Mayan Networks Corp/CA – ‘SC 13D/A’ on 9/28/01 re: Ariel Corp – EX-4

On:  Friday, 9/28/01   ·   Accession #:  1012870-1-502079   ·   File #:  5-46105

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Amendment to General Statement of Beneficial Ownership   —   Schedule 13D
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: SC 13D/A    Amendment No. 1 to Schedule 13D                       12     44K 
 2: EX-3        Subordinated Convertible Promissory Note 8/28/2001    10     39K 
 3: EX-4        Subordinated Convertible Promissory Note 9/26/2001    10     39K 

EX-4   —   Subordinated Convertible Promissory Note 9/26/2001

EX-4
1st Page of 10
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 
 EXHIBIT 4
 ---------

 Subordinated Convertible Promissory Note dated as of September 26, 2001

EX-4
2nd Page of 10
TOC
1st
Previous
Next
↓Bottom
Just 2nd
THIS SUBORDINATED CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE 
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE SOLD,  
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT        
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR, IF
REQUIRED BY THE ISSUER OF THIS NOTE, AN OPINION OF COUNSEL REASONABLY           
SATISFACTORY TO THE ISSUER OF THIS NOTE THAT REGISTRATION IS NOT REQUIRED UNDER 
SUCH ACT, OR IS SOLD PURSUANT TO RULE 144 OF THE SECURITIES ACT.                

SUBORDINATED CONVERTIBLE PROMISSORY NOTE

$200,000                                                      September 26, 2001
                                                           Palo Alto, California

     Ariel Corporation, a Delaware corporation ("Borrower"), for value received,
hereby unconditionally promises to pay to Mayan Networks Corporation (together  
with its successors and assigns, the "Lender"), on the earlier of (a) the       
Effective Time (as defined in that certain Agreement and Plan of Merger between 
Borrower and Lender dated as of March 28, 2001 (the "Merger Agreement")) or (b) 
Lender's demand following termination of the Merger Agreement, in lawful money  
of the United States, at the address of Lender set forth below, the principal   
sum of TWO HUNDRED THOUSAND DOLLARS AND NO CENTS ($200,000) or such other       
amount as represents the aggregate principal amount of the advances made by     
Lender to Borrower hereunder, in the amount necessary to repay in full the      
unpaid principal balance hereof together with simple interest on the unpaid     
principal at a fixed rate equal to 8% per annum; provided, however, that in the 
event that the Merger Agreement is terminated by Lender pursuant to Section     
9.01(e) thereof, the amounts due under this Subordinated Convertible Promissory 
Note (including, without limitation, unpaid principal and accrued and unpaid    
principal thereon), shall be due and payable on the one-year anniversary of such
termination of the Merger Agreement. In the event that the Merger Agreement is  
terminated by Lender pursuant to Section 9.01(e) thereof, interest shall        
continue to accrue on the unpaid principal balance in accordance herewith.      

    In the event that any amount of principal or interest, or any other amount
payable hereunder, is not paid in full when due (whether at stated maturity, by 
acceleration or otherwise), the Borrower agrees to pay interest on such unpaid  
principal or other amount, from the date such amount becomes due until the date 
such amount is paid in full, payable on demand, at a rate per annum equal at all
times to 13%.                                                                   

   All computations of interest shall be made on the basis of a 365-day year
for the number of days actually elapsed.                                        

   This Subordinated Convertible Promissory Note (this "Subordinated Note"),
and each Term Loan (as defined below) advanced hereunder, is secured by the     
collateral (the "Collateral") more specifically described in the Security       
Agreement dated as of May 21, 2001 between Borrower and Lender, substantially in
the form of Exhibit A hereto, (as amended, modified, renewed, extended or       
---------                                               
replaced from time to time the "Security Agreement") and in the Intellectual    
Property Security Agreement dated as of May 21, 2001 between Borrower and       
Lender, substantially in the form of Exhibit B hereto, (as amended, modified,   
   ---------
renewed, extended or replaced from time to time the "IP Security Agreement" and,
collectively with the Security Agreement, the "Security Agreements"). Borrower  
hereby acknowledges and confirms that all indebtedness, liabilities and other   
obligations under or in connection with this Subordinated Note are "Obligations"
for the purposes of the Security Agreements and that this Subordinated Note is a
"Note" for                                                                      

