Document:

Exhibit 10.2

                                                               EXECUTION VERSION

                          REGISTRATION RIGHTS AGREEMENT

     THIS REGISTRATION  RIGHTS AGREEMENT (this  "AGREEMENT") is made and entered
into as of January 2, 2014,  between  TUNGSTEN CORP., a Nevada  corporation (the
"COMPANY"),  and HANOVER HOLDINGS I, LLC, a New York limited  liability  company
(the "INVESTOR").

     In  connection  with the Note  Purchase  Agreement,  dated as of January 2,
2014,  entered  into  by the  Company  and  the  Investor  (the  "NOTE  PURCHASE
AGREEMENT"),  the  Company  has  agreed,  upon  the  terms  and  subject  to the
conditions of the Note Purchase  Agreement,  to issue and sell to the Investor a
note of the Company (the "NOTE"), which will, among other things, be convertible
into  shares of the  Company's  common  stock,  $0.0001 par value per share (the
"COMMON STOCK",  as converted,  the "CONVERSION  SHARES") in accordance with the
terms of the Note.

     To induce the Investor to consummate the  transactions  contemplated by the
Note Purchase Agreement,  the Company has agreed to provide certain registration
rights  under the 1933 Act of 1933,  as amended,  and the rules and  regulations
thereunder, or any similar successor statute (collectively, the "1933 ACT"), and
applicable state securities laws.

     The Company and the Investor hereby agrees as follows:

     Section 1.  Definitions.  Capitalized  terms used and not otherwise defined
herein that are defined in the Note Purchase  Agreement  shall have the meanings
given such terms in the Note Purchase Agreement. As used in this Agreement,  the
following terms shall have the following meanings:

          "INITIAL  REGISTRATION   STATEMENT"  means  the  initial  Registration
     Statement filed pursuant to this Agreement.

          "PROSPECTUS" means the prospectus included in a Registration Statement
     (including,  without limitation, a prospectus that includes any information
     previously  omitted  from  a  prospectus  filed  as  part  of an  effective
     registration  statement in reliance upon Rule 430A  promulgated  by the SEC
     pursuant to the 1933 Act),  as amended or  supplemented  by any  prospectus
     supplement, with respect to the terms of the offering of any portion of the
     Registrable Securities covered by a Registration  Statement,  and all other
     amendments and  supplements  to the  Prospectus,  including  post-effective
     amendments,  and all  material  incorporated  by  reference or deemed to be
     incorporated by reference in such Prospectus.

          "EFFECTIVENESS  DEADLINE"  means,  (i)  with  respect  to the  Initial
     Registration  Statement required to be filed hereunder,  the earlier of (A)
     the 100th  calendar  day  after  the date of hereof in the event  that such
     Registration  Statement  is subject to a limited or full  review by the SEC
     and (B) the  fifth  Trading  Day  after the date the  Company  is  notified
     (orally  or in  writing,  whichever  is  earlier)  by  the  SEC  that  such
     Registration  Statement  will not be  reviewed  or will not be  subject  to
     further  review,  and (ii)  with  respect  to any  additional  Registration
     Statements which may be required  pursuant to Section 2, the earlier of (A)
     the  90th   calendar  day   following  the  date  on  which  an  additional
<PAGE>
     Registration  Statement is required to be filed hereunder in the event that
     such  Registration  Statement is subject to a limited or full review by the
     SEC and (B) the fifth  Trading  Day after the date the  Company is notified
     (orally  or in  writing,  whichever  is  earlier)  by  the  SEC  that  such
     Registration  Statement  will not be  reviewed  or will not be  subject  to
     further review.

          "FILING  DEADLINE"  means,  with  respect to the Initial  Registration
     Statement  required  hereunder,  the 45th  calendar day  following the date
     hereof and, with respect to any additional  Registration  Statements  which
     may be required pursuant to Section 2, the earliest practical date on which
     the Company is permitted  to file such  additional  Registration  Statement
     related  to the  Registrable  Securities  (taking  into  account  any Staff
     position  with  respect  to  date on  which  the  Staff  will  permit  such
     additional Registration Statement to be filed with the SEC).

          "REGISTRABLE  SECURITIES" means, as of any date of determination,  (a)
     all  Conversion  Shares then issuable upon  conversion in full of the Notes
     (assuming on such date the Notes are  converted  in full without  regard to
     any conversion  limitations therein), and (b) any securities issued or then
     issuable   upon  any  stock   split,   dividend   or  other   distribution,
     recapitalization or similar event with respect to the foregoing;  provided,
     however, that any such Registrable Securities shall cease to be Registrable
     Securities for so long as (x) a Registration  Statement with respect to the
     sale of such Registrable  Securities is declared effective by the SEC under
     the 1933 Act and such  Registrable  Securities have been disposed of by the
     holder in accordance  with such effective  Registration  Statement,  or (y)
     such  Registrable  Securities  have been previously sold in accordance with
     Rule 144.

          "REGISTRATION  STATEMENT" means any registration statement required to
     be filed  hereunder  pursuant  to Section 2,  including  (in each case) the
     Prospectus,  amendments and supplements to any such registration  statement
     or Prospectus,  including pre- and post-effective  amendments, all exhibits
     thereto,  and all  material  incorporated  by  reference  or  deemed  to be
     incorporated by reference in any such registration statement.

          "RESTRICTION  TERMINATION  DATE"  shall have the  meaning set forth in
     Section 2.

          "RULE 415" means Rule 415  promulgated by the SEC pursuant to the 1933
     Act, as such Rule may be amended or  interpreted  from time to time, or any
     similar   rule  or   regulation   hereafter   adopted  by  the  SEC  having
     substantially the same purpose and effect as such Rule.

          "SEC" means the United States Securities and Exchange Commission.

     Section 2. Registration Statement  Requirements.  The Company shall prepare
and, as soon as  practicable,  but in no event  later than the Filing  Deadline,
file with the SEC the Initial Registration  Statement on Form S-1, or such other
form reasonably acceptable to the Investor,  covering the resale by the Investor
of all or such  portion of the  Registrable  Securities  as permitted by the SEC
(provided  that the Company shall use diligent  efforts to advocate with the SEC
for the registration of all of the Registrable Securities) pursuant to Rule 415.

                                       2
<PAGE>
The  Company  shall  use  its  reasonable  best  efforts  to have  such  Initial
Registration  Statement,  and each other  Registration  Statement required to be
filed  pursuant to the terms  hereof,  declared  effective by the SEC as soon as
practicable,  but in no event later than the applicable  Effectiveness Deadline.
If at any  time  all  Registrable  Securities  are not  covered  by the  Initial
Registration  Statement filed pursuant to this Section 2, the Company shall file
with the SEC one or more additional  Registration  Statements so as to cover all
of the Registrable Securities not covered by the Initial Registration Statement,
in each case,  as soon as  practicable  (taking into account any Staff  position
with respect to date on which the Staff will permit such additional Registration
Statement(s)  to be  filed  with  the  SEC),  but in no  event  later  than  the
applicable Filing Deadline for such additional Registration Statement(s). If the
staff of the SEC (the  "STAFF") or the SEC seeks to  characterize  any  offering
pursuant  to a  Registration  Statement  filed  pursuant  to this  Agreement  as
constituting  an offering of securities  that does not permit such  Registration
Statement  to become  effective  and be used for  resales by the  Investor  on a
delayed or continuous basis under Rule 415 at then-prevailing market prices (and
not fixed prices) (or as otherwise may be  acceptable  to the  Investor),  or if
after the filing of the Initial Registration  Statement with the SEC pursuant to
this  Section 2, the  Company is  otherwise  required by the Staff or the SEC to
reduce  the  number  of   Registrable   Securities   included  in  such  Initial
Registration Statement,  then the Company shall reduce the number of Registrable
Securities to be included in such Initial Registration Statement (with the prior
consent of the Investor as to the specific Registrable  Securities to be removed
therefrom)  until  such  time as the  Staff  and the SEC  shall so  permit  such
Registration   Statement  to  become   effective   and  be  used  as  aforesaid.
Notwithstanding  anything in this  Agreement  to the  contrary,  if after giving
effect to the actions  referred to in the immediately  preceding  sentence,  the
Staff or the SEC does not permit such Registration Statement to become effective
and be used for resales by the Investor on a delayed or  continuous  basis under
Rule  415 at  then-prevailing  market  prices  (and  not  fixed  prices)  (or as
otherwise  may be  acceptable  to the  Investor),  the Company shall not request
acceleration of the effective date of such Registration  Statement,  the Company
shall  promptly (but in no event later than 48 hours)  request the withdrawal of
such  Registration  Statement  pursuant to Rule 477 under the 1933 Act,  and the
Effectiveness  Deadline  shall  automatically  be  deemed to have  elapsed  with
respect to such Registration  Statement at such time as the Staff or the SEC has
made a final and non-appealable  determination that the SEC will not permit such
Registration  Statement to be so utilized (unless prior to such time the Company
and the Investor have received  assurances  from the Staff or the SEC reasonably
acceptable  to the  Investor  that a new  Registration  Statement  filed  by the
Company with the SEC promptly  thereafter  may be so utilized).  In the event of
any reduction in Registrable Securities pursuant to this paragraph,  the Company
shall file additional  Registration Statements in accordance with this Section 2
until such time as all Registrable Securities have been included in Registration
Statements  that have  been  declared  effective  and the  prospectus  contained
therein is available for use by the Investor.

     Section 3. Registration Procedures. If and whenever the Company is required
by the  provisions of Section 2 to effect the  registration  of any  Registrable
Securities under the 1933 Act, the Company will, as expeditiously as possible:

     (a) subject to the timelines  provided in this Agreement,  prepare and file
the  Registration  Statement  with the SEC,  with  respect  to such  Registrable

                                       3
<PAGE>
Securities  and  use  its   commercially   reasonable   efforts  to  cause  such
Registration  Statement  to become  and remain  effective  for the period of the
distribution  contemplated  thereby (determined as herein provided),  respond as
promptly as commercially  practicable to any comments received from the SEC with
respect  to a  Registration  Statement  or any  amendment  thereto  and file any
pre-effective amendments with respect to a Registration Statement as promptly as
reasonable possible, and promptly provide to Investors copies of all filings and
SEC letters of comment  (provided that the Company shall excise any  information
contained  therein  which  would  constitute  material  non-public   information
regarding the Company or any subsidiary) and notify the Investors (by telecopier
or by e-mail  addresses  provided  by the  Investors)  on or before  the  second
business day thereafter that the Company receives notice that (i) the SEC has no
comments or no further  comments  on the  registration  statement,  and (ii) the
registration statement has been declared effective;

     (b) prepare and file with the SEC 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  and prepare and file
with  the  SEC  such  additional  Registration  Statements  as may  be  required
hereunder and to keep each additional Registration Statement effective;

     (c)  furnish to the  Investors  such  number of copies of the  Registration
Statement  and the  prospectus  included  therein  (including  each  preliminary
prospectus) as such Investors  reasonably may request in order to facilitate the
public sale or their disposition of the securities  covered by such Registration
Statement or make them electronically available;

     (d) use its  commercially  reasonable  efforts to  register  or qualify the
Registrable   Securities  covered  by  such  Registration  Statement  under  the
securities  or "Blue  Sky" laws of such  jurisdictions  as the  Investors  shall
request in writing,  provided,  however, that the Company shall not for any such
purpose be required to qualify to transact business as a foreign  corporation in
any  jurisdiction  where it is not so  qualified  or to  consent  to  service of
process in any such jurisdiction;

     (e) list the Registrable  Securities covered by such Registration Statement
with the principal market or exchange on which the Common Stock is then listed;

     (f) promptly  notify the Investors of the Company's  becoming  aware that a
prospectus  relating  thereto is required to be delivered under the 1933 Act, of
the happening of any event or passage of time of which the Company has knowledge
as a result of which the prospectus contained 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 or
the financial  statements  included  therein  ineligible  for inclusion or which
becomes  subject to a SEC,  state or other  governmental  order  suspending  the
effectiveness  of the  Registration  Statement  covering any of the  Registrable
Securities. Each Investor hereby covenants that it will not sell any Registrable
Securities  pursuant to such prospectus during the period commencing at the time
at which the Company gives such Investor  notice of the suspension of the use of
such  prospectus in accordance with this Section 3(f) and ending at the time the
Company gives such  Investor  notice that such  Investor may  thereafter  effect
sales pursuant to the prospectus, or until the Company delivers to such Investor
or files with the SEC an amended or supplemented prospectus.

