Exhibit 10.3

 

THIS NOTE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE. THIS NOTE HAS BEEN SOLD IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.

 

MICRONET ENERTEC TECHNOLOGIES, INC

 

ENERTEC ELECTRONICS LTD

 

Secured Promissory Note

 

No. MICT-5 Original Principal Amount: $1,500,000 Issuance Date:  August 22, 2017
 

 

 

FOR VALUE RECEIVED, MICRONET ENERTEC TECHNOLOGIES, INC., a corporation organized
and existing under the laws of the State of Nevada (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”), hereby promise to pay to the
order of YA II PN, Ltd. or its registered assigns (the “Holder”) (i) the
outstanding portion of the amount set out above as the Original Principal Amount
(as reduced pursuant to the terms hereof pursuant to scheduled payment,
redemption, conversion, or otherwise, the “Principal”) when due, whether upon
the Maturity Date (as defined below), acceleration, redemption or otherwise (in
each case in accordance with the terms hereof) and (ii) to pay interest
(“Interest”) on any outstanding Principal at the applicable Interest Rate (as
defined below) from the date defined in Section 17 hereof as the Issuance Date
until the same is paid, whether upon the Maturity Date or acceleration,
redemption or otherwise (in each case in accordance with the terms hereof)
pursuant to the terms of this Promissory Note (the “Note”).

 

This Note is being issued pursuant to that certain Note Purchase Agreement dated
as of October 28, 2016, as amended and supplemented from time to time (the “Note
Purchase Agreement“) among the Holder and the Borrowers. Certain capitalized
terms used herein but otherwise not defined herein are defined in Section 17 or
in the Note Purchase Agreement.

 

(1)           GENERAL TERMS

 

(a)          Maturity Date. All amounts owed under this Note shall be due and
payable on such date (the “Maturity Date”) that is either (i) 90 days from the
Issuance Date (the “Early Maturity Date”), or (ii) the date that is the one year
anniversary from the Issuance Date (the “Extended Maturity Date”), as
applicable. On the Maturity Date, the Borrowers shall pay to the Holder an
amount in cash representing all then outstanding Principal and accrued and
unpaid Interest. The Borrowers may elect the Extended Maturity Date by providing
written notice to the Holder within five Business Days of the Early Maturity
Date and by, on or before the Early Maturity Date, (i) paying to the Investor
the Extension Fee (as defined in Section 16), and (ii) issuing to the Investor
the Extension Warrants (as defined in Section 16).

 

 

 

 

(b)          Interest. Interest shall accrue on the outstanding Principal
balance hereof at a rate equal to 7% per annum (“Interest Rate”) beginning on
the Early Maturity Date. Interest shall be calculated on the basis of a 365-day
year and the actual number of days elapsed, to the extent permitted by
applicable law. No interest shall accrue before the Early Maturity Date.

 

(c)          Payments of Principal and Interest. Except with respect to
mandatory pre-payments as set forth below, not payments shall be due from the
Issuance Date through the Early Maturity Date. If the Borrower has elected the
Extended Maturity Date and paid the Extension Fee and issued the Extension
Warrants on or before the Early Maturity Date, then the Borrower shall pay (i)
$200,000 of Principal on March 31, 2018 plus all accrued and unpaid Interest
outstanding under this Note as of such payment date, and (ii) $200,000 of
Principal on June 30, 2018 plus all accrued and unpaid Interest outstanding
under this Note as of such payment date, and the balance on the Maturity Date,
in each case 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).

 

(2)           NO PREPAYMENT PENALTY, MANDATORY PRE-PAYMENTS. The Borrowers may
prepay all or any part of the balance outstanding hereunder at any time without
penalty. The Borrowers shall use any cash proceeds received in connection with
the sale or proposed sale of any of its holdings in any of its subsidiary (if
and to the extent such transaction is consummated) including without limitation,
installment payments or break-up fee payments, to make pre-payments hereunder as
soon as such proceeds are received by the Borrower.

