Dated 19 August, 2019

 

Credit Agreement

between

 

Powerfleet Israel Holding Company Ltd.

 

and

 

Pointer Telocation Ltd.

 

as Borrowers

 

Bank Hapoalim B.M.

as Lender

 

   

   

 

Table of Contents

 

    Page 1. Definitions and Interpretation 1 2. The Facility 12 3. Purpose 12 4.
Conditions of Utilisation 13 5. Utilisation – Term Loan Facilities 15 6.
Utilisation – Facility C 16 7. Repayment 18 8. Prepayment and Cancellation 19 9.
Interest 22 10. Interest Periods 23 11. Fees 24 12. Taxes 25 13. Increased Costs
29 14. Other Indemnities 30 15. Mitigation 31 16. Costs and Expenses 31 17.
Transaction Securities 31 18. Representations and Warranties 33 19. Information
Undertakings 39 20. Financial Covenants 42 21. General Undertakings 45 22.
Events of Default 53 23. Changes to the Lender 57 24. Changes to the Borrower 58
25. Conduct of business by the Lender 58 26. Payment Mechanics 58 27. Set-Off 59
28. Notices 60 29. Calculations and Certificates 61 30. Partial invalidity 62
31. Remedies and waivers 62 32. Amendments 62 33. Confidentiality of the terms
of the Facility 62 34. Counterparts 63 35. Miscellaneous 63 36. Governing Law 64
37. Jurisdiction 64

 

   

   

 

This Credit Agreement (the “Agreement”) is dated 19 August, 2019

 

Between:

 

(1) Powerfleet Israel Holding Company Ltd., a company incorporated under the
laws of the State of Israel, registration number 51-598400-3, as borrower
(“Pointer HoldCo”);     (2) Pointer Telocation Ltd., a company incorporated
under the laws of the State of Israel, registration number 52-004147-6, as
borrower (“Pointer”);       (jointly and severally)       (Pointer and Pointer
HoldCo, collectively, the “Borrowers”, and each of them, the “Borrower”)     (3)
Bank Hapoalim B.m, a company incorporated under the laws of the State of Israel,
registration number 52-000011-8, as lender (the “Lender”).

 

It is agreed as follows:

 

1. Definitions and Interpretation

 

  1.1 Definitions

 

In this Agreement:

 

“Acquisition Documents” means the Merger Agreement, the Investment Agreement,
the Investment Documents (as defined in the Investment Agreement) and each other
document, agreement, instrument and certificate in connection therewith.

 

“Affiliate” means in relation to any person, any person which controls, is
controlled by, or under common control with such person.

 

“Anti-Corruption Laws” means all laws, rules, and regulations of any
jurisdiction applicable to the relevant member of the Group from time to time
concerning or relating to bribery or corruption.

 

“Acquisition Transaction” means the Merger Transaction and the Investment
Transaction collectively.

 

“Authorisation” means an authorisation, consent, approval, resolution, licence
or exemption, filing, notarisation or registration (including, for the avoidance
of doubt, any Governmental Authorisation and any approval or consent of any
stock exchange).

 

“Availability Period” means:

 

  (a) with respect to the Term Loan Facilities, the period on and from the date
of this Agreement until: (i) the Closing Date or (ii) if the Closing Date has
not occurred on or prior to such date, then - November 30, 2019; and         (b)
with respect to Facility C, the period from and including the Closing Date to
and including one Business day prior to the Final Maturity Date.

 

“Available Facility under Facility C” means,

 

in respect of Facility C, the amount of the Facility pursuant to Clause ‎2.1(c),
minus the amounts of any Utilisation thereunder, calculated pursuant to Clause
‎6.5.

 

 1 

 

 

“Base Rate” means:

 

  (a) the weighted average rate of the gross yield to maturity (before tax), of
the Selected Bonds, as of the 5 (five) trading days immediately preceding the
Closing Date, as published by the Tel Aviv Stock Exchange, to be calculated by
the Lender pursuant to the Weighted Average Formula. The foregoing weighted
average rate must be stated as a percentage and rounded up to the nearest two
digits after the decimal point; however,         (b) if in any event, for
whatever reason, at the discretion of the Lender, the weighted average cannot be
calculated pursuant to paragraph (a) above, including if the issue of Bonds is
discontinued, or the number of Bonds is reduced, or the gap between the weighted
average of the Loan and the duration of each one of the two closest series of
the Bonds exceeds two years, or if the daily trading of one of the series of
Bonds is less than NIS 3,000,000, then the “Base Rate” shall be the Reference
Rate Interest.         (c) if there are no Selected Bonds available during the 5
(five) applicable trading days, the calculation will be made on the basis of any
3 (three) trading days out of such 5 (five) applicable trading days, on which
such Selected Bonds are available.

 

For the purposes hereof:

 

“Bonds” means, governmental bonds denominated in NIS, not linked to the CPI
(consumer prices index), bearing interest at a fixed rate, the principal amount
of which is payable in full on one fixed date, issued by the State of Israel and
listed for trade on the Tel Aviv Stock Exchange, the daily trading of each one
of them on the 5 (five) trading days immediately preceding the Closing Date is
at least NIS 3,000,000.

 

“Reference Rate Interest” means the rate of interest in effect at the Lender on
the Closing Date, and which serves the Lender as the basis for determining
interest for its customers on deposits in the currency, for the amount, of the
category and for the period similar to the currency, amount, category of the
relevant Loan and its repayment schedule.

 

“Selected Bonds” means, the two series of Bonds having a duration which is the
closest to the average life of the applicable Loan under any Term Loan Facility
(principal), one with a duration which is longer than the average life of such
Loan under any Term Loan Facility and one with a duration which is equal to or
shorter than the average life of such Term Loan, and provided that the gap
between the duration of each one of the Bonds and the average life of the
applicable Term Loan does not exceed two years.

 

“Weighted Average Formula” shall be calculated as follows:

 

YTMa + (YTMb - YTMa) / (Db-Da) * (Dd-Da)

 

For the calculation above:

 

“a” - the Selected Bond having equal or shorter duration than the average life
of the applicable Term Loan.

 

Da - the duration of “a”.

 

YTMa - the simple average of the gross yields to maturity (before tax) of “a”
during the 5 trading days preceding Closing Date.

 

 2 

 

 

“b” - the Selected Bond having longer duration than the average life of the
applicable Term Loan.

 

Db - the duration of “b”.

 

YTMb - simple average of the gross yield to maturity (before tax) of “b” during
the 5 trading days preceding the Closing Date.

 

Dd - the average life of the applicable Term Loan.

 

The average life of a Loan under any Term Loan Facility shall be calculated by
the Lender according to such Loan’s principal payments and such payments’ dates,
and in accordance with the Lender’s normal practice applicable to such Loan.

 

“Break Costs” mean, with respect to any of the Term Loans, the break costs
amount as set out in Schedule ‎8.5(b).

 

“Business Day” means a day (other than a Friday or a Saturday or a Sunday) on
which banks are open for general business in Israel.

 

“Closing Date” means the date of the Closing (as such term is defined in the
Investment Agreement and the Merger Agreement), in accordance with the terms of
the Acquisition Documents.

 

“Collateral Agent” means Poalim Trust Services Ltd. or any successor or other
collateral or security agent (including the Lender itself) appointed in
accordance with the provisions of the relevant Security Document.

 

“Commitment” means, the amount of Facility C pursuant to Clause ‎2.1(c), to the
extent not cancelled, reduced or transferred by it under this Agreement.

 

“Companies Law” means the Israeli Companies Law 5759-1999, as amended from time
to time and all regulations promulgated thereunder.

 

“Compliance Certificate” means a certificate substantially in the form set out
in Schedule 4 (Form of Compliance Certificate).

 

“Default” means an Event of Default or any event or circumstance specified in
Clause ‎20 (Events of Default) which would (with the expiry of a grace period,
the giving of notice, the making of any determination under the Finance
Documents or any combination of any of the foregoing) be an Event of Default.

 

“Default Interest” means the interest calculated pursuant to Clause ‎9.4.

 

“Distribution” with respect to any entity incorporated in Israel, shall have the
meaning ascribed to it under the Companies Law.

 

“Distribution Compliance Certificate” means a certificate substantially in the
form set out in Schedule 4 (Form of Distribution Compliance Certificate).

 

“Event of Default” means any event or circumstance specified as such in Clause
‎22 (Events of Default) (save for Clause ‎22.19 (Acceleration)).

 

“Facilities” means the Term Loan Facilities and Facility C, and “Facility” shall
mean any of them.

 

“Facility A” means the amortizing term loan facility made available under this
Agreement as described in Clause ‎2.1(a).

 

 3 

 

 

“Facility B” means the term loan facility made available under this Agreement as
described in Clause ‎2.1(b).

 

“Facility C” means the revolving facility made available under this Agreement as
described in Clause ‎2.1(c).

 

“Final Maturity Date” means with respect to any of the Facilities, the date
falling sixty (60) months from the Closing Date.

 

“Finance Document” means this Agreement, the Security Documents, the Parent
Undertaking Letter, the Parent Subordination Undertaking, the Initial
Utilisation Request, any Standard Form Document, any certificate required to be
provided under this Agreement and any other document designated as such by the
Lender and the Borrowers.

 

“Financial Indebtedness” means any indebtedness for or in respect of:

 

  (a) moneys borrowed and debit balances at banks or other financial
institutions;         (b) any amount raised by acceptance under any acceptance
credit facility or dematerialised equivalent;         (c) any amount raised
pursuant to any note purchase facility or the issue of bonds, notes or any
similar instrument (whereas only the portion of any convertible bonds classified
as indebtedness as per GAAP are included as indebtedness);         (d) the
capitalised value in respect of any lease or hire purchase contract which would,
in accordance with GAAP, be treated as a balance sheet liability (but excluding
any operating leases or leases which would be considered an operating lease
under GAAP as applied to the Original Financial Statements which is subsequently
treated as a finance or capital lease as a result of any change to the treatment
of such leases or other arrangements under GAAP);         (e) receivables sold
or discounted (other than any receivables to the extent they are sold on a
non-recourse basis);         (f) any amount raised under any other transaction
(including any forward sale or purchase agreement) required by GAAP to be shown
as a borrowing in the audited consolidated balance sheet of the relevant entity;
        (g) any derivative transaction entered into in connection with
protection against or benefit from fluctuation in any rate or price (and, when
calculating the value of any derivative transaction, only the marked to market
net obligations (or, if any actual amount is due as a result of the termination
or close-out of that derivative transaction, that amount) shall be taken into
account);         (h) any counter-indemnity obligation in respect of a
guarantee, indemnity, bond, standby or documentary letter of credit or any other
instrument issued by a bank or financial institution in respect of an underlying
liability (but not, in any case, performance bonds, advance payment bonds or
documentary letters of credit issued in respect of the obligations of any member
of the Group arising in the ordinary course of business) of an entity which is
not a member of the Group which liability would fall within one of the other
paragraphs of this definition);         (i) the acquisition cost of any asset or
service to the extent payable before or after its acquisition or possession by
the party liable and the amount of any liability under any other advance or
deferred purchase agreement, in each case, where the advance or deferred payment
(as the case may be) is for more than six (6) months before or after the date of
the acquisition or supply (as the case may be) and is arranged primarily as a
method of raising finance or of financing the acquisition of that asset or
service (but excluding trade credit on customary commercial terms and any
earn-out or similar arrangements);

 

 4 

 

 

  (j) any amount raised by the issue of shares which are redeemable (other than
at the option of the issuer) or are otherwise classed as borrowings under GAAP
as in force as at the date of this Agreement; and         (k) (without double
counting) the amount of any liability in respect of any guarantee or indemnity
for any of the items referred to in paragraphs ‎(a) to ‎(j) above.

 

“Financial Year” means the annual accounting period of the Borrowers ending 31
December each year.

 

“Free and Clear” means free and clear of any Security, claim or any other right
of third parties (other than: (a) any Transaction Securities, or (b) any pledge,
preferential right of payment or mandatory right of set off created or arising
by operation of law that cannot be waived).

 

“GAAP” means generally accepted accounting principles in the United States, as
in effect from time to time.

 

“Governmental Authority” means any (i) nation or government, any federal, state,
province, city, town, municipality, county, local or other political subdivision
thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or merger control authority, (ii) federal, state,
provincial, court or tribunal, (iii) self-regulatory organization (including any
national securities exchange), or (iv) other governmental, quasi-governmental,
supranational or regulatory entity created or empowered under a statute (or
rule, regulation or ordinance promulgated thereunder) or at the direction of any
governmental authority, including those set forth in clauses (i), (ii) or (iii)
of this definition, and that is empowered thereunder or thereby to exercise
executive, legislative, judicial, taxing, regulatory or administrative powers or
functions of or pertaining to government.

 

“Governmental Authorisation” means any license, approval, clearance, permit,
certificate, waiver, amendment, consent, exemption, variance, expiration and
termination of any waiting period requirements, other actions by, and any
notice, filing, registration, qualification, declaration and designation with,
and other authorizations and approvals issued by or obtained from a Governmental
Authority.

 

“Group” means each of the Borrowers and any of their subsidiaries, as applicable
from time to time, and “member of the Group” shall be construed accordingly.

 

“Independent Auditor” means an external independent auditor appointed by the
Borrowers, for the purposes of Clause ‎21.19(c)(iii), with the Lender’s prior
written consent, which shall be associated with one of the “Big 4” international
auditing firms, or another reputable national auditing firm consented to by the
Lender in advance (which consent shall not be unreasonably withheld).

 

“Initial Utilisation Request” means the utilisation request to be delivered and
completed by Pointer HoldCo prior to the Closing Date pursuant to Clause ‎4.1
below requesting the Utilisation of each of the Term Loan Facilities,
substantially in the relevant form set out in Schedule 1 (Form of Initial
Utilisation Request) (or in such other form as may be agreed by the Lender).

 

“Interest Payment Date” means the last day of each Interest Period.

 

 5 

 

 

“Interest Period” means in relation to any Loan under any Facility, each period
determined in accordance with Clause ‎10 (Interest Periods) and, in relation to
an Unpaid Sum, each period determined in accordance with Clause ‎9.4 (Default
Interest).

 

“Investors” means ABRY Senior Equity V, L.P. and ABRY Senior Equity
Co-Investment Fund V, L.P.

 

“Investment Agreement” means the Investment and Transaction Agreement, dated
March 13, 2019, made between PowerFleet US, the Parent, Powerfleet US
Acquisition Inc. and the Investors, and each other document, agreement,
instrument and certificate in connection therewith.

 

“Investment Transaction” means the transaction contemplated under the Investment
Agreement, whereby Parent and PowerFleet US will, concurrently with or
immediately prior to the Merger Transaction, reorganize into a new holding
company structure by merging PowerFleet US Acquisition Inc. with and into
PowerFleet US, resulting in PowerFleet US surviving as a wholly-owned subsidiary
of Parent.

 

“Lender” means:

 

  (a) the Lender; and         (b) any bank, financial institution, trust, fund
or other entity which has become a Party as a “Lender” in accordance with Clause
‎23 (Changes to the Lender),

 

which in each case has not ceased to be a Party in accordance with the terms of
this Agreement.

 

“Loan” means a loan made or to be made under any of the Facilities or the
principal amount outstanding for the time being of that loan.

 

“Material Adverse Effect” means a change, effect, event or circumstances or
development, which, at the reasonable discretion of the Lender has or is
reasonably likely to have, individually or in the aggregate, a material adverse
effect on either:

 

  (a) the business or financial condition of the Borrowers (together, taken as a
whole, but without reference to the Material Subsidiaries) or the Material
Subsidiaries (taken as a whole, together with Pointer);         (b) the ability
of the Borrowers (together, taken as a whole, but without reference to the
Material Subsidiaries) to perform and comply with their payment obligations
under the Finance Documents; or         (c) the rights or remedies of Lender
under the Finance Documents.

 

“Material Subsidiary” means any Subsidiary of Pointer which, whether existing
now or later established or purchased:

 

  (a) is listed in Schedule 5 (Material Subsidiaries); or         (b) has a
consolidated turnover that equals to or exceeds fifteen per cent (15%) or more
of the consolidated turnover of Pointer, in which case Pointer shall notify the
Lender in writing and designate such Subsidiary as a Material Subsidiary and,
from the date such Subsidiary reached the applicable turnover threshold
(pursuant to its financial statements) and onwards, such Subsidiary shall be
deemed a Material Subsidiary.

 

 6 

 

 

Compliance with the conditions set out in paragraph (b) above shall be
determined by reference to the most recent Compliance Certificate supplied by
Pointer or the latest audited financial statements of the Subsidiary
(consolidated in the case of a Subsidiary which itself has Subsidiaries) and the
latest audited consolidated financial statements of the Group. However, if a
Subsidiary has been acquired since the date at which the latest audited
consolidated financial statements of the Group were prepared, the financial
statements shall be deemed to be adjusted in order to take into account the
acquisition of the Subsidiary. For the avoidance of doubt, any Subsidiary which
has been designated as a Material Subsidiary shall remain to be designated as
such up until the Final Maturity Date.

 

“Merger Agreement” means the Agreement and Plan of Merger dated March 13, 2019,
made between the Borrowers, Parent, PowerFleet US and Powerfleet Israel
Acquisition Ltd., and each other document, agreement, instrument and certificate
in connection therewith.

 

“Merger Transaction” means the merger transaction contemplated under the Merger
Agreement between Pointer and Powerfleet Israel Acquisition Ltd., with Pointer
continuing as the surviving company.

 

“Money Laundering Laws” shall have the meaning ascribed to it in Clause ‎18.20.

 

“New Lender” has the meaning given to that term in Clause ‎23 (Changes to the
Lender).

 

“NIS” means New Israel Shekels, being the lawful currency of the State of Israel
or any successor currency.

 

“Original Financial Statements” means the audited financial statements of the
Borrowers for the period ending on 31 December 2018, provided that to the extent
that Pointer HoldCo provides a confirmation by its auditor or legal advisor, in
form and substance satisfactory to the Lender, that Pointer HoldCo is not
required by law to prepare any financial statements for the Financial Year of
2018, then it shall mean the audited financial statements of Pointer for the
period ending on 31 December 2018.

 

“Parent” means PowerFleet Inc., a corporation duly incorporated under the laws
of the State of Delaware, whose principal place of business is at 123 Tice Blvd.
Woodcliff Lake NJ 07677.

 

“Parent Subordination Undertaking” means a subordination undertaking executed by
Pointer HoldCo and Parent (and any of its Affiliates acceding to such agreement,
if applicable), in the form set out in Schedule 2 (Subordination Undertaking),
in connection with any Subordinated Shareholder Loan.

 

“Parent Undertaking Letter” shall have the meaning ascribed to it in Clause
‎17.3.

 

“Party” means a party to this Agreement.

 

“Perfection Requirements” means the making or the procuring of the appropriate
registrations, filing, endorsements, notarisation, stampings or notifications of
the Security Documents or the Transaction Securities and any other actions or
steps, necessary in any jurisdiction or under any laws or regulations in order
to create or perfect any Security or the Transaction Securities or to achieve
the relevant priority expressed therein.

 

“Powerfleet Group” means the Parent, PowerFleet US, the Investor, the Group and
any of their affiliates from time to time.

 

“PowerFleet US” means, I.D. Systems, Inc. currently (and until the Closing Date)
a Nasdaq-listed corporation duly incorporated under the laws of the State of
Delaware, whose principal place of business is at 123 Tice Boulevard, Woodcliff
Lake, NJ.

 

“Pointer Brazil” means Pointer do Brasil Comercial Ltda., a wholly owned
Subsidiary of Pointer as of the date hereof.

 

 7 

 

 

“Pointer Brazil Tax Proceeding” means the tax deficiency notice received by
Pointer on August 6, 2015 against Pointer Brazil, pursuant to which Pointer
Brazil is required to pay an aggregate amount of approximately US $14,000,000 as
of December 31, 2018 (and any proceedings relating to such notice).

 

“Pointer Charged Account” means account number 614100 at Bank Hapoalim B.M.,
Branch no. 600, in the name of Pointer; and account number 543203 at Bank
Hapoalim B.M., Branch no. 600, in the name of Pointer; and any substitute bank
account held with Bank Hapoalim B.M. in the name of Pointer which shall be
pledged under the Security Documents.

 

“Pointer HoldCo Charged Account” means Pointer HoldCo’s bank account that is to
be opened at and held with Bank Hapoalim B.M; and any substitute bank account
held with Bank Hapoalim B.M. in the name of Pointer Holdco which shall be
pledged under the Security Documents.