                                       4
<PAGE>
     (g) The Company shall  cooperate  with any  broker-dealer  through which an
Investor  proposes to resell its  Registrable  Securities  in effecting a filing
with the FINRA Corporate  Financing  Department  pursuant to FINRA Rule 5110, as
requested  by any such  Investor,  and the  Company  shall  pay the  filing  fee
required by such filing within two (2) business days of request therefor.

     Section 4. Provision of Documents. It shall be a condition precedent to the
obligations  of the  Company  to  complete  the  registration  pursuant  to this
Agreement  with respect to the  Registrable  Securities of the Investor that the
Investor shall furnish to the Company such  information  regarding  itself,  the
Registrable  Securities held by it and the intended method of disposition of the
Registrable Securities held by it, as shall be reasonably required to effect and
maintain the  effectiveness of the  registration of such Registrable  Securities
and shall execute such  documents in connection  with such  registration  as the
Company may reasonably request.

     Section 5. Expenses. All expenses incurred by the Company in complying with
Section 2, including,  without  limitation,  all  registration  and filing fees,
printing  expenses  (if  required),   fees  and  disbursements  of  counsel  and
independent  public  accountants for the Company,  fees and expenses  (including
reasonable  counsel  fees)  incurred in  connection  with  complying  with state
securities  or  "Blue  Sky"  laws,  fees of the  Financial  Industry  Regulatory
Authority,  Inc.  ("FINRA") in connection with any filing with FINRA pursuant to
FINRA Rule 5110 that may be required to be made by any broker  through  which an
Investor  intends to make sales of Registrable  Securities,  transfer taxes, and
fees of transfer agents and registrars,  are called "REGISTRATION EXPENSES." The
Company will pay all  Registration  Expenses in connection with any Registration
Statement described in Section 2.

     Section 6. Indemnification.

     (a)  In  the  event  any   Registrable   Securities  are  included  in  any
Registration Statement under this Agreement,  to the fullest extent permitted by
law, the Company will, and hereby does, indemnify,  hold harmless and defend the
Investor,  each of its directors,  officers,  shareholders,  members,  partners,
employees,  agents,  advisors,  representatives  (and any other  Persons  with a
functionally equivalent role of a Person holding such titles notwithstanding the
lack of such title or any other title) and each Person, if any, who controls the
Investor  within  the  meaning  of the  1933 Act or the 1934 Act and each of the
directors,  officers,   shareholders,   members,  partners,  employees,  agents,
advisors,  representatives (and any other Persons with a functionally equivalent
role of a Person holding such titles  notwithstanding  the lack of such title or
any other title) of such  controlling  Persons  (each,  an "INVESTOR  PARTY" and
collectively, the "INVESTOR PARTIEs"), against any losses, obligations,  claims,
damages, liabilities, contingencies, judgments, fines, penalties, charges, costs
(including,  without limitation,  court costs, reasonable attorneys' fees, costs
of defense and investigation),  amounts paid in settlement or expenses, joint or
several,  (collectively,  "CLAIMS")  incurred  in  investigating,  preparing  or
defending any action, claim, suit, inquiry, proceeding,  investigation or appeal
taken from the foregoing by or before any court or governmental,  administrative
or other  regulatory  agency,  body or the SEC,  whether  pending or threatened,
whether  or not an  Investor  Party is or may be a party  thereto  ("INDEMNIFIED

                                       5
<PAGE>
DAMAGES"),  to which any of them may become  subject  insofar as such Claims (or
actions or proceedings,  whether  commenced or threatened,  in respect  thereof)
arise out of or are based  upon:  (i) any untrue  statement  or  alleged  untrue
statement of a material fact in a Registration  Statement or any  post-effective
amendment  thereto or in any filing made in connection with the qualification of
the offering under the  securities or other "Blue Sky" laws of any  jurisdiction
in which Registrable Securities are offered ("BLUE SKY FILING"), or the omission
or alleged  omission to state a material fact  required to be stated  therein or
necessary  to make the  statements  therein  not  misleading  or (ii) any untrue
statement  or alleged  untrue  statement  of a material  fact  contained  in any
prospectus (as amended or supplemented)  or in any prospectus  supplement or the
omission or alleged  omission to state  therein any material  fact  necessary to
make the statements made therein,  in light of the circumstances under which the
statements  therein were made,  not  misleading  (the  matters in the  foregoing
clauses  (i) and (ii)  being,  collectively,  "VIOLATIONS").  Subject to Section
6(c),  the  Company  shall  reimburse  the  Investor  Parties,  promptly as such
expenses  are  incurred  and are due and  payable,  for any legal  fees or other
reasonable  expenses  incurred  by  them in  connection  with  investigating  or
defending  any such Claim.  Notwithstanding  anything to the contrary  contained
herein, the indemnification  agreement contained in this Section 6(a): (i) shall
not  apply to a Claim  by an  Investor  Party  arising  out of or  based  upon a
Violation  which  occurs in reliance  upon and in  conformity  with  information
furnished  in writing to the Company by such  Investor  Party for such  Investor
Party expressly for use in connection with the preparation of such  Registration
Statement,  prospectus or prospectus supplement or any such amendment thereof or
supplement  thereto;  (ii) shall not be  available to the Investor to the extent
such  Claim is based on a failure of the  Investor  to deliver or to cause to be
delivered the  prospectus  (as amended or  supplemented)  made  available by the
Company (to the extent applicable),  including,  without limitation, a corrected
prospectus,  if such  prospectus  (as  amended  or  supplemented)  or  corrected
prospectus  was timely made  available by the Company  pursuant to Section 3 and
then only if, and to the extent  that,  following  the receipt of the  corrected
prospectus  no grounds  for such Claim would have  existed;  and (iii) shall not
apply to amounts paid in settlement of any Claim if such  settlement is effected
without the prior  written  consent of the Company,  which  consent shall not be
unreasonably  withheld or delayed. Such indemnity shall remain in full force and
effect  regardless  of any  investigation  made by or on behalf of the  Investor
Party and shall survive the transfer of any of the Registrable Securities by the
Investor pursuant to Section 8(f).

     (b) In connection with any Registration  Statement in which the Investor is
participating,  the Investor agrees to severally and not jointly indemnify, hold
harmless  and defend,  to the same extent and in the same manner as is set forth
in Section 6(a), the Company,  each of its  directors,  each of its officers who
signs the  Registration  Statement  and each  Person,  if any,  who controls the
Company  within the  meaning of the 1933 Act or the 1934 Act (each,  an "COMPANY
PARTY"),  against  any  Claim or  Indemnified  Damages  to which any of them may
become subject,  under the 1933 Act, the 1934 Act or otherwise,  insofar as such
Claim or Indemnified  Damages arise out of or are based upon any  Violation,  in
each case, to the extent, and only to the extent,  that such Violation occurs in
reliance  upon  and in  conformity  with  written  information  relating  to the
Investor  furnished  to  the  Company  by  the  Investor  expressly  for  use in
connection with such  Registration  Statement;  and, subject to Section 6(c) and
the below  provisos in this Section 6(b),  the Investor will reimburse a Company
Party any legal or other expenses  reasonably  incurred by such Company Party in
connection with  investigating or defending any such Claim;  provided,  however,

                                       6
<PAGE>
the indemnity  agreement  contained in this Section 6(b) and the agreement  with
respect to  contribution  contained in Section 7 shall not apply to amounts paid
in  settlement  of any Claim if such  settlement  is effected  without the prior
written  consent  of the  Investor,  which  consent  shall  not be  unreasonably
withheld or delayed,  provided  further that the Investor  shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified Damages as does
not exceed the net proceeds to the Investor as a result of the  applicable  sale
of  Registrable  Securities  pursuant  to  such  Registration  Statement.   Such
indemnity shall remain in full force and effect  regardless of any investigation
made by or on behalf of such Company Party and shall survive the transfer of any
of the Registrable Securities by the Investor pursuant to Section 8(f).

     (c) Promptly  after  receipt by an Investor  Party or Company Party (as the
case may be) under this Section 6 of notice of the commencement of any action or
proceeding   (including,   without   limitation,   any  governmental  action  or
proceeding) involving a Claim, such Investor Party or Company Party (as the case
may  be)  shall,  if a Claim  in  respect  thereof  is to be  made  against  any
indemnifying  party under this  Section 6, deliver to the  indemnifying  party a
written notice of the commencement  thereof,  and the  indemnifying  party shall
have the right to participate in, and, to the extent the  indemnifying  party so
desires,  jointly with any other indemnifying party similarly noticed, to assume
control  of the  defense  thereof  with  counsel  mutually  satisfactory  to the
indemnifying  party and the Investor Party or the Company Party (as the case may
be); provided,  however, an Investor Party or Company Party (as the case may be)
shall have the right to retain its own  counsel  with the fees and  expenses  of
such counsel to be paid by the indemnifying party if: (i) the indemnifying party
has agreed in writing to pay such fees and expenses; (ii) the indemnifying party
shall have  failed  promptly  to assume the  defense of such Claim and to employ
counsel reasonably  satisfactory to such Investor Party or Company Party (as the
case may be) in any such  Claim;  or (iii) the named  parties  to any such Claim
(including,  without  limitation,  any  impleaded  parties)  include  both  such
Investor Party or Company Party (as the case may be) and the indemnifying party,
and such  Investor  Party or such Company  Party (as the case may be) shall have
been  advised by counsel  that a conflict  of interest is likely to exist if the
same counsel were to represent such Investor Party or such Company Party and the
indemnifying  party (in which case, if such Investor Party or such Company Party
(as the case may be) notifies the  indemnifying  party in writing that it elects
to employ separate  counsel at the expense of the indemnifying  party,  then the
indemnifying  party  shall not have the right to assume the  defense  thereof on
behalf of the indemnified  party and such counsel shall be at the expense of the
indemnifying party,  provided further that in the case of clause (iii) above the
indemnifying party shall not be responsible for the reasonable fees and expenses
of more than one (1) separate legal counsel for all Investor  Parties or Company
Parties (as the case may be). The Company  Party or Investor  Party (as the case
may be) shall  reasonably  cooperate with the  indemnifying  party in connection
with any negotiation or defense of any such action or Claim by the  indemnifying
party and shall furnish to the  indemnifying  party all  information  reasonably
available  to the  Company  Party or  Investor  Party (as the case may be) which
relates to such action or Claim. The  indemnifying  party shall keep the Company
Party or Investor Party (as the case may be) reasonably apprised at all times as
to the  status  of the  defense  or any  settlement  negotiations  with  respect
thereto. No indemnifying party shall be liable for any settlement of any action,
claim or  proceeding  effected  without  its prior  written  consent;  provided,
however,  the  indemnifying  party  shall not  unreasonably  withhold,  delay or
condition its consent.  No indemnifying  party shall,  without the prior written
consent of the Company Party or Investor Party (as the case may be),  consent to
entry of any judgment or enter into any  settlement  or other  compromise  which

                                       7
<PAGE>
does not include as an unconditional  term thereof the giving by the claimant or
plaintiff  to such  Company  Party or  Investor  Party (as the case may be) of a
release  from all  liability  in respect to such Claim or  litigation,  and such
settlement  shall  not  include  any  admission  as to  fault on the part of the
Company Party.  For the avoidance of doubt, the immediately  preceding  sentence
shall apply to  Sections  6(a) and 6(b)  hereof.  Following  indemnification  as
provided for hereunder, the indemnifying party shall be subrogated to all rights
of the Company Party or Investor  Party (as the case may be) with respect to all
third  parties,   firms  or  corporations  relating  to  the  matter  for  which
indemnification  has been made.  The  failure to deliver  written  notice to the
indemnifying  party within a  reasonable  time of the  commencement  of any such
action  shall  not  relieve  such  indemnifying  party of any  liability  to the
Investor  Party or  Company  Party (as the case may be) under  this  Section  6,
except to the extent that the  indemnifying  party is  materially  and adversely
prejudiced in its ability to defend such action.

