Addendum to Employment Agreement
Exhibit
10.8
Addendum
to Employment Agreement
This
Addendum dated February 28, 2006, to the Employment Agreement by and between
IXI
Mobile, Inc., a Delaware corporation (the “Corporation”)
and
Xxxx Xxxxxx (“Employee”)
effective as of March 1, 2001 as amended on June 1, 2001 (“Addendum
1”)
and as
of January 1, 2006 (“Addendum
2”)
(the
“Employment
Agreement”)
is
entered into by and between Company and Employee
(the
“Addendum”).
| Whereas: |
Employee
is employed by the Corporation as of March 1, 2001, pursuant to the
Employment Agreement;
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| Whereas: |
The
parties have agreed that, as of the date of the closing of the
contemplated merger transaction (the “Addendum
Effective Date”
and the “Closing”,
respectively), among the Corporation, the Israel Technology Acquisition
Corp., and the ITAC Acquisition Subsidiary Corp. (the “Group”)
and subject thereto, the terms of the Employee’s employment shall be
automatically modified and the Employment Agreement amended, in accordance
with the terms set forth below.
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Therefore,
it
is
hereby stipulated and agreed between the parties as follows:
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1.
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The
preface to this Addendum constitutes an indivisible and integral
part
thereof.
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2.
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Unless
otherwise defined herein, the capitalized terms appearing herein
shall
have the meanings attributed to them in the Employment Agreement
or, where
so expressly indicated, in the Agreement and Plan of Merger entered
into
as of February 28, 2006 (the "Merger
Agreement").
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3.
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As
of the Addendum's Effective Date, the terms of Employee’s employment shall
be modified and the Employment Agreement amended as
follows:
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3.1.
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The
Salary (as defined in Section 3.1 (a) of the Employment Agreement
and as
amended by Addendum 1 and thereafter by Addendum 2 to the Employment
Agreement) shall be increased to the annual gross sum of US$250,000
(two
hundred fifty thousand US dollars) payable in 12 monthly installments
beginning with the monthly installment of the Salary payable for
the month
in which the Closing shall occur, with the aforesaid increase in
the
Salary being paid for said month on a pro-rata basis, for that portion
of
the month following the Closing.
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3.2.
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Annual
Bonus
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3.2.1.
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In
addition to the Salary, and commencing with the 2006 calendar year,
the
Employee shall be entitled to an annual bonus for each calendar year
in
which he was employed in a gross amount calculated as follows (the
“Annual
Bonus”):
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A
gross
amount equal to 2% (two percent) of that portion of the Group’s net income (as
such term is defined in Section 2.15 of the Merger Agreement) which exceeds
the
amount of the net income of the Group in the immediately preceding calendar
year
(the “Profit
Increase”).
For
the
removal of doubt, it is hereby clarified that the baseline for the calculation
of the Profit Increase for the 2006 calendar year shall be the net income of
the
Corporation in 2005 calendar year and if the financial statements of the
Corporation for 2005 show no net income then the baseline amount shall be zero.
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3.2.2.
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The
Annual Bonus shall be paid within five (5) Business Days following
the
filing of the Parent’s Annual Report on Form 10K with the Securities and
Exchange Commission for the relevant year. Subject to the provisions
of
Section 3.4 of this Addendum, in the event of a termination of the
Employment Agreement prior to completion of any calendar year and/or
prior
to the publication of the financial statements for a given calendar
year,
Employee shall be entitled to the proportionate share of the Annual
Bonus
and the Target Bonuses (based upon a calculation of the applicable
bonus
for the entire calendar year in which the Employment Agreement has
been
terminated), as the case may be, which shall be paid within the timeframe
provided for in the Addendum.
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3.3. Target
Bonuses
Options
3.3.1. Immediately
following the Closing, the Board of Directors of the Parent shall grant Employee
options to purchase 750,000 shares of the Parent's Common Stock (the
"Additional
Options")
which
shall vest in accordance with the following terms:
3.3.1.1. Upon
reaching the 2007 Net Profit Target (as defined in, and in accordance with
the
terms of, the Merger Agreement), an aggregate number of Additional Options
shall
vest equal to 150,000 multiplied by a fraction (A) the numerator of which shall
be the excess of Parent’s net income of the calendar year ending December 31,
2007 over $15,000,000 and (B) the denominator of which shall be $10,000,000.
