Item 1.01 Entry into Material Definitive Agreement.
Merger Agreement
On November 7, 2019, MICT, Inc., a Delaware
corporation (“MICT” or the “Company”), GFH Intermediate Holdings Ltd., a British
Virgin Islands company (“Intermediate”) that is wholly owned by Global Fintech Holding Ltd., a British
Virgin Islands company (“GFH”) entered into, and MICT Merger Subsidiary Inc., a to-be-formed British
Virgin Islands company and a wholly owned subsidiary of MICT (“Merger Sub”), shall upon execution of
a joinder enter into, an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, among
other things, subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will merge
with and into Intermediate, with Intermediate continuing as the surviving entity, and each outstanding share of Intermediate’s
common stock shall be cancelled in exchange for the right of the holders thereof to receive a substantially equivalent security
of MICT (collectively, the “Acquisition”). GFH will receive an aggregate of 109,946,914 shares of MICT
common stock as merger consideration in the Acquisition.
Concurrent with the execution of the Merger
Agreement, Intermediate entered into (i) a share exchange agreement with Beijing Brookfield Interactive Science & Technology
Co. Ltd., an enterprise formed under the laws of the Peoples Republic of China (“Beijing Brookfield”),
pursuant to which Intermediate will acquire all of the issued and outstanding ordinary shares and other equity interest of Beijing
Brookfield from the shareholders of Beijing Brookfield in exchange for 16,310,759 newly issued shares of GFH and (ii) a share exchange
agreement with ParagonEx Ltd., a British Virgin Islands business company (“ParagonEx”), shareholders
of ParagoneEx specified therein (the “ParagonEx Sellers”) and Mark Gershinson, pursuant to which, the
ParagonEx Sellers will transfer to Intermediate all of the issued and outstanding securities of ParagonEx in exchange for Intermediate’s
payment and delivery of $10.0 million in cash, which is to be paid upon the closing of the Acquisition, and 75,132,504 newly issued
shares of GFH deliverable at the closing of the share exchange.
After giving effect to the Acquisition, the
conversion of the Convertible Debentures (as discussed below) and the conversion or exercise of the securities issued by MICT pursuant
to the Offering of Series A Convertible Preferred Stock and Warrants and the Offering of Convertible Note and Warrants, each as
previously described in the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the
“SEC”) on June 10, 2019, it is expected that MICT will have approximately $15.0 million of cash as well
as ownership of ParagonEx and Beijing Brookfield and that MICT’s current stockholders will own approximately 11,089,532 shares,
or 7.64%, of the 145,130,577 shares of MICT common stock outstanding.
Consummation of the transactions contemplated
by the Merger Agreement is subject to certain closing conditions, including, among other things, approval by the stockholders of
MICT and receipt of a fairness opinion indicating that the transactions contemplated by the Merger Agreement are fair to the stockholders
of MICT. The Merger Agreement contains certain termination rights for the Company and Intermediate. The Merger Agreement also contains
customary representations, warranties and covenants made by, among others, MICT, Intermediate and Merger Sub, including as to the
conduct of their respective businesses (as applicable) between the date of signing the Merger Agreement and the closing of the
transactions contemplated thereby.
The Merger Agreement provides that all options
to purchase shares of the Company’s common stock that are outstanding and unexercised shall be accelerated in full effective
as of immediately prior to the effective time of the Acquisition. The options shall survive the closing of the Acquisition for
a period of 15 months from the date of the closing of the Acquisition and all equity incentive plans of the Company shall remain
in effect.
The foregoing description of the Merger Agreement
and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the
Merger Agreement, which is filed herewith as Exhibit 2.1 and is incorporated herein by reference.
Voting
Agreement
In connection with the execution and delivery
of the Merger Agreement, David Lucatz, on behalf of his affiliates that are stockholders of the Company (the “Stockholder”),
entered into a voting agreement (the “Voting Agreement”) pursuant to which, during the term of such agreement,
the Stockholder has agreed to certain actions in support of the transactions contemplated by the Merger Agreement and will, at
every meeting of the stockholders of the Company called for such purpose, and at every adjournment or postponement thereof (or
in any other circumstances upon which a vote, consent or approval is sought, including by written consent), not vote any of his
shares of the Company’s common stock at such meeting in favor of, or consent to, and will vote against and not consent to,
the approval of any alternative proposal that is intended, or would reasonably be expected, to prevent, impede, interfere with,
delay or adversely affect in any material respect the transactions contemplated by the Merger Agreement.
The foregoing description of the Voting Agreement
does not purport to be complete and is qualified in its entirety by reference to the Voting Agreement, a form of which is filed
herewith as Exhibit 10.1 and incorporated herein by reference.