 

“Pointer Shares” means 100% (on a fully diluted basis) of the ordinary shares of
Pointer held by Pointer HoldCo on or about the Closing Date.

 

“Quarter” means a period commencing on January 1 and ending on the following
March 31, commencing on April 1 and ending on the following June 30, commencing
on July 1 and ending on the following September 30, or commencing on October 1
and ending on the following December 31, all-inclusive and in accordance with
the Gregorian calendar.

 

“Repayment Instalment” means an instalment in which the Loans under Facility A
are to be repaid, as determined in Clause ‎7.1(a)(i).

 

“Repeating Representations” means each of the representations set out in Clause
‎18.1 (Status) to Clause ‎18.6 (Governing law and enforcement), Clause ‎18.10
(Pari passu ranking), Clause ‎18.13 (Good title to assets) and Clause ‎18.14
(Legal and beneficial ownership).

 

“Reporting Date” means 31 March, 30 June, 30 September and 31 December of each
year and such other dates, if any, on which a quarterly or annual period for
which the Borrower publishes consolidated financial statements ends.

 

“Reserve Fund” means the reserve fund deposited by Pointer HoldCo in the Pointer
HoldCo Charged Account, as set forth in Clause ‎20.3 below.

 

“Sanctioned Country” means, at any time, a country, region or territory which is
itself the subject or target of any country or territory-wide Sanctions (at the
time of this Agreement, Crimea, Cuba, Iran, North Korea, Lebanon, Iraq and
Syria).

 

“Sanctioned Person” means, at any time, any person: (a) listed on any
Sanctions-related list of designated Persons maintained by a Sanctions
Authority; or (b) operating, organised, or resident in or under the laws of a
Sanctioned Country; (c) owned or controlled by any such person or persons
described in the foregoing paragraphs (a) or (b); or (d) otherwise the target of
any Sanctions.

 

“Sanctions” means any trade, economic or financial sanctions laws, regulations,
embargoes or restrictive measures administered, enacted or enforced by a
Sanctions Authority.

 

“Sanctions Authority” means any of (a) the U.S. government, including the Office
of Foreign Assets Control of the U.S. Department of the Treasury or the U.S.
Department of State, (b) Israel, (c) the United Nations Security Council, (d)
the European Union, or (e) Her Majesty’s Treasury of the United Kingdom.

 

 8 

 

 

“Secured Obligations” means all present and future obligations and liabilities
(whether actual or contingent, whether owed jointly or severally or in any
capacity whatsoever), of the Borrowers to the Lender under the Finance Documents
and under any other agreements, undertakings and documents, with respect to any
banking services of any type, whether relating to the financing under the
Finance Documents or not (including, without limitation, principal, interest,
commissions, bank and other costs and expenses of any kind whatsoever), together
with all costs, charges and expenses (including legal fees) incurred by the
Lender, in connection with the protection, preservation or enforcement of its
rights under any such document.

 

“Securities Law” means the Israeli Securities Law, 5728-1968, including the
regulations promulgated thereunder.

 

“Security” or “Security Interest” means a mortgage, charge, pledge, lien
(including Kizuz and Ikavon), assignment, encumbrance or transfer for security
purposes, retention of title arrangement or other security interest securing any
obligation of any person or any other agreement or arrangement having a similar
effect.

 

“Security Documents” means:

 

  (a) the Security documents creating the securities detailed under Clause ‎17.1
below;         (b) the corporate guarantees to be granted by each Borrower, as
set forth in Clause ‎17.2 below;         (c) the Parent Subordination
Undertaking;         (d) the Parent Undertaking Letter,

 

together with any other document entered into by any Borrowers creating or
expressed to create any Security Interest over all or any part of its assets in
respect of the obligations of any of the Borrowers under any of the Finance
Documents.

 

“Standard Form Document” means all standard forms, agreements or other documents
required by any Lender in order to provide its part of the Facilities, including
applications to open accounts and including customary letters of undertaking and
other standard documents governing Facility C (including the issue of any
Documentary Credit, revolving debitory account facility or any other facility
thereunder).

 

“Subordinated Shareholder Lender” means any Powerfleet Group Company, as the
provider of, or if applicable, the assignee of the benefit of, any Subordinated
Shareholder Loan.

 

“Subordinated Shareholder Loan” means Financial Indebtedness of any of the
Borrowers to any Powerfleet Group Company in respect of unsecured subordinated
shareholder loans (including capital notes) made available to any of the
Borrowers by such Powerfleet Group Company pursuant to a loan agreement that is
subject to a subordination undertaking in the form set forth in Schedule
2 (Subordination Undertaking), (or otherwise subordinated to the Facilities to
the satisfaction of the Lender).

 

“Subordinated Parent Loan” means the Subordinated Shareholders Loan granted by
the Parent to Pointer HoldCo pursuant to Clause ‎4.2(a), if applicable.

 

“Tax” means any tax, levy, impost, duty, fees and other compulsory payments, or
other charge or withholding of a similar nature of any kind or category,
including on account of income, capital gain, or profits, value added tax,
deductions and withholdings which are by their nature or are payable on account
of tax, levy, impost, duty, fees and other compulsory payments as aforesaid
(including stamp tax to the extent applicable, any penalty or interest payable
in connection with any failure to pay or any delay in paying any of the same).

 

“Term Loan Facilities” means Facility A and Facility B.

 

 9 

 

 

“Transactions” means the Merger Transaction and the Investment Transaction.

 

“Transaction Documents” means the Finance Documents and the Acquisition
Documents.

 

“Transaction Securities” means the assets and rights subject to Security
Interest under the Security Documents, and as listed in Clause ‎17 (Transaction
Securities).

 

“Unpaid Sum” means any sum due and payable but unpaid by the Borrowers under the
Finance Documents.

 

“Utilisation” means, with respect to the Term Loans Facilities - a Loan, and
with respect to Facility C – any advance or drawing under any revolving debitory
account facility (Hahad), issuance of a bank guarantee or any documentary credit
provided by the Lender under Facility C, and entry into any derivative
transaction where the counterparty is a Lender or creation of any other
Financial Indebtedness in connection with any banking services provided by the
Lender under Facility C.

 

“Utilisation Date” means the date any Utilisation is made (or is to be made).

 

“US $” and “USD” means United States Dollars, being the lawful currency of the
United States of America or any successor currency.

 

“VAT” means value added tax as provided for in the Israeli Value Added Tax Law
5736-1975 and any other tax of a similar nature in any relevant jurisdiction.

 

  1.2 Construction

 

  (a) Unless a contrary indication appears, any reference in this Agreement to:

 

  (i) any “Lender”, the “Borrowers” or any “Party” shall be construed so as to
include its successors in title, permitted assigns and permitted transferees to,
or of, its rights or obligations under the Finance Documents;         (ii)
“assets” includes present and future properties, revenues and rights of every
description which are treated as assets pursuant to GAAP (or any other
applicable accounting principles);         (iii) a “Finance Document” or any
other agreement or instrument is a reference to that Finance Document or other
agreement or instrument as amended, novated, supplemented, extended or restated;
        (iv) “indebtedness” includes any obligation (whether incurred as
principal or as surety) for the payment or repayment of money, whether present
or future, actual or contingent;         (v) “subsidiary” includes, with respect
to any person, a person who is directly or indirectly controlled by such person
or is consolidated into the financial statements of such person;         (vi)
“know your customer checks” are the checks that are necessary for the Lender to
meet its obligations under applicable money laundering regulations to identify a
person who is (or is to become) its customer;         (vii) Subject to Clauses
10.3 and 26.3, a “month” means a period starting on one day in a calendar month
and ending on the numerically corresponding day in the next calendar month,
except that:

 

  (A) (subject to paragraph ‎(C) below) if the numerically corresponding day is
not a Business Day, that period shall end on the next Business Day in that
calendar month in which that period is to end if there is one, or if there is
not, on the immediately preceding Business Day;

 

 10 

 

 

  (B) if there is no numerically corresponding day in the calendar month in
which that period is to end, that period shall end on the last Business Day in
that calendar month; and         (C) if an Interest Period begins on the last
Business Day of a calendar month, that Interest Period shall end on the last
Business Day in the calendar month in which that Interest Period is to end.

 

The above rules will only apply to the last month of any period;

 

  (viii) a “person” includes any individual, firm, company, corporation,
government, state or agency of a state or any association, trust, joint venture,
consortium, partnership or other entity (whether or not having separate legal
personality);         (ix) a “regulation” includes any regulation, rule,
official directive, request or guideline (whether or not having the force of law
but, if not having the force of law, where compliance is customary in the
relevant industry and jurisdiction) of any governmental, intergovernmental or
supranational body, agency, department or of any regulatory, self-regulatory or
other authority or organisation;         (x) “including” means including without
limitation, and “includes” and “included” shall be construed accordingly;      
  (xi) any matter being “permitted” under this Agreement or any other Finance
Document or other agreement shall include references to such matters not being
prohibited or otherwise being approved by the Lender under this Agreement or
such Finance Document or other document;         (xii) a time of day is a
reference to time in Israel;         (xiii) a provision of law is a reference to
that provision as amended or re-enacted;         (xiv) a Clause or a Schedule is
a reference to a clause of or a schedule to this Agreement; and         (xv) the
singular includes the plural and vice versa.

 

  (b) Section, Clause and Schedule headings are for ease of reference only.    
    (c) Unless a contrary indication appears, a term used in any other Finance
Document or in any notice given under or in connection with any Finance Document
has the same meaning in that Finance Document or notice as in this Agreement.  
      (d) For the avoidance of doubt, it is hereby clarified that all Standard
Form Documents to be entered into by any Borrower with the Lender are intended
to add and not to derogate from the provisions of this Agreement.
Notwithstanding the foregoing, if and to the extent a contradiction exists
between the provisions of any other Finance Document and any provision in any
Standard Form Document, the provisions of such other Finance Document shall
prevail.         (e) A Default and an Event of Default is “continuing” if it has
not been remedied or waived.

 

 11 

 

 

2. The Facility

 

  2.1 Facility

 

Subject to the terms of this Agreement, the Lender shall make available the
following Facilities to:

 

  (a) Pointer HoldCo, an amortizing term loan facility in an aggregate amount of
NIS equivalent to US $20,000,000 (“Facility A” and the “Facility A Principal
Amount”, respectively), to be calculated and made available to Pointer HoldCo
pursuant to Clause ‎5.2;         (b) Pointer HoldCo, a term loan facility in an
aggregate amount of NIS equivalent to US $10,000,000 (“Facility B”), to be
calculated and made available to Pointer HoldCo pursuant to Clause ‎5.2; and    
    (c) Pointer, a revolving facility in an aggregate amount of NIS equivalent
to US $10,000,000 (“Facility C”), to be calculated and made available to Pointer
pursuant to Clause ‎6.5.

 

  2.2 Execution by Pointer

 

Pointer shall execute a deed of accession attached hereto as Schedule ‎2.2
(“Deed of Accession”) and become party to this Agreement on the Closing Date and
as a condition to the Closing hereunder. Upon its execution of the Deed of
Accession, Pointer shall be bound by the provisions of this Agreement as if it
had executed the Agreement on the date hereof, provided that until such
execution by Pointer, Pointer shall have no liability under this Agreement, and
Pointer HoldCo shall be liable hereunder for all obligations of the Borrowers,
including with respect to payment of fees and commissions hereunder.

 

3. Purpose

 

  3.1 Purpose

 

The applicable Borrower shall apply all amounts borrowed by it under the
Facilities, as follows:

 

  (a) Amounts borrowed by Pointer HoldCo under any of the Term Loan Facilities
shall be applied towards funding the Cash Consideration (as defined in the
Merger Agreement) in respect of the Merger Transaction, and any payment to the
Lender of any related fees specified in Clause ‎11 below as payable on the
Closing Date; and         (b) Amounts borrowed by Pointer under Facility C,
shall be applied towards (i) general corporate purposes (including working
capital and capital expenditure of Pointer), and (ii) if the Term Loan
Facilities have been fully utilised, then, subject to Pointer HoldCo’s
discretion, for the purposes specified under Clause ‎3.1‎(a) above.

 

  3.2 Monitoring

 

The Lender is not bound to monitor or verify the application of any amount
borrowed pursuant to this Agreement.

 

 12 

 

 

4. Conditions of Utilisation

 

  4.1 Initial conditions precedent

 

The obligations of the Lender to comply with the Initial Utilisation Requests at
the Closing Date and to make Facility C available, are subject to (i) the Lender
having received all of the documents and other evidence listed in Schedule ‎4.1
(Conditions Precedent) hereto in the form and substance satisfactory to the
Lender on or prior to the Closing Date, and (ii) the satisfaction of all the
other conditions precedent set forth in such Schedule by such time.

 

  4.2 Further conditions precedent

 

Subject to Clause ‎4.1 (Initial conditions precedent), the Lender will only be
obliged to comply with Clause ‎5.3 in relation to the Loans under the Term Loan
Facilities, on the date of the Initial Utilisation Requests and on the Closing
Date if:

 

  (a) By no later than the date of the Closing Date (but in any case prior to
any Utilisation hereunder), evidence that the Pointer HoldCo received from
Parent (directly or indirectly) a cash contribution, either by way of an equity
investment or by way of a Subordinated Shareholder Loan, the amount required as
consideration for completing the Acquisition Transaction (such that following
such cash contribution, the Utilisations under the Term Loans hereunder shall be
the only remaining cash amount required for closing the Acquisition
Transaction), and in any case in an amount which will not be less than US $
40,000,000, and for that purpose contributed all or a portion of the proceeds
from the sale of the Investment Shares and the Acquisition Shares (each, as
defined in the Investment Agreement) to Pointer HoldCo.         (b) Arrangements
are in place (for example, a completion escrow agreement), and satisfactory
documents (for example, evidence of due filing of any applicable merger forms)
are delivered, which (i) do not require any Utilisation to be funded by the
Lender hereunder until all applicable obligations of the parties under the
Acquisition Documents (save for the payment of amounts of the Cash Consideration
(as defined in the Merger Agreement) equal to the total amount of the Term Loan
Facilities) have been performed and (ii) provide that following or
simultaneously with the funding of such Utilisation hereunder, the Closing Date
will occur (without the need for any other conditions to be satisfied) and the
Pointer Shares will be fully owned by Pointer HoldCo, Free and Clear.        
(c) On the Closing Date, all the representations and warranties in Clause ‎18
(Representations and Warranties) are true and correct.         (d) On the
Closing Date, no Default is continuing or would result from the proposed
Utilisation.         (e) There shall be no impediment, restriction, limitation
or prohibition imposed under law or regulation or under the requirements of the
Bank of Israel, as such are interpreted and implemented by the Lender’s internal
procedures, as to the proposed Utilisation under this Agreement or the repayment
thereof or as to the Securities to be created under the Security Documents or as
to application of the proceeds of the realisation of any rights thereunder.
Without derogating from the foregoing, the proposed Utilisation shall not result
in the Lender exceeding the limits under Bank of Israel guidelines with respect
to single borrowers (“Loveh Boded”), groups of borrowers (“Kvutzat Lovim”),
connected persons (“Anashim Kshurim”) or any other limit or limitations imposed
thereunder. Without derogating from the foregoing, the Lender confirms that if
the Facilities would have been Utilised in their entirety on the date hereof, no
such impediment, restriction, limitation or prohibition would have existed.
However, such confirmation does not provide any indication as to the existence
of any such impediment, restriction, limitation or prohibition on any
Utilisation Date.

 

 13 

 

 

  (f) There shall not occur, in the Lender’s reasonable judgment, any Material
Adverse Effect or there shall be no ground entitling the Lender under any
Finance Document or other documents signed or that will be signed in favor of
the Lender by any of the Borrowers or their Subsidiaries (and without regard to
any grace or remedy period, if agreed upon) to declare any and all outstanding
sums that are due or that will be due from any of the Borrowers or from the
Group to the Lender under any such Finance Document or other documents, to be
immediately due and payable (even if the Lender will not realize its right to do
so).         (g) There shall be no injunction issued by any court, whether in
Israel, in the USA or in any other jurisdiction, that is in effect in connection
with the Acquisition Transaction or the financing hereunder.         (h) All
payments required to be made at such time by the Lender under the Finance
Documents were made.         (i) Any outstanding loans and other credit
instruments and banking services, including any loans, facilities, bank
guarantees, L/Cs and any derivatives transactions, granted by the Lender to
Pointer as of the date hereof and prior to the Accession of Pointer to this
Agreement on the Closing Date, shall have been fully repaid (or, as applicable
to any relevant banking service - cancelled, closed out, returned or otherwise
terminated) or, if so agreed by the Lender in its discretion with respect to any
banking service - utilised under Facility C and amended to reflect the
applicable terms hereunder.

 

  4.3 Conditions precedent to Utilisation of Facility C after Closing Date

 

The obligations of the Lender to comply with any Utilisation Request under
Facility C after the Closing Date, are subject to the conditions precedent that:

 

  (a) on the date of the Utilisation Request and on the proposed Utilisation
Date, no Default is continuing or would result from the proposed Utilisation.  
      (b) on the date of the Utilisation Request and on the proposed Utilisation
Date, the Repeating Representations are true and correct.         (c) there
shall be no impediment, restriction, limitation or prohibition imposed under law
or regulation or under the requirements of the Bank of Israel as such are
interpreted and implemented by the Lender’s internal procedures, as to the
proposed Utilisation under this Agreement or the repayment thereof or as to the
Securities to be created under the Security Documents or as to application of
the proceeds of the realisation of any rights thereunder. Without derogating
from the foregoing, the proposed Utilisation shall not result in the Lender
exceeding the limits under Bank of Israel guidelines and directives or the
guidelines and directives of the Supervisor of Capital Markets, Insurance and
Savings Department with respect to single borrowers (“Loveh Boded”), groups of
borrowers (“Kvutzat Lovim”), connected persons (“Anashim Kshurim”) or any other
limit or limitations imposed thereunder.

 

 14 

 

 

  4.4 Cancellation

 

The Commitments under the Term Facilities which, at that time, are unutilised
shall be immediately cancelled at the end of the applicable Availability Period,
and Clause ‎35.3 (Longstop date for the first Utilisation Date) shall apply.

 

5. Utilisation – Term Loan Facilities

 

  5.1 Delivery of an Initial Utilisation Request

 

  (a) Pointer HoldCo may draw the Term Loan Facilities by delivery to the Lender
of a duly completed Initial Utilisation Request not later than three (3)
Business Days prior to the Closing Date, until 12 am (or such shorter period as
the Lender may agree, which agreement shall not be unreasonably withheld).      
  (b) Pointer HoldCo shall notify the Lender about the proposed Closing Date
promptly upon agreeing on such date with the Parent.         (c) Only one
Initial Utilisation Request may be made by Pointer HoldCo with respect to any of
the Term Loan Facilities, and if, for any reason, the amount requested is less
than the aggregate amount of the applicable Term Loan Facility, all undrawn
amounts in respect of that Facility shall be cancelled and the Lender shall have
no further obligations to provide any portion of that Term Loan Facility.

 

However, notwithstanding the foregoing or anything else in this Agreement to the
contrary, Pointer HoldCo may change, delay or extend the Initial Utilisation
Request (as the same may be changed pursuant hereto), provided (i) that Pointer
HoldCo delivers to the Lender a duly completed amended Initial Utilisation
Request not later than three (3) Business Days prior to the Closing Date, until
12 am (or such shorter period as the Lender may agree, which agreement shall not
be unreasonably withheld) (ii) such change, delay or extension is made in order
to ensure that a draw pursuant to an Initial Utilisation Request is made on the
actual Closing Date (but in any case by no later than the end of the
Availability Period with respect to the Term Loans); and (iii) for the avoidance
of doubt, no such change may be made following delivery to the Lender of the
Conversion Instructions, as defined in Clause ‎5.2(a).

 

  5.2 Currency and amount

 

  (a) The Term Loans shall be denominated in NIS, but as requested by the
Borrowers, shall be made available to the Borrowers in USD, pursuant to the
following mechanism:

 

  (i) The Initial Utilisation Request shall specify a Utilisation amount
denominated in USD.         (ii) On the Closing Date the Borrowers shall
instruct the Lender, by submitting irrevocable instructions to the Lender, in
form and substance satisfactory to the Lender, together with any other
applicable Standard Form Documents, including an irrevocable instruction to
enter into a foreign exchange transaction on their behalf (the “Conversion
Instructions”) pursuant to which the Borrower shall use the proceeds of the Term
Loans, and any proceeds under Facility C as shall be indicated by Pointer, for
the purchase of USD (the “Conversion Transaction”).         (iii) The Conversion
Transaction shall be made in accordance with the applicable market rate at the
time the Lender acts pursuant to such instructions (in this paragraph (a): the
“Applicable Conversion Rate”), and on terms to be set out in the applicable
Standard Form Documents, including payment of applicable fees and commissions.

