8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC  20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): January 31, 2022 (January 27, 2022)

On Track Innovations Ltd.

(Exact Name of Registrant as Specified in Its Charter)

Israel

(State or Other Jurisdiction of Incorporation)

000-49877	N/A
(Commission File Number)	(IRS Employer Identification No.)

Hatnufa 5, Yokneam Industrial Zone, Yokneam, Israel	2069200
(Address of Principal Executive Offices)	(Zip Code)

011 972 4 6868000

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01. Entry into a Material Definitive Agreement.

On January 19, 2022, On Track Innovations Ltd. (the “Company”) announced that it entered into a binding term sheet (the “Term Sheet”) with Nayax Ltd. (“Nayax”). The Term Sheet provides that the Company and Nayax shall enter into a two-step transaction relating to (i) Nayax extending a senior secured convertible loan to the Company (the “Loan”); and (ii) the purchase by Nayax of 100% of the share capital of the Company pursuant to a merger agreement (the “Merger Agreement”).

On January 27, 2022, the Company entered into a Senior Secured Convertible Loan Agreement (the “Agreement”) with Nayax. Under the Agreement, Nayax has agreed to extend a loan to the Company in the amount of $5,500,000 (the “Loan Amount”), of which approximately $173,000 have been already advanced to the Company to pay the Company’s employee salaries. The Loan Amount is expected to be used to pay in full the Company’s existing debts to its secured creditors (the “Secured Debt”) and discharge certain current liabilities. The Loan is subject to 10% interest per year, and the accumulated interest and value added tax, if any, is payable quarterly commencing on April 1, 2022. The Loan matures on the second anniversary of the closing of the Loan Agreement and may not be prepaid by the Company. Nayax may, in its sole discretion, extend additional loans to the Company, which amounts would be added to the Loan Amount. The Company undertook not to enter into, during the Exclusivity Period (as such term is defined below), any loan, financing, credit or similar agreement with any third party, except with Lender’s prior written approval, which approval.

Upon full payment of the Secured Debt and removal of security interests relating thereto, the Loan Amount shall rank senior to any other indebtedness of the Company. The Company undertook that until repayment of the Loan Amount, it shall not, without the Lender’s prior express written consent, create any lien, pledge, charge, encumbrance, hypothecation or similar arrangements or other third-party rights of any kind with respect to its assets or property, including intellectual property rights.

The Loan Amount is secured pursuant to a debenture (the “Debenture”) by a first priority floating charge over all the tangible or intangible assets and other property of the Company as of the date of the Agreement or thereafter acquired.

The Lender has the right to convert the Loan Amount after the earlier to occur: (i) an Event of Default (as defined in the Agreement), or (ii) the completion of the Merger Agreement, and prior to the repayment in full of the Loan Amount, into ordinary shares, par value NIS 0.1 (the “Ordinary Shares”), of the Company, at a price per Ordinary Share equal to $0.043 (the “Conversion”). The Company agreed to convene a shareholders meeting if the Lender has the right of Conversion but the Company has insufficient registered share capital, or if shareholder approval is required, to effect the Conversion. Until the repayment of the Loan Amount or otherwise conversion thereof, the Company agreed not to issue to any third party any shares, options, warrants, or any other instrument convertible into Ordinary Shares, without the prior written consent of the Lender. Upon the occurrence of an Event of Default, at the election of the Lender: (i) the Loan Amount shall become immediately due and payable; and (ii) the interest on the Loan Amount shall be increased to an annual rate of 16%.

The Company further undertook that until the earlier to occur of: (i) consummation of the Merger Agreement, or (ii) the date that is six months following the execution date of the Agreement (the “Exclusivity Period”), the Company, its board of directors, any of its executive officers, their agents or representatives in their capacity as such (collectively, the “Standstill Parties”) shall cease all discussions, negotiations, solicitation of offers, or provision of information to any third party regarding a competing transaction. In addition, during Exclusivity Period, none of the Standstill Parties shall sell, transfer, pledge or perform any other transactions with the Company’s shares or debt, except with the prior written approval of the Lender.

The Agreement and Debenture include customary representations and warranties, as well as events of default, which include, among other things, failures to repay any amounts due to the Lender, breaches or defaults under the terms of the Agreement or Debenture. If an event of default occurs, the Loan Amount shall immediately become due and payable, without the need for any notice by the Lender. In case of any contradiction or discrepancy between the Agreement and the Term Sheet, the provisions of the Agreement shall control, provided that nothing in the Agreement shall derogate from the parties’ obligations under the Term Sheet.

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The securities being issued are exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated thereunder because, among other things, the transaction did not involve a public offering, Nayax is an accredited investor, Nayax is taking the securities for investment and not resale and the Company took appropriate measures to restrict the transfer of the securities. The Debenture and the Ordinary Shares issuable upon conversion of the Debenture have not been registered under the Securities Act and may not be sold in the United States absent registration or an exemption from registration. 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. 

The foregoing descriptions of the Agreement and the Debenture are qualified by reference to the full text of the Agreement and the Debenture, copies of which are filed as Exhibit 10.1 and 4.1, respectively, to this Current Report on Form 8-K.

Item 1.02 Termination of a Material Definitive Agreement.

On January 31, 2022, Nayax advised the Company that it paid in full all amounts due under that certain loan financing agreement dated December 9, 2020, with Jerry L. Ivy, Jr., Descendants’ Trust and another party, as such agreement was amended (the “Ivy Loan Agreement”) and the associated debenture. Accordingly, the Ivy Loan Agreement and the associated debenture, have been satisfied in full and have been terminated.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.

Item 3.02 Unregistered Sales of Equity Securities.

The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.

Item 9.01.  Financial Statements and Exhibits.

(d) Exhibits

4.1	Debenture Dated January 27, 2022.
10.1	Loan Financing Agreement dated January 27, 2022.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

Warning Concerning Forward-Looking Statements

This Current Report on Form 8-K contains forward-looking statements within the meaning of the “safe harbor” provisions of federal securities laws. For example, forward-looking statements are being used when the Company discusses the potential to enter into and close the Merger Agreement, the payment of debts, the use of the proceeds from the Agreement, and the potential for the signing of the Merger Agreement, . These forward-looking statements and their implications are based on the current expectations of the management of the Company only and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Except as otherwise required by law, the Company undertakes no obligation to publicly release any revisions to the forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. For a more detailed description of the risks and uncertainties affecting the registrant, reference is made to the Company’s reports filed from time to time with the Securities and Exchange Commission.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	On Track Innovations Ltd.
Date: January 31, 2022	By:	/s/ Assaf Cohen
	Name:	Assaf Cohen
	Title:	Chief Financial Officer

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EX-4.1

Exhibit 4.1

Execution Version

DEBENTURE

This Debenture (this “Debenture”) is made and entered into as of January 27, 2022 (the “Effective Date”) by and between On Track Innovations Ltd., a company organized under the laws of the State of Israel with registration no. 520042862 (the “Company”), and Nayax Ltd., a company organized under the laws of the State of Israel with registration no. 513639013 (the “Lender”).

WHEREAS, the Company and the Lender entered into that certain Senior Secured Convertible Loan Agreement, dated as of the same date herewith (the “Loan Agreement”); Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement;

WHEREAS, in order to secure the full and punctual payment and performance when due of the Secured Sums (as defined below), the Company has agreed to charge and pledge, by way of a first ranking floating charge (subject to Section 1.6 of the Loan Agreement), all of the Company’s assets as of the date hereof or hereafter acquired, in favor of the Lender, in accordance with the terms hereof; and

WHEREAS, the board of directors of the Company has determined that the entering into this Debenture is in the best interest of the Company;

NOW, THEREFORE, it has been agreed that the Company shall secure the repayment of the Loan Amount (as defined under the Loan Agreement) in connection with the Loan Agreement, all in accordance with the terms hereinafter contained.

