MICRONET ENERTEC TECHNOLOGIES, INC. (NASDAQ:MICT) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement.
Standby Equity Distribution Agreement
On August 22, 2017, Micronet Enertec Technologies, Inc. (the “Company”) entered into a Standby Equity Distribution Agreement (the “SEDA”) with YA II PN Ltd. (“YA II”), a Cayman Islands exempt limited partnership, for the sale of up to $10 million of shares of the Company’s common stock, par value $0.001 per share, over a three-year commitment period. Under the terms of the SEDA, the Company may from time to time, in its discretion, sell newly-issued shares of its common stock to YA II at a discount to market of 1.5%. The Company and YA II previously entered into a prior Standby Equity Distribution Agreement on June 30, 2016 for the sale of up to $2.39 million of shares of the Company’s common stock over a three year period. In addition, on June 30, 2016, October 28, 2016, December 22, 2016 and June 8, 2017, the Company and its wholly-owned subsidiary, Enertec Electronics Ltd., entered into note purchase agreements with YA II whereby YA II purchased notes for an aggregate purchase price of $2.7 million from the Company.
The Company is not obligated to utilize any of the $10 million available under the SEDA and there are no minimum commitments or minimum use penalties. The total amount of funds that ultimately can be raised under the SEDA over the three-year term will depend on the market price for the Company’s common stock and the number of shares actually sold. YA II is obligated under the SEDA to purchase shares of the Company’s common stock from the Company subject to certain conditions including, but not limited to the Company filing a registration statement with the United States Securities and Exchange Commission (the “SEC”) to register the resale by YA II of shares of common stock sold to YA II under the SEDA (“Registration Statement”) and the SEC declaring such Registration Statement effective.
The SEDA does not impose any restrictions on the Company’s operating activities. During the term of the SEDA, YA II is prohibited from engaging in any short selling or hedging transactions related to the Company’s common stock.
In connection with the SEDA, the Company agreed to pay YA Global II SPV, LLC, a wholly owned subsidiary of YA II, a commitment fee in the amount of $800,000 (the “Commitment Fee”) in the aggregate, which shall be paid in eight quarterly installments of $100,000, with the first installment due and payable on the fifth trading day following the execution of the SEDA. The Commitment Fee may be paid in cash or shares of the Company’s common stock.
This Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Supplemental Agreement and Secured Promissory Note
On August 22, 2017, the Company and its subsidiary, Enertec Electronics Ltd., executed a Supplemental Agreement with YA II (the “Supplemental Agreement”) which seeks to supplement a note purchase agreement executed by the parties on October 28, 2016. to the Supplemental Agreement, the Company borrowed $1.5 million from YA II to the terms of a secured promissory note (the “Note”). The outstanding principal balance of the Note shall bear interest at 7% per annum. The Note matures on November 22, 2017, but the Company may extend such maturity date to August 22, 2018 at its sole discretion (an “Extension”). In the event the Company elects to utilize the Extension, the Company has agreed to (i) pay an aggregate of $200,000 of principal plus all accrued and unpaid interest under the Note on March 31, 2018, (ii) pay an aggregate of $200,000 of principal plus all accrued and unpaid interest under the Note on June 30, 2018, (iii) pay an extension fee of $50,000 and (iv) shall issue YA II a five-year warrant to purchase 158,000 shares of the Company’s common stock at an exercise price of $1.50 per share.
Upon the occurrence of an Event of Default (as defined in the Note), all amounts payable may be due immediately. In addition, if the Company receives any cash proceeds in connection with the sale or proposed sale of any of its holdings in any of its subsidiary (if and to the extent such transaction is consummated) including without limitation, installment payments or break-up fee payments, the Company is required to pre-pay the outstanding balance of the Note as soon as such proceeds are received. The Note, along with another note held by YA II, is secured by a pledge of shares of Micronet Ltd. owned by Enertec Electronics Ltd.
The descriptions of the SEDA, Supplemental Agreement and Note are qualified in their entirety by reference to the complete text of the SEDA, Supplemental Agreement and Note which have been filed with this Current Report on Form 8-K as Exhibits 10.1, 10.2 and 10.3, respectively, and are incorporated by reference herein.
Item 1.01 Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of the Registrant.
The response to this item is included in Item 1.01, Entry into a Material Definitive Agreement, and is incorporated herein in its entirety.
Item 1.01. Financial Statements and Exhibits
(d) Exhibits
| 10.1 | Standby Equity Distribution Agreement, dated as of August 22, 2017, between Micronet Enertec Technologies, Inc. and YA II PN, Ltd. |
| 10.2 | Supplemental Agreement, dated as of August 22, 2017, between Micronet Enertec Technologies, Inc., Enertec Electronics Ltd and YA II PN, Ltd. |
| 10.3 | Promissory Note, dated as of August 22, 2017, between Micronet Enertec Technologies, Inc., Enertec Electronics Ltd and YA II PN, Ltd. |
MICRONET ENERTEC TECHNOLOGIES, INC. ExhibitEX-10.1 2 f8k082217ex10-1_micronet.htm STANDBY EQUITY DISTRIBUTION AGREEMENT,…To view the full exhibit click here
About MICRONET ENERTEC TECHNOLOGIES, INC. (NASDAQ:MICT)
Micronet Enertec Technologies, Inc. (Micronet Enertec) operates through Israel-based companies, which include Enertec Systems 2001 Ltd (Enertec), its subsidiary, and Micronet Ltd (Micronet), which develops, manufactures, integrates and markets rugged computers, tablets and computer-based systems and instruments for the commercial, defense and aerospace markets. The Company’s segments include defense and aerospace segment, and mobile resource management (MRM). The Company’s products, solutions and services are designed to perform in severe environments and battlefield conditions. Micronet operates in the commercial mobile resource management market and is a developer, manufacturer and provider of mobile computing platforms, designed for integration into fleet management and mobile workforce management solutions. Enertec operates in the defense and aerospace markets. Enertec designs, develops and manufactures computer based instruments and aerospace electronic solutions.