 

 15 

 

 

  (iv) Within two (2) Business Days following the Closing Date, the Lender shall
provide the Borrower with a repayment schedule specifying, inter alia, the NIS
amount of the Loans.

 

  (b) The amount of the proposed Loan under any of the Term Loan Facilities must
be an amount which is not more than the total amount of the respective Facility.
        (c) For the avoidance of doubt, any transaction performed by the
Borrowers (including such transactions performed by the Lender pursuant to
paragraph (a) or pursuant to any Borrowers’ instructions) in connection with the
conversion pursuant to paragraph (a) above, including in case of repayment of
Loans, as set forth in Clause ‎7.1(a)(iii) below, shall be subject to any
applicable commissions, fees and expenses payable in accordance with Clause
‎11.6 below or any applicable Standard Form Document.         (d) Without
derogating from the aforesaid, in case after delivery to the Lender of the
Conversion Instructions, there has been any cancellation, delay or change of the
Closing Date or any such cancellation, delay or change in a Utilisation request
or in the Conversion Instructions (other than any such cancellation, delay or
change caused by the Lender), the Borrowers shall pay to the Lender, immediately
upon demand, any cost, expense, loss or damage incurred by the Lender in
connection with such Conversion Instructions.

 

  5.3 If the conditions set out in Clauses ‎4.1, ‎4.2 and this Clause ‎5 above
have been met, the Lender shall make each Loan under the Term Loan Facilities
available by the Closing Date.

 

6. Utilisation – Facility C

 

  6.1 Delivery of Utilisation requests

 

  (a) Pointer may utilise any type of credit available under Facility C, as set
out in Clause ‎6.4 below, in accordance with the terms and conditions applicable
thereto under the Standard Form Documents governing such type of Facility, as
required by the Lender.         (b) Pointer may make unlimited Utilisations with
respect to the Facility C, and each amount utilised may be reborrowed, all in
accordance with the terms of the Standard Form Documents.         (c) Any
Utilisation request under Facility C shall:

 

  (i) specify the type of credit, as set out in Clause ‎6.4 below, and the
currency and period requested for such credit;         (ii) be made for a
proposed Utilisation Date which is a Business Day within the Availability Period
applicable to Facility C.

 

 16 

 

 

  6.2 Currency and amount

 

  (a) The currency specified in any Utilisation request may be NIS or USD, as
shall be further detailed under the Standard Form Documents.         (b) The
amount of the proposed Loan must be an amount which is not more than the
Available Facility under Facility C.

 

  6.3 Extension of banking services

 

If the conditions set out in Clauses ‎4.1, ‎4.2 and ‎4.3, and this Clause ‎‎6
and in the applicable Standard Form Documents have been met, the Lender shall
make the requested type of Utilisation under Facility C available by the
applicable Utilisation Date.

 

  6.4 Types of credit

 

  (a) Subject to paragraph (b) below, the types of credit available under
Facility C shall be as follows:

 

  (i) Revolving debitory account facility (Hahad);         (ii) Bank guarantees;
        (iii) Documentary credit;         (iv) Derivative transactions.

 

  (b) Subject to Clause ‎6.5(b) below, the maximum actual and contingent
liability under Facility C, other than for the type of credit listed in
paragraph (a)(i) above, shall not exceed at any time an amount of US $5,000,000
(to be converted to NIS on the Closing Date in accordance with the Applicable
Conversion Rate, as defined in Clause ‎5.2(a)(iii)) (including any exposure of
the Lender in connection with any derivative transactions, as shall be
determined by the Lender in accordance with the applicable Standard Form
Documents), to be calculated pursuant to Clause ‎5.2.

 

  6.5 Calculation of the Available Facility under Facility C

 

  (a) For purpose of calculating the Available Facility under Facility C, at any
applicable calculation date, credit of the types set out in Clause ‎6.4 shall be
deducted from the amount of the Facility pursuant to Clause ‎2.1(c), as follows
(and without duplication):

 

  (i) any remaining credit amounts on account of credit of the types set out in
Clause ‎6.4 (other than on account of revolving debitory account facilities
(Hahad)) utilised under Facility C and outstanding on the relevant date of
calculation;         (ii) the total amount of any revolving debitory account
facility (Hahad) under Facility C in effect on the relevant date of calculation;
        (iii) the higher of: the aggregate amount of all balances of the
exposure deriving from any options, future contracts, asset, right, or base
asset – all as defined and calculated under the applicable Standard Form
Documents relating to future and financial instruments (Maof) on the relevant
date of calculation; or - the amount of any “approved facility” under such
Standard Form Documents.         (iv) the higher of: the aggregate amount of all
of the exposures with respect to any derivative transactions - all as defined
and calculated under the applicable Standard Form Documents relating to
derivative transactions on the relevant date of calculation; and, the amount of
any “approved risk facility” under such Standard Form Documents; and      

 

 17 

 

 

  (v) the unpaid interest amounts accrued in connection with any of the
outstanding credit of the types set forth above, notwithstanding such amounts
are not yet due;         in each case, as determined by the Lender in accordance
with the applicable Standard Form Documents.

 

  (b) Without derogating from the foregoing, if pursuant to Clause ‎4.2(i) the
Lender shall agree, at its discretion, to maintain any existing credit (of any
type) that has been granted by the Lender to Pointer prior to the Closing Date
under Facility C, then such maintained credit shall be included in the
calculation of the Available Facility under Facility C, and shall be considered
as Utilisations thereof as detailed in this Clause ‎6.5 (mutatis mutandis).

 

7. Repayment

 

  7.1 Repayment of Loans

 

  (a) Repayment of the Loans made under any Term Loan Facilities shall be as
follows:

 

  (i) with respect to the Loan under Facility A, the Loan shall be repaid at the
end of each Interest Period, as set out in Clause ‎10.1 below (each such
repayment, a “Repayment Instalment”), provided that the Repayment Instalments
shall equal the following aggregate annual amounts:

 

The relevant year   Repayment Instalment First anniversary of the Closing Date  

10% of the Facility A Principal Amount

      Second anniversary of the Closing Date  

25% of the Facility A Principal Amount

      Third anniversary of the Closing Date  

27.5% of the Facility A Principal Amount

      Fourth anniversary of the Closing Date  

27.5% of the Facility A Principal Amount

      Final Maturity Date  

10% of the Facility A Principal Amount

 

In this Clause ‎7.1‎(a)‎(i), the “Facility A Principal Amount” shall be reduced
immediately after any prepayment pursuant to Clause ‎8 (Prepayment and
Cancellation) below.

 

  (ii) The Loan under Facility B, shall be repaid (together with all accrued and
unpaid Interest thereon) in one instalment, on the Final Maturity Date; and    
    (iii) All Loans shall be repaid by the Borrowers in NIS.

 

 18 

 

 

  (b) Repayment of any outstanding amounts under Facility C shall be made in
accordance with the applicable Standard Form Documents relating to the
Utilisations of such Facility, as applicable, provided that the last repayment
date of any outstanding amount thereunder shall not be later than the Final
Maturity Date.

 

  7.2 Repayment Schedule

 

Details of the payments and the repayment dates of the Term Loans and the
Interest thereon, shall be set out in a repayment schedule which will be
delivered to Pointer Holdco by the Bank shortly after the Utilisation Date of
the Term Loans. Such repayment schedule shall constitute an integral part of
this Agreement.

 

  7.3 Reborrowing

 

The relevant Borrower may not reborrow any part of the Term Loan Facilities
which is repaid or prepaid, but may reborrow at any time prior to the end of the
applicable Availability Period any part of Utilisations under Facility C, which
is repaid or prepaid.

 

8. Prepayment and Cancellation

 

  8.1 Illegality

 

  (a) If it becomes unlawful for the Lender to perform any of its obligations as
contemplated by the Finance Documents or to fund, issue or maintain any
Utilisation under any of the Facilities:

 

  (i) the Lender shall promptly notify the Borrowers upon becoming aware of that
event;         (ii) upon such notification, or, if later, on the latest date
until which the obligations may remain in effect without causing Lender to be in
such illegality as aforesaid, to the extent necessary to avoid any such
illegality as aforesaid, the Borrowers and the Lender shall negotiate bona fide
the amendments required in order to refrain from violating the relevant law;
provided that, in the event that such negotiations are, for any reason,
unsuccessful prior to the last day of the Interest Period for each Utilisation
occurring after the Lender has notified the Borrowers or, if earlier, the date
specified by the Lender in the notice delivered to the Borrowers (being no
earlier than the last day of any applicable grace period permitted by law) any
Available Facility under Facility C will be immediately cancelled; and        
(iii) the Borrowers shall repay the relevant Utilisations (together with any
outstanding Secured Obligations) (to the extent necessary, as shall be
determined by the Lender in its reasonable discretion).

 

  (b) In the event of prepayment of any Loan or Utilisation pursuant to
paragraph (a), the Borrowers shall pay to the Lender any applicable Break Costs.
In addition, if the illegality set forth in paragraph (a) above was a result of
any change in connection with the Borrowers, their affiliates or their business,
then the Borrowers shall also pay to the Lender the Prepayment Premium, as
defined in Clause ‎8.3(b).         (c) Notwithstanding the provisions of Clause
‎11, in the event of cancellation of any part of the Facilities pursuant to
paragraph (a) occurring prior to the Closing Date, the Lender shall repay to the
Borrower that proportion of the Special One-Time Fee referred to in Clause ‎11.3
received by the Lender equal to the proportion which the cancelled amount of the
Facility comprises of the total amount of the Facilities pursuant to Clause
‎2.1.

 

 19 

 

 

  (d) Notwithstanding the foregoing, in the event that the Borrower is able to
take steps (not affecting or derogating from the provisions of the Finance
Documents) so as to avoid such illegality as aforesaid prior to the date
immediately prior to the illegality as aforesaid taking effect, then, without
derogating from the rights of the Lender under the Finance Documents, the Lender
shall cooperate with the Borrower to allow such arrangement, provided that
nothing in this sentence shall obligate any of the parties hereto to waive or
amend any of its rights under the Finance Documents (or, for the avoidance of
doubt, under any other agreement to which the Lender is a party).

 

  8.2 Voluntary cancellation

 

  (a) At any time prior to the Closing Date, any Borrower may, if it gives the
Lender not less than seven (7) Business Days’ prior notice, cancel the whole or
any part (but, if in part, being a minimum amount of NIS1,000,000( of the
Available Facility under Facility C, and during the Availability Period of the
Term Loan Facilities, of the Term Loan Facilities, provided that it first
demonstrates to the satisfaction of the Lender, that:

 

  (i) there shall be or there shall reasonably be expected to be sufficient
funds available to fund the Cash Consideration (as defined in the Merger
Agreement), pursuant to the Merger Agreement and to consummate the Acquisition
Transaction; and -         (ii) no Default is continuing, and the cancellation
will not result in the occurrence of a Default.

 

  (b) Following the Closing Date, Pointer may, if it gives the Lender not less
than seven (7) Business Days’ prior notice, cancel the whole or any part (but,
if in part, being a minimum amount of NIS1,000,000( of the Available Facility
under Facility C, provided that it first demonstrates to the satisfaction of the
Lender, that no Default is continuing, and the cancellation will not result in
the occurrence of a Default and all relevant conditions under the applicable
Standard Form Documents have been met.

 

  8.3 Voluntary prepayment of the Term Loan Facilities

 

  (a) Pointer HoldCo may, if it gives the Lender not less than fourteen (14)
(but not more than sixty (60)) Business Days’ prior notice, prepay, in whole or
in part (but, if in part, being a minimum amount of NIS1,000,000) the
outstanding amount of the Loans under the Term Loan Facilities.          
Pointer HoldCo may, if it gives the Lender not less than three (3) Business Day
prior notice (and subject to such notice being received by the Lender by no
later than 12:00 PM, three (3) Business Days prior to the prepayment date set
out in the prepayment notice) cancel and terminate such prepayment notice.      
  (b) Prepayment of Loans under the Term Loan Facilities may only be made if the
prepayment is made together with a prepayment premium, as follows (the
“Prepayment Premium”):

 

Date of Prepayment   Prepayment Premium Before the date falling 1 year after the
Closing Date   2% of the principal amount prepaid on such Date of Prepayment    
  On or after the date falling 1 years after the Closing Date but before the
date falling 2 years after the Closing Date   1% of the principal amount prepaid
on such Date of Prepayment       On or after the date falling 2 years after the
Closing Date   No Prepayment Premium is payable

 

 20 

 

 

  8.4 Prepayment in case of Pointer Distribution proceeds– Cash Sweep

 

In case Pointer HoldCo is required, pursuant to Clause ‎21.12(b) to apply any
remaining amounts of a Pointer Distribution (as defined in Clause ‎21.12
(Pointer Distribution proceeds)) towards prepayment of Loans under the Term Loan
Facilities, then such prepayment shall firstly be applied towards prepayment of
the Loan under Facility B, and then towards prepayment of the Loan under
Facility A.

 

  8.5 Miscellaneous Provisions

 

  (a) Any notice of cancellation or prepayment given to the Lender under this
Clause ‎8 shall be irrevocable and, unless a contrary indication appears in this
Agreement, shall specify the date upon which the relevant cancellation or
prepayment is to be made, which in case of any Voluntary Prepayment under Clause
‎8.3 or any mandatory prepayment under Clause ‎0 above must be on an Interest
Payment Date, and the amount of that cancellation or prepayment.         (b) Any
prepayment under this Agreement, whether mandatory or voluntary, shall be made
together with (i) accrued interest on the amount prepaid and all other amounts
accrued or outstanding under the Finance Documents in connection with the amount
prepaid, and (ii)(A) (except as provided under Clause ‎8.1 (Illegality)) the
Prepayment Premium, and (B) any Break Costs. For the avoidance of doubt, the
Prepayment Premium and Break Costs amount shall also be payable in the event of
acceleration of a Loan pursuant to Clause ‎22.19 (Acceleration) below.        
(c) The Borrowers shall not repay or prepay all or any part of the Utilisations
or cancel all or any part of the Commitments except at the times and in the
manner expressly provided for in this Agreement.

 

  8.6 Application of prepayment proceeds

 

Prepayments made pursuant to this Agreement shall be applied between the
Facilities as follows:

 

  (a) Prepayment of Loans pursuant to Clause ‎8.1 (Illegality) shall be applied
towards the Facilities in the order requested by the Lender.         (b) Any
other prepayment shall be applied between the Facilities in the following order:
first, towards prepayment of the then outstanding Loans under Facility A and
Facility B on a pro rata basis; second, towards prepayment of any Utilisations
under Facility C.

  

 21 

 

 

  (c) With respect to prepayment of any of the Facilities, any partial
prepayment made pursuant to this Agreement (other than a prepayment required to
be made pursuant to Clause ‎8.1 (Illegality)) shall be applied with respect to
prepayment of the Loan under Facility A – in inverse order.

 

9. Interest

 

  9.1 Calculation of interest

 

The rate of interest on each Loan under the Facilities for each Interest Period
is the percentage rate per annum determined by the Lender to be the aggregate of
the applicable:

 

  (a) With respect to the Loan made under Facility A:

 

  (i) the applicable margin, being (subject to Clause ‎9.3) - four hundred and
forty-five (445) basis points (i.e. 4.45%) per-annum; and         (ii) the Base
Rate.

 

  (b) With respect to the Loan made under Facility B:

 

  (i) The applicable margin, being (subject to Clause ‎9.3) - five hundred and
forty (540) basis points (i.e. 5.4%) per-annum; and         (ii) the Base Rate.

 

  (c) With respect to any Utilisation under a revolving debitory account
facility (Hahad) under Facility C:

 

  (i) the applicable margin being (subject to Clause ‎9.3):

 

  (A) if the currency for the Utilisation made is in NIS, then two hundred and
fifty (250) basis points (i.e. 2.5%);         (B) if the currency for the
Utilisation made is in USD, then four hundred and sixty (460) basis points (i.e.
4.6%).

 

  (ii) and the applicable base rate, being:

 

  (A) if the currency for the Utilisation made is in NIS, the then applicable
prime interest rate (“ריבית פריים”) applicable by the Lender; or         (B) if
the currency for the Utilisation made is in USD, the then applicable LIBOR Rate,
as shall be defined in the relevant Standard Form Documents (but provided that
under no circumstances will the LIBOR Rate be less than 0.00%).

 

9.2 Payment of interest

 

  (a) Pointer HoldCo shall pay accrued interest on each Loan under the Term Loan
Facilities on the last day of each Interest Period.         (b) Interest on
account of Utilisation under the revolving debitory account facility (Hahad)
under Facility C shall be payable on such dates as will be determined under the
applicable Standard Form Documents.

 

 22 

 

 

9.3 Step up in Margin

 

If, during two consecutive Quarters, Pointer Holdco’s Net Debt to EBITDA (as
defined in Clause ‎20.1(a) below) ratio is equal to or exceeds 3.5, based on its
consolidated financial statements, then from the end of the period of the
financial statements for the second relevant Quarter showing such ratio, until
the end of the period of the financial statements for the quarter where such
ratio does not exceed 3.5, the margin on each Loan under any of the Term Loan
Facilities and the margin on any Utilisation under a revolving debitory account
facility (Hahad) under Facility C shall increase by 0.5% per annum.

 

9.4 Default Interest

 

  (a) If the Borrowers fail to pay any amount payable by them under a Finance
Document on its due date, interest shall accrue on the overdue amount from the
due date up to the date of actual payment (both before and after judgment) at a
rate which, subject to paragraph (b) below, is the maximum interest rate as may
be from time to time applied by the Lender to debit balances in current accounts
denominated in NIS (or in USD, as applicable) for which there is no valid
current facility. Any interest accruing under this Clause ‎9.4 shall be
immediately payable by the Borrowers on demand by the Lender.         (b)
Subject to any law, Default Interest shall be compounded in accordance with the
Lender’s calculations at the end of the interest period applicable to the
relevant overdue amount, or, if interest periods are not applicable - every
Quarter, on the first day of the consecutive Quarter. The amounts of interest so
compounded, shall also accrue the Default Interest, which shall be calculated in
the manner set out above, until the final repayment of all overdue amounts. The
first and last periods for compounding the Default Interest may be shorter than
the other relevant periods.

 

  (c) The Lender may, at its sole discretion, calculate the interest over any
overdue amount in a rate lower than the Default Interest detailed in this Clause
‎9.4, but the Lender shall be under no obligation at any time to do so.        
(d) For the avoidance of doubt, the right of the Lender to receive any Default
Interest and the actual collection thereof shall not in any way derogate from
any other remedies or relief (excluding, for the avoidance of doubt, the
imposition of a higher interest rate) available to the Lender under law or under
any of the Finance Documents, including any right to enforce or bring any
proceedings under the Security Documents.

 

10. Interest Periods

 

  10.1 Interest Periods – Term Loan Facilities

 

  (a) Subject to paragraph (b) below, the Interest Periods for any Loan under
the Term Loan Facilities shall be 3 (three) months, and shall end on March 25,
June 25, September 25 and December 25 of each Financial Year (if applicable),
except that the first and last Interest Periods may be shorter than 3 (three)
months.         (b) An Interest Period for a Loan shall not extend beyond the
then prevailing Final Maturity Date.         (c) Each Interest Period for a Loan
shall start on its Utilisation Date or (if already made) on the last day of its
preceding Interest Period, and end on the next Interest Payment Date.

 

 23 

 

 

10.2 Interest Periods – Facility C

 

Interest on account of any outstanding amount under a revolving debitory account
facility (Hahad) drawn under Facility C, as applicable, shall be payable on such
dates as will be determined under the applicable Standard Form Documents.

 

10.3 Non-Business Days

 

  (a) If an Interest Period applicable to the Loans under the Term Loan
Facilities would otherwise end on a day which is not a Business Day, that
Interest Period will instead end on the next Business Day (whether in that
calendar month (if there is one) or in the consecutive calendar month (if there
is not)).         (b) With respect to any credit under Facility C, any payment
due on any day that is not a Business Day, shall be made in accordance with the
Standard Form Documents.

