October 25, 2007
Xxxxxxx
00, 0000
Xxxxxx
Xxxxxx Funds
0
Xxxxxxxxx Xxxxxx
Herzliya
Pituach 00000
Xxxxxx
Xxxxx
Ventures
7
Xxxxxxxx Xxxxx St.
Ramat
Gan
52521
Israel
Ladies
and Gentelmen,
Reference
is hereby made to that certain Letter Agreement (as amended) entered into
between us on June 19, 2006 (the "June
'06 Letter Agreement")
providing for the extension by you of a guaranty previously provided by you
to
Bank Leumi Le’Israel Ltd. (the "Bank")
to
secure the obligations of IXI Mobile (R&D) Ltd. ("Subsidiary")
in
connection with that certain line of credit (the "LOC")
and
loan (the "Loan")
obtained by the Subsidiary from the Bank in the aggregate principal commitment
amount of $8,000,000.
The
purpose of this Letter Agreement is to set forth the terms and conditions of
our
understanding and agreement relating to the conversion of certain Assumed Debt
(as defined below) into fully
paid and non-assessable shares of IXI Mobile, Inc.’s ("Company")
Common
Stock, par value $0.0001 per share (“IXI
Stock”).
Unless
otherwise defined below, all capitalized terms herein shall have the meanings
assigned to such terms in the June '06 Letter Agreement.
| 1. |
Assumption
of Leumi Debt and
Conversion.
|
|
1.1.
|
Assumption and Conversion
of
Debt. Notwithstanding
anything to the contrary in the June '06 Letter Agreement, each one
of
you, severally and not jointly, hereby elects: (i) to assume that
portion
of the debt currently owed by the Subsidiary to the Bank under the
LOC
and/or the Loan as set forth opposite each your respective name on
Schedule
1
attached hereto (collectively, the "Assumed
Debt");
and (ii) to, concurrently upon said assumption, convert each your
respective portion of the Assumed Debt into that number of shares
of
IXI
Stock
as
determined by dividing (A) each your respective portion of the Assumed
Debt by (B) $3.60 and as set forth opposite each your respective
name on
Schedule
1
hereto .
|
|
1.2.
|
Warrant
Coverage.
As an inducement to you to so assume the Assumed Debt and to convert
it
into shares of IXI Stock, the Company will issue to each one of you,
in
addition to the shares of IXI Stock issued to you under Section 1.1
above,
a warrant (the "IXI
Warrant")
to purchase that number of shares of IXI Stock set forth opposite
your
name on Schedule
1
hereto (equaling 60% percent of the number of shares of IXI Stock
issued
to you upon conversion of your respective portion of the Assumed
Debt
under Section 1.1 above). The IXI Warrant shall be substantially
in the
form attached hereto as Exhibit A. By your signature below, each
one of
you, severally and not jointly, hereby agrees that the IXI Warrant
issued
to each of you pursuant to the terms and conditions hereof, is in
lieu of,
and replaces, substitutes and terminates any rights of such party
to
receive any ITAC Warrants (as defined in the Loan Agreement) pursuant
to
the combined provisions of the June '06 Letter Agreement and the
Loan
Agreement and any such rights are hereby forever terminated and dismissed
in their entirety. Each one of you further agrees (severally and
not
jointly) that this Letter Agreement constitutes an amendment of the
June
'06 Letter Agreement with respect to each your right to receive ITAC
Warrants as described above.
|
|
1.3.
|
Termination
of Subsidiary Repayment Obligations under June '06 Letter
Agreement.
Each one of you, severally and not jointly, hereby agrees that upon
conversion of each your respective portion of the Assumed Debt into
IXI
Stock and issuance to such party of the IXI Warrant, the Subsidiary's
repayment obligations with respect to each your portion of the Assumed
Debt pursuant to the June '06 Letter Agreement shall terminate and
be
deemed fully discharged and
satisfied.
|
|
1.4.
|
Termination
of Conversion Rights under June '06 Letter
Agreement.