In
no event shall the fraction in the preceding sentence exceed one (1);
any
of
the foregoing Additional Options which were not vested in accordance with the
foregoing shall
expire and be of no further effect; and
3.3.1.2. Upon
reaching the 2008 Net Profit Target (as defined in, and in accordance with
the
terms of, the Merger Agreement) an aggregate number of Additional Options shall
vest equal to 150,000 multiplied by a fraction (A) the numerator of which shall
be the excess of Parent’s net income for the calendar year ending December 31,
2008 over $20,000,000 and (B) the denominator of which shall be $25,000,000.
In
no event shall the fraction in the preceding sentence exceed one (1);
any
of
the foregoing Additional Options not vested in accordance with the foregoing
shall
expire and be of no further effect; and
3.3.1.3. 450,000
of the Additional Options, a third of which shall vest upon and be conditional
upon achievement of each of the First Share Price Trigger (150,000 Additional
Options), the Second Price Trigger (150,000 Additional Options), and the Third
Price Trigger (150,000 Additional Options) (as each term is defined in, and
in
accordance with the terms of, the Merger Agreement). Provided, however, that
the
First Share Price Trigger, the Second Price Trigger, and the Third Price Trigger
shall be deemed to have occurred only if such relevant Share Price shall have
remained during
any twenty (20) Trading Days during any thirty (30) consecutive Trading Day
period at any time during the period commencing on the Closing and ending on
the
fourth anniversary thereof.. Upon
the
fourth
anniversary from Closing, any Additional Options not vested in accordance with
the foregoing shall expire and be of no further effect.
3.3.2. The
foregoing vesting schedule shall be accelerated in every event where the Holders
and the Derivative Holders (as such terms are defined in the Merger Agreement)
shall be entitled to acceleration of the issuance of any Additional Shares
(as
such term is defined in the Merger Agreement).
3.3.3. The
Additional Options shall be granted pursuant to the Parent’s US employee share
option plan. The exercise price of the Additional Options shall be US$5.00
(five
US dollars) per share of Parent’s Common Stock issuable upon such
exercise.
Cash
Bonuses
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3.3.4. In
addition to the Additional Options, Employee shall be entitled to the following
cash bonuses:
3.3.4.1. a
cash
bonus in the gross amount of US $200,000 (two hundred thousand US dollars)
upon
achievement of the First Share Price Trigger during any twenty (20) Trading
Days
during any thirty (30) consecutive Trading Day period at any time during the
period commencing on the Closing and ending on the fourth anniversary thereof
(the “Share
Price Bonus”).
3.3.4.2. a
cash
bonus of the gross amount of up to US$800,000 (eight hundred thousand US
dollars) (“Second
Bonus”)
upon
the Employee becoming entitled to the Share Price Bonus under 3.3.4.1 above
and
the
occurrence of any one of the following conditions, as follows: (i) if the Parent
receives funds upon the exercise of warrants outstanding on the date of the
Merger Agreement to acquire shares of Parent Common Stock (“Parent
Warrants”)
of no
less than US$ 45 million, the Employee shall be entitled to the full amount
of
the Second Bonus; (ii) if the Parent’s Board calls for the cashless exercise of
the lower of (a) all outstanding Parent Warrants, or (b) 69% of the Parent
Warrants, the Employee shall be entitled to the full amount of the Second Bonus;
and (iii) if Parent receives proceeds from the exercise of Parent Warrants
in
the amount of less than US$45 million, then a proportionate amount of the Second
Bonus shall be payable to Employee - the sum of which shall be calculated by
multiplying the Second Bonus by a fraction, the numerator of which shall be
the
amount of such proceeds and the denominator of which shall be US$45 million.
Sums payable under (iii) above shall be calculated and payable on a quarterly
basis and shall be deemed on account of payments due under (i) and (ii) above.
Under no event will the aggregate amount payable to Employee under this
subsection 3.3.4.2 exceed US$800,000.