 

(3)           REPRESENTATIONS AND WARRANTIES. The Borrowers hereby represents
and warrants to the Investor that the following are true and correct as of the
date hereof:

 

(a) (i) The Borrowers have the requisite corporate power and authority to enter
into and perform its obligations under this Note and any related agreements, in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
this Note and any related agreements by the Borrowers and the consummation by it
of the transactions contemplated hereby and thereby, have been duly authorized
by the each Borrower’s Board of Directors and no further consent or
authorization is required by any Borrower, Board of Directors, or stockholders,
(iii) this Note and any related agreements have been duly executed and delivered
by the Borrowers, (iv) this Note and any related agreements, constitute the
valid and binding obligations of the Borrowers enforceable against each Borrower
in accordance with their terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors’ rights and remedies.

 

 2 

 

 

(b) The execution, delivery and performance by the Borrowers of its obligations
under this Note will not (i) result in a violation of any Borrower’s
incorporation documents or any certificate of designation of any outstanding
series of preferred stock or (ii) conflict with or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Borrower or
any of its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations and the rules and regulations of the Principal Market on
which the Common Stock is quoted) applicable to the Borrower or any of its
subsidiaries or by which any material property or asset of the Borrower is bound
or affected and which would cause a Material Adverse Effect.

 

(4)           EVENTS OF DEFAULT.

 

(a)          An “Event of Default”, wherever used herein, means any one of the
following events (whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body) shall have occurred and be continuing:

 

(i)          the Borrowers’ failure to pay to the Holder any amount of
Principal, Interest or other amounts when and as due and payable under this Note
and such failure was not cure within 5 days following the Holder’s written
notice to such effect;

 

(ii)          any Borrower or any subsidiary of any Borrower shall commence, or
there shall be commenced against any Borrower or any subsidiary of any Borrower
under any applicable bankruptcy or insolvency laws as now or hereafter in effect
or any successor thereto, or any Borrower or any subsidiary of any Borrower
commences, or there shall be commenced against any Borrower or any subsidiary of
any Borrower, any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or
similar law of any jurisdiction whether now or hereafter in effect relating to
any Borrower or any subsidiary of any Borrower, in each case which remains
un-dismissed for a period of 61 days; or any Borrower or any subsidiary of any
Borrower is adjudicated insolvent or bankrupt pursuant to a final,
non-appealable order; or any order of relief or other order approving any such
case or proceeding is entered; or any Borrower or any subsidiary of any Borrower
suffers any appointment of any custodian, private or court appointed receiver or
the like for it or any substantial part of its property which continues
un-discharged or un-stayed for a period of 61 days; or any Borrower or any
subsidiary of any Borrower makes a general assignment for the benefit of
creditors; or any Borrower or any subsidiary of any Borrower shall admit in
writing that it is unable to pay its debts generally as they become due; or any
Borrower or any subsidiary of any Borrower shall call a meeting of its creditors
with a view to arranging a composition, adjustment or restructuring of its
debts; or any corporate or other action is taken by any Borrower or any
subsidiary of any Borrower for the purpose of effecting any of the foregoing;

 

 3 

 

 

(iii)          the common stock of the Company shall cease to be authorized for
quotation or trading on the Nasdaq Capital Market, or trading in the common
stock of the Company has been suspended for any reason, for a period of more
than ten Trading Days, or the ordinary shares of Micronet Ltd. shall cease to be
authorized for trading on the Tel-Aviv Stock Exchange, or trading in the
ordinary shares of Micronet Ltd. has been suspended for any reason, for a period
of more than ten Trading Days and in any such case the failure was not cured
within 20 days.

