EXHIBIT 10.48



                                     Warrant

THE WARRANT  EVIDENCED OR CONSTITUTED  HEREBY,  AND ALL ORDINARY SHARES ISSUABLE
HEREUNDER,  HAVE  BEEN  AND  WILL  BE  ISSUED  WITHOUT  REGISTRATION  UNDER  THE
SECURITIES ACT OF 1933, AS AMENDED ("THE ACT") AND MAY NOT BE SOLD,  OFFERED FOR
SALE,  TRANSFERRED,  PLEDGED OR HYPOTHECATED  WITHOUT REGISTRATION UNDER THE ACT
UNLESS  EITHER (i) THE COMPANY HAS  RECEIVED AN OPINION OF COUNSEL,  IN FORM AND
SUBSTANCE   REASONABLY   SATISFACTORY  TO  THE  COMPANY,   TO  THE  EFFECT  THAT
REGISTRATION  IS NOT REQUIRED IN CONNECTION  WITH SUCH  DISPOSITION  OR (ii) THE
SALE OF SUCH SECURITIES HAS BEEN REGISTERED UNDER THE ACT.

                       WARRANT TO PURCHASE ORDINARY SHARES
                          OF ON TRACK INNOVATIONS LTD.

NO. 1

         This Certifies That, for value received,  Herald  Investment Trust PLC,
(the  "Holder"),  is  entitled,  subject  to the  terms and  conditions  of this
Warrant, to purchase from On Track Innovations Ltd., an Israeli corporation (the
"Company"),  at a price  per  share as  specified  below up to  90,909  Ordinary
Shares,  par  value  NIS 0.1 each  (subject  to  adjustment  for  stock  splits,
recapitalization events and the like) (the "Warrant Shares").

         Terms used  herein and not  otherwise  defined  shall have the  meaning
assigned thereto in the Stock and Warrant Purchase Agreement dated July 10, 2003
between  the  Holder  and  the  Company   attached  hereto  as  Exhibit  1  (the
"Agreement").

1. CERTAIN  DEFINITIONS.  As used in this Warrant the following terms shall have
the following respective meanings:

         "HSR Act" means the  Hart-Scott-Rodino  Antitrust  Improvements  Act of
1976, as amended.

          "Registered  Holder"  means any Holder in whose  name this  Warrant is
registered upon the books and records maintained by the Company.

         "Warrant"  as used  herein,  includes  this  Warrant  and  any  warrant
delivered in substitution or exchange therefor as provided herein.

2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         2.1 Due  Authorization;  Consents.  All corporate action on the part of
the  Company,  its  officers,  directors  and  shareholders  necessary  for  the
authorization, execution and delivery of, and the performance of all obligations
of the Company under, this Warrant, and the authorization, issuance, reservation
for  issuance and delivery of all of the Warrant  Shares,  has been taken.  This
Warrant  is a  valid  and  binding  obligation  of the  Company  enforceable  in
accordance with its terms, subject,


<PAGE>

as to enforcement of remedies, to applicable bankruptcy, insolvency, moratorium,
reorganization  and similar laws affecting  creditors'  rights  generally and to
general equitable principles. All consents, approvals and authorizations of, and
registrations,   qualifications   and  filings   with,   any  federal  or  state
governmental  agency,  authority  or  body,  or any  third  party,  required  in
connection with the execution,  delivery and performance of this Warrant and the
consummation of the transactions contemplated hereby have been obtained.

         2.2   Governmental   Consents.   All   consents,   approvals,   orders,
authorizations or registrations,  qualifications,  designations, declarations or
filings  with any  governmental  authority  on the part of Company  required  in
connection with the  consummation of the transactions  contemplated  herein have
been obtained.