3.3.4.3. (a)
cash
bonuses in the gross amount of US $200,000 (two hundred thousand US dollars)
each for the achievement of each of the (i) the Revenue Target (as defined
in
the Merger Agreement) during calendar year 2006; (ii) the Second Price Trigger;
and (iii) the Third Price Trigger; (b) upon reaching the 2007 Net Profit Target,
a cash bonus in the gross amount of US$200,000 (two hundred thousand US dollars)
multiplied by a fraction (A) the numerator of which shall be the excess of
Parent’s net income of the calendar year ending December 31, 2007 over
$15,000,000 and (B) the denominator of which shall be $10,000,000. In no event
shall the fraction in the preceding sentence exceed one (1); (c) upon reaching
the 2008 Net Profit Target, a cash bonus in the gross amount of US$200,000
(two
hundred thousand US dollars) multiplied by a fraction (A) the numerator of
which
shall be the excess of Parent’s net income for the calendar year ending December
31, 2008 over $20,000,000 and (B) the denominator of which shall be $25,000,000.
In no event shall the fraction in the preceding sentence exceed one (1). The
bonuses included in this Section shall be referred to herein as the
“Target
Bonuses”.
Provided,
however that the Second Price Trigger, and the Third Price Trigger shall be
deemed to have occurred only if such relevant Share Price shall have remained
during
any twenty (20) Trading Days during any thirty (30) consecutive Trading Day
period at any time during the period commencing on the Closing and ending on
the
fourth anniversary thereof.
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3.4. Section
2
of the Employment Agreement shall be deleted and a new Section 2 shall be
inserted and shall read as follows:
2.
TERM
Corporation
and Employee may terminate this Agreement at any time and for any reason upon
90
days’ prior written notice to the other party (the “Termination
Notice”).
In
the
event that (i) the Corporation terminates the Employment Agreement for any
reason (including pursuant to Section 8.1(a) of the Employment Agreement) other
than a termination by the Board for just cause pursuant to Section 8.1(b) of
the
Employment Agreement; or (ii) the Employee terminates the Employment Agreement
for just cause pursuant to Section 8.1 (c) of the Employment Agreement, Employee
shall be entitled to the following
(a)
Salary and benefits set forth in sections 3.1(a) as amended in this Addendum;
3.1(b), 3.1(c), 3.1(d) and 3.1(e) under the Employment Agreement which would
have been due to him in a twelve-month period following the furnishing of the
Termination Notice (the “Severance
Period”);
and
(b)
un-expired Additional Options not yet vested as of the effective date of
termination shall not expire and shall vest upon triggering events set forth
in
Section 3.3.1, if applicable, even if those occur after termination;
and
(c)
immediate vesting upon the effective date of termination of all unvested
Corporation Options and Corporation Shares (defined below);
(d)
extension of the exercise period of all Corporation Options and all vested
Additional Options to the full term of said options pursuant to the relevant
share option plan in place with regard to said options, and in the absence
of a
provision in the share option plan in this regard, the full term of said options
shall be 10 years or earlier upon so called "Change of Control" events as set
forth in the Corporation's US Share Option Plan ("Plan");
upon a
so called "Change of Control" event such Corporation Options and Additional
Options shall be subject to adjustment/swap/early exercise in the same manner
as
other options subject to the Plan.
(e)
Target Bonuses and Annual Bonuses which would have been due to him during the
Severance Period; In the event that such Severance Period ends prior to
completion of any calendar year and/or prior to the publication of the financial
statements for a given calendar year, Employee shall be entitled to the
proportionate share of the Annual Bonus and the Target Bonuses (based upon
a
calculation of the applicable bonus for the entire calendar year in which the
Severance Period ends), as the case may be, which shall be paid within the
timeframe provided for in the Addendum.
In
addition to the foregoing, in the event that the First Share Price Trigger
during
any twenty (20) Trading Days during any thirty (30) consecutive Trading Day
period
is
achieved following the effective date of termination but before the lapse of
the
fourth anniversary from Closing, the Corporation's obligation to pay Employee
the Share Price Bonus and the Second Bonus shall survive said terminationand
be
payable upon the meeting of any of the conditions set forth in Sections 3.3.4.1
and 3.3.4.2 , as applicable.
For
the
avoidance of doubt the 90 day notice period set forth in the first paragraph
of
Section 2 shall overlap with the Severance Period.