1. NATURE OF THE DEBENTURE

This Debenture and the Security Interests (as defined below) created hereby are made to secure the full and punctual payment of all the sums due and to become due to the Lender from the Company in connection with the Loan Agreement including, without limitation, in connection with the Company’s obligations pursuant to the Loan Agreement or any amendment thereof, whether due from the Company alone or jointly with others, whether the Company may have incurred or will incur liability with respect thereto in the future, as obligor and/or as guarantor and/or as endorser or otherwise, now due or becoming due in the future, which are payable prior to the realization of the collateral security to which this Debenture is applicable or subsequent thereto, whether due absolutely or contingently, directly or indirectly, unlimited in amount together with interest, commissions, charges, fees and reasonable expenses of whatever nature, including costs of realizing the collateral security, reasonable lawyers’ fees, insurance, stamp duty and any other payments arising from this Debenture and together with any nature of linkage differences due and becoming due from the Company to the Lender in any manner whatsoever in respect of linked principal and interest and any other linked sum (all the foregoing sums being jointly and severally hereinafter referred to as the “Secured Sums”).

2. THE CHARGE

2.1 As collateral security for the full and punctual payment of all of the Secured Sums (whether at stated maturity, acceleration or otherwise), and without derogating from any other security, the Company hereby absolutely and unconditionally charges in favor of the Lender and its successors by way of a first ranking floating charge (subject to Section 1.6 of the Loan Agreement) all of the Company’s property, assets and rights, now or at any time belonging to or acquired by the Company and the profits and benefits derived therefrom, including without derogating from the generality of the aforementioned, the property, assets and rights set forth below, (hereinafter together, the “Charged Assets”):

(a) All the Company’s assets, monies, property and rights thereto of any kind whatsoever without exception, whether now or hereafter at any time in the future owned by or in the possession of the Company in any manner or way whatsoever (including, for the avoidance of any doubt, and without limitation, all accounts, license and royalty fees and other revenues, proceeds, or income arising out of or relating to any Intellectual Property);

(b) All the stocks, shares, debentures, bonds, notes, instruments, bills drawn or made by others, securities and other documents or instruments of any kind owned by the Company and/or which the Company has any right in connection thereto or is entitled to give instructions to sell now and at any time in the future held by the Lender and/or by others and/or any rights in respect thereof;

(c) All rights in land and/or all contractual rights under agreements between the Company and any third party now and hereafter existing at any time whatsoever;

(d) All present and future rights to compensation, indemnity, insurance proceeds, warranty or guaranty accruing to the Company by reason of the loss of, damage to or expropriation of, or any other event or circumstance with respect to, such Charged Assets and all proceeds and benefits deriving from such Charged Assets as listed herein (including, without limitation, those received upon any collection, exchange, sale or other disposition of such Charged Assets and any property into which such Charged Assets are converted, whether cash or non-cash);

(e) All present and future rights, claims and remedies of the Company under and in respect of (i) all contracts and policies of insurance executed and/or issued in relation to the Charged Assets, from time to time; (ii) all payments to the Company in relation to sub-section (i); and (iii) all claims, rights and remedies of the Company arising from sub-sections (i) and/or (ii) and any monies paid or payable pursuant thereto whether held in or for the benefit of any trust or other account relative thereto or otherwise;

(f) All present and future rights, claims and remedies of the Company including without limitation any right to exemptions, relief, or reduction under and deriving from Income Tax Ordinance [New Version], 5721-1961, the Property Tax and Compensation Fund Law, 5721-1961, Land Appreciation Tax Law, 5723-1963 as in force from or at any relevant time, and under any other applicable law arising in connection with the Charged Assets;

(g) The uncalled and/or called but unpaid share capital of the Company and its reputation; and

(h) All such securities, documents and instruments, bills drawn or made by others which the Company has delivered or may deliver to the Lender from time to time whether for collection, safekeeping or otherwise.

In addition, to the extent required by applicable law to create and perfect a first ranking floating charge over the Charged Assets, the Company also assigns such Charged Assets to the Lender by way of first ranking floating charge and pledge.

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For the avoidance of doubt, the Charged Assets shall include the Intellectual Property as defined in Annex A of this Debenture. However, since a certain portion of the Intellectual Property was funded by the Israeli Innovation Authority (the “IIA” and the “Funded IP”, respectively), the charges and pledges of such Funded IP in favor of the Lender hereunder, shall be subject to the approval of the IIA, and this Debenture shall be deemed to apply to such Funded IP only following the IIA’s approval. The Company shall take all necessary actions to obtain such approval. In addition, the realization of charges and pledges with respect to Funded IP shall be in accordance with provisions of the Encouragement of Research, Development and Technological Innovation in the Industry Law, 5744-1984, and the applicable procedures of the IIA.

The pledge and charge created by operation of this Debenture shall apply to all and any rights to compensation or indemnity which may accrue to the Company by reason of the loss of, damage to or appropriation of the Charged Assets.

2.2 First Ranking. The Company specifically acknowledges that all of the Security Interests created by the Company under Section 2 of this Debenture shall rank in priority to any other Security Interests created by the Company, (subject to Section 1.6 of the Loan Agreement).

For the purposes hereof, “Security Interest” shall mean (i) any mortgage, charge, pledge, lien, hypothecation, assignment by way of security, security interest, title retention or other encumbrance of any kind securing, or any right securing, any obligation of any person, or any other agreement or arrangement having a similar effect; and/or (ii) any other type of preferential arrangement having similar effect.

3. COMPANY REPRESTNATIONS

The Company hereby declares as follows:

3.1 The Charged Assets is not charged, pledged or attached in favor of any other persons or parties other than Bank Leumi and the Jerry L. Ivy, Jr. Descendants’ Trust (the “Secured Lenders”).

3.2 The Charged Assets is, in its entirety, in the exclusive possession and ownership of the Company, subject to Section 3.1 above.

3.3 There are no restriction or condition of law or any agreement exists or applies to the ability of the Company to transfer or charge the Charged Assets, other than as set forth in Section 2.1 herein and subject to Section 1.6 of the Loan Agreement.

3.4 The Company is capable of and entitled to charge the Charged Assets, other than as set forth in Section 2.1 herein and subject to Section 1.6 of the Loan Agreement.

3.5 No assignment of rights or other disposition has occurred derogating from the value of the Charged Assets.

3.6 The Company is not aware of any party claiming that the transactions set forth herein or in the Loan Agreement were not duly approved.

4. COVENANTS OF THE COMPANY

The Company hereby covenants as follows:

4.1 To hold the Charged Assets in accordance with the provisions of the Loan Agreement and this Debenture;

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4.2 To use and deal with the Charged Assets with the utmost care and to notify the Lender of any case of material disrepair, damage, loss, fault or defect affecting same and to remedy any material disrepair, damage, fault or defect affecting the Charged Assets due to use or for any other reason, and to be liable towards the Lender for any material disrepair, damage, fault or defect as aforesaid;

4.3 To allow any representative of the Lender, at any reasonable time and upon prior notice, to inspect and examine the condition of the Charged Assets wherever the Charged Assets may be situated;

4.4 [Reserved]

4.5 Other than in the ordinary course of the Company’s business, consistent with past practice, not to sell, assign, dispose of, hire out, let, lease or transfer any of the Charged Assets and not to allow any person to do any of the foregoing acts, without the prior written consent of the Lender, except as specifically permitted under the Loan Agreement;

4.6 Other than in the ordinary course of the Company’s business, consistent with past practice, not to sell, assign, transfer, let, lease, surrender, dispose of, relinquish or waive, in whole or in part, any present or future asset, claim or right of the Company, constituting Charged Assets hereunder, except as specifically permitted under the Loan Agreement;