         2.3 Compliance  with Other  Instruments.  The  execution,  delivery and
performance  of and  compliance  with this Warrant and the  consummation  of the
transactions  contemplated  hereby will not be in conflict  with or  constitute,
with or without  the  passage of time or the giving of notice or both,  either a
default under the  Memorandum of  Association,  Articles of  Association,  other
constitutive  document,  or any  agreement  or  contract  of the  Company,  or a
violation  of any  statutes,  laws,  regulations  or orders,  or an event  which
results in the creation of any lien, charge or encumbrance upon any asset of the
Company.

3. EXERCISE OF WARRANT

         3.1A.  Subject  to  compliance  with the terms and  conditions  of this
Warrant and applicable securities laws, this Warrant may be exercised,  in whole
or in part with  respect  to the  applicable  number of  Warrant  Shares,  at an
exercise price (the "Exercise Price") of U.S. $3.85 per Warrant Share;  provided
that in the event a registration  statement  under the United States  Securities
Act of 1933, as amended,  covering the Warrant Shares is not declared  effective
by January 10, 2004, the then applicable Exercise Price shall decrease by twenty
percent  (20%) at the end of each  quarter  thereafter  until such  registration
statement is declared effective.

         3.1B. The Holder may exercise this Warrant in respect of the applicable
number  of  Warrant  Shares,  at any time or from  time to time by the  delivery
(including, without limitation,  delivery by facsimile) of the form of Notice of
Exercise attached hereto as Exhibit 2 (the "Notice of Exercise"),  duly executed
by  the  Holder,  at the  principal  office  of the  Company,  and  as  soon  as
practicable after such date, surrendering:

                  (a) this Warrant at the principal office of the Company, and

                  (b) payment, (i) in cash (by check) or by wire transfer, of an
amount  equal to the  product  obtained by  multiplying  the number of shares of
Warrant  Shares  being  purchased  upon  such  exercise  by the then  applicable
Exercise  Price,  except that if Holder is subject to HSR Act  Restrictions  (as
defined in Section 3.6 below),  the Exercise Amount shall be paid to the Company
within five (5) business days of the termination of all HSR Act Restrictions.

         3.2.  Fractional  Shares. The Company shall pay the Holder cash in lieu
of any fraction of a share equal to such  fraction of the Exercise  Price of one
whole  share of  Warrant  Shares.  No  fractional  shares or scrip  representing
fractional shares shall be issued upon an exercise of this Warrant.

                                       2
<PAGE>

         3.3. HSR Act. The Company  hereby  acknowledges  that  exercise of this
Warrant  by Holder  may  subject  the  Company  and/or  the Holder to the filing
requirements  of the HSR Act and that Holder may be  prevented  from  exercising
this Warrant until the expiration or early  termination  of all waiting  periods
imposed by the HSR Act ("HSR Act Restrictions").

         3.4.  Partial  Exercise;  Effective  Date of  Exercise.  In case of any
partial  exercise of this  Warrant,  the Company  shall cancel this Warrant upon
surrender  hereof and shall  execute and deliver a new Warrant of like tenor and
date for the balance of the shares of Warrant Shares purchasable hereunder. This
Warrant shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided  above.  However,
if Holder is subject to HSR Act filing requirements this Warrant shall be deemed
to have  been  exercised  on the  date  immediately  following  the  date of the
expiration  of all HSR Act  Restrictions.  The person  entitled  to receive  the
shares of Warrant Shares issuable upon exercise of this Warrant shall be treated
for all  purposes  as the  holder of  record  of such  shares as of the close of
business on the date the Holder is deemed to have exercised this Warrant.

         3.5 Expiration of Warrant.  This Warrant shall expire,  with respect to
the  applicable  number of Warrant Shares only, on the earlier to occur of : (a)
the date  that is five (5) years  following  the date of this  Warrant;  (b) the
merger  or  consolidation  of the  Company  with or into,  or the sale of all or
substantially  all of the assets or shares of the Company to,  another person or
entity,   following  which  the  Company  is  not  the  surviving  entity  ("M&A
Transaction");  provided,  however,  that the Holder  receives at least 30 days'
prior  written  notice of such follow on offering  and shall be entitled to make
its exercise of this Warrant conditional upon the closing of such transaction.

