SECOND AMENDMENT TO LOAN AGREEMENT
SECOND
AMENDMENT TO LOAN AGREEMENT
This
Second Amendment to the Loan Agreement (this “Amendment”),
is
made and entered into as of December 5, 2006, by and among IXI
MOBILE (R&D) LTD.,
an
Israeli limited liability company, (the “Company”),
IXI MOBILE,
INC.,
a
Delaware corporation (the “Parent
Guarantor”)
and
SOUTHPOINT
MASTER FUND LP
(the
“Lender).
The
parties hereby agree as follows:
RECITALS
WHEREAS,
the
Company, the Parent Guarantor and the Lender have previously entered into that
certain Loan Agreement dated as of June 19, 2006 and a First Amendment thereto
dated as of June 26, 2006 (collectively, the "Loan
Agreement");
and
WHEREAS,
the
parties now wish to further amend the Loan Agreement as set forth in this
Amendment.
NOW,
THEREFORE,
in
consideration of the foregoing and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereby
agree as follows:
Unless
otherwise defined below, all capitalized terms herein shall have the meanings
assigned to such terms in the Loan Agreement
1. Amendment
of the Loan Agreement.
1.1 The
definition of the term "Basic Interest Rate" is hereby amended and restated
in
its entirety to read as follows:
"“Basic
Interest Rate”
means
with respect to each Loan, 10% per annum; provided, however, that if, and only
if, the ITAC/IXI Merger does not close, then on the first anniversary of the
Closing Date the Basic Interest shall be increased to 20% per annum and such
rate shall apply throughout the period commencing on such first anniversary
of
the Closing Date and ending on the payment in full of the Loan."
1.2 Section
2.3 of the Loan Agreement is hereby amended and restated in its entirety to
read
as follows:
"2.3 Repayment.
(a) All
payment obligations to the Lenders under the Loan Documents shall be due and
payable on the earlier to occur of: (i) the date 365 days following the closing
date of the ITAC/IXI Merger (the “Repayment
Date”);
(ii)
the acceleration of the Loans in accordance with the terms of this Agreement;
and (iii) June 20, 2008 (subsections (ii) and (iii) to be
referred to herein as the “Maturity
Date”)
unless
any such portion of the principal amount of the Loan and any accumulated unpaid
interest thereon has already been prepaid in full pursuant to Section 2.5
hereof. The parties hereby agree that the Lenders shall have the right to
convert all or any part of each their respective Loan pursuant to Section 3.2
below and that any amount so converted into Conversion Stock will be deemed
fully paid and all Obligations relating thereto will be deemed fully
satisfied.
(b) The
parties acknowledge that all payment obligations of the Loan Parties to any
Leumi Guarantors assuming any part of the Leumi Debt (both terms as defined
in
Section 4.22(b) below) pursuant to Section 3.1 below, including, without
limitation, payment of the entire unpaid principal of such assumed amount and
any accumulated unpaid interest thereon, shall be due and payable on the earlier
to occur of: (i) the Repayment Date; and (ii) the two dates combining of the
Maturity Date. The parties hereby agree that each of the Leumi Guarantors shall
have the right to convert all or any part of each its respective Conversion
Amount pursuant to Section 3.2 below and that any amount so converted into
Conversion Stock will be deemed fully paid and all obligations relating thereto
will be deemed fully satisfied."
1.3 Section
2.4 of the Loan Agreement is hereby amended and restated in its entirety to
read
as follows:
"2.4 Loan
Interest Rate.
The
Company shall pay interest on the unpaid principal amount of each Loan from
the
Closing Date until such Loan has been paid in full, at a per annum rate of
interest equal to the Basic Interest Rate. All computations of interest on
each
Loan shall be based on a year of 360 days for actual days elapsed.
Notwithstanding any other provision hereof, the amount of interest payable
hereunder shall not in any event exceed the maximum amount permitted by the
law
applicable to interest charged on commercial loans. Accrued and
unpaid interest
on any portion of the principal amount of the Loan outstanding as of June 30,
2007 (the “First
Interest Payment Date”)
shall
be payable on such date and thereafter quarterly in arrears or upon a Prepayment
(as defined below). In any event, all unpaid principal and accrued and unpaid
interest shall be due and payable in full on First Repayment Date and Second
Repayment (if the ITAC/IXI Merger closes), or on the Maturity Date (if the
ITAC/IXI Merger does not close). In addition to payment of interest, the Lenders
shall be entitled to the rights and benefits conferred to them by Sections
3.2
and 3.3 below."
1.4 Section
3.2(a) of the Loan Agreement is hereby amended and restated in its entirety
to
read as follows:
"3.2 Conversion.