Offering of Secured Convertible Debentures
On November 7, 2019, the Company entered into
a Securities Purchase Agreement (the “Primary Purchase Agreement”) with certain investors identified
therein (the “Primary Purchasers”) pursuant to which, among other things, the Primary Purchasers agreed,
subject to the satisfaction or waiver of the conditions set forth in the Primary Purchase Agreement, to purchase from the Company
5% senior secured convertible debentures due 2020 (the “Primary Convertible Debentures”) with an aggregate
principal amount of approximately $15.9 million (the “Primary Convertible Debenture Offering”). Concurrently
with entry into the Primary Purchase Agreement, the Company entered into a separate Securities Purchase Agreement (the “Non-Primary
Purchase Agreement” and, together with the Primary Purchase Agreement, the “Purchase Agreements”)
with certain investors identified therein (the “Non-Primary Purchasers” and, together with the Primary
Purchasers, the “Purchasers”) pursuant to which, among other things, the Non-Primary Purchasers agreed,
subject to the satisfaction or waiver of the conditions set forth in the Non-Primary Purchase Agreement, to purchase from the Company
5% senior secured convertible debentures due 2020 (the “Non-Primary Convertible Debentures” and, together
with the Primary Convertible Debentures, the “Convertible Debentures”) with an aggregate principal amount
of $9.0 million (together with the Primary Convertible Debenture Offering, collectively, the “Convertible Debenture
Offering”). The Convertible Debentures shall be convertible into shares of Common Stock of the Company at a conversion
price of $1.41 per share. The Convertible Debentures will be due upon the earlier of (i) six months from the date of issuance and
(ii) the termination of the Merger Agreement. The Company is obligated to pay interest to the Purchasers on the outstanding principal
amount at the rate of 5% per annum, payable quarterly, in cash or, at the Company’s option in certain instances, in shares
of Common Stock. The Company may not voluntarily prepay any portion of the principal amount of the Convertible Debentures without
the prior written consent of the Purchasers.
Subject to stockholder approval of an increase
in the shares of Common Stock to allow for the full conversion of the Convertible Debentures into Common Stock, the Convertible
Debentures shall be convertible into Common Stock at the option of the Purchasers at any time and from time to time. Upon the closing
of the Acquisition and written notice of the Company to the Purchasers, the Purchasers shall be forced to convert the Convertible
Debentures into shares of Common Stock of the Company (the “Forced Conversion”). Upon the occurrence
of certain events, including, among others, if the Company fails to file a preliminary proxy statement with respect to the Acquisition
on or prior to November 18, 2019, if the Forced Conversion does not occur on or before January 24, 2020, or certain breaches of
the Primary Purchasers’ Registration Rights Agreement (as defined below), the Primary Purchasers are permitted to require
the Company to redeem the Primary Convertible Debentures, including any interest that has accrued thereunder, for cash.
The proceeds of each Convertible Debenture Offering
shall be placed in separate blocked bank accounts, each of which shall be subject to a blocked deposit account control agreement
to be entered into. The Company shall not have access to such proceeds until the closing of the Acquisition and only upon the satisfaction
of certain other requirements, including, among other things, effectiveness of the Resale Registration Statement (as defined below).
The Purchase Agreements provide for customary
registration rights, pursuant to their respective registration rights agreement to be entered into at the time of the closing of
the Convertible Debenture Offering (each, a “Registration Rights Agreement”). Pursuant to the Registration
Rights Agreements, the Company will be obligated to, among other things, (i) file a registration statement (the “Resale
Registration Statement”) with the SEC within seven business days following the filing of an initial proxy statement
with respect to the Acquisition, but no later than November 27, 2019, for purposes of registering the shares of Common Stock issuable
upon the conversion of the Convertible Debentures and (ii) use its best efforts to cause the Resale Registration Statement to be
declared effective by the SEC as soon as practicable after filing, and in any event no later than the effectiveness of the
Acquisition. The Registration Rights Agreements will contain customary terms and conditions for a transaction of this type, including
certain customary cash penalties on the Company for its failure to satisfy the specified filing and effectiveness time periods.
The securities sold in the Convertible Debenture Offering shall
be issued in reliance on an exemption from registration under Section 4(a)(2) the Securities Act of 1933, as amended, and Regulation
D promulgated thereunder.
The foregoing description of the Convertible
Debenture Offering is qualified in its entirety by reference to the Purchase Agreements, the form of Primary Debentures and the
form of Non-Primary Debentures (the “Convertible Debenture Transaction Documents”), copies of which are
filed as exhibit 10.2, 10.3, 4.1 and 4.2 to this Current Report on Form 8-K, respectively. The representations, warranties and
covenants contained in the Convertible Debenture Transaction Documents were made only for purposes of such agreements and as of
specific dates, were solely for the benefit of the parties to the Convertible Debenture Transaction Documents, and may be subject
to limitations agreed upon by the contracting parties. Accordingly, the Convertible Debenture Transaction Documents are incorporated
herein by reference only to provide information regarding the terms of the Convertible Debenture Transaction Documents, and not
to provide any other factual information regarding the Company or its business, and should be read in conjunction with the disclosures
in the Company’s periodic reports and other filings with the SEC.