EX-4
3rd Page of 10
TOC
1st
Previous
Next
↓Bottom
Just 3rd
the purposes of the Security Agreements. Borrower hereby ratifies and affirms   
the security interests granted by Borrower to Lender under and the Borrower's   
obligations pursuant to the Security Agreements. Notwithstanding the foregoing, 
in the event that the Merger Agreement is terminated by Lender pursuant to      
Section 9.01(e) thereof, Lender agrees to subordinate its lien in the Collateral
to any lender who thereafter agrees to provide financing to Borrower (a         
"Subsequent Lender") and to enter into a lien subordination agreement, in form  
and substance satisfactory to Lender and such Subsequent Lender, as such        
Subsequent Lender shall reasonably request, to provide for, among other things, 
(x) the subordination of the Liens of Lender in any Collateral to the Liens of  
such Subsequent Lender in such Collateral, and (y) the agreement of Lender to   
refrain from taking any action or exercising any rights with respect to such    
Collateral for such period of time as shall be satisfactory to Lender and such  
Subsequent Lender.                                                              

Subject to the terms and conditions hereof, and provided no Event of  
Default has occurred, Borrower may request one or more advances (each such      
advance a "Term Loan" and such advances collectively, the "Term Loans") under   
this Subordinated Note. Borrower must give Lender at least three (3) days'      
written notice requesting any such Term Loan, and Borrower must affirm in each  
such written notice that (i) the representations and warranties of Borrower set 
forth in the Merger Agreement, Security Agreements and the Notes (as defined in 
the Security Agreement) are true and correct in all material respects as of the 
time of such advance and (ii) Borrower has not breached in any material respect 
any covenant contained in the Merger Agreement, Security Agreements and the     
Notes (as defined in the Security Agreement), and (iii) no "Event of Default" as
defined in the Security Agreement has occurred. Any Term Loan repaid by         
Borrower, in whole or in part, may not be reborrowed. Submission by Borrower to 
Lender of a budget, in form and substance satisfactory to Lender, shall be a    
condition precedent to each Term Loan. Each Term Loan shall be applied by       
Borrower exclusively as set forth in the budget submitted by Borrower as a      
condition precedent to such Term Loan.                                          

   Anything herein to the contrary notwithstanding, if during any period for
which interest is computed hereunder, the amount of interest computed on the    
basis provided for in this Subordinated Note, together with all fees, charges   
and other payments which are treated as interest under applicable law, as       
provided for herein or in any other document executed in connection herewith,   
would exceed the amount of such interest computed on the basis of the Highest   
Lawful Rate, the Borrower shall not be obligated to pay, and the Lender shall   
not be entitled to charge, collect, receive, reserve or take, interest in excess
of the Highest Lawful Rate, and during any such period the interest payable     
hereunder shall be computed on the basis of the Highest Lawful Rate. As used    
herein, "Highest Lawful Rate" means the maximum non-usurious rate of interest,  
as in effect from time to time, which may be charged, contracted for, reserved, 
received or collected by the Lender in connection with this Subordinated Note   
under applicable law.                                                           

The Lender may elect, at any time and from time to time, at its sole  
option, to convert all or any part of the outstanding principal of and accrued  
interest on this Subordinated Note into that number of fully paid and           
nonassessable shares of Borrower's Common Stock that is equal to the dollar     
amount of the principal and accrued interest indebtedness being converted,      
divided by the average closing price of Borrower's Common Stock on the Nasdaq   
National Market for the ten trading days ending on and including the third      
trading day prior to the date of the notice of conversion (the "Conversion      
Price"); provided, that in no event shall Lender be entitled to convert this    
Subordinated Note into a total number of shares of Common Stock that exceeds    
that number of shares which is equal to 19.9% of the Borrower's total issued and
outstanding shares of Common Stock as of the date of such conversion, less such 
number of shares of Common Stock (if any) that are then held by Lender.         