 

(iv)          the Company is a party to any agreement memorializing (1) the
consummation of any transaction or event (whether by means of a share exchange
or tender offer applicable to the Common Stock, a liquidation, consolidation,
recapitalization, reclassification, combination or merger of the Company or a
sale, lease or other transfer of all or substantially all of the consolidated
assets of the Company) or a series of related transactions or events pursuant to
which all of the outstanding shares of Common Stock are exchanged for, converted
into or constitute solely the right to receive, cash, securities or other
property, (2) a consolidation or merger in which the Company is not the
surviving corporation, or (3) a sale, assignment, transfer, conveyance or other
disposal of all or substantially all of the properties or assets of the Company
to another person or entity (each of (1), (2) and (3) a “Change in Control”)
unless in connection with such Change in Control, all Principal and accrued and
unpaid Interest due under this Note will be paid in full or the Holder consents
to such Change in Control;

 

(v)          a material event of default or material breach by any Borrower
under the Note Purchase Agreement, any other Transaction Documents, or any other
material obligation, instrument, debenture, note or agreement for borrowed money
occurring after the Issuance Date of this Note and continuing beyond any
applicable notice and/or grace period.

 

(5)           REMEDIES UPON DEFAULT.

 

(a)          During the time that any portion of this Note is outstanding, if
(i) any Event of Default has occurred, the Holder, by notice in writing to any
Borrower, may at any time and from time to time declare the full unpaid
Principal of this Note or any portion thereof, together with Interest accrued
thereon to be due and payable immediately (the “Accelerated Amount”) or (ii) any
Event of Default specified in Section 4(a)(ii) has occurred, the unpaid
Principal of the Note and the Interest accrued thereon shall be immediately and
automatically due and payable without necessity of further action.

 

(6)           REISSUANCE OF THIS NOTE. Upon receipt by any Borrower of evidence
reasonably satisfactory to such Borrower of the loss, theft, destruction or
mutilation of this Note, and, in the case of loss, theft or destruction, of an
indemnification undertaking by the Holder to such Borrower in customary form
and, in the case of mutilation, upon surrender and cancellation of this Note,
the Borrowers shall execute and deliver to the Holder a new Note representing
the outstanding Principal which Note (i) shall be of like tenor with this Note,
(ii) shall represent, as indicated on the face of such new Note, the Principal
remaining outstanding (iii) shall have an issuance date, as indicated on the
face of such new Note, which is the same as the Issuance Date of this Note, (iv)
shall have the same rights and conditions as this Note, and (v) shall represent
accrued and unpaid Interest from the Issuance Date.

 

 4 

 

 

(7)           NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms hereof must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one (1) Business Day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:

 

If to the Borrowers, to: Micronet Enertec Technologies, Inc.   28 West Grand
Avenue, Suite 3   Montvale, NJ 07645   Attention:  David Lucatz   Email:
David@micronet-enertec.com     With a copy to:

Zysman, Aharoni, Gayer and Sullivan & Worcester LLP

 

1633 Broadway

New York, NY 10019

Attention: Oded Har-Even, Esq.

Telephone: (212) 660-5002

Email: ohareven@zag-sw.com

 

If to the Holder: YA II PN, Ltd.   1012 Springfield Avenue   Mountainside,
NJ  07092   Attention: Mark Angelo   Telephone: (201) 985-830     With a copy
to: David Gonzalez, Esq.   1012 Springfield Avenue   Mountainside, NJ  07092  
Telephone: (201) 985-8300   Email: dgonzalez@yorkvilleadvisors.com

 

or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party three Business Days prior to the effectiveness of such change.
Written confirmation of receipt (i) given by the recipient of such notice,
consent, waiver or other communication, (ii) mechanically or electronically
generated by the sender’s facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (iii)
provided by a nationally recognized overnight delivery service, shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.

 

(8)           No provision of this Note shall alter or impair the obligations of
the Borrowers, which are absolute and unconditional, to pay the Principal of or
Interest (if any) on, this Note at the time, place, and rate, and in the
currency, herein prescribed. This Note is a direct obligation of each Borrower.
As long as this Note is outstanding, the Borrowers shall not and shall cause its
subsidiaries not to, without the consent of the Holder, (i) amend its articles
of incorporation, bylaws or other charter documents so as to adversely affect
any rights of the Holder under this Note; or (ii) enter into any agreement with
respect to any of the foregoing.

