Document:

EXHIBIT 10.41

                             AGREEMENT AND AMENDMENT

         This  AGREEMENT  AND  AMENDMENT  is made as of September 4, 2003 by and
among On Track Innovations Ltd., an Israeli company (the "Company"),  Goldstrand
Investment,  Inc.  ("Goldstrand")  and,  as to Sections 1 and 4 through 6 hereof
only, Seth Fireman ("Fireman").

         WHEREAS,  on June 27,  2003 (the  "Effective  Date"),  the  Company and
Goldstrand entered into (i) a Subscription  Agreement (the "Initial Subscription
Agreement")  for 50,000  Ordinary  Shares of the Company,  par value NIS 0.1 per
share (each,  an "Ordinary  Share"),  (ii) a Subscription  Agreement for 100,000
Ordinary  Shares (the "Second  Subscription  Agreement"  and,  together with the
Initial  Subscription  Agreement,  the  "Subscription  Agreements"),  and  (iii)
Registration Rights Agreement dated as of June 27, 2003; and

         WHEREAS,  on the  Effective  Date,  the Company  issued to Goldstrand a
warrant (the "Warrant") to purchase up to 23,913 Ordinary Shares, at an exercise
price per Ordinary Share of $5.75; and

         WHEREAS, on June 30, 2003, the Company agreed to issue a second warrant
to purchase additional  Ordinary Shares (the "Additional  Warrant" and, together
with the Warrant,  the  "Warrants")  subject to certain terms and conditions set
forth in the Company's undertaking to Fireman (the "Warrant Confirmation"); and

         WHEREAS,  it has come to the  attention of the parties that as a result
of their bona fide  oversight,  the number of Ordinary Shares issuable under the
Warrant and the  Additional  Warrant is inaccurate and that it reflects a lesser
number of  Ordinary  Shares for which such  Warrants  are  exercisable  than the
parties had contemplated; and

         WHEREAS,  in order to reflect the original  intention of the parties as
of the Effective  Date, the parties hereto agree,  as of the Effective  Date, to
(i)  terminate  the  Warrant  Confirmation  in  its  entirety,  (ii)  amend  the
Subscription  Agreements  and the  Warrants,  and (iii)  append  the form of the
Warrant and the Additional Warrant to the Initial Subscription Agreement and the
Second Subscription Agreement, respectively.

         NOW, THEREFORE, in consideration of the premises and for other good and
valuable   consideration,   the  receipt  and   adequacy  of  which  are  hereby
acknowledged, the parties hereto agree as follows:

1. Termination of the Warrant  Confirmation.  The Warrant Confirmation is hereby
terminated in its entirety,  effective as of June 30, 2003, is null and void and
of no further force or effect.

<PAGE>

2. Amendments to the Initial Subscription Agreement.

         (a) A new Section 1A shall be inserted immediately  following Section 1
thereof, to read in its entirety as follows:

         "1A.  Immediately  upon the subscription of the Ordinary Shares and the
full payment of $137,500 for the shares so being  subscribed,  the Company shall
issue to the Subscriber a warrant in the form attached  hereto as Exhibit A, for
the purchase of 50,000  Ordinary  Shares of the Company,  par value NIS 0.1, per
share."

         (b) The warrant described in Section 1A shall be annexed to the Initial
Subscription Agreement in the form annexed hereto as Exhibit A.

         (c) Concurrently  herewith,  Goldstrand shall return the Warrant to the
Company,  the Company  shall cancel the Warrant,  and the Company shall issue to
Goldstrand  a new  warrant  in the form if  Exhibit A  hereto.  The date of such
warrant shall be the Effective Date.

3. Amendment to the Second Subscription Agreement.

         (a) A new Section 1A shall be inserted immediately  following Section 1
thereof, to read in its entirety as follows:

         "1A.  Immediately  upon the subscription of the Ordinary Shares and the
full payment of $275,000 for the shares so being  subscribed,  the Company shall
issue to the Subscriber a warrant in the form attached  hereto as Exhibit A, for
the purchase of 50,000  Ordinary  Shares of the Company,  par value NIS 0.1, per
share."

         (b) The warrant described in Section 1A shall be annexed to the Initial
Subscription Agreement in the form annexed hereto as Exhibit B.

4.  Effect  of  Amendment.  Except  as  expressly  amended  hereby,  each of the
Subscription Agreements, shall remain in full force and effect.

5. Law  Governing.  This  Agreement  shall be  governed  by,  and  construed  in
accordance  with, the internal laws of the State of New York,  without regard to
principles of conflicts of law.

6.  Counterparts.  This Agreement may be executed in any number of counterparts,
and by the parties  hereto in separate  counterparts,  each of which so executed
shall  be  deemed  to be an  original  and all of  which  taken  together  shall
constitute one and the same agreement.

                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

<PAGE>

         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.

                                      ON TRACK INNOVATIONS LTD.