4.7 To notify Lender forthwith of the levying of any attachment on the Charged Assets, to forthwith notify the attachor of the charge in favor of the Lender and to take at the Company’s own expense immediately and without delay all such measures as are required for discharging such attachment;

4.8 Not to charge or pledge in any manner or way the Charged Assets by conferring any rights ranking pari-passu, prior to or deferred to the rights of the Lender and not to make any assignment of any right which the Company may have in the Charged Assets without receiving the prior written consent of the Lender;

4.9 To be liable towards the Lender for any defect in the Company’s title to the Charged Assets and/or any default thereunder and to bear the responsibility for the authenticity, regularity and correctness of all the signatures, endorsements and particulars of any documents, instruments and securities which have been or may be delivered to the Lender by way of collateral security;

4.10 To pay when due all taxes and compulsory payments levied against the Charged Assets and/or the income accruing thereon under any law and to furnish the Lender, at its request, with all the receipts for such payments. If the Company fails to make such payments when due, the Lender may pay the same for the account of the Company and debit the Company with the payment thereof coupled with expenses, and interest at the Step-up Rate. Such payments shall be secured by this Debenture;

4.11 Not to wind up, liquidate or dissolve, sell, exchange, lease, transfer or otherwise dispose of all or substantially all its properties or other assets;

4.12 That no structural change is or will be effected in the Company and/or that no change of control in the Company will occur, except as specifically permitted under the Loan Agreement;

4.13 Not to create, incur, assume, allow, or suffer to be created or exist any lien, pledge, charge encumbrance, hypothecation or similar arrangements or other third party rights of any kind, on any of its assets or property, or permit any collateral not to be subject to the first priority security interest granted in the Loan Agreement, or the charges granted hereunder, or enter into any agreement, document, instrument or other arrangement (except with or in favor of Lender) with any person or entity which directly or indirectly prohibits or has the effect of prohibiting Company or any of its subsidiaries from assigning, mortgaging, pledging, granting a security interest or charge in, over or upon, or encumbering any of Company’s and/or any of its subsidiaries’ Intellectual Property, except as specifically permitted under the Loan Agreement.

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4.14 The Company undertakes to notify the Lender forthwith:

(a) of any of the events enumerated in Section 6.4 hereof;

(b) of any material reduction in value of any collateral security granted or which may be granted by the Company;

(c) of any application filed for the winding-up of the Company’s affairs or for the appointment of a receiver over the Company’s assets as well as any resolution regarding any structural change in the Company or any intention to do so;

(d) of any change of address of the Company.

4.15 To keep the Charged Assets insured at all times for full value and comply with the terms of such insurance policies.

4.16 To ensure the Lender’s rights in connection with the Charged Assets, immediately following the execution of this Debenture, the Company shall (a) ensure the Secured Lenders Repayment and release of the pledges registered in favor of the Secured Lenders in accordance with Section 1.6 of the Loan Agreement, and (b) in parallel, the Company shall register the Security Interests created by this Debenture with the Israeli Registrar of Companies, and shall file such registration within three (3) business days from the Effective Date and shall deliver to the Lender original certificates issued by the Israeli Registrar of Companies, evidencing the registration of this Debenture promptly following receipt of such certificates.

5. INTEREST

The Lender shall be entitled to calculate interest on the Secured Sums at such rate as has been agreed (or may be agreed upon from time to time between the Lender and the Company) according to the terms of the Loan Agreement.

6. REPAYMENT

6.1 The Company hereby undertakes to pay the Lender all and any of the Secured Sums promptly on the Maturity Date or any other date on which the Secured Sums become due and payable by the Company to the Lender in accordance with the Loan Agreement.

6.2 The Lender may decline to accept any prepayment of the Secured Sums or pay part thereof prior to the date of maturity thereof and the Company shall not be entitled to redeem all or any of the Charged Assets by discharging the Secured Sums and/or any part thereof prior to their prescribed maturity dates.

6.3 Neither the Company nor any person having a right liable to be affected by the pledges and charges hereby created or the realization thereof shall have any right under Section 13(b) of the Pledge Law, 5727-1967, or any other statutory provisions in substitution therefor.

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6.4 Without derogating from the generality of the provisions of this Debenture, the Lender shall be entitled to demand the immediate payment of the Secured Sums and to debit any account of the Company with the amount thereof in any one of the events enumerated below, in which case the Company undertakes to pay the Lender all of the Secured Sums, and the Lender shall be entitled to take whatever steps it sees fit for the collection of the Secured Sums and in particular to crystallize the floating charge on the Charged Assets as provided in Section 7 hereof and to realize, at the Company’s expense, the collateral securities by any means allowed by law;

(a) The Company is in breach of any of its obligations, undertakings, representations or warranties under this Debenture (the foregoing shall not derogate from any right, under any law or the Loan Agreement, granted to the Lender in respect of any other breach); and/or;

(b) There occurs and continues to subsist an event which gives the Lender right to demand payment, under any document signed between the Company and the Lender, (including, inter alia, under the Loan Agreement), provided that any period (if any) given to the Company to effect such payment under such document shall have elapsed and as long as such payment is not actually effected.

7. RIGHTS OF THE LENDER

7.1 The Lender shall have the right of possession, lien, set-off and charge over all the charges and pledges granted under this Debenture.

7.2 Without derogating from the other provisions contained in this Debenture, any waiver, extension, concession, acquiescence or forbearance (hereinafter: “waiver”) on the Lender’s part as to the non-performance, partial performance or incorrect performance of any of the Company’s obligations pursuant to this Debenture, such waiver shall not be treated as a waiver on the part of the Lender of any rights but as a limited consent given in respect of the specific instance.

7.3 In any of the events enumerated in Section 6.4 hereof;

(a) the Lender shall be entitled to notify the Company of the crystallization immediately or on a date specified by the Lender of the floating charge over the Charged Assets or any part thereof and to adopt all the measures it deems fit in order to recover the Secured Sums and realize all of its rights hereunder, including the realization of the Charged Assets, in whole or in part, and to apply the proceeds thereof to the Secured Sums without the Lender first being required to realize any other guarantees or collateral securities, if such be held by the Lender.

(b) Should the Lender decide to realize securities and other negotiable instruments, in accordance with Section 4(2) of the Pledge Law 5727-1967, then three (3) business days’ advance notice regarding the steps that the Lender intends to take shall be deemed to be reasonable advance notice for the purpose of Section 19(b) of the Pledge Law, 5727-1967, or any other statutory provisions in substitution therefor.

(c) As long as the Secured Sums are not paid in full, the Lender may, as attorney-in-fact of the Company (and, for the purpose hereof, the Company irrevocably appoints the Lender to be its attorney-in-fact), sell all or any of the Charged Assets by public auction or otherwise, by itself or through others, for cash or instalments thereof or otherwise, at a price and on such terms as the Lender in its absolute discretion shall deem fit, and likewise the Lender may of its own accord or through the court or an execution office, realize the Charged Assets or any other property, inter alia, by appointing a receiver or receiver and manager on behalf of the Lender (a “Receiver”), who shall be empowered, inter alia, to:

(i) call in all or any part of the Charged Assets.

(ii) carry on or to participate in the management of the business of the Company, as they see fit.

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(iii) sell or agree to the sale of the Charged Assets, in whole or in part, to dispose of same or agree to dispose of same in such other manner on such terms as they deem fit.

(iv) make such other arrangement regarding the Charged Assets or any part thereof as they deem fit.

(d) All income to be received by the receiver or the receiver and manager from the Charged Assets as well as any proceeds to be received by the Lender and/or by the receiver or receiver and manager from the sale of the Charged Assets or any part thereof shall be applied in such order as Lender shall determine in its sole discretion.

7.4 Should the payment date of the Secured Sums or any part thereof not yet have fallen due at the time of the sale of the Charged Assets, or the Secured Sums be due to the Lender contingently only, then the Lender shall be entitled to recover out of the proceeds of the sale an amount sufficient to cover the Secured Sums and the amount so recovered shall be charged to the Lender as security for, and be held by the Lender until the discharge in full of, the Secured Sums.