 

 5 

 

 

(9)           This Note shall be governed by and interpreted in accordance with
the laws of the State of New York, without regard to the principles of conflict
of laws. Each of the parties consents to the jurisdiction of the state courts of
the State of New York and the U.S. District Court for the District of New York
sitting in Manhattan, in connection with any dispute arising under this Note and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non conveniens to the bringing of any such
proceeding in such jurisdictions.

 

(10)         If an Event of Default has occurred, then the Borrowers shall
reimburse the Holder promptly for all reasonable out-of-pocket fees, costs and
expenses, including, without limitation, reasonable attorneys’ fees and expenses
incurred by the Holder in any action in connection with this Note, including,
without limitation, those incurred: (i) during any workout, attempted workout,
and/or in connection with the rendering of legal advice as to the Holder’s
rights, remedies and obligations, (ii) collecting any sums which become due to
the Holder in accordance with the terms of this Note, (iii) defending or
prosecuting any proceeding or any counterclaim to any proceeding or appeal; or
(iv) the protection, preservation or enforcement of any rights or remedies of
the Holder.

 

(11)         Any waiver by the Holder of a breach of any provision of this Note
shall not operate as or be construed to be a waiver of any other breach of such
provision or of any breach of any other provision of this Note. The failure of
the Holder to insist upon strict adherence to any term of this Note on one or
more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Note. Any waiver must be in writing.

 

(12)         If any provision of this Note is invalid, illegal or unenforceable,
the balance of this Note shall remain in effect, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances. If it shall be found that any
Interest or other amount deemed Interest due hereunder shall violate applicable
laws governing usury, the applicable rate of Interest due hereunder shall
automatically be lowered to equal the maximum permitted rate of interest. The
Borrowers covenant (to the extent that it may lawfully do so) that each Borrower
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law or other law
which would prohibit or forgive the Borrowers from paying all or any portion of
the Principal of or Interest on this Note as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Note, and the Borrowers (to the extent they
may lawfully do so) hereby expressly waive all benefits or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Holder, but will suffer
and permit the execution of every such as though no such law had been enacted.

 

(13)         Whenever any payment or other obligation hereunder shall be due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day.

 

 6 

 

 

(14)         Assignment of this Note by the Borrowers shall be prohibited
without the prior written consent of the Holder. Holder shall be entitled to
assign this Note in whole or in part to any person or entity without the consent
of the Borrowers.

 

(15)         THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’
ACCEPTANCE OF THE NOTE PURCHASE AGREEMENT AND THIS NOTE.

 

(16)         CERTAIN DEFINITIONS For purposes of this Note, the following terms
shall have the following meanings:

 

(a)          “Business Day” means any day except Saturday, Sunday and any day
which shall be a federal legal holiday in the United States or a day on which
banking institutions in the United States are authorized or required by law or
other government action to close.

 

(b)          “Extension Fee” shall mean a fee in the amount of $50,000 U.S.

 

(c)          “Extension Warrants” shall mean warrants in the form set forth on
Exhibit B to the Supplemental Agreement between the Borrowers and the Holder
dated August 22, 2017 to purchase 158,000 shares of Common Stock at an exercise
price of $1.50 per share and an exercise period of 5 years from the issuance
date.

 

(d)          “Issuance Date” means the date this Note is executed and delivered
by the Borrowers to the Holder as set forth on the first page of this Note.

 

(e)          “Trading Day” means a day on which the principal Trading Market is
open for trading.

 

(f)          “Trading Market” means any of the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the date in question:
the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market, the New York Stock Exchange, OTCBB, or the OTC Markets (or
any successors to any of the foregoing).

 

(g)          “Transaction Documents” shall have the meaning set forth in the
Note Purchase Agreement.

 

[Signature Page Follows]

 

 7 

 

 

IN WITNESS WHEREOF, each Borrower has caused this Note to be duly executed by a
duly authorized officer as of August 22, 2017.

 

 

BORROWERS:

     

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.

 

   

 

 

Schedule I

 

(Holder Account Information)

 

YA II PN, LTD.

 

-Wiring Instructions-