EXHIBIT 10.49
SANDS BROTHERS INTERNATIONAL LTD.
INVESTMENT BANKERS
MEMBER NASD
00 XXXX XXXXXX, XXX XXXX, X.X. 00000
(000) 000-0000 Toll Free (000) 000-0000 Fax (000) 000-0000
July 11, 2003
Xx. Xxxx Xxxxxx
On Track Innovations Ltd
ZHR, Industrial Zone
Rosh Xxxx, Xxxxxx 12000
Re: Financial Advisor Agreement
Dear Oded:
Sands Brothers International (SBIL") is pleased to act as the non-exclusive
financial advisor for On Track Innovations Ltd. ("Company") in connection with
your proposed capital transaction. The terms of our engagement are set forth
below. We look forward to working with you.
1. The Offering.
We understand you wish to raise up to $2.5 million through a "PIPE"
transaction involving the sale of securities to institutional
investors (the "Offering"). You understand the actual terms of the
Offering will depend on market conditions, and will be subject to
negotiation between the Company and prospective investors.
2. Fees and Expenses.
(a) Concurrently with the closing of any part of the Offering, the
Company will pay us in cash a fee equal to 10% of the gross
proceeds received from the sale of securities on investors we
introduce to you and 5% on investors who invest through
intermediaries we introduce to you.
(b) In addition, the Company agrees to reimburse us upon request for
our expenses, including the fees and disbursements of our legal
counsel of up to $8,000.
(c) Furthermore, upon the closing of the offering, the Company shall
grant to us warrants for the purchase of an amount equal to 10%
of the securities issued in the offering on investors we
introduce to you and 5% on investors who invest through
intermediaries we introduce to you. The Warrants shall be:
exercisable into securities similar to those issued as part of
the offering; have a strike price equal to 110% of the offering
price; have a term of five years; and include a cashless issuance
provision.
3. Terms.
(a) The term of this agreement shall be three months; however, either
party may terminate this agreement at any time upon 10 days
written notice to the other party. Upon termination, we will be
entitled to collect all fees earned and expenses incurred through
the date of termination.
(b) If any part of the offering is not closed during the term, for
reasons other than termination of this agreement by us, and
during the six months following termination of the agreement, any
person which we introduced, directly or indirectly, to the
Company or with which we have discussions or negotiations during
the term of behalf of the Company, purchases securities from the
Company (other than through a underwritten public offering), you
agree to pay us upon the closing a cash fee in the amount that
would otherwise have been payable to SBIL had such transaction
occurred during the term.
4. Representations and Warranties.
(a) You hereby authorize SBIL to transmit to the prospective
purchasers of the securities material prepared by the Company
with such exhibits and supplements as may from time to time
required or appropriate and or copies of the Company's most
recent filings with Securities and Exchange Commission, together
with summary materials prepared by the Company, if we deem them
appropriate (collectively "Material"). The Company represents and
warrants that the Material (i) will be prepared by the management
of the Company and reviewed and approved by its Board of
Directors; and (ii) will not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein or
previously made, in light of the circumstances under which they
made, not misleading. The Company will advise SBIL immediately of
the occurrence of any event or any other change known to the
Company which results in the Material containing an untrue
statement of a material fact or omitting to state a material fact
required to be stated therein or necessary to make the statements
therein or previously made, in light of the circumstance under
which they were made, not misleading.
(b) You agree that you will enter into subscription, registration
rights and other customary agreements, and that your counsel will
supply an opinion letter on the transaction, and comfort letter
on the non-financial portions of the material and your auditors
will supply a "comfort" letter on the financial information in
the material, all of which will be in form and substance
reasonably acceptable to, and addressed to the investors.
5. Indemnification, Contribution, and Confidentiality.
The Company agrees to indemnify SBIL and its controlling persons,
representatives and agents in accordance with the indemnification
provisions set forth in Schedule A, and the parties agree to the
confidentiality provisions of Schedule B, all of which are
incorporated herein by this reference. These provisions will apply
regardless of whether the proposed offering is consummated.
6. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the state of New York applicable to contracts executed and
to be wholly performed therein without giving effect to its conflicts
of laws principles or rules. This letter, including Schedule A,
constitutes the entire understanding of the parties with respect to
the subject matter hereof and may not be altered or amended except in
a writing signed by both parties. This Agreement shall be deemed to
have been made and delivered in New York City and shall be governed as
to validity, interpretation, construction, effect and in all other
respects by the internal laws of the State of New York. The Company
(l) agrees that any legal suit, action or proceeding arising out of or
relating to this letter shall be instituted exclusively in New York
State Supreme Court, County of New York, or in the United States
District Court for the Southern District of New York, (2) waives any
objection which the Company may have now or hereafter to the venue of
any such suit, action or proceeding, and (3) irrevocably consents to
the jurisdiction of the New York State Supreme Court, County of New
York, and the United States District Court for the Southern District
of New York in any such suit, action or proceeding. The Company
further agrees to accept and acknowledge service of any and all
process which may be served in any such suit, action or proceeding in
the New York State Supreme Court, County of New York, or in the United
States District Court for the Southern District of New York and agrees
that service of process upon the Company mailed by certified mail to
the Company's address shall be deemed in every respect effective
service of process upon the Company, in any such suit, action or
proceeding. THE PARTIES HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED
HEREBY. Neither the execution and delivery of this letter by the
Company nor the consummation of the transactions contemplated hereby
will, directly or indirectly, with or without the giving of notice or
lapse of time, or both: (i) violate any provisions of the Certificate
of Incorporation or By-laws of the Company; or (ii) violate, or be in
conflict with, or constitute a default under, any agreement, lease,
mortgage, debt or obligation of the Company or require the payment,
any pre-payment or other penalty with respect thereto.
7. Announcement of Offering.
If the Offering is consummated, SBIL may at its expense, place an
announcement in such newspapers and periodicals as SBIL may desire.
OTI reserves the right to review and comment on any announcement that
SBIL intends to publish with respect to any financing contemplated
here under that closes.
8. Advice to the Board.
The Company acknowledges that any advice given by us to you is solely
for the benefit and use of the Board of Directors of the Company and
may not be used, reproduced, disseminated, quoted or referred to,
without our prior written consent.
9. Entire Agreement.
This Agreement constitutes the entire Agreement between the parties
and supersedes and cancels any and all prior or contemporaneous
arrangements, understandings and agreements, written or oral between
them relating to the subject matter hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
We look forward to working with you and developing a long-term relationship
with the Company.
Very Truly yours,
Sands Brothers International, Ltd.
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
President
Confirmed and accepted as of This ___11th___ day of July, 2003.
On Track Innovations Ltd.
By: /s/ Xxxx Xxxxxx
Xxxx Xxxxxx
Chief Operating Officer
SCHEDULE A
INDEMNIFICATION
Recognizing that matters of the type contemplated in this engagement
sometimes result in litigation and that SBIL' role is advisory, the Company
agrees to indemnify and hold harmless Sands Brothers, its affiliates and their
respective officers, directors, employees, agents and controlling persons
(collectively, the "Indemnified Parties"), from and against any losses, claims,
damages and liabilities, joint or several, related to or arising in any manner
out of any transaction, financing, proposal or any other matter (collectively,
the "Matters") contemplated by the engagement of SBIL hereunder, and will
promptly reimburse the Indemnified Parties for all expenses (including fees and
expenses of legal counsel) as incurred in connection with the investigation of,
preparation for or defense of any pending or threatened claim related to or
arising in any manner out of any Matter contemplated by the engagement of SBIL
hereunder, or any action or proceeding arising therefrom (collectively,
"Proceedings"), whether or not such Indemnified Party is a formal party to any
such Proceeding. Notwithstanding the foregoing, the Company shall not be liable
in respect of any losses, claims, damages, liabilities or expenses that a court
of competent jurisdiction shall have determined by final judgment resulted
solely from the gross negligence or willful misconduct of an Indemnified Party.
The Company further agrees that it will not, without the prior written consent
of Sands Brothers, settle, compromise or consent to the entry of any judgment in
any pending or threatened Proceeding in respect of which indemnification may be
sought hereunder (whether or not SBIL or any Indemnified Party is an actual or
potential party to such Proceeding), unless such settlement, compromise or
consent includes an unconditional release of SBIL and each other Indemnified
Party hereunder from all liability arising out of such Proceeding.
The Company agrees that if any indemnification or reimbursement sought
pursuant to this letter were for any reason not to be available to any
Indemnified Party or insufficient to hold it harmless as and to the extent
contemplated by this letter, then the Company shall contribute to the amount
paid or payable by such Indemnified Party in respect of losses, claims, damages
and liabilities in such proportion as is appropriate to reflect the relative
benefits to the Company and its stockholders on the one hand, and SBIL on the
other, in connection with the Matters to which such indemnification or
reimbursement relates or, if such allocation is not permitted by applicable law,
not only such relative benefits but also the relative faults of such parties as
well as any other equitable considerations. It is hereby agreed that the
relative benefits to the Company and/or its stockholders and to SBIL with
respect to SBIL' engagement shall be deemed to be in the same proportion as (i)
the total value paid or received or to be paid or received by the Company and/or
its stockholders pursuant to the Matters (whether or not consummated) for which
SBIL is engaged to render financial advisory services bears to (ii) the fees
paid to SBIL in connection with such engagement. In no event shall the
Indemnified Parties contribute or otherwise be liable for an amount in excess of
the aggregate amount of fees actually received by SBIL pursuant to such
engagement (excluding amounts received by SBIL as reimbursement of expenses).
