Exhibit 10.1

 

EXECUTION COPY

 

SHARE PURCHASE AGREEMENT

 

AMONG

 

On Track Innovations ltd.

 

and

 

Jerry L. Ivy, Jr. Descendants’ Trust

 

and

 

THE other INVESTORS PARTY HERETO

 

 

 

 

SHARE PURCHASE AGREEMENT

 

THIS SHARE PURCHASE AGREEMENT (the “Agreement”), dated as of December 23, 2019,
is by and among On Track Innovations Ltd., a company formed under the laws of
the State of Israel (the “Company”), Jerry L. Ivy, Jr. Descendants’ Trust
(“Ivy”), and each of the other investors identified on the signature pages
hereto (each (including Ivy), an “Investor”, or collectively, together with Ivy,
the “Investors”).

 

RECITALS

 

A. The Board of Directors of the Company (the “Board”) has determined that it is
in the best interests of the Company to raise equity financing in an aggregate
amount of up to $2,500,000, all on the terms and conditions more fully set out
in this Agreement;

 

B. The Company desires to issue and sell, and each Investor, severally and not
jointly with any other Investor, desires to purchase ordinary shares of the
Company, NIS 0.1 per share (the “Ordinary Shares”) as provided for under this
Agreement;

 

C.  In order to complete the transactions contemplated under this Agreement and
issue and sell Ordinary Shares the Company needs to increase its authorized
share capital, which requires the approval of the Company’s shareholders;

 

D.  The parties agree that the sale of the Ordinary Shares under this Agreement
shall be made in two tranches, and on the Initial Closing (as defined below) the
Company will issue to the Investors such number of Ordinary Shares that does not
require an increase in the Company’s share capital; and

 

E.  The parties further agree that if the Company increases its authorized share
capital the Company will issue to the Investors additional Ordinary Shares
pursuant to the Subsequent Closing (as defined below).

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Investors,
intending to be legally bound hereby, agree as follows:

 

Article I
DEFINITIONS

 

1.1 Definitions. The following terms have the meanings indicated:

 

“$” means U.S. dollars.

 

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 144 under the
Securities Act.

 

“Business Day” means any day other than a Friday, Saturday, Sunday, or any day
which shall be a federal legal holiday in the United States or a legal holiday
in Israel.

 

“Closing” means each of the Initial Closing and the Subsequent Closing.

 

“Closing Date” means each of the Initial Closing Date and the Subsequent Closing
Date.

 

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“Damages” shall mean any loss, claim, damage, liability, cost and expense
(including, without limitation, reasonable attorneys’ fees and disbursements and
costs and expenses of expert witnesses and investigation).

 

“DTC” shall mean The Depository Trust Company, or any successor performing
substantially the same function for the Company.

 

“DTC/FAST Program” shall mean the DTC’s Fast Automated Securities Transfer
Program.

 

“DWAC” shall mean Deposit Withdrawal at Custodian as defined by the DTC.

 

“DWAC Eligible” shall mean that (a) the Ordinary Shares are eligible at DTC for
full services pursuant to DTC’s Operational Arrangements, including, without
limitation, transfer through DTC’s DWAC system, (b) the Company has been
approved (without revocation) by the DTC’s underwriting department, (c) the
Transfer Agent is approved as an agent in the DTC/FAST Program, (d) the Ordinary
Shares are otherwise eligible for delivery via DWAC, and (e) the Transfer Agent
does not have a policy prohibiting or limiting delivery of the Ordinary Shares,
as applicable, via DWAC.

 

“DWAC Shares” means Ordinary Shares that are (i) issued in electronic form, (ii)
freely tradable and transferable and without restriction on resale and (iii)
timely credited by the Company to the Investor’s or its designee’s specified
DWAC account with DTC under the DTC/FAST Program, or any similar program
hereafter adopted by DTC performing substantially the same function.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, including
the rules and regulations promulgated thereunder.

 

“Exempt Issuance” means the issuance of (a) Ordinary Shares or options to
employees, officers or directors of the Company pursuant to any stock or option
plan duly adopted for such purpose, established for such purpose for services
rendered to the Company, (b) securities upon the exercise or exchange of or
conversion of any securities issued hereunder and/or other securities
exercisable or exchangeable for or convertible into Ordinary Shares issued and
outstanding on the date of this Agreement, and (c) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall
only be to a person (or to the equityholders of a person) which is, itself or
through its subsidiaries, an operating company or an owner of an asset in a
business synergistic with the business of the Company and shall provide to the
Company additional benefits in addition to the investment of funds, but shall
not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is
investing in securities.

 

“FINRA” means the Financial Industry Regulatory Authority, Inc.

 

“Initial Closing” means the closing of the purchase and sale of the Ordinary
Shares pursuant to Section 2.1(a).

 

“Initial Closing Date” means the date on which (i) all the conditions with
respect to the Initial Closing, as set forth in Sections 5.1 and 5.2 (other than
those conditions waived by the Person entitled to the benefit of such
conditions), have been satisfied and (ii) each party delivers those items
required to be delivered to the other party(ies) as set forth in Sections 2.2(a)
and (b), or such other date agreed upon by the parties.

 

“Lien” means a lien, charge, pledge, security interest, encumbrance, right of
first refusal, preemptive right or other restriction.

 

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“Losses” means any and all losses, claims, damages, liabilities, settlement
costs and expenses, including, without limitation, reasonable attorneys’ fees.

 

“Material Adverse Effect” shall mean any effect on the business, operations,
properties, or financial condition of the Company and the Subsidiaries that is
material and adverse to the Company and the Subsidiaries and/or any condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Company to enter into and perform its obligations under
any Transaction Document.

 

“NIS” means New Israeli Shekels.

 

“Ordinary Shares Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Ordinary Shares, including, without limitation, any debt, preferred stock,
right, option, warrant or other instrument that is at any time convertible into
or exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Ordinary Shares.

 

“Per Share Purchase Price” means $0.20.

 

“Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, a
government or any department or agency thereof and any other legal entity.

 

“Principal Market” shall mean any of the national exchanges (e.g., NYSE or
Nasdaq), or principal quotation systems (i.e. OTCQX, OTCQB, OTC Pink, the OTC
Bulletin Board), or other principal exchange or recognized quotation system
which is at the time the principal trading platform or market for the Ordinary
Shares.

 

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, a partial proceeding, such as a deposition),
whether commenced or threatened in writing.

 

“Registrable Securities” means the Ordinary Shares acquired hereunder, and any
shares of capital stock issued or issuable with respect to such Ordinary Shares
as a result of any stock split, dividend, distribution, recapitalization or
similar transaction; provided, that the Registrable Securities shall cease to be
Registrable Securities when (a) such Registrable Securities have been disposed
of, or (b) such Registrable Securities may be sold without restrictions or other
limitations pursuant to Rule 144 (or any successor provision) under the
Securities Act (including, without limitation, volume restrictions) and without
the need for current public information required by Rule 144(c)(1).

 

“Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended, including the
rules and regulations promulgated thereunder.

 

“Short Sales” means and includes, without limitation, all “short sales” as
defined in Rule 200 promulgated under Regulation SHO under the Exchange Act and
all types of direct and indirect stock pledges, forward sale contracts, options,
puts, calls, short sales, swaps, derivatives and similar arrangements (including
on a total return basis), and sales and other transactions through non-U.S.
broker-dealers or foreign regulated brokers.

 

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“Subsequent Closing” means the closing of the purchase and sale of the Ordinary
Shares pursuant to Section 2.1(b).