 

11. Fees

 

  11.1 Credit Allocation Fee

 

  (a) The Borrowers shall pay to the Lender a credit allocation fee in NIS at
the rate of 0.5% per annum on the undrawn and uncancelled amount of all of the
Facilities computed on a daily basis during the period commencing on the date of
this Agreement and ending on the last day of the Availability Period of the Term
Loan Facilities.         (b) The accrued fee under paragraph (a) is payable in
one instalment on the Closing Date, and in case of cancellation of any part of
the Facilities prior to such date – at the time the cancellation is effective.

 

  11.2 Credit Allocation Fee (Facility C)

 

  (a) Pointer shall pay to the Lender a credit allocation fee in NIS at the rate
of 1% per annum on the unutilized and uncancelled amount of the Commitment under
Facility C, computed on a daily basis during the period commencing from the
Closing Date and ending on the Final Maturity Date.           it is hereby
clarified, that with respect to any revolving debitory account facility (Hahad)
under Facility C, notwithstanding Clause ‎6.5(a)(ii), a non utilisation fee
shall be payable by Pointer at the rate specified in this Clause ‎11.2 (and
without duplication) with respect to any unutilized and uncancelled amount of
such revolving debitory account facility (Hahad).         (b) The accrued
commitment fee as per Clause ‎11.2‎(a) above is payable on the first Business
Day of each Quarter.

 

11.3 Special One-time Payment

 

The Borrowers shall pay to the Lender a non-refundable special one-time payment
in an amount equal to US $390,000 payable no later than five (5) days following
the date hereof, in light of the Lender’s special specific examinations in
connection with the entry into the financing contemplated hereunder, which
involve specific examination relating to the Acquisition Transaction, the
collateral and the financial covenants set out hereunder.

 

11.4 Collateral Agency Payment

 

The Borrowers shall pay to the Collateral Agent (for its own account), an annual
collateral agency payment of NIS 10,000, in connection with the registration of
the pledged Pointer Shares on its name under the applicable Securities Documents
and its other roles thereunder, such payment to be paid at a date not later than
30 days following the Closing Date and on each anniversary of such date, up
until the Final Maturity Date.

 

 24 

 

 

11.5 Bank Guarantees Fees

 

Pointer shall, in respect of each bank guarantee which it requests to be issued
or renewed under Facility C, pay to the Lender, a fee at the following rate per
annum of the maximum actual and contingent liabilities under such bank
guarantee, as follows:

 

  (a) 1.5% per annum for any bank guarantees other than financial bank
guarantees, as classified by the Lender; and         (b) 3.5% per annum for any
financial bank guarantees, as classified by the Lender.

 

11.6 Other Commissions, Fees and Expenses

 

In addition to the fees set forth above, the Borrowers shall pay the Lender all
other commissions, fees and expenses in connection with the banking transactions
performed in connection with the Facilities and the Finance Documents, in the
amounts, on the dates and in the manner set forth in the price list (Taarifon)
for large enterprises published by the Lender from time to time.

 

11.7  Non-Refundable Fees

 

All fees and commissions payable under the Finance Documents are non-refundable.

 

12. Taxes

 

  12.1 Definitions

 

  (a) In this Agreement:

 

“Tax Deduction” means a deduction or withholding for or on account of Tax from a
payment under a Finance Document, other than a FATCA Deduction.

 

“Tax Payment” means either the amount withheld by Borrower from payment made to
the Lender under Clause ‎12.6 (Tax Gross Up) or a payment under Clause ‎12.7
(Tax Indemnity).

 

(b)Unless a contrary indication appears, in this Clause ‎12 a reference to
“determines” or “determined” means a determination made in the absolute
discretion of the person making the determination.

 

12.2Any Tax that is payable in connection with the operations or the
transactions contemplated under the Finance Documents or on account of or in
connection with any Loan (except for income tax to tax authorities in Israel, on
the income of the Lender deriving from interest, fees, commissions and charges
which the Borrowers are obligated to pay the Lender pursuant to the Finance
Documents), shall be borne by the Borrowers alone and paid by them.

 

12.3The Lender may debit any of the Pointer Charged Account or the Pointer
HoldCo Charged Account, as the case may be, with any Tax that is required to be
deducted at source and remit same to the relevant tax authorities, unless the
Borrowers deliver to the Lender, in advance and to its satisfaction, an
appropriate confirmation from the competent tax authorities as to exemption from
deduction of Tax at source or the reduction thereof.

 

 25 

 

 

12.4Without derogating from anything hereunder, the execution of the
transactions pursuant to the Finance Documents is conditional upon the Lender
having determined at its discretion, that such execution meets the requirements
of any law and the directives issued by the competent Governmental Authorities
and that all of the provisions any applicable law have been fulfilled in so far
as imposed upon the Lender in connection with payments of Tax. Nothing herein
operates so as to impose any duty on the Lender to act as aforesaid, or to
impose any liability upon it with respect to the transactions contemplated by
this Agreement or liability for not having acted as aforesaid.

 

12.5The Borrowers shall deliver to the Lender, immediately upon its first
demand, with any information, confirmation, document or exemption (including any
confirmation of the rate of deduction at source or exemption therefrom) as may
be required in connection with the provisions of this Clause ‎12, and including
documents in connection with foreign law which may be required by the Lender,
and the Borrowers shall update the Lender as to any change that occurs from time
to time in their tax status, including in the countries of their citizenship or
residency for tax purposes.

 

  12.6Tax Gross Up

 

(a)The Borrower shall make all payments to be made by it under the Finance
Documents or in connection therewith free and clear of any Tax or deduction,
without set-off or counter claim and without any deduction in respect of or on
account of any set-off or counter claim.     (b)If a Tax Deduction is required
by law to be made by the Borrower, the amount of the payment due from the
Borrower shall be increased to an amount which (after making any Tax Deduction)
leaves an amount equal to the payment which would have been due if no Tax
Deduction had been required (the “Full Amount”). The Borrowers shall indemnify
the Lender for any loss or cost actually incurred by the Lender by reason of any
failure or breach by any of the Borrowers in deducting any amount deductible on
account of Tax or by reason of the Full Amount not being paid.     (c)If the
Borrower is required to make a Tax Deduction, the Borrower shall make that Tax
Deduction and any payment required in connection with that Tax Deduction within
the time allowed and in the amount required by law.     (d)Within thirty (30)
days of making either a Tax Deduction or any payment required in connection with
that Tax Deduction, the Borrower shall deliver to the Lender certificates
reasonably satisfactory to them evidencing that the Tax Deduction has been made
or (as applicable) any appropriate payment paid to the relevant taxing
authority, including all of the receipts, confirmations or other evidence that
may be required by the Lender to its satisfaction in connection with the payment
of the Deductible Amount to the relevant tax authority (the “Deductible
Confirmations”).     (e)If following payment of any amount on account of a Tax
Deduction by the Borrowers to the relevant tax authority, the Lender actually
receives a refund of Tax or a Tax credit, then, subject to furnishing the Lender
with the Deductible Confirmations, the Lender shall pay the Borrowers the amount
of the refund or the credit that it has received as aforesaid, up to the amount
on account of a Tax Deduction paid by the Borrowers to the tax authority as
aforesaid, provided, however, that nothing herein operates so as to prevent the
Lender from conducting its tax affairs at its discretion.     (f)The Lender and
the Borrower shall co-operate in completing any procedural formalities necessary
for the Borrower to obtain authorisation to make that payment without a Tax
Deduction.

 

 26 

 

 

12.7Tax Indemnity

 

(a)The Borrower shall (within three (3) Business Days of demand by the Lender)
pay to the Lender an amount equal to the loss, liability or cost which the
Lender determine will be or has been (directly or indirectly) suffered for or on
account of Tax by the Lender in respect of any payment received under a Finance
Document.

 

(b)Paragraph ‎(a) above shall not apply:

 

to the extent a loss, liability or cost:

 

(A)is compensated for by an increased payment under Clause ‎12.6 (Tax Gross Up);
or

 

(B)relates to a FATCA Deduction required to be made by a Party.

 

12.8VAT

 

(a)All amounts expressed to be payable under a Finance Document by any Party to
the Lender which (in whole or in part) constitute the consideration for any
goods or services supplied for VAT purposes are deemed to be exclusive of any
VAT which is chargeable on such goods or services, and accordingly, if VAT is or
becomes chargeable on any such goods or services made by the Lender to any Party
under a Finance Document and the Lender is required to account to the relevant
tax authority for the VAT, that Party must pay to the Lender (in addition to and
at the same time as paying any other consideration for such supply) an amount
equal to the amount of the VAT (and the Lender must promptly provide an
appropriate VAT invoice to that Party).

 

(b)Where a Finance Document requires the Borrower to reimburse or indemnify the
Lender for any cost or expense, the Borrower shall reimburse or indemnify (as
the case may be) the Lender for the full amount of such cost or expense,
including such part thereof as represents VAT.

 

12.9FATCA Information

 

(a)In this Clause ‎12.9:

 

“FATCA” means: (i) sections 1471 to 1474 of the US Internal Revenue Code of 1986
(the “Code”) or any associated regulations; (ii) any treaty, law or regulation
of any other jurisdiction, or relating to an intergovernmental agreement between
the US and any other jurisdiction, which (in either case) facilitates the
implementation of any law or regulation referred to in paragraph (i) above; or
(iii) any agreement pursuant to the implementation of any treaty, law or
regulation referred to in paragraphs (i) or (ii) above with the US Internal
Revenue Service, the US government or any governmental or taxation authority in
any other jurisdiction.

 

“FATCA Application Date” means: (i) in relation to a “withholdable payment”
described in section 1473 (1) (A) (i) of the Code (which relates to payments of
interest and certain other payments from sources within the US), 1 July 2014;
(ii) in relation to a “withholdable payment” described in section 1473 (1) (A)
(ii) of the Code (which relates to “gross proceeds” from the disposition of
property of a type that can produce interest from sources within the US), 1
January 2019; or (iii) in relation to a “passthru payment” described in section
1471 (d) (7) of the Code not falling within paragraphs (i) or (ii) above, 1
January 2019, or, in each case, such other date from which such payment may
become subject to a deduction or withholding required by FATCA as a result of
any change in FATCA after the date of this Agreement.

 

 27 

 

 

“FATCA Deduction” means a deduction or withholding from a payment under a
Finance Document required by FATCA.

 

“FATCA Exempt Party” means a Party that is entitled to receive payments free
from any FATCA Deduction.

 

(b)Subject to paragraph ‎(d) below, each Party shall, within ten (10) Business
Days of a reasonable request by another Party:

 

(i)confirm to that other Party whether it is:

 

(A)a FATCA Exempt Party; or

 

(B)not a FATCA Exempt Party;

 

(ii)supply to that other Party such forms, documentation and other information
relating to its status under FATCA as that other Party reasonably requests for
the purposes of that other Party’s compliance with FATCA; and

 

(iii)supply to that other Party such forms, documentation and other information
relating to its status as that other Party reasonably requests for the purposes
of that other Party’s compliance with any other law, regulation, or exchange of
information regime.

 

(c)If a Party confirms to another Party pursuant to paragraph ‎‎(b)(i) above
that it is a FATCA Exempt Party and it subsequently becomes aware that it is
not, or has ceased to be a FATCA Exempt Party, that Party shall notify that
other Party reasonably promptly.

 

(d)Paragraph ‎(a) above shall not oblige the Lender to do anything, and
paragraph ‎(b)(iii) above shall not oblige any other Party to do anything, which
would or might in its reasonable opinion constitute a breach of:

 

(i)any law or regulation;

 

(ii)any fiduciary duty; or

 

(iii)any duty of confidentiality.

 

(e)If a Party fails to confirm whether or not it is a FATCA Exempt Party or to
supply forms, documentation or other information requested in accordance with
paragraph ‎(b)(i) or ‎(b)(ii) above (including, for the avoidance of doubt,
where paragraph ‎(d) above applies), then such Party shall be treated for the
purposes of the Finance Documents (and payments under them) as if it is not a
FATCA Exempt Party until such time as the Party in question provides the
requested confirmation, forms, documentation or other information.

 

12.10FATCA Deduction

 

(a)Each Party may make any FATCA Deduction it is required to make by FATCA, and
any payment required in connection with that FATCA Deduction, and no Party shall
be required to increase any payment in respect of which it makes such a FATCA
Deduction or otherwise compensate the recipient of the payment for that FATCA
Deduction.

 

 28 

 

 

(b)Each Party shall promptly, upon becoming aware that it must make a FATCA
Deduction (or that there is any change in the rate or the basis of such FATCA
Deduction) notify the Party to whom it is making the payment and, in addition,
shall notify the Borrower.

 

13.Increased Costs

 

13.1Increased Costs

 

(a)Subject to Clause ‎13.2 (Exceptions) the Borrowers shall, within five (5)
Business Days of a demand by the Lender pay the Lender the amount of any
Increased Costs incurred by it or any of its Affiliates as a result of (i) the
introduction of or any change in (or in the interpretation, administration or
application of) any law or regulation after the date of this Agreement (or, if
later, the date it became a Lender), (ii) compliance with any law or regulation
made after the date of this Agreement or (iii) the implementation or application
of, or compliance with Basel III, or any law or regulation that implements or
applies Basel III.

 

(b)In this Agreement

 

(i)“Increased Costs” means:

 

(A)a reduction in the rate of return from the Facilities or on the Lender’s (or
its Affiliate’s) overall capital;

 

(B)an additional or increased cost; or

 

(C)a reduction of any amount due and payable under any Finance Document,

 

which the Lender notified in writing that was incurred or suffered by the Lender
or any of its Affiliates to the extent that it is attributed to the Lender
having entered into its Commitment or funding or performing its obligations
under any Finance Document.

 

(ii)“Basel III” means:

 

(A)the agreements on capital requirements, a leverage ratio and liquidity
standards contained in “Basel III: A global regulatory framework for more
resilient banks and banking systems”, “Basel III: International framework for
liquidity risk measurement, standards and monitoring” and “Guidance for national
authorities operating the countercyclical capital buffer” published by the Basel
Committee on Banking Supervision in December 2010, each as amended, supplemented
or restated;

 

(B)the rules for global systemically important banks contained in “Global
systemically important banks: assessment methodology and the additional loss
absorbency requirement – Rules text” published by the Basel Committee on Banking
Supervision in November 2011, as amended, supplemented or restated; and

 

(C)any further guidance or standards published by the Basel Committee on Banking
Supervision relating to “Basel III”.

 

 29 

 

 

13.2Exceptions

 

(a)Clause ‎13.1 (Increased Costs) does not apply to the extent any Increased
Cost is:

 

(i)attributable to a Tax Deduction required by law to be made by the Borrower;

 

(ii)attributable to a FATCA Deduction required to be made by a Party;

 

(iii)compensated for by Clause ‎12.7 (Tax Indemnity) or would have been
compensated for under‎ Clause ‎12.7 (Tax Indemnity) but was not so compensated
solely because any of the exclusions set out in Clause ‎12.7 (Tax Indemnity)
applied;

 

(b)In this Clause ‎13.2, a reference to a “Tax Deduction” has the same meaning
given to that term in Clause ‎1.1 (Definitions).

 

14.Other Indemnities

 

(a)The Borrower shall within five (5) Business Days of demand (which demand
shall be accompanied by reasonable calculations or details of the amount
demanded) indemnify the Lender against any cost, loss or liability which the
Lender incurs (without duplication) as a consequence of:

 

(i)the occurrence of any Event of Default or the operation of Clause ‎22.19
(Acceleration);

 

(ii)a failure by the Borrowers to pay any amount due under a Finance Document on
its due date;

 

(iii)funding, or making arrangements to fund, any Utilisation or a revolving
debitory account facility (Hahad) requested by the Borrower in a Utilisation
request but not made by reason of the operation of any one or more of the
provisions of this Agreement (other than by reason of Illegality (to the extent
such illegality was not caused by changes relating to the Borrowers or the
Group), Default or gross negligence by the Lender alone);

 

(iv)issuing, renewing or making arrangements to issue or renew a Documentary
Credit requested by Pointer in a Utilisation request but not issued, by reason
of a Default; or

 

(v)a Utilisation (or part of a Utilisation) not being prepaid in accordance with
a notice of prepayment given by the Borrower.

 

(b)The Borrower shall promptly indemnify the Lender, each Affiliate of a Lender
and each officer or employee of the Lender or its Affiliate, against any cost,
loss or liability incurred by the Lender or its Affiliate (or officer or
employee of the Lender or Affiliate) in connection with or arising out of the
Merger Transaction or the funding of the Merger Transaction (including but not
limited to those incurred in connection with any litigation, arbitration or
administrative proceedings or regulatory enquiry concerning the Merger
Transaction), unless such loss or liability is caused by the gross negligence or
wilful misconduct of the Lender or its Affiliate. Any Affiliate or any officer
or employee of a Lender or its Affiliate may rely on this Clause ‎14.

 

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15.Mitigation

 

15.1Mitigation

 

(a)The Lender shall take all reasonable steps to mitigate any circumstances
which arise and which would result in any amount becoming payable under or
pursuant to, or cancelled pursuant to, any of Clause ‎8.1 (Illegality), Clause
‎12.6 (Tax Gross Up), Clause ‎12.7 (Tax Indemnity) or Clause ‎13 (Increased
Costs).

 

(b)Paragraph ‎(a) above does not in any way limit the obligations of the
Borrowers under the Finance Documents.

 

15.2Limitation of liability

 

(a)The Borrowers shall promptly indemnify the Lender for all costs and expenses
reasonably incurred by it as a result of steps taken by it under Clause ‎15.1
(Mitigation).

 

(b)The Lender is not obliged to take any steps under Clause ‎15.1 (Mitigation)
if, in the opinion of the Lender, to do so might be prejudicial to it, provided
that the fact that the Lender may incur non material costs and expenses in
connection with steps it may take under Clause ‎15.1 shall not in and of itself
be deemed prejudicial to the Lender, if such costs and expenses were notified to
the Borrowers and paid by the Borrowers.

 

16.Costs and Expenses

 

16.1Transaction expenses

 

The Borrowers shall pay promptly following a demand in writing from the Lender:

 

(a)any reasonably incurred and properly documented legal fees (up to an amount
pre-agreed between the Borrower and the Lender’ counsel) in connection with the
drafting and negotiation of the Finance Documents as agreed;

 

(b)any reasonably incurred and properly documented costs related to the creation
and perfection of the Securities under the Security Documents; and -

 

(c)all reasonable and properly documented out-of-pocket costs and expenses
incurred by the Lender in connection with the ongoing administration of the
Facilities.

 

16.2Enforcement Costs

 

The Borrowers shall, within three (3) Business Days of demand, pay the Lender
the amount of all costs and expenses (including documented legal fees) incurred
by it in connection with the enforcement of, or the preservation of any rights
under, any Finance Document.

 

17.Transaction Securities

 

17.1Borrowers shall, on or prior to the Closing Date, create the following
Securities in favour of the Lender, in form and substance satisfactory to the
Lender, such Securities shall secure the Secured Amounts:

 

(a)A first ranking floating charge by each Borrower over all of their present
and future, tangible and intangible, assets, including, but not limited to,
property, monies, rights of any kind (whether contingent or absolute) and the
profits and benefits derived therefrom, whether now or hereafter at any time in
the future owned by or in the possession of them, including a fixed charge over
their registered capital stock and goodwill.

 

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(b)A first ranking fixed pledge and charge by Pointer HoldCo over the entire
Pointer Shares (on a fully diluted basis) as at the date of this Agreement and
at any time thereafter, including all Related Rights in respect of such Pointer
Shares.

 

“Related Rights” means, in relation to any of the Pointer Shares, all
Distributions, all (cash and non-cash) dividends or other moneys paid or payable
in relation thereto (including all liquidation proceeds, redemption proceeds and
repaid capital in case of a capital reduction), all rights for repayment of any
shareholders’ loans and any other rights relating to such loans, all rights of
Pointer HoldCo to receive any fees (management, consulting, finder’s, success,
or any other types of fees), commissions, salaries, remuneration or
compensation, and any other payment relating to services, and all shares,
warrants, securities, rights, moneys or property accruing or offered at any time
in relation to any of the Pointer Shares by way of redemption, substitution,
exchange, bonus, pursuant to option rights or otherwise.

 

The pledged Pointer Shares shall be registered as Security in the name of the
Collateral Agent and held by such Collateral Agent, under an agreement in the
form attached as a schedule to the deed of pledge.