The Company further agrees that no Indemnified Party shall have any
liability (whether direct of indirect, in contract or tort or otherwise) to the
Company for or in connection with SBIL' engagement hereunder except for losses,
claims, damages, liabilities or expenses that a court of competent jurisdiction
shall have determined by final judgment resulted solely from the gross
negligence or willful misconduct of such Indemnified Party. The indemnity,
reimbursement and contribution obligations of the Company shall be in addition
to any liability which the Company may otherwise have and shall be binding upon
and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company or an Indemnified Party.
The indemnity, reimbursement, contribution provisions set forth herein
shall remain operative and in full force and effect regardless of (i) any
withdrawal, termination or consummation of or failure to initiate or consummate
any Matter referred to herein, (ii) any investigation made by or on behalf of
any party hereto or any person controlling (within the meaning of Section 15 of
the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange
Act of 1934, as amended) any party hereto, (iii) any termination or the
completion or expiration of this letter or SBIL' engagement and (iv) whether or
not SBIL shall, or shall not, be called upon to render any formal or informal
advice in the course of such engagement.
SCHEDULE B
INFORMATION TO BE SUPPLIED; CONFIDENTIALITY
In connection with SBIL's activities on behalf of the Company, the
Company will furnish SBIL with all financial and other information regarding the
Company that SBIL reasonably believes appropriate to its assignment (all such
information so furnished by the Company, whether furnished before or after the
date of this Agreement, being referred to herein as the "Information"). The
Company will provide SBIL with access to the officers, directors, employees,
independent accountants, legal counsel and other advisors and consultants of the
Company. The Company recognizes and agrees that SBIL (i) will use and rely
primarily on the Information and information available from generally recognized
public sources in performing the services contemplated by this Agreement without
independently verifying the Information or such other information, (ii) does not
assume responsibility for the accuracy of the Information or such information,
and (iii) will not make an appraisal of any assets or liabilities owned or
controlled by the Company or its market competitors.
SBIL will maintain the confidentiality of the Information and, unless
and until such information shall have been made publicly available by the
Company or by others without breach of a confidentiality agreement, shall
disclose the information only as authorized by the Company or as required by law
or by order of a governmental authority or court of competent jurisdiction. In
the event that SBIL is legally required to make disclosure of any of the
Information, SBIL will give notice to the Company prior to such disclosure, to
the extent that SBIL can practically do so.
The foregoing paragraph shall not apply to information that:
(i) at the time of disclosure by the Company is, or
thereafter becomes, generally available to the public
or within the industries in which the Company or SBIL
or its affiliates conduct business, other than as a
direct result of a breach by SBIL of its obligations
under this Agreement;
(ii) prior to or at the time of disclosure by the Company,
was already it in the possession of, or, conceived
by, SBIL or any of its affiliates, or could have been
developed by them from information then in their
possession, by the application of other information
or techniques in their possession, generally
available to the public, or available to SBIL or its
affiliates other than from the Company;
(iii) at the time of disclosure by the Company or
thereafter, is obtained by SBIL or any of its
affiliates from a third party who SBIL reasonably
believes to be in possession of the information not
in violation of any contractual, legal or fiduciary
obligation to the Company with respect to that
information; or
(iv) is independently developed by SBIL or its affiliates.
Nothing in this Agreement shall be construed to limit the ability of
SBIL or its affiliates to pursue, investigate, analyze, invest in, or engage in
investment banking, financial advisory or any other business relationship with
entities other than the Company, notwithstanding that such entities may be
engaged in a business which is similar to or competitive with the business of
the Company, and notwithstanding that such entities may have actual or potential
operations, products, services, plans, ideas, customers or supplies similar or
identical to the Company's, or may have been identified by the Company as
potential merger or acquisition targets or potential candidates for some other
business combination, cooperation or relationship. The Company expressly
acknowledges and agrees that it does not claim any proprietary interest in the
identity of any other entity in its industry or otherwise, and that the identity
of any such entity is not confidential information.