     (d) No Person involved in the sale of Registrable  Securities who is guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) in connection with such sale shall be entitled to indemnification  from any
Person  involved  in such sale of  Registrable  Securities  who is not guilty of
fraudulent misrepresentation.

     (e) The  indemnification  required  by  this  Section  6  shall  be made by
periodic  payments of the amount thereof during the course of the  investigation
or defense,  as and when bills are received or Indemnified Damages are incurred;
provided  that the Investor  shall  promptly  reimburse the Company for all such
payments to the extent a court of  competent  jurisdiction  determines  that any
Investor Party was not entitled to such payments.

     (f) The indemnity and contribution  agreements contained herein shall be in
addition  to (i) any cause of action or similar  right of the  Company  Party or
Investor  Party  against  the  indemnifying   party  or  others,  and  (ii)  any
liabilities the indemnifying party may be subject to pursuant to the law.

     Section  7.  Contribution.   To  the  extent  any   indemnification  by  an
indemnifying  party is  prohibited  or limited by law,  the  indemnifying  party
agrees to make the maximum contribution with respect to any amounts for which it
would  otherwise be liable under  Section 6 to the fullest  extent  permitted by
law; provided,  however:  (i) no contribution shall be made under  circumstances
where the maker would not have been liable for  indemnification  under the fault
standards set forth in Section 6 of this  Agreement,  (ii) no Person involved in
the  sale of  Registrable  Securities  which  Person  is  guilty  of  fraudulent
misrepresentation  (within  the  meaning  of  Section  11(f) of the 1933 Act) in
connection  with such sale shall be  entitled  to  contribution  from any Person
involved in such sale of Registrable Securities who was not guilty of fraudulent
misrepresentation;   and  (iii)   contribution  by  any  seller  of  Registrable
Securities shall be limited in amount to the amount of net proceeds  received by
such seller from the applicable sale of such Registrable  Securities pursuant to
such Registration  Statement.  Notwithstanding the provisions of this Section 7,
the Investor shall not be required to contribute,  in the aggregate,  any amount
in excess  of the  amount by which the net  proceeds  actually  received  by the
Investor from the applicable sale of the Registrable  Securities  subject to the
Claim  exceeds the amount of any damages that the Investor  has  otherwise  been

                                       8
<PAGE>
required to pay, or would  otherwise be required to pay under  Section  6(b), by
reason of such  untrue or  alleged  untrue  statement  or  omission  or  alleged
omission.

     Section 8. Miscellaneous.

     (a) Remedies. In the event of a breach by the Company or by the Investor of
any of their respective  obligations  under this Agreement,  the Investor or the
Company,  as the case may be, in  addition to being  entitled  to  exercise  all
rights granted by law and under this Agreement,  including  recovery of damages,
shall be entitled to specific  performance  of its rights under this  Agreement.
Each of the Company and the  Investor  agrees that  monetary  damages  would not
provide  adequate  compensation for any losses incurred by reason of a breach by
it of any of the provisions of this Agreement and hereby further agrees that, in
the event of any action for specific  performance in respect of such breach,  it
shall  not  assert  or shall  waive  the  defense  that a remedy at law would be
adequate.

     (b) Compliance.  The Investor covenants and agrees that it will comply with
the  prospectus  delivery  requirements  of the 1933 Act as  applicable to it in
connection  with sales of  Registrable  Securities  pursuant  to a  Registration
Statement.

     (c)  Piggy-Back  Registrations.  If,  at any time  prior  to the six  month
anniversary of the date hereof, there is not an effective Registration Statement
covering all of the  Registrable  Securities and the Company shall  determine to
prepare and file with the SEC a registration  statement  relating to an offering
for its own  account or the  account of others  under the 1933 Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the 1933 Act) or their then  equivalents  relating  to equity  securities  to be
issued solely in connection  with any  acquisition  of any entity or business or
equity  securities  issuable in connection  with the  Company's  stock option or
other employee  benefit plans,  then the Company shall deliver to the Investor a
written notice of such  determination and, if within fifteen days after the date
of the delivery of such notice,  the Investor  shall so request in writing,  the
Company  shall  include in such  registration  statement all or any part of such
Registrable  Securities  the  Investor  requests  to  be  registered;  provided,
however,  that the Company  shall not be required  to register  any  Registrable
Securities  pursuant  to  this  Section  8(c)  that  are the  subject  of a then
effective Registration Statement.

     (d)  Amendments  and Waivers.  No provision  of this  Agreement  may be (i)
amended other than by a written instrument signed by both parties hereto or (ii)
waived  other  than in a written  instrument  signed by the party  against  whom
enforcement of such waiver is sought. Failure of any party to exercise any right
or remedy under this  Agreement or otherwise,  or delay by a party in exercising
such right or remedy, shall not operate as a waiver thereof.

     (e)  Notices.  Any and all notices or other  communications  or  deliveries
required or permitted to be provided  hereunder  shall be delivered as set forth
in the Note Purchase Agreement.

     (f)  Successors and Assigns.  This Agreement  shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of the parties.
The  Company  may not  assign  (except  by  merger)  its  rights or  obligations
hereunder  without the prior written  consent of the Investor.  The Investor may

                                       9
<PAGE>
assign its rights  hereunder  if: (i) the  Investor  agrees in writing with such
transferee or assignee (as the case may be) to assign all or any portion of such
rights,  and a copy of such  agreement  is  furnished  to the  Company  within a
reasonable time after such transfer or assignment (as the case may be); (ii) the
Company is, within a reasonable  time after such transfer or assignment  (as the
case may be),  furnished with written notice of (a) the name and address of such
transferee or assignee (as the case may be), and (b) the securities with respect
to which such registration rights are being transferred or assigned (as the case
may be);  (iii)  immediately  following such transfer or assignment (as the case
may  be) the  further  disposition  of such  securities  by such  transferee  or
assignee  (as the case may be) is  restricted  under the 1933 Act or  applicable
state  securities  laws if so  required;  (iv) at or before the time the Company
receives the written  notice  contemplated  by clause (ii) of this sentence such
transferee  or assignee  (as the case may be) agrees in writing with the Company
to be bound by all of the  provisions  contained  herein;  (v) such  transfer or
assignment  (as the case may be) shall  have been  made in  accordance  with the
applicable  requirements  of the Note Purchase  Agreement and the Note; and (vi)
such  transfer or assignment  (as the case may be) shall have been  conducted in
accordance  with all  applicable  federal and state  securities  laws.  The term
"Investor"  in this  Agreement  shall  also  include  all such  transferees  and
assignees.

     (g) Execution and  Counterparts.  This  Agreement may be executed in two or
more counterparts,  all of which when taken together shall be considered one and
the same agreement and shall become effective when counterparts have been signed
by each party and delivered to the other party,  it being  understood  that both
parties need not sign the same  counterpart.  In the event that any signature is
delivered by facsimile  transmission  or by e-mail  delivery of a ".pdf"  format
data file,  such  signature  shall create a valid and binding  obligation of the
party  executing (or on whose behalf such  signature is executed)  with the same
force and effect as if such facsimile or ".pdf"  signature page were an original
thereof.

     (h) Governing  Law. All questions  concerning the  construction,  validity,
enforcement  and  interpretation  of  this  Agreement  shall  be  determined  in
accordance with the provisions of the Note Purchase Agreement.

     (i) Severability.  If any term, provision,  covenant or restriction of this
Agreement is held by a court of competent  jurisdiction to be invalid,  illegal,
void or  unenforceable,  the remainder of the terms,  provisions,  covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected,  impaired or  invalidated,  and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially  the same result as that  contemplated by such
term, provision,  covenant or restriction.  It is hereby stipulated and declared
to be the  intention of the parties that they would have  executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

     (j) Headings.  The headings in this Agreement are for convenience  only, do
not  constitute  a part of the  Agreement  and  shall  not be deemed to limit or
affect any of the provisions hereof.

                            (SIGNATURE PAGES FOLLOW)

                                       10
<PAGE>
     IN WITNESS  WHEREOF,  the parties have  executed this  Registration  Rights
Agreement as of the date first written above.

                       TUNGSTEN CORP.

                       By:
                          ------------------------------------------------------
                          Name:
                          Title:

<PAGE>
     IN WITNESS  WHEREOF,  the parties have  executed this  Registration  Rights
Agreement as of the date first written above.

                       HANOVER HOLDINGS I, LLC, A NEW YORK LIMITED
                       LIABILITY COMPANY

                       By:
                          ------------------------------------------------------
                          Name:
                          Title:exhibit_4-1.htm

Exhibit 4.1

 

ON TRACK INNOVATIONS LTD.

 

AND

 

CONTINENTAL STOCK TRANSFER & TRUST COMPANY

 

RIGHTS AGREEMENT

 

DATED AS OF JANUARY 12, 2009

 

AS AMENDED ON JANUARY 11, 2012

 

AND AS FURTHER AMENDED ON JANUARY 9, 2014

 

        This Rights Agreement (“Agreement”), is dated as of January 12, 2009, as amended on January 11, 2012, and as further amended on January 9, 2014, between On Track Innovations Ltd., an Israeli company (the “Company”), and Continental Stock Transfer & Trust Company, a New York Corporation, as rights agent (the “Rights Agent”).

 

        The Board of Directors of the Company has authorized and directed the issuance and the distribution of one bonus right (a “Right”) for each Ordinary Share (as hereinafter defined) of the Company outstanding on January 10, 2009 (the “Record Date”) and for each Ordinary Shares issued by the Company at any time (and from time to time) subsequent to the Record Date and prior to the earliest of the Distribution Date, the Redemption Date and the Final Expiration Date (as such terms are hereinafter defined).

 

        Accordingly, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:

 

Section 1.     Definitions. For purposes of this Agreement, the following terms have the meanings indicated:

 

    (a)       “Acquiring Person” shall mean any Person who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 15% or more of the Ordinary Shares of the Company then outstanding, but shall not include the Company, any Subsidiary of the Company, any employee benefit or share ownership plan of the Company or any Subsidiary of the Company, or any entity holding Ordinary Shares for or pursuant to the terms of any such plan. Notwithstanding the foregoing, no Person shall become an “Acquiring Person” as the result of an acquisition of Ordinary Shares by the Company which, by reducing the number of Ordinary Shares of the Company outstanding, increases the proportionate number of Ordinary Shares of the Company beneficially owned by such Person to 15% or more of the Ordinary Shares of the Company then outstanding; provided, however, that, if a Person shall become the Beneficial Owner of 15% or more of the Ordinary Shares of the Company then outstanding by reason of share purchases by the Company and shall, after such share purchases by the Company, become the Beneficial Owner of any additional Ordinary Shares of the Company, then such Person shall be deemed to be an “Acquiring Person” and provided further, that if the Board of Directors of the Company determines in good faith that a Person who would otherwise be an “Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph (a), has become such inadvertently, and such Person divests as promptly as practicable a sufficient number of Ordinary Shares, so that such Person would no longer be an “Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph (a), then such Person shall not be deemed to be an “Acquiring Person” for any purposes of this Agreement. Notwithstanding the foregoing, no Person shall become an “Acquiring Person”, if the majority of the Board of Directors, in its sole and absolute discretion, determines that such person shall not be deemed an Acquiring Person.

 

    (b)        “Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in effect on the date of this Agreement.

 

    (c)        “Associate” shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in effect on the date of this Agreement.