                                      By: /s/ Oded Bashan, /s/ Ronnie Gilboa
                                          Name:  Oded Bashan, Ronnie Gilboa
                                          Title: President, VP Projects

                                      GOLDSTRAND INVESTMENT, INC.

                                      By: /s/ Seth Fireman
                                          Name:  Seth Fireman
                                          Title: Managing Director

Agreed to and accepted as of the date first written
 above (as to Sections 1 and 4 through 6 only):

/s/ Seth Fireman
Seth Fireman

<PAGE>

                                    EXHIBIT A
                                 FORM OF WARRANT

                                     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,  Goldstrand  Investment (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 50,000 Ordinary Shares,  par value
NIS 0.1 each (subject to adjustment  for stock splits,  recapitalization  events
and the like) (the "Warrant Shares").

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.

<PAGE>

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, 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. $5.75 per Warrant Share.

         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 1 (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.

<PAGE>

         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.

         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 three (3) 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:
<PAGE>

         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 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
<PAGE>

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 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

<PAGE>

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.

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.
<PAGE>

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 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:              Goldstrand Investment
                           1040 1st Avenue, #190
                           New York, New York 10022

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.
<PAGE>

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 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]

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
July 14, 2003.

GOLDSTRAND INVESTMENT                            On Track Innovations Ltd.

By:___________________________                   By:____________________________

_____________________________                    _______________________________
Printed Name                                     Printed Name

_____________________________                    _______________________________
Title                                            Title

<PAGE>

                                    EXHIBIT 1

                               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.

<PAGE>

                                    EXHIBIT B
                                 FORM OF WARRANT

                                     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,  Goldstrand  Investment (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 50,000 Ordinary Shares,  par value
NIS 0.1 each (subject to adjustment  for stock splits,  recapitalization  events
and the like) (the "Warrant Shares").

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.

<PAGE>

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, 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. $5.75 per Warrant Share.

         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 1 (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.
<PAGE>

         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.

         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 three (3) 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:
<PAGE>

         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 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
<PAGE>

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 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.

10.  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.

11. [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
<PAGE>

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.

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.
<PAGE>

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 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:              Goldstrand Investment
                           1040 1st Avenue, #190
                           New York, New York 10022

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.
<PAGE>

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 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]

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
_____________.

GOLDSTRAND INVESTMENT                             On Track Innovations Ltd.

By:___________________________                    By:___________________________

_____________________________                     ______________________________
Printed Name                                      Printed Name

_____________________________                     ______________________________
Title                                             Title

<PAGE>

                                    EXHIBIT 1

                               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.EXHIBIT 10.42

                          REGISTRATION RIGHTS AGREEMENT

         REGISTRATION  RIGHTS  AGREEMENT  dated as of the 27th day of June, 2003
(this  "Agreement")  by and  between  ON  TRACK  INNOVATIONS  LTD.,  an  Israeli
corporation (the Corporation"), and Goldstrand Investment (the "Investor").

         WHEREAS,  the  Investor  owns or has the right to purchase or otherwise
acquire  shares  of  the  Ordinary  Shares  (as  hereinafter   defined)  of  the
Corporation;

         WHEREAS,  the  Corporation  and the  Investor  deem  it to be in  their
respective  best interests to set forth the rights of the Investor in connection
with the public offerings and sales of the Ordinary Shares;

         NOW,  THEREFORE,  in consideration of the premises and mutual covenants
and obligations  hereinafter set forth,  the Corporation and the Investor hereby
agree as follows:

         Section 1. Definitions.

         As used in this Agreement the following  terms shall have the following
meanings:

         (a)  "Commission"  means the Securities and Exchange  Commission or any
other Federal agency at the time administering the Securities Act.

         (b)  "Exchange  Act" means the  Securities  Exchange Act of 1934 or any
successor  Federal  statute,  and the rules and  regulations  of the  Commission
promulgated thereunder, all as the same shall be in effect from time to time.

         (c) "Investor" means the person identified in the preamble hereto.

         (d) "Ordinary Shares" means the ordinary shares of the Corporation, NIS
0.1 nominal value.

         (e) "Other  Shares"  means at any time those shares of Ordinary  Shares
which do not constitute Primary Shares or Registrable Shares.

         (f)  "Primary  Shares"  means at any time the  authorized  but unissued
shares of Ordinary Shares held by the Corporation in its treasury.

         (g)  "Registrable  Shares" means shares of Ordinary  Shares held by the
Investor. As to any particular Registrable Shares, once issued, such Registrable
Shares shall cease to be Registrable  Shares when (i) they have been  registered
under the Securities Act, the registration statement in connection therewith has
been  declared  effective  and they  have  been  disposed  of  pursuant  to such
effective  registration  statement,  (ii)  they  are  eligible  to  be  sold  or
distributed  pursuant  to Rule 144 within any  consecutive  three  month  period
(including,  without  limitation,  Rule 144(k)) without volume  limitations,  or
(iii) they shall have ceased to be outstanding.