(a) In
the
event the ITAC/IXI Merger becomes effective and subject to and conditioned
upon
the ITAC/IXI Merger becoming effective, each Conversion Participant shall have
the option to convert its respective Conversion Amount pursuant to this
Agreement and the ITAC Certification into such number of fully paid and
non-assessable shares of ITAC’s Common Stock, par value $0.0001 per share
(“ITAC
Stock”)
as
determined by dividing (A) such Conversion Participant’s Conversion Amount by
(B) $5.50, appropriately adjusted for stock dividends, stock splits and other
recapitalizations subsequent to the date of ITAC’s most recent publicly
available securities law filing prior to the execution of this Agreement.”
1.5 Section
3.2(d) of the Loan Agreement is hereby amended and restated in its entirety
to
read as follows:
"3.2 Conversion.
(d) An
Optional Conversion shall be effectuated by the Conversion Participant by
furnishing both the Parent Guarantor and ITAC (in the case of an Optional
Conversion pursuant to the combined provisions of Section 3.2(a) above and
the
ITAC Certification) or by furnishing the Parent Guarantor (in the case of an
Optional Conversion pursuant to Section 3.2(b) above)
within
three hundred sixty five (365) days following the closing date of the ITAC/IXI
Merger (in the case of an Optional Conversion pursuant to the combined
provisions of Section 3.2(a) above and the ITAC Certification) or no later
than
within sixty (60) Business Days following the date on which the Conversion
Participant receives notice from the Parent Guarantor that the ITAC/IXI Merger
failed to become effective and the Company failed to make the first interest
payment on the First Interest Payment Date (in the case of an Optional
Conversion pursuant to Section 3.2(b) above), a notice indicating the Conversion
Participant’s Conversion Amount and otherwise evidencing such Conversion
Participant’s intention to convert its respective Conversion Amount (the
“Conversion
Notice”).
Should any Lender and/or Leumi Guarantor fail to deliver a Conversion Notice
within the timeframe and to the party or parties set forth above, such Lender
and/or Leumi Guarantor shall be deemed to have waived its right for Optional
Conversion and such right shall automatically, without any action on the part
of
the Parent Guarantor and/or ITAC, be of no further force and effect with respect
to such Lender and/or Leumi Guarantor."
1.5 Section
3.3 of the Loan Agreement is hereby amended and restated in its entirety to
read
as follows:
"3.3 Equity
Securities.
(a) As
an
inducement to the Lenders to advance the Loans to the Company, in the event
the
ITAC/IXI Merger becomes effective and subject and conditioned upon the ITAC/IXI
Merger becoming effective, ITAC shall issue pursuant to the combined provisions
of this Section 3.3(a) and the ITAC Certification, as soon as practicable
following the consummation of the ITAC/IXI Merger, to the Lender a total amount
of One Million (1,000,000) shares of ITAC’s Common Stock (“ITAC
Stock”),
par
value $0.0001 per share, appropriately adjusted for stock dividends, stock
splits and other recapitalizations subsequent to the date of ITAC’s most recent
publicly available securities law filing prior to the execution of this
Agreement, with each Lender receiving the amount of ITAC Stock set forth
apposite such Lender’s name on the Schedule of Lenders. For clarification
purposes the parties acknowledge and agree that pursuant to the Leumi
Guarantors’ Agreement, as an inducement to the Leumi Guarantors to enter into
the Leumi Guarantors’ Agreement, the Leumi Guarantors will receive 400,000
shares of ITAC Stock as described in Section 4.22(d) below.
1.6 Section
4.22(d) of the Loan Agreement is hereby amended and restated in its entirety
to
read as follows:
4.22(d) The
Parent Guarantor has entered into an agreement with the Leumi Guarantors (the
“Leumi
Guarantors’ Agreement”)
pursuant to which, among other things: (i) the Parent Guarantor is obligated
to
repay the Leumi Guarantors any part of the Leumi Debt assumed by any of the
Leumi Guarantors and to indemnify the Leumi Guarantors for any amounts paid
by
the Leumi Guarantors to Bank Leumi pursuant to their guaranty of the Leumi
Credit Line and any related make-whole and other amounts payable by the Parent
Guarantor in connection with such guaranty; (ii) as consideration for the
guaranty provided and continued by the Leumi Guarantors, the Leumi Guarantors
will receive: (A) in the event the ITAC/IXI Merger becomes effective and subject
and conditioned upon the ITAC/IXI Merger becoming effective, a total amount
of
Four Hundred Thousand (400,000) shares of ITAC Stock (as defined above), and,
additionally, (B) an amount equal to the balance between the Basic Interest
Rate
and the interest rate owed under the Leumi Credit Line calculated on $8,000,000
for the Period commencing on the date on which the guaranty of the Leumi
Guarantors was extended and ending on the Repayment Date (if the ITAC/IXI Merger
closes) or on the First Interest Payment Date (if the ITAC/IXI Merger does
not
close) (depending on when any interest first gets repaid to the Lenders); (iii)
in addition to the consideration set forth in Subsection (c)(iii) above, to
secure the Parent Guarantor’s obligations pursuant to the Leumi Guarantors’
Agreement, concurrently with the execution of this Agreement, the Parent
Guarantor is granting the Leumi Guarantors the same security interests provided
to the Lenders by the Security Documents (collectively, the “Leumi
Guarantors’ Security Interests”)
with
such Leumi Guarantors’ Security Interests ranking equally with any security
interests provided to the Lenders by the Security Documents. The transactions
described in this Section 4.22(d) above shall collectively be referred to
hereunder as the “Leumi
Guarantors’ Arrangement”.