   Any conversion shall be deemed to have been made immediately prior to the
close of business on the date upon which written notice of the conversion of    
this Subordinated Note is given to                                              

2 

EX-4
4th Page of 10
TOC
1st
Previous
Next
↓Bottom
Just 4th
Borrower (in accordance with the notice provisions hereof), and the person or   
persons entitled to receive the securities issuable upon conversion of this     
Subordinated Note (the "Conversion Securities") shall be treated for all        
purposes (including, without limitation, the right to participate in all        
distributions or restructuring or recapitalizations relating to the Borrower) as
the record holder or holders of such securities as of such time. If the         
conversion is in connection with an underwritten offering of securities         
registered pursuant to the Securities Act of 1933, the conversion may, at the   
option of any holder tendering this Subordinated Note for conversion, be        
conditioned upon the closing with the underwriters of the sale of securities    
pursuant to such offering, in which event the person(s) entitled to receive the 
Conversion Securities shall not be deemed to have converted this Note until     
immediately prior to the closing of such sale of securities.                    

Lender agrees to surrender this Subordinated Note to the Borrower for 
cancellation following conversion of this Subordinated Note and/or repayment of 
all principal and accrued interest outstanding under this Subordinated Note. If 
this Subordinated Note is converted in part, the Borrower shall forthwith issue 
to the Lender, or its nominees, a new replacement note (upon the same terms) in 
respect of the unconverted portion of this Note.                                

If the Borrower shall dissolve, liquidate or wind up its affairs, the 
Lender shall have the right, but not the obligation, to exercise its conversion 
rights under this Subordinated Note effective as of the date of and immediately 
prior to such dissolution, liquidation or winding up.                           

     If the Borrower shall by reclassification of securities or otherwise change
any of the Conversion Securities into the same or a different number of         
securities of any other class or classes, this Subordinated Note shall          
thereafter represent the right to acquire such number and kind of securities as 
would have been issuable as the result of such change with respect to the       
Conversion Securities immediately prior to such reclassification, all subject to
further adjustment as provided in this Subordinated Note.                       

     If the Borrower shall split, subdivide or combine the Conversion Securities
into a different number or securities of the same class, the number of such     
securities into which this Subordinated Note converts shall be proportionately  
increased in the case of a split or subdivision or proportionately decreased in 
the case of a combination.                                                      

If at any time, the holders of the Conversion Securities shall have   
received, or, on or after the record date fixed for the determination of        
eligible stockholders, shall have become entitled to receive, without payment   
therefor, other or additional stock or other securities or property (other than 
cash) of the Borrower by way of dividend, then and in each case, this           
Subordinated Note shall represent the right to acquire, in addition to the      
number of Conversion Securities, and without payment of any additional          
consideration therefor, the amount of such other or additional stock or other   
securities or property (other than cash) of the Borrower which such holder would
hold on the date of such exercise had it been the holder of record of the       
Conversion Securities on the date hereof and had thereafter, during the period  
from the date hereof to and including the date of such conversion, retained such
shares and/or all other additional stock available by it as aforesaid during    
such period, giving effect to all adjustments called for during such period by  
the provisions of this Subordinated Note.                                       

 Upon the occurrence of each adjustment or readjustment pursuant to this
Subordinated Note, the Borrower, at its expense, shall promptly compute such    
adjustment or readjustment in accordance with the terms hereof and furnish to   
Lender a certificate setting forth such adjustment or readjustment and showing  
in detail the facts upon which such adjustment or readjustment is based. The    
Borrower shall, upon the written request, at any time, of any such holder,      
furnish or cause to be furnished to Lender a like certificate setting forth: (i)
such adjustments and readjustments; and (ii) the number of                      

3 

EX-4
5th Page of 10
TOC
1st
Previous
Next
↓Bottom
Just 5th
Conversion Securities and the amount, if any, of other property which at the    
time would be received upon the conversion of this Subordinated Note.           