         (h) "Rule 144" means Rule 144  promulgated  under the Securities Act or
any  successor  rule thereto or any  complementary  rule  thereto  (such as Rule
144A).

         (i) "Securities  Act" means the Securities Act of 1933 or any successor
Federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect from time to time.
<PAGE>

         Section 2. Required Registration.

         The Investor may demand that the  Corporation  effect the  registration
under the Securities Act of Registrable  Shares.  The Corporation shall promptly
use its best efforts to effect the registration  under the Securities Act of the
Registrable  Shares  which the  Corporation  has been so  requested  to register
within 60 days after the date hereof;  provided,  however,  that the Corporation
shall not be  obligated  to effect any  registration  under the  Securities  Act
except in accordance with the following provisions:

         (a) the  Corporation  shall not be obligated to use its best efforts to
file and cause to become  effective  (i) more  than one  registration  statement
initiated pursuant to this Section 2 or (ii) any registration  statements during
any period in which any other registration  statement (other than on Form S-4 or
Form S-8  promulgated  under the Securities Act or any successor  forms thereto)
pursuant to which  Primary  Shares are to be or were sold has been filed and not
withdrawn or has been declared effective within the prior 90 days.

         (b) the  Corporation  may delay  the  filing  or  effectiveness  of any
registration statement for a period of up to 90 days after the date of a request
for  registration  pursuant to this Section 2 if at the time of such request (i)
the  Corporation is engaged,  or has fixed plans to engage within 90 days of the
time of such  request,  in a firm  commitment  underwritten  public  offering of
Primary  Shares  in  which  the  holders  of  Registrable   Shares  may  include
Registrable  Shares  pursuant  to Section 3 or (ii) the  Corporation  reasonably
determines that such registration and offering would interfere with any material
transaction  involving the  Corporation,  as approved by the Board of Directors,
provided   however,   that  the   Corporation  may  only  delay  the  filing  or
effectiveness  of a registration  statement  pursuant to this Section 2(b) for a
total of 120 days after the date of a request for registration  pursuant to this
Section 2.

         (c) with  respect to any  registration  pursuant to this Section 2, the
Corporation  shall give notice of such  registration to the holders of all Other
Shares which are entitled to registration rights and the Corporation may include
in such registration any Primary Shares or Other Shares; provided, however, that
if the managing  underwriter  advises the Corporation  that the inclusion of all
Registrable  Shares,  Primary Shares and/or Other Shares proposed to be included
in such registration  would interfere with the successful  marketing  (including
pricing) of the Registrable Shares proposed to be included in such registration,
then the number of  Registrable  Shares,  Primary  Shares  and/or  Other  Shares
proposed to be included in such registration  shall be included in the following
order:

              (i) first, the Registrable Shares requested to be included in such
registration  (or,  if  necessary,  such  Registrable  Shares pro rata among the
holders  thereof  based upon the number of  Registrable  Shares  requested to be
registered by each such holder);

              (ii) second, the Primary Shares; and

              (iii) third,  the Other Shares which are entitled to  registration
rights.

         (d) At any time before the registration  statement covering Registrable
Shares  become  effective,  the holders of a majority of such shares may request
the Corporation to withdraw or not to file the registration  statement.  In that
event,  if such request of withdrawal  shall not have been caused by, or made in
response  to,  the  material  adverse  effect  of  an  event  on  the  business,
properties,   conditions,   financial  or   otherwise,   or  operations  of  the
Corporation,  the holders shall have used their demand  registration right under
this  Section 2 and the  Corporation  shall no longer be  obligated  to register
Registrable  Shares pursuant to the exercise of such registration right pursuant
to this Section 2 unless the remaining  holders shall pay to the Corporation the
expenses incurred by the Corporation through the date of such request.

                                       2
<PAGE>

         Section 3. Piggyback Registration.

         If the  Corporation  at any time  proposes  for any reason to  register
Primary  Shares or Other Shares under the Securities Act (other than on Form S-4
or  Form  S-8  promulgated  under  the  Securities  Act or any  successor  forms
thereto),  it shall give written  notice to the Investor of its  intention so to
register such Primary Shares or Other Shares at least 30 days before the initial
filing of such registration  statement and, upon the written request,  delivered
to the  Corporation  within 20 days  after  delivery  of any such  notice by the
Corporation,  of the Investor to include in such registration Registrable Shares
(which  request shall specify the number of  Registrable  Shares  proposed to be
included in such registration and shall state that such Investor desires to sell
such Registrable Shares in the public securities markets), the Corporation shall
use its best efforts to cause all such Registrable Shares to be included in such
registration on the same terms and conditions as the securities  otherwise being
sold in such registration;  provided,  however, that if the managing underwriter
advises the Corporation  that the inclusion of all Registrable  Shares requested
to be  included  in  such  registration  would  interfere  with  the  successful
marketing  (including pricing) of the Primary Shares or Other Shares proposed to
be registered by the Corporation, then the number of Primary Shares, Registrable
Shares and Other Shares  proposed to be included in such  registration  shall be
included in the following order:

