Gemini Israel Funds Herzliya Pituach 46725 Israel Landa Ventures Ramat Gan 52521 Israel June 19, 2006
Gemini
Israel Funds
0
Xxxxxxxxx Xxxxxx
Herzliya
Pituach 46725
Xxxxxx
Xxxxx
Ventures
7
Xxxxxxxx Xxxxx St.
Ramat
Gan 52521
Israel
June
19, 2006
IXI
Mobile, Inc. (the "Parent")
000
Xxxxxxxxx Xxxxx Xxxxx 000
Redwood
City 94065
USA
IXI
Mobile (R&D) Ltd. (the "Subsidiary"
and
collectivley with Parent, "you")
00
Xxxxxxxx Xxxxxx
Raanana,
43665
Israel
Ladies
and Gentelmen,
The
purpose of this Letter Agreement is to set forth the terms and conditions of
our
understanding and agreement relating to the extension of that certain guaranty
("Guaranty")
provided by us to Bank Leumi Le’Israel Ltd. (the "Bank")
to
secure the obligations of the Subsidiary pursuant to that certain line of credit
(the "LOC")
and
loan (the "Loan")
obtained by the Subsidiary from the Bank. The aggregate commitment amount under
the LOC is currently $4,000,000 and the current aggregate principal amount
of
the Loan equals $4,000,000.
Reference
is hereby made to that certain Agreement and Plan of Merger dated February
28,
2006 recently entered into by and among the Parent, Israel Technology
Acquisition Corporation ("ITAC")
and
ITAC Acquisition Subsidiary Corp., a wholly-owned subsidiary of ITAC
("Merger
Sub")
providing for a merger (the “ITAC/IXI
Merger”)
of
Merger Sub with and into the Parent, resulting in the Parent surviving the
ITAC/IXI Merger and becoming a wholly owned subsidiary of ITAC.
Reference
is further made to that certain Loan Agreement by and between you and Southpoint
Master Fund LP dated of even date herewith (the "Loan
Agreement").
Capitalized
terms not otherwise defined herein shall have the meaning assigned them in
the
Loan Agreement.
The
terms
of our agreement and understanding are as follows:
1. We
hereby
commit to extend our Guaranty and keep it outstanding for as long as the LOC
and/or the Loan remain outstanding, provided that the Company is in compliance
with the terms and conditions of this Letter Agreement; and provided further
that in no event will the Guaranty remain outstanding following the Repayment
Date or the Maturity Date, as the case may be.
IXI
Mobile
June
19,
2006
Page
2
2.
We
further commit that should the Bank terminate all or any part of any of the
LOC
or the Loan prior to the Repayment Date or prior to the Maturity Date, as the
case may be, we hereby commit to advance the Company any and all funds required
in order to repay the Bank any amounts then owed by the Company to the Bank
under the terminated LOC and/or under the terminated Loan, as applicable;
provided, however, that, for purposes of Section 3 below, any such repayment
by
us to the Bank shall be deemed an assumption of Leumi Debt and any amounts
paid
by any one of us to the Bank pursuant to this Section 2, shall be considered
an
Assumed Debt.
3. By
your
signature below, you hereby agree that:
(a)
at any
time or from time to time following the date of execution of this Letter
Agreement, each of us shall have the right to assume all or any part of any
amounts owed by the Subsidiary to the Bank under the LOC or under the Loan
(any
such amount assumed by any of us including any interest thereon together with
any amount advanced by us pursuant to Section 2 above, collectively referred
to
herein as the "Assumed
Debt").
Any
Assumed Debt will be evidenced by a Convertible Secured Promissory Note executed
by the Subsidiary in substantially the same form as the form of Note attached
as
Exhibit A of the Loan Agreement.
(b) if
any of
us elects to assume any Assumed Debt, then such assuming party shall be entitled
to the rights and benefits conferred by Sections 3.2 and 3.3(b) of the Loan
Agreement subject to the terms and conditions of such Sections. The rights
and
benefits conferred by Sections 3.2 and 3.3(b) of the Loan Agreement and the
terms and conditions related thereto are incorporated herein by this
reference.
(c) prior
to
an Optional Conversion pursuant to Section 3.2(b) of the Loan Agreement, the
Company shall take any and all actions necessary to authorize and reserve a
sufficient number of shares of IXI Stock to effect such Optional Conversion
and
upon delivery following such Optional Conversion, all shares of IXI Stock shall
be duly authorized, validly issued, fully paid and non-assessable.