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3.5. In
the
event that (i) the Board of the Corporation terminates the Employment Agreement
of the Employee for just cause pursuant to Section 8.1(b) of the Employment
Agreement; or (ii) the Employee terminates the Employment Agreement other than
for just cause pursuant to Section 8.1 (c) of the Employment Agreement, then
Employee shall only be entitled to (a) Salary and benefits set forth in sections
3.1(a) as amended in this Addendum; 3.1(b), 3.1(c), 3.1(d) and 3.1(e) under
the
Employment Agreement and Annual Bonuses, Target Bonuses, Share Price Bonus,
Second Bonus, and Additional Options (subject to vesting events and conditions
precedent set forth in this Addendum ) which would have been due to him in
a
three-month period following the furnishing of the Termination Notice. Any
Additional Options and Corporation Options vested prior to expiry of the three
months period shall be exercisable no later than 6 months following such date
or
earlier upon so called "Change of Control" events as set forth in the
Corporation's Plan; upon a so called "Change of Control" event such Corporation
Options and Additional Options shall be subject to adjustment/swap/early
exercise in the same manner as other options subject to the Plan.
3.6. Section
8.1 of the Employment Agreement shall be amended by deleting Sections 8.1 (d)
and 8.1 (e) and replacing them with the following new Section 8.1
(d):
“(d)
In
the event of a termination of this Employment Agreement by either party pursuant
to Section 2 of this Employment Agreement (as amended by Section 3.4 of the
Addendum), during the notice period provided in said Section 2 Employee shall
cooperate with the Corporation and use his best efforts to assist the
integration into the Corporation’s organization of the person or persons who
will assume the Employee’s responsibilities. During the aforesaid notice period
the employer-employee relationship shall continue.”
3.7. Section
8.2 of the Employment Agreement shall be deleted.
3.8. Pre-Closing
Shares
Immediately
prior to the Closing, and as a bonus to Employee for his efforts in connection
with the consummation of the transactions contemplated by the Merger Agreement,
the Board of Directors of the Corporation shall issue to the Employee that
number of shares of the Corporation's Common Stock, pursuant to the
Corporation’s US Share Option Plan (the “Shares”)
which,
upon conversion to shares of Common Stock of the Parent shall equal 216,000
shares of the Parent's Common Stock (the “Shares”).
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3.8.1.
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With
regard to shares of Common Stock in the Corporation (the “Corporation
Shares”)
and options to purchase Common Stock in the Corporation (the “Corporation
Options”),
presently held by Employee, Employee hereby waives any acceleration
or
other rights pertaining to any securities held by him which may be
triggered by the merger transaction among the
Group.
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3.9.
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Closing
Bonus
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Subject
to the Closing, Employee shall be entitled to a one-time lump-sum bonus in
the
gross amount of US$220,000 (Two Hundred Twenty Thousand US dollars) payable
immediately following the Closing (the “Closing
Bonus”).
Employee hereby irrevocably instructs the Corporation to deduct from the net
amount of the Closing Bonus payable to Employee the full amount of the loan
outstanding and owed by Employee to the Corporation, in the sum of US$110,000
(One Hundred Ten Thousand US dollars.
4. The
provisions of this Addendum are subject to the Closing and are in amendment
of
the provisions of the Employment Agreement. In the event of an inconsistency
between the provisions of the Employment Agreement and the provisions of this
Addendum, the provisions of this Addendum shall prevail.
5. For
the
removal of doubt it is hereby clarified that, other than as specifically amended
hereby, the provisions of the Employment Agreement shall remain in full force
and effect.
6. Employee
confirms that other than an outstanding debt owed to the Employee which, as
of
the date of signing this Addendum amounts to $8,334(eight thousand three hundred
thirty four US dollars), and reimbursement of expenses in the ordinary course
of
business, the Corporation or any of its affiliated entities has no outstanding
debts and liabilities to the Employee arising under any relationship with the
Corporation preceding the signing date of this Addendum and that he has no
claims, demands and requests from the Company for any such debts and
liabilities. For the removal of doubt, it is hereby clarified that the foregoing
confirmation does not apply to any debt or liability that may arise following
the date of signing of this Addendum.
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IN
WITNESS WHEREOF, the parties hereto have hereby duly executed this Addendum
on
the day and year first set forth above.
| IXI Mobile Inc. | /s/ Xxxx Xxxxxx | |
| By: /s/ Xxxxxx Xxxxx | Xxxx Xxxxxx |
We
agree to the above:
/s/
Xxxxxx Xxxxxxx
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