Item 1.01. Entry into a Material Definitive Agreement.
On December 9, 2020, On Track Innovations Ltd. (the "Company") entered into a
loan financing agreement with Jerry L. Ivy, Jr., Descendants' Trust (the
"Lender"). The Lender is the Controlling Shareholder of the Company (as such
term is defined under the Israeli Companies Law, 5759-1999, as amended (the
"Companies Law")). The agreement was amended on January 26, 2021 (as amended,
the "Agreement") to allow for an additional lender to join the Lender and lend
an additional $100,000 and provides that the Lender and the additional lender
will extend a loan to the Company in the aggregate amount of up to $1,600,000
(the "Loan Amount"). The Agreement, before it was amended, was further described
in the Current Report on Form 8-K filed by the Company on December 15, 2020.
The Agreement provides, among other things, that the Loan Amount and all accrued
interest (the "Secured Amount") matures upon the lapse of six months following
the initial closing, i.e., on June 17, 2021 (the "Maturity Date"), and becomes
payable in full on the Maturity Date, provided that the maturity date can be
extended at the sole option of the majority of the lenders. On June 17, 2021,
the Lender, being the majority of the lenders, exercised its option to extend
the maturity date, and the parties entered into a notice of exercise of option
and agreement (the "Extension Agreement"), according to which the maturity date
was extended until December 17, 2021 (the "Extended Maturity Date", and the
"Extended Maturity Period", as applicable).
On December 16, 2021, the Lender exercised its option to extend the maturity
date for the second time, and the parties entered into a second notice of
exercise of option and agreement (the "Second Extension Agreement"), according
to which the maturity date was further extended until January 28, 2022 (the
"Second Extended Maturity Date", and the "Second Extended Maturity Period", as
applicable).
The Loan Amount had been bearing interest on all outstanding principal at an
interest rate of 8.0% per annum up until the Maturity Date. During the Extended
Maturity Period, the loan has been accruing interest on all outstanding
principal and unpaid interest at an interest rate of 10% per annum, and it was
agreed that the interest rate during the Second Extended Maturity Period shall
continue to bear interest at a rate of 10% per annum. The net amount of interest
on the Loan Amount accrued through December 17, 2021 was $137,818 (the "Interest
Debt"). Any payment of interest is subject to withholding of taxes at source and
the interest rates mentioned above are net of such withholding. Under the Second
Extension Agreement, it was agreed that the Interest Debt shall be payable on
the Second Extended Maturity Date, while until then it shall be considered part
of the Loan Amount and shall bear the Extension Interest rate. In the event of a
conversion of the Loan amount, the Loan Amount and Interest Debt (if not
otherwise paid by the Company) shall convert into ordinary shares of the Company
at the conversion price of $0.124, as originally contemplated under the
Agreement.
Subject to the understandings detailed herein, the Agreement shall continue to
be in effect and apply, in accordance with its terms.
The foregoing descriptions of the Agreement, the Extension Agreement and the
Second Extension Agreement are qualified by reference to the full texts of the
Agreement , the Extension Agreement and the Second Extension Agreement.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
10.1 Second Notice of Exercise of Option and Agreement dated December 16,
2021.
104 Cover Page Interactive Data File. (Embedded within the Inline XBRL
document.)
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