(d) the
Parent agrees to provide us with a written document signed by the Parent and
by
the individuals or entities consisting of the majority required for an amendment
of the Parent's Amended and Restated Stockholders Agreement made as of August
24, 2004, as amended, as well as a written document signed by the Parent and
by
the individuals or entities consisting of the majority required for an amendment
of the Parent's Amended and Restated Investors Rights Agreement made as of
August 24, 2004, as amended, evidencing the consent of such parties to the
application of such Agreements to any IXI Stock received by us (if at all)
on an
Optional Conversion. Such written documents shall become effective only on
the
occurrence of an optional conversion pursuant to Section 3.2(b) of the Loan
Agreement and us becoming holders of Series E Preferred Stock of the
Parent.
4. By
the
Subsidiary's signature below, the Subsidiary hereby covenants and agrees to
repay each one of us our receptive Assumed Debt (if any). The Subsidiary further
covenants and agree to indemnify each one of us for any amounts respectively
paid by any one of us to the Bank pursuant to the Guaranty and any related
make-whole and other amounts payable by the Subsidiary in connection with the
Guaranty. Additionally, you agree that any amounts payable to us by the
Subsidiary pursuant to this Section 4 and under any other provisions of this
Letter Agreement shall be subject to the same repayment, prepayment,
acceleration and conversion terms and conditions as set forth in the Loan
Agreement, including, without limitation, the terms and conditions of Sections
2.3 through 2.9 of the Loan Agreement, which such terms and conditions are
incorporated herein by this reference. Notwithstanding the foregoing, we hereby
acknowledge and agree that any amount of Assumed Debt converted by us into
Conversion Stock on an Optional Conversion will be deemed fully paid and all
obligations relating thereto will be deemed fully satisfied.
IXI
Mobile
June
19,
2006
Page
3
5. In
consideration of our undertakings pursuant to this Letter Agreement, by your
signature below, you hereby acknowledge and agree as follows: (A) in the event
the ITAC/IXI Merger becomes effective and subject to and conditioned upon the
ITAC/IXI Merger becoming effective, ITAC shall issue, pursuant to the combined
provisions of this Section 5 and the ITAC Certification (as defined below),
a
total amount of Two Hundred Forty Thousand (240,000) shares of ITAC's Common
Stock ("ITAC
Stock"),
par
value $0.0001 per share, with each of us receiving the amount of ITAC Stock
set
forth apposite its respective name on Schedule I attached hereto, and, (B)
the
Subsidiary shall pay each one of us an amount equal to each our respective
pro
rata share in the balance between the Basic Interest Rate and the interest
rate
owed under the LOC and the Loan calculated on $8,000,000 for any period during
which the Loan and/or LOC were outstanding during the period commencing on
March
1, 2006 (the date on which the Guaranty was initially activated) and ending
on
the Repayment Date (if the ITAC/IXI Merger closes) or on the First Interest
Payment Date and any subsequent interest payment under the Loan Agreement (if
the ITAC/IXI Merger does not close).
6. You
shall
use your best efforts to cause ITAC to execute and deliver to us the
Certification attached hereto as Exhibit
A
(the
"ITAC
Certification").
7. In
addition to the consideration set forth in Section 5 above, to secure the
Subsidiary's payment obligations pursuant to this Letter Agreement, each one
of
you shall grant to us, the same security interests provided to the Lenders
by
the Security Documents under the Loan Agreement (to the extent any such Security
Documents are applicable to any of you), including, without limitation, a
continuing first priority (except as otherwise set forth in the Loan Agreement
or in any of the other Loan Documents) security interest in all of the Company's
and the Subsidiary's right, title and interest in and to the Collateral pursuant
to a security agreement in substantially the same form as the First Ranking
Security Agreement attached as Exhibit B to the Loan Agreement, pursuant to
a
debenture in substantially the same form as the First Ranking Debenture - Fixed
and Floating Charge attached as Exhibit C to the Loan Agreement and pursuant
to
any IP Security Agreement required under the Loan Agreement. Additionally,
the
Parent shall absolutely, continually, unconditionally and irrevocably guarantee
the prompt and full performance by the Subsidiary of the Subsidiary's payment
obligations under this Letter Agreement pursuant to a personal guaranty in
substantially the same form as the Guaranty attached as Exhibit D to the Loan
Agreement. We hereby acknowledge and agree that the security interests granted
by any one of you pursuant to this Section 7 and any security documents
referenced herein shall rank equally with the security interests granted by
any
one of you pursuant to the Loan Agreement and Security Documents. This Letter
Agreement together with any security documents referenced in this Section 7
shall collectively be referred to hereunder as the "Transaction
Documents".
8. The
occurrence of any one or more of the following events shall constitute an Event
of Default under this Letter Agreement:
(a) The
Subsidiary shall not have made payment of (i) principal of amount due hereunder
when due, or (ii) interest on any principal of amount due hereunder, or (iii)
any other monetary obligations under any of the Transaction
Documents
(as
defined above) for five (5) Business Days or more after the same
shall have become due and payable.