1.7 Schedule
I to the Loan Agreement is hereby amended and restated in its entirety to read
as follows:
“SCHEDULE
I
SCHEDULE
OF LENDERS
|
Lender
|
Principal
Amount
|
Address
|
||
|
Southpoint
Master Fund, LP
|
$20,000,000.00
One
Million (1,000,000) shares of ITAC Common Stock
|
Southpoint
Capital Advisors LP
000
Xxxxx Xxxxxx;
Xxxxx
0000
Xxx
Xxxx, XX 00000
|
||
|
Total
Principal Amount
|
$20,000,000.00
|
|||
|
Maximum
Principal
Amount in
the
event of a Luemi Debt assumption*
|
$8,000,000.00
Four
Hundred Thousand (400,000) shares of ITAC Common Stock
|
x/x
Xxxxxx Xxxxxx Xxxxx
0
Xxxxxxxxx xxxxxx Xxxxxxxx, Xxxxxx
Xxxxx
Ventures Ltd.
Begin
7 St.
Ramat
Gan, Israel
|
||
|
Total
Maximum Principal Amount in
the
event of a Luemi Debt assumption*
|
$28,000,000.00
|
* In
the
event of an assumption by any of the Leumi Guarantors of any Leumi Debt, this
Schedule of Lenders shall be revised to include the name of the assuming Leumi
Guarantor(s) and the respective amount of the assumed Leumi Debt.”
2. No
Other Modifications.
Except
as expressly set forth herein, all other terms and conditions of the Loan
Agreement shall remain in full force and effect.
3. Miscellaneous.
3.1 Counterparts;
Fax Signatures.
This
Amendment may be executed in counterparts, each of which shall constitute an
original, but all of which together shall constitute one and the same Amendment.
Originally executed counterparts may be delivered by facsimile and any such
delivery shall be valid for all purposes as delivery of a manual signature
and
equally admissible in any legal proceedings to which any of the Company, the
Parent Guarantor, or the Lender is a party.
3.2 Severability.
If any
provision of this Amendment or the application thereof, shall for any reason
and
to any extent be determined by a court of competent jurisdiction to be invalid
or unenforceable under applicable law, the remaining provisions of this
Amendment shall be interpreted so as best to reasonably effect the intent of
the
parties hereto.
3.3 Entire
Agreement.
This
Amendment, together with the Loan Documents and all exhibits hereto and thereto,
constitute the entire understanding and agreement of the parties with respect
to
the transactions contemplated herein and supersede all prior and contemporaneous
understandings and agreements, whether written or oral, with respect to such
transactions.
3.4 Governing
Law;
Forum.
This
Amendment shall be governed in all respects by Section 9.10 and 9.13 of the
Loan
Agreement.
[Remainder
of Page Intentionally Left Blank]
IN
WITNESS WHEREOF, the parties have executed this Second Amendment to Loan
Agreement as of the date first written above.
|
IXI
MOBILE (R&D), LTD.
|
|
|
By:
/s/ Xxxx Xxxxx
|
|
|
Name:
Xxxx Xxxxx
|
|
|
Title:
CFO
|
|
|
IXI
MOBILE, INC.
|
|
|
By:
/s/ Xxxx Xxxxx
|
|
|
Name:
Xxxx Xxxxx
|
|
|
Title:
CFO
|
[Signature
Page to Second Amendment to Loan Agreement]
IN
WITNESS WHEREOF, the parties have executed this Second Amendment to Loan
Agreement as of the date first written above.
|
SOUTHPOINT
MASTER FUND, LP
|
|
|
By:
Southpoint GP, LP, its general partner
|
|
|
By: Southpoint GP, LLC
|
|
|
By: /s/
Xxxxxx X. Xxxxx
|
|
|
Name: Xxxxxx X. Xxxxx
|
|
|
Title: Manager
|
|
|
By: /s/
Xxxx X. Xxxxx, XX
|
|
|
Name: Xxxx X. Xxxxx, XX
|
|
|
Title: Manager
|
[Signature
Page to Second Amendment to Loan Agreement]