 

(c)A first ranking fixed pledge and assignment by way of a pledge by each
Borrower over all of their rights under the Merger Agreement.

 

(d)A first ranking fixed pledge and assignment by way of a pledge by Pointer
over the Pointer Charged Account and all of its rights relating thereunder.

 

(e)A first ranking fixed pledge and assignment by way of a pledge by Pointer
HoldCo over the Pointer HoldCo Charged Account and all of its rights relating
thereunder.

 

(f)A first ranking fixed pledge and assignment by way of a pledge by Pointer
HoldCo over all amounts available in the Reserve Fund and all of its rights
relating thereunder.

 

(g)A first ranking fixed pledge and charge including assignment of rights by way
of charge, by each Borrower, over all of their rights: (i) for exemption,
relief, discount, offset and deduction, which shall reduce their tax rate or tax
liability to the extent that they are entitled to them upon realisation of any
security interest or of the Transaction Securities; (ii) to offset losses,
including their right to offset losses arising from the realisation of any
security interest or of the Transaction Securities; and (iii) to select whether
to take advantage of such exemption or relief or discount or offset or
deduction; All of which: whether derive from the sale of the Transaction
Securities or not, whether by virtue of the Income Tax Ordinance [New Version],
the Value Added Tax Law, 5736-1975 or any other law.

 

17.2The Borrowers shall create the following guarantees in favour of the Lender:

 

(a)A corporate guarantee by Pointer HoldCo, securing all of the Secured
Obligations of Pointer to the Lender under the Finance Documents, with respect
to Facility C.

 

(b)A corporate guarantee by Pointer, securing all of the Secured Obligations of
Pointer HoldCo to the Lender under the Finance Documents, with respect to the
Term Loan Facilities.

 

17.3The Borrowers shall deliver to the Lender an undertaking letter to be
executed by Parent in favour of the Lender, in form attached as Schedule ‎17.3
hereto, pursuant to which no payment will be made, and no Security shall be
provided by any member of the Group (except for Pointer Brazil), to any third
party, in connection with the Pointer Brazil Tax Proceeding (the “Parent
Undertaking Letter”).

 

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17.4The Security listed in this Clause ‎17 shall constitute continuing security
for the full and punctual payment, discharge and performance of all the Secured
Obligations and shall remain in full force and effect, irrespective of any
settlement of account or other matter or thing whatsoever and shall not be
considered satisfied by any intermediate payment of all or any of the Secured
Obligations.

 

18.Representations and Warranties

 

Each Borrowers acknowledges and accepts that the Lender has entered into this
Agreement in reliance on the representations set forth in this Clause 18.

 

18.1Status

 

(a)With respect to Pointer:

 

(i)Pointer is a corporation, duly incorporated and validly existing under the
laws of the State of Israel.

 

(ii)Pointer’s structure chart, both prior to the Closing Date and following such
date, including its direct and indirect shareholders and its subsidiaries and
any other holdings, is detailed in Schedule ‎18.1.

 

(iii)As of the Closing Date and after the closing of the Transactions, Pointer
HoldCo is the sole shareholder of Pointer, owning directly, Free and Clear, 100%
of the Pointer Shares. There are no outstanding subscriptions, options,
warrants, calls, rights or other agreements or commitments of any nature
relating to any of the Pointer Shares.

 

(b)With respect to Pointer HoldCo:

 

(i)Pointer HoldCo is a corporation, duly incorporated and validly existing under
the laws of the State of Israel.

 

(ii)As of the Closing Date, Parent is the sole shareholder of Pointer HoldCo,
owning directly, Free and Clear, 100% of the Pointer HoldCo’s share capital.
There are no outstanding subscriptions, options, warrants, calls, rights or
other agreements or commitments of any nature relating to any of the Pointer
HoldCo’s share capital.

 

(iii)Subject to Clause ‎21.8(a), Pointer HoldCo’s main business is the holding
and management of the Pointer Shares (including any activities permitted under
this Agreement).

 

(c)It has the power to own its assets and carry on its business as it is being
conducted.

 

(d)It is not a “Company in Violation” under section 362A of the Companies Law.

 

18.2Binding obligations

 

The obligations expressed to be assumed by it in each Finance Document are
legal, valid, binding and enforceable obligations, except: (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws of general application affecting enforcement of creditors’ rights generally
under Israeli law, (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable remedies under
Israeli law, and (iii) insofar as indemnification and contribution provisions
may be limited by applicable Israeli law.

 

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18.3Non-conflict with other obligations

 

The entry into and performance by it of any Finance Document entered into by it
or under which it has incurred any obligation and the transactions contemplated
by the Finance Documents and the realisation of any of the Transaction
Securities by the Lender or a Receiver do not (and will not conflict to a
material extent) with:

 

(a)any law or regulation or judicial or official order applicable to it;

 

(b)its constitutional documents; or

 

(c)any agreement or document binding upon it or any of its assets (other than,
with respect to Pointer, any immaterial agreements).

 

18.4Power and authority

 

It has the power to enter into, perform and deliver, and has taken all necessary
action to authorise its entry into, performance and delivery of, the Finance
Documents entered into by it and its performance of the transactions
contemplated by those Finance Documents.

 

18.5Validity and admissibility in evidence

 

All Authorisations required to enable it lawfully to enter into any Finance
Documents being entered into by it or under which it incurs any obligations or
to exercise its rights and comply with its obligations in the Finance Documents
to which it is a party have been obtained or effected and are in full force and
effect or will be obtained when required.

 

18.6Governing law

 

The choice of governing law of each of the Finance Documents will be recognised
and enforced in Israel.

 

18.7Insolvency

 

No:

 

(a)corporate action, legal proceeding or other procedure or step described in
Clause ‎22.8 (Insolvency proceedings); or

 

(b)creditors’ process described in Clause ‎22.9 (Creditors’ process),

 

has been taken or (to the best of its knowledge and belief) threatened in
relation to it; and none of the circumstances described in Clause ‎22.7
(Insolvency) applies to it.

 

18.8No default

 

(a)No Event of Default and, on the date of this Agreement, no Default is
continuing or might reasonably be expected to result from the making of any
Utilisation or the entry into, the performance of, or any transaction
contemplated by, any Finance Document.

 

(b)No other event or circumstance is outstanding which constitutes a default
under any other agreement or instrument which is binding on it or to which its
assets are subject (and with respect to Pointer – under any other such material
agreement or instrument).

 

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18.9No misleading information

 

(a)Any material written factual information provided by or on behalf of it to
the Lender in connection with the Transaction Documents, the Group (to the best
of its knowledge and belief) and any of the Transactions, was true and accurate
in all material respects as at the date it was provided or as at the date (if
any) stated therein.

 

(b)No material information has been given or withheld by or on behalf of it that
results in the written information provided by or on behalf of it to the Lender
in connection with the Transaction Documents, the Group (to the best of its
knowledge and belief) and any of the Transactions being untrue or misleading in
any material respect.

 

18.10Pari passu ranking

 

The Borrowers’ payment obligations under the Finance Documents rank at least
pari passu with the claims of all their other unsecured and unsubordinated
creditors, except for obligations mandatorily preferred by law applying to
Israeli companies generally.

 

18.11Taxation

 

(a)Except for the Pointer Brazil Tax Proceeding, no written claims are being
made or threatened against the Borrowers or any Material Subsidiary with respect
to Taxes.

 

(b)It is not materially overdue in the filing of any Tax returns and it is not
overdue in the payment of any material amount in respect of Tax (taking into
account any extension or grace period) other than where (i) such payment is
being contested in good faith, (ii) adequate reserves are being maintained for
those Taxes or (iii) such payment can be lawfully withheld.

 

(c)Pointer Brazil is the only member of the Group and the Powerfleet Group being
party to the Pointer Brazil Tax Proceeding or otherwise being demanded by the
Brazilian tax authorities to pay amounts in connection with the Pointer Brazil
Tax Proceeding, and no other member of the Group is, or shall be, liable in
connection with such indebtedness or have assumed, or shall assume, any such
indebtedness.

 

(d)The Borrowers are Israeli residents for Tax purposes.

 

18.12No immunity

 

In any proceedings in relation to the Finance Documents, it, or, to the best of
its knowledge, any Material Subsidiary, will not be entitled to claim for itself
or any of its material assets immunity from suit, execution, attachment or other
legal process.

 

18.13Good title to assets

 

The Borrowers and any Material Subsidiary have good, valid and marketable title
to, or valid leases or licences of, and all necessary Authorisations to use, the
assets necessary to carry on its business as presently conducted.

 

18.14Legal and beneficial ownership

 

On and from the Closing Date, all assets subject to a Transaction Security will
be legally and beneficially owned by the applicable Borrower, Free and Clear,
except if otherwise permitted hereunder.

 

18.15Acquisition Documents, disclosures and other Documents

 

(a)The Acquisition Documents contain all the material terms of the Transactions.

 

 35 

 

 

(b)The obligations expressed to be assumed by it in any Acquisition Documents
are legal, valid, binding and enforceable obligations.

 

(c)The entry into and performance by it of any Acquisition Document entered into
by the Borrower or under which the Borrower has incurred any obligation and the
transactions contemplated by the Acquisition Documents do not and will not
conflict with any law or regulation or judicial or official order applicable to
it; its constitutional documents; or any agreement or document binding upon it
or any of its assets.

 

(d)It has the power to enter into, perform and deliver, and has taken all
necessary action to authorise its entry into, performance and delivery of, the
Acquisition Documents entered into by the Borrower or under which the Borrower
has incurred any obligation and the transactions contemplated by those
Acquisition Documents.

 

(e)There is no material disclosure made to the Acquisition Documents which has
not been disclosed in writing to the Lender prior to the date of this Agreement,
which has or may have a Material Adverse Effect on any of the material
information, opinions, intentions, forecasts and projections provided to the
Lender.

 

(f)Borrowers’ representations and warranties under any Acquisition Documents are
true and correct in all material respects when made and when deemed to be
repeated.

 

18.16Authorisations

 

(a)As of the Closing Date, all Authorisations that are required as of that date
under any Acquisition Document have been obtained or effected and are in full
force and effect.

 

(b)As of the Closing Date, all material Authorisations required to enable the
Group to lawfully conduct its business in the general nature existing on the
date of this Agreement have been obtained or effected and are in full force and
effect and was not breached.

 

18.17No breach of laws

 

The Borrowers have not breached any law or regulation binding upon it to an
extent which would have a Material Adverse Effect.

 

18.18Sanctions

 

Neither the Borrowers nor any Material Subsidiary, nor (to the best of their
knowledge) their directors or officers:

 

(a)is a Sanctioned Person or is engaging in any transaction or conduct that
could reasonably be expected to result in it becoming a Sanctioned Person;

 

(b)is or has been subject to any claim, proceeding, formal notice or
investigation with respect to Sanctions;

 

(c)is engaging or has engaged in any transaction that evades or avoids, or has
the purpose of evading or avoiding, or breaches or attempts to breach, directly
or indirectly, Sanctions; or

 

(d)has engaged or is engaging, directly or indirectly, in any trade, business or
other activities which is in breach of any Sanctions.

 

 36 

 

 

(e)has, in breach of applicable Sanctions, entered into any transaction,
contract or arrangement or agreed to enter into any of the preceding (i) that is
prohibited under the Law on the Struggle Against Iran’s Nuclear Program,
5772-2012 or (ii) with any person that is, or is controlled by, a person
resident in, organized under the laws of, or owned or controlled by the
government of, a country or territory that is an enemy country under the Israeli
Trade with the Enemy Ordinance.

 

18.19Anti-Bribery and Corruption

 

(a)It will (following the Closing Date) procure that Group maintains in effect
policies and procedures designed to ensure compliance with Anti-Corruption Laws.

 

(b)It has conducted and is conducting its business in compliance with all
Anti-Corruption Laws in all material respects.

 

18.20Anti-Money Laundering

 

Its (and each of the Material Subsidiaries’) operations are and have been
conducted in material compliance with applicable financial recordkeeping and
reporting requirements and the money laundering statutes to which it is subject
and the rules and regulations thereunder and any related or similar rules,
regulations or guidelines (in each case, to the extent that compliance is
required as a matter of law) to which it is subject that are issued,
administered or enforced by any governmental agency which supervises a member of
the Group (collectively, the “Money Laundering Laws”) and, to the best of its
knowledge, no action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving it (or each of the
Material Subsidiaries) with respect to the Money Laundering Laws is pending or
threatened. It further represents that no funds or other consideration that it
contributes in connection with any transaction under this Agreement will have
been derived from or related to any activity that is deemed criminal under Money
Laundering Laws.

 

18.21Loans and guarantees

 

The Borrowers and the Material Subsidiaries have not made any loans, granted any
credit or issued any guarantee or indemnity to or for the benefit of any person
or otherwise voluntarily assumed any liability, whether actual or contingent, in
respect of any obligation of any person, except as set forth in Schedule ‎18.21.

 

18.22Security Interest and Financial Indebtedness

 

(a)No Security Interest exists over all or any of the present or future assets
of the Borrowers and the Material Subsidiaries, other than the Securities listed
in Schedule ‎18.22 ‎(a).

 

(b)Pointer HoldCo has no Financial Indebtedness, except for Financial
Indebtedness under (i) the Finance Documents to which it is a party; and (ii)
the Subordinated Parent Loan (if applicable pursuant to Clause ‎4.2(a)).

 

(c)The Material Subsidiaries have no Financial Indebtedness, except for
Financial Indebtedness as detailed in Schedule ‎18.22 ‎(b).

 

(d)The Borrowers do not perform, in their normal course of business, factoring
transactions, discounting of receivables, securitization transactions, or other
transaction having similar effect.

 

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  18.23 Financial Statements

 

(a)The Original Financial Statements were prepared in accordance with GAAP
consistently applied.

 

(b)The Original Financial Statements fairly represent the financial condition,
cash flow and results of operations, during the periods set forth therein.

 

(c)There has been no change in its assets, business or financial condition (or
the business or consolidated financial condition of the Group) since the date
the Original Financial Statements refer to that would constitute a Material
Adverse Effect.

 

(d)No member of the Group had any material Financial Indebtedness which was not
expressly disclosed in the Original Financial Statements (or in the notes
thereto) or reserved against therein.

 

  18.24No proceedings pending or threatened

 

(a)Except for the Pointer Brazil Tax Proceeding, no Proceedings of or before any
court, arbitral body or agency: (a) that is material to any member of the Group;
or (b) that challenges, or that seeks the prevention or material delay of or
makes illegal or otherwise may impede, any of the transactions contemplated
under the Acquisition Documents or the Finance Document, has been commenced or
(to its Knowledge) threatened against any member of the Group or the Powerfleet
Group.

 

(b)No proceedings or investigations have been initiated against (or by) any
officer of any member of the Group or the Powerfleet Group in its capacity as
such, or involving criminal procedures.

 

  18.25Intra-Group Distributions

 

Except under any applicable law, no member of the Group is restricted from
making any Distributions, dividend or other similar payment (in cash or in kind)
on, or in respect of, any share capital by way of dividend, repayment of loans,
redemption of capital or otherwise.

 

  18.26Material agreements

 

(a)Pointer is not a party to any material agreement (as defined below), except
for:

 

(i)the Merger Agreement and the Finance Documents; and -

 

(ii)the material agreements detailed in Schedule ‎18.26(a).

 

(b)Pointer is not a party to any agreements with any member of the Powerfleet
Group, except as set forth in in Schedule ‎18.26(b).

 

(c)For purposes of this Clause ‎18.26, “material agreement” means any contract,
agreement, indenture, note, bond, mortgage, loan, instrument, lease or license
pursuant to which (A) payments were made during Financial Years 2018 or 2019, or
(B) payments are reasonably anticipated by Pointer, as of the Closing Date, to
be made during Financial Year 2020, in each case by or to Pointer, in excess of
US$ 10,000,000.

 

  18.27Repetition

 

(a)The Borrowers make the representations and warranties set out in this Clause
‎18 on the date of this Agreement (and with respect to representations made by
Pointer - on the date on which it executes this Agreement), on the date of the
Initial Utilisation Request and on the Closing Date.

 

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(b)The Repeating Representations:

 

(i)shall be made by the Borrowers on the date of each Utilisation request; and

 

(ii)shall be deemed to be made by the Borrowers on the first day of each
Interest Period,

 

in each case by reference to the facts and circumstances existing at the date
the Repeating Representation is made or deemed to be made.

 

19.Information Undertakings

 

The undertakings in this Clause ‎19 (Information Undertakings) remain in force
from the date of this Agreement for so long as any amount is outstanding under
the Finance Documents or any Commitment is in force.

 

  19.1Financial statements

 

Each Borrower shall supply to the Lender, as soon as the same are approved by
the relevant company, but in any event by the earlier of:

 

(a)120 days after the end of each of its Financial Years, or

 

the date on which such financial statements are required to be prepared under
any applicable law,

 

its audited consolidated financial statements and its unaudited nonconsolidated
(“solo”) financial statements for that Financial Year; and, promptly, following
a written request from the Lender, the solo financial statements of any Material
Subsidiary for that Financial Year.

 

(b)90 days after the end of each Quarter, the unaudited but reviewed
consolidated financial statements of Pointer Holdco and its unaudited
nonconsolidated (“solo”) financial statements for that Financial Quarter; and,
following a written request from the Lender, the unaudited nonconsolidated
financial statements of the Material Subsidiaries for that Financial Quarter.

 

It is a condition precedent to the receipt of the Loans and to the continued
provision of the banking services under the Finance Documents that Financial
Statements be provided to the Lender pursuant to the terms set out hereunder,
inter alia as required in accordance with regulations of the Bank of Israel or
of any other competent authority or in accordance with any law.

 

19.2Requirements as to financial statements

 

(a)Each set of financial statements of any of the Borrowers and any Material
Subsidiary, as applicable, delivered by the Borrowers pursuant to Clause ‎19.1
(Financial statements) shall be certified by the CEO or CFO or by a director of
the Borrower or the Material Subsidiary, as applicable, as fairly representing
its financial condition as at the date of those financial statements.

 

 39 

 

 

(b)Each Borrower shall procure that each set of financial statements delivered
pursuant to Clause ‎19.1 (Financial statements) is prepared using GAAP and with
respect to any Material Subsidiary - accounting practices and financial
reference periods and financial year ends consistent with those applied in the
preparation of Original Financial Statements unless, in relation to any set of
financial statements, it notifies the Lender that there has been a change in
GAAP, the accounting practices or reference periods or its financial year end,
that affects any representation or undertaking under the Finance Documents, or
that is otherwise material, and its auditors deliver to the Lender:

 

(i)a description of any change necessary for those financial statements to
reflect GAAP, accounting practices and reference periods and financial year end
upon which the Original Financial Statements were prepared; and

 

(ii)sufficient information, in form and substance as may reasonably be required
by the Lender, to enable them to make an accurate comparison between the
financial position indicated in those financial statements and the Original
Financial Statements.

 

(c)If a Borrower notifies the Lender in accordance with paragraph (b) above and
such changes would be material in the context of this Agreement, the Lender
agrees to enter into discussions for a period of not more than forty-five (45)
days with a view to agreeing any amendments required to be made to this
Agreement to place the Borrowers and the Lender in substantially the same
position as they would have been in if the change had not occurred. If no such
agreement is reached in relation to any material change, the Lender shall
(acting reasonably and in good faith) determine the amendments necessary to
reflect the original commercial agreement of the Parties (in a manner which is
otherwise consistent with the terms of this Agreement and, if during the
aforesaid discussions the Borrowers and the Lender specifically agreed on any
relevant matter, taking account of any such agreements, and such determination
shall bind the Borrowers.

 

19.3Compliance Certificate, Excluded Expenses and Distribution Compliance
Certificate

 

(a)The Borrowers shall supply to the Lender, together with each of the financial
statements delivered pursuant to Clause ‎19.1 (Financial statements), a
Compliance Certificate setting out (in reasonable detail) computations as to
compliance with Clause ‎20 (Financial Covenants) as at the applicable Reporting
Date, including, for the avoidance of doubt, information and computation of all
items required for purpose of calculating the Financial Covenants pursuant to
Clause ‎20 (Financial Covenants).