Each one of you, severally and not jointly, hereby agrees that the
foregoing conversion of each your respective portion of the Assumed
Debt
into shares of IXI Stock and the issuance to such party of its respective
IXI Warrant, are in lieu of, and replace, substitute and terminate
any
conversion rights such party may have pursuant to the provisions
of the
June '06 Letter Agreement and the Loan Agreement with respect to
the
Assumed Debt. Each one of you further agrees (severally and not jointly)
that this Letter Agreement constitutes an amendment of the June '06
Letter
Agreement with respect to the Assumed Debt hereunder
converted.
|
|
1.5.
|
Condition
Precedent.
The transactions contemplated by this Section 1 shall be subject
to and
conditioned upon your furnishing to us, prior to the consummation
of the
transactions hereby contemplated, of a written document in form and
substance satisfactory to us and signed by the Bank, by which, as
of the
date of assumption of the Assumed Debt by you, the Bank relieves,
discharges and exonerates the Subsidiary from any and all of its
obligations and liabilities to the Bank in connection with the Assumed
Debt and pursuant to which, as between the Bank and the Subsidiary,
the
Assumed Debt shall be deemed, as of the date of assumption of same
by you,
fully repaid by the Subsidiary.
|
| 2. |
Representations
and Warranties.
|
You
hereby, severally and not jointly, represent and warrant as
follows:
(a) Each
one
of you has all requisite power and authority to execute, deliver and perform
this Letter Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Letter Agreement by each of
you,
the fulfillment of and the compliance with the respective terms and provisions
hereof and thereof and the due consummation of the transactions contemplated
hereby, have been duly and validly authorized by all necessary action on the
part of each one of you. This Letter Agreement, when executed and delivered
by
each one of you, will constitute valid and legally binding obligations of each
one of you, enforceable in accordance with their terms.
(b) You
acknowledge that the IXI Stock and IXI Warrant (collectively, the "Securities")
you
receive are not registered under the United States Securities Act of 1933,
as
amended (the "1933
Act"),
or in
any state and that you must hold such Securities for an indefinite period unless
the Securities are subsequently registered or a Federal and state exemption
from
such registration is available.
(c) You
are
acquiring the Securities for your own account, as a profit-motivated investment,
and without the participation of any person in any part of such acquisition.
You
do not intend to divide your participation with others or to resell or otherwise
dispose of all or any part of the Securities in violation of the Securities
laws
of the United States.
(d) You
have
ad full access to any and all information with regard to the transaction
contemplated hereunder and the Company, including financial statements and
other
documents, that you deem relevant to the acquisition, and you have had full
access to management of the Company to obtain whatever information you deemed
relevant to your acquisition of the Securities. You acknowledge that you have
received all information requested from the Company and are satisfied with
all
such information, and no additional information is needed or required for
execution of this Letter Agreement.
(e) You
understand that the purchase of the Securities involve substantial risk. You
confirm that you have experience as an investor in securities of companies
in
the development stage and acknowledges that you re able to fend for yourself,
can bear the economic risk of your investment in the Securities and have such
knowledge and experience in financial or business matters that you are capable
of evaluating the merits and risks of this investment in the Securities and
protecting your own interests in connection with this investment.
(f) You
understand that the Securities are characterized as "restricted securities"
under the 1933 Act and Rule 144 promulgated thereunder inasmuch as they are
being acquired from the Company in a transaction not involving a public
offering, and that under the 1933 Act and applicable regulations thereunder
such
securities may be resold without registration under the 1933 Act only in certain
limited circumstances. In this connection, you represent that you are familiar
with Rule 144 of the U.S. Securities and Exchange Commission, as presently
in
effect, and understand the resale limitations imposed thereby and by the 1933
Act. You understand that the Company is under no obligation to register any
of
the Securities.
(g) You
are
either (i) not a “U.S. Person” as such term is defined in Rule 902 (the
provisions of which are known to such Lender) promulgated under the 1933 Act,
or
(ii) an “accredited investor,” as such term is defined in Rule 501 (the
provisions of which are known to such Lender) promulgated under the 1933
Act
(h) At
no
time were you presented with or solicited by any publicly issued or circulated
newspaper, mail, radio, television or other form of general advertising or
solicitation in connection with the offer, sale and purchase of the
Securities.