         (a) if the Corporation  proposes to register Primary Shares, or Primary
Shares and Other Shares:

              (i) First, the Primary Shares; and

              (ii) Second,  the Registrable Shares and Other Shares requested to
be included in such registration (or, if necessary,  such Registrable Shares and
Other Shares pro rata among the holders  thereof based upon the number of shares
of Registrable  Shares and Other Shares  requested to be registered by each such
holder); or

         (b) if the Corporation  proposes to register Other Shares pursuant to a
request  for  registration  by the  holders of such  Other  Shares  (other  than
pursuant to Section 3 hereof):

              (i) First,  the Other  Shares held by the parties  demanding  such
registration; and

              (ii) Second,  the Registrable  Shares and Other Shares (other than
shares registered pursuant to Section 3(b)(1) hereof) requested to be registered
by the  holders  hereof (or, if  necessary,  pro rata among the holders  thereof
based on the number of  Registrable  Shares  and Other  Shares  requested  to be
registered by such holders).

         Section 4. Holdback Agreement.

         If the Corporation at any time shall register shares of Ordinary Shares
under the Securities Act (including any registration  pursuant to Sections 2 and
3 hereof) for sale to the public, the Investor shall not sell publicly, make any
short sale of,  grant any  option  for the  purchase  of, or  otherwise  dispose
publicly of, any Registrable  Shares (other than those shares of Ordinary Shares
included in such  registration  pursuant to Sections 2 and 3 hereof) without the
prior written consent of the Corporation,  for a reasonable period designated by
the  Corporation  as  required  by  any  underwriter  in  connection  with  such
registration. The Corporation shall obtain the agreement of any person permitted
to sell shares of stock in a registration to be bound by and to comply with this
Section 4 as if such person was an Investor hereunder.

                                       3
<PAGE>

         Section 5. Preparation and Filing.

         If and whenever the Corporation is under an obligation  pursuant to the
provisions of this Agreement to use its best efforts to effect the  registration
of  any  Registrable   Shares,   the  Corporation   shall  as  expeditiously  as
practicable:

         (a)  use its  best  efforts  to  cause a  registration  statement  that
registers such Registrable Shares to become and remain effective for a period of
90 days or until  all of such  Registrable  Shares  have  been  disposed  of (if
earlier);

         (b) furnish,  at least five business days before filing a  registration
statement that registers such Registrable  Shares, a prospectus relating thereto
or any  amendments or supplements  relating to such a registration  statement or
prospectus,  to one counsel selected by the Investor (the "Investor's Counsel"),
copies of all such documents proposed to be filed (it being understood that such
five-business-day  period  need  not  apply  to  successive  drafts  of the same
document  proposed to be filed so long as such successive drafts are supplied to
the  Investor's  Counsel in advance of the  proposed  filing by a period of time
that is customary and reasonable under the circumstances);

         (c)  prepare  and  file  with  the  Commission   such   amendments  and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration  statement effective for
at least a period of 90 days or until all of such  Registrable  Shares have been
disposed of (if earlier) and to comply with the provisions of the Securities Act
with respect to the sale or other disposition of such Registrable Shares;

         (d)  notify in  writing  the  Investor's  Counsel  promptly  (i) of the
receipt by the Corporation of any  notification  with respect to any comments by
the Commission with respect to such registration  statement or prospectus or any
amendment  or  supplement  thereto  or any  request  by the  Commission  for the
amending or  supplementing  thereof or for additional  information  with respect
thereto, (ii) of the receipt by the Corporation of any notification with respect
to the issuance by the Commission of any stop order suspending the effectiveness
of such  registration  statement or  prospectus  or any  amendment or supplement
thereto or the  initiation or threatening of any proceeding for that purpose and
(iii) of the receipt by the Corporation of any notification  with respect to the
suspension  of the  qualification  of such  Registrable  Shares  for sale in any
jurisdiction  or the  initiation  or  threatening  of any  proceeding  for  such
purposes;

         (e) use its best efforts to register or qualify such Registrable Shares
under  such  other  securities  or blue  sky laws of such  jurisdictions  as the
Investor  reasonably  request and do any and all other acts and things which may
be reasonably  necessary or advisable to enable the Investor to  consummate  the
disposition  in  such  jurisdictions  of the  Registrable  Shares  owned  by the
Investor;  provided,  however,  that the  Corporation  will not be  required  to
qualify generally to do business,  subject itself to general taxation or consent
to general service of process in any  jurisdiction  where it would not otherwise
be  required  to do so but for this  paragraph  (e) or to provide  any  material
undertaking or make any changes in its By-laws or  Certificate of  Incorporation
which the Board of Directors  determines to be contrary to the best interests of
the Corporation or to modify any of its contractual relationships then existing;