 

In addition, the Borrowers shall supply to the Lender together with each of the
financial statements delivered pursuant to Clause ‎19.1 (Financial statements),
an annual report, in form satisfactory to the Lender, detailing the amounts and
purpose of any Excluded Amounts paid by the Borrowers pursuant to Clauses
‎21.12(c)(i) or ‎(b) during the period commencing on the Closing Date, or on the
date of the latest report that was delivered to the Lender, as applicable, and
ending on the date of delivery of such report to the Lender.

 

(b)The Borrowers shall supply to the Lender, no later than five (5) Business
Days prior to the date of any Permitted Distribution, as defined in Clause
‎21.13 (Distributions) made by the Borrower (or later, if so agreed by the
Lender), a Distribution Compliance Certificate setting out (in reasonable
detail) computations as to compliance with Clause ‎21.13 (Distributions) as at
the applicable date of making any such Permitted Distribution (as defined under
Clause ‎21.13 below).

 

(c)Each Compliance Certificate and Distribution Compliance Certificate shall be
signed by one of the following: a director, the chief executive officer or the
chief financial officer of the applicable Borrower. At the request of the
Lender, the Borrowers shall deliver any further information required for purpose
of examining the Borrowers’ compliance with Clause ‎20 (Financial Covenants) and
with Clause ‎21.13 (Distributions).

 

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19.4Information in connection with the Merger Transaction

 

The Borrowers shall supply to the Lender, or procure the supply to the Lender:

 

(a)Notification of any Distribution declared or made by Pointer, together with
reasonable details in connection with such Distribution.

 

(b)a copy of each Acquisition Document together with, on or prior to the Closing
Date, a copy of any written amendment thereto or waiver in respect thereof and,
after the Closing Date, a copy of any written amendment or waiver which would,
in each case, be material to the interests of the Lender;

 

(c)if Pointer or any of its Material Subsidiaries, obtain any credit rating
(either for itself as an issuer of any debt obligations and provided that there
shall be no obligation to obtain such a rating), the Borrowers shall deliver to
the Lender such rating reports and any related documents made available by the
relevant rating agency promptly upon their receipt, together with the details of
any changes to such ratings since the date of any previous reports and the dates
of such changes. It is hereby clarified that the Borrowers are not required to
obtain or maintain any level of any such rating; and

 

(d)promptly upon becoming aware of the same, written notice, in reasonable
detail, of any material representation or warranty given by any party to any
Acquisition Document (other than the Borrowers) being untrue or misleading in
any material respect.

 

19.5Miscellaneous information

 

The Borrowers shall supply to the Lender, or procure the supply to the Lender:

 

(a)all documents dispatched by a Borrower to its creditors (if any) generally at
the same time as they are dispatched;

 

(b)promptly, upon becoming aware of them, the details of any litigation,
arbitration, administrative, regulatory proceedings or investigations which are
(i) material to any member of the Group, and - (ii) current, threatened in
writing or pending against a Borrower or any Material Subsidiary.

 

(c)promptly, after becoming aware of the relevant claim, the details of any
material claim which is current, threatened in writing or pending against the
Parent, PowerFleet US or any other person in respect of the Acquisition
Documents;

 

(d)promptly, such further information regarding the financial condition,
business and operations of any Material Subsidiary as the Lender may reasonably
request; and

 

(e)promptly, following a written reasonable request from the Lender, such
further information as is necessary for the Lender to comply with any Israeli
banking laws and regulations applicable to the Lender or as is required by the
Lender in order to comply with its internal compliance and risk management
requirements.

 

19.6Notification of default

 

(a)The Borrowers shall notify the Lender of any Default (and the steps, if any,
being taken to remedy it) promptly upon becoming aware of its occurrence.

 

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(b)Promptly upon a request by the Lender, the applicable Borrower shall supply
to the Lender a certificate signed by one of the following: a director, the
chief executive officer or the chief financial officer of such Borrower on its
behalf certifying that no Default is continuing (or if a Default is continuing,
specifying the Default and the steps, if any, being taken to remedy it).

 

19.7“Know your customer” checks

 

The Borrowers shall promptly upon the request of the Lender supply, or procure
the supply of, such documentation and other evidence as is reasonably requested
by the Lender (for itself or, in the case of transfer or assignment pursuant to
Clause ‎23.1 (Assignments and transfers by the Lender) below, on behalf of any
prospective new Lender) in order for the Lender (or any prospective new Lender)
to carry out and be satisfied it has complied with all necessary “know your
customer” or other similar checks under all applicable laws and regulations
pursuant to the transactions contemplated in the Finance Documents.

 

20.Financial Covenants

 

20.1Financial covenants

 

(a)Definitions:

 

“Current Payments” means, the cumulative amount of principal and interest
payments of Loans under any of the Facilities payable during the relevant future
12 months period.

 

“Debt” means, without duplication the total indebtedness and obligations of the
applicable Borrower, direct and indirect (including on account of any
guarantees, charges and pledges in favour of any third party and under any
indemnification undertaking by the applicable Borrower as Security for
indebtedness and obligations of the types specified below incurred by any third
party: (1) to banks and other financial institutions and (2) arising from
debentures of any type, including bonds, notes and convertible notes and (3) on
account of loans received from any direct or indirect shareholder or any of its
Affiliates or from any third party or on account of amounts raised in any other
way (but excluding Subordinated Shareholder Loans provided to the applicable
Borrower, with respect to which subordination undertaking in the form set out in
Schedule 2 (Subordination Undertaking) was executed); and (4) on account of
loans received from any third parties or on account of amounts raised in any
other manner which are classified as incurring of indebtedness, or that their
economic result is the incurrence of indebtedness; and (5) on account of amounts
received as a result of selling or discounting receivables, accounts, bills or
other financial assets, on terms which include recourse to the seller; and (6)
on account of amounts raised under any other transactions and which are
classified as Financial Indebtedness according to the applicable accounting
principles.

 

“EBIT” means, EBITDA less depreciation and amortization.

 

“EBITDA” means, the net income of the applicable Borrower, before depreciation
and amortization, financing expenses (save for such expenses classified as
“Banking and other fees”), tax expenses (both current taxes and changes in
deferred taxes), and excluding: (i) foreign currency translation losses and
income, (ii) stock option and other equity-based compensation expenses, (iii)
net loss and income from disposed or discontinued operations, provided, however,
that the aggregate sum of such exclusions shall not exceed 10% of the EBITDA
during the course of the applicable Reporting Date, and (iv) the Excluded
Expenses, all - for a period of four consecutive Quarters immediately preceding
the Reporting Date (including, for the avoidance of doubt, the Quarter ending on
the Reporting Date).

 

 42 

 

 

“Equity” means, the equity of the applicable Borrower within the meaning thereof
according to the applicable accounting principles, including Subordinated
Shareholder Loans provided to the applicable Borrower, with respect to which
subordination undertakings in the form set out in ‎Schedule 2 (Subordination
Undertaking) were executed.

 

“Excluded Expenses” means, with respect to the EBITDA, the following expenses:
(i) “Management fee - DBSI” and the “SEC fees”, as set forth in the draft KPMG
Executive Summary Report, dated February 1, 2019 that has been provided to the
Lender in connection with the Transactions, in a total amount not exceeding US
$381,000; and (ii) Expenses related to the Transactions, to be paid on or about
the Closing Date, in a total amount not exceeding US $3,000,000, provided that
the Lender has received a detailed documented break down, in form and substance
satisfactory to the Lender, of such expenses.

 

“Net Debt” means, Debt net of: (1) cash and cash equivalents; (2) deposits with
banks and financial institutions that are authorized by law to carry on
financial activity provided, that none of those are subject to pledge, charge or
other Security Interest of any third party (other than in favor of the Lender),
or to a trust arrangement or to other restrictions on withdrawal.

 

“Working Capital” means, the sum of inventory and trade receivables (other than
receivables that are subject to factoring, discounting, securitization, sale, or
similar transactions), net of: (i) trade payables; and (ii) deferred revenues
and customers advances (for the avoidance of doubt, all – to the extent
classified as current assets or liabilities, as applicable).

 

(b)During the period commencing from the date hereof and ending on the Final
Maturity Date, the Borrowers hereby undertake that, with respect to each
Reporting Date (and as will be examined in each Examination Date (as defined
below)):

 

(i)Pointer’s Net Debt to EBITDA ratio shall not exceed 2, based on its
non-consolidated (“solo”) financial statements.

 

(ii)Pointer’s Net Debt shall be less than 100% of its Working Capital, based on
its consolidated financial statements.

 

(iii)Minimum Equity of Pointer HoldCo shall not be less than US $60,000,000,
based on its consolidated financial statements.

 

(iv)Pointer HoldCo’s Equity to total assets ratio shall be greater than 35%,
based on its consolidated financial statements.

 

(v)Pointer HoldCo’s Net Debt to EBITDA Ratio shall be less than 4, based on its
consolidated financial statements.

 

(vi)The ratio between Pointer’s EBIT during the four consecutive calendar
Quarters preceding the applicable Reporting Date, and the Current Payments
during the four consecutive calendar Quarters following the applicable Reporting
Date, shall be greater than 1.2, based on its consolidated financial statements.

 

 43 

 

 

20.2Financial testing

 

(a)In this Clause ‎20.2: “Examination Date” means each date on which the
Borrowers are required to provide the Lender the (quarterly or annual) financial
statements pursuant to Clause ‎19.1 (Financial Statements).

 

(b)The financial covenants set out in Clause ‎20.1 (Financial Covenants) shall
be tested on each Examination Date with respect to the applicable Reporting Date
and by reference to the most recently available financial statements delivered
pursuant to Clause ‎19.1 (Financial statements) in respect of the period ending
on that Reporting Date (together with any other relevant available internal
accounts or financial information and including information on any Distributions
made by Pointer from the date of such report until the Examination Date) and (b)
the Compliance Certificate delivered pursuant to Clause ‎19.3 (Compliance
Certificate and Distribution Compliance Certificate) in respect of that
Reporting Date.

 

(c)Notwithstanding the foregoing, to the extent Borrower is not in compliance
with the financial covenants set out in Clause ‎20.1(b) above at any Reporting
Date, such non-compliance shall not constitute an Event of Default provided
that:

 

(i)such non-compliance has been cured by the following Reporting Date,
including, without limitation, by way of an Equity Injection (as defined below)
or prepayment in accordance with Clause ‎8 (Prepayment and Cancellation); or -

 

(ii)within fifteen (15) Business Days after the relevant Examination Date, a
cash injection is made by Pointer Holdco’s shareholders to Pointer HoldCo (as
equity or Subordinated Loans), in an amount which, when added to Equity or
deducted from the Net Debt of the relevant Borrower, shall cause such Borrower
to comply with the applicable financial covenants (the “Equity Injection”). The
Equity Injection shall be, at the discretion of the Borrowers, either deposited
in the Pointer HoldCo Charged Account or used for prepayment of the Term Loans
in accordance with Clause ‎8 (Prepayment and Cancellation).

 

The Equity Injection may be used for purpose of meeting any financial covenant
set out in Clause ‎20.1(b) above for not more than five (5) times until the
Final Maturity Date.

 

(d)Upon the receipt by Pointer HoldCo of Equity Injection pursuant to Clause
‎(c)(ii) above, the covenants set forth in Clause ‎20.1(b) above shall be
recalculated, giving effect to a pro forma increase to Equity and reduction in
Net Debt for such Examination Date in an amount equal to such Equity Injection;

 

(e)Without derogating from the above, upon the occurrence of the event detailed
in Clause ‎21.19(c) below, the financial covenants set out in Clause ‎20.1
(Financial Covenants) above shall be calculated in accordance with the adjusted
calculations performed by the Independent Auditor in the Determination Date (as
defined under Clause ‎21.19(c)(ii) below).

 

20.3Reserve Fund

 

(a)On or prior to the first anniversary of the Closing Date, Pointer HoldCo
shall deposit the Minimum Reserve Amount in a separate deposit under the Pointer
HoldCo Charged Account (the “Reserve Fund”), such Reserve Fund to be maintained
up until the Final Maturity Date and for so long as any Secured Amounts under
the Finance Documents are outstanding.

 

 44 

 

 

“Minimum Reserve Amount” shall be an aggregate NIS amount in cash equivalent to
US $3,000,000, to be converted into NIS on the Closing Date in accordance with
the Applicable Conversion Rate, as defined in Clause ‎5.2(a)(iii)), provided
that in the event that the outstanding Loans under the Term Loan Facilities
shall not exceed 50% of the aggregate amount of Term Loan Facilities set out in
Clause ‎2.1, then at the request of the Borrowers - such Minimum Reserve Amount
shall be reduced by 50%, as shall be calculated by the Lender.

 

(b)At any time, the balance of cash standing to the credit of Pointer HoldCo in
the Reserve Fund shall be an aggregate amount not less than Minimum Reserve
Amount. For the avoidance of doubt, Pointer HoldCo will not be able to utilise
such amount for any purpose, without the prior written consent of the Lender.

 

21.General Undertakings

 

The undertakings in this Clause ‎21 will remain in force from the date of this
Agreement for so long as any amount is outstanding under the Finance Documents
or any Commitment is in force.

 

21.1Authorisations

 

Each Borrower shall promptly:

 

(a)obtain, comply with and do all that is necessary to maintain in full force
and effect; and

 

(b)upon written request supply certified copies to the Lender of,

 

(i) any material Authorisation required under any law or regulation applicable
to it to enable it to lawfully comply with its obligations under the Finance
Documents and to ensure the legality, validity, enforceability or admissibility
in evidence in Israel of any Finance Document, and (ii) any material
Authorisation under any law or regulation applicable to the Borrowers or any
Material Subsidiary required to enable the Borrowers or any Material Subsidiary
to lawfully conduct its business in all material respects in substantially the
manner existing on the date of this Agreement.

 

21.2Compliance with laws

 

The Borrowers shall (and shall ensure each Material Subsidiary will) comply in
all material respects with all laws to which they may be subject.

 

21.3Modifications of Organisational Documents

 

The Borrowers shall not change their legal form or amend or modify its
certificate of incorporation, by-laws or other organizational or governing
documents in any way that would be materially adverse to the interests of the
Lender.

 

21.4Share Capital

 

The Borrowers shall not repurchase, cancel or redeem their shares or otherwise
reduce its share capital or make payments in respect of any convertible or
hybrid instrument otherwise than as permitted under this Agreement.

 

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21.5Negative pledge

 

The Borrowers shall (and shall ensure each Material Subsidiary will) not create
or permit to subsist any Security over any of their assets, except for:

 

(a)fixed charges over specific assets in favour of the providers of finance for
the acquisition of specific assets (Shaslan) (as referred to in Section 169(d)
of the Israeli Companies Ordinance [New Version], 1983) and securing the
financing for such specific assets only;

 

(b)the Securities created under the Security Documents and any other Security
registered as of the Closing Date in favor of the Lender in Pointer’s company
registry with the Israeli Registrar of Companies; or

 

(c)the customary (unregistered) rights of set off and lien over credit balances
on bank accounts arising pursuant to the standard terms and conditions
applicable to such accounts (provided that any such set off or lien is only
permitted if the bank may set off, or is securing, only indebtedness of the
applicable Borrower itself, and, for the avoidance of doubt - no cash pooling
arrangements will be permitted hereunder),

 

provided, however, that the Security detailed in paragraph (a) and (c) above
shall be granted by any of the Borrowers, or any Material Subsidiary, as
applicable, in the ordinary course of its business.

 

21.6Disposals

 

The Borrowers shall (and shall ensure each Material Subsidiary will) not enter
into any transaction whether voluntary or involuntary to sell, lease, transfer
or otherwise dispose of any assets subject to the Transaction Securities or any
other asset (including receivables), except for:

 

(a)transactions in the ordinary course of business of the Borrowers: (i) for the
sale, lease, transfer or other disposal, on arms’ length terms and for market
value, of inventory; (ii) for the sale, lease, transfer or other disposal of
worn-out or obsolete equipment; (iii) consisting of the Borrower’s or its
subsidiaries’ use or transfer of money or cash equivalents in a manner that is
not specifically prohibited; (iv) consisting of the grant of licenses for the
use of the intellectual property of the Borrower or its subsidiaries, on arms’
length terms and for market value;

 

(b)transaction(s) for the sale or disposal of Pointer Brazil to any third party
(not being an Affiliate of the Borrowers or of Powerfleet Inc.), on arms’ length
terms and for market value (but provided that the Borrowers shall not incur any
indebtedness in connection with such transactions (other than those indemnities
relating to representations and warranties customarily undertaken in
transactions of that type), and shall not undertake, directly or indirectly, any
of Pointer Brazil’s indebtedness or obligations,; and –

 

(c)transactions for the sale of assets (other than any asset subject to a
Transaction Security being a fixed pledge) (in this paragraph, the “Disposed
Asset”) to any third party (not being an Affiliate of the Borrowers or of
Powerfleet Inc.), on arms’ length terms and for market value, and provided that:
(i) no default has occurred or is continuing or would result after giving effect
to the transaction; (ii) the Disposed Asset generates less than 10% of Pointer
HoldCo’s EBITDA (as defined in Clause ‎20.1 (Financial Covenants)), based on its
most updated annual consolidated financial statements; (iii) the value of the
Disposed Asset does not exceed 10% of the total assets of Pointer HoldCo, based
on its consolidated financial statement; and - (iv) immediately after the sale
of the Disposed Asset, and after effecting such sale, Pointer HoldCo’s Equity
shall not be reduced by more than 5%.

 

The Borrowers shall deliver to the Lender, prior to any such sale of a Disposed
Asset, a written notice satisfactorily evidencing their compliance with the
conditions set out above, including, inter alia, details of the proposed
transaction, and pro forma financial statements giving effect to the
transactions.

 

 46 

 

 

21.7Merger

 

Subject to Clause ‎21.6, the Borrowers and the Material Subsidiaries shall not
enter into any amalgamation, demerger, merger or corporate consolidation.
Notwithstanding the foregoing or anything else herein to the contrary, nothing
in this Clause ‎21.7 or elsewhere in this Agreement shall limit the ability of a
member of the Group (except for the Borrowers and Pointer Brazil) to effect any
amalgamation, demerger, merger or corporate consolidation if (i) the
counterparty of such amalgamation, demerger, merger or corporate consolidation
is another member of the Group, provided that if any of the assets involved in
such transaction are pledged under the Finance Documents, a pledge will be
created in favor of the Lender, to the Lender’s reasonable satisfaction, on
similar terms (mutatis mutandis); or if (ii) the Borrowers repay in full and
terminate the Facilities at any time prior to any such transaction (including
the time immediately prior to the consummation thereof) by repayment in full (in
accordance with Clause ‎8 (Prepayment and cancellation)),of all amounts of
principal and interest due hereunder, including all outstanding Secured Amounts
under the Finance Documents, cancellation in full of all Commitments under
Facility C, cancellation and return of any guarantee or documentary credit
Utilised under Facility C and closing out of all derivative transactions
thereunder.

 

21.8Change of business

 

(a)Pointer HoldCo shall maintain its business as limited to the holding and
management of the Pointer Shares (including any activities permitted under this
Agreement), the carrying out of the ancillary holding company activities
(subject to any limitations under the Finance Documents) and performing
management activities carried out as of the date hereof by Pointer, and shall
not incur any Financial Indebtedness (except for such indebtedness under the
Finance Documents or in connection with the Subordinated Parent Loan, if
applicable pursuant to Clause ‎4.2(a)); provided that, subject to Lender’s prior
written consent (after being convinced that there is no adverse impact to its
rights or to the Borrowers’ ability to perform all of their obligations under
the Finance Documents), Pointer HoldCo shall be permitted to perform commercial
activity representing a new line of business for Pointer, and -

 

(b)The Borrowers shall procure that no substantial change is made to the general
nature of the business of the Group (taken as a whole) from that carried on at
the date of this Agreement.

 

21.9Taxation, Book Records

 

(a)The Borrowers shall (and shall ensure each Material Subsidiary will) duly and
punctually pay and discharge all Taxes imposed upon them or their assets within
the time period allowed (taking into account extensions) (except to the extent
that (i) such payment is being contested in good faith, (ii) adequate reserves
are being maintained for those Taxes or (iii) such payment can be lawfully
withheld).

 

(b)Paragraph (a) above, shall not apply with respect to any Tax indebtedness
(whether contingent or actual) arising out of the Pointer Brazil Tax Proceeding.

 

(c)The Borrowers shall not change their residence for Tax purposes.

 

(d)The Borrowers shall, and shall cause each Material Subsidiary to keep proper
books of records and account in which full, true and correct entries in
conformity with GAAP in all material aspects.

