, or other disposal of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to another Person in accordance with Section 8.1, the Successor Company formed by such consolidation or combination or with or into which the Company is merged or to which such sale, exchange, assignment, conveyance, transfer, or other disposal is made shall succeed to, and may exercise every right and power of, the Company under this Note and the other Transaction Documents with the same effect as if such Successor Company had been named as the Company herein. If the predecessor is still in existence after such transaction, it will be released from its obligations and covenants under the Transaction Documents.
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ARTICLE IX
TRANSFER OF THE NOTE
Section 9.1 Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 9.2 below, the Holder of this Note shall be entitled to transfer this Note in full to any other Person. Any such transfer shall be notified to the Company according to the terms hereof and be accompanied by updated wire instructions for the new Holder(s) of this Note. In connection with any such transfer, upon surrender to the Company of this Note for transfer, the Company shall deliver to the assignee(s) designated by Holder a Note or Notes of like tenor and terms for the appropriate Principal Amount.
Section 9.2 Transfer Restrictions. The Holder of this Note may not transfer the Ordinary Shares issuable upon conversion of this Note, in a privately negotiated transaction, to any Person that would beneficially own (calculated in accordance with Section 5.1(g) above), after giving effect to such transfer, more than 9.99% of the outstanding Ordinary Shares, to the extent that the identity of the transaction counterparty can be reasonably ascertained. For the avoidance of doubt, the foregoing limitation shall not apply to (A) any block trade in which a broker dealer will attempt to sell the shares to a third party as agent or other similar transactions with a financial intermediary or (B) any bona fide sales to the public that are not directed at a particular transferee, including, without limitation, sales through electronic systems or computer algorithms.
ARTICLE X
AMENDMENT AND WAIVER
The provisions of this Note may only be amended with the written consent of the Company and the Holder of this Note.
ARTICLE XI
CANCELLATION
After the entire Principal Amount at any time owed on this Note, together with any accrued and unpaid default interest, has been paid in full or this Note has been converted in full to Ordinary Shares or redeemed in full (and in either case, the Change of Control Amount, if applicable, has been paid in full), this Note shall be surrendered to the Company for cancellation and shall not be reissued.
ARTICLE XII
NOTICES
Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with Section 8.3 of the Purchase Agreement.
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ARTICLE XIII
PAYMENTS
This Note is payable without relief from valuation or appraisement laws. All payments to be made to Holder of the Note shall be made in the lawful money of the United States of America in immediately available funds; provided, that the Company shall not have the right to pre-pay the outstanding Principal Amount of, or otherwise redeem, this Note without the consent of the Holder of this Note.
ARTICLE XIV
PLACE OF PAYMENT
Payments of principal and other amounts shall be made by wire transfer to the account designated in writing by the Holder at or prior to the time of initial issuance of this Note, or to such other address or to the attention of such other person as specified by Holder upon prior written notice to the Company.
ARTICLE XV
GOVERNING LAW
(a) THIS NOTE AND ALL ISSUES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW).
(b) The parties agree that the competent courts within the jurisdiction of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York shall have exclusive jurisdiction (and are deemed to be a convenient forum for each party) as to resolution of any dispute.
ARTICLE XVI
RANKING
The Note is a senior unsecured obligation of the Company and will rank pari passu in right of payment with all other senior unsecured and unsubordinated obligations of the Company.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company has executed and delivered this Note on February 17, 2022.

| ALLOT LTD. |
| By: | /s/ Erez Antebi |
| Name: | Erez Antebi |
| Title: | President and Chief Executive Officer |

[Signature Page to Convertible Promissory Note]

ATTACHMENT 1
FORM OF CONVERSION NOTICE
[See attached.]
Attachment 1

[FORM OF NOTICE OF CONVERSION]
Date: _________________, 20____
Allot Ltd.
Attn: General Counsel
22 Hanagar Street
Neve Ne’eman Industrial Zone B
Hod-Hasharon 4501317
Israel
HOLDER CONVERSION NOTICE
The undersigned Holder hereby gives notice to Allot Ltd., a company limited by shares organized under the laws of the State of Israel (the “Company”), pursuant to that certain Convertible Promissory Note made by the Company on February 17, 2022 (the “Note”), that the Holder elects to convert all or such portion (that is $1,000 Principal Amount or an integral multiple thereof) of the outstanding Principal Amount of the Note set forth below into fully paid and non-assessable Ordinary Shares of the Company as of the date specified below. Said conversion shall be based on the Conversion Rate as provided in the Note. In the event of a conflict between this Holder Conversion Notice and the Note, the Note shall govern, or, in the alternative, at the election of the Holder in its sole discretion, the Holder may provide a new form of Holder Conversion Notice to conform to the Note. Capitalized terms used in this notice without definition shall have the meanings given to them in the Note.

A. | Conversion Date: _________________

B. | Conversion Amount: Check one:

| ☐ | Entire Outstanding Balance

| ☐ | $___________________________

Please issue the Ordinary Shares into which the Note is being converted (in the form of uncertificated shares represented by an electronic position) to Holder, or for its benefit, as follows:

Issue to: | Name of registered holder: ________________________________________________________________________
| Mailing Address: ________________________________________________________________________________
| Email Address: _________________________________________________________________________________
| Phone Number:__________________________________________________________________________________

☐ | Check here if requesting transfer of the Conversion Shares electronically (via DWAC) to the following account:

Broker: _________________________________________________________________________________________________
DTC#: __________________________________________________________________________________________________
Account #: ______________________________________________________________________________________________
Account Name: __________________________________________________________________________________________________
Address: ________________________________________________________________________________________________

[Signature Page Follows]

Sincerely,
HOLDER:
[●]

By: _________________________________________ |

Name:
Title:
Signature Page to Holder Conversion Notice