         (f) furnish to the Investor holding such Registrable Shares such number
of copies of a summary  prospectus,  if any,  or other  prospectus,  including a
preliminary  prospectus,  in conformity with the  requirements of the Securities
Act, and such other  documents as such Investor may reasonably  request in order
to facilitate the public sale or other disposition of such Registrable Shares;

                                       4
<PAGE>

         (g) without  limiting  subsection  (e) above,  use its best  efforts to
cause such  Registrable  Shares to be registered  with or approved by such other
governmental  agencies  or  authorities  as may be  necessary  by  virtue of the
business and operations of the  Corporation to enable the Investor  holding such
Registrable Shares to consummate the disposition of such Registrable Shares;

         (h) notify the  Investor  holding such  Registrable  Shares on a timely
basis at any time  when a  prospectus  relating  to such  Registrable  Shares is
required to be delivered under the Securities Act within the appropriate  period
mentioned in  subparagraph  (a) of this Section 4, of the happening of any event
as a result of which the prospectus included in such registration  statement, as
then in effect,  includes  an untrue  statement  of a material  fact or omits to
state a material  fact  required to be stated  therein or  necessary to make the
statements  therein not misleading in light of the  circumstances  then existing
and, at the  request of an  Investor,  prepare  and  furnish to such  Investor a
reasonable  number  of  copies  of a  supplement  to or  an  amendment  of  such
prospectus as may be necessary so that, as thereafter  delivered to the offerees
of such  shares,  such  prospectus  shall not include an untrue  statement  of a
material fact or omit to state a material fact required to be stated  therein or
necessary  to make  the  statements  therein  not  misleading  in  light  of the
circumstances then existing;

         (i) subject to the execution of confidentiality  agreements in form and
substance satisfactory to the Corporation, make available upon reasonable notice
and during normal  business hours,  for inspection by the Investor  holding such
Registrable Shares, any underwriter participating in any disposition pursuant to
such registration statement and any attorney, accountant or other agent retained
by the Investor or underwriter (collectively,  the "Inspectors"),  all pertinent
financial and other records, pertinent corporate documents and properties of the
Corporation  (collectively,  the "Records"), as shall be reasonably necessary to
enable  them to  exercise  their  due  diligence  responsibility,  and cause the
Corporation's  officers,  directors  and  employees  to supply  all  information
(together with the Records, the "Information")  reasonably requested by any such
Inspector in connection with such registration statement. Any of the Information
which the Corporation  determines in good faith to be confidential  and of which
determination  the  Inspectors  are so  notified,  shall not be disclosed by the
Inspectors  unless (i) the disclosure of such  Information is necessary to avoid
or correct a misstatement or an omission in the registration statement, (ii) the
release of such  Information  is ordered  pursuant  to a subpoena or other order
from a court of competent  jurisdiction or (iii) such  Information has been made
generally  available  to the public;  the  Investor  agree that they will,  upon
learning that  disclosure of such  information is sought in a court of competent
jurisdiction,  give notice to the Corporation and allow the Corporation,  at the
Corporation's  expense, to undertake appropriate action to prevent disclosure of
the Information deemed confidential;

         (j) use its best  efforts  to  obtain  from its  independent  certified
public  accountants  "cold comfort" letters addressed to the Corporation and any
selling  Stockholders  in  customary  form and at  customary  times and covering
matters of the type customarily covered by cold comfort benefits;

         (k) use its best  efforts  to obtain  from its  counsel  an  opinion or
opinions  in  customary  form  addressed  to the  Corporation  and  any  selling
Stockholders;

         (l)  provide a  transfer  agent and  registrar  (which  may be the same
entity and which may be the Corporation) for such Registrable Shares;

         (m) issue to any  underwriter  to which the Investor may sell shares in
such offering certificates evidencing such Registrable Shares;

         (n) list such Registrable Shares on any national securities exchange on
which any shares of the Ordinary Shares are listed or, if the Ordinary Shares is
not listed on a national  securities  exchange,  use its best efforts to qualify
such Registrable  Shares for inclusion on the automated  quotation system of the

                                       5
<PAGE>

National  Association of Securities  Dealers,  Inc. (the "NASD"),  or such other
national  securities  exchange as the holders of a majority of such  Registrable
Shares shall reasonably request;

         (o) otherwise use its best efforts to comply with all applicable  rules
and regulations of the Commission and make available to its security holders, as
soon as reasonably practicable,  earnings statements (which need not be audited)
covering a period of 12 months beginning within three months after the effective
date of the registration statement,  which earnings statements shall satisfy the
provisions of Section 11 (a) of the Securities Act; and

         (p) subject to all the other provisions of this Agreement, use its best
efforts to take all other steps  accessory  to effect the  registration  of such
Registrable Shares contemplated hereby.