IXI
Mobile
June
19,
2006
Page
4
(b) The
breach by the Subsidiary (other than a breach which constitutes an Event of
Default under Section 8(a) above) of any of the terms or provisions of the
Transaction Documents or the breach by ITAC of any of the representations,
warranties, terms or provisions of the ITAC Certification, which is not remedied
within fifteen (15) Business Days after written notice from us.
You
agree
that upon the occurrence of an Event of Default (as defined above) we shall
be
entitled to all the rights and remedies set forth in Article IX of the Loan
Agreement, provided that if the Subsidiary is also in default under the Loan
Agreement such rights and remedies and the Collateral shall be subject to the
control of the Lenders pursuant to the Intercreditor Agreement in the form
attached hereto as Exhibit
B.
9. By
your
signature below you hereby represent and warrant to us that you have all
requisite power and authority to execute, deliver and perform the Transaction
Documents (to the extent you are a party thereto) and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of the Transaction Documents by you (to the extent you are a party
thereto), the fulfillment of and the compliance by you with the terms and
provisions hereof and thereof and the due consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by all
necessary action on your part. To the extent you are a party to any of the
Transaction Documents, the Transaction Documents when executed and delivered
by
you, will constitute valid and legally binding obligations of you, enforceable
in accordance with their terms except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent convey-ance, and other laws
of general application affecting enforcement of creditors’ rights generally, and
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.
10. Each
one
of us, hereby, severally and not jointly, represents and warrants to you as
follows:
(a) Each
one
of us has all requisite power and authority to execute, deliver and perform
the
Transaction Documents and to consummate the transactions contemplated hereby
and
thereby. The execution, delivery and performance of the Transaction Documents
by
each of us, the fulfillment of and the compliance with the respective terms
and
provisions hereof and thereof and the due consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by all
necessary action on the part of each one of us. The Transaction Documents,
when
executed and delivered by each one of us, will constitute valid and legally
binding obligations of each one of us, enforceable in accordance with their
terms except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent convey-ance, and other laws of general application
affecting enforcement of creditors’ rights generally, and as limited by laws
relating to the availability of specific performance, injunctive relief or
other
equitable remedies.
(b) This
Letter Agreement is made with each one of us in reliance upon each our
representation to the Company (to the extent any one of us is entitled to any
equity securities of the Company) and to ITAC (to the extent any one of us
is
entitled to any equity securities of ITAC), which by each our execution of
this
Letter Agreement each one of us hereby confirms, that, for so long as the ITAC
Stock, the ITAC Warrants, the shares of Common Stock issuable upon exercise
of
the ITAC Warrants, the shares of Optional Conversion Stock and any shares of
Common Stock issuable upon conversion Optional Conversion Stock (if applicable)
(collectively, the "Securities")
are not
covered by an effective registration statement under the Securities Act of
1933,
as amended (the "Securities
Act"),
each
one of us will be acquiring the Securities for its own account, for investment
and not with a view to the distribution of any part thereof, nor with any
intention of distributing the same of any part thereof. By
executing this Letter Agreement, each one of us further represents that it
does
not presently have, and will not enter into, any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of
the
Securities and such party has not been formed for the specific purpose of
acquiring such Securities.
IXI
Mobile
June
19,
2006
Page
5
(c) Each
on
of us understands that the Securities have not been nor will they be registered
under the Securities Act by reason of their issuance or potential issuance
in a
transaction exempt from the registration requirements of the Securities Act,
and
that they must be held indefinitely unless a subsequent disposition thereof
is
registered under the Securities Act or is exempt from registration. Each on
of
us recognizes that because of these restrictions such party will have to bear
the economic risk of part of such party’s investment for an indefinite period of
time. Each one of us has adequate means for providing for its financial needs
and personal contingencies and has no need for liquidity in its
Securities.
(d) Each
on
of us understands that the exemption from registration afforded by Rule 144
(the
provisions of which are known to such Lender) promulgated under the Securities
Act depends on the satisfaction of various conditions and that, if applicable,
Rule 144 may only afford the basis for sales under certain circumstances and
only in limited amounts.
(e) Each
on
of us has had a reasonable time prior to the date hereof to ask questions and
receive answers concerning the terms and conditions of the offering (or
potential offering) of the Securities, as well as the business, properties,
prospects and financial condition of the Company and of ITAC, and to obtain
any
additional information which the Company or ITAC possesses or could acquire
without unreasonable effort or expense, and has generally such knowledge and
experience in business and financial matters and with respect to investments
in
securities of privately held companies as to enable it to understand and
evaluate the risks of such investment and form an investment decision with
respect thereto. In addition, Each on of us represents that it has received
all
the information it requested for deciding whether to purchase the Securities.
In
addition, each on of us is able to bear the economic risk of the transaction
contemplated by this Letter Agreement.
(f) Each
on
of us is an “accredited investor,” as such term is defined in Rule 501 (the
provisions of which are known to such Lender) promulgated under the Securities
Act.