 

“Subsequent Closing Date” means the date on which (i) all the conditions with
respect to the Subsequent Closing, as set forth in Sections 5.1 and 5.2 (other
than those conditions waived by the Person entitled to the benefit of such
conditions), have been satisfied and (ii) each party delivers those items
required to be delivered as set forth in Sections 2.2(a) and (b), or such other
date agreed upon by the parties.

 

“Subsidiary” means each of the wholly owned subsidiaries of the Company as of
the date hereof.

 

“Transaction Documents” means this Agreement and each of the other agreements or
instruments entered into or executed by the parties hereto in connection with
the transactions contemplated by this Agreement and the other agreements or
instruments.

 

Article II
PURCHASE AND SALE

 

2.1 Closing.

 

(a) Initial Closing. Subject to the terms and conditions set forth in this
Agreement, at the Initial Closing, the Company shall issue and sell to each
Investor, and each Investor shall purchase from the Company, such number of
Ordinary Shares set forth on such Investor’s signature page to this Agreement,
at a purchase price per Ordinary Share equal to the Per Share Purchase Price.
The time of the Initial Closing shall be when those items required to be
delivered as set forth in Sections 2.2(a) and (b) have been delivered on the
Initial Closing Date. The Initial Closing shall take place pursuant to the
electronic or other remote exchange of all executed documents and other
deliverables required by this Agreement to be delivered at the Initial Closing.

 

(b) Subsequent Closing. Subject to the terms and conditions set forth in this
Agreement, and only if the Subsequent Closing Condition has been satisfied, the
Company shall issue and sell to each Investor, and each Investor shall,
severally and not jointly, purchase from the Company, such number of Ordinary
Shares set forth on such Investor’s signature page to this Agreement, at the Per
Share Purchase Price. The date and time of the Subsequent Closing shall be when
those items required to be delivered as set forth in Sections 2.2(a) and (b)
have been delivered on the Subsequent Closing Date. The Subsequent Closing shall
take place pursuant to the electronic or other remote exchange of all executed
documents and other deliverables required by this Agreement to be delivered at
the Subsequent Closing.

 

2.2 Closing Deliveries.

 

(a) At each Closing, the Company shall deliver to each Investor a certificate,
duly executed by the Company and registered in the name of such Investor, or, if
so indicated on such Investor’s signature page, in such other name(s) as
designated by such Investor, inclusive of such restrictive and other legends as
set forth in Section 4.1(b), evidencing such number of Ordinary Shares pursuant
to the provisions of Section 2.1 above. In lieu of such certificate, the Company
may deliver a copy of irrevocable issuance instructions in respect of such
Investor’s Ordinary Shares delivered to the Company’s transfer agent.

 

(b) At each Closing, each Investor shall, severally and not jointly, deliver or
cause to be delivered to the Company the following:

 

(i) an aggregate amount equal to the Per Share Purchase Price multiplied by the
number of Ordinary Shares to be purchased by such Investor hereunder, pursuant
to the provisions of Section 2.1 above, in immediately available funds, by wire
transfer pursuant to the instructions attached as Schedule 2.2(b)(i); and

 

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(ii) as the Company received governmental funding from the Israel Innovation
Authority (formerly the Office of the Chief Scientist in the Ministry of
Economics), each Investor shall execute and deliver an undertaking in the form
of Schedule 2.2(b)(ii) attached hereto.

 

Article III
REPRESENTATIONS AND WARRANTIES

 

3.1 Representations and Warranties of the Company. The Company hereby represents
and warrants to the Investors as follows:

 

(a) Due Execution. The Company has taken all corporate and other actions
necessary to enable it to enter into and perform this Agreement. The execution
and delivery of this Agreement by the Company does not, and the performance by
the Company of its obligations under this Agreement, will not, with or without
the giving of notice or the lapse of time or both, (i) conflict with or violate
the organizational documents of the Company, and (ii) to the Company’s
knowledge, violate any law, statute, ordinance, rule, regulation, order,
judgment or decree applicable to the Company or by which any of its properties
or assets is bound or affected.

 

(b) Authority. The Company has the capacity and authority to execute and deliver
this Agreement, to perform hereunder and to consummate the transactions
contemplated hereby without the necessity of any further act or consent of, or
to notify, any other person whomsoever, except as specifically otherwise
provided herein. This Agreement, and each and every other agreement, document
and instrument to be executed, delivered and performed by or on behalf of the
Company pursuant hereto, have been duly executed and delivered by a duly
authorized representative of the Company and constitutes or will, when executed
and delivered, constitute the legal, valid and binding obligations enforceable
against the Company in accordance with its terms. This Agreement and the
Transaction Documents to which the Company is a party or has or will execute
have been duly executed and delivered by the Company and constitute the valid
and binding obligations of such Investor, enforceable against it in accordance
with their terms, except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally,
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.

 

(c) Due Organization. The Company and each of the Subsidiaries is an entity duly
incorporated or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization, with the
requisite power and authority to own and use its properties and assets and to
carry on its business as currently conducted. Neither the Company nor any
Subsidiary is in violation nor default of any of the provisions of its
respective certificate or articles of incorporation, bylaws or other
organizational or charter documents that would cause to the Company a Material
Adverse Effect. Each of the Company and the Subsidiaries is duly qualified to
conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in a Material Adverse Effect and no
proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and authority or
qualification..

 

(d) Consents. Except as expressly provided herein, no consent or authorization
from any governmental authority, court or third party is required by the Company
for the execution or performance of this Agreement.

 

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(e) No Public Offering. Based on the representations and warranties of the
Investor, the offer, issue, and sale of the Ordinary Sharers contemplated hereby
are exempt from the prospectus requirements of the Israeli and U.S. securities
laws and regulation. Neither the Company nor any authorized agent acting on its
behalf will knowingly take any action hereafter that would cause the loss of
such exemptions. The Company has not offered or sold its Ordinary Shares or
related derivative securities to more than 35 investors (excluding qualified
institutional investors and other excluded investors) during the past 12 months.

 

(f) No Brokers. No agent, broker, investment banker, person or firm acting in a
similar capacity on behalf of or under the authority of the Company is or will
be entitled to any broker’s or finder’s fee or any other commission or similar
fee, directly or indirectly, on account of any action taken by the Company in
connection with any of the transactions contemplated under this Agreement.

 

(g) Capitalization. As of the date hereof, the authorized capital stock of the
Company consists solely of 50,000,000 shares of Ordinary Shares, par value of
NIS 0.1 per share, of which 41,324,377 shares of Ordinary Shares as of November
5, 2019 are issued and outstanding. Except as set forth on Schedule 3.1(g), the
Company has not issued any capital stock since its most recently filed periodic
report under the Exchange Act, other than pursuant to the exercise of employee
stock options under the Company’s stock option plans, and the issuance of
Ordinary Shares to employees pursuant to the Company’s employee stock purchase
plans. No Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as set forth on Schedule
3.1(g) and except as a result of the purchase and sale of the Ordinary Shares,
there are no outstanding options, warrants, scrip rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire any Ordinary Shares, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional Ordinary Shares or
Ordinary Shares Equivalents. The issuance and sale of the Ordinary Shares
pursuant to this Agreement will not obligate the Company to issue Ordinary
Shares or other securities to any Person (other than the Investors) and will not
result in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under any of such securities. There are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s
stockholders.

 

(h) Listing and Maintenance Requirements. The Ordinary Shares are registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to have the
effect of, terminating the registration of the Ordinary Shares under the
Exchange Act nor has the Company received any notification that the SEC is
contemplating terminating such registration. The Company has not, since October
31, 2019, received notice from the Principal Market on which the Ordinary Shares
is currently quoted to the effect that the Company is not in compliance with the
listing or maintenance requirements of such Principal Market. The Company is,
and has no reason to believe that it will not in the foreseeable future continue
to be, in compliance with all such listing and maintenance requirements.