The Borrower shall at all times reserve and keep available out of its 
authorized but unissued shares of Common Stock, solely for the purpose of       
effecting the conversion of this Subordinated Note, such number of its Common   
Stock as shall from time to time be sufficient to effect the conversion of this 
Subordinated Note; and if at any time the number of authorized but unissued     
shares of Common Stock shall not be sufficient to effect the conversion of this 
Subordinated Note the Borrower will take such corporate action as may be        
necessary to increase its authorized but unissued shares of Common Stock or     
other securities issuable upon conversion of this Subordinated Note as shall be 
sufficient for such purpose.                                                    

  Upon Lender's election to convert any of the outstanding principal of or
accrued interest on this Subordinated Note, Borrower, at its expense, will as   
soon as practicable (and in any event within two business days) cause to be     
issued in the name of and delivered to Lender or its nominee, a certificate or  
certificates for the number of fully paid and nonassessable Conversion          
Securities, to which Lender is entitled upon such conversion. No fractional     
shares will be issued upon any conversion of this Subordinated Note or any part 
hereof. If, upon any conversion of this Subordinated Note, a fraction of a share
would otherwise result, then Borrower will pay Lender in lawful money of the    
United States in immediately available funds a sum equivalent to the fair market
value of one share of the type and class of the Conversion Securities           
(determined in accordance with the Conversion Price applicable at the time of   
such conversion), multiplied by the fraction of a share of stock to which Lender
would otherwise be entitled.                                                    

    The Borrower will not, by amendment of its Certificate of Incorporation or
Bylaws, or through reorganization, consolidation, merger, dissolution, issue or 
sale of securities, sale of assets or any other voluntary action, willfully     
avoid or seek to avoid the observance or performance of any of the terms of this
Subordinated Note, but shall at all times in good faith assist in the carrying  
out of all the provisions of this Subordinated Note and in the taking of all    
such action as may be necessary or appropriate in order to protect the rights of
the Lender against impairment. Without limiting the generality of the foregoing,
the Borrower will take all such action as may be necessary or appropriate in    
order that the Borrower may duly and validly issue fully paid and nonassessable 
shares of Common Stock upon any conversion of this Subordinated Note.           

    Borrower represents and warrants to the Lender that this Subordinated Note
does not contravene any contractual or judicial restriction binding on or       
affecting the Borrower and that this Subordinated Note is the legal, valid and  
binding obligation of the Borrower enforceable against it in accordance with its
terms.                                                                          

  Subordination. Notwithstanding any other provisions of this Subordinated
-------------                                                         
Note to the contrary, by its acceptance of this Subordinated Note, the Holder of
this Subordinated Note agrees as follows:                                       

(1) The principal of and interest on this Subordinated Note (and all  
extensions and renewals thereof and replacements therefor) and all premiums,    
fees, costs, expenses and all other sums now or hereafter due in connection with
the foregoing (collectively, the "Subordinated Debt") is subordinate in right of
payment to the payment to TRANSAMERICA BUSINESS CREDIT CORPORATION ("Senior     
Lender", which term shall include any other future institutional lender to      
Borrower which replaces said Senior Lender), in full in cash, of all present and
future indebtedness for borrowed money of Borrower to Senior Lender and all     
interest thereon, and all liabilities, guarantees and other obligations of      
Borrower to Senior Lender in connection therewith, now existing or hereafter    
arising,                                                                        

