EXHIBIT 10.40
ON TRACK INNOVATIONS LTD.
Subscription Agreement
THE ORDINARY SHARES COVERED HEREBY HAVE NOT BEEN REGISTERED, QUALIFIED, APPROVED
OR DISAPPROVED UNDER ANY FEDERAL OR STATE SECURITIES LAWS, NOR HAS THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER FEDERAL OR STATE
REGULATORY AUTHORITY PASSED ON OR ENDORSED THE MERITS OF THE OFFERING OF THE
ORDINARY SHARES. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THE ORDINARY
SHARES MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF BY AN INVESTOR
UNLESS THE ORDINARY SHARES HAVE BEEN REGISTERED UNDER FEDERAL SECURITIES LAWS
AND, WHERE REQUIRED, UNDER THE LAWS OF OTHER JURISDICTIONS, OR UNLESS THE
PROPOSED SALE, TRANSFER OR DISPOSITION IS EXEMPT FROM REGISTRATION. ACCORDINGLY,
A PURCHASER OF THE ORDINARY SHARES MUST BE PREPARED TO BEAR THE ECONOMIC RISK OF
THE INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
Dated as of June 27, 2003
Gentlemen:
The undersigned (the "Subscriber") is executing and delivering this
Agreement in connection with the subscription by the undersigned for one hundred
thousand (100,000) ordinary shares, NIS 0.1 nominal value (the "Ordinary
Shares"), of On Track Innovations Ltd., (the "Corporation"). The undersigned
understands that the Corporation is relying upon the accuracy and completeness
of the information contained herein in complying with its obligations under
federal and state securities laws and in considering whether or not to accept
the subscription of the undersigned.
The undersigned hereby irrevocably agrees, represents and warrants
with, to and for the benefit of the Corporation as follows:
1. Subscription.
This Subscription Agreement contemplates the effectiveness of a
registration statement for the Ordinary Shares under the Securities Act of 1933,
as amended, and the obligation of the Subscriber to acquire the Ordinary Shares
is subject to notice (the "Registration Notice") by the Corporation that the
effectiveness of such registration statement is imminent.
(a) Subject to the terms and conditions of this Agreement, the
undersigned hereby subscribes for the Ordinary Shares and agrees to become a
Subscriber for the amount set forth herein immediately above the signature of
the undersigned.
(b) The undersigned will tender herewith a check payable to On Track
Innovations Ltd. in the full amount of the subscription price of the undersigned
pursuant to Section 1(a) upon receipt of the Registration Notice.
(c) The undersigned is delivering herewith (i) two signed copies of
this Agreement and (ii) a signed and completed Investor Suitability
Questionnaire, in the form accompanying this Agreement.
2. Acceptance. The undersigned understands and agrees that the
Corporation has full right to accept or reject this subscription, in whole or in
part. Upon acceptance of a subscription by the Corporation, one copy of this
Agreement, signed by the undersigned and, to indicate acceptance, by the
Corporation, shall be returned to the undersigned by the Corporation.
3. Representations and Warranties.
(a) Set forth below is the true and correct address of the
undersigned's residence or principal place of business. The only jurisdiction in
which an offer to sell the Ordinary Shares was made to the undersigned is the
jurisdiction in which such residence or principal place of business is situated.
The undersigned has no present intention of becoming a resident of (or moving
its principal place of business to) any other state or jurisdiction.
(b) The undersigned understands that the Ordinary Shares have not been
registered under the Securities Act of 1933, as amended (the "1933 Act"), or
under the laws of any other jurisdiction. The undersigned understands and agrees
that the Ordinary Shares must be held indefinitely unless they are subsequently
registered under the 1933 Act and, where required, under the laws of other
jurisdictions or unless an exemption from registration is available.
(c) The Ordinary Shares for which the undersigned hereby subscribes are
being acquired solely for the undersigned's own account for investment and are
not being purchased with a view to or for resale, distribution or other
disposition, and the undersigned has no present plans to enter into any
contract, undertaking, agreement or arrangement for any such resale,
distribution or other disposition.