8. NATURE OF THE COLLATERAL SECURITY

8.1 The collateral securities which have been or may be given to the Lender under this Debenture shall be continuing and revolving securities and shall remain in force until all Secured Sums have been fully discharged and the Lender has certified in writing that this Debenture is terminated.

8.2 All collateral securities and guarantees which have been or may be given to the Lender for payment of the Secured Sums shall be independent of one another.

8.3 The nature and effect of the collateral securities to which this Debenture is applicable shall not be affected nor shall the validity of any of the securities and obligations of the Company hereunder be impaired or affected by any compromise, concession, granting of time or other like release consented to by the Lender with respect to the Company and/or any of its subsidiaries or by any variation in the Company’s and/or the subsidiary’s obligations towards the Lender in connection with the Secured Sums or by any release or waiver by the Lender of any other collateral security or guarantees.

8.4 The Lender may deposit all or any of the collaterals given or which may be given pursuant to this Debenture with a bailee of its own choosing, at its discretion and at the Company’s expense, and may substitute such bailee with another from time to time. The Lender may register all or any of such collaterals with any competent authority in accordance with any law and/or in any public register.

9. RIGHT OF ASSIGNMENT

The Lender may at any time, at its own discretion and without the Company’s consent being required, assign this Debenture and its rights arising thereunder, including the collaterals in whole or in part and any assignee may also reassign the said rights without any further consent being required from the Company to any entity controlled by, controlling (directly or indirectly), or under common control of the Lender (the term ‘control’ shall be as defined under the Securities Law of 1968). Such assignment may be effected by endorsement on this Debenture or in any other way the Lender or any subsequent assignor deems fit. Lender shall use reasonable efforts to provide Company with a written notice of such assignment.

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10. NOTICE OF OBJECTION

The Company undertakes to notify the Lender in writing of any objection or contention it may have regarding any statement of account, extract thereof, certificate or notice received by it from the Lender including information received through any automatic terminal facility. Where no such objection or contention is received by the Lender, then the Company will be deemed to have confirmed the correctness thereof.

11. EXPENSES

All the expenses in connection with this Debenture and all and any expenses involved in the realization of the collateral security and institution of proceedings for collection (including fees of the Lender’s lawyers), insurance, safe-keeping, maintenance and repair of the Charged Assets shall be paid by the Company to the Lender on its first demand, together with interest at the Step-up Rate from the date such demand was made until payment in full, and until payment in full, all the above expenses together with interest thereon shall be secured by this Debenture. The Lender may debit the Company with the aforesaid expenses, together with interest thereon.

12. LIABILITY; INDEMNIFICATION

12.1 Neither the Lender nor the Receiver, nor any of their respective partners, managers, agents, directors, officers, employees, delegates, advisers or representatives of any of them, as the case may be, shall be liable for any loss, damage, claim, demand, liability, cost or expense arising from the exercise or the attempted or purported exercise or the failure to exercise any of their respective rights, powers and discretions under this Debenture, or shall be under any duty to exercise any of their respective rights, powers and discretions under this Debenture.

12.2 No claim shall be made by Company against the Lender or its partners, managers, agents, directors, officers, employees, delegates, advisers or representatives, for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or under any other theory of liability arising out of or related to the transactions contemplated by this Debenture, or any act, omission or event occurring in connection therewith.

12.3 The Company waives, releases and agrees not to sue upon any claim for such loss, claim, demand, liability, cost, expense or damages, whether or not accrued and whether or not known or suspected to exist in its favor.

12.4 To the extent permitted by applicable law, the Company hereby waives any requirements, except as otherwise required by this Debenture, with respect to notice, form or the terms of the exercise by the Lender, the Receiver, or any of their respective partners, managers, agents, directors, officers, employees, delegates, advisers or representatives of any of them, as the case may be, of their respective rights and discretions under this Debenture.

12.5 The Lender and/or the Receiver and their respective partners, managers, agents, directors, advisors, officers, consultants, service providers and employees (the “Indemnified Persons”) shall be entitled to be indemnified out of the Charged Assets in respect of any loss, cost or liability incurred by such Indemnified Person as a direct result of: (i) the taking, holding, protection or enforcement of the Security Interest created or purported to be created under this Debenture; (ii) the exercise (or failure to exercise) of any of the rights, powers, discretions and remedies vested in any Indemnified Person under, or in accordance with, this Debenture or by applicable law, (iii) any failure by the Company to comply with its obligations under this Debenture, provided that in all such events the Company shall not be obliged to indemnify an Indemnified Person for any loss, cost or liability of such Indemnified Person as a consequence of the fraud, willful misconduct, or gross negligence thereof.

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12.6 Any amount payable under Section 12.5 above, that is not paid by the Company within ten (10) days from its due date, shall bear interest at the annual rate of 1.5% (compounded on a monthly basis) for the period commencing from the date on which the Company should have paid such amount until the date of actual payment of the same; such interest shall form part of the Secured Sums.

12.7 All the reasonable fees, costs and expenses incurred by the Lender or any Receiver in connection with the enforcement of this Debenture and realization of the Charged Assets, and all filing fees payable in respect of this Debenture, shall be paid by the Company to the Lender or any Receiver, as applicable, upon first demand and shall be an integral part of the Secured Liabilities.

13. INTERPRETATION; AMENDMENT

13.1 Any of the representations, warranties and covenants made by Company hereunder shall be in addition to, and shall not derogate in any manner from, any representations, warranties and covenants made by Company under the Loan Agreement.

13.2 In this Debenture – (a) the singular includes the plural and vice versa; (b) the masculine gender includes the feminine gender and vice versa; (c) the headings are only indicative and are not to be used in construing this Debenture; (d) the recitals hereto form an integral part hereof.

13.3 Any term of this Debenture may be amended and the observance of any term hereof may be waived (either prospectively or retroactively and either generally or in a particular instance) with the written consent of both parties only.

13.4 To the extent required, this Debenture may be translated into Hebrew for the sole purpose of the registration and filing of this Debenture with the Israeli Registrar of Companies and/or any other relevant Israeli official registrations. Notwithstanding the aforesaid, the executed English version of this Debenture shall prevail and supersede for all purposes and for all respects, in the event of any discrepancy or inconsistency between the English version and the translation.

14. NOTICES AND WARNINGS

14.1 Each communication to be made under this Debenture shall be made in writing and, unless otherwise stated, may be made also by telex or facsimile transmission or by electronic mail.

Each communication or document to be made or delivered by each party to another pursuant to this Debenture shall (unless that other party has by written notice, specified another address) be made or delivered to that party, addressed as follows:

(a)	If to the Company: On Track Innovations Ltd.
	C/o Amir Eilam, Chief Executive Officer
	Hatnufa 5, Yokneam Industrial Zone
	Box 372, Yokneam, Israel
	amir_e@otiglobal.com

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With a copy to: Gornitzky & Co.

  20 Haharash St.

  Tel Aviv 6761310, Israel

  Fax: +972-3-560-6555

  Attn: Shy S. Baranov, Adv.

  E-mail:baranov@gornitzky.com

(b) If to the Lender: Nayax Ltd.

  Arik Einstein St 3

  Herzliya 465907, Israel

With a copy to: Herzog Fox & Neeman,

Herzog Tower, 6 Yitzhak Sadeh St.

Tel Aviv 6777506, Israel

Attn.: Nir Dash; dashn@herzoglaw.co.il

    Ron Ben-Menachem; ron@herzoglaw.co.il

and shall be deemed to have been made or delivered (a) upon the earlier of actual receipt and five (5) business days after deposit in regular mail, first class, registered or certified mail return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by electronic mail or facsimile transmission with receipt confirmation; (c) one (1) business day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger.