 

(i) SEC Documents; Disclosure. Except as set forth on Schedule 3.1(i), the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the one (1) year
preceding the date hereof (the foregoing materials, including the exhibits
thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Documents”) on a timely basis or has received a
valid extension of such time of filing and has filed any such SEC Documents
prior to the expiration of any such extension. As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
Securities Act and the Exchange Act, as applicable, and other federal laws,
rules and regulations applicable to such SEC Documents, and none of the SEC
Documents when filed contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company included
in the SEC Documents comply as to form and substance in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC or other applicable rules and regulations with respect thereto. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except (a) as may be otherwise indicated in such financial statements or the
notes thereto or (b) in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed or summary statements) and
fairly present in all material respects the financial position of the Company as
of the dates thereof and the results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments).

 

6

 

 

(j) Valid Issuances. The Ordinary Shares are duly authorized and, when issued
and paid for in accordance with the applicable Transaction Documents, will be
duly and validly issued, fully paid, and non-assessable, free and clear of all
Liens imposed by the Company other than restrictions on transfer provided for in
the Transaction Documents.

 

(k) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby, including, without limitation, the issuance of
the Ordinary Shares, do not and will not: (a) result in a violation of the
Company’s or any Subsidiary’s certificate or articles of incorporation, by-laws
or other organizational or charter documents, (b) conflict with, or constitute a
material default (or an event that with notice or lapse of time or both would
become a material default) under, result in the creation of any Lien upon any of
the properties or assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture, instrument or any “lock-up” or similar provision of any
underwriting or similar agreement to which the Company or any Subsidiary is a
party, or (c) result in a violation of any federal, state or local law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or any Subsidiary or by which
any property or asset of the Company or any Subsidiary is bound or affected nor
is the Company otherwise in violation of, conflict with or in default under any
of the foregoing (except in all events for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect). The
business of the Company is not being conducted in violation of any law,
ordinance or regulation of any governmental entity, except for possible
violations that either singly or in the aggregate do not and will not have a
Material Adverse Effect. The Company is not required under federal, state or
local law, rule or regulation to obtain any consent, authorization or order of,
or make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under the
Transaction Documents (other than any SEC, FINRA or state securities filings
that may be required to be made by the Company subsequent to any Closing or any
registration statement that may be filed pursuant hereto); provided that, for
purposes of the representation made in this sentence, the Company is assuming
and relying upon the accuracy of the relevant representations and agreements of
each Investor herein.

 

(l) No Material Adverse Change. No event has occurred that would have a Material
Adverse Effect on the Company that has not been disclosed in the SEC Documents.

 

(m) Litigation and Other Proceedings. Except as disclosed in the SEC Documents
or as set forth on Schedule 3.1(m), there are no actions, suits, investigations,
inquiries or proceedings pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their respective
properties, nor has the Company received any written or oral notice of any such
action, suit, proceeding, inquiry or investigation, which would have a Material
Adverse Effect. No judgment, order, writ, injunction or decree or award has been
issued by or, to the knowledge of the Company, requested of any court,
arbitrator or governmental agency which would have a Material Adverse Effect.
There has not been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the SEC involving the Company, any Subsidiary
or any current or former director or officer of the Company or any Subsidiary.

 

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(n) Registration Rights. No Person (other than the Investors) has any right to
cause the Company to effect the registration under the Securities Act of any
securities of the Company or any Subsidiary.

 

3.2 Representations and Warranties of the Investors. Each Investor hereby, as to
such Investor only and for no other Investor, represents and warrants to the
Company as follows:

 

(a) Organization; Authority. Such Investor, if such Investor is not a natural
person, is an entity or trust duly organized, validly existing and, to the
extent applicable, in good standing under the laws of the jurisdiction of its
organization with the requisite corporate, limited liability company,
partnership or other power and authority to enter into and to consummate the
transactions contemplated by the Transaction Documents and otherwise to carry
out its obligations hereunder and thereunder. The purchase by such Investor of
the Ordinary Shares hereunder and the consummation of the transactions
contemplated by the Transaction Documents have been duly authorized by all
necessary corporate, partnership or other action on the part of such Investor.
This Agreement and the Transaction Documents to which such Investor is a party
or has or will execute have been duly executed and delivered by such Investor
and constitute the valid and binding obligations of such Investor, enforceable
against it in accordance with their terms, except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

 

(b) No Public Sale or Distribution. Such Investor is acquiring the Ordinary
Shares for its own account and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered under the Securities Act or under an exemption from such
registration and in compliance with applicable federal and state securities
laws, and such Investor does not have a present arrangement to effect any
distribution of the Ordinary Shares or any other Ordinary Shares to or through
any person or entity.

 

(c) Investor Status; Risk of Loss. At the time such Investor was offered the
Ordinary Shares, it was, and on the date hereof it is, and on the date on which
it receives the Ordinary Shares it will be, an “accredited investor” as defined
in Rule 501(a) under the Securities Act. Such Investor has such experience in
business and financial matters that such Investor is capable of evaluating the
merits and risks of an investment in the Ordinary Shares. Each Investor
acknowledges that an investment in the Securities is speculative and involves a
high degree of risk and can afford the complete loss of such investment. Such
Investor is not a registered broker dealer registered under Section 15(a) of the
Exchange Act, or a member of FINRA or an entity engaged in the business of being
a broker dealer. Such Investor is not affiliated with any broker dealer
registered under Section 15(a) of the Exchange Act, or a member of FINRA or an
entity engaged in the business of being a broker dealer. Such Investor has made
its own decisions with respect to its investment in the Ordinary Shares, and not
acted or agreed to act as a group with any other Investor or other person
(except to the extent disclosed in a filing with the SEC under Section 13(d) or
13(g) of the Exchange Act) with respect to acquiring, holding, voting or
disposing the Ordinary Shares.

 

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(d) General Solicitation. Such Investor is not purchasing the Ordinary Shares as
a result of any advertisement, article, notice or other communication regarding
the Ordinary Shares published in any newspaper, magazine or similar media,
broadcast over television or radio, disseminated over the Internet or presented
at any seminar or any other general solicitation or general advertisement.
Neither such Investor, nor any Person acting on behalf of such Investor, has
offered or sold, and does not presently intend to offer and sell at any future
time, any Ordinary Shares by any form of general solicitation or general
advertising.

 

(e) No Conflicts. The execution, delivery and performance by such Investor of
this Agreement and each other Transaction Document and the consummation by such
Investor of the transactions contemplated hereby and thereby will not (i) result
in a violation of the organizational documents of such Investor or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which such Investor is a party, or (iii) result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws) applicable to such Investor, except in the case of
clauses (ii) and (iii) above, for such that are not material and do not
otherwise affect the ability of such Investor to consummate the transactions
contemplated hereby or perform its obligations hereunder or thereunder.

 

(f) Access to Information. Such Investor acknowledges that it has had the
opportunity to review the Transaction Documents (including all exhibits and
schedules thereto) and the SEC Documents and has been afforded, (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the offering of the Ordinary Shares and the merits and risks of investing in
the Ordinary Shares; (ii) access to information about the Company and its
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment.

 

(g) Residency. Such Investor is a resident of that jurisdiction specified in its
address on such Investor’s signature page hereto.

 

(h) Not an Israeli Resident. Such Investor confirms that she or he is not a
resident of the State of Israel.