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(d) The undersigned understands, acknowledges, agrees and is aware
that:
(i) no federal or state agency has passed upon the Ordinary
Shares or made any finding or determination as to the fairness of this
investment;
(ii) the Ordinary Shares are speculative investments which
involve a high degree of risk, including the risk that the undersigned
might lose its entire investment in the Corporation; and
(iii) any federal income tax benefits which may be available
to the undersigned may be lost through adoption of new laws, amendments
to existing laws or regulations, or changes in the interpretation of
existing laws and regulations.
(e) The undersigned has carefully reviewed and understands the risks of
a purchase of the Ordinary Shares.
(f) In connection with the undersigned's investment in the Corporation,
the undersigned has obtained the advice of the undersigned's own investment
advisors, counsel and accountants ("advisors").
(g) The undersigned and the undersigned's advisors have been furnished
all materials relating to the Corporation or the offering of Ordinary Shares
(the "Offering") which the undersigned and the undersigned's advisors have
requested. The undersigned and the undersigned's advisors have been afforded the
opportunity to ask questions of the Corporation concerning the terms and
conditions of the Offering and to obtain any additional information necessary to
verify the accuracy of any representations or information set forth about the
Ordinary Shares.
(h) The Corporation has answered all inquiries that the undersigned and
the undersigned's advisors have made concerning the Corporation or any other
matters relating to the creation and operations of the Corporation and the terms
and conditions of the Offering.
(i) At no time was the undersigned presented with or solicited by any
leaflet, public promotional meeting, newspaper or magazine article, radio or
television advertisement or any other form of general advertising or general
solicitation.
(j) The undersigned has the financial ability to bear the economic risk
of the undersigned's investment in the Corporation and has adequate net worth
and means of providing for the undersigned's current needs and contingencies to
sustain a complete loss of the undersigned's investment and has no need for
liquidity in the undersigned's investment in the Corporation.
(k) The undersigned has such knowledge and experience in financial and
business matters that the undersigned is capable of evaluating, and has
evaluated, the merits and risks of the proposed investment.
(l) The undersigned represents and warrants that it is an "accredited
investor," as that term is defined in Rule 501 of Regulation D under the 0000
Xxx.
(m) The information provided by the undersigned in the Investor
Suitability Questionnaire and the other Subscription documents delivered by the
undersigned to the Corporation herewith is incorporated herein by reference and
made a part hereof, and the undersigned represents and warrants that such
information is true and complete and fairly reflects the current financial
condition and affairs of the undersigned.
(n) If the undersigned is a corporation, partnership, trust or other
entity, (i) it is authorized and qualified and has full right and power to
become a Subscriber in, and is authorized to purchase Ordinary Shares and to
perform its obligations pursuant to the provisions hereof, (ii) the person
signing this Subscription Agreement, the other Subscription Documents, and any
other instrument executed and delivered herewith on behalf of such entity has
been duly authorized by such entity and has full power and authority to
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do so, and (iii) such entity has not been formed for the specific purpose of
acquiring an interest in the Corporation, unless each owner of such entity is an
accredited investor under Regulation D of the SEC under the 1933 Act and has
submitted information substantiating such qualification.
(o) The undersigned hereby represents and warrants to the Corporation
that by reason of the undersigned's business or financial experience the
undersigned has the capacity to protect the undersigned's interests in
connection with an investment in the Corporation.
(p) If the undersigned is a Plan or an entity whose underlying assets
include the assets of any Plan by reason of such Plan's investment in the
entity, then the undersigned represents and warrants that either such Plan or
the fiduciary responsible for the investment and reinvestment of either the
assets of such Plan, or that portion of the assets of such Plan from which the
investment in the Corporation will be made, has considered the following with
respect to such Plan's investment in the Corporation and has determined that in
view of such considerations, the purchase of an interest in the Corporation is
in furtherance of and in the best interests of the participants in such Plan and
their beneficiaries:
(A) the role such investment or investment course of action plays in,
as applicable, that portion of such Plan's portfolio which such fiduciary
manages, or in all of the assets of such Plan;
(B) whether such investment or investment course of action is
reasonably designed, as part of, as applicable, that portion of the portfolio
managed by such fiduciary, or as part of all of the assets of such Plan, to
further the purposes of such Plan, taking into account both the risk of loss and
the opportunity for gain that could result therefrom;
(C) the composition of, as applicable, that portion of the portfolio
which such fiduciary manages, or all of the assets of such Plan, with regard to
diversification of the assets of such Plan;
(D) the liquidity and current rate of return of, as applicable, that
portion of the portfolio managed by such fiduciary, or all of the assets of such
Plan, relative to the anticipated cash flow requirements of such Plan; and
(E) the projected return of, as applicable, that portion of the
portfolio managed by such fiduciary, or all of the assets of such Plan, relative
to the funding objectives of such Plan.