15. GOVERNING LAW AND PLACE OF JURISDICTION

15.1 This Debenture shall be construed in accordance with the laws of the State of Israel.

15.2 The exclusive place of jurisdiction for the purpose of this Debenture is hereby established as the competent court of law in Israel situated in Tel Aviv-Jaffa.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, THE PARTIES HAVE CAUSED THIS DEBENTURE OF FLOATING CHARGE TO BE SIGENED ON THE DATE FIRST ABOVE WRITTEN.

COMPANY
On Track Innovations Ltd.
By:	/s/ Amir Eilam	/s/ Assaf Cohen
Title:	Chief Executive Officer	Chief Financial Officer

LENDER
Nayax Ltd.
By:	/s/ Yair Nechmad	/s/ David Ben Avi
Title:	Chief Executive Officer	Cofounder and Chief Technology Officer

[SIGNATURE PAGE TO DEBENTURE (FLOATING CHARGE)]

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EX-10.1

Exhibit 10.1

Execution Version

SENIOR SECURED CONVERTIBLE LOAN AGREEMENT

This Senior Secured Convertible Loan Agreement (the “Agreement”) is made and entered into as of January 27, 2022 (the “Effective Date”), by and between On Track Innovations Ltd., a company organized under the laws of the State of Israel with registration no. 520042862 (the “Company”), and Nayax Ltd., a company organized under the laws of the State of Israel with registration no. 513639013 (the “Lender” and together with the Company, the “Parties”).

WHEREAS, on January 10, 2022, the Company filed with the Nazareth District Court certain petitions under the Israeli Insolvency and Economic Rehabilitation Law – 2018 (the “Insolvency Proceedings”);

WHEREAS, on January 19, 2022, in order to avoid the Insolvency Proceedings, the Parties entered into a Term Sheet (the “Term Sheet”), pursuant to which the Lender, among other things, agreed to extend to the Company this senior secured convertible loan and subsequently, the Company’s petitions in the Insolvency Proceedings were, with the court’s approval, withdrawn by the Company;

WHEREAS, this Agreement is intended as the first step in a two-step transaction where ultimately the Lender shall purchase 100% of the share capital of the Company; and

WHEREAS, the board of directors of each Party has determined that it is in the best interests of the Company and the Lender, as applicable, to enter into this Agreement;

NOW, THEREFORE, in consideration of these premises, the respective covenants of the Company and the Lender set forth below and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

1. TERMS OF LOAN

1.1. Loan. Subject to the terms of this Agreement, the Lender shall lend to the Company an amount of US$5,500,000 (five million and five hundred thousand U.S. dollars) (the “Principal Amount”). The Principal Amount, minus the Advancement (as defined below), shall be wired by the Lender to the Company (or directly to the Company’s creditors in such amounts and allocation as set out in Exhibit A to the extent the Company may so request from the Lender) no later than one (1) business day after the Effective Date, by means of wire transfer of immediately available funds.

1.2. Advancement. The Company confirms that an amount of US$173,178 (one hundred seventy-three thousand and one hundred seventy-eight U.S. dollars)¹ was transferred on January 19, 2022, from the Lender, on behalf of the Company, to the Company’s employees’ bank accounts, as an advancement on account of the Principal Amount (the “Advancement”).

1.3. Use of Proceeds. The Company undertakes to utilize the Principal Amount to fund only the items listed on Exhibit A attached hereto. Exhibit A also indicates what portions of the Principal Amount shall be paid to the Company, and what portions of the Principal Amount shall be paid directly to the Company’s creditors (including secured lenders). Until such time as the Company and the Lender shall enter into a Merger Agreement (as defined below), the Company shall provide the Lender with a periodic report outlining the uses of the Principal Amount in the previous week, in a form and timing to be agreed by the Parties.

1.4. Additional Amounts. The Lender may, at its sole discretion, extend additional amounts to the Company under this Agreement (the “Additional Amounts”) in order, among other things, to allow the Company to pay its debts as they become due, provided that with respect to such Additional Amounts, if extended by the Lender to the Company (a) the uses of such Additional Amounts shall be approved in advance and in writing by the Lender, and (b) such Additional Amounts shall be deemed a part of the Principal Amount and the terms of the Agreement and any related security interest shall apply to such Additional Amounts in full.

¹ Based on wire in an amount of ILS 541,180.73 dated January 19, 2022, and the Bank of Israel representative exchange rate of ILS 3.125 / $1.

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1.5. Interest. The Principal Amount shall bear interest at an annual compounded rate of 10% (ten percent), which shall accrue daily until the Maturity Date (as defined below) (the “Interest”). Each fiscal quarter, commencing on April 1, 2022 (and following on the first date of the first month of each subsequent quarter), the Company shall pay to the Lender the Interest accumulated during the previous quarter and any additional Value Added Tax (as applicable, upon receipt of an invoice), by a wire transfer of immediately available funds. The Principal Amount together with the accrued Interest, and any Additional Amounts (and any Interest accrued thereon) shall be referred to herein, in the aggregate, as the “Loan Amount”.

1.6. Ranking. The Principal Amount shall be used, among other things, to irrevocably pay in full the Company’s debts to Bank Leumi and repayment of the loan under that certain loan financing agreement dated December 9, 2020 between the Company and Jerry L. Ivy, Jr., Descendants’ Trust, as amended (the “Ivy Agreement”). Upon full payment of the debts to Bank Leumi and the repayment in full of the loans under the Ivy Agreement (the “Secured Lenders Repayment”) and removal of security interests relating thereto, the Loan Amount shall rank senior to any other indebtedness of the Company.

1.7. Repayment. The Principal Amount shall be due and payable in full by the Company on the second (2^nd) anniversary of the Effective Date (the “Maturity Date”), by wire transfer to the Lender’s bank account which details shall be provided to the Company in writing prior to the Maturity Date. If the Maturity Date is not a business day in Israel, such payment shall be made on the following business day. Except for in the case of Conversion, the Principal Amount may not be repaid by the Company prior to the Maturity Date.

2. COLLATERAL

2.1. Floating Charge. On the Effective Date, the Company shall enter into a debenture, in the form attached hereto as Exhibit B, as security for the Loan Amount (including any Additional Amounts), granting to the Lender a first priority floating charge over all the assets of the Company as of the date hereof or hereafter acquired (the “Floating Charge”).

2.2. Removal of Existing Charges. After the Effective Date, and provided that the Secured Lenders Repayment shall have taken place, the Company shall present to the Lender duly exercised approvals of all of the secured lenders of the Company approving the removal and release of the existing charges registered in the name of such secured lenders from the registry of the Companies Registrar, which approvals shall be filed with the Companies Registrar within one (1) business day from the date of receipt thereof.

2.3. Negative Pledge. As of the Effective Date and until full and complete repayment of the Loan Amount, the Company shall not, without the Lender’s prior express written consent, create any lien, pledge, charge, encumbrance, hypothecation or similar arrangements or other third-party rights of any kind with respect to its assets or property, including intellectual property rights.

2.4. Repayment on Maturity. Upon the repayment or conversion in full of the Loan Amount, the Lender shall promptly execute any documents required by the Company in order to remove the Floating Charge and Fixed Charges.

3. CONVERSION

3.1. At any time after the earlier to occur: (b) an Event of Default (as defined below), or (b) the completion of the Merger Agreement (as defined below), and prior to the repayment in full of the Loan Amount, the Lender shall be entitled, at its sole and absolute discretion, by written notice to the Company (the “Conversion Notice”), to demand to convert the entire outstanding Loan Amount into Ordinary Shares, par value NIS 0.1 each, of the Company (the “Ordinary Shares”), at a price per Ordinary Share equal to $0.043 (the “Conversion”). The Company shall take all necessary actions to cause the Conversion to occur within no more than three (3) business days from receipt of the Conversion Notice.