 

 47 

 

 

21.10Pari passu ranking

 

The Borrower shall (and shall ensure each Material Subsidiary will) ensure that
at all times any unsecured and unsubordinated claims of the Lender against it
under the Finance Documents rank at least pari passu with the claims of all its
other unsecured and unsubordinated creditors except those creditors whose claims
are mandatorily preferred by laws of general application to companies.

 

21.11Loans and guarantees, investments and acquisitions

 

(a)The Borrowers shall (and shall ensure each Material Subsidiary will):

 

(i)not make any loans, grant any credit or issue any guarantee (or an indemnity
constituting a guarantee to or for the benefit of any person or otherwise
voluntarily assume any liability, whether actual or contingent, in respect of
any obligation of any person, unless otherwise permitted hereunder;

 

(ii)not make any investments, including any advance, loan, extension of credit
(by way of guaranty or otherwise) or capital contribution to, or purchase of any
capital stock, bonds, notes, debentures or other debt securities of, or any
assets constituting a business unit of, or any other investment, except for
investments in the course of their cash management (but not with respect to the
Reserve Fund), in the ordinary course of business or unless otherwise permitted
hereunder;

 

(iii)not acquire a company or any shares or securities or a business or
undertaking or any other assets (or, in each case, any interest in any of them),
except for investments in the course of their cash management (but not with
respect to the Reserve Fund), in the ordinary course of business or unless
otherwise permitted hereunder.

 

(b)Without derogating from paragraph (a) above and paragraph ‎(c) below, the
Borrowers and the Material Subsidiaries shall be entitled to perform any of the
activities detailed thereunder, including capital investments in their existing
assets (subject to Clause ‎21.19(c)(iv) below) provided that:

 

(i)no Default has occurred and is continuing;

 

(ii)such actions are in its ordinary course of business; and

 

(iii)such actions shall not exceed a total aggregate amount of US $4,500,000 in
any Calendar Year.

 

(c)Without derogating from paragraphs (a) and ‎(b) above, the Borrowers and the
Material Subsidiaries shall be entitled to:

 

so long as no Default would result after giving pro forma effect therefrom, and
subject to any “Know Your Client” requirements applicable to the Lender, acquire
a company or any shares or securities or a business or undertaking or any other
assets (or, in each case, any interest in any of them) (“Acquisitions”) provided
that the following conditions are met:

 

(A)the amount of each such Acquisition does not exceed US $10,000,000, and the
aggregate amount of all Acquisitions until the Final Maturity Date does not
exceed US $20,000,000;

 

 48 

 

 

(B)The acquired entity or business is profitable (net income and EBITDA), with
its Net Debt to EBITDA ratio at and after giving effect to the closing of the
Acquisition (as measured with respect to the Borrowers pursuant to Clause ‎20.1
(Financial Covenants), mutatis mutandis) is less than 3; and

 

(C)The nature of the operations of the acquired entity, business or asset is
substantially similar to that of the Group.

 

The Borrowers shall deliver to the Lender, prior to any such Acquisition, a
written notice satisfactorily evidencing their compliance with the conditions
set out above, including, inter alia, details of the proposed transaction, and
management’s estimate of the pro forma effect of the transaction on the
Borrowers’ most recently delivered financial statements.

 

21.12Pointer Distribution proceeds

 

(a)The Borrowers shall inform the Lender of any Distribution declared or made by
Pointer to Pointer HoldCo, promptly upon it becoming aware of it, and deliver a
calculation as to the application of such Distribution pursuant to paragraph
(b), including the relevant information required for calculating the prepayment
amounts pursuant to Clause ‎8.4 (Prepayment in case of Pointer Distribution
proceeds – Cash Sweep). The proceeds of such Distributions shall be paid into
the Pointer HoldCo Charged Account, which shall be at any time legally and
beneficially owned by the Pointer HoldCo, Free and Clear.

 

(b)Pointer HoldCo shall apply any cash Distribution made by Pointer to Pointer
HoldCo, except for the Excluded Amounts (as defined below) (the “Pointer
Distributions”), as follows:

 

(i)First, in payment of Interest in respect of the Term Loan Facilities and any
accrued fees under the Finance Documents then payable; and

 

(ii)Second, to the extent that any amounts remain after the application of the
above, in prepayment of Loans under the Term Facilities pursuant to Clause 8.4
(Prepayment in case of Pointer Distribution proceeds – Cash Sweep).

 

(c)In this Clause ‎21.12, “Excluded Amounts” means (i) any amounts intended, on
or prior to the date of receipt of a Pointer Distribution by Pointer HoldCo, to
fund the payment of any costs and expenses set out in Clauses ‎21.13(b) incurred
by Pointer HoldCo in a total amount (taking into account any other Distribution
made pursuant to Clauses ‎21.13(b) during the relevant year) not exceeding the
amount set out thereunder, plus any taxes incurred by Pointer HoldCo from the
receipt of a Pointer Distribution and (ii) amounts used by Pointer Holdco to
fund the Reserve Fund.

 

21.13Distributions

 

Pointer HoldCo shall not make any Distribution or any payment, in cash or in
kind, to any Powerfleet Group Company, except for the following (the “Permitted
Distributions”):

 

(a)any amounts not required to be applied in prepayment of the Facilities in
accordance with Clause 8.4 (Prepayment in case of Pointer Distribution proceeds
– Cash Sweep) and eligible for Distribution pursuant to Clause ‎21.12; provided
the following conditions are met:

 

 49 

 

 

(i)the proposed Distribution is made on or about an Examination Date with
respect to the annual financial statements of the Borrowers, or, if otherwise –
the Borrowers delivered to the Lender their most recent reviewed consolidated
financial statements for the last Financial Quarter ending not earlier than 90
days prior to the date of Distribution, and their unaudited non-consolidated
financial statements for such date.

 

(ii)the proposed Distribution is permitted under any applicable law;

 

(iii)no Default is continuing or would result from the proposed Permitted
Distribution;

 

(iv)following the Distribution, Pointer HoldCo’s Net Debt to EBITDA ratio shall
not exceed 2.5, based on its most recent consolidated financial statements;

 

(v)if so required hereunder, the balance of cash standing to the credit of
Pointer HoldCo in the Reserve Fund, is at least equal to the Minimum Reserve
Amount, as defined in Clause ‎20.3;

 

(vi)an amount in NIS equal to US $10,000,000 (to be converted to NIS in
accordance with the Applicable Conversion Rate, as defined in Clause
‎5.2(a)(iii)) of the principal amounts of the outstanding Loans under any of the
Term Loan Facilities have been prepaid prior to such Distribution; and

 

(vii)Pointer HoldCo delivers to the Lender a Distribution Compliance Certificate
five Business Days prior to the date of such Permitted Distribution (or later,
if so agreed by the Lender).

 

(b)amounts sufficient to fund administrative costs, directors’ remuneration,
taxes, professional fees and the like reasonably incurred by any direct or
indirect holding company of Pointer HoldCo, in each case to the extent referable
to acting as a holding company of Pointer HoldCo or the Group, and in a total
amount not to exceed US$2,000,000 in any Financial Year of Pointer HoldCo.

 

21.14Transactions with Affiliates

 

The Borrowers shall (and shall ensure each Material Subsidiary will) not enter
into any transaction, including any purchase, sale, lease or exchange of
property, the rendering of any service or the payment of any management,
advisory or similar fees, with any Powerfleet Group Company unless such
transaction is consistent with any transfer pricing report prepared for the
Group or any constituent company therein and is made in the ordinary course of
business, on arms’ length terms and for market value.

 

21.15Insurance

 

Each Borrower shall (and shall ensure that each Material Subsidiary will)
maintain insurances on and in relation to its business and assets against those
risks and to the extent as is usual for companies carrying on the same or
substantially similar business.

 

21.16Sanctions

 

(a)Each Borrower shall (and shall ensure that each Material Subsidiary will)
comply in all material respects with all Sanctions that it and each Material
Subsidiary is required to comply with by law.

 

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(b)The Borrowers shall not (and shall ensure that each Material Subsidiary will
not):

 

(i)use, lend, contribute or otherwise make available all or any part of the
proceeds of any Utilisation directly or knowingly indirectly;

 

(A)for the purpose of financing or facilitating any trade, business or other
activities involving any Sanctioned Person, or in any Sanctioned Country; or

 

(B)in any other manner that would reasonably be expected to result in any Party
being in breach of any Sanctions that such Party is required to comply with by
law or becoming a Sanctioned Person; or

 

(ii)engage in any transaction that evades or avoids, or has the purpose of
evading or avoiding, or breaches or attempts to breach, directly or indirectly,
any Sanctions.

 

(c)The Borrowers shall not (and shall ensure that none of the Material
Subsidiaries will) enter into any transaction, contract or arrangement or agreed
to enter into any of the preceding (i) that is prohibited under the Law on the
Struggle Against Iran’s Nuclear Program, 5772-2012 or (ii) with any Person that
is, or is controlled by, a Person located, resident in, organized under the laws
of, or owned or controlled by the government of, a country or territory that is
an enemy country under the Israeli Trade with the Enemy Ordinance.

 

(d)The Borrowers shall (and shall ensure that each Material Subsidiary will)
promptly upon becoming aware of the same, supply to the Lender details of any
claim, action, suit, proceedings or investigation against it with respect to
Sanctions.

 

21.17Anti-bribery and Corruption and Anti-Money Laundering

 

(a)Each Borrower shall (and shall procure that each Material Subsidiary will)
conduct its businesses at all times in material compliance with all applicable
Anti-Corruption Laws and Money Laundering Laws to which it is subject, the rules
and regulations thereunder and any related or similar rules, regulations or
guidelines (in each case, to the extent that compliance is required as a matter
of law) to which it is subject that are issued, administered or enforced by any
governmental agency which supervises a member of the Group.

 

(b)The Borrower shall not (and shall procure that none of the Material
Subsidiaries or their respective directors, officers and employees shall),
directly or knowingly indirectly, use all or any of the proceeds of any of the
Facilities, or lend, permit, contribute or otherwise make available such
proceeds to any person which could reasonably be expected to be in furtherance
of any offer, payment, promise to pay, or authorisation of the payment or giving
of money, or anything else of value, to any person in violation of any
Anti-Corruption Laws and Money Laundering Laws.

 

21.18Acquisition Documents

 

(a)The Borrowers shall take all reasonable and practical steps (having regard to
the commercial context) to preserve and enforce their material rights (or the
rights of any other member of the Group) and pursue any material claims and
remedies arising under any Acquisition Documents.

 

(b)The Borrower shall not amend, vary, novate, supplement, supersede, waive or
terminate any term of any Acquisition Document without the prior written consent
of the Lender, except for amendments which are not materially adverse to the
interests of the Lender (taken as a whole) under the Finance Documents or that
do not have a Material Adverse Effect on the Borrowers’ ability to perform their
obligations under the Finance Documents.

 

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21.19Maintenance of Security Interest

 

(a)At any time and from time to time, promptly upon receiving a reasonable
written request of the Lender, the applicable Borrower, at its sole expense,
will duly execute and deliver, and have recorded, such further instruments and
documents and take such further actions as the Lender may reasonably request for
the purpose of obtaining or preserving the full benefits of this Agreement and
the Security Documents and of the rights and powers herein and therein granted
including, without limitation, the filing of any form with the Israeli Registrar
of Companies, the Israeli Registrar of Pledges or any other applicable
Governmental Authority.

 

(b)With respect to any property acquired after the Closing Date by the
applicable Borrower that constitutes Related Rights as to which the Lender does
not have (but is intended, in accordance with Clause ‎17 (Transaction
Securities), to have) a perfected pledge, such Borrower shall promptly execute
and deliver to the Lender such new debentures or amendments to the Security
Documents or such other documents and take all actions as the Lender (acting
together) may reasonably request to grant to them a perfected first priority
Security Interest in such property.

 

(c)In case Pointer Brazil will be obligated to create any Security Interest over
any of its assets pursuant to the Pointer Brazil Tax Proceeding, Pointer Brazil
shall so notify the Lender, and the Lender shall agree to the creation of such
Security Interest, provided that:

 

(i)the indebtedness secured by such Security shall be on a non-recourse basis
(in substance satisfactory to the Lender) to other members of the Group, and the
State Revenue Service of Sao Paulo or anyone on its behalf shall have no right
(under any law or agreement) to receive any payment or asset from any Borrower
or any Material Subsidiary (besides Pointer Brazil);

 

(ii)Pointer Brazil shall be excluded from the consolidated financial statements
of any and each of the Borrowers (including for the purpose of determining
compliance with the financial covenants set forth in Clause ‎20.1 (Financial
Covenants) on the applicable Examination Date (the “Determination Date”)), by
using a methodology that, with respect to the first financial statements
delivered hereunder and excluding Pointer Brazil , shall be approved by the
Independent Auditor, in form and substance satisfactory to the Lender (and at
the Borrowers’ own expense) (the “Approved Methodology”);

 

(iii)compliance with paragraph (ii) above on the first Determination Date after
the date of notification to the Lender shall be certified by the Independent
Auditor, in form and substance satisfactory to the Lender (at the Borrowers’ own
expense), and thereafter, the Compliance Certificate furnished on each
subsequent Examination Date shall be adjusted in accordance with the Approved
Methodology;

 

(iv)without derogating from Clause ‎21.11(a)(ii) above, Pointer shall not be
allowed to perform any of the actions permitted thereunder in connection with
Pointer Brazil.

 

(d)Promptly following the establishment of the Reserve Fund, as set forth in
Clause ‎20.3 above, Pointer HoldCo shall execute in favour of the Lender, a
first ranking fixed charge over any of its rights thereunder, in form and
substance satisfactory to the Lender.

 

 52 

 

 

  21.20 Company in Violation

 

Each Borrower shall ensure that neither it nor any Material Subsidiary becomes a
“Company in Violation” under section 362A of the Israeli Companies Law
5759-1999.

 

22. Events of Default

 

Each of the events or circumstances set out in Clause ‎22 is an Event of Default
(save for Clause ‎22.19 (Acceleration).

 

  22.1 Non-payment

 

The Borrower does not pay on the due date any amount payable pursuant to a
Finance Document at the place and in the currency in which it is expressed to be
payable unless:

 

  (a) its failure to pay is caused by administrative or technical error; and    
    (b) payment is made within three Business Days of its due date.

 

  22.2 Financial covenants

 

  (a) Any obligation under Clause ‎20.1 (Financial covenants) is not complied
with when tested and such non-compliance is not remedied within any applicable
time periods.         (b) Any obligation under Clause ‎20.3 (Reserve Fund) is
not complied with.

 

  22.3 Other obligations

 

  (a) Any of the Borrowers does not comply with its obligations under any
provision of the Finance Documents (other than those referred to in Clause ‎22.1
(Non-payment) and Clause ‎22.2 (Financial covenants).         (b) No Event of
Default under paragraph ‎(a) above will occur if the failure to comply is
capable of remedy and is remedied as follows: if material - within 20 Business
Days from the earlier of (i) the Borrower becoming aware of the failure to
comply or (ii) the giving of notice by the Lender to the Borrower in respect of
such failure, and if immaterial – within 30 Business Days following such date or
within a longer period agreed by the Lender.

 

  22.4 Authorisation

 

If any Authorisation required under any law or regulation applicable to the
Borrowers and necessary to enable the Borrowers to conduct their on-going
business activities, as of the date hereof, or to lawfully perform their
obligations under the Finance Documents (including in order to establish,
protect and perfect each Transaction Security) and to ensure the legality,
validity, enforceability or admissibility in evidence of any Finance Document in
any applicable jurisdiction, is breached or is cancelled or is adversely
modified, in each case, in any material respect, without the prior consent of
the Lender and which is not remedied within 20 Business Days from the earlier of
(i) the Borrowers becoming aware of such breach, cancellation or adverse
modification or (ii) the giving of notice by the Lender to the Borrowers in
respect of such breach, cancellation or adverse modification.

 

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  22.5 Misrepresentation

 

  (a) Any representation or statement made by any Borrower in the Finance
Documents or any other document delivered by or on behalf of any Borrower under
or in connection with any Finance Document is or proves to have been incorrect
or misleading in any material respect when made or deemed to be made.        
(b) No Event of Default will occur under this Clause ‎22.5 (Misrepresentation)
if the event or circumstance giving rise to the misrepresentation is capable of
remedy and the event or circumstance giving rise to the representation or
statement being incorrect or misleading is remedied within 20 Business Days from
the earlier of (i) the applicable Borrower becoming aware of the
misrepresentation or (ii) the giving of notice by the Lender to the applicable
Borrower in respect of such misrepresentation.

 

  22.6 Cross default

 

  (a) Subject to paragraph (b) below:

 

  (i) Any Financial Indebtedness of any member of the Group is not paid when due
nor within any applicable grace period.         (ii) Any Financial Indebtedness
of any member of the Group is declared to be or otherwise becomes due and
payable prior to its specified maturity as a result of an event of default
(however described).         (iii) Any creditor of any Borrower becomes entitled
to declare any Financial Indebtedness of the Borrower due and payable prior to
its specified maturity as a result of an event of default (however described).

 

  (b) No Event of Default will occur under this Clause ‎22.6 in respect of
Financial Indebtedness or a commitment for Financial Indebtedness:

 

  (i) with respect to any member of the Group (other than Pointer HoldCo) , in
an aggregate amount of less than US $500,000;         (ii) owed by one member of
the Group to another member of the Group; or         (iii) with respect to
paragraphs (a)(i) or (a)(ii) - owed under any Subordinated Shareholder Loan.

 

  22.7 Insolvency

 

Any one of the Borrowers is:

 

  (a) unable or admits its inability to pay its debts as they fall due; or -    
    (b) by reason of financial difficulties, commences negotiations with one or
more of its creditors (other than the Lender in connection with any Financial
Indebtedness under the Finance Documents) with a view to reach a debt
restructuring arrangement, as such term is defined under the Israeli Insolvency
and Rehabilitation Law, 2018, or any similar arrangement (and including in case
of initiation of any “protected negotiations” under such law).

 

 

 54 

 

 

  22.8 Insolvency proceedings

 

  (a) With respect to the Borrowers, any corporate action or legal proceedings
is taken or commenced by a Borrower, or any legal proceeding is commenced by any
third party including a creditor of a Borrower, in relation to:

 

  (i) the suspension of payments, a moratorium of any indebtedness, winding-up,
dissolution, administration or reorganisation (by way of voluntary arrangement,
scheme of arrangement or otherwise) of any of them, including by way of a
request to initiate proceedings (בקשה לפתיחת הליכים) under the Israeli
Insolvency and Rehabilitation Law, 2018;         (ii) a composition, compromise,
assignment or arrangement with any creditor (other than the Lender in connection
with any Financial Indebtedness under the Finance Documents) of any of them;    
    (iii) the appointment of a liquidator, receiver, receiver and manager,
administrative receiver, administrator, examiner, compulsory manager, or other
similar officer in respect of any of them or their assets (in whole or in part);
or         (iv) enforcement of any Security over any assets of any of them (in
whole or in part),

 

or any analogous procedure or step is taken in any jurisdiction.

 

  (b) Paragraph ‎(a) above shall not apply to any winding-up petition which is
frivolous or vexatious and is discharged, stayed or dismissed within 30 Business
Days of commencement.

 

22.9Creditors’ process

 

  (a) Any expropriation, attachment, sequestration, distress or execution
affects any asset or assets of any of the Borrowers.         (b) Paragraph ‎(a)
above shall apply with respect to assets that are not subject to Transaction
Security in the form of a fixed charge, only if the action is taken in
connection with indebtedness that does not exceed US $500,000 in aggregate and
is not discharged within 30 Business Days of its commencement.

 

22.10Unlawfulness

 

  (a) It is or becomes unlawful for the Borrowers to perform any of their
obligations under the Finance Documents in a manner that could reasonably be
expected to materially adversely affect the interests of the Lender (taken as a
whole) under the Finance Documents and, if capable of remedy, such circumstances
are not remedied within 30 Business Days of such circumstances arising.        
(b) It is or becomes unlawful for any Party to the Transaction Documents to
perform any of its material obligations thereunder in a material way.

 

22.11Repudiation

 

  (a) The Borrowers repudiate a Finance Document or evidence an intention to
repudiate a Finance Document.         (b) Any Party to the Acquisition Documents
rescinds or purports to rescind or repudiates or purports to repudiate any of
those agreements or instruments in whole or in part where to do so has or is
reasonably likely to have a Material Adverse Effect on the interests of the
Lender under the Finance Documents.

