Exhibit 10.1

 

SUPPLEMENTAL AGREEMENT

 

This Supplemental Agreement (the “Agreement”), dated as of June 8, 2017, is entered into by and between YA II PN, LTD., a Cayman Islands exempt limited partnership (the “Investor”), MICRONET ENERTEC TECHNOLOGIES, INC., a corporation organized and existing under the laws of the State of Delaware (the “Company” or a “Borrower”), and ENERTEC ELECTRONICS LTD., a corporation organized and existing under the laws of the State of Israel (“Enertec” or a “Borrower” and collectively with the Company, the “Borrowers”).

 

BACKGROUND

 

(A)

On June 30, 2016 the parties entered into a note purchase agreement (the “Original Purchase Agreement”) pursuant to which the Borrowers issued and sold to the Investor, and the Investor purchased from the Borrowers, a secured promissory note in an aggregate principal amount of $600,000 (as amended from time to time, the “Original Note”). Pursuant to the Original Note, the Borrowers shall make quarterly payments on each of (i) October 10, 2016, (ii) May 1, 20171, and (iii) September 1, 2017, and the Maturity Date of the Original Note is December 20, 2017.

 

(B)

On October 28, 2016 the parties entered into a note purchase agreement (the “Second Purchase Agreement”) pursuant to which the Borrowers issued and sold to the Investor, and the Investor purchased from the Borrowers, a secured promissory note in an aggregate principal amount of $500,000 (as amended from time to time, the “Second Note”). Pursuant to the Second Note, the Borrowers shall make quarterly payments on each of (i) May 1, 20172, and (ii) September 1, 2017, and the Maturity Date of the Second Note is December 20, 2017.

 

(C)

On December 22, 2016 the parties entered into a supplemental agreement to the Second Purchase Agreement (the “First Supplemental Agreement”) pursuant to which the Borrowers issued and sold to the Investor, and the Investor purchased from the Borrowers, a secured promissory note in an aggregate principal amount of $1,000,000 (as amended from time to time, the “Third Note”). Pursuant to the Third Note, the Borrowers shall make all payments on the Maturity Date of the Third Note, which is December 20, 2017.

 

(D)

In connection with the Original Note the parties entered in a pledge agreement and escrow deed on June 30, 2016 (collectively, the “Pledge Agreements”) pursuant to which Enertec provided a first priority lien and security interest over certain shares of Micronet Ltd. (“Micronet”) and deposited such pledged shares into a bank account in Israeli controlled by an escrow agent appointed by the parties pursuant to an escrow deed dated June 30, 2016 (the “Escrow Deed”). As of the date hereof, the number of Ordinary Shares of Micronet pledged as collateral security by Enertec in connection with both the Original Note, the Second Note, and the Third Note is 3,700,000 (the “Micronet Stock” and collectively, along with any such additional shares of Micronet Stock as pledged from time to time in accordance with Section 1(f) of the Second Purchase Agreement, collectively, the “Pledged Shares”).

 

(E)

The parties desire to further supplement the Second Purchase Agreement in order to provide for an additional Closing of the issuance and sale of a new Note (as defined in the Second Purchase Agreement) in the principal amount of $600,000 on the terms and conditions set forth herein and make other modifications to the payment terms of the Original Note, the Second Note, and the Third Note as set forth herein.

 

1	The October 10, 2016 and the May 1, 2017 payments have been paid by the Borrowers.

2	The May 1, 2017 payment has been paid by the Borrowers.

 

AGREED TERMS

 

1.	Definitions and interpretation

 

1.1	Capitalized terms not otherwise defined herein shall have the meanings set forth in the Original Purchase Agreement or the Second Purchase Agreement, as applicable.