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3.2. Insufficient Registered Share Capital. If, upon receipt of a Conversion Notice, the Company shall not have sufficient registered capital to issue the Ordinary Shares required to perform the Conversion, then (a) it shall issue to the Lender the maximum number of Ordinary Shares then available within three (3) business days from receipt of the Conversion Notice, and (b) convene, within no more than fifty (50) days, a general meeting of the shareholders of the Company to: (i) increase the registered share capital to allow the Conversion in full; and (ii) to the extent required, approve the Conversion under Section 328 of the Companies Law, 1999 (“Section 328”). Should the general meeting of shareholders of the Company fail to approve the increase of the registered share capital of the Company as required in order to allow for the Conversion of the Loan Amount in full into Ordinary Shares, or that an approval under Section 328 is not obtained, then only such portion of the Loan Amount which conversion did not require the increase in the registered share capital of the Company and that does not violate Section 328, if applicable, shall be converted into Ordinary Shares; such failure shall constitute an “Event of Default” and the provisions of Section ‎4 of this Agreement shall apply with respect to the remainder of the Loan Amount not so converted.

3.3. Until such time when the Loan Amount shall have been repaid in full or have otherwise been converted into Ordinary Shares, the Company shall not issue and shall not undertake to issue to any third party any shares, options, warrants, or any other instrument convertible into Ordinary Shares, without the prior written consent of the Lender.

4. EVENTS OF DEFAULT

Any of the following events shall cause an event of default (each an “Event of Default”):

4.1. Failure to timely pay the Loan Amount, or any portion thereof;

4.2. Any representation, warranty or statement made by the Company in this Agreement (including the Exhibits herein), and/or in any filing made by the Company with the U.S. Securities and Exchange Commission (the “SEC”), or any other governmental agency, is incorrect, untrue or misleading in any material respect when it is made or deemed repeated;

4.3. A breach by the Company of this Agreement, failure to fully or timely perform any covenant set forth herein or a legal determination by a court that the Agreement has not been duly authorized by the Company;

4.4. Any material financial indebtedness of the Company or a subsidiary of the Company is not paid when due, or any security interests over any material part of the assets of the Company or any subsidiary of the Company is lawfully enforced;

4.5. Any event that triggers an acceleration of any material rights or obligations of the Company or any subsidiary of the Company, such as rights held by employees and service providers, or repayment obligations towards lenders or noteholders;

4.6. Any judgment made against the Company or any subsidiary of the Company which is not paid, stayed or discharged within thirty (30) days;

4.7. The Company or any subsidiary of the Company shall stop payment or shall be unable to, or shall admit inability to, pay its debts as they become due, or shall be adjudicated or declared bankrupt or insolvent or shall enter into any composition or other arrangement with its creditors generally;

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4.8. The commencement by the Company, by any of its subsidiaries, or by any third party, of any liquidation, insolvency, or winding up proceedings, provided that if any of the proceedings above was initiated by a third party, then the proceedings were not withdrawn or dismissed within fourteen (14 or the adoption of a resolution by the Company or any of its subsidiaries to commence any such proceedings;

4.9. The appointment of a receiver or trustee over any part or the Company’s assets or any of its subsidiaries’ assets;

4.10. The levy of an attachment or the institution of execution proceedings against all or a substantial part of Company’s or any of its subsidiaries’ assets, and the levy is not discharged or stayed (whether through the posting of a bond or otherwise) within fourteen (14) days after the occurrence thereof;

4.11. Any event or series of events occur(s), which in the reasonable opinion of the Lender (after receiving a written explanation from the Company within three (3) business days of the Lender’s written notice to the Company regarding the facts triggering the material adverse effect) has a material adverse effect on the ability of the Company or any subsidiary of the Company to comply with any of its material obligations hereunder;

4.12. The Company and the subsidiaries of the Company cease, threaten to cease, or suspend carrying on their business or a material part of their business;

4.13. Failure to enter into the Merger Agreement. Failure to (a) put to the vote of the Company’s shareholders’, by May 5, 2022, a Merger Agreement between the Company and the Lender (the “Merger Agreement”), in form and substance to the Lender’s satisfaction, or (b) have the Merger Agreement approved by the Company’s board of directors or the Company’s shareholders by May 31, 2022;

4.14. Breach of Section ‎6.1 [Exclusivity] or Section ‎6.2 [Standstill] of this Agreement; or

4.15. Failure to approve the share capital increase in connection with the Conversion, in accordance with Section ‎3.2 of this Agreement.

Notwithstanding the above, any event that occurs primarily from a set of circumstances that existed as of the Effective Date and were disclosed to the Lender (including with respect to any past due debts the Company disclosed to the Lender) shall not be deemed an Event of Default.

5. REMEDIES UPON AN EVENT OF DEFAULT

Upon the occurrence of an Event of Default, at the election of the Lender in its sole discretion: (a) the Loan Amount shall become immediately due and payable by the Company only (“Acceleration”); or (b) the interest on the Loan Amount shall be increased to an annual rate of 16% (sixteen percent), calculated in accordance with Section 1.5 of this Agreement retroactively as of the date on which the Event of Default occurred, until actual payment (the “Step-up Rate”). Should the Lender elect Acceleration, the Step-up Rate shall apply until actual payment thereof. Value Added Tax shall be added to any payment hereunder.

6. EXCLUSIVITY & STANDSTILL

6.1. Exclusivity. From the Effective Date and until the earlier to occur of: (i) consummation of the Merger Agreement, or (ii) the date that is six months following the Effective Date (the “Exclusivity Period”), the Company, its board of directors, any of its executive officers, their agents or representatives in their capacity as such (collectively, the “Standstill Parties”) shall cease all discussions, negotiations, solicitation of offers, or provision of information to any third party regarding a competing transaction.

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6.2. Standstill. None of the Standstill Parties shall sell, transfer, pledge or perform any other transactions with the Company’s shares or debt, during Exclusivity Period except with the prior written approval of the Lender. The Company shall not enter into, during the Exclusivity Period, any loan, financing, credit or similar agreement with any third party, except for with Lender’s prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed.

6.3. Ordinary Course. Except as expressly permitted by this Agreement or with the prior written consent of the Lender (not to be unreasonably withheld, conditioned or delayed), during the Exclusivity Period, the Company shall, and shall cause each of its subsidiaries to, (a) conduct its business in the ordinary course consistent with past practice, (b) comply in all material respects with all applicable laws and the requirements of all of its material contracts, (c) use commercially reasonable efforts to maintain and preserve intact its business organization and the goodwill of those having business relationships with it and retain the services of its present officers and key employees, and (d) keep in full force and effect all material insurance policies maintained by the Company and its subsidiaries, other than changes to such policies made in the ordinary course of business. Without limiting the generality of the foregoing, except as expressly permitted by this Agreement or with the Lender’s prior written consent (not to be unreasonably withheld, conditioned or delayed), during the Exclusivity Period, the Company shall not, and shall not permit any of its subsidiaries to: (i) issue, sell, grant, dispose of, pledge or otherwise encumber any shares of its capital stock, voting securities or equity interests, or any securities or rights convertible into, exchangeable or exercisable for, or evidencing the right to subscribe for any shares of its capital stock, (ii) incur or assume any indebtedness, borrow any funds, guarantee any indebtedness unless in the ordinary course of business consistent with past practice, or issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities, (iii) sell, transfer, lease, mortgage, encumber or otherwise dispose of or subject to any lien or pledge any of its properties or assets, (iv) make any capital expenditure in excess of US$25,000, (v) directly or indirectly acquire, dispose or invest in any equity interest or businesses of any person, (vi) enter into, terminate or amend any material contract, (vii) increase in any manner the compensation of any of its directors, officers or employees or enter into, establish, amend or terminate any employment, consulting, retention, change in control, collective bargaining, bonus or other incentive compensation, profit sharing, health or other welfare, stock option or other equity (or equity-based), pension, retirement, vacation, severance, deferred compensation or other compensation or benefit plan, policy, agreement, trust, fund or arrangement with, for or in respect of, any stockholder, director, officer, other employee, consultant or affiliate, other than with respect to employees – in the ordinary course of business consistent with past practices, (viii) make any changes in financial or tax accounting methods, principles or practices, (ix) amend the Company’s articles of association or other governing documents or any governing documents of any subsidiary of the Company, (x) pay, discharge, settle or satisfy any claims, liabilities, indebtedness or obligations (absolute, accrued, asserted or un-asserted, contingent or otherwise), (xi) settle or compromise any litigation or proceeding, and (xii) agree, in writing or otherwise, to take any of the foregoing actions, or take any action or agree, in writing or otherwise, to take any action which would cause any of the representations or warranties of the Company set forth in this Agreement to be untrue or delay the ability of the Parties to satisfy any of the terms and conditions forth in this Agreement. Nothing in the above shall prevent the Company from continue to operate its business as done before, on a consistent basis.

