K B Recycling Industries : Convertible Note August 2020

Execution Copy

THE SECURITIES REFERENCED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

CONVERTIBLE NOTE
$3,000,000			August 20, 2020
For value received, K.B Recycling Industries Ltd., a private company organized under the
laws of the State of Israel ( he Company),	mi e	a	Clover Wolf Capital Limited

Partnership ( he Holder), by way of conversion of this Note into ordinary shares of the Company as set forth below, the principal sum of three million US dollar ($3,000,000), ( hi Note, and the Principal Amount, respectively). This Note is subject to the following terms and conditions.

1. Basic Terms.

1. Events of Default. The occurrence of any of the following shall constitute

a Event of Default

de hi N e:

1. 1. Voluntary Bankruptcy or Insolvency Proceedings. The Company shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) admit in writing its inability to pay its debts generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors, (iv) be dissolved or liquidated, (v) commence a voluntary case or other proceeding seeking liquidation or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it, or (vi) take any action for the purpose of effecting any of the foregoing; or
   2. Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the Company, or of all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect to the Company or any of its subsidiaries, if any, or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter in effect shall be commenced and an order for relief entered or such proceeding shall not be dismissed or discharged within 120 days of commencement.
2. Rights of Holder upon Default. Upon the occurrence of any Event of Default hereof and at any time thereafter during the continuance of such Event of Default, Holder may, with the written consent of the Required Holders, by written notice to the Company, declare all outstanding obligations payable by the Company hereunder to be immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby

expressly waived. In addition to the foregoing remedies, upon the occurrence and during the continuance of any Event of Default, Holder may, with the written consent of the Required Holders, exercise any other right power or remedy permitted to it by law.

1. Series of Notes. This Note is issued as part of a series of Convertible

Promissory Notes, each containing substantially identical terms and conditions. Such Convertible

P	mi	N	e	a e efe	ed	he ei a he Noteshe h lde he e f a e efe ed he ei a
he	Holders	a d	he H lde	f at least [65%] of the aggregate unpaid Principal Amount of the
Notes a e	efe	ed	he ei	a	he Required Holders. The Company shall maintain a ledger of

all Holders.

1. Securities. The Notes and the equity securities issuable upon conversion

he e f a e c llec i el efe ed he ei a he Securities.

1. Payment. All cash payments shall be made in lawful money of the United States of America at such place as the Holder hereof may from time to time designate in writing to the Company. Payment shall be credited first to the Interest accrued then due and payable and the remainder shall be applied to principal. This note shall bear a flat interest rate at an annual rate of 5% only in the event of a cash payment under this note, and in no event any interest shall be accrued and converted as part of a conversion of the Principal Amount of this Note under its terms.
   2. Conversion.

1. Definitions.

(i) Affilia e mea with respect to any specified Holder, any other individual or entity who or which, directly or indirectly, controls, is controlled by, or is under common control with such specified Holder, including, without limitation, any general partner, officer, director, member, manager or shareholder of such Holder and any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members of, or is under common investment management with, such Holder.

	(ii)	C m a	IPO mea	an	initial	public	offering	of	the
C m a	O di a Sha e				a	a egi	a i	a eme	de	he
he ge e al	blic

U.S Securities Act of 1933 ( he Exchange Act), as amended or the Israeli Securities Law, 5728- 1968, as amended, or under equivalent securities laws of another jurisdiction.

				(iii)	Conversion Price	mea a price per share (or a conversion price,
i h	e	ec	c	e i	a	a e	e	de c ibed i a ag a h (iii) f	he Cha ge f
C	l	defi	i i	) obtained	by	dividing	the	Valuation Cap by fully-diluted	capitalization

immediately prior to such conversion assuming the exercise or conversion of all convertible securities of the Company but excluding any shares issuable upon conversion of the Notes.

1. Long Stop Datemea 12 months as of the date of this Note.

(v)

Ordinary Sharesmea

di a ha e f he C m a

a al e

NIS 1.00 each.

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(vi)	Share Capital	mea	he ha e ca i al f he C m a .
(vii)	Valuation Cap	mea	US$ 10,000,000

1. Mandatory Conversion upon Company IPO. Outstanding Principal

Amount shall be automatically converted into equity securities immediate prior to the closing of

he C m a IPO.

1. Terms of Conversion. If there is a Company IPO on or before the Long Stop Date, the Company will automatically issue to the Holder a number of Ordinary Shares equal to the Principal Amount divided by the Conversion Price.
2. Documents. The issuance of shares upon such conversion of this Note,

irrespectively the reason for conversion, shall be upon the terms and subject to the conditions applicable to all other shareholders of the Company. In connection with such conversion of this Note, the Holder hereby agrees to execute and deliver to the Company all documents reasonably required by the Company and its counsel including a lock-up agreement in connection with the

C m a IPO.

1. Post-LongStop Date Conversion.
2. 1. If he C m a IPO has not been consummated on or before the Long Stop Date, the Required Holders may elect ,and such election shall apply to all of the Holders,

to (i) convert the Principal Amount under the Note into he C m a m e i cla f ha e at the date of such conversion at a price per share equal to the price per share obtained by dividing

USD 10,000,000 b he C m a f ll -diluted capitalization immediately prior to such conversion assuming the exercise or conversion of all convertible securities of the Company but excluding any shares issuable upon conversion of the Notes or (ii) require the Company to pay the Principal Amount and any accrued and unpaid Interest (minus any tax withholding obligations, if applicable) then outstanding, within 30 days.