 

2.	Additional Closing

 

2.1        Purchase of Note. The Investor shall purchase, and the Borrowers shall sell, a Note in the aggregate principal amount of $600,000, which shall be purchased for 100% of the face amount of the Note issued and sold. This Closing of the purchase and sale of this Note (the “Third Closing”) shall occur in one tranche as soon as possible after the first date that all the conditions precedent to the Closing set forth in Section 1(e) of the Second Purchase Agreement have been satisfied (or such other date as may be agreed upon by the parties) (the “Third Closing Date”), subject to the satisfaction of all the conditions precedent set forth therein and herein.

 

2.2        Form of Payment. Subject to the satisfaction of the terms and conditions of the Second Purchase Agreement as supplemented by this Agreement, on the Third Closing Date (i) the Investor shall deliver to the Borrowers as set forth herein the principal amount of the Note to be issued and sold to the Investor on such Closing, and (ii) the Borrowers shall deliver to the Investor, the Note duly executed on behalf of the Borrowers in the principal amount so purchased. The Note issued to the Investor at the Third Closing shall be in the form of Exhibit A attached hereto with a maturity date of December 31, 2018.

 

2.3        Warrants. In connection with the Third Closing the Company shall grant to the Investor a warrant in the form of Exhibit B attached to the Second Purchase Agreement to purchase 90,000 shares of common stock of the Company at an exercise price of $2.00 per share and a term of 5 years from the date of issuance

 

2.4        Fees. In connection with the Third Closing, the Borrowers shall pay to YA Global II SPV LLC (as designee of the Investor) a commitment fee in the amount equal to $25,000. In addition, the parties agree that in consideration of the agreements of the Investor set forth herein, including the agreements of the Investor to defer the repayments under the First Note, Second Note, and Third Note, the remaining $50,000 commitment fee described in Section 2.4 of the First Supplemental Agreement shall be accelerated and due and payable on the date hereof and paid in cash.

 

2.5        Conditions Precedent to the Third Closing. The obligation of the Investor hereunder to purchase the Note at the Third Closing is subject to the satisfaction, at or before the Third Closing Date, of each of the conditions precedent set forth in Section 1(e) of the Second Purchase Agreement, provided that these conditions are for the Investor’s sole benefit and may be waived by the Investor at any time in its sole discretion.

 

 

3.	Modifications to Original Note, the Second Note, and the Third Note.

 

3.1        Modifications to the Original Note. The Maturity Date of the Original Note shall be amended to December 31, 2017. In addition Section (c) of the Original Note shall be deleted in its entirety and replaced with the following:

 

1(c) Payments of Principal and Interest. On each of (i) October 10, 2016, (ii) May 1, 2017³, (iii) September 30, 2017, and (iv) December 31, 2017 (each such date, a “Payment Due Date”), the Borrowers shall make a payment to the Holder in the amount of $150,000 of Principal plus all accrued and unpaid Interest outstanding under this Note as of such payment date by wire transfer of immediately available funds to the account listed on Schedule I hereto (or to any other account specified by the Holder to the Borrowers in writing) to be received on or before such Payment Due Date.

 

3.2        Modifications to the Second Note. The Maturity Date of the Second Note shall be amended to March 31, 2018. In addition Section (c) of the Second Note shall be deleted in its entirety and replaced with the following:

 

1(c) Payments of Principal and Interest. (i) On May 1, 2017 the Borrowers shall make a payment to the Holder in the amount of $150,000 of Principal plus all accrued and unpaid Interest outstanding under this Note as of such payment date⁴, (ii) on September 30, 2017 the Borrowers shall make a payment to the Holder in the amount of $100,000 of Principal plus all accrued and unpaid Interest outstanding under this Note as of such payment date, (iii) on December 31, 2017 the Borrowers shall make a payment to the Holder in the amount of $150,000 of Principal plus all accrued and unpaid Interest outstanding under this Note as of such payment date, and (iv) on March 31, 2018 the Borrowers shall make a payment to the Holder in the amount of $100,000 of Principal plus all accrued and unpaid Interest outstanding under this Note as of such payment date (each such date, a “Payment Due Date) by wire transfer of immediately available funds to the account listed on Schedule I hereto (or to any other account specified by the Holder to the Borrowers in writing) to be received on or before such Payment Due Date.