4. VALID ISSUANCE;  TAXES. All shares of Warrant Shares issued upon the exercise
of this Warrant shall be validly issued, fully paid and non-assessable,  and the
Company shall pay all taxes and other  governmental  charges that may be imposed
in respect of the issue or delivery  thereof.  The Company shall not be required
to pay any tax or other charge imposed in connection with any transfer  involved
in the  issuance  of any  certificate  for shares of Warrant  Shares in any name
other than that of the Registered  Holder of this Warrant,  and in such case the
Company  shall not be  required  to issue or deliver  any stock  certificate  or
security  until  such  tax or  other  charge  has  been  paid,  or it  has  been
established to the Company's reasonable satisfaction that no tax or other charge
is due.

5.  ADJUSTMENT  OF  PURCHASE  PRICE AND NUMBER OF  SHARES.  In  addition  to any
adjustment to the Warrant Shares required by the terms of such Warrant Shares in
the Company's  Articles of  Association,  the number of shares of Warrant Shares
issuable  upon  exercise  of this  Warrant  (or any  shares  of  stock  or other
securities or property receivable or issuable upon exercise of this Warrant) and
the Purchase  Price are subject to adjustment  upon  occurrence of the following
events:

         5.1. Adjustment for Share Splits, Share Subdivisions or Combinations of
Shares. The Purchase Price of this Warrant shall be proportionally decreased and
the number of shares of Warrant  Shares  issuable  upon exercise of this Warrant
(or any shares of stock or other  securities  at the time issuable upon exercise
of this Warrant) shall be proportionally increased to reflect any stock split or
subdivision  of the Company's  Warrant Shares or Ordinary  Shares.  The Purchase
Price of this Warrant shall be proportionally increased and the number of shares
of Warrant Shares issuable

                                       3
<PAGE>

upon exercise of this Warrant (or any shares of stock or other securities at the
time issuable upon exercise of this Warrant) shall be  proportionally  decreased
to reflect any combination of the Company's Shares.

         5.2.  Adjustment  for  Dividends  or  Distributions  of Shares or Other
Securities or Property.  In case the Company shall make or issue, or shall fix a
record date for the  determination of eligible  holders  entitled to receive,  a
dividend or other distribution with respect to the Warrant Shares (or any shares
of stock or other  securities at the time issuable upon exercise of the Warrant)
payable in (a) securities of the Company or (b) assets (excluding cash dividends
paid or payable solely out of retained  earnings),  then, in each such case, the
Holder of this  Warrant on exercise  hereof at any time after the  consummation,
effective  date or record  date of such  dividend or other  distribution,  shall
receive,  in  addition  to the shares of Warrant  Shares (or such other stock or
securities)  issuable  on such  exercise  prior to such date,  and  without  the
payment of  additional  consideration  therefor,  the  securities  or such other
assets of the Company to which such Holder  would have been  entitled  upon such
date if such  Holder  had  exercised  this  Warrant  on the date  hereof and had
thereafter,  during the period from the date hereof to and including the date of
such exercise,  retained such shares and/or all other additional stock available
by it as aforesaid  during such period giving effect to all  adjustments  called
for by this Section 5.

         5.3.   Reclassification.   If  the  Company,   by  reclassification  of
securities or otherwise, shall change any of the securities as to which purchase
rights  under  this  Warrant  exist  into  the  same or a  different  number  of
securities  of any  other  class  or  classes,  this  Warrant  shall  thereafter
represent  the right to acquire such number and kind of securities as would have
been issuable as the result of such change with respect to the  securities  that
were subject to the purchase rights under this Warrant immediately prior to such
reclassification  or other  change and the  Purchase  Price  therefore  shall be
appropriately  adjusted,  all subject to further  adjustment as provided in this
Section 5. No  adjustment  shall be made  pursuant to this  Section 5.3 upon any
conversion or  redemption of the Warrant  Shares which is the subject of Section
5.5.