 

(i) Transfer or Resale. Such Investor understands that: (i) the Ordinary Shares
have not been registered under the Securities Act, any U.S. state securities
laws or under the laws of any other jurisdiction, and may not be offered for
sale, sold, assigned or transferred unless (A) subsequently registered
thereunder or (B) such Investor shall have delivered to the Company an opinion
of counsel acceptable to the Company, in a form reasonably acceptable to the
Company, to the effect that such Ordinary Shares to be sold, assigned or
transferred may be sold, assigned or transferred pursuant to an exemption from
such registration; (ii) any sale of the Ordinary Shares made in reliance on Rule
144 may be made only in accordance with the terms of Rule 144 and further, if
Rule 144 is not applicable, any resale of the Ordinary Shares under
circumstances in which the seller (or the Person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the Securities
Act) may require compliance with some other exemption under the Securities Act
or the rules and regulations of the SEC thereunder; and (iii) unless otherwise
provided for in this Agreement, neither the Company nor any other Person is
under any obligation to register the Ordinary Shares under the Securities Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder.

 

(j) No Brokers. No agent, broker, investment banker, person or firm acting in a
similar capacity on behalf of or under the authority of an Investor is or will
be entitled to any broker’s or finder’s fee or any other commission or similar
fee, directly or indirectly, on account of any action taken by the Company or
such Investor in connection with any of the transactions contemplated under this
Agreement.

 

9

 

 

Article IV
ADDITIONAL COVENANTS

 

4.1 Transfer Restrictions.

 

(a) Each Investor covenants that the Ordinary Shares acquired by such Investor
will be disposed of only pursuant to an effective registration statement under,
and in compliance with the requirements of, the Securities Act or pursuant to an
available exemption from the registration requirements of the Securities Act,
and in compliance with applicable state and foreign securities laws. In
connection with any transfer of Ordinary Shares other than pursuant to an
effective registration statement or to the Company, the Company may require the
transferor to provide to the Company an opinion of counsel acceptable to the
Company (which may include the Company counsel), the form and substance of which
opinion shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration under the Securities Act.

 

(b) The Investors agree to the imprinting (or other evidence), until no longer
required by this Section 4.1(b), of those legends set forth in Section 4.1(c),
together with such other legends as may be required by applicable law. The
Ordinary Shares shall not be required to contain such legend or any other legend
(i) following any sale of such Ordinary Shares pursuant to an effective
registration statement under the Securities Act, (ii) pursuant to Rule 144 if
the holder provides the Company with a legal opinion reasonably acceptable to
the Company to the effect that the Ordinary Shares can be sold under Rule 144
issued by counsel acceptable to the Company (which may include the Company
counsel), or (iii) if the holder provides the Company with a legal opinion
reasonably acceptable to the Company issued by counsel acceptable to the Company
(which may include the Company counsel) to the effect that the legend is not
required under applicable requirements of the Securities Act (including
controlling judicial interpretations and pronouncements issued by the Staff of
the SEC).

 

(c) Prior to the effectiveness of the Registration Statement described in
Section 4.2, the certificates (or other evidence) representing the Ordinary
Shares shall bear any legend as required by the “blue sky” laws of any state and
restrictive legends in substantially the following forms (and a stop-transfer
order may be placed against transfer of such share certificates or any Ordinary
Shares held electronically in book-entry with the Company’s transfer agent):

 

THE SHARES REPRESENTED BY THIS SHARE CERTIFICATE HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR SIMILAR LAWS IN OTHER JURISDICTIONS, AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION THEREUNDER, AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE COMPANY
OR OTHER COUNSEL ACCEPTABLE TO THE COMPANY.

 

Such investor understands that the legend set forth above shall be removed and
the Company shall issue a certificate (or similar evidence) without such legend
to the holder of the Ordinary Shares upon which it is stamped, if, unless
otherwise required by state securities laws, (i) such Ordinary Shares (x) are
registered for resale pursuant to an effective registration statement under the
Securities Act and (y) are resold pursuant to such registration statement or
(ii) in connection with a sale, assignment or other transfer pursuant to Rule
144, such holder provides the Company with an opinion of the Company counsel or
a law firm reasonably acceptable to the Company, in a form reasonably acceptable
to the Company, to the effect that such sale, assignment or transfer may be made
in compliance with Rule 144.

 

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4.2 Filing of Current Report; Registration.

 

(a) The Company agrees that it shall file a Current Report on Form 8-K,
including any required Transaction Documents as exhibits thereto, with the SEC
within the time required by the Exchange Act, relating to the transactions
contemplated by, and describing the material terms and conditions of, the
Transaction Documents (the “Current Report”). The Company shall permit the
Investors to review and comment upon the final pre-filing draft version of the
Current Report at least one (1) Trading Day prior to its filing with the SEC,
and the Company shall give reasonable consideration to all such comments. The
Investors shall use their reasonable best efforts to comment upon the final
pre-filing draft version of the Current Report within one (1) Trading Day from
the date each such Investor receives it from the Company.

 

(b) Not later than the 90th day following the Subsequent Closing Date, the
Company will file with the SEC and the state in which such Investor is a
resident a registration statement on Form S-1, Form S-3 or such other form under
the Securities Act as is then available to the Company (including the
prospectus, amendments and supplements to such registration statement or
prospectus, including pre- and post-effective amendments, all exhibits thereto
and all material incorporated by reference or deemed to be incorporated by
reference, if any, in such registration statement, the “Registration
Statement”), providing for the resale from time to time by the Investors of any
and all Registrable Securities. The Company agrees to use its commercially
reasonable efforts to cause the Registration Statement to be declared effective
by the SEC as soon as practicable following such filing. The Company shall
promptly, and in any event within five (5) Business Days, notify the Investors
of the effectiveness of the Registration Statement. The Company shall maintain
the effectiveness of the Registration Statement for so long as there are any
Registrable Securities outstanding that may not be freely transferred
notwithstanding the provisions of Rule 144, with respect to such Registrable
Securities.

 

(c) Promptly following the effective date of the Registration Statement, the
Company shall cause the Ordinary Shares issued to the Investors to be DWAC
Shares and DWAC Eligible.

 

4.3 Shareholders Meeting.

 

(a) The Company shall promptly following the Initial Closing Date, and subject
to the applicable time limitations under the applicable law, summon an
extraordinary meeting of the shareholders of the Company (the “Shareholders
Meeting”). The Company shall include on the agenda of the Shareholders Meeting
(in addition to potentially other items), (i) a proposal to increase the number
of Ordinary Shares authorized for issuance from 50,000,000 to 100,000,000; and
(ii) a proposal to approve the purchase of the Ordinary Shares pursuant to this
Agreement as a private placement the purpose of which is to allow Ivy to hold
25% or more of the total voting rights at the general meeting of the
shareholders of the Company; and (iii) a proposal to elect the applicable Ivy
Designees (as defined below) as directors in accordance with the terms of the
Company’s Articles of Association (collectively, the “Proposals”). The Company
shall consult Ivy, and take into consideration Ivy’s comments, on the text of
the Proposals.

 

(b) Ivy agrees that he (as trustee) shall, and shall cause each member of the
“group” described in that certain Schedule 13D dated July 5, 2019 as filed with
the SEC on July 9, 2019, to, appear in person or by proxy at the Shareholders
Meeting, and any adjournment, postponement, rescheduling or continuation thereof
and vote any and all of the Ordinary Shares for which they have the right to
vote at such Shareholders Meeting in favor of the Proposals.

 

11

 

 

4.4 Board Designation.

 

(a) Subject to the provisions of this Section 4.4, and provided that the Initial
Closing has occurred, the Board shall appoint one (1) representative to the
Board designated by Ivy. After the Subsequent Closing occurs, at Ivy’s election
and upon notice, the Board shall appoint an additional representative designated
by Ivy (together with the representative described in the prior sentence, the
“Ivy Designees”); provided, however that the appointment of Ivy Designees shall
remain valid through the next general meeting of the Company’s shareholders or
as set forth in the Company’s Articles of Association.