7. COMPANY REPRESENTATIONS

The Company hereby represents and warrants, as of the Effective Date, as follows. Any reference in this Section ‎7 to the Company shall be deemed to apply to the Company and all of its subsidiaries. Other than the express representation set forth below, the Company does not make any additional representations, and the transaction set forth in this Agreement is entered into on an "as is" basis without any other representations or warranties.

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7.1. Due Incorporation and Power. The Company is a corporation duly organized and validly existing under the laws of the state of Israel (with respect to any of its subsidiaries, any other relevant jurisdiction, as applicable) and has the power to own and lease its properties and to carry on its business as now being conducted and as proposed to be conducted.

7.2. Power and Authority. Unless otherwise provided in this Agreement, no consents, authorizations or approvals of any kind of any governmental authority or other third party are required in connection with the execution or performance of this Agreement by Company, or such consents shall have been obtained. The Company is not aware of any party claiming that the transactions set forth herein or in the Term Sheet were not duly approved.

7.3. No Violations. The consummation of the transactions contemplated hereunder and the performance of the Company’s obligations hereunder do not violate the provisions of the articles of association of the Company, and will not result in any breach of, or constitute a default under, any agreement or instrument to which the Company is a party or under which it is bound. The execution of the Term Sheet, this Agreement, and any ancillary document herein and therein (the “Transaction Documents”) and performance of the transactions contemplated hereby and thereby by the Company have been authorized by the Company’s Board of Directors, and the Transaction Documents have been executed and delivered by the Company.

7.4. No Consents. Unless otherwise provided in this Agreement, the execution and performance of the Transaction Documents by the Company will not (a) give to others any rights, including rights of termination, cancellation or acceleration, in or with respect to any agreement, contract or commitment referred to in this paragraph, or to any of the properties of the Company, or (b)s require the consent or approval of any person or entity.

7.5. Intellectual Property. In this Agreement, all patents, trademarks, service marks, trade names, copyrights and all trade secrets, including know-how, invention, designs, processes, computer programs, algorithms, drawings, photographs, models, and any other form of intellectual property, shall collectively be referred to herein as “Intellectual Property”. The Company’s registered or registrable Intellectual Property is listed on Exhibit C hereto (the “Registered IP”). Intellectual Property which is not listed in Exhibit C shall be referred to as “Un-Registered IP”. Other than any pledges in favor or Bank Leumi or under the Ivy Agreement, the Company possesses all right, title, and interest in and to the Registered IP (it being understood that with respect to patents, the foregoing representations shall apply only to the ownership of a patent application and the inventions covered thereunder and not as a representation regarding the patentability of any invention or the scope of any patent that may be granted pursuant to such application). All Un-Registered IP which the Company currently uses or intends to use is either owned by the Company or the Company has the right to use such Un-Registered IP pursuant to written license, sublicense, agreement, or permission, free and clear of any security interest, third party rights and royalties or other fees. Each item of Intellectual Property owned or used by the Company immediately prior to the Effective Date will be owned or available for use by the Company on substantially the same terms and conditions immediately subsequent to the Effective Date.

7.6. No Infringement. (i) To the Company’s best knowledge, the Company has not interfered with, infringed upon, misappropriated, or otherwise come into conflict with any intellectual property rights of any third party nor will the conducting by it of its business, or use of the Intellectual Property, as presently conducted and as proposed to be conducted interfere, infringe upon, misappropriate or otherwise come into conflict with any Intellectual Property rights of any third party; (ii) since January 1, 2019, the Company has not received any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation (including any claim that the Company must license or refrain from using any intellectual property rights of any third party) and to the Company’s best knowledge there is no basis for such; and (iii) to the Company’s best knowledge, no third party has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property of the Company.

7.7. Protection of IP Rights and Trade Secrets. The Company takes such action to maintain and protect each item of Intellectual Property that it owns or uses which actions are reasonable and customary in the industry in which the Company operates. All of the Company’s confidential information is being (and has been) continuously maintained in confidence by the Company by taking reasonable precautions to protect and prevent its disclosure to unauthorized parties. The Company has complied in all material respects with the requirements of, and has filed all material documentation required in dealing with, all patent and trademark offices and any other patent registry agency in which its patent applications were filed; and all patents (if any) and patent applications are in effect, and, to the Company’s best knowledge, there is no prior art or any other possible claim which renders the inventions of the Company referred to in the patents, patent applications and related documentation (if any) invalid in any manner.

7.8. Litigation. Except for potential claims from the Company's creditors that were disclosed to the Lender, the Company is not: (i) subject to any outstanding injunction, judgment, order, decree, writ, stipulation, ruling, or charge of any court or any governmental agency or any arbitrator; or (ii) a party or to the Company’s knowledge, is threatened in writing to be made a party to, any action, suit, proceeding, hearing, complaint, charge or investigation of, in, or before any court or quasi-judicial or administrative agency of any state, municipal, or foreign jurisdiction or before any arbitrator or other method of settling disputes or disagreements. The Company does not know, anticipate, or has any basis to believe that any such action, suit, proceeding, hearing, complaint, charge or investigation may be brought or threatened against the Company and the Company does not intend to initiate any such action, suit, proceeding, hearing, complaint, charge or investigation. Without derogating from any of the foregoing, there is no action, suit, proceeding, or investigation pending or to the Company’s knowledge, currently threatened in writing involving any of the Company’s employees, their use in connection with the Company’s business of any information or techniques allegedly proprietary to any of their former employers, or their obligations under any agreement with prior employers.

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7.9. Financial Statements. Attached as Exhibit D hereto are (a) unaudited consolidated financial statements of the Company as of and for the period that ended on September 30, 2021, (b) the audited financial statements of the Company as of and for the period that ended on December 31, 2020 (collectively (a) and (b) - the “Financial Statements”), and (c) the trial balance sheets as of December 31, 2021. The Financial Statements: (i) have been prepared in accordance with accounting practices generally accepted in the United States (“US GAAP”) applied on a consistent basis, (ii) are in accordance with the books and records of the Company, and (iii) are true and correct in all respects and present fairly the financial condition of the Company at the date or dates therein indicated and the results of operations and cash flows for the periods therein specified; provided, however, that, other than the audited Financial Statements, the Financial Statements are subject to normal year-end adjustments and lack footnotes and other presentation items. All proper and necessary books of account and accounting records have been maintained by the Company, are in its possession and contain accurate information in accordance with generally accepted principles consistently applied relating to all transactions to which the Company has been a party. Except as set forth in the Financial Statements, the Company has no known liabilities, contingent or otherwise, and obligations under contracts and commitments incurred in the ordinary course of business and not required under US GAAP to be reflected in the Financial Statements. The Company maintains and will continue to maintain a standard system of accounting established and administered in accordance with US GAAP.