1. The issuance of shares upon conversion under section 2(e)(i)(i)

above shall be upon the terms and subject to the conditions applicable to the C m a	most
senior class of shares at the date of such conversion, a d he C m a	Articles of Association

and other corporate governing documents.

3. Change of Control. If, prior to the occurrence of a conversion upon a Company IPO or a Post Long Stop Date Conversion, a Change of Control Event occurs, the Company will give the Holders at least fifteen (15) days prior written notice of the anticipated Change of Control Event, and the Holders will be automatically issued immediately prior to the closing of such Change of Control Event such number of the most senior class of shares of the Company then outstanding, equal to the quotient obtained by dividing the outstanding balance of the Principal Amount by the Conversion Price.

The e m Change of Controlmea (i) a ale f all b a iall all f he C m a a e

other than to an Excluded Entity (as defined below), or (ii) the consummation of a transaction, or

series of related transactions, for the sale f all f he C m a he a di g share capital, or (iii) the consummation of the merger or consolidation of the Company with or into another

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entity other than an Excluded Entity. Notwithstanding the foregoing, a transaction shall not

c	i	e a Cha ge	f C	l if i	e i	(A) cha	ge	he j	i dic i	f he C m a
incorporation,	(B) create a	holding company that will	be owned in substantially the same
	i	b	he	e	h	h ld he	C m a	ec	i ie	immediately before such
transaction.
A	Excluded Entity	mea	a company or other entity of which the holders of voting rights of

the Company outstanding immediately prior to such transaction are the direct or indirect holders of voting securities representing at least a majority of the votes entitled to be cast by all of such

c

a i

he e i

i g ec i ie

a di g immedia el af e ch a ac i .

1. Mechanics and Effect of Conversion. In connection with any conversion, or repayment of this Note, the Holder shall surrender this Note, duly endorsed, to the Company or any transfer agent of the Company, and shall execute and deliver to the Company any other documentation reasonably required by the Company in connection with such conversion (including, in the event of a conversion of this Note into share capital, the applicable executed conversion documents as reasonably required by the Company). The Company may elect not to issue or deliver the shares or other property into which this Note may convert until the Holder has surrendered this Note to the Company and delivered to the Company such documentation. Upon conversion of this Note, the Company will be forever released from all of its obligations and liabilities under this Note with regard to that portion of the Principal Amount and accrued interest being converted including without limitation the obligation to pay such portion of the Principal Amount and accrued interest.
2. Shareholders, Officers and Directors Not Liable. In no event shall any shareholder, officer or director of the Company be liable for any amounts due or payable pursuant to this Note.
3. No Fractional Shares. No fractional shares of the Company will be issued pursuant to this Security, and the number of shares to be issued shall be rounded to the nearest whole number.
4. Loss of Note. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note or any Note exchanged for it, and indemnity satisfactory to the Company (in case of loss, theft or destruction) or surrender and cancellation of such Note (in the case of mutilation), the Company will make and deliver in lieu of such Note a new Note of like tenor.
5. Taxes. The Company may deduct, from any payment or in connection with a conversion of the Principal Amount, cash or shares representing the amount of withholding taxes as and if required under applicable law. Notwithstanding the aforesaid, any taxes, levies charges and other duties or amounts that are levied or due in connection with the transactions contemplated

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under this Note, the conversion of the Principal Amount or the issuance of shares to the Holders upon conversion event, shall be borne solely by such Holder.

1. 9. Miscellaneous.

2. Governing Law. The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of Israel, without giving effect to principles of conflicts of law. Any dispute arising under or in relation to this Agreement shall be resolved exclusively in the competent court located in Tel Aviv-Jaffa, Israel and each of the parties hereby irrevocably submits to the exclusive jurisdiction of such court.
3. Entire Agreement. This Note constitutes the entire agreement and understanding between the Company and the Holder relating to the subject matter herein and supersedes all prior or contemporaneous discussions, understandings and agreements, whether oral or written between them relating to the subject matter hereof.
4. Amendments and Waivers. Any term of this Note may be amended only with the written consent of the Company and the Required Holders. Any amendment or waiver effected in accordance with this Section 9(c) shall be binding upon the Company, the Holder and each transferee of any Note.
5. Successors and Assigns. The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the Company and the Holder. Notwithstanding the foregoing, the Holder may not assign, pledge, or otherwise transfer this Note without the prior written consent of the Company, other than assignment to such Holder Affiliates. Subject to the preceding sentence, this Note may be transferred only upon surrender of the original Note for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to the Company. Thereupon, a new note for the same principal amount and interest will be issued to, and registered in the name of, the transferee. Interest and principal are payable only to the registered holder of this Note.
6. Notices. Any notice, demand or request required or permitted to be given under this Note shall be in writing and shall be deemed sufficient when delivered personally or by overnight courier or sent by email, or five days after having been sent, if sent by registered or

certified mail, return receipt requested, postage prepaid, addressed to the party to be notified at

ch a add e a e f h he ig a e age, a b e e l m dified b i e ice,

or if no address is specified on the signature page, at the most recent address set forth in the

C m a b k and records.

1. Counterparts. This Note may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and all of which together shall constitute one and the same instrument. Execution of a facsimile, electronic or scanned copy will have the same force and effect as execution of an original, and a facsimile, electronic or scanned signature will be deemed an original and valid signature.

[Signature Page Follows]

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