4 

EX-4
6th Page of 10
TOC
1st
Previous
Next
↓Bottom
Just 6th
including without limitation any interest accruing after the commencement of any
bankruptcy, arrangement, or reorganization proceeding with respect to Borrower  
(whether or not such interest is recoverable from Borrower or allowable or      
provable in any such proceeding), costs, expenses, penalties, indemnities, and  
reimbursement obligations (collectively, the "Senior Debt"). Holder agrees not  
to directly or indirectly ask for or accept payment of all or any part of the   
Subordinated Debt, in cash or other property or by set-off or in any other      
manner for any of the Subordinated Debt if Borrower is in default in its        
obligations to Senior Lender or if such actions would create an event of default
in respect of such obligations. Unless and until all of the Senior Debt has been
indefeasibly paid in full, in cash, Holder further agrees not to do any of the  
following, directly or indirectly: (i) demand, sue for, accelerate the maturity 
of, or otherwise enforce any of the Subordinated Debt; (ii) enforce any guaranty
of any of the Subordinated Debt, (iii) take, hold or claim any collateral or    
security for any of the Subordinated Debt (except that Borrower may grant a     
security interest in certain of its assets to Lender in respect of the          
Subordinated Debt, provided, however, that any such security interest granted by
--------  -------                         
Borrower to Lender in respect of the Subordinated Debt shall by its terms be    
junior and subordinate in all respects to the security interest granted by      
Borrower to Senior Lender in respect of the Senior Debt for however long such   
security interest granted by Borrower to Senior Lender in respect of the Senior 
Debt shall remain in effect); (iv) exercise any rights or remedies with respect 
to the Subordinated Debt, judicially or non-judicially (including without       
limitation the commencement of any bankruptcy or insolvency proceeding against  
Borrower), or (v) attempt to do any of the foregoing; provided that nothing     
herein shall prevent Holder from converting this Subordinated Note into equity  
securities of Borrower on such terms as may be mutually acceptable to Holder and
Borrower.                                                                       

    (2) Holder agrees that upon any distribution of the assets or readjustment
of the indebtedness of Borrower whether by reason of liquidation, composition,  
bankruptcy, arrangement, receivership, assignment for the benefit of creditors  
or any other action or proceeding involving the readjustment of all or any of   
the Subordinated Debt, or the application of the assets of Borrower to the      
payment or liquidation thereof, Senior Lender shall be entitled to receive      
payment in full in cash of all of the Senior Debt prior to the payment of all or
any part of the Subordinated Debt, and in order to enable Senior Lender to      
enforce its rights hereunder in any such action or proceeding, Senior Lender is 
hereby irrevocably authorized and empowered in its sole discretion (but without 
any obligation on its part) to make and present for and on behalf of Holder such
proofs of claim against Borrower on account of the Subordinated Debt as Senior  
Lender may deem expedient or proper and to vote such proofs of claim in any such
proceeding and to receive and collect any and all dividends or other payments or
disbursements made thereon in whatever form the same may be paid or issued and  
to apply same on account of the Senior Debt. Holder further agrees to execute   
and deliver to Senior Lender such assignments or other instruments as may be    
required by Senior Lender in order to enable Senior Lender to enforce any and   
all such claims and to collect any and all dividends or other payments or       
disbursements which may be made at any time on account of all and any of the    
Subordinated Debt. Any amounts received by Holder contrary to the provisions of 
this Section shall be held in trust by Holder for the benefit of Senior Lender  
and shall forthwith be paid over to Senior Lender to be applied to Senior Lender
debt in such order as Senior Lender in its sole discretion shall determine,     
without limiting any other right of Senior Lender hereunder or otherwise and    
without otherwise affecting the liability of Holder.                            

    (3) Holder agrees that, in addition to any other rights that Senior Lender
may have at law or in equity, Senior Lender may at any time, and from time to   
time, without the Holder's consent and without notice to the Holder, renew,     
extend or increase any of the Senior Debt or that of any other person at any    
time directly or indirectly liable for the payment of any Senior Debt, accept   
partial payments of the Senior Debt, settle, release (by operation of law or    
otherwise), compound, compromise, collect or liquidate any of the Senior Debt,  
make loans or advances to Borrower secured in whole or in part by collateral or 
unsecured or refrain from making any loans or advances to Borrower, change,     
waive, alter or vary the interest charge on, or any other terms or provisions of
the Senior Debt or any present or future                                        

5 

EX-4
7th Page of 10
TOC
1st
Previous
Next
↓Bottom
Just 7th
instrument, document or agreement between Senior Lender and Borrower, release,  
exchange, fail to perfect, delay the perfection of, fail to resort to, or       
realize upon any collateral, and take any other action or omit to take any other
action with respect to the Senior Debt or any collateral as Senior Lender deems 
necessary or advisable in Senior Lender's sole discretion.                      