3. We
further note your consent to our providing copies of this Letter Agreement
to
potential PIPE investors as well as to NASDAQ and/or any other US governmental
authority.
4. This
Letter Agreement may be executed in two (2) or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and
the same instrument. The parties agree that facsimile signatures shall be
binding.
5. All
notices required or permitted hereunder shall be in writing and shall be deemed
effectively given: (a) upon personal delivery to the party to be notified,
(b) when sent by confirmed facsimile if sent during normal business hours
of the recipient, if not, then on the next business day of the recipient,
(c) three (3) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent the
party's address set forth in the header of this Letter Agreement or at such
other address as any party may designate by ten (10) days advance written notice
to the other parties hereto.
6. Any
term
of this Letter Agreement may be amended and the observance of any term of this
Letter Agreement may be waived (either generally or in a particular instance
and
either retroactively or prospectively), only with the written consent of all
the
parties hereto.
7. This
Letter Agreement shall be governed by and construed under the laws of the State
of Delaware, exclusive of the provisions thereof governing conflicts of
laws.
|
Sincerely,
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| IXI MOBILE, INC. | ||
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| By: | ||
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| Name: | ||
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||
| Title: | ||
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|
||
[IXI
Signature Page to Conversion Letter Agreement]
IN
WITNESS WHEREOF, the parties have executed this Letter Agreement as of the
date
first written above.
|
GEMINI
ISRAEL III LIMITED PARTNERSHIP,
by
its general partner Gemini Capital Associates III L.P.,
by
its general partner Gemini Israel Funds Ltd.
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| By: | ||
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| Name: | ||
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| Title: | ||
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GEMINI
ISRAEL III PARALLEL FUND LIMITED PARTNERSHIP,
by
its general partner Gemini Capital Associates III, L.P.
by
its general partner Gemini Israel Funds Ltd.
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| By: | ||
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| Name: | ||
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| Title: | ||
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||
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GEMINI
ISRAEL III OVERFLOW FUND LIMITED PARTNERSHIP,
by
its general partner Gemini Capital Associates III L.P.,
by
its general partner Gemini Israel Funds Ltd.
|
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| By: | ||
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| Name: | ||
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| Title: | ||
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GEMINI
PARTNER INVESTORS LIMITED PARTNERSHIP.
by
its general partner Gemini Israel Funds Ltd.
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| By: | ||
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| Name: | ||
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| Title: | ||
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||
[Gemini
Signature Page to Conversion Letter Agreement]
IN
WITNESS WHEREOF, the parties have executed this Letter Agreement as of the
date
first written above.
|
XXXXX
VENTURES LTD.
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| By: | ||
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| Name: | ||
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| Title: | ||
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[Xxxxx
Signature Page to Conversion Letter Agreement]
[G/L
Signature Page to Conversion Letter Agreement]
Schedule
1
Gemini
Allocation of IXI Stock
|
Name
of Entity
|
Amount
of Assumed Debt
|
|
Number
of shares of IXI Stock
|
|
Number
of Shares into which IXI Warrant is Exercisable
|
|||||
|
Gemini
Israel III LP
|
$
|
1,786,000
|
496,111
|
297,667
|
||||||
|
Gemini
Partners Investors LP
|
$
|
21,250
|
5,903
|
3,542
|
||||||
|
Gemini
Israel III Parallel Fund LP
|
$
|
325,500
|
90,417
|
54,250
|
||||||
|
Gemini
Israel III Overflow Fund LP
|
$
|
367,250
|
102,014
|
61,208
|
||||||
|
Total
|
$
|
2,500,000
|
694,444
|
416,667
|
||||||
Xxxxx
Allocation of IXI Stock
|
Name
of Entity
|
Amount
of Assumed Debt
|
|
Number
of shares of IXI Stock
|
|
Number
of Shares into which IXI Warrant is Exercisable
|
|||||
|
Xxxxx
Ventures
|
$
|
2,368,000
|
657,778
|
394,667
|
||||||
|
Total
|
$
|
2,368,000
|
657,778
|
394,667
|
||||||
Exhibit
A
Form
of Warrant