 

  

  

  

 

    (d)        A Person shall be deemed the “Beneficial Owner” of and shall be deemed to “beneficially own” any securities:

 

(i)        which such Person or any of such Person’s Affiliates or Associates, directly or indirectly, beneficially owns, within the meaning of Rule 13d-3 of the General Rules and Regulations promulgated under the Exchange Act as in effect on the date of this Agreement;

 

(ii)        which such Person or any of such Person’s Affiliates or Associates has (A) the right to acquire (whether such right is exercisable immediately or only after the passage of time or upon the satisfaction of any condition, whether or not within the control of such Person, Affiliate or Associate) pursuant to any agreement, arrangement or understanding (whether or not in writing, but other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities), or upon the exercise of conversion rights, exchange rights, rights (other than these Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for purchase or exchange; or (B) the right to vote pursuant to any agreement, arrangement or understanding (whether or not in writing); provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security if the agreement, arrangement or understanding to vote such security (1) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations promulgated under the Exchange Act and (2) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report); or

 

(iii)        which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person’s Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing, but other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities) for the purpose of acquiring, holding, voting (except to the extent contemplated by the proviso to Section 1(d)(ii)(B) hereof) or disposing of any securities of the Company.

 

        Notwithstanding anything in this definition of Beneficial Ownership to the contrary, (i) the phrase “then outstanding,” when used with reference to a Person’s Beneficial Ownership of securities of the Company, shall mean the number of such securities then issued and outstanding together with the number of such securities not then actually issued and outstanding which such Person would be deemed to own beneficially hereunder and (ii) nothing in this Section 1(d) shall cause a Person engaged in business as an underwriter of securities to be the “Beneficial Owner” of, or to “beneficially own,” any securities acquired through such Person’s participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition, and then only if such securities continue to be owned by such Person at such expiration of forty days.

 

    (e)        “Business Day” shall mean any day other than a Saturday, a Sunday, or a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close.

 

    (f)         “Close of Business” on any given date shall mean 5:00 P.M., New York, New York time, on such date; provided, however, that, if such date is not a Business Day, it shall mean 5:00 P.M., New York, New York time, on the next succeeding Business Day.

 

    (g)        “Distribution Date” shall have the meaning set forth in Section 3(a) hereof.

 

    (h)        “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

    (i)         “Exchange Ratio” shall have the meaning set forth in Section 24(a) hereof.

 

  

- 2 -

  

    (j)        “Exercise Ratio” shall be four tenths (4/10), half (1/2), one (1), two (2) or three (3) Ordinary Shares per each Right, as may be determined by the Company's Board of Directors , regardless of a different ratio stated in any other document (including in a Right Certificate). If the Board of Directors resolves that the Exercise Ration shall be set at four tenths (4/10), or half (1/2) Ordinary Share per each Right, the Board of Directors shall take such actions to handle a situation where shareholders hold fraction of Ordinary Share.

 

    (k)        “Final Expiration Date” shall have the meaning set forth in Section 7(a) hereof.

 

    (l)         “NASDAQ” shall mean NASDAQ Stock Market.

 

    (m)       “Ordinary Shares” when used with reference to the Company, shall mean the ordinary shares, par value NIS 0.10 per share, of the Company. “Ordinary Shares” when used with reference to any Person other than the Company, shall mean the share capital (or equity interest) with the greatest voting power of such other Person or, if such other Person is a Subsidiary of another Person, the Person or Persons which ultimately control such first-mentioned Person.

 

    (n)        “Person” shall mean any individual, firm, corporation, partnership, limited liability company, limited liability partnership, association, trust, syndicate or other entity, and shall include any successor (by merger or otherwise) of such entity, as well as any unincorporated group of individuals or entities that, by formal or informal agreement or arrangement (whether or not in writing), have embarked on a common purpose or act.

 

    (o)        “Purchase Price” shall have the meaning set forth in Section 4 hereof.

 

    (p)        “Record Date” shall have the meaning set forth in the second paragraph hereof.

 

    (q)        “Redemption Date” shall have the meaning set forth in Section 7(a) hereof.

 

    (r)         “Reduced Threshold” shall have the meaning set forth in Section 27 hereof.

 

    (s)        “Right” shall have the meaning set forth in the second paragraph hereof.

 

    (t)         “Right Certificate” shall have the meaning set forth in Section 3(a) hereof.

 

    (u)        “Shares Acquisition Date” shall mean the first date of public announcement by the Company or an Acquiring Person that an Acquiring Person has become such.

 

    (v)        “Subsidiary” of any Person shall mean any corporation or other entity of which a majority of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by such Person.

 

    (w)       “Summary of Rights” shall have the meaning set forth in Section 3(b) hereof.

 

    (x)        “Trading Day” means a day on which the principal national securities exchange on which the security is listed or admitted to trading is open for the transaction of business, or, if the security is not listed or admitted to trading on any national securities exchange but are quoted on NASDAQ, a day on which NASDAQ is in operation or if the security is neither listed nor admitted to trading on any national securities exchange, a Business Day.

 

Section 2.     Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such co-Rights Agents as it may deem necessary or desirable, upon ten (10) days’ prior written notice to the Rights Agent. The Rights Agent shall have no duty to supervise, and shall in no event be liable for, the acts or omissions of any such co-Rights Agent.

 

  

- 3 -

  

 

Section 3.     Issue of Right Certificates. (a) Until the earlier of (i) the Close of Business on the tenth day after the Shares Acquisition Date (or such later date as may be determined by action of the Board of Directors of the Company prior to such time as any Person becomes an Acquiring Person) ; or (ii) the Close of Business on the tenth Business Day (or such later date as may be determined by action of the Board of Directors of the Company prior to such time as any Person becomes an Acquiring Person) after the date of the commencement by any Person (other than the Company, any Subsidiary of the Company, any employee benefit or stock ownership plan or of the Company or of any Subsidiary of the Company or any entity holding Ordinary Shares of the Company for or pursuant to the terms of any such plan) of a tender or exchange offer (other than a Permitted Offer) the consummation of which would result in any Person becoming the Beneficial Owner of Ordinary Shares of the Company aggregating 15% or more of the then outstanding Ordinary Shares of the Company (including any such date which is after the date of this Agreement and prior to the issuance of the Rights) (the earlier of such dates being herein referred to as the “Distribution Date”), (x) the Rights will be evidenced (subject to the provisions of Section 3(b) hereof) by the balances indicated in the book-entry account system of the transfer agent for the Ordinary Shares registered in the names of the holders thereof (which Ordinary Shares shall also be deemed to represent Right Certificates) or, in the case of certificated shares, the certificates for Ordinary Shares of the Company registered in the names of the holders thereof (which certificates shall also be deemed to be Right Certificates) and not by separate Right Certificates, and (y) the right to receive Right Certificates will be transferable only in connection with the transfer of Ordinary Shares of the Company. As soon as practicable after the Distribution Date, the Company will prepare and execute, the Rights Agent will countersign, and the Company will send or cause to be sent (and the Rights Agent will, if requested, send) by first-class, insured, postage-prepaid mail, to each record holder of Ordinary Shares of the Company as of the Close of Business on the Distribution Date, at the address of such holder shown on the records of the Company, a Right Certificate, in substantially the form of Exhibit A hereto (a “Right Certificate”), evidencing one Right for each Ordinary Share so held. As of the Distribution Date, the Rights will be evidenced solely by such Right Certificates.

 

(b)        On the Record Date, or as soon as practicable thereafter, the Company will send a copy of a Summary of Rights to Purchase Ordinary Shares, in substantially the form of Exhibit B hereto (the “Summary of Rights”), by first-class, postage-prepaid mail, to each record holder of Ordinary Shares as of the Close of Business on the Record Date, at the address of such holder shown on the records of the Company. At any time following the Record Date, the Company will send a copy of the Summary of Rights, by first-class, postage-prepaid mail, to any record holder of Ordinary Shares who requests a copy of the Summary of Rights, at the address of such holder shown on the records of the Company. With respect to certificates for Ordinary Shares of the Company outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by the balances indicated in the book-entry account system of the transfer agent for the Ordinary Shares or, in the case of certificated shares, such certificates registered in the names of the holders thereof together with a copy of the Summary of Rights attached thereto. Until the Distribution Date (or the earlier of the Redemption Date or the Final Expiration Date), the surrender for transfer of any certificate for Ordinary Shares of the Company outstanding on the Record Date, with or without a copy of the Summary of Rights attached thereto, shall also constitute the transfer of the Rights associated with the Ordinary Shares of the Company represented thereby.

 

    (c)        Rights shall be issued in respect of all Ordinary Shares issued (or delivered from the Company’s treasury) after the Record Date but prior to the earliest of the Distribution Date, the Redemption Date or the Final Expiration Date and shall be evidenced by the following legends:

 

 (i)        Confirmation and account statements sent to holders of Ordinary Shares in book-entry form (which Ordinary Shares shall also be deemed to represent certificates for Rights) shall bear the following legend:

 

The Ordinary Shares par value NIS 0.10 per share, of On Track Innovations Ltd. (the “Corporation”) entitle the holder thereof to certain Rights as set forth in a Rights Agreement between the Corporation and Continental Stock Transfer & Trust Company dated as of January 12, 2009 as may be amended from time to time (the “Rights Agreement”), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of the Corporation. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by the shares to which this statement relates. The Corporation will mail (or cause the Rights Agent to mail) to the holder of shares to which this statement relates a copy of the Rights Agreement without charge promptly after receipt of a written request therefor. Under certain circumstances set forth in the Rights Agreement, Rights issued to an Acquiring Person and/or any Associate and/or Affiliate thereof (as such terms are defined in the Rights Agreement) may be null and void. The Rights shall not be exercisable, and shall be void so long as held, by a holder in any jurisdiction where the requisite qualification for the issuance to such holder, or the exercise by such holder of the Rights in such jurisdiction, shall not have been obtained or be obtainable.

 

  

- 4 -

  

 

With respect to Ordinary Shares in book-entry form for which there has been sent a confirmation or account statement containing the foregoing legend, until the earliest of the Distribution Date, the Redemption Date or the Final Expiration Date, the Rights associated with the Ordinary Shares shall be evidenced by such Ordinary Shares alone and registered holders of Ordinary Shares shall also be the registered holders of the associated Rights, and the transfer of any of such Ordinary Shares shall also constitute the transfer of the Rights associated with such shares of Ordinary Shares.

 

 (ii)        In the case of certificated shares, certificates for Ordinary Shares which become outstanding (including, without limitation, reacquired Ordinary Shares referred to in the last sentence of this paragraph (c)) after the Record Date but prior to the earliest of the Distribution Date, the Redemption Date or the Final Expiration Date shall have impressed on, printed on, written on or otherwise affixed to them the following legend:

 

This certificate also evidences and entitles the holder hereof to certain rights as set forth in an Agreement between On Track Innovations Ltd. (the “Corporation”) and Continental Stock Transfer & Trust Company, as Rights Agent, dated as of January 12, 2009 as may be amended from time to time (the “Agreement”), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of the Corporation. Under certain circumstances, as set forth in the Agreement, such Rights (as defined in the Agreement) will be evidenced by separate certificates and will no longer be evidenced by this certificate. The Corporation will mail (or cause the Rights Agent to mail) to the holder of this certificate a copy of the Agreement without charge after receipt of a written request therefor. Under certain circumstances set forth in the Rights Agreement, Rights issued to an Acquiring Person and/or any Associate and/or Affiliate thereof (as such terms are defined in the Rights Agreement) may be null and void. The Rights shall not be exercisable, and shall be void so long as held, by a holder in any jurisdiction where the requisite qualification for the issuance to such holder, or the exercise by such holder of the Rights in such jurisdiction, shall not have been obtained or be obtainable.