 (4) In the event of any financing of Borrower by Senior Lender during a
bankruptcy, arrangement, or reorganization of Borrower, the Holder agrees that  
the term "Senior Debt" shall include without limitation all indebtedness,       
liabilities and obligations incurred in any such proceeding, and the Holder     
agrees to take such actions and execute such documents in such proceedings as   
may be reasonably necessary in order to effectuate the foregoing.               

(5) Holder agrees not to contest the validity, perfection, priority or
enforceability of the Senior Debt or Senior Lender's security interest in any   
collateral.                                                                     

(6) If, after payment of the Senior Debt, Borrower thereafter becomes 
liable to Senior Lender on account of the Senior Debt, or any payment made on   
the Senior Debt shall for any reason be returned by Senior Lender, the          
provisions herein applicable to such Senior Debt shall thereupon in all respects
become effective with respect to such subsequent or reinstated Senior Debt,     
without the necessity of any further act or agreement between Senior Lender and 
the Holder.                                                                     

 (7) In the event of any litigation between Senior Lender and the Holder
based upon or arising out of the provisions herein governing Senior Lender's    
rights in respect of the Senior Debt, the prevailing party shall be entitled to 
recover all of its reasonable costs and expenses (including without limitation  
reasonable attorneys fees) from the non-prevailing party.                       

 (8) Senior Lender is a third-party beneficiary of the provisions herein
pertaining to the Senior Debt.                                                  

    Events of Default. The occurrence of any of the following shall constitute
-----------------                                                     
an "Event of Default" under this Subordinated Note:                             

 (1) the failure to make any payment of principal, interest or any other
amount payable hereunder when due under this Subordinated Note or the breach of 
any other condition or obligation under this Subordinated Note;                 

    (2) any representation or warranty by Borrower under or in connection with
this Subordinated Note, the Security Agreement, the IP Security Agreement or any
other certificate, document, agreement or instrument delivered to Lender under  
or in connection with this Subordinated Note is incorrect in any material       
respect when made or deemed made.                                               

 (3) the breach of any covenant under the Merger Agreement, the Security
Agreement, or the IP Security Agreement and the continuation of any such breach 
for five (5) days;                                                              

     (4) the failure to timely file an annual report on Form 10-K as required by
the rules of the Securities and Exchange Commission;                            

    (5) the existence of any material changes to Ariel Corporation's unaudited
financial statements for the year ended December 31, 2000 which were provided by
Ariel Corporation to Mayan Networks Corporation prior to the execution of the   
Merger Agreement;                                                               

6 

EX-4
8th Page of 10
TOC
1st
Previous
Next
↓Bottom
Just 8th
     (6) the filing of a petition by or against the Borrower under any provision
of the Bankruptcy Reform Act, Title 11 of the United States Code, as amended or 
recodified from time to time, or under any similar law relating to bankruptcy,  
insolvency or other relief for debtors; or appointment of a receiver, trustee,  
custodian or liquidator of or for all or any part of the assets or property of  
the Borrower; or the insolvency of the Borrower; or the making of a general     
assignment for the benefit of creditors by the Borrower;                        

    (7) any of the documents relating to the Collateral after delivery thereof
shall for any reason be revoked or invalidated, or otherwise cease to be in full
force and effect, or the Borrower or any other person shall contest in any      
manner the validity or enforceability thereof, or the Borrower or any other     
person shall deny that it has any further liability or obligation thereunder; or
any of the documents relating to the Collateral for any reason, except to the   
extent permitted by the terms thereof, shall cease to create a valid and        
perfected security interest in any of the Collateral purported to be covered    
thereby; or                                                                     

(8) any "Event of Default" as defined in the Notes of the Security    
Agreements shall have occurred.                                                 

