Exhibit
10.1
 
Execution Version

SECOND AMENDMENT
TO
NOTE AND WARRANT PURCHASE AGREEMENT
 
 Second Amendment to Note and Warrant Purchase Agreement (this “Amendment”),
dated as of August 31, 2011, by and between Lapis Technologies Inc., a Delaware
corporation (the “Company”), and UTA Capital LLC, a Delaware limited liability
company (the “Purchaser”).

WITNESSETH :

WHEREAS, the Company and the Purchaser entered into a Note and Warrant Purchase
Agreement, dated as of July 12, 2011 as amended on August 16, 2011 (the
“Agreement”), pursuant to which, among other things, the Company agreed to issue
to the Purchaser secured promissory notes and warrants, on the terms and subject
to the conditions set forth in the Agreement; and

WHEREAS, pursuant to Section 14.4 of the Agreement, the Company and the
Purchaser desire to amend the Agreement as provided herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, the parties
agree as follows:

Section 1.1.        Amendments to the Recitals. The recitals to the Agreement
are hereby deleted in their entirety and restated to read as follows:
 
“WHEREAS, the Company desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase from the Company, secured promissory notes,
substantially in the forms of Exhibit A-1 (the “First Note”), Exhibit A-2 (the
“Intermediate Note”) and Exhibit A-3 (the “Second Note”) attached hereto (each
such note, a “Note” and together, the “Notes”), the First Note maturing thirty
(30) months from the Initial Closing Date (as defined below) and having a
principal amount of $3,000,000 (the “First Note Principal Amount”), the
Intermediate Note maturing twelve (12) months from the Intermediate Closing Date
(as defined below) and having a principal amount of $1,500,000 (the
“Intermediate Note Principal Amount”), and the Second Note maturing twenty seven
(27) months from the Second Closing Date (as defined below) and having a
principal amount equal to (i) $3,000,000 less (ii) the aggregate unpaid
principal amount outstanding under the Intermediate Note as of the Second
Closing (as defined below) (the “Second Note Principal Amount”);

WHEREAS, to induce Purchaser to purchase the Notes, the Company has agreed to
issue to Purchaser warrants to purchase shares of the Company’s common stock,
$.001 par value per share (the “Common Stock”), in accordance with the terms set
forth in the forms of warrant attached hereto as Exhibit B-1 and Exhibit B-2
(the “Warrants”).”

 
 

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Section 1.2.           Amendments to the Agreement.
 
(a)           Amendment to Section 1.1.   Section 1.1 of the Agreement is hereby
deleted in its entirety and restated to read as follows:
 
“1.1 Sale and Issuance of Notes.  Subject to the terms and conditions of this
Agreement, (a) the Purchaser agrees to purchase at the Initial Closing (as
defined below), and the Company agrees to sell and issue to the Purchaser, the
First Note in the First Note Principal Amount (the “Initial Closing Date
Purchase Price”), (b) the Purchaser agrees to purchase at the Intermediate
Closing (as defined below), if any, and the Company agrees to sell and issue to
the Purchaser, the Intermediate Note in the Intermediate Principal Amount (the
“Intermediate Closing Date Purchase Price”) and (c) the Purchaser agrees to
purchase at the Second Closing (as defined below), if any, and the Company
agrees to sell and issue to the Purchaser, the Second Note in the Second Note
Principal Amount (the “Second Closing Date Purchase Price”).”