         5.4. Adjustment for Capital Reorganization, Merger or Consolidation. In
case of any capital  reorganization  of the capital stock of the Company  (other
than  a  combination,  reclassification,   exchange  or  subdivision  of  shares
otherwise  provided for herein),  or any merger or  consolidation of the Company
with or into another  corporation,  or the sale of all or substantially  all the
assets  of  the  Company  then,  and in  each  such  case,  as a  part  of  such
reorganization,  merger, consolidation, sale or transfer, lawful provision shall
be made so that the Holder of this  Warrant  shall  thereafter  be  entitled  to
receive upon exercise of this Warrant,  during the period  specified  herein and
upon payment of the Purchase Price then in effect, the number of shares of stock
or other securities or property of the successor corporation resulting from such
reorganization,  merger,  consolidation,  sale or transfer  that a holder of the
shares  deliverable  upon  exercise of this Warrant  would have been entitled to
receive in such reorganization,  consolidation, merger, sale or transfer if this
Warrant  had been  exercised  immediately  before such  reorganization,  merger,
consolidation,  sale or transfer,  all subject to further adjustment as provided
in this Section 5. The foregoing  provisions of this Section 5.4 shall similarly
apply  to  successive  reorganizations,   consolidations,   mergers,  sales  and
transfers and to the stock or securities  of any other  corporation  that are at
the  time  receivable  upon  the  exercise  of this  Warrant.  If the  per-share
consideration  payable to the Holder  hereof for shares in  connection  with any
such transaction is in a form other than cash or marketable securities, then the
value of

                                       4
<PAGE>

such  consideration  shall be determined in good faith by the Company's Board of
Directors. In all events, appropriate adjustment (as determined in good faith by
the  Company's  Board  of  Directors)  shall be made in the  application  of the
provisions  of this  Warrant  with  respect to the rights and  interests  of the
Holder after the  transaction,  to the end that the  provisions  of this Warrant
shall be applicable  after that event, as near as reasonably may be, in relation
to any shares or other  property  deliverable  after that event upon exercise of
this Warrant. This Section 5.4 is subject to Section 3.8 above.

6. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment in the Purchase
Price, or number or type of shares  issuable upon exercise of this Warrant,  the
Chief  Financial  Officer  or  Controller  of the  Company  shall  compute  such
adjustment  in  accordance  with  the  terms  of  this  Warrant  and  prepare  a
certificate  setting forth such  adjustment and showing in detail the facts upon
which such adjustment is based,  including a statement of the adjusted  Purchase
Price.  The Company shall  promptly send (by facsimile and by either first class
mail, postage prepaid or overnight  delivery) a copy of each such certificate to
the Holder.

7. LOSS OR MUTILATION.  Upon receipt of evidence reasonably  satisfactory to the
Company of the ownership of and the loss,  theft,  destruction  or mutilation of
this Warrant, and of indemnity  reasonably  satisfactory to it, and (in the case
of mutilation) upon surrender and cancellation of this Warrant, the Company will
execute  and  deliver in lieu  thereof a new  Warrant of like tenor as the lost,
stolen, destroyed or mutilated Warrant.

8. RESERVATION OF WARRANT SHARES. The Company hereby covenants that at all times
there shall be reserved for issuance and delivery  upon exercise of this Warrant
such number of shares of Warrant  Shares or other shares of capital stock of the
Company as are from time to time  issuable  upon  exercise of this  Warrant and,
from time to time,  will  take all steps  necessary  to amend  its  Articles  of
Association to provide sufficient  reserves of shares of Warrant Shares issuable
upon exercise of this  Warrant.  All such shares shall be duly  authorized,  and
when  issued  upon  such  exercise,  shall be  validly  issued,  fully  paid and
non-assessable,  free and clear of all liens,  security  interests,  charges and
other  encumbrances or restrictions on sale and free and clear of all preemptive
rights,  except  encumbrances  or  restrictions  arising  under federal or state
securities laws. Issuance of this Warrant shall constitute full authority to the
Company's officers who are charged with the duty of executing share certificates
to execute and issue the  necessary  certificates  for shares of Warrant  Shares
upon the exercise of this Warrant.