 

 55 

 

 

22.12Material adverse change

 

Any event or circumstance exists or occurs which has or is reasonably likely to
have a Material Adverse Effect.

 

22.13Cessation of business

 

The Group (taken as a whole) ceases to conduct the business carried on by it as
at the date of this Agreement.

 

22.14Audit qualification

 

The auditors of any of the Borrowers:

 

  (a) include a going concern notice in respect of any of their financial
statements (other than in relation to the ability of the applicable Borrower to
comply with the financial covenant set out in Clause ‎20.1(b)); or         (b)
otherwise qualify any of their financial statements where that qualification is
in terms or as to issues which could reasonably be expected, whether
individually or cumulatively, to have a Material Adverse Effect.

 

22.15Litigation

 

Any litigation, arbitration, administrative, governmental, regulatory or other
investigations, proceedings or disputes are commenced against any member of the
Group or their assets which are reasonably likely to be adversely determined
and, which if so determined, would have a Material Adverse Effect.

 

22.16Invalidity, Unenforceability or Termination of Transaction Documents

 

If:

 

  (a) this Agreement or any of the Security Documents ceases, for any reason, to
be in full force and effect, or any Security created by any of the Security
Documents ceases to be enforceable and of the same effect and priority purported
to be created thereby; or         (b) any material provision of a Finance
Document is not legal, valid, binding and enforceable in accordance with its
terms (subject to the reservations set out in Clause ‎18.2).

 

22.17Change of control

 

If: (i) Pointer HoldCo ceases to hold (directly and solely) all means of control
in Pointer, or ceases to effectively control Pointer; or (ii) if Pointer
HoldCo’s share capital is not held directly and solely by the Parent or if the
Parent ceases to effectively control Pointer HoldCo; or (iii) if Parent’s shares
are, for any reason, not traded as a public company on any stock exchange in the
United States, or any other exchange or market in Tel Aviv or London , as the
case may be.

 

Notwithstanding the foregoing or anything else herein to the contrary, nothing
in this Clause ‎22.17 or elsewhere in this Agreement shall prevent a change of
control as contemplated by this Clause ‎22.17 if the Borrowers repay in full and
terminate the Facilities at any time prior to any such transaction (including
the time immediately prior to the consummation thereof) by repayment in full (in
accordance with Clause ‎8 (Prepayment and cancellation)), of all amounts of
principal and interest due hereunder, including all outstanding Secured Amounts
under the Finance Documents, cancellation in full of all Commitments under
Facility C, cancellation and return of any guarantee or documentary credit
Utilised under Facility C and closing out of all derivative transactions
thereunder.

 

 56 

 

 

For the purposes of this Clause ‎22.17 “control” and “means of control” shall
have the meaning ascribed to them in the Securities Law.

 

22.18Reduction of cure periods

 

Notwithstanding anything to the contrary in this Clause ‎22, in the event that
the Lender reasonably believes that a delay in acting pursuant to Clause ‎22.19
below due to the operation of any cure period specified under the Finance
Documents would materially prejudice the ability of the Lender to receive
payment in full of any amount then outstanding under the Finance Documents
(including as a consequence of the realisation of the securities pledged
thereunder), such that an immediate action is unavoidably required to preserve
the Lender’s rights under the Finance Documents or to permit recovery, the
Lender may, by written notice to the Borrowers, shorten or cancel any such cure
period.

 

22.19Acceleration

 

On and at any time after the occurrence of an Event of Default, so long as the
Default is continuing, the Lender may:

 

  (a) take any or all of the following actions:

 

  (i) cancel any Commitment, whereupon such Commitment shall immediately be
cancelled;         (ii) declare that all or part of the Utilisations, together
with accrued interest, any Prepayment Premium or Break Costs amount and all
other amounts accrued or outstanding under the Finance Documents be immediately
due and payable, whereupon they shall become immediately due and payable;      
  (iii) enforce and realize any Security Interest pursuant to the Security
Documents, without being subject to any order of realization between the
Transaction Securities;

 

  (b) exercise any or all of its rights, remedies, powers or discretions under
any of the Finance Documents.

 

23.Changes to the Lender

 

23.1Assignments and transfers by the Lender

 

  (a) Subject to this Clause ‎23, a Lender (the “Existing Lender”) may, without
the prior written consent of the Borrowers, assign, transfer or enter into any
sub-participation in respect of any of its rights and obligations under or in
connection with the Finance Documents, in whole or in part, to:

 

  (i) another bank or financial institution included in sections (2) to (4) of
the first supplement of the Securities Law, 5728-1968 and any ‘investment
basket’ (‘Sal Hashkaot’) comprising the activities of any such entities in
connection with the consolidation of any of their investment activity, or any of
their affiliates, (but except for any hedge funds) or similar entities regulated
under any foreign law; or to a fund or other entity which is regularly engaged
in or established for the purpose of making, purchasing or investing in loans,
securities or other financial assets, and is acceptable to the Borrower, which
consent shall not be unreasonably withheld or delayed; or –

 

 57 

 

 

  (ii) if a Default has occurred and is continuing – to any other entity.

 

(the “New Lender”).

 

  (b) The New Lender shall become a Party as a “Lender”.         (c)
Notwithstanding anything provided under this Clause ‎23, the Lender may without
consulting with or obtaining consent from the Borrowers, at any time: (i)
charge, assign or otherwise create Security Interest in or over (whether by way
of collateral or otherwise) all or any of its rights under any Finance Document
to secure obligations of the Lender; (ii) enter into any securitization or risk
transfer transaction.

 

23.2Intercreditor Agreement

 

If following any assignment as set out in Clause ‎23.1, there shall be more than
one Lender hereunder, the Lenders shall enter, as a condition to such
assignment, into an intercreditor agreement in connection with their
participations in the Facilities. In such case, the Borrower shall agree to the
appointment of the Lender as facility agent and security agent on behalf of the
Lender, under terms to be agreed between the Lenders.

 

24.Changes to the Borrower

 

Assignments and transfer by the Borrower

 

The Borrowers may not assign any of its rights or transfer any of its rights or
obligations under the Finance Documents.

 

25.Conduct of business by the Lender

 

No provision of this Agreement will:

 

  (a) interfere with the right of the Lender to arrange its affairs (tax or
otherwise) in whatever manner it thinks fit;         (b) oblige the Lender to
investigate or claim any credit, relief, remission or repayment available to it
or the extent, order and manner of any claim; or         (c) oblige the Lender
to disclose any information relating to its affairs (tax or otherwise) or any
computations in respect of Tax.

 

26.Payment Mechanics

 

26.1Payments to the Lender

 

  (a) On each date on which the Borrowers is required to make a payment to the
Lender under a Finance Document, the Borrower shall make such payment, for value
on the due date by no later than 12:00 PM (Israel time).         (b) Payments to
the Lender by any of the Borrowers shall be made to the Pointer Charged Account
or the Pointer HoldCo Charged Account, as applicable, or to any other bank
account as shall be instructed by the Lender.

 

 58 

 

 

  (c) Subject to any law, the Lender may debit the Pointer Charged Account or
the Pointer HoldCo Charged Account, as applicable, without any prior demand,
with any indebtedness on account of principal, interest, fees, commissions,
charges or costs and expenses due and payable under the Finance Documents; and -
the Lender is not obliged to check whether on any of the dates for debiting any
such accounts there is in the account to be debited an available balance which
is sufficient and the Borrowers shall be responsible for any consequences which
might arise from there being no such available balance.

 

26.2Partial payments

 

  (a) If the Lender receives a payment that is insufficient to discharge all the
amounts then due and payable by the Borrowers under the Finance Documents, the
Lender shall apply that payment towards the obligations of the Borrower under
the Finance Documents in the following order:

 

  (i) first, in or towards payment of any unpaid amount owing on account of
expenses and indemnities due but unpaid under the Finance Documents;        
(ii) second, in or towards payment of any accrued interest, fee or commission
due but unpaid under the Finance Documents;         (iii) third, in or towards
payment of any principal due but unpaid under the Finance Documents; and        
(iv) fourth, in or towards payment of any other sum due but unpaid under the
Finance Documents.

 

  (b) The Lender may vary the order set out in paragraph ‎(a) above.         (c)
Paragraphs ‎(a) and ‎(b) above will override any appropriation made by the
Borrowers.

 

26.3Business Days

 

  (a) Without derogating from Clause ‎10.2 or from the Standard Form Documents
(and unless the Standard Form Documents require otherwise), any payment under
the Finance Documents which is due to be made on a day that is not a Business
Day shall be made on the next Business Day, and the aforesaid amount shall
continue to bear interest at the rate of the applicable interest payable under
the Finance Documents for the period for which such date of payment was
deferred.         (b) The date on which interest is accrued to any principal
amount of the Term Loans shall not be changed even if such date falls on a day
which is not a Business Day.

 

27.Set-Off

 

  (a) The Lender may set off any matured obligation due from the Borrowers under
the Finance Documents (to the extent beneficially owned by the Lender) against
any obligation owed by the Lender to the Borrowers, regardless of the place of
payment, booking branch or currency of either obligation. If the obligations are
in different currencies, the Lender may convert either obligation at a market
rate of exchange in its usual course of business for the purpose of the set-off.

 

 59 

 

 

  (b) In addition, the Lender shall have a right of lien over any moneys,
securities, bank notes, bills, assets or other rights in the possession or under
the control of the Lender at any time for or on behalf any of the Borrowers,
including such as have been derived for collection, as Security, for
safe-keeping or otherwise, and the Lender shall be entitled at all times,
without being obliged to notify the Borrowers in advance thereof, to detain the
same until payment of all sums (whether in Israeli currency or in foreign
currency) due or to become due to the Lender from the Borrowers in any account
or in any manner or cause.         (c) All payments to be made by the Borrowers
under the Finance Documents shall be calculated and be made without (and free
and clear of any deduction for) set-off or counterclaim.

 

28.Notices

 

28.1Communications in writing

 

Any communication to be made under or in connection with the Finance Documents
shall be made in writing and, unless otherwise stated, may be made by fax or
letter.

 

28.2Addresses

 

The address and fax number (and the department or officer, if any, for whose
attention the communication is to be made) of each Party for any communication
or document to be made or delivered under or in connection with the Finance
Documents is:

 

  (a) in the case of the Borrowers:

 

Pointer Telocation Ltd.

 

  Attention: Mr. Ned Mavrommatis, CFO; Mr. David Mahlab, President and CEO; Mr.
Yaniv Dorani, CFO   Telephone: (201) 678-7733; 03-572-3111   E-Mail:
Ned@id-systems.com; davidm@pointer.com; yanivd@pointer.com   Address: Rosh Ha’
Ayin 48091

 

Powerfleet Israel Holding Company Ltd.

 

  Attention: Mr. Ned Mavrommatis, CFO   Telephone: (201) 678-7733   E-Mail:
Ned@id-systems.com   Address: 123 Tice Blvd Woodcliff Lake NJ 07677

 

  (b) in the case of the Lender:

 

Bank Hapoalim B.M.

 

  Attention: Mr. Amnon Kirmayer (Client Relations Manager, Industry, Commerce
and Hotels Sector at the Business Division); Mr. Shay Sasson (Head of Industry,
Commerce and Hotels Sector at the Business Division)   Telephone: 03-5674817;
03-5675776   E-Mail: amnon.kirmayr@poalim.co.il; shay.sasson@poalim.co.il  
Address: 23 Menachem Begin Rd. Tel-Aviv, Israel

 

or any substitute address or fax number or department or officer as the Party
may notify to the other Party by not less than ten (10) Business Days’ notice.

 

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28.3Delivery

 

  (a) Any communication or document made or delivered by one person to another
under or in connection with the Finance Documents will only be effective:

 

  (i) if by way of fax, when received in legible form; or         (ii) if by way
of letter, when it has been left at the relevant address or five (5) Business
Days after being deposited in the post postage prepaid in an envelope addressed
to it at that address;         (iii) and, if a particular department or officer
is specified as part of its address details provided under Clause ‎28.2
(Addresses), if addressed to that department or officer.

 

  (b) Any communication or document to be made or delivered to the Parties shall
be deemed to have been served within 5 (five) days after the time at which such
notice was posted and, in proving such service, it shall be sufficient to prove
that the notice was properly addressed and posted.         (c) Any communication
or document which becomes effective, in accordance with paragraphs ‎(a) to (b)
above, after 5:00 p.m. in the place of receipt shall be deemed only to become
effective on the following day.

 

28.4Electronic communication

 

Any communication to be made between the Parties under or in connection with the
Finance Documents may be made by electronic mail or other electronic means only
to the extend so permitted under the Standard Form Documents.

 

28.5Language

 

Any notice given and all other documents provided under or in connection with
this Agreement shall be in English (However, communication in connection with
the Securities Documents or the Standard Form Documents may also be made in
Hebrew).

 

29.Calculations and Certificates

 

29.1Accounts

 

In any litigation or arbitration proceedings arising out of or in connection
with a Finance Document, the entries made in the accounts maintained by the
Lender are prima facie evidence of the matters to which they relate.

 

29.2Certificates and Determinations

 

Any certification or determination by the Lender of a rate or amount under any
Finance Document is, in the absence of manifest error, conclusive evidence of
the matters to which it relates.

 

29.3Day count convention

 

Any interest, commission or fee accruing under a Finance Document will accrue
from day to day and is calculated on the basis of the actual number of days
elapsed and a year of 365 (or 366, as applicable) days.

 

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30.Partial invalidity

 

If, at any time, any provision of a Finance Document is or becomes illegal,
invalid or unenforceable in any respect under any law of any jurisdiction,
neither the legality, validity or enforceability of the remaining provisions nor
the legality, validity or enforceability of such provision under the law of any
other jurisdiction will in any way be affected or impaired.

 

31.Remedies and waivers

 

No failure to exercise, nor any delay in exercising, on the part of the Lender,
any right or remedy under a Finance Document shall operate as a waiver of any
such right or remedy or constitute an election to affirm any of the Finance
Documents. No election to affirm any Finance Document on the part of the Lender
shall be effective unless it is in writing. No single or partial exercise of any
right or remedy shall prevent any further or other exercise or the exercise of
any other right or remedy. The rights and remedies provided in each Finance
Document are cumulative and not exclusive of any rights or remedies provided by
law.

 

32.Amendments

 

Any term of the Finance Documents may be amended or waived only with the written
consent of the Lender and the Borrowers and any such amendment or waiver will be
binding on all Parties.

 

33.Confidentiality of the terms of the Facility

 

33.1Confidentiality and disclosure

 

  (a) The Lender undertakes to keep the terms of the Finance Documents
confidential and not to disclose them to anyone, save to the extent permitted by
paragraph (b) below.         (b) The Lender may disclose any term of the Finance
Documents, to:

 

  (i) any of its Affiliates comprising their activities in connection with the
consolidation of any of their investment activity) and any of its or their
officers, directors, employees, credit and investment committee members,
professional advisers, auditors and partners if any person to whom that
information is to be given pursuant to this paragraph ‎(i) is informed in
writing of its confidential nature and that it may be price-sensitive
information except that there shall be no such requirement to so inform if the
recipient is subject to professional obligations to maintain the confidentiality
or is otherwise bound by requirements of confidentiality in relation to it;    
    (ii) any person to whom information is required or requested to be disclosed
by any court of competent jurisdiction or any governmental, banking, taxation or
other regulatory authority or similar body, the rules of any relevant stock
exchange or pursuant to any applicable law or regulation (including the Bank of
Israel) if the person to whom that information is to be given is informed in
writing of its confidential nature and that it may be price-sensitive
information, except that there shall be no requirement to so inform if the
information is provided to any regulatory authority or if, in the reasonable
opinion of the Lender, it is not practicable so to do in the circumstances;

 

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  (iii) to any person (or through) to whom it assigns or transfers (or may
potentially assign or transfer) all or any of its rights or obligations under
any Finance Documents or which succeeds (or which may potentially succeed) it as
a trustee and, to any of their Affiliates (including any funds under similar
management or control and ‘investment basket’ (‘Sal Hashkaot’) comprising their
activities in connection with the consolidation of any of their investment
activity), representatives and professional advisers; and         (iv) to any
person with the consent of the Borrowers.

 

  (c) The Borrowers undertakes to keep the terms of the Finance Documents
confidential and not to disclose them to anyone, save for: (i) disclosures
permitted pursuant to paragraphs (b)(i) and (ii) (mutatis mutandis); and (ii)
disclosure to any other person with the consent of the Lender (not to be
unreasonably withheld).

 

33.2Related obligations

 

The Borrowers shall (to the extent permitted by law and regulation) inform the
Lender:

 

  (a) of the circumstances of any disclosure made pursuant to paragraph
‎(b)‎(ii) of Clause ‎33.1 (Confidentiality and disclosure) except where such
disclosure is made to any of the persons referred to in that paragraph during
the ordinary course of its supervisory or regulatory function; and         (b)
upon becoming aware that any information has been disclosed in breach of this
Clause ‎33.

 

34.Counterparts

 

Each Finance Document may be executed in any number of counterparts, and this
has the same effect as if the signatures on the counterparts were on a single
copy of the Finance Document.

 

35.Miscellaneous

 

35.1Third party rights

 

  (a) Unless expressly provided to the contrary in a Finance Document a person
who is not a Party has no right to enforce or to enjoy the benefit of any term
of this Agreement.         (b) Notwithstanding any term of any Finance Document
the consent of any person who is not a Party is not required to rescind or vary
this Agreement at any time.

 

35.2Personal Liability

 

Where any natural person gives a certificate or other document or otherwise
gives a representation or statement on behalf of any of the parties to the
Finance Documents pursuant to any provision thereof and such certificate or
other document, representation or statement proves to be incorrect, the
individual shall incur no personal liability in consequence of such certificate,
other document, representation or statement being incorrect save where such
individual acted fraudulently in giving such certificate, other document,
representation or statement (in which case any liability of such individual
shall be determined in accordance with applicable law) and each such individual
may rely on this Clause ‎35.2.

 

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35.3Longstop date for the first Utilisation Date

 

In the event that the Utilisation Date of the Term Loan Facilities has not
occurred on or before the end of the Availability Period of the Term Loan
Facilities (including if case of the conditions precedent to such Utilisation
were not satisfied) or if the Closing Date did not occur by such date (the
“Longstop Date”), then the Lender may terminate this Agreement by written notice
to the Borrower, and the Borrower shall pay to the Lender by no later than the
Longstop Date, the credit allocation fee pursuant to Clause ‎11.3 (Credit
allocation fee), and any costs and expenses payable pursuant to Clause ‎16.1
(Transaction expenses) (if applicable). Upon such termination, the parties will
have no rights and obligations hereunder, save with respect to Clauses
(Confidentiality of the terms of the facility), ‎36‎ (Governing law) and ‎37
(Jurisdiction) which shall survive such termination, except that in the event
the Borrower has not paid all amounts required to be paid to the Lender under
this Clause ‎‎35.3 (as applicable), the Lender shall have all rights to receive
such payments, and all Lenders’ rights under the Finance Documents relating
thereto (including enforcement and realization of any Transaction Security, if
applicable) shall survive.

 

36.Governing Law

 

This Agreement and any non-contractual obligations arising out of or in
connection with it are governed by and construed in accordance with Israeli
laws, without giving effect to any choice of law or conflict of law rules or
provisions that would cause the application of the laws of any jurisdiction
other than Israel.

 

37.Jurisdiction

 

37.1Submission

 

  (a) The courts of Tel Aviv, Israel shall have exclusive jurisdiction to settle
any dispute arising out of or in connection with this Agreement (including a
dispute relating to the existence, validity or termination of this Agreement or
any non-contractual obligation arising out of or in connection with this
Agreement) (a “Dispute”).         (b) The Parties agree that the courts of Tel
Aviv, Israel are the most appropriate and convenient courts to settle Disputes
and accordingly no Party will argue to the contrary.

 

Notwithstanding paragraph ‎(a) above, the Lender shall not be prevented from
taking proceedings relating to a Dispute in any other courts with jurisdiction.
To the extent allowed by law, the Lender may take concurrent proceedings in any
number of jurisdictions.

 

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The Borrower

 

/s/ Ned Mavrommatis   Powerfleet Israel Holding Company Ltd.       By: Ned
Mavrommatis  

 

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The Lender

 

/s/ Bank Hapoalim B.M., Head office   Bank Hapoalim B.M.       By: Amnon
Kirmayer         By: Galit Ovadia  

 

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