(b)           Amendment to Section 1.2.   Section 1.2 of the Agreement is hereby
deleted in its entirety and restated to read as follows:
 
“1.2 Issuance of Warrants.  Subject to the terms and conditions of this
Agreement:
 
(a)           the Company shall issue to the Purchaser, at the Initial Closing,
a Warrant, substantially in the form attached hereto as Exhibit B-1 (the “First
Warrant”), to initially purchase up to 952,227 shares of Common Stock, which
equals, as of the date of the Initial Closing, 12% of the sum of (x) the number
of then currently issued and outstanding shares of Common Stock, plus, without
duplication, (y) the number of additional shares of Common Stock underlying
Common Stock Equivalents (as defined below) outstanding as of immediately prior
to the Initial Closing, and (z) the number of additional shares of Common Stock
issuable upon exercise in full of the First Warrant,
 
(b)           (I) the Company shall issue to the Purchaser, at the Intermediate
Closing, a Warrant, substantially in the form attached hereto as Exhibit B-2
(the “2% Intermediate Warrant”), to initially purchase up to 2% of the sum of
(x) the number of then currently issued and outstanding shares of Common Stock,
plus, without duplication, (y) the number of additional shares of Common Stock
underlying Common Stock Equivalents (as defined below) outstanding immediately
prior to the Intermediate Closing, and (z) the number of additional shares of
Common Stock issuable upon exercise in full of the 2% Intermediate Warrant or
(II) if the Intermediate Closing does not occur within 60 days following the
delivery of an Intermediate Closing Notice (as defined below) by the Purchaser
to the Company pursuant to Section 2.3(a)(i) hereof (such 60th day, the “Warrant
Issuance Date”), and the Purchaser is ready, willing and able to fund the
Intermediate Note, the Company shall issue to the Purchaser, on the Warrant
Issuance Date, a Warrant, substantially in the form attached hereto as Exhibit
B-2 (the “2% Default Intermediate Warrant”; the 2% Intermediate Warrant and the
2% Default Intermediate Warrant are referred to collectively herein as the
“Intermediate Warrant”), to initially purchase up to 2% of the sum of (x) the
number of then currently issued and outstanding shares of Common Stock, plus,
without duplication, (y) the number of additional shares of Common Stock
underlying Common Stock Equivalents (as defined below) outstanding as of the
Warrant Issuance Date, and (z) the number of additional shares of Common Stock
issuable upon exercise in full of the 2% Default Intermediate Warrant; and
 
 
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(c)           the Company shall issue to Purchaser, at the Second Closing, a
Warrant, substantially in the form attached hereto as Exhibit B-1 (the “Second
Warrant”), to initially purchase up to such number of additional shares of
Common Stock as equals, when added to the shares issuable upon exercise of the
First Warrant, but without duplication, 12% of the sum of (x) the number of then
currently issued and outstanding shares of Common Stock, plus, without
duplication, (y) the number of additional shares of Common Stock underlying or
Common Stock Equivalents (as defined below) outstanding immediately after the
Second Closing (including, without limitation, the First Warrant and the
Intermediate Warrant), and (z) the number of additional shares of Common Stock
issuable upon exercise in full of the Second Warrant).”

(c)           Amendments to Section 2.1.  The last sentence of Section 2.1 of
the Agreement is hereby amended by deleting the words “Purchase Price” and
inserting in lieu thereof the words “Initial Closing Date Purchase Price”.
 
(d)           Amendments to Section 2.2.  The last sentence of Section 2.2 of
the Agreement is hereby amended by deleting the words “Purchase Price” and
inserting lieu thereof the words “Second Closing Date Purchase Price”.
 
(e)           New Section 2.3.  The following new Sections 2.3(a)(i),
2.3(a)(ii), 2.3(b) and 2.3(c) are hereby inserted immediately following Section
2.2 to read as follows:
 
“(a)  Requests for the Purchase and Sale of the Intermediate Notes.
 
(i)      Subject to Section 2.3(a)(ii), at any time following the 120th day
following the Initial Closing, but not later than the earlier to occur of (x)
the nine (9) month anniversary of the Initial Closing Date and (y) the Second
Closing Date, (I) the Purchaser may, at its option, deliver to the Company
irrevocable written notice requiring the Company to sell to the Purchaser the
Intermediate Note at the Intermediate Closing or (II) the Company may, at its
option, deliver to the Purchaser irrevocable written notice requiring the
Purchaser to purchase from the Company the Intermediate Note at the Intermediate
Closing (such written notice delivered by the Purchaser or the Company, as
applicable, the “Intermediate Closing Notice”).  The proceeds from the issuance
of the Intermediate Note shall be used solely to refinance all principal,
premium, if any, interest, fees and other amounts due or outstanding under the
existing bank facility provided by First International Bank of Israel (“FIBI”)
(such obligations, specifically excluding any performance guarantees issued by
FIBI on behalf of the Company, the “FIBI Obligations”) and to pay fees and
expenses related thereto.
 