9. [Intentionally omitted]

10.  RESTRICTIONS ON TRANSFER.  The Holder, by acceptance  hereof,  agrees that,
absent  an  effective  registration  statement  filed  with  the SEC  under  the
Securities  Act of 1933 (the "Act"),  covering the  disposition  or sale of this
Warrant or the Warrant  Shares issued or issuable  upon  exercise  hereof as the
case may be, and registration or qualification under applicable state securities
laws,  such Holder will not sell,  transfer,  pledge,  or hypothecate any or all
such Warrants or Warrant Shares, unless such transfer is performed in compliance
with the provisions of the Company's  Articles of Association and either (i) the
Company has  received an opinion of counsel,  in form and  substance  reasonably
satisfactory  to the  Company,  to the  effect  that  such  registration  is not
required in connection with such disposition or (ii) the sale of such securities
has been registered under the Act.

                                       5
<PAGE>

11.  COMPLIANCE WITH SECURITIES LAWS. By acceptance of this Warrant,  the Holder
hereby  represents,  warrants and covenants  that any shares of stock  purchased
upon exercise of this Warrant shall be acquired for investment only and not with
a view to, or for sale in connection  with, any distribution  thereof;  that the
Holder has had such  opportunity  as such  Holder has deemed  adequate to obtain
from  representatives  of the Company such information as is necessary to permit
the Holder to evaluate  the merits and risks of its  investment  in the Company;
that the Holder is able to bear the economic  risk of holding such shares as may
be acquired  pursuant to the exercise of this Warrant for an indefinite  period;
that the Holder  understands  that the shares of stock acquired  pursuant to the
exercise of this Warrant will not be registered under the Act (unless  otherwise
required pursuant to exercise by the Holder of the registration  rights, if any,
previously granted to the registered Holder) and will be "restricted securities"
within  the  meaning  of Rule 144  under  the Act and that  the  exemption  from
registration under Rule 144 will not be available for at least one year from the
date of exercise of this  Warrant,  subject to any special  treatment by the SEC
for exercise of this Warrant  pursuant to Section 3.2, and even then will not be
available unless a public market then exists for the stock, adequate information
concerning  the Company is then  available  to the  public,  and other terms and
conditions  of Rule 144 are  complied  with;  and that  all  stock  certificates
representing  shares of stock issued to the Holder upon exercise of this Warrant
may have affixed thereto a legend substantially in the following form:

         THE SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN REGISTERED  UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
         LAWS OF ANY STATE.  THESE  SECURITIES  ARE SUBJECT TO  RESTRICTIONS  ON
         TRANSFERABILITY  AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
         AS PERMITTED UNDER THE ACT AND THE APPLICABLE  STATE  SECURITIES  LAWS,
         PURSUANT TO REGISTRATION OR EXEMPTION  THEREFROM.  INVESTORS  SHOULD BE
         AWARE THAT THEY MAY BE  REQUIRED  TO BEAR THE  FINANCIAL  RISKS OF THIS
         INVESTMENT  FOR AN  INDEFINITE  PERIOD  OF TIME.  THE  ISSUER  OF THESE
         SECURITIES  MAY  REQUIRE AN  OPINION  OF COUNSEL IN FORM AND  SUBSTANCE
         SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED  TRANSFER OR
         RESALE  IS  IN  COMPLIANCE  WITH  THE  ACT  AND  ANY  APPLICABLE  STATE
         SECURITIES LAWS.