         The Investor,  upon receipt of any notice from the  Corporation  of any
event of the kind described in Section 4(h) hereof, shall forthwith  discontinue
disposition of the  Registrable  Shares pursuant to the  registration  statement
covering such Registrable  Shares until the Investor's  receipt of the copies of
the supplemented or amended prospectus contemplated by Section 4(h) hereof, and,
if so directed by the Corporation, the Investor shall deliver to the Corporation
all copies, other than permanent file copies then in the Investor's  possession,
of the  prospectus  covering such  Registrable  Shares at the time of receipt of
such notice.

         Section 6. Expenses

         All  expenses  (other  than  underwriting   discounts  and  commissions
relating to the  Registrable  Shares,  as provided in the last  sentence of this
Section 6) incurred by the  Corporation in complying with Section 5,  including,
without  limitation,  all  registration  and filing fees (including all expenses
incident  to  filing  with  the  NASD),  fees and  expenses  of  complying  with
securities  and blue sky  laws,  printing  expenses,  fees and  expenses  of the
Corporation's  counsel and accountants,  and reasonable fees and expenses of the
Investor's Counsel,  shall be paid by the Corporation;  provided,  however, that
all underwriting discounts and selling commissions applicable to the Registrable
Shares and Other Shares shall be borne by the holders  selling such  Registrable
Shares and Other Shares,  in proportion to the number of Registrable  Shares and
Other Shares sold by each such holder.

         Section 7. Indemnification.

         (a) In connection with any registration of any Registrable Shares under
the Securities Act pursuant to this Agreement,  the Corporation  shall indemnify
and hold harmless the  Investor,  each  underwriter,  broker or any other person
acting on behalf of the holders of Registrable  Shares and each other person, if
any,  who  controls  any of the  foregoing  persons  within  the  meaning of the
Securities  Act against any losses,  claims,  damages or  liabilities,  joint or
several (or actions in respect  thereof),  to which any of the foregoing persons
may  become  subject  under the  Securities  Act or  otherwise,  insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue  statement  or  allegedly  untrue  statement of a
material  fact  contained  in  the  registration   statement  under  which  such
Registrable  Shares were  registered  under the Securities  Act, any preliminary
prospectus or final  prospectus  contained  therein or otherwise  filed with the
Commission,  any  amendment or  supplement  thereto or any document  incident to
registration or qualification of any Registrable  Shares, or arise out of or are
based upon the  omission or alleged  omission to state  therein a material  fact
required to be stated  therein or necessary to make the  statements  therein not
misleading or, with respect to any prospectus,  necessary to make the statements
therein in light of the circumstances under which they were made not misleading,
or any violation by the Corporation of the Securities Act or state securities or
blue sky laws  applicable to the  Corporation and relating to action or inaction
required  of  the   Corporation  in  connection   with  such   registration   or
qualification  under such state securities or blue sky laws; and shall reimburse
the  Investor,  such  underwriter,  such broker or such other  person  acting on
behalf of the holders of Registrable Shares and each such controlling person for
any legal or other  expenses  reasonably  incurred by any of them in  connection
with  investigating  or defending  any such loss,  claim,  damage,

                                       6
<PAGE>

liability or action; provided, however, that the Corporation shall not be liable
in any such case to the extent that any such loss, claim,  damage,  liability or
action  (including  any legal or other  expenses  incurred)  arises out of or is
based upon an untrue  statement  or  allegedly  untrue  statement or omission or
alleged omission made in said registration  statement,  preliminary  prospectus,
final prospectus,  amendment  supplement or document incident to registration or
qualification of any Registrable  Shares in reliance upon and in conformity with
written  information  furnished to the  Corporation  through an instrument  duly
executed by the Investor or his counsel or underwriter  specifically  for use in
the preparation thereof; provided further, however, that the foregoing indemnity
agreement is subject to the condition that,  insofar as it relates to any untrue
statement,  omission or alleged omission made in any preliminary  prospectus but
eliminated or remedied in the final  prospectus  (filed  pursuant to Rule 424 of
the Securities Act), such indemnity  agreement shall not inure to the benefit of
any Investor, underwriter, broker or other person acting on behalf of holders of
the Restricted  Shares from whom the person asserting any loss,  claim,  damage,
liability  or expense  purchased  the  Restricted  Shares  which are the subject
thereof,  if a copy of such final  prospectus  had been made  available  to such
person and such Investor,  underwriter,  broker or other person acting on behalf
of holders of the Registrable Shares and such final prospectus was not delivered
to such  person with or prior to the  written  confirmation  of the sale of such
Registrable Shares to such person.