7.10. Compliance with Law and other Instruments. The Company has conducted its business in accordance with all applicable laws of the countries in which it is conducting or has conducted its business and is not in violation or default that could cause a material adverse effect on the Company with respect to any law, or judgment of any court or any governmental agency, or any of the Company’s permits. To the Company’s best knowledge, there is no existing law, rule, regulation or order which would prohibit or restrict the Company from, or otherwise materially adversely affect the Company in, conducting its business in any jurisdiction in which it is now conducting business or in which it currently proposes to conduct business.

7.11. Debts and Loan Facilities. Except as set forth in Exhibit E, there are no debts owing by or liabilities of the Company, nor has the Company borrowed or lent any money which has not yet been repaid. Other than with respect to the financing by Bank Leumi, the Company is not in default under any instrument constituting any material indebtedness or under any guarantee of any material indebtedness and no event has occurred which, under the terms of any such instrument or guarantee, such indebtedness or guarantee should be called or the liabilities thereunder accelerated before their due date (if any) or any loan facilities terminated.

7.12. Security Interests. Exhibit F sets forth any and all the security interests existing in connection with any tangible or intangible assets and other property of the Company. Except as set forth in Exhibit F, no other security interest is existing and/or registered on the assets and property of the Company, except for the security interests created for the benefit of the Lender hereunder.

7.13. Reports. The Company has filed or furnished all material forms, reports and documents with the SEC and other governmental agency that it has been required to file or furnish under any applicable securities or other law (all such forms, reports and documents, including exhibits and schedules, filed or furnished, together with any amendments thereto, the “Reports”). As of its filing or furnishing date (or, if amended or superseded by a filing or furnishing prior to the date of this Agreement, on the date of such amended or superseded filing or furnishing), (i) the Reports complied in all material respects with the applicable requirements of the U.S. Securities Act of 1933, the U.S. Securities Exchange Act of 1934, the Sarbanes-Oxley Act and any other applicable law, and (ii) the Reports did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

7.14. Liabilities. Except as set forth in the Reports, Financial Statements and Exhibit E and except for normal liabilities arising in the ordinary course of business consistent with past practice, the Company does not have any liabilities, either accrued, contingent or otherwise, whether due or to become due, that individually or in the aggregate have had or would reasonably be expected to have a material adverse effect on the Company.

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7.15. Capitalization. As of the date hereof, the authorized and registered share capital of the Company is NIS 12,000,000, divided into 120,000,000 Ordinary Shares, 75,775,393 shares of which are issued and outstanding as of the Effective Date (except, for the avoidance of doubt, treasury shares). As of the Effective Date, the Company’s share capital also consists of the following securities: options outstanding that are issued under the 2001 stock option plan of the Company (the “Option Plan”) – 546,500 options, options remaining available for future issuance under the Option Plan - 3,886,046 options, 6,000,000 shares reserved under the Company’s 2021 Incentive Option Plan, of which 3,615,500 shares have been, or are committed, to be issued to employees and directors. In addition, up to 14,175,927 Ordinary Shares are reserved for issuance upon conversion under the Ivy Agreement. Except as set forth herein and as arising under this Agreement, there are no other shares, convertible or other securities, outstanding warrants, options, or other rights to subscribe for, purchase, or acquire from the Company any securities of the Company, or under which the Company is, or may become, obligated to issue any securities.

7.16. Taxation. The Company (i) other than as disclosed to the Lender, has timely filed (taking into account any extensions of time in which to file) all returns and reports (including elections, declarations and disclosures) relating to VAT, income taxes, deductions and withholding taxes, social security and any other applicable taxes (“Tax Returns”) required to be filed with any governmental authority by the Company and (ii) other than as set forth in Exhibit E, has paid, or adequately reserved (in accordance with US GAAP) on the most recent Financial Statements for the payment of, all taxes required to be paid. The Company is not aware of any outstanding dispute, audit, investigation, proceeding or claim with any relevant taxation authority in relation to any material liability of the Company for taxation, any material relief, deduction, or allowance afforded to it, or in relation to the status or characterization of the Company or any of its enterprises under or for the purpose of any provision of any legislation relating to taxation.

8. GENERAL PROVISIONS

8.1. Entire Agreement; Amendment; Waiver. This Agreement, along with Term Sheet, constitute the full and entire understanding and agreement between the Parties hereto with regard to the subject matters hereof. In case of any contradiction or discrepancy between this Agreement and the Term Sheet, the provisions of this Agreement shall override, provided that nothing in this Agreement shall derogate from the Parties’ obligations under the Term Sheet (including, specifically, with respect to the Break-up Fee (as defined in the Term Sheet)). Any term of this Agreement may be amended with the written consent of the Company and the Lender. No delay or omission to exercise any right, power or remedy accruing to any Party upon any breach or default under this Agreement, shall be deemed a waiver thereof or of any other breach or default theretofore or thereafter occurring. Except as otherwise provided for herein, the observance of any term hereof may be waived (either prospectively or retroactively and either generally or in a particular instance) only with the written consent of the Party against such waiver is sought.

8.2. Successors and Assigns; Assignment. Each of the Parties shall not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the other Party, provided that the Lender may assign or transfer its rights under this Agreement without the Company’s consent to any entity controlled by, controlling (directly or indirectly), or under common control of the Lender (the term 'control' shall be as defined under the Securities Law of 1968). The rights and obligations of the Parties under this Agreement shall be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives.

8.3. Further Actions. At any time and from time to time, each of the Parties agrees, without further consideration, to take such actions and to execute and deliver such documents as, in the other Party's opinion, may be reasonably necessary to carry out and give full effect to the provisions of this Agreement and the intentions of the Parties as reflected hereby and thereby.

8.4. No Third Party Rights. Nothing in this Agreement shall be deemed to create any right on the part of any person or entity not a party to this Agreement other than as expressly set forth herein.

8.5. Governing Law. This Agreement shall be governed by, and construed, enforced and interpreted in accordance with, the laws of the State of Israel. The competent courts in Tel Aviv-Jaffa district shall have exclusive jurisdiction over any dispute or claim arising in connection with or as a result of this Agreement, and each of the Parties irrevocably submits to the exclusive jurisdiction of such court.

8.6. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

8.7. Reporting. The Lender acknowledges that this Agreement and relating documents, such as the Debenture, may be deemed to be “material contracts,” as that term is defined by Item 601(b)(10) of Regulation S-K promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), and that the Company may therefore be required to file such documents as an exhibits to reports or registration statements filed under the Securities Act of 1933 or the Exchange Act. The Lender further agrees that the status of such documents and materials as material contracts shall be determined solely by the Company, in consultation with its counsel.

[Signature Page Follows]

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IN WITNESS WHEREOF, this Agreement has been executed by the Parties as of the date first hereinabove written.

COMPANY

On Track Innovations Ltd.

By:	/s/ Amir Eilam	/s/ Assaf Cohen
Title:	Chief Executive Officer	Chief Financial Officer

LENDER

Nayax Ltd.

By:	/s/ Yair Nechmad	/s/ David Ben Avi
Title:	Chief Executive Officer	Cofounder and Chief Technology Officer

[Signature Page to Senior Secured Convertible Loan Agreement]

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XML

Cover	Jan. 27, 2022
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jan. 27, 2022
Entity File Number	000-49877
Entity Registrant Name	On Track Innovations Ltd.
Entity Central Index Key	0001021604
Entity Tax Identification Number	00-0000000
Entity Incorporation, State or Country Code	L3
Entity Address, Address Line One	Hatnufa 5
Entity Address, Address Line Two	Yokneam Industrial Zone
Entity Address, City or Town	Yokneam
Entity Address, Country	IL
Entity Address, Postal Zip Code	2069200
City Area Code	011 972
Local Phone Number	4 6868000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false