 

With respect to such certificates containing the foregoing legend, until the earliest of the Distribution Date, the Redemption Date or the Final Expiration Date, the Rights associated with the Ordinary Shares of the Company represented by such certificates shall be evidenced by such certificates alone, and the surrender for transfer of any such certificate shall also constitute the transfer of the Rights associated with the Ordinary Shares of the Company represented thereby. In the event that the Company purchases or acquires any Ordinary Shares of the Company after the Record Date but prior to the Distribution Date, the Redemption Date or the Final Expiration Date, any Rights associated with such Ordinary Shares of the Company shall be deemed cancelled and retired so that the Company shall not be entitled to exercise any Rights associated with the Ordinary Shares of the Company which are no longer outstanding, until such Ordinary Shares so purchased by the Company are again outstanding.

 

Section 4.     Form of Right Certificates. The Right Certificates (and the forms of election to purchase Ordinary Shares and of assignment to be printed on the reverse thereof) shall be substantially the same as Exhibit A hereto, and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any applicable rule or regulation made pursuant thereto or with any applicable rule or regulation of any stock exchange, trading market or automated quotation system on which the Right Certificates may from time to time be listed, or to conform to customary usage. Subject to the provisions of Section 22 hereof, the Right Certificates shall be dated as of the Record Date and on their face shall entitle the holders thereof to purchase such number of Ordinary Shares equal to the effective Exercise Ratio at the price of NIS0.10 per share (the “Purchase Price”), but the number of such Ordinary Shares and the Purchase Price shall be subject to adjustment as provided herein.

 

  

- 5 -

  

 

Section 5.     Countersignature and Registration. The Right Certificates shall be executed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, or any of its Vice Presidents, or Secretary, either manually or by facsimile signature, shall have affixed thereto the Company’s seal or a facsimile thereof, and shall be attested by the Chief Financial Officer of the Company, either manually or by facsimile signature. The Right Certificates shall be countersigned by the Rights Agent, either manually or by facsimile signature, and shall not be valid for any purpose unless countersigned. In case any officer of the Company who shall have signed any of the Right Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Right Certificates, nevertheless, may be countersigned by the Rights Agent and issued and delivered by the Company with the same force and effect as though the individual who signed such Right Certificates had not ceased to be such officer of the Company; and any Right Certificate may be signed on behalf of the Company by any individual who, at the actual date of the execution of such Right Certificate, shall be a proper officer of the Company to sign such Right Certificate, although at the date of the execution of this Agreement any such individual was not such an officer.

 

        Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its principal office, books for registration and transfer of the Right Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Right Certificates, the number of Rights evidenced on its face by each of the Right Certificates and the date of each of the Right Certificates.

 

Section 6.     Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject to the provisions of Section 14 hereof, at any time after the Close of Business on the Distribution Date, and at or prior to the Close of Business on the earlier of the Redemption Date or the Final Expiration Date, any Right Certificate or Right Certificates (other than Right Certificates representing Rights that have become void pursuant to Section 11(a)(ii) hereof or that have been exchanged pursuant to Section 24 hereof) may be transferred, split up, combined or exchanged for another Right Certificate or Right Certificates entitling the registered holder to purchase a like number of Ordinary Share as the Right Certificate or Right Certificates surrendered then entitled such holder to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Right Certificate or Right Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Right Certificate or Right Certificates to be transferred, split up, combined or exchanged at the principal office of the Rights Agent. Thereupon the Rights Agent shall countersign and deliver to the Person entitled thereto a Right Certificate or Right Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Right Certificates.

 

Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and, at the Company’s request, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will make and deliver a new Right Certificate of like tenor to the Rights Agent for delivery to the registered holder in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.

 

Section 7.     Exercise of Rights; Purchase Price; Expiration Date of Rights. (a) The registered holder of any Right Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein), in whole or in part, at any time after the Distribution Date, upon surrender of the Right Certificate, with the form of election to purchase on the reverse side thereof duly executed, to the Rights Agent at the principal office of the Rights Agent, together with payment of the Purchase Price for each Ordinary Share as to which the Rights are exercised, at or prior to the earliest of (i) the Close of Business on January 10, 2016, or such later date as determined by the Board of Directors of the Company (so long as such determination is made prior to January 10, 2016 (the “Final Expiration Date”), (ii) the time at which the Rights are redeemed as provided in Section 23 hereof (the “Redemption Date”), or (iii) the time at which such Rights are exchanged as provided in Section 24 hereof.

 

    (b)        The Purchase Price for each Ordinary Share purchasable pursuant to the exercise of a Right shall initially be NIS0.10 per share, and shall be subject to adjustment from time to time as provided in Section 11 or 13 hereof, and shall be payable in lawful money of the United States of America in accordance with paragraph (c) below, based on the official NIS-US$ exchange rate last published by the Bank of Israel prior to the first day Rights becoming exercisable.

 

  

- 6 -

  

 

    (c)        Upon receipt of a Right Certificate representing exercisable Rights, with the form of election to purchase duly executed, accompanied by payment of the Purchase Price for the shares to be purchased and an amount equal to any applicable transfer tax required to be paid by the holder of such Right Certificate in accordance with Section 9 hereof by certified check, cashier’s check or money order payable to the order of the Company, the Rights Agent shall thereupon promptly (i) (A) requisition from any transfer agent of the Ordinary Shares certificates for such number of Ordinary Shares equal to the effective Exercise Ratio to be purchased and the Company hereby irrevocably authorizes any such transfer agent to comply with all such requests, or (B) requisition from the depositary agent depositary receipts representing such number of Ordinary Share as are to be purchased (in which case certificates for the Ordinary Shares represented by such receipts shall be deposited by the transfer agent of the Ordinary Shares with such depositary agent) and the Company hereby directs such depositary agent to comply with such request; (ii) when appropriate, requisition from the Company the amount of cash to be paid in lieu of issuance of fractional shares in accordance with Section 14 hereof; (iii) promptly after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated by such holder; and (iv) when appropriate, after receipt, promptly deliver such cash to or upon the order of the registered holder of such Right Certificate.

 

    (d)        In case the registered holder of any Right Certificate shall exercise less than all the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent to the registered holder of such Right Certificate or to such holder’s duly authorized assigns, subject to the provisions of Section 14 hereof.

 

Section 8.     Cancellation and Destruction of Right Certificates. All Right Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or to any of its agents, be delivered to the Rights Agent for cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right Certificates shall be issued in lieu thereof, except as expressly permitted by any of the provisions of this Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all cancelled Right Certificates to the Company, or shall, at the written request of the Company, destroy such cancelled Right Certificates, and, in such case, shall deliver a certificate of destruction thereof to the Company.

 

Section 9.     Availability of Ordinary Shares. (a) The Company covenants and agrees that it will cause to be reserved and kept available out of its authorized and unissued Ordinary Shares or any Ordinary Shares held in it as dormant shares, the number of Ordinary Shares that will be sufficient to permit the exercise in full of all outstanding Rights in accordance with the Exercise Ratio.

 

    (b)        The Company shall use its reasonable commercial efforts to (i) file, as soon as practicable following the earliest date after any Person, alone or together with its Affiliates and Associates, becomes an Acquiring Person, or as soon as is required by law following the Distribution Date, as the case may be, a registration statement under the Securities Act of 1933, as amended, with respect to the securities purchasable upon exercise of the Rights on an appropriate form, (ii) cause such registration statement to become effective as soon as practicable after such filing, and (iii) cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities, and (B) the date of the expiration of the Rights. The Company will also take such action as may be appropriate, and commercially reasonable, under, or to ensure compliance with, the securities or “blue sky” laws of the various states in connection with the exercisability of the Rights. The Company may temporarily suspend, for a period of time not to exceed 180 days after the date set forth in clause (i) of the first sentence of this Section 9(b), the exercisability of the Rights in order to prepare and file such registration statement and permit it to become effective. Upon any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction unless the requisite qualification in such jurisdiction shall have been obtained.

 

  

- 7 -

  

 

    (c)        The Company covenants and agrees that it will take all such action as may be necessary to ensure that all Ordinary Shares delivered upon exercise of Rights shall, at the time of delivery of the certificates for such Ordinary Shares (subject to payment of the Purchase Price), be duly and validly authorized and issued and fully paid and nonassessable shares.

 

    (d)        The Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges which may be payable in respect of the issuance or delivery of the Right Certificates or of any Ordinary Shares upon the exercise of Rights. The Company shall not, however, be required to pay any transfer tax which may be payable in respect of any transfer or delivery of Right Certificates to a Person other than, or the issuance or delivery of certificates or depositary receipts or entries in the book-entry account system of the transfer agent for the Ordinary Shares in a name other than that of, the registered holder of the Right Certificate evidencing Rights surrendered for exercise or to issue or to deliver any certificates for Ordinary Shares or depositary receipts or entries in the book-entry account system of the transfer agent for Ordinary Shares upon the exercise of any Rights until any such tax shall have been paid (any such tax being payable by the holder of such Right Certificate at the time of surrender) or until it has been established to the Company’s satisfaction that no such tax is due.

 

Section 10.     Ordinary Shares Record Date. Each Person in whose name any certificate or entry in the book-entry account system of the transfer agent for Ordinary Shares are issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the Ordinary Shares represented thereby on, and such certificate or entry in the book-entry account system of the transfer agent shall be dated, the date upon which the Right Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (and any applicable transfer taxes) was made; provided, however, that, if the date of such surrender and payment is a date upon which the Ordinary Shares transfer books of the Company are closed, such Person shall be deemed to have become the record holder of such shares on, and such certificate or entry in the book-entry account system of the transfer agent shall be dated, the next succeeding Business Day on which the Ordinary Shares transfer books of the Company are open. Prior to the exercise of the Rights evidenced thereby, the holder of a Right Certificate shall not be entitled to any rights of a shareholder of the Company with respect to shares for which the Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein.

 

Section 11.     Adjustment of Purchase Price, Number of Shares or Number of Rights. The Purchase Price, the number of Ordinary Shares covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11.

 

    (a)        (i) In the event the Company shall at any time after the date of this Agreement (A) declare a dividend on the Ordinary Shares payable in Ordinary Shares, (B) subdivide the outstanding Ordinary Shares, (C) combine the outstanding Ordinary Shares into a smaller number of Ordinary Shares or (D) issue any shares of its share capital in a reclassification of the Ordinary Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a), the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of share capital issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive, upon payment of the Purchase Price then in effect, the aggregate number and kind of shares of share capital which, if such Right had been exercised immediately prior to such date and at a time when the Ordinary Shares transfer books of the Company were open, such holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or reclassification; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the share capital of the Company issuable upon exercise of one Right.

 

        If an event occurs which would require an adjustment under both Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii).

 

  

- 8 -

  

 

 (ii)        Subject to Section 24 hereof, in the event any Person becomes an Acquiring Person, each holder of a Right shall thereafter have a right to receive such number of Ordinary Shares per each Right held thereby, equal to the then effective Exercise Ratio, upon exercise thereof at a price equal to the then current Purchase Price. In the event that any Person shall become an Acquiring Person and the Rights shall then be outstanding, the Company shall not take any action which would eliminate or diminish the benefits intended to be afforded by the Rights, except as set forth in this Agreement.

 

        From and after the occurrence of such event, any Rights that are or were acquired or beneficially owned by any Acquiring Person (and/or any Associate and/or Affiliate of such Acquiring Person) shall be void, and any holder of such Rights shall thereafter have no right to exercise such Rights under any provision of this Agreement. No Right Certificate shall be issued pursuant to Section 3 hereof that represents Rights beneficially owned by an Acquiring Person whose Rights would be void pursuant to the preceding sentence and/or any Associate and/or Affiliate thereof; no Right Certificate shall be issued at any time upon the transfer of any Rights to an Acquiring Person whose Rights would be void pursuant to the preceding sentence and/or any Associate and/or Affiliate thereof or to any nominee of such Acquiring Person, Associate or Affiliate; and any Right Certificate delivered to the Rights Agent for transfer to an Acquiring Person whose Rights would be void pursuant to the preceding sentence shall be cancelled.