12. NO RIGHTS OR LIABILITIES AS SHAREHOLDERS. This Warrant shall not entitle the
Holder to any voting rights or other rights as a shareholder of the Company.  In
the absence of  affirmative  action by the Holder to purchase  Warrant Shares by
exercise of this  Warrant no  provisions  of this  Warrant,  and no  enumeration
herein of the rights or  privileges of the Holder hereof shall cause such Holder
hereof to be a shareholder of the Company for any purpose.

13. NOTICES. All notices and other communications  hereunder shall be in writing
and shall be given in person,  by registered mail (registered  international air
mail if mailed internationally), by an overnight courier service which obtains a
receipt

                                       6
<PAGE>

to evidence  delivery,  or by  facsimile  transmission  (provided  that  written
confirmation of receipt is provided), addressed as set forth below:

If to the Company:         On Track Innovations Ltd.
                           Z.H.R. Industrial Zone
                           Rosh Pina, Israel 12000

With a copy to:            Zysman, Aharoni, Gayer & Co., Law Offices
                           52A Hayarkon Street
                           Tel Aviv, Israel 63432
                           Attn: Shy Baranov, Adv.
                           Fax Number: +972-3-7955520

If to Holder:              Herald Investment Trust PLC
                           12 Charterhouse Square
                           London EC1M 6AX

Or such other address as any party may designate to the other in accordance with
the  aforesaid  procedure.  All notices and other  communications  delivered  in
person or by courier  service shall be deemed to have been given as of three (3)
business days after sending thereof, those given by facsimile transmission shall
be deemed given  twenty-four hours following  transmission,  and all notices and
other  communications  sent by  registered  mail (or air mail if the  posting in
international) shall be deemed given seven (7) days after posting.

14.  HEADINGS.  The headings in this Warrant are for purposes of  convenience in
reference only, and shall not be deemed to constitute a part hereof.

15.  GOVERNING  LAW;  JURISDICTION.  Any claim arising under or relating to this
Warrant, shall be governed by the laws of the State of Israel, without regard to
principles of conflict of laws. Each party hereto consents that any legal action
or proceeding against it under, arising out of or in any manner relating to this
Warrant  shall be  brought  exclusively  in the  courts of the State of New York
located  in New York  County  or in the  United  States  District  Court for the
Southern District of New York. Each party hereto expressly waives any right to a
trial by jury in any action or proceeding  under this  Warrant,  and agrees that
any such  action or  proceeding  shall be tried  before a court and not before a
jury.

16. NO  IMPAIRMENT.  The Company  will at all times in good faith  assist in the
carrying  out of all such terms and in the  taking of all such  action as may be
necessary or appropriate in order to protect the rights of the Registered Holder
of this Warrant  against  impairment.  Without  limiting the  generality  of the
foregoing,  the  Company  (a) will not  increase  the par value of any shares of
stock  issuable  upon the  exercise  of this  Warrant  above the amount  payable
therefor  upon  such  exercise,  and (b) will  take all  such  action  as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and  non-assessable  shares of Warrant  Shares upon  exercise of this
Warrant.

17. NOTICES OF RECORD DATE. In case:

         17.1.  the  Company  shall take a record of the  holders of its Warrant
Shares (or other stock or securities at the time receivable upon the exercise of
this  Warrant),  for the purpose of  entitling  them to receive any  dividend or
other  distribution,  or any

                                       7
<PAGE>

right to subscribe for or purchase any shares of stock of any class or any other
securities or to receive any other right; or

         17.2.  of any  consolidation  or  merger  of the  Company  with or into
another   corporation,   any  capital   reorganization   of  the  Company,   any
reclassification  of the share capital of the Company,  or any conveyance of all
or  substantially  all of the assets of the  Company to another  corporation  in
which  holders  of the  Company's  stock are to  receive  stock,  securities  or
property of another corporation; or