     Upon the occurrence of any Event of Default, the Lender, at its option, may
(i) by notice to the Borrower, declare the unpaid principal amount of this      
Subordinated Note, all interest accrued and unpaid hereon and all other amounts 
payable hereunder to be immediately due and payable, whereupon the unpaid       
principal amount of this Subordinated Note, all such interest and all such other
amounts shall become immediately due and payable, without presentment, demand,  
protest or further notice of any kind, provided that if an event described in   
paragraph (6) above shall occur, the result which would otherwise occur only    
upon giving of notice by the Lender to the Borrower as specified above shall    
occur automatically, without the giving of any such notice; and (ii) whether or 
not the actions referred to in clause (i) have been taken, exercise any or all  
of the Lender's rights and remedies under the Security Agreements and proceed to
enforce all other rights and remedies available to the Lender under applicable  
law.                                                                            

    In addition to any other rights or remedies which Lender may have (whether
hereunder, by law or otherwise), the Lender is authorized at any time and from  
time to time, without prior notice to Borrower, to set off and apply against any
and all amounts owing at such time by Lender to or for the account of Borrower  
(including without limitation any amounts payable pursuant to the Merger        
Agreement) against all obligations owing by Borrower to Lender (including,      
without limitation, the obligations represented by this Subordinated Note) now  
or hereafter existing, irrespective of whether Lender shall have made any demand
under this Subordinated Note and although such obligations may be contingent or 
unmatured.                                                                      

   Borrower hereby waives diligence, demand, presentment, protest or further
notice of any kind. Borrower agrees to make all payments under this Subordinated
Note without setoff or deduction and regardless of any counterclaim or defense. 

 No single or partial exercise of any power under this Subordinated Note
shall preclude any other or further exercise of such power or exercise of any   
other power. No delay or omission on the part of the Lender in exercising any   
right under this Subordinated Note shall operate as a waiver of such right or   
any other right hereunder.                                                      

    This Subordinated Note shall be binding on the Borrower and its successors
and assigns, and shall be binding upon and inure to the benefit of the Lender,  
any future holder of this Subordinated Note and their respective successors and 
assigns. Borrower may not assign or transfer this Subordinated Note or any of   
its obligations hereunder without the Lender's prior written consent.           

7 

EX-4
9th Page of 10
TOC
1st
Previous
Next
↓Bottom
Just 9th
    If Borrower defaults and the indebtedness represented by this Subordinated
Note or any part thereof is collected through legal action or other judicial    
proceedings, Borrower agrees to pay, in addition to the principal and interest  
payable hereon, reasonable attorneys' fees and costs incurred by Lender to the  
extent provided under the Security Agreements.                                  

    Any notice or other communication required or permitted hereunder shall be
in writing and shall be deemed to have been given, and any payment shall be     
deemed to have been made, upon delivery if personally delivered, or one day     
after deposit if deposited in the United States mail for mailing by certified   
mail, postage prepaid, and addressed as follows:                                

If to Lender:    Mayan Networks Corporation 
      2115 O'Nel Drive
        San Jose, CA 95131
                                   Attn:  John Tingleff, Chief Financial Officer

If to Borrower:  Ariel Corporation          
    2540 Route 130
        Cranbury, NJ 08512
                        Attn:  Dennis Schneider, President

    Lender or Borrower may change their address for purposes of this paragraph
by giving to the other written notice of such new address in conformance with   
this paragraph.                                                                 

 [remainder of this page intentionally left blank]

8 

EX-4
Last Page of 10
TOC
1st
Previous
Next
↓Bottom
Just 10th
THIS SUBORDINATED NOTE IS BEING DELIVERED IN, AND THE OBLIGATIONS OF  
BORROWER AND THE RIGHTS OF LENDER SHALL BE GOVERNED BY AND CONSTRUED IN,        
ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF CALIFORNIA WITHOUT
GIVING EFFECT TO THE CHOICE OF LAWS RULES THEREOF.                              

                         ARIEL CORPORATION

                                By: /s/ Dennis Schneider
                                                --------------------------------
                               Name:  Dennis Schneider
                        Title: President

9 

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘SC 13D/A’ Filing		Date		First		Last			Other Filings
Filed on:		9/28/01
		9/26/01		1		2
		5/21/01		2
		3/28/01		2					425,  8-K
		12/31/00		7					10-K
									List all Filings