 
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(ii)      At any time prior to the delivery by the Purchaser to the Company of
an Intermediate Closing Notice (but if the Purchaser has delivered an
Intermediate Closing Notice to the Company, not later than 60 days following the
Company’s receipt of such notice), if the Company (x) identifies to the
Purchaser a lender (satisfactory to the Purchaser) who is ready, willing and
able to provide financing sufficient to refinance at least 90% of the FIBI
Obligations (but if the Purchaser has delivered an Intermediate Closing Notice
to the Company, the Company shall have initially identified such lender to the
Purchaser in writing not later than 45 days following the Company’s receipt of
such notice) and such lender provides such financing and concurrently enters
into a subordination and intercreditor agreement on terms no less favorable to
the Purchaser (as determined by the Purchaser in its discretion) than the terms
set forth in the Acceptable Consent and Subordination Letter (as defined below)
or (y) delivers to the Purchaser (i) an execution version of the Acceptable
Consent and Subordination Letter, duly executed by FIBI and (ii) such other
documentation as the Purchaser shall reasonably request evidencing that such
Acceptable Consent and Subordination Letter shall replace the Letter Agreement,
to be dated on or around September 1, 2011, by and among the Purchaser, FIBI and
certain of the Company’s Israeli subsidiaries, then the Purchaser shall no
longer have the right to (a) deliver an Intermediate Closing Notice or, if an
Intermediate Closing Notice has already been delivered, to close (or any
obligation to consummate) the Intermediate Closing and (b) receive the
Intermediate Note or the Intermediate Warrant.
 
(b)  Intermediate Closing.  Subject to the terms of this Agreement, on the
sixtieth (60th) day following the delivery of the Intermediate Closing Notice,
except as otherwise provided in Section 2.3(a)(ii) hereof, and subject to the
satisfaction or, if permissible, waiver of the conditions set forth in Section 7
and Section 8, the closing for the sale and purchase of the Intermediate Note
and the 2% Intermediate Warrant shall take place at the offices of Seyfarth Shaw
LLP, 620 Eighth Avenue, New York, NY 10018, at 10:00 a.m., local time, unless
another time, date or place is agreed to in writing by the Company and the
Purchaser (the “Intermediate Closing”).  The date upon which the Intermediate
Closing shall occur is herein called the “Intermediate Closing Date”.  On the
Intermediate Closing Date, Purchaser shall pay the Intermediate Closing Date
Purchase Price to the Company via federal funds wire transfer(s) of immediately
available funds, in accordance with written instructions provided to Purchaser
prior to the date hereof.
 
(c)  Warrant Issuance Date.  Except as otherwise provided in Section 2.3(a)(ii)
hereof, the Company shall issue to the Purchaser the 2% Default Intermediate
Warrant on the Warrant Issuance Date if the Intermediate Closing does not occur
within 60 days following the delivery of an Intermediate Closing Notice by the
Purchaser to the Company pursuant to Section 2.3(a)(i) hereof and the Purchaser
is ready, willing and able to fund the Intermediate Note.”
 
(f)           Amendment to Section 3.4(b).  Section 3.4(b) is hereby amended by
inserting the phrase “(other than as set forth in the Operating Subsidiary
Pledge and Security Agreement)” immediately following the words “accounts
receivable”.
 
(g)           Amendment to Section 3.6(a).  Section 3.6(a) is hereby amended by
deleting the words “the First International Bank (“FIBI”)” and inserting in lieu
thereof the word “FIBI”.
 