         (b) In connection with any registration of Registrable Shares under the
Securities Act pursuant to this Agreement, the Investor shall indemnify and hold
harmless  (in the  same  manner  and to the  same  extent  as set  forth  in the
preceding  paragraph of this Section 7) the  Corporation,  each  director of the
Corporation,  each officer of the Corporation  who shall sign such  registration
statement,  each  underwriter,  broker or other  person  acting on behalf of the
holders of Registrable  Shares and each person who controls any of the foregoing
persons  within the meaning of the  Securities Act with respect to any statement
or omission from such  registration  statement,  any  preliminary  prospectus or
final prospectus  contained therein or otherwise filed with the Commission,  any
amendment or  supplement  thereto or any document  incident to  registration  or
qualification of any Registrable  Shares, if such statement or omission was made
in reliance upon and in  conformity  with written  information  furnished to the
Corporation  or such  underwriter  specifically  for use in connection  with the
preparation  of  such  registration  statement,  preliminary  prospectus,  final
prospectus, amendment, supplement or document.

         (c) Promptly  after  receipt by an  indemnified  party of notice of the
commencement  of any  action  involving  a claim  referred  to in the  preceding
paragraphs of this Section 7, such indemnified party will, if a claim in respect
thereof is made against an indemnifying party, give written notice to the latter
of the  commencement  of such action.  The failure of any  indemnified  party to
notify an  indemnifying  party of any such action shall not (unless such failure
shall have a material  adverse  effect on the  indemnifying  party)  relieve the
indemnified  party on  account  of this  Section  7. In case any such  action is
brought against an indemnified party, the indemnifying party will be entitled to
participate  in and to  assume  the  defense  thereof,  jointly  with any  other
indemnifying  party  similarly  notified  to the extent  that it may wish,  with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying  party to such  indemnified  party of its election so to assume
the defense  thereof,  the  indemnifying  party shall not be responsible for any
legal  or other  expenses  subsequently  incurred  by the  indemnified  party in
connection with the defense thereof; provided,  however, that if any indemnified
party  shall have  reasonably  concluded  that there may be one or more legal or
equitable  defenses  available to such indemnified party which are additional to
or conflict with those available to the  indemnifying  party, or that such claim
or litigation  involves or could have an effect upon matters beyond the scope of
the indemnity agreement provided in this Section 7, the indemnifying party shall
not have the  right to  assume  the  defense  of such  action  on behalf of such
indemnified party (but shall have the right to participate  therein with counsel
of its choice) and such  indemnifying  party shall  reimburse  such  indemnified
party and any person  controlling such indemnified party for that portion of the
fees and  expenses of any counsel  retained  by the  indemnified  party which is
reasonably related to the matters covered by the indemnity agreement provided in
this Section 7. If the indemnifying  party is not entitled to, or elects not to,
assume the  defense  of a claim,  it will not be  obligated  to pay the fees and
expenses of more than one counsel with respect to such claim.

                                       7
<PAGE>

         (d) If the indemnification  provided for in this Section 7 is held by a
court of competent  jurisdiction to be unavailable to an indemnified  party with
respect to any loss, claim, damage, liability or action referred to herein, then
the  indemnifying   party,  in  lieu  of  indemnifying  such  indemnified  party
hereunder,  shall  contribute to the amounts paid or payable by such indemnified
party as a result  of such  loss,  claim,  damage,  liability  or action in such
proportion as is appropriate  to reflect the relative fault of the  indemnifying
party on the one hand and of the  indemnified  party on the other in  connection
with the  statements or omissions  which resulted in such loss,  claim,  damage,
liability or action as well as any other relevant equitable considerations.  The
relative fault of the indemnifying  party and of the indemnified  party shall be
determined by reference  to, among other  things,  whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information  supplied by the indemnifying party or by
the indemnified  party and the parties'  relative intent,  knowledge,  access to
information  and  opportunity  to correct or prevent such statement or omission.
The  parties  agree  that it would  not be just and  equitable  if  contribution
pursuant hereto were determined by pro rata allocation or by any other method or
allocation which does not take account of the equitable  considerations referred
to herein. No person guilty of fraudulent misrepresentation shall be entitled to
contribution from any person.

         Section 8. Underwriting Agreement.

         Notwithstanding the provisions of Sections 3, 4, 5 and 6, to the extent
that the Investor shall enter into an underwriting or similar  agreement,  which
agreement  contains  provisions  covering  one or more issues  addressed in such
Sections,  the provisions  contained in such agreement  addressing such issue or
issues shall control;  provided,  however,  that any such agreement to which the
Corporation is not a party shall not be binding upon the Corporation.  No holder
may participate in any  underwritten  registration  hereunder unless such holder
(a) agrees to such holder's securities on the basis provided in any underwriting
arrangements  and (b)  completes  and  executes  all  questionnaires,  powers of
attorney,  indemnities,  underwriting  agreements and other documents reasonably
and customarily required under the terms of such underwriting arrangements.

         Section 9. Information by Holder.

         The Investor shall furnish to the Corporation such written  information
regarding  the  Investor  and the  distribution  proposed by the Investor as the
Corporation  may  reasonably  request  in  writing  and as shall  be  reasonably
required  in  connection  with any  registration,  qualification  or  compliance
referred to in this Agreement.