 

(b) Each of Ivy Designees may be elected to serve as a member of the Board only
if he or she (a) satisfies the statutory requirements under the Israeli
Companies Law, 1999 to serve as a director of the Company; and (b) provides the
Company with a completed and executed director declaration and “D&O
Questionnaire” in such forms as shall be provided by the Company and such
additional information and documents the Company may reasonably request
(including but not limited to an executed confidentiality agreement).

 

(c) Subject to any legal requirements, the Ivy Designees shall be entitled to
the same compensation, indemnification and directors and officers liability
insurance as the other non-employee directors of the Company.

 

(d) Ivy acknowledges and agrees that each of the Ivy Designees shall be required
to preserve the confidentiality of the Company’s information, including any
non-public information entrusted to or obtained by such director by reason of
his/her position as a director of the Company. The Company hereby consents to
the disclosure by the Ivy Designees of Company information with Ivy or his
Affiliates, provided that Ivy and his Affiliates are then subject to a
non-disclosure agreement with the Company in such form as approved by counsel to
the Company.

 

4.5 Use of Proceeds. The Company shall use the net proceeds from the sale of the
Ordinary Shares hereunder for working capital.

 

4.6 Purchase in the Open Market. Ivy shall be entitled to purchase additional
Ordinary Shares in the open market subject to applicable law and the Company’s
insider trading policy.

 

4.7 Information Rights. Subject to the terms of any non-disclosure or
confidentiality agreement, the Company shall provide Ivy with information and
reports concerning operations and performance similar to and concurrent with the
Company’s reports to its Board.

 

4.8 Rule 10b-5 and Insider Trading Matters. Ivy confirms that he is familiar
with Rule 10b-5 promulgated under the Securities Exchange Act and its
applicability on any material non-public information Ivy may receive from the
Company under this Agreement. Ivy further undertakes to abide to the Company’s
Insider Trading Policy as amended from time to time and any instructions
provided by the Company thereunder.

 

4.9 Listing of Ordinary Shares. The Company shall promptly secure the listing of
all of the Ordinary Shares to be issued to the Investors hereunder on the
Principal Market (subject to official notice of issuance) and shall use
commercially reasonable best efforts to maintain, so long as any of the Ordinary
Shares shall be so listed, the listing of all such Ordinary Shares from time to
time issuable hereunder. The Company shall use its commercially reasonable
efforts to continue the listing and trading of the Ordinary Shares on the
Principal Market (including, without limitation, maintaining sufficient net
tangible assets) and will comply in all respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of the Principal Market.

 

12

 

 

4.10 Pre-Emptive Right. If the Company offers, or intends to offer, any equity
securities (including any instruments convertible for or exchange into equity
securities), except with respect to an Exempt Issuance, the Company covenants
and agrees to first offer such securities to Ivy. If Ivy declines to purchase
such securities, the Company may offer the securities on the same terms and
conditions (or other terms and conditions no less favorable to those offered to
Ivy pursuant to the initial offer pursuant to this Section 4.10) to other
interested persons. If the Company modifies or amends the material terms or
material conditions of such offering before it is completed in a manner that is
less favorable to Ivy than the initial offer pursuant to this Section 4.10, the
Company shall comply again with the provisions of this Section 4.10.

 

4.11 Prohibited Transactions. Each Investor will not, directly or indirectly,
(i) engage in any purchases or sales in any of the Company’s securities,
including derivatives thereof, until permitted under the Company’s insider
trading policy; or (ii) engage in any Short Sales prior to the later of (a) the
date that such Short Sales are not prohibited by applicable law or regulation
and (b) the time the transactions contemplated by this Agreement are publicly
disclosed.

 

Article V
CONDITIONS

 

5.1 Conditions Precedent to the Obligations of the Investors. The obligation of
each Investor to acquire Ordinary Shares at the applicable Closing is subject to
the satisfaction or waiver by such Investor, at or before the Closing, of each
of the following conditions:

 

(a) Representations and Warranties. The representations and warranties of the
Company contained in Section 3.1 shall be true and correct in all material
respects as of the date when made and as of the applicable Closing Date as
though made on and as of the applicable Closing Date (except for those
representations and warranties that speak as of a specific date, which shall be
true and correct in all material respects as of such specified date).

 

(b) Performance. The Company shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by it at or
prior to the applicable Closing.

 

(c) Transaction Documents. The Company shall have executed each of the
Transaction Documents to which it is a party and delivered the same to the
Investors.

 

(d) No Injunction. No Proceeding shall have been filed and no statute, rule,
regulation, executive order, decree, ruling or injunction shall have been
enacted, entered or promulgated by any court or governmental authority of
competent jurisdiction that prohibits or seeks to prohibit or otherwise
challenges the consummation of any of the transactions contemplated by the
Transaction Documents.

 

(e) No Stop Order or Suspension. Neither the SEC, FINRA or the Principal Market
nor any state agency or other administrative body shall have initiated or
instituted any Proceeding relating to the Company or the Ordinary Shares or
issued a stop order or other order suspending trading of the Ordinary Shares.

 

(f) No Change of Executive Officers. There shall have been no change in the
identity of the chief executive officer of the Company since the date hereof.

 

(g) DWAC Eligible. The Ordinary Shares must be DWAC Eligible and not subject to
a “DTC chill.”

 

13

 

 

(h) SEC Documents. All reports, schedules, registrations, forms, statements,
information and other documents required to have been filed by the Company with
the SEC pursuant to the reporting requirements of the Exchange Act shall have
been filed with the SEC within the applicable time periods prescribed for such
filings under the Exchange Act.

 

(i) Subsequent Closing Condition. Only with respect to the Subsequent Closing,
the Company’s shareholders shall have approved the Proposals pursuant to Section
4.3(a) (the “Subsequent Closing Condition”).

 

5.2 Conditions Precedent to the Obligations of the Company. The obligation of
the Company to issue and sell the Ordinary Shares at the applicable Closing is
subject to the satisfaction or waiver by the Company, at or before the
applicable Closing, of each of the following conditions:

 

(a) Representations and Warranties. The representations and warranties of the
Investors contained herein shall be true and correct in all material respects as
of the date when made and as of the applicable Closing Date as though made on
and as of the applicable Closing Date (except for those representations and
warranties that speak as of a specific date, which shall be true and correct in
all material respects as of such specified date).

 

(b) Performance. The Investors shall have performed, satisfied and complied in
all material respects with all covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied with by the
Investors at or prior to the applicable Closing, including, only with respect to
the Subsequent Closing, the satisfaction of the covenant under Section 4.3(b)
above.

 

(c) Transaction Documents. Each Investor shall have executed each of the
Transaction Documents to which it is a party and delivered the same to the
Company. The Investors shall have delivered to the Company those items required
by Section 2.2(b).

 

(d) No Injunction. No Proceeding shall have been filed and no statute, rule,
regulation, executive order, decree, ruling or injunction shall have been
enacted, entered or promulgated by any court or governmental authority of
competent jurisdiction that prohibits or seeks to prohibit or otherwise
challenges the consummation of any of the transactions contemplated by the
Transaction Documents.

 

Article VI

 

INDEMNIFICATION.