         17.3. of any voluntary  dissolution,  liquidation  or winding-up of the
Company; or

         17.4.  of any  redemption or  conversion  of all  outstanding  Ordinary
Shares or Warrant Shares;

then, and in each such case, if applicable, the Company will mail or cause to be
mailed to the Registered Holder of this Warrant a notice specifying, as the case
may be,  (i) the date on which a record is to be taken for the  purpose  of such
dividend,  distribution or right, or (ii) the date on which such reorganization,
reclassification,  consolidation, merger, conveyance, dissolution,  liquidation,
winding-up,  redemption or conversion is to take place,  and the time, if any is
to be fixed,  as of which the  holders  of record of  Warrant  Shares,  Ordinary
Shares  or (such  stock or  securities  as at the time are  receivable  upon the
exercise of this Warrant), shall be entitled to exchange their shares of Warrant
Shares,  Ordinary Shares (or such other stock or securities),  for securities or
other  property   deliverable   upon  such   reorganization,   reclassification,
consolidation,  merger, conveyance, dissolution, liquidation or winding-up. Such
notice  shall be  delivered  at least  ten (10) days  prior to the date  therein
specified.

18.  SEVERABILITY.  If any term,  provision,  covenant  or  restriction  of this
Warrant is held by a court of  competent  jurisdiction  to be  invalid,  void or
unenforceable,   the   remainder  of  the  terms,   provisions,   covenants  and
restrictions  of this Warrant shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.

19. COUNTERPARTS. For the convenience of the parties, any number of counterparts
of  this  Warrant  may be  executed  by the  parties  hereto  and  delivered  by
facsimile,  and each such executed  counterpart shall be, and shall be deemed to
be, an original instrument.

20. NO  INCONSISTENT  AGREEMENTS.  The Company  will not on or after the date of
this  Warrant  enter into any  agreement  with respect to its  securities  which
prohibits the rights granted to the Holders of this Warrant.  The rights granted
to  the  Holders  hereunder  do not  in  any  way  conflict  with  and  are  not
inconsistent  with the rights  granted to  holders of the  Company's  securities
under any other agreements, except rights that have been waived or lapsed.

         [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                       8
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
July 10, 2003.


HERALD INVESTMENT TRUST PLC                 On Track Innovations Ltd.


By: /s/ Drene Jackson                       By: /s/ Oded Bashan


Drene Jackson                               Oded Bashan
Printed Name                                Printed Name


Fund Manager                                President
Title                                       Title








                                       9
<PAGE>



                                    EXHIBIT 1

                                    AGREEMENT





                 [OMITTED - will be furnished to the Securities
                     and Exchange Commission upon request.]













                                       10
<PAGE>



                                    EXHIBIT 2

                               NOTICE OF EXERCISE

                    (To be executed upon exercise of Warrant)

On Track Innovations Ltd.                                    WARRANT NO. __

The  undersigned  hereby  irrevocably  elects to exercise  the right of purchase
represented by the within Warrant  Certificate for, and to purchase  thereunder,
the securities of On Track Innovations Ltd., as provided for therein, and (check
the applicable box):

|_|      Tenders  herewith  payment of the exercise price in full in the form of
         cash or (by check) or by wire transfer in same-day  funds in the amount
         of  $____________  for  _________  such  securities,  pursuant  to  the
         Warrant.

|_|

Please issue a certificate or  certificates  for such securities in the name of,
and pay any cash for any  fractional  share to (please  print name,  address and
social security number):

Name:             _____________________________________________________

Address:          _____________________________________________________

Signature:        _____________________________________________________


Note: The above signature should  correspond  exactly with the name on the first
page of this Warrant Certificate.

If said  number of  shares  shall not be all the  shares  purchasable  under the
within  Warrant  Certificate,  a new Warrant  Certificate is to be issued in the
name of said  undersigned  for the balance  remaining of the shares  purchasable
thereunder rounded up to the next higher whole number of shares.


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