 

 (iii)        In the event that there shall not be sufficient Ordinary Shares issued but not outstanding or authorized but unissued to permit the exercise in full of the Rights in accordance with subparagraph (ii) above, the Company shall take all such action as may be necessary to authorize additional Ordinary Shares for issuance upon exercise of the Rights.

    (b)        No adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Purchase Price; provided, however, that any adjustments which by reason of this Section 11(b) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest one one-millionth of an Ordinary Share or one ten-thousandth of any other share or security as the case may be. Notwithstanding the first sentence of this Section 11(b), any adjustment required by this Section 11 shall be made no later than the earlier of (i) three years from the date of the transaction which requires such adjustment, or (ii) the date of the expiration of the right to exercise any Rights.

    (c)        If, as a result of an adjustment made pursuant to Section 11(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive any share capital of the Company other than Ordinary Shares, thereafter the number of such other shares so receivable upon exercise of any Right shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Ordinary Shares contained in Section 11(a) and (b) hereof, inclusive, and the provisions of Sections 7, 9, 10 and 13 hereof with respect to the Ordinary Shares shall apply on like terms to any such other shares.

 

    (d)        All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the number Ordinary Share purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.

 

    (e)        The Company may elect, on or after the date of any adjustment of the Purchase Price, to adjust the number of Rights in substitution for any adjustment in the number of Ordinary Shares issuable upon exercise of the Rights. Each of the Rights outstanding after such adjustment of the number of Rights shall be exercisable for such number of Ordinary Shares equal to the effective Exercise Ratio for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one ten-thousandth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Right Certificates have been issued, shall be at least 10 days later than the date of the public announcement. If Right Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(e), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Right Certificates on such record date Right Certificates evidencing, subject to Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Right Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Right Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Right Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein, and shall be registered in the names of the holders of record of Right Certificates on the record date specified in the public announcement.

 

  

- 9 -

  

 

    (f)        Irrespective of any adjustment or change in the Purchase Price or in the number of Ordinary Shares issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price and the number of Ordinary Shares equal to the effective Exercise Ratio which were expressed in the initial Right Certificates issued hereunder.

 

    (g)        Before taking any action that would cause an adjustment reducing the Purchase Price below the then par value, if any, of the Ordinary Shares issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable Ordinary Shares at such adjusted Purchase Price.

 

    (h)        In any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuing to the holder of any Right exercised after such record date of the Ordinary Shares and other share capital or securities of the Company, if any, issuable upon such exercise over and above the Ordinary Shares and other shares capital or securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to receive such additional shares upon the occurrence of the event requiring such adjustment.

 

    (i)        In the event that, at any time after the date of this Agreement and prior to the Distribution Date, the Company shall (i) declare or pay any dividend on the Ordinary Shares payable in Ordinary Shares, or (ii) effect a subdivision, combination or consolidation of the Ordinary Shares (by reclassification or otherwise than by payment of dividends in Ordinary Shares) into a greater or lesser number of Ordinary Shares, then, in any such case, (A) the number of Ordinary Shares purchasable after such event upon proper exercise of each Right shall be adjusted accordingly, and (B) each Ordinary Share outstanding immediately after such event shall have issued with respect to it that number of Rights which each Ordinary Share outstanding immediately prior to such event had issued with respect to it. The adjustments provided for in this Section 11(i) shall be made successively whenever such a dividend is declared or paid or such a subdivision, combination or consolidation is effected.

 

Section 12.     Certificate of Adjusted Purchase Price or Number of Shares. Whenever an adjustment is made as provided in Section 11 or 13 hereof, the Company shall promptly (a) prepare a certificate setting forth such adjustment and a brief statement of the facts accounting for such adjustment, (b) file with the Rights Agent and with each transfer agent for the Ordinary Shares and the Securities and Exchange Commission a copy of such certificate and (c) if such adjustment occurs at any time after the Distribution Date, mail a brief summary thereof to each holder of a Right Certificate in accordance with Section 25 hereof.

 

Section 13.     Consolidation, Merger or Sale or Transfer of Assets or Earning Power. In the event, directly or indirectly, at any time after a Person has become an Acquiring Person, (a) the Company shall consolidate with, or merge with and into, any other Person, (b) any Person shall consolidate with the Company, or merge with and into the Company and the Company shall be the continuing or surviving corporation of such merger and, in connection with such merger, all or part of the Ordinary Shares shall be changed into or exchanged for shares or other securities of any other Person (or the Company) or cash or any other property, or (c) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer), in one or more transactions, assets or earning power aggregating 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person other than the Company or one or more of its wholly-owned Subsidiaries, then, and in each such case, proper provision shall be made so that (i) each holder of a Right (except as otherwise provided herein) shall thereafter have the right to receive, upon the exercise thereof at a price equal to NIS0.10 per share, in accordance with the terms of this Agreement and in lieu of Ordinary Shares, the number of securities of such other Person to which each shareholder is entitled to for each of its Ordinary Shares of the Company (including the Company as successor thereto or as the surviving corporation) multiplied by the effective Exercise Ratio; (ii) the issuer of such securities shall thereafter be liable for, and shall assume, by virtue of such consolidation, merger, sale or transfer, all the obligations and duties of the Company pursuant to this Agreement; (iii) the term “Company” shall thereafter be deemed to refer to such issuer; and (iv) such issuer shall take such steps (including, but not limited to, the reservation of a sufficient number of its securities in accordance with Section 9 hereof) in connection with such consummation as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to the securities thereafter deliverable upon the exercise of the Rights. The Company shall not consummate any such consolidation, merger, sale or transfer unless, prior thereto, the Company and such issuer shall have executed and delivered to the Rights Agent a supplemental agreement so providing. The Company shall not enter into any transaction of the kind referred to in this Section 13 if at the time of such transaction there are any rights, warrants, instruments or securities outstanding or any agreements or arrangements which, as a result of the consummation of such transaction, would eliminate or substantially diminish the benefits intended to be afforded by the Rights. The provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers.

 

  

- 10 -

  

 

Section 14.     Fractional Rights and Fractional Shares. (a) The Company shall not be required to issue fractions of Rights or to distribute Right Certificates which evidence fractional Rights. If the Company elects not to issue such fractional Rights, the Company shall pay, in lieu of such fractional Rights, to the registered holders of the Right Certificates with regard to which such fractional Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current market value of a whole Right. For the purposes of this Section 14(a), the current market value of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable. The closing price for any day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case, as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on NASDAQ or, if the Rights are not listed or admitted to trading on NASDAQ, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading or, if the Rights are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by NASDAQ or such other system then in use or, if on any such date the Rights are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the Board of Directors of the Company. If on any such date no such market maker is making a market in the Rights, the fair value of the Rights on such date as determined in good faith by the Board of Directors of the Company shall be used.

 

    (b)        The Company shall not be required to issue fractions of Ordinary Shares upon exercise of the Rights or to distribute certificates or make any entries in the book-entry account system of the transfer agent that evidence fractional Ordinary Shares. If the Company elects not to issue such fractional Ordinary Shares, the Company shall pay, in lieu of such fractional Ordinary Shares, to the registered holders of Right Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one Ordinary Share. For the purposes of this Section 14(b), the current market value of an Ordinary Share shall be the closing price of an Ordinary Share for the Trading Day immediately prior to the date of such exercise.

 

    (c)        The holder of a Right, by the acceptance of the Right, expressly waives such holder’s right to receive any fractional Rights or any fractional shares upon exercise of a Right (except as provided above).

 

Section 15.     Rights of Action. All rights of action in respect of this Agreement, excepting the rights of action vested in the Rights Agent pursuant to Section 18 hereof, are vested in the respective registered holders of the Right Certificates (and, prior to the Distribution Date, the registered holders of the Ordinary Shares); and any registered holder of any Right Certificate (or, prior to the Distribution Date, of the Ordinary Shares), without the consent of the Rights Agent or of the holder of any other Right Certificate (or, prior to the Distribution Date, of the Ordinary Shares), may, in such holder’s own behalf and for such holder’s own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, such holder’s right to exercise the Rights evidenced by such Right Certificate in the manner provided in such Right Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement, and will be entitled to specific performance of the obligations under, and injunctive relief against actual or threatened violations of the obligations of any Person subject to, this Agreement.

 

  

- 11 -

  

 

Section 16.     Agreement of Right Holders. Every holder of a Right, by accepting the same, consents and agrees with the Company and the Rights Agent and with every other holder of a Right that:

 

    (a)        prior to the Distribution Date, the Rights will be evidenced by the balances indicated in the book-entry account system of the transfer agent for the Ordinary Shares registered in the names of the holders of the Ordinary Shares (which Ordinary Shares shall also be deemed to represent certificates for Rights) or, in the case of certificated shares, the certificates for the Ordinary Shares registered in the names of the holders of the Ordinary Shares (which certificates for shares of Ordinary Shares shall also constitute certificates for Rights) and each Right will be transferable only in connection with the transfer of Ordinary Shares;

 

    (b)        after the Distribution Date, the Right Certificates are transferable only on the registry books of the Rights Agent if surrendered at the principal office of the Rights Agent, duly endorsed or accompanied by a proper instrument of transfer;

 

    (c)        the Company and the Rights Agent may deem and treat the person in whose name the Right Certificate (or, prior to the Distribution Date, the associated balance indicated in the book-entry account system of the transfer agent for the Ordinary Shares or, in the case of certificated shares, the associated Ordinary Shares certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificate or the associated balance indicated in the book-entry account system of the transfer agent for the Ordinary Shares or, in the case of certificated shares, the associated Ordinary Shares certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary; and

 

    (d)        notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation; provided, however, the Company must use its reasonable best efforts to have any such order, decree or ruling lifted or otherwise overturned as soon as possible.

 

Section 17.     Right Certificate Holder Not Deemed a Shareholder. No holder, as such, of any Right Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of the Ordinary Shares or any other securities of the Company which may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting shareholders (except as provided in Section 25 hereof), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Right Certificate shall have been exercised in accordance with the provisions hereof.

 

Section 18.     Concerning the Rights Agent. The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder, and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, or expense incurred without gross negligence, bad faith or willful misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending against any claim of liability in the premises.

 

  

- 12 -

  

 

        The Rights Agent shall be protected and shall incur no liability for, or in respect of any action taken, suffered or omitted by it in connection with, its administration of this Agreement in reliance upon any Right Certificate or certificate for the Ordinary Shares or Ordinary Shares or any balance indicated in the book-entry account system of the transfer agent, or, for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper person or persons, or otherwise upon the advice of counsel as set forth in Section 20 hereof.

 

Section 19.     Merger or Consolidation or Change of Name of Rights Agent. Any corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any entity succeeding to the stock transfer or corporate trust powers of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section 21. The purchase of all or substantially all of the Rights Agent’s assets employed in the performance of transfer agent activities shall be deemed a merger or consolidation for purposes of this Section 19. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so countersigned; and, in case at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and, in all such cases, such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement.

 

        In case at any time the name of the Rights Agent shall be changed and at such time any of the Right Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates so countersigned; and, in case at that time any of the Right Certificates shall not have been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name or in its changed name; and, in all such cases, such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement.

 

Section 20.     Duties of Rights Agent. The Rights Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound:

 

    (a)        The Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion.

 

    (b)        Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by any one of the Chairman of the Board, the Chief Executive Officer, any Vice President, Secretary or the Chief Financial Officer of the Company and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate.

 

    (c)        The Rights Agent shall be liable hereunder to the Company and any other Person only for its own gross negligence, bad faith or willful misconduct.

 

  

- 13 -

  

 

    (d)        The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Right Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only.

 

    (e)        The Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Right Certificate; nor shall it be responsible for any change in the exercisability of the Rights (including the Rights becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights (including any adjustment required under the provisions of Sections 11 or 13 or the manner, method or amount thereof) provided for in Section 3, 11, 13, 23 or 24 hereof, or the ascertaining of the existence of facts that would require any such change or adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after actual notice that such change or adjustment is required); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any Ordinary Shares to be issued pursuant to this Agreement or any Right Certificate or as to whether any Ordinary Shares will, when issued, be validly authorized and issued, fully paid and nonassessable.