 

6.1 Indemnification Obligations. Each Investor and the Company (each an
“Indemnifying Party”) agrees to indemnify and hold harmless the other parties
along with their respective officers, directors, employees, and authorized
agents and members of any Schedule 13D “group”, and each Person or entity, if
any, who controls such party within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act (an “Indemnified Party”) from and against
any Damages and any action in respect thereof to which the Indemnified Party
becomes subject to, resulting from, arising out of or relating to (i) any
misrepresentation, breach of any representation or warranty or nonfulfillment of
or failure to perform any covenant or agreement on the part of the Indemnifying
Party contained in this Agreement, (ii) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
post-effective amendment thereof or supplement thereto or any SEC Document, or
the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading, (iii)
any untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in the light of the
circumstances under which the statements therein were made, not misleading, or
(iv) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation under the
Securities Act, the Exchange Act or any state securities law, as such Damages
are incurred, except to the extent such Damages result primarily from the
Indemnified Party’s failure to perform any covenant or agreement contained in
this Agreement or the Indemnified Party’s negligence, recklessness or bad faith
in performing its obligations under this Agreement; provided, however, that (i)
with respect to the Registration Statement and any other SEC filing, the
foregoing indemnity agreement shall not apply to any Damages of an Indemnified
Party to the extent, but only to the extent, arising out of or based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made by an Indemnifying Party in reliance upon and in conformity with written
information furnished to the Indemnifying Party by the Indemnified Party
expressly for use in the Registration Statement, any post-effective amendment
thereof or supplement thereto, or any preliminary prospectus or final prospectus
(as amended or supplemented) or any other SEC filing; and (ii) the foregoing
indemnity shall not apply to “forward looking statements” made by the Company if
and to the extent such statements are “forward looking statements” as defined
in, and that comply with, 15 U.S. Code § 78u–5(i) and (c), respectively.

 

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6.2 Method of Asserting Indemnification Claims. All claims for indemnification
by any Indemnified Party under Section 6.1 shall be asserted and resolved as
follows:

 

(a) In the event any claim or demand in respect of which an Indemnified Party
might seek indemnity under Section 6.1 is asserted against or sought to be
collected from such Indemnified Party by a Person other than a party hereto or
an affiliate thereof (a “Third Party Claim”), the Indemnified Party shall
deliver a written notification, enclosing a copy of all papers served, if any,
and specifying the nature of and basis for such Third Party Claim and for the
Indemnified Party’s claim for indemnification that is being asserted under any
provision of Section 6.1 against an Indemnifying Party, together with the amount
or, if not then reasonably ascertainable, the estimated amount, determined in
good faith, of such Third Party Claim (a “Claim Notice”) with reasonable
promptness to the Indemnifying Party. If the Indemnified Party fails to provide
the Claim Notice with reasonable promptness after the Indemnified Party receives
notice of such Third Party Claim, the Indemnifying Party shall not be obligated
to indemnify the Indemnified Party with respect to such Third Party Claim to the
extent that the Indemnifying Party’s ability to defend has been prejudiced by
such failure of the Indemnified Party. The Indemnifying Party shall notify the
Indemnified Party as soon as practicable within the period ending thirty (30)
calendar days following receipt by the Indemnifying Party of either a Claim
Notice or an Indemnity Notice (as defined below) (the “Dispute Period”) whether
the Indemnifying Party disputes its liability or the amount of its liability to
the Indemnified Party under Section 6.1 and whether the Indemnifying Party
desires, at its sole cost and expense, to defend the Indemnified Party against
such Third Party Claim.

 

(i) If the Indemnifying Party notifies the Indemnified Party within the Dispute
Period that the Indemnifying Party desires to defend the Indemnified Party with
respect to the Third Party Claim pursuant to this Section 6.2(a), then the
Indemnifying Party shall have the right to defend, with counsel reasonably
satisfactory to the Indemnified Party, at the sole cost and expense of the
Indemnifying Party, such Third Party Claim by all appropriate proceedings, which
proceedings shall be vigorously and diligently prosecuted by the Indemnifying
Party to a final conclusion or will be settled at the discretion of the
Indemnifying Party (but only with the consent of the Indemnified Party in the
case of any settlement that provides for any relief other than the payment of
monetary damages or that provides for the payment of monetary damages as to
which the Indemnified Party shall not be indemnified in full pursuant to Section
6.1). The Indemnifying Party shall have full control of such defense and
proceedings, including any compromise or settlement thereof; provided, however,
that the Indemnified Party may, at the sole cost and expense of the Indemnified
Party, at any time prior to the Indemnifying Party’s delivery of the notice
referred to in the first sentence of this clause (i), file any motion, answer or
other pleadings or take any other action that the Indemnified Party reasonably
believes to be necessary or appropriate to protect its interests; and provided,
further, that if requested by the Indemnifying Party, the Indemnified Party
will, at the sole cost and expense of the Indemnifying Party, provide reasonable
cooperation to the Indemnifying Party in contesting any Third Party Claim that
the Indemnifying Party elects to contest. The Indemnified Party may participate
in, but not control, any defense or settlement of any Third Party Claim
controlled by the Indemnifying Party pursuant to this clause (i), and except as
provided in the preceding sentence, the Indemnified Party shall bear its own
costs and expenses with respect to such participation. Notwithstanding the
foregoing, the Indemnified Party may take over the control of the defense or
settlement of a Third Party Claim at any time if it irrevocably waives its right
to indemnity under Section 6.1 with respect to such Third Party Claim.

 

15

 

 

(ii) If the Indemnifying Party fails to notify the Indemnified Party within the
Dispute Period that the Indemnifying Party desires to defend the Third Party
Claim pursuant to Section 6.2(a), or if the Indemnifying Party gives such notice
but fails to prosecute vigorously and diligently or settle the Third Party
Claim, or if the Indemnifying Party fails to give any notice whatsoever within
the Dispute Period, then the Indemnified Party shall have the right to defend,
at the sole cost and expense of the Indemnifying Party, the Third Party Claim by
all appropriate proceedings, which proceedings shall be prosecuted by the
Indemnified Party in a reasonable manner and in good faith or will be settled at
the discretion of the Indemnified Party (with the consent of the Indemnifying
Party, which consent will not be unreasonably withheld). The Indemnified Party
will have full control of such defense and proceedings, including any compromise
or settlement thereof; provided, however, that if requested by the Indemnified
Party, the Indemnifying Party will, at the sole cost and expense of the
Indemnifying Party, provide reasonable cooperation to the Indemnified Party and
its counsel in contesting any Third Party Claim which the Indemnified Party is
contesting. Notwithstanding the foregoing provisions of this clause (ii), if the
Indemnifying Party has notified the Indemnified Party within the Dispute Period
that the Indemnifying Party disputes its liability or the amount of its
liability hereunder to the Indemnified Party with respect to such Third Party
Claim and if such dispute is resolved in favor of the Indemnifying Party in the
manner provided in clause (iii) below, the Indemnifying Party will not be
required to bear the costs and expenses of the Indemnified Party’s defense
pursuant to this clause (ii) or of the Indemnifying Party’s participation
therein at the Indemnified Party’s request, and the Indemnified Party shall
reimburse the Indemnifying Party in full for all reasonable costs and expenses
incurred by the Indemnifying Party in connection with such litigation. The
Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this clause (ii), and
the Indemnifying Party shall bear its own costs and expenses with respect to
such participation.

 

(iii) If the Indemnifying Party notifies the Indemnified Party that it does not
dispute its liability or the amount of its liability to the Indemnified Party
with respect to the Third Party Claim under Section 6.1 or fails to notify the
Indemnified Party within the Dispute Period whether the Indemnifying Party
disputes its liability or the amount of its liability to the Indemnified Party
with respect to such Third Party Claim, the amount of Damages specified in the
Claim Notice shall be conclusively deemed a liability of the Indemnifying Party
under Section 6.1 and the Indemnifying Party shall pay the amount of such
Damages to the Indemnified Party on demand. If the Indemnifying Party has timely
disputed its liability or the amount of its liability with respect to such
claim, the Indemnifying Party and the Indemnified Party shall proceed in good
faith to negotiate a resolution of such dispute; provided, however, that if the
dispute is not resolved within thirty (30) days after the Claim Notice, the
Indemnifying Party shall be entitled to institute such legal action as it deems
appropriate.