(h)           Amendment to Section 3.6(b).  Section 3.6(b) is hereby amended by
deleting the words “the First Note” and inserting in lieu thereof the words “the
Notes” and by deleting the words “the Second Note” and inserting in lieu thereof
the words “the Notes”.
 
 
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(i)            Amendment to Section 6.2(a)(i)(c).  Section 6.2(a)(i)(c) is
hereby amended by deleting the words “the First Note and the Second Note” and
inserting in lieu thereof the words “the First Note, the Intermediate Note and
the Second Note”.
 
(j)            Amendment to Section 6.2(c).  A new Section 6.2(c) is hereby
inserting immediately following Section 6.2(b)(iii) to read as follows:
 
“(c)         Following the issuance of the Intermediate Note and the repayment
in full of the FIBI Obligations, the Company may incur additional first lien
indebtedness from a lender satisfactory to the Purchaser, provided that (i) the
proceeds from such indebtedness are used to repay in full all outstanding
obligations under the Intermediate Note, (ii) following the incurrence of such
indebtedness, the Company shall remain in compliance with Section 6.2(a)(i), and
(iii) such lender shall agree to the subordination and intercreditor
arrangements set forth in the draft consent and subordination letter attached
hereto as Exhibit G (the “Acceptable Consent and Subordination Letter”).”   
 
(k)           Amendment to Section 7.  The lead-in paragraph of Section 7 is
hereby amended and restated to read as follows:
 
“The obligation of Purchaser to complete the Initial Closing with respect to the
First Note, the Intermediate Closing with respect to the Intermediate Note and
the Second Closing with respect to the Second Note are subject to the
fulfillment on or prior to the Initial Closing Date, the Intermediate Closing
Date or the Second Closing Date, as applicable, of all of the following
conditions, any one or more of which may be waived by Purchaser in writing and
in its sole discretion:”
 
(l)            Amendment to Section 7(l).  Section 7(l) is hereby amended by
deleting the words “twenty thousand dollars ($20,000)” and inserting in lieu
thereof the words “twenty-five thousand dollars ($25,000)”.
 
(m)          New Section 7(o).  The following new Section 7(o) is hereby
inserted immediately following Section 7(n):
 
“(o)           At the Intermediate Closing, (i) the Company shall deliver to the
Purchaser (x) a payoff letter reasonably satisfactory to the Purchaser duly
executed by FIBI indicating that upon payment of the amount set forth therein
the FIBI Obligations shall be repaid and extinguished in full and all liens
related thereto shall be released (other than liens on such collateral as may be
reasonably necessary to secure the Company’s obligations under performance
guarantees issued by FIBI in favor of the Company) and (y) such documents or
instruments reasonably requested by Purchaser evidencing the release of all such
liens, and (ii) the Company shall grant to the Purchaser a first lien security
interest in the collateral (other than any accounts receivable or contract
rights representing the right to receive payment for goods or services provided
by the Company or any of its subsidiaries to Israeli Aircraft Industries Ltd.
(“IAI”) or to any subsidiary or controlled affiliate of IAI) from which the
liens were released pursuant to the foregoing clause (i). ”
 
(n)           Amendment to Section 8(d).  Section 8(d) is hereby amended by
deleting the words “Purchase Price” and inserting in lieu thereof the words “the
Initial Closing Date Purchase Price, the Intermediate Closing Date Purchase
Price or the Second Closing Date Purchase Price, as applicable,”.
 
 
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(o)           New Section 9(b).  The following new Section 9(b) is hereby
inserted immediately following Section 9(a), and Sections 9(b) and (c) are
hereby reordered to become Sections 9(c) and (d), respectively:
 
“(b)           from the sale of the Intermediate Note, for the exclusive purpose
of refinancing the FIBI Obligations.”
 
(p)          Amendment to Section 14.1.  Section 14.1 is hereby amended by
deleting “August 15” and inserting in lieu thereof “September 3”.
 