 

    (f)        The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement.

 

    (g)        The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Secretary or the Chief Financial Officer of the Company, and to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered by it in good faith in accordance with instructions of any such officer or for any delay in acting while waiting for those instructions.

 

    (h)        The Rights Agent and any shareholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal entity.

 

    (i)        The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct, provided that reasonable care was exercised in the selection and continued employment thereof.

 

Section 21.     Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon 30 days’ notice in writing mailed to the Company and to each transfer agent of the Ordinary Shares or Ordinary Shares by registered or certified mail, and to the holders of the Right Certificates by first-class mail. In the event the transfer agency relationship in effect between the Company and the Rights Agent terminates, the Rights Agent will be deemed to have resigned automatically and be discharged from its duties under this Agreement as of the effective date of such termination, and the Company shall be responsible for sending any required notice. The Company may remove the Rights Agent or any successor Rights Agent upon 30 days’notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Ordinary Shares or Ordinary Shares by registered or certified mail, and to the holders of the Right Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of 30 days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right Certificate (which holder shall, with such notice, submit such holder’s Right Certificate for inspection by the Company), then the registered holder of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be a corporation or other entity organized and doing business under the laws of the United States or of the State of Delaware (or of any other state of the United States so long as such corporation or other entity is authorized to do business as a banking institution such other state), in good standing, which is authorized under such laws to exercise corporate trust or stock transfer powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus, along with its Affiliates, of at least $50 million. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Ordinary Shares or Ordinary Shares, and mail a notice thereof in writing to the registered holders of the Right Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.

 

  

- 14 -

  

 

Section 22.     Issuance of New Right Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right Certificates evidencing Rights in such form as may be approved by the Board of Directors of the Company to reflect any adjustment or change in the Purchase Price and the number or kind or class of shares or other securities or property purchasable under the Right Certificates made in accordance with the provisions of this Agreement.

 

Section 23.     Redemption. (a) The Board of Directors of the Company may, at its option, at any time prior to 10 days after such time that any Person becomes an Acquiring Person (or such later date as may be determined by action of the Board of Directors of the Company prior to such time as any Person becomes an Acquiring Person), redeem all but not less than all the then outstanding Rights for no consideration. The redemption of the Rights by the Board of Directors of the Company may be made effective at such time, on such basis and with such conditions as the Board of Directors of the Company, in its sole discretion, may establish.

 

    (b)        Immediately upon the action of the Board of Directors of the Company ordering the redemption of the Rights pursuant to paragraph (a) of this Section 23, and without any further action and without any notice, the right to exercise the Rights will terminate and the holders of Rights shall have no further right. The Company shall promptly give public notice of any such redemption; provided, however, that the failure to give, or any defect in, any such notice shall not affect the validity of such redemption. Within 10 days after such action of the Board of Directors of the Company ordering the redemption of the Rights, the Company shall mail a notice of redemption to all the holders of the then outstanding Rights at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent for the Ordinary Shares. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Neither the Company nor any of its Affiliates and/or Associates may redeem, acquire or purchase for value any Rights at any time in any manner other than that specifically set forth in this Section 23 or in Section 24 hereof, and other than in connection with the purchase of Ordinary Shares prior to the Distribution Date.

 

Section 24.     Exchange. (a) The Board of Directors of the Company may, at its option, at any time after any Person becomes an Acquiring Person, exchange all or part of the then outstanding and exercisable Rights (which shall not include Rights that have become void pursuant to the provisions of Section 11(a)(ii) hereof) for Ordinary Shares at an exchange ratio equal to the effective Exercise Ratio per Right, appropriately adjusted to reflect any adjustment in the number of Rights. Notwithstanding the foregoing, the Board of Directors of the Company shall not be empowered to effect such exchange at any time after any Person (other than the Company, any Subsidiary of the Company, any employee benefit or stock ownership plan of the Company or any such Subsidiary, or any entity holding Ordinary Shares for or pursuant to the terms of any such plan), together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or more of the Ordinary Shares then outstanding.

 

  

- 15 -

  

 

    (b)        Immediately upon the action of the Board of Directors of the Company ordering the exchange of any Rights pursuant to paragraph (a) of this Section 24 and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive that number of Ordinary Shares equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. The Company shall promptly give public notice of any such exchange; provided, however, that the failure to give, or any defect in, such notice shall not affect the validity of such exchange. The Company promptly shall mail a notice of any such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange of the Ordinary Shares for Rights will be effected, and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights which have become void pursuant to the provisions of Section 11(a)(ii) hereof) held by each holder of Rights.

 

    (c)        In the event that there shall not be sufficient Ordinary Shares issued but not outstanding or authorized but unissued to permit any exchange of Rights as contemplated in accordance with this Section 24, the Company shall take all such action as may be necessary to authorize additional Ordinary Shares for issuance upon exchange of the Rights.

 

    (d)        The Company shall not be required to issue fractions of Ordinary Shares or to distribute certificates or make any entries in the book-entry account system of the transfer agent which evidence fractional Ordinary Shares. In lieu of such fractional Ordinary Shares, the Company shall pay to the registered holders of the Right Certificates with regard to which such fractional Ordinary Shares would otherwise be issuable an amount in cash equal to the same fraction of the current market value of a whole Ordinary Share. For the purposes of this paragraph (d), the current market value of a whole Ordinary Share shall be the closing price of a Ordinary Share for the Trading Day immediately prior to the date of exchange pursuant to this Section 24.

 

Section 25.     Notice of Certain Events. (a) In case the Company shall, at any time after the Distribution Date, propose (i) to pay any dividend payable in shares of any class to the holders of the Ordinary Shares or to make any other distribution to the holders of the Ordinary Shares (other than a regular quarterly cash dividend and other than repurchase of Company’s own shares), (ii) to offer to the holders of the Ordinary Shares rights or warrants to subscribe for or to purchase any additional Ordinary Shares or shares of any class or any other securities, rights or options, (iii) to effect any reclassification of the Ordinary Shares (other than a reclassification involving only the subdivision of outstanding Ordinary Shares), (iv) to effect any merger, consolidation or other combination into or with, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one or more transactions, of 50% or more of the assets, cash flow or earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person, (v) to effect the liquidation, dissolution or winding up of the Company, or (vi) to declare or pay any dividend on the Ordinary Shares payable in Ordinary Shares or to effect a subdivision, combination or consolidation of the Ordinary Shares (by reclassification or otherwise than by payment of dividends in Ordinary Shares), then, in each such case, the Company shall give to each holder of a Right Certificate, in accordance with Section 26 hereof, a notice of such proposed action, which shall specify the record date for the purposes of such share dividend, or distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the holders of the Ordinary Shares, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii) above at least 10 days prior to the record date for determining holders of the Ordinary Shares for purposes of such action, and, in the case of any such other action, at least 10 days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the Ordinary Shares, whichever shall be the earlier.

 

    (b)        In case the event set forth in Section 11(a)(ii) hereof shall occur, then the Company shall, as soon as practicable thereafter, give to each holder of a Right Certificate, in accordance with Section 26 hereof, a notice of the occurrence of such event, which notice shall describe such event and the consequences of such event to holders of Rights under Section 11(a)(ii) hereof.

 

  

- 16 -

  

 

Section 26.     Notices. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Right Certificate to or on the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows:

 

On Track Innovations Ltd.

Z.H.R Industrial Zone

P.O. Box 32, Rosh Pina 12000 Israel

Attention: Company's Secretary

Subject to the provisions of Section 21 hereof, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the Rights Agent shall be sufficiently given or made if sent by overnight delivery service or first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows:

 

Continental Stock Transfer & Trust Company

17 Battery Place, 8th Floor

New York, NY 10004

Attention: Compliance Department

 

Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Right Certificate shall be sufficiently given or made if sent by overnight delivery service or first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company.

 

Section 27.     Supplements and Amendments. The Company may from time to time supplement or amend (including terminate) this Agreement without the approval of any holders of Right Certificates in order to cure any ambiguity, to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, or to make any other provisions with respect to the Rights which the Company may deem necessary or desirable, any such supplement or amendment to be evidenced by a writing signed by the Company and the Rights Agent; provided, however, that, from and after such time as any Person becomes an Acquiring Person, this Agreement shall not be amended in any manner which would adversely affect the interests of the holders of Rights (other than an Acquiring Person or an Affiliate or Associate thereof). Without limiting the foregoing, the Company may at any time prior to such time as any Person becomes an Acquiring Person amend this Agreement to lower the thresholds set forth in Section 1(a) and 3(a) hereof to not less than 10% (the “Reduced Threshold”) provided, however, that no Person who beneficially owns a number of Ordinary Shares equal to or greater than the Reduced Threshold shall become an Acquiring Person unless such Person shall, after the public announcement of the Reduced Threshold, increase its beneficial ownership of the then outstanding Ordinary Shares (other than as a result of an acquisition of Ordinary Shares by the Company) to an amount equal to or greater than the greater of (x) the Reduced Threshold or (y) the sum of (i) the lowest beneficial ownership of such Person as a percentage of the outstanding Ordinary Shares as of any date on or after the date of the public announcement of such Reduced Threshold plus (ii) .001%.

 

Section 28.     Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder.

 

Section 29.     Determinations and Actions by the Board of Directors, etc. For all purposes of this Agreement, any calculation of the number of Ordinary Shares outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding Ordinary Shares of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The Board of Directors of the Company shall have the exclusive power, authority and discretion to administer this Agreement and to exercise all rights and powers specifically granted to such Board of Directors or to the Company, or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to (i) interpret the provisions of this Agreement, and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including, but not limited to, a determination to redeem or not redeem the Rights, to amend the Agreement or to find or to announce publicly that any Person has become an Acquiring Person). All such actions, calculations, interpretations and determinations (including, for purposes of clauses (i) and (iii) below, all omissions with respect to the foregoing) which are done or made by the Board of Directors of the Company or the Company (i) shall be within the discretion of the Board of Directors, (ii) shall be final, conclusive and binding on the Company, the Rights Agent, the holders of the Right Certificates and all other parties, and (iii) shall not subject the Board of Directors of the Company to any liability to the holders of the Rights and Right Certificates.

 

  

- 17 -

  

 

Section 30.     Benefits of this Agreement. Nothing in this Agreement shall be construed to give to any Person other than the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Ordinary Shares) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Ordinary Shares).

 

Section 31.     Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

 

Section 32.     Governing Law. This Agreement shall be deemed to be a contract made under the laws of the State of New York and for all purposes shall be governed by and construed in accordance with the laws of such state applicable to contracts to be made and performed entirely within such state (where and each Right Certificate issued hereunder shall be governed by the laws of the State of Israel).

 

Section 33.     Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

 

Section 34.     Descriptive Headings. Descriptive headings of the several Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

 

Section 35.     Force Majeure. Notwithstanding anything to the contrary contained herein, the Rights Agent shall not be liable for any delays or failures in performance resulting from acts beyond its reasonable control including, without limitation, acts of God, terrorist acts, shortage of supply, breakdowns or malfunctions, interruptions or malfunction of computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties, war, or civil unrest.

 

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and attested, all as of the day and year first above written.

 

ON TRACK INNOVATIONS LTD.

 

By: /s/ Ofer Tsiperman

 

Ofer Tziperman, CEO

By: /s/ Shy Tomer

 

Shay Tomer, CFO

 

CONTINENTAL STOCK TRANSFER & TRUST COMPANY

 

By: /s/ Monty Harry

Monty Harry, Vice President

 

  

- 18 -

  

 

Exhibit A

 

Form of Right Certificate

 

	
Certificate No. R-

	
______ Rights

 

NOT EXERCISABLE AFTER JANUARY 10, 2016 OR SUCH LATER DATE AS DETERMINED BY THE COMPANY’S BOARD OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION FOR NO CONSIDERATION AND TO EXCHANGE ON THE TERMS SET FORTH IN THE AGREEMENT.