 

(b) In the event any Indemnified Party should have a claim under Section 6.1
against the Indemnifying Party that does not involve a Third Party Claim, the
Indemnified Party shall deliver a written notification of a claim for indemnity
under Section 6.1 specifying the nature of and basis for such claim, together
with the amount or, if not then reasonably ascertainable, the estimated amount,
determined in good faith, of such claim (an “Indemnity Notice”) with reasonable
promptness to the Indemnifying Party. The failure by any Indemnified Party to
give the Indemnity Notice shall not impair such party’s rights hereunder except
to the extent that the Indemnifying Party demonstrates that it has been
irreparably prejudiced thereby. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim or the amount of the claim
described in such Indemnity Notice or fails to notify the Indemnified Party
within the Dispute Period whether the Indemnifying Party disputes the claim or
the amount of the claim described in such Indemnity Notice, the amount of
Damages specified in the Indemnity Notice will be conclusively deemed a
liability of the Indemnifying Party under Section 6.1 and the Indemnifying Party
shall pay the amount of such Damages to the Indemnified Party on demand. If the
Indemnifying Party has timely disputed its liability or the amount of its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party shall proceed in good faith to negotiate a resolution of such dispute;
provided, however, that if the dispute is not resolved within thirty (30) days
after the Claim Notice, the Indemnifying Party shall be entitled to institute
such legal action as it deems appropriate.

 

16

 

 

(c) The Indemnifying Party agrees to pay the Indemnified Party, promptly as such
expenses are incurred and are due and payable, for any reasonable legal fees or
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim.

 

(d) The indemnity provisions contained herein shall be in addition to (i) any
cause of action or similar rights of the Indemnified Party against the
Indemnifying Party or others, and (ii) any liabilities the Indemnifying Party
may be subject to.

 

Article VII
MISCELLANEOUS

 

7.1 Termination. This Agreement may be terminated by the Company or Investors
having the right to acquire a majority of Ordinary Shares hereunder, by written
notice to the other parties, if (1) the Initial Closing has not been consummated
by January 31, 2020; or (2) the Subsequent Closing has not been consummated by
April 30, 2020; provided that no such termination will affect the right of any
party to sue for any breach by the other party (or parties), and further
provided that no termination of this Agreement after the Initial Closing has
occurred shall invalidate the transactions contemplated under the Initial
Closing.

 

7.2 Fees and Expenses. Each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement and the other Transaction Documents,
provided that the Company shall pay $15,000 for Ivy’s counsel’s fees and
expenses. The Company shall pay all transfer agent fees, stamp taxes and other
taxes and duties levied in connection with the sale and issuance of Ordinary
Shares.

 

7.3 Entire Agreement; Further Assurances. The Transaction Documents, together
with the Exhibits, Annexes and Schedules thereto, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules. At or after the applicable Closing, and
without further consideration, the Company and the Investors will execute and
deliver to the Investors such further documents as may be reasonably requested
in order to give practical effect to the intention of the parties under the
Transaction Documents.

 

7.4 Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of (a) the date of transmission, if such
notice or communication is delivered via email at the email address specified on
the applicable signature page to this Agreement prior to 6:30 p.m. Eastern Time
on a Business Day, (b) the next Business Day after the date of transmission, if
such notice or communication is delivered via email at the email address
specified on the applicable signature page to this Agreement on a day that is
not a Business Day or later than 6:30 p.m. Eastern Time on any Business Day,
(c) the Business Day following the date of deposit with a nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom such
notice is required to be given. The addresses and email addresses for such
notices and communications are those set forth on the signature pages hereof, or
such other address or email addresses as may be designated in writing hereafter,
in the same manner, by any such Person.

 

17

 

 

7.5 Amendments; Waivers. No provision of this Agreement may be waived or amended
except in a written instrument signed, in the case of an amendment, by the
Company and the Investors holding or having the right to acquire a majority of
the Ordinary Shares to be purchased hereunder at the time of such amendment or,
in the case of a waiver, by the party against whom enforcement of such waiver is
sought. No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such
right.

 

7.6 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

 

7.7 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of Ivy. Any Investor may not assign
his rights under this Agreement or any rights or obligations hereunder without
the prior written consent of Ivy; provided that, upon the approval of Ivy, (i)
such Person to whom such Investor assigns or transfers any Ordinary Shares,
agrees in writing with the transferee or assignee to assign such rights, and a
copy of such agreement is furnished to the Company after such assignment,
(ii) the Company is furnished with written notice of the name and address of
such transferee or assignee, (iii) following such transfer or assignment, the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act and applicable state securities laws, (iv)
such transferee agrees in writing to be bound, with respect to the transferred
Ordinary Shares, by the provisions hereof that apply to the “Investors” and (v)
such transfer shall have been made in accordance with the applicable
requirements of this Agreement and with all laws applicable thereto.

 

7.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person.

 

7.9 Governing Law; Venue; Waiver of Jury Trial. ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ISRAEL.
THE COMPANY AND INVESTORS HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE
JURISDICTION OF ANY COURT OF COMPETENT JURISDICTION LOCATED IN TEL AVIV-JAFFA,
ISRAEL AND SEATTLE, WASHINGTON FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY
THE COMPANY OR ANY INVESTOR HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY
TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO
THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY
WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE
COMPANY OR ANY INVESTOR, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND
CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY
(WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES
TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD
AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN
SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER
PERMITTED BY LAW. THE COMPANY AND INVESTORS HEREBY WAIVE ALL RIGHTS TO A TRIAL
BY JURY.

 

18

 

 

7.10 Survival. Unless this Agreement is terminated pursuant to Section 7.1, the
representations and warranties contained herein shall survive for a period of
two years immediately following the applicable Closing Date, and the other
agreements and covenants contained herein shall survive the applicable Closing
Date indefinitely.

 

7.11 Execution. This Agreement may be executed in counterparts, all of which
when taken together shall be considered one and the same agreement. In the event
that any signature is delivered by email attachment, such signature shall create
a valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such email-attached
signature page were an original thereof.

 

7.12 Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Agreement shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

 

7.13 Independent Nature of Investors’ Obligations and Rights. The obligations of
each Investor under any Transaction Document are several and not joint with the
obligations of any other Investor, and no Investor shall be responsible in any
way for the performance of the obligations of any other Investor under any
Transaction Documents. Nothing contained herein or in any Transaction Document,
and no action taken by any Investor pursuant thereto, shall be deemed to
constitute the Investors as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Investors are in any
way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Document. Each Investor
acknowledges that no other Investor has acted as agent for such Investor in
connection with making its investment hereunder and that no other Investor will
be acting as agent of such Investor in connection with monitoring its investment
hereunder. Each Investor shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Investor to be joined as an additional party in any
Proceeding for such purpose.

 

7.14 Publicity. The Company and the Investors shall consult with each other in
issuing any press releases or otherwise making public statements with respect to
the transactions contemplated hereby and no party shall issue any such press
release or otherwise make any such public statement, other than as required by
law, without the prior written consent of the other parties, which consent shall
not be unreasonably withheld or delayed, except that no prior consent shall be
required if such disclosure is required by law, in which such case the
disclosing party shall provide the other party with prior notice of such public
statement. The Investors acknowledge that the Transaction Documents may be
deemed to be “material contracts,” as that term is defined by Item 601(b)(10) of
Regulation S-K, and that the Company may therefore be required to file such
documents as exhibits to reports or registration statements filed under the
Securities Act or the Exchange Act. The Investors further agree that the status
of such documents and materials as material contracts shall be determined solely
by the Company, in consultation with its counsel.