         Section 10. Exchange Act Compliance.

         The Corporation shall comply with all of the reporting  requirements of
the Exchange Act applicable to it (whether or not it shall be required to do so,
but specifically excluding Section 14 of the Exchange Act if not then applicable
to the Corporation) and shall comply with all other public information reporting
requirements of the Commission  which are conditions to the availability of Rule
144 for the sale of the Ordinary  Shares.  The Corporation  shall cooperate with
the Investor in supplying such  information as may be necessary for the Investor
to complete  and file any  information  reporting  forms  presently or hereafter
required by the Commission as a condition to the availability of Rule 144.

         Section 11. No Conflict of Rights

         The   Corporation   shall  not,  after  the  date  hereof,   grant  any
registration  rights  which  conflict  with or impair  the  registration  rights
granted  hereby.  In  the  event  the  Corporation  grants  to  any  person  any
registration  rights that are superior in scope or substance to the registration
rights granted to the holders of the  Registrable  Shares,  such superior rights
shall be simultaneously granted to such holders.

                                       8
<PAGE>

         Section 12. Termination.

         This  Agreement  shall  terminate  and be of no further force or effect
when there shall no longer be any Registrable Shares outstanding;  provided that
Sections 6 and 7 shall survive any termination of this Agreement.

         Section 13. Successors and Assigns.

         This Agreement  shall bind and inure to the benefit of the  Corporation
and the  Investor  and,  subject to Section 14, the  respective  successors  and
assigns of the Corporation and the Investor.

         Section 14. Assignment.

         The  Investor  may assign  his rights  hereunder  to any  purchaser  or
transferee of  Registrable  Shares;  provided,  however,  that such purchaser or
transferee  shall, as a condition to the  effectiveness of such  assignment,  be
required to execute a counterpart to this Agreement agreeing to be treated as an
Investor  whereupon such purchaser or transferee shall have the benefits of, and
shall be subject to the  restrictions  contained  in, this  Agreement as if such
purchaser or transferee was originally included in the definition of an Investor
herein and had originally been a party hereto

         Section 15. Entire Agreement

         This Agreement and the other writings  referred to herein or therein or
delivered  pursuant hereto or thereto,  contain the entire agreement between the
Investor  and the  Corporation  with  respect to the subject  matter  hereof and
supersede all prior and  contemporaneous  arrangements  or  understandings  with
respect thereto.

         Section 16. Notices.

         All notices,  requests,  consents and other communications hereunder to
any party shall be deemed to be sufficient if contained in a written  instrument
delivered in person or sent by telecopy, nationally-recognized overnight courier
or first class  registered or certified mail return receipt  requested,  postage
prepaid,  addressed  to such party at the  address set forth below or such other
address as may  hereafter  be  designated  in writing by such party to the other
parties:

         (i) if to the Investor, to:

                              Goldstrand Investment
                              1040 1st Avenue
                              #190
                              New York, New York 10022

         (ii) if to the Corporation, to:

                              On Track Innovations Ltd.
                              Z.H.R Industrial Zone
                              Rosh Pina
                              Israel
                              Telephone: 04-6868000
                              Fax: 04-6938887

All such notices, requests, consents and other communications shall be deemed to
have  been  delivered  (a) in the  case of  personal  delivery  or  delivery  by
telecopy,  on the  date  of  such  delivery,  (b) in the  case  of

                                       9
<PAGE>

dispatch by  nationally-recognized  overnight courier,  on the next business day
following  such dispatch and (c) in the case of mailing,  on the third  business
day after the posting thereof.

         Section 17. Modifications; Amendments; Waivers.

         The terms and  provisions  of this  Agreement  may not be  modified  or
amended, nor may any provision be waived, except pursuant to a writing signed by
the Corporation and the Investor.

         Section 18. Counterparts.

         This Agreement may be executed in any number of counterparts,  and each
such counterpart  hereof shall be deemed to be an original  instrument,  but all
such counterparts together shall constitute but one agreement.

         Section 19. Headings.

         The  headings  of the  various  sections  of this  Agreement  have been
inserted for  convenience of reference only and shall not be deemed to be a part
of this Agreement.

         Section 20. Governing Law.

         This  Agreement  shall be governed by and construed in accordance  with
the  laws of the  State  of New  York  applicable  to  contracts  made and to be
performed wholly therein.

         IN WITNESS  WHEREOF,  the undersigned  have executed and delivered this
Agreement as of the date first set forth above.

                                      ON TRACK INNOVATIONS LTD.

                                      By: /s/ Oded Bashan, /s/ Ronnie Gilboa
                                           Name:
                                           Title:

                                      GOLDSTRAND INVESTMENT

                                      By: /s/ Seth Fireman
                                           Name:  Seth Fireman
                                           Title: Managing Director

                                       10

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