 

Right Certificate

 

On Track Innovations Ltd.

 

        This certifies that ____________________, or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Agreement, dated as of January 12, 2009 as amended on January 11, 2012 and further amended on January 9, 2014 (the “Agreement”), between On Track Innovations Ltd., a company incorporated under the laws of the State of Israel (the “Company”), and Continental Stock Transfer & Trust Company (the “Rights Agent”), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Agreement) and prior to 5:00 P.M., New York, New York time, on January 10, 2016 (or such later date as determined by the Board of Directors of the Company (so long as such determination is made prior to January 10, 2016)) at the principal office of the Rights Agent, or at the office of its successor as Rights Agent, _____ [effective Exercise Ratio] fully paid non-assessable Ordinary Shares, par value NIS 0.10 per share, of the Company (the “Ordinary Shares”), at a purchase price of NIS0.10 per one Ordinary Share (the “Purchase Price”), upon presentation and surrender of this Right Certificate with the Form of Election to Purchase duly executed. The number of Rights evidenced by this Right Certificate (and the number of Ordinary Shares which may be purchased upon exercise hereof) set forth above, and the Purchase Price set forth above, are the number and Purchase Price as of ____________, based on the Ordinary Shares as constituted at such date. As provided in the Agreement, the Purchase Price and the number of Ordinary Share which may be purchased upon the exercise of the Rights evidenced by this Right Certificate are subject to modification and adjustment upon the happening of certain events.

 

        This Right Certificate is subject to all of the terms, provisions and conditions of the Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Right Certificates. Copies of the Agreement are on file at the principal executive offices of the Company and the offices of the Rights Agent.

 

        This Right Certificate, with or without other Right Certificates, upon surrender at the principal office of the Rights Agent, may be exchanged for another Right Certificate or Right Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of Ordinary Shares as the Rights evidenced by the Right Certificate or Right Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Right Certificate or Right Certificates for the number of whole Rights not exercised.

 

        Subject to the provisions of the Agreement, the Rights evidenced by this Right Certificate (i) may be redeemed by the Company for no consideration; or (ii) may be exchanged in whole or in part for Ordinary Shares or shares of the Company’s Ordinary Shares Stock, par value NIS 0.10 per share.

 

  

- 19 -

  

 

        No fractional Ordinary Shares will be issued upon the exercise of any Right or Rights evidenced hereby, but, in lieu thereof, a cash payment will be made, as provided in the Agreement.

 

        No holder of this Right Certificate shall be entitled to vote or receive dividends or be deemed for any purpose the holder of the Ordinary Shares or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting shareholders (except as provided in the Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate shall have been exercised as provided in the Agreement.

 

    This Right Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent.

 

        WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.

 

Dated as of ______, ___________.

 

ON TRACK INNOVATIONS LTD.

 

By:

——————————————

 

Name:

——————————————

 

Title:

——————————————

 

  

- 20 -

  

 

Form of Reverse Side of Right Certificate

 

FORM OF ASSIGNMENT

 

(To be executed by the registered holder if such

holder desires to transfer the Right Certificate.)

 

        FOR VALUE RECEIVED _________________________________ hereby sells, assigns and transfers unto ______________________________________________________

 

(Please print name and address of transferee)

 

this Right Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint _________ attorney, to transfer the within Right Certificate on the books of the within-named Company, with full power of substitution.

 

Dated: ___________________

 

	  	  	
——————————————

Signature

Signature Guaranteed:

 

        Signatures must be guaranteed by an eligible guarantor institution which is a participant in the Securities Transfer Agents Medallion Program (“STAMP”), the NASDAQ Medallion Signature Program (“MSP”), or the Stock Exchanges Medallion Program (“SEMP”), pursuant to Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended. Guarantees by a notary public are not acceptable.

 

        The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not beneficially owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the Agreement).

 

	  	  	
——————————————

Signature

 

  

- 21 -

  

 

Form of Reverse Side of Right Certificate – continued

 

FORM OF ELECTION TO PURCHASE

 

(To be executed if holder desires to exercise 

Rights represented by the Right Certificate.)

 

To: On Track Innovations Ltd.

 

        The undersigned hereby irrevocably elects to exercise ______ Rights represented by this Right Certificate to purchase the Ordinary Shares issuable upon the exercise of such Rights and requests that certificates for such Ordinary Shares be issued in the name of:

 

Please insert social security 

or other identifying number

 

(Please print name and address)

 

If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new Right Certificate for the balance remaining of such Rights shall be registered in the name of and delivered to:

 

Please insert social security 

or other identifying number

 

(Please print name and address)

 

Dated: _______________________

 

	  	  	
——————————————

Signature

 

Signature Guaranteed:

 

        Signatures must be guaranteed by an eligible guarantor institution which is a participant in the Securities Transfer Agents Medallion Program (“STAMP”), the NASDAQ Medallion Signature Program (“MSP”), or the Stock Exchanges Medallion Program (“SEMP”), pursuant to Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended. Guarantees by a notary public are not acceptable.

 

        The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not beneficially owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the Agreement).

 

	  	  	
——————————————

Signature

  

- 22 -

  

 

NOTICE

 

        The signature in the Form of Assignment or Form of Election to Purchase, as the case may be, must conform to the name as written upon the face of this Right Certificate in every particular, without alteration or enlargement or any change whatsoever.

 

        In the event the certification set forth above in the Form of Assignment or the Form of Election to Purchase, as the case may be, is not completed, the Company and the Rights Agent will deem the beneficial owner of the Rights evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as defined in the Agreement) and such Assignment or Election to Purchase will not be honored.

 

  

- 23 -

  

 

Exhibit B

 

SUMMARY OF RIGHTS TO PURCHASE ORDINARY SHARES

 

Introduction

 

        On January 11, 2009 the Board of Directors (the “Board”) of On Track Innovations Ltd. (the “Company”), a company formed under the laws of the State of Israel, authorized the distribution of one bonus right (a “Right”) for each Ordinary Share of the Company outstanding on January 11, 2009, in the framework of a certain Rights Agreement between the Company and Continental Stock Transfer & Trust Company, a New York Corporation, as rights agent, dated as of January 12, 2009, as amended on January 11, 2012 and further amended on January 9, 2014.

 

        The Board has adopted this Rights Agreement to protect shareholders from coercive or otherwise unfair takeover tactics. In general terms, it works by imposing a significant penalty upon any person or group that acquires 15% or more of the outstanding ordinary shares of the Company without the approval of the Board. The Rights Agreement should not interfere with any merger or other business combination approved by the Board.

 

        For those interested in the specific terms of the Rights Agreement as made between the Company and Continental Stock Transfer & Trust Company, as the Rights Agent, on January 12, 2009, as amended on January 11, 2012 and further amended on January 9, 2014, we provide the following summary description. Please note, however, that this description is only a summary, and is not complete, and should be read together with the entire Rights Agreement, which has been filed with the Securities and Exchange Commission as an exhibit to the registration statement Form 8-A dated January 12, 2009, as amended on a Form 8-A/A dated January 11, 2012 and further amended on a Form 8-A/A date January 9, 2014. A copy of the agreement is available free of charge from the Company.

 

        Capitalized terms used herein shall have the meaning ascribed to them in the Rights Agreement.

 

The Rights. The Board authorized the issuance of a Right with respect to each outstanding Ordinary Share on January 10, 2009. The Rights will initially trade with, and will be inseparable from, the Ordinary Share. The Rights are evidenced only by the balances indicated in the book-entry account system of the transfer agent for the Company’s Ordinary Shares or, in the case of certificated shares, the certificates that represent such Ordinary Shares. New Rights will accompany any new Company’s Ordinary Shares we issue after January 10, 2009 until the Distribution Date described below.

 

Exercise Price. Each Right will allow its holder to purchase from the Company either four tenths (4/10), half (1/2), one (1), two (2) or three (3) Ordinary Shares, based on the then effective Exercise Ratio, at a purchase price of NIS 0.10 per one Ordinary Share, once the Rights become exercisable. Prior to exercise, the Right does not give its holder any dividend, voting, or liquidation rights.

 

Exercisability. The Rights will not be exercisable until

 

	
·

	
10 days (or a later date determined by the Board before any person or group becomes an Acquiring Person) after the public announcement that a person or group has become an “Acquiring Person” by obtaining beneficial ownership of 15% or more of the Company’s outstanding Ordinary Shares, except if such person or group has become an “Acquiring Person” pursuant to an offer approved by the majority of the Board of Directors; or

 

	
·

	
10 business days (or a later date determined by the Board before any person or group becomes an Acquiring Person) after a person or group begins a tender or exchange offer (except if such person or group has become an “Acquiring Person” pursuant to an offer approved by the majority of the Board of Directors) which, if completed, would result in that person or group becoming an Acquiring Person.

 

  

- 24 -

  

 

        We refer to the date when the Rights become exercisable as the “Distribution Date.” Until that date, the balances in the book-entry accounting system of the transfer agent for the Company’s Ordinary Shares or, in the case of certificated shares, Ordinary Shares certificates will also evidence the Rights, and any transfer of Ordinary Shares or, in the case of certificated shares, certificates for Ordinary Shares will constitute a transfer of Rights. After that date, the Rights will separate from the Ordinary Shares and be evidenced solely by Rights certificates that we will mail to all eligible holders of Ordinary Shares. Any Rights held by an Acquiring Person and/or any Associate and/or Affiliate thereof are void and may not be exercised.

 

        The Board may reduce the threshold at which a person or group becomes an Acquiring Person from 15% to not less than 10% of the outstanding Ordinary Shares.

 

Consequences of a Person or Group Becoming an Acquiring Person.

 

	
·

	
Flip In. If a person or group becomes an Acquiring Person, all holders of Rights except the Acquiring Person and/or any Associate and/or Affiliate thereof may, for a purchase price of NIS0.10 per one Ordinary Share, purchase such number of Ordinary Shares equal to the effective Exercise Ratio.

 

	
·

	
Flip Over. If the Company is later acquired in a merger or similar transaction after the Distribution Date, all holders of Rights except the Acquiring Person and/or any Associate and/or Affiliate thereof may, for a purchase price of NIS0.10 per share, purchase the number of shares of the acquiring corporation, that each shareholder of the Company is entitled for each Ordinary Shares multiplied by the Exercise Ratio.

 

Expiration. The Rights will expire on January 10, 2016 or such later date as determined by the Board (so long as such determination is made prior to January 10, 2016).

 

Redemption. The Board may redeem the Rights for no consideration at any time prior to 10 days (or a later date determined by the Board before any person or group becomes an Acquiring Person) after such time that any person or group becomes an Acquiring Person. If the Board redeems any Rights, it must redeem all of the Rights.

 

Exchange. After a person or group becomes an Acquiring Person, but before an Acquiring Person owns 50% or more of the Company’s outstanding Ordinary Shares, the Board may extinguish the Rights by exchanging such number of Ordinary Shares equal to the Exercise Ratio or an equivalent security for each Right, other than Rights held by the Acquiring Person.

 

Anti-Dilution Provisions. The Board may adjust the purchase price of the Ordinary Shares, the number of Ordinary Shares issuable and the number of outstanding Rights to prevent dilution that may occur from a stock dividend, a stock split, a reclassification of the Ordinary Shares. No adjustments to the Exercise Price of less than 1% will be made.

 

Amendments. The terms of the Rights Agreement may be amended (including terminated) by the Board without the consent of the holders of the Rights. However, the Board may not amend the Rights Agreement to lower the threshold at which a person or group becomes an Acquiring Person to below 10% of our outstanding Ordinary Shares. In addition, the Board may not cause a person or group to become an Acquiring Person by lowering this threshold below the percentage interest that such person or group already owns. After a person or group becomes an Acquiring Person, the Board may not amend the Rights Agreement in a way that adversely affects holders of the Rights.

 

- 25 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00225-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00225-of-00352.parquet"}]]