 

3	For the avoidance of doubt, the October 10, 2016 and May 1, 2017 payments has been paid by the Borrowers.

4	For the avoidance of doubt, the May 1, 2016 payment has been paid by the Borrowers.

 

 

3.3        Modifications to the Third Note. The Maturity Date of the Third Note shall be amended to September 30, 2018. In addition Section (c) of the Third Note shall be deleted in its entirety and replaced with the following:

 

1(c) Payments of Principal and Interest. (i) On March 31, 2018 the Borrowers shall make a payment to the Holder in the amount of $300,000 of Principal plus all accrued and unpaid Interest outstanding under this Note as of such payment date, (ii) on June 30, 2018 the Borrowers shall make a payment to the Holder in the amount of $400,000 of Principal plus all accrued and unpaid Interest outstanding under this Note as of such payment date, and (iii) on September 30, 2018 the Borrowers shall make a payment to the Holder in the amount of $300,000 of Principal plus all accrued and unpaid Interest outstanding under this Note as of such payment date, (each such date, a “Payment Due Date) by wire transfer of immediately available funds to the account listed on Schedule I hereto (or to any other account specified by the Holder to the Borrowers in writing) to be received on or before such Payment Due Date.

 

3.4        For the sake of clarity, the chart below shall summarize the required Principal payments on all the Notes as modified herein:

 

	Repayment Date		Principal Repayment																TOTAL
			MICT LN1				MICT LN2				MICT LN3				MICT LN4
	September 30, 2017			150,000.00				100,000.00				-				-			$	250,000.00
	December 31, 2017			150,000.00				150,000.00				-				-			$	300,000.00
	March 31, 2018			-				100,000.00				300,000.00				-			$	400,000.00
	June 30, 2018			-				-				400,000.00							$	400,000.00
	September 30, 2018											300,000.00				100,000.00			$	400,000.00
	December 31, 2018															500,000.00			$	500,000.00
	TOTALS		$	300,000.00			$	350,000.00			$	1,000,000.00			$	600,000.00			$	2,250,000.00

 

3.5        Consideration for Modifications. As consideration for the modifications made to the Original Note, the Second Note, and the Third Note, the Borrowers shall:

 

(i) pay to YA Global II SPV LLC (as designee of the Investor) an extension fee in the amount equal to $25,000 in cash, which shall be due and payable on the date hereof; and

 

(ii) enter into warrant amendment agreements in the form set forth on Exhibit B attached hereto pursuant to which the warrant exercise price of the warrants issued to the Investor shall be reduced to $2.00 per share.

 

4.	Representations and warranties

 

4.1       The Borrowers represents and warrants to the Investor as of the date of this Agreement that:

 

(a)

it has the requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated by this Agreement;

 

(b)

it has taken all necessary corporate actions to authorize the execution, delivery and performance of this Agreement and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection therewith;

 

(c)

the obligations assumed by the Borrowers in this Agreement are legal, valid, and enforceable obligations binding on it in accordance with its terms; and

 

 

5.	Counterparts and delivery

 

This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

6.	Governing law

 

This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under the Second Purchase Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Agreement to be signed by their duly authorized officers.

 

	MICRONET ENERTEC TECHNOLOGIES, INC.
	By:	/s/ David Lucatz
	Name:	David Lucatz
	Title:	Chairman President and CEO
	ENERTEC ELECTRONICS LTD
	By:	/s/ Tali Dinar
	Name:	Tali Dinar
	Title:	CFO of Enertec Electronics Ltd.
	INVESTOR:
	YA II PN, LTD.
	By:	Yorkville Advisors Global LP
	Its:	General Counsel
		By:	Yorkville Advisors Global LLC
		Its:	General Counsel
	By:	/s/ David Gonzalez
	Name:	David Gonzalez
	Title:	General Counsel

 

 

EXHIBIT A

 

FORM OF NOTE

 

 

 

 

 

EXHIBIT B

 

FORM WARRANT AMENDMENTS