(g) No
Person
acting on behalf or under the authority of any one of us is or will be entitled
to any broker’s, finder’s, or similar fee or commission in connection with the
transactions contemplated hereby.
(h) It
is
understood that the Securities may bear a legend in substantially the form
set
forth below and any other legend required by any Blue Sky Laws or other laws
of
any state of the United States to the extent such laws are applicable to the
securities represented by the certificate so legended:
IXI
Mobile
June
19,
2006
Page
6
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT"), OR UNDER ANY STATE SECURITIES
LAWS. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISTRIBUTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL (OR WRITTEN WAIVER THEREOF FROM THE ISSUER) IN A FORM REASONABLY
SATISFACTORY TO THE ISSUER THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE
WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS."
The
Company or ITAC (as the case may be) need not register a transfer of such
legended securities, and may also instruct its transfer agent not to register
the transfer of such legended securities, unless the conditions specified in
the
foregoing legends are satisfied.
11. 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.
12. 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) five (5) 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. Copies of all notices to the Company shall also
be
sent to Xxxx Xxxxx, Esq., Xxxxxx, Xxx & Xxxxxx, 0 Xxxxxxxx Xxxxxx, Xxx Xxxx
00000, Xxxxxx (fax: x000 (0) 00000000).
13. 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.
14. The
Transaction Documents contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect to such subject
matter.
15. This
Letter Agreement and the Loan Agreement (to the extent it applies to the
undersigned under the terms of this Letter Agreement) shall be governed by
and
construed under the laws of the State of Israel, exclusive of the provisions
thereof governing conflicts of laws.
Sincerely,
[Signature
Page Follows]
IXI
Mobile
June
19,
2006
Page
7
|
GEMINI
ISRAEL III LIMITED PARTNERSHIP,
|
||
|
by
its general partner Gemini Capital Associates III L.P.,
by
its general partner Gemini Israel Funds Ltd.
|
||
|
By:
/s/
Xxxxx Xxxxx
|
/s/
Xxxx Xxxx
|
|
|
Name:
Xxxxx Xxxxx
|
Xxxx
Xxxx
|
|
|
Title:
CFO, GP
|
Managing
Partner
|
|
|
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.
|
||
|
By:/s/
Xxxxx Xxxxx
|
/s/
Xxxx Xxxx
|
|
|
Name:
Xxxxx Xxxxx
|
Xxxx
Xxxx
|
|
|
Title:
CFO, GP
|
Managing
Partner
|
|
|
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.
|
||
|
By:
/s/
Xxxxx Xxxxx
|
/s/
Xxxx Xxxx
|
|
|
Name:
Xxxxx Xxxxx
|
Xxxx
Xxxx
|
|
|
Title:
CFO, GP
|
Managing
Partner
|
|
|
GEMINI
PARTNER INVESTORS LIMITED XXXXXXXXXXX.xx its general partner Gemini
Israel
Funds Ltd.
|
||
|
By:
/s/
Xxxxx Xxxxx
|
/s/
Xxxx Xxxx
|
|
|
Name:
Xxxxx Xxxxx
|
Xxxx
Xxxx
|
|
|
Title:
CFO, GP
|
Managing
Partner
|
|
|
XXXXX
VENTURES LTD.
|
||
|
By:
/s/
X. Xxxxx
|
||
|
Name:
X. Xxxxx
|
||
|
Title:
Chairman
|
||
|
AGREED
AND ACCEPTED:
|
AGREED
AND ACCEPTED:
|
|
|
IXI
Mobile, Inc.
|
IXI
Mobile (R&D) Ltd.
|
|
|
By:
/s/
Xxxx Xxxxxx
|
By: /s/
Xxxxxx Xxxxx
|
|
|
Name:
Xxxx Xxxxxx
|
Name:
Xxxxxx Xxxxx
|
|
|
Title:
Chief Executive Officer
|
Title:
Chairman
|
|
[Signature
Page to Gemini - Xxxxx - IXI Letter Agreement]
SCHEDULE
I
Allocation
of ITAC Stock
|
Name
of Entity
|
%
|
Amount
Guaranteed
|
Number
of ITAC Stock
|
|||||||
|
Gemini
Israel III LP
|
45.00
|
%
|
3,600,377
|
108,011
|
||||||
|
Gemini
Partners Investors LP
|
0.54
|
%
|
43,042
|
1,291
|
||||||
|
Gemini
Israel III Parallel Fund LP
|
8.20
|
%
|
656,381
|
19,692
|
||||||
|
Gemini
Israel III Overflow Fund LP
|
9.25
|
%
|
740,200
|
22,206
|
||||||
|
Xxxxx
Ventures Ltd.
|
37.00
|
%
|
2,960,000
|
88,800
|
||||||
|
Total
|
8,000,000
|
240,000
|
||||||||