(q)          Amendment to Section 14.9.  Section 14.9 is hereby amended by
deleting clause (i) in its entirety and inserting in lieu thereof the following:
“(i) repayment in full of the Notes,”.
 
Section 1.3.          Amendments to the Exhibits.
 
(i)           The first sentence of Exhibit A-1 is hereby amended by adding the
words “(the “Principal Amount”)” at the end thereof.
 
(ii)          The first sentence of Section 1 of Exhibit A-1 is hereby amended
and restated to read as follows:
 
“ This Secured Promissory Note (the “Note”) is one of up to three notes
(collectively, the “Notes”) purchased or which may be purchased under that
certain Note and Warrant Purchase Agreement, dated as of July 12, 2011, between
Borrower and Purchaser (as may be amended from time to time, the “Purchase
Agreement”).”
 
(iii)         New Exhibit A-2 is hereby inserted to read as set forth on Exhibit
A attached hereto.
 
(iv)         Exhibit A-2 to the Agreement is hereby amended and restated in its
entirety as set forth on Exhibit B attached hereto and renamed Exhibit A-3.
 
(v)          Exhibit B to the Agreement is hereby renamed Exhibit B-1.
 
(vi)         New Exhibit B-2 is hereby inserted to read as set forth on Exhibit
C attached hereto.
 
(vii)        New Exhibit G is hereby inserted to read as set forth on Exhibit D
attached hereto.
 
Section 1.4.        Miscellaneous.
 
(a)           Reference to and Effect on the Agreement.  This Amendment modifies
the Agreement to the extent set forth herein, is hereby incorporated by
reference into the Agreement and is made a part thereof.  Except as specifically
amended by this Amendment, the Agreement shall remain in full force and effect
in accordance with its terms and is hereby ratified and confirmed.

 
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(b)           Execution.  This Amendment may be executed in 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 the other party, it being understood that both parties need not
sign the same counterpart.  In the event that any signature is delivered by
facsimile transmission or email attachment, 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
email-attached signature page were an original thereof.
 
(c)           Entire Agreement.  This Amendment and the Transaction Documents
(as defined in the Agreement), together with the exhibits and schedules hereto
and thereto, contain the entire understanding of the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
oral or written, with respect to such matters, which the parties acknowledge
have been merged into such documents, exhibits and schedules.
 
(d)           Governing Law; Venue; Waiver of Jury Trial.  ALL QUESTIONS
CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF TO THE EXTENT THAT THE GENERAL APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.  THE COMPANY AND PURCHASER HEREBY
IRREVOCABLY SUBMIT 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 BROUGHT BY THE COMPANY OR PURCHASER HEREUNDER, ARISING FROM OR IN
CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED
HEREIN, AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT,
ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR PURCHASER, ANY CLAIM THAT IT IS
NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT,
ACTION OR PROCEEDING IS IMPROPER.  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 THIS 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 MANNER PERMITTED BY LAW.  THE COMPANY AND PURCHASER HEREBY WAIVE ALL
RIGHTS TO A TRIAL BY JURY.
 
[SIGNATURE PAGE FOLLOWS]

 
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the date
first above written.
 

 
THE COMPANY:
     
LAPIS TECHNOLOGIES, INC.
     
By:
/s/ David Lucatz
   
Name:
David Lucatz
   
Title:
President and Chief Executive Officer
       
Address:
 
70 Kinderkamack Road
 
Emerson, New Jersey
 
07630
 
Email Address: david@dl-capital.com
 
Facsimile Number: 9723-533-5129

 

 
PURCHASER:
     
UTA CAPITAL LLC
     
By:
YZT Management LLC, its Managing
Member
     
By:
/s/ Udi Toledano
   
Name:
Udi Toledano
   
Title:
Managing Member
       
Address:
 
100 Executive Drive
 
Suite 330
 
West Orange, NJ 07052
 
Email Address: udi@aatcap.com
 
Facsimile Number: 973-736-0201

 
 

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