 

[SIGNATURE PAGES FOLLOW]

 

19

 

 

IN WITNESS WHEREOF, the parties hereto have executed or caused this Agreement to
be duly executed by their respective authorized signatories as of the date first
indicated above.

 

  On Track Innovations Ltd.       By: /S/ Yehuda Holtzman   Name:  Yehuda
Holtzman   Title: Chief Executive Officer       Address for Notices:   c/o On
Track Innovations Ltd.   Z.H.R. Industrial Zone, P.O. Box 32,   Rosh Pina,
Israel, 1200000   Attn: Yehuda Holtzman, Chief Executive Officer   Email:
_____________       With a copy (which shall not constitute notice) to:      
ZAG/S&W LLP   41-45 Rothschild Blvd., Beit Zion, Tel Aviv, 65784 Israel   Attn:
Shy S. Baranov, Adv.   Email: _________________

 

[Company Signature Page to Share Purchase Agreement]

 

20

 

 

Investor Signature Page

 

IN WITNESS WHEREOF, by its execution and delivery of this signature page, the
undersigned Investor hereby joins in and agrees to be bound by the terms and
conditions of that certain Share Purchase Agreement dated as of December 23,
2019 (the “Agreement”), by and among On Track Innovations Ltd., a company formed
under the laws of the State of Israel, and the Investors party thereto, as to
the number of Ordinary Shares set forth below such Investor’s name below, and
authorizes this signature page to be attached to the Agreement or counterparts
thereof. 

 

  Name of Investor: Jerry L. Ivy, Jr. Descendants’ Trust       /S/ Jerry L. Ivy,
Jr.   Name: Jerry L. Ivy, Jr.   Title: Trustee                            With a
copy (which shall not constitute notice) to:       Law Office of Mark R. Beatty
  10900 N.E. 4th Street, Suite 1850   Bellevue, WA 98004   Attn:   Mark R.
Beatty   Email:  ___________       Number of Ordinary Shares Purchased:
10,000,000 to be split between the Initial Closing and Subsequent Closing as
follows:       Number of Ordinary Shares Purchased at the Initial Closing:
5,200,000       Number of Ordinary Shares Purchased at the Subsequent Closing:
4,800,000       Aggregate Purchase Price: $2,000,000 to be split between the
Initial Closing and Subsequent Closing as follows:       Purchase Price at the
Initial Closing: $1,040,000       Purchase Price at the Subsequent Closing:
$960,000      

Address: _____________

      Telephone No.: _________       Email Address: _________

 

[Investor Signature Page to Share Purchase Agreement]

 

21

 

 

Investor Signature Page

 

IN WITNESS WHEREOF, by its execution and delivery of this signature page, the
undersigned Investor hereby joins in and agrees to be bound by the terms and
conditions of that certain Share Purchase Agreement dated as of December 23,
2019 (the “Agreement”), by and among On Track Innovations Ltd., a company formed
under the laws of the State of Israel, and the Investors party thereto, as to
the number of Ordinary Shares set forth below such Investor’s name below, and
authorizes this signature page to be attached to the Agreement or counterparts
thereof.

 

  Name of Investor: William C. Anderson       Signature:  /S/ William C.
Anderson       Number of Ordinary Shares Purchased: 2,000,000 to be split
between the Initial Closing and Subsequent Closing as follows:       Number of
Ordinary Shares Purchased at the Initial Closing: 1,040,000       Number of
Ordinary Shares Purchased at the Subsequent Closing: 960,000       Aggregate
Purchase Price: $400,000 to be split between the Initial Closing and Subsequent
Closing as follows:       Purchase Price at the Initial Closing: $208,000      
Purchase Price at the Subsequent Closing: $192,000      

Address: ________________

      Telephone No.: ___________       Email Address: ___________

 

[Investor Signature Page to Share Purchase Agreement]

 

22

 

 

Investor Signature Page

 

IN WITNESS WHEREOF, by its execution and delivery of this signature page, the
undersigned Investor hereby joins in and agrees to be bound by the terms and
conditions of that certain Share Purchase Agreement dated as of December 23,
2019 (the “Agreement”), by and among On Track Innovations Ltd., a company formed
under the laws of the State of Israel, and the Investors party thereto, as to
the number of Ordinary Shares set forth below such Investor’s name below, and
authorizes this signature page to be attached to the Agreement or counterparts
thereof.

 

  Name of Investor: James Scott Medford       Signature:  /S/ James Scott
Medford       Number of Ordinary Shares Purchased: 500,000 to be split between
the Initial Closing and Subsequent Closing as follows:       Number of Ordinary
Shares Purchased at the Initial Closing: 260,000       Number of Ordinary Shares
Purchased at the Subsequent Closing: 240,000       Aggregate Purchase Price:
$100,000 to be split between the Initial Closing and Subsequent Closing as
follows:       Purchase Price at the Initial Closing: $52,000       Purchase
Price at the Subsequent Closing: $48,000      

Address: _____________

      Telephone No.: _________       Email Address: _________

 

[Investor Signature Page to Share Purchase Agreement]

 

23

 

 

Schedule 2.2(b)(i)

 

Wire Transfer Instructions

 

 

 

 

 

 

24

 

 

Undertaking to Israel Innovation Authority

 

Schedule 2.2(b)(ii)

 

נוהל מס’: 02-05 נספח ב

עדכון מס’ 1

תקף מתאריך

18/04/2016 עמוד 1 מתוך 1

 

To:___The National Technological Innovation Authority (“Innovation Authority”)

 

Relating to projects that have been financed by or are currently being financed
by the Innovation Authority (or have been financed by the Office of the Chief
Scientist of the Ministry of Economy and Industry - hereinafter referred to as
the “OCS”) _______________ [Please specify project title and file number] and to
projects of the Company (as this term is defined below) that may be financed by
the Innovation Authority in the future (the “Projects”).

 

Undertaking

 

We, the undersigned, of __________________ [Foreign investor’s name] a company
incorporated, organized and existing under the laws of _______________ and whose
registered office is at _________________ (“______”), having, by an agreement
dated _________, committed to invest in ____________ Ltd. (the “Company”), in
exchange for [number and type of shares] ________ shares of the Company;

 

Recognizing that the Company’s research and development or technological
innovation Projects are currently, have been or will be financially supported by
the Innovation Authority or the OCS under and subject to the provisions of The
Encouragement of Research, Development and Technological Innovation in the
Industry Law 5744-1984 (the “Innovation Law”) and the, applicable regulations,
rules, procedures and benefit plans;

 

Recognizing that the Innovation Law places strict constraints on the transfer of
know-how and/or production rights, making all such transfers subject to the
absolute discretion of the Innovation Authority’s research committee (the
“Research Committee”), acting in accordance with the aims of the Innovation Law
and requiring that any such transfer receive the prior written approval of the
Research Committee;

 

Hereby declare and undertake:

 

1.To observe strictly all the requirements of the Innovation Law and the
provisions of the applicable regulations, rules, procedures and benefit plans,
as applied to the Company and as directed by the Research Committee, in
particular those requirements relating to the prohibitions on the transfer of
know-how and/or production rights.

 

2.As a shareholder of the Company, to make all reasonable efforts that the
Company shall observe strictly all the requirements of the Innovation Law and
the provisions of the applicable regulations, rules, procedures and benefit
plans, as applied to the Company and as directed by the Research Committee, in
particular those requirements relating to the prohibitions on the transfer of
know-how and/or production rights.

 

      Date   Name (block letters) and signature of Authorized Company
Representative and Company Seal

 

25

 

 

ON TRACK INNOVATIONS LTD.

 

SCHEDULES

 

 

 

 

 

 

 

 

 

26