(q) The undersigned represents and warrants that neither it, nor its
affiliates, is a broker-dealer or otherwise a "Restricted Person" as such term
has meaning under the United States National Association of Securities Dealers,
Inc. ("NASD") Rules of Fair Practice and the related interpretations adopted by
the NASD's Board of Governors and if the undersigned or its affiliates becomes
such the undersigned will promptly notify the Corporation.
(r) The undersigned acknowledges and agrees that the certificate
representing the Ordinary Shares shall bear a restrictive legend as counsel to
the Corporation may determine is necessary or appropriate under applicable
securities laws substantially to the effect of the following:
The Securities represented by this Certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be sold, transferred, pledged or hypothecated unless
subsequently registered under said Act or an exemption from
registration is available.
4. Covenant to Update Information. The undersigned covenants to advise
the Corporation by telephone and in writing if any representation and warranty
contained herein becomes untrue.
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5. Agreement with Respect to Resale. The undersigned agrees that no
Ordinary Shares will be resold without registration under the 1933 Act, and,
where required, under the laws of other jurisdictions, or availability of an
exemption therefrom.
6. Indemnification. The undersigned acknowledges that the undersigned
understands the meaning and legal consequences of the representations and
warranties contained in this Agreement and agrees to indemnify and hold harmless
the Corporation and its affiliates, employees, officers and agents and each
other Subscriber from and against any and all loss, damage, liability or
expense, including, without limitation, legal fees, due to or arising out of a
breach of any representation or warranty of the undersigned contained in any
document furnished by the undersigned in connection with the offering and sale
of the Ordinary Shares, including, without limitation, this Agreement and the
Investor Suitability Questionnaire, and all schedules, appendices and exhibits
hereto or thereto, submitted by the undersigned, or failure by the undersigned
to comply with any covenant or agreement by the undersigned herein or in any
other document furnished by the undersigned to any of the foregoing in
connection with this transaction.
7. Notices. All notices and other communications required or permitted
under this Agreement shall be in writing, and shall be deemed to have been given
if delivered personally, mailed, postage prepaid, by first class mail, to the
parties at the addresses set forth in this Agreement or such other address as a
party may specify to the other by notice as provided in this Section.
8. Assignment. This Agreement may not be assigned or transferred by
either party without the consent of the other party and any purported assignment
without such consent shall be null and void.
9. Amendment and Waiver. This Agreement may be amended or modified only
by an instrument signed by the undersigned and the Corporation. A waiver of any
provision of this Agreement must be in writing, designated as such, and signed
by the party against whom enforcement of that waiver is sought. The waiver by a
party of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent or other breach thereof.
10. Binding Effect. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the undersigned and the
Corporation and its respective heirs, executors administrators, successors,
legal representatives and assigns. If the undersigned shall be joint and
several, then the representations and warranties herein contained shall be
deemed to be made by and be binding upon each such person and such person's
heirs, executors, administrators, legatees, devisees, assigns, legal
representatives and successors.
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IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement on this 27th day of June, 2003.
Total investment: $275,000
GOLDSTRAND INVESTMENT
By: /s/ Seth Fireman
Name: Seth Fireman
Title: Managing Director
Address:
0000 0xx Xxxxxx, #190
Number and Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxx, Xxxxx, Zip Code
00-0000000
IRS Number
Accepted By:
ON TRACK INNOVATIONS LTD.
By: /s/ Xxxx Xxxxxx, /s/ Xxxxxx Xxxxxx
Title: Chairman and CEO, VP Projects
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