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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
SWISSRAY INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
October 17, 1997
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Date of Report (Date of earliest event reported)
NEW YORK 0-2697 16-0950197
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
200 EAST 32ND STREET SUITE 34-B, NEW YORK, NEW YORK 10016
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(Address of principal executive offices) (Zip Code)
(212) 545-0095
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(Registrant's telephone number, including area code)
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Item 5. Other Events.
On October 17, 1997, Swissray International, Inc.' (the "Registrant")
through its wholly-owned subsidiary, Swissray Medical Systems, Inc., (the
"Buyer") acquired substantially all of the assets and assumed certain
liabilities of Service Support Group, LLC ("SSG"), a limited liability company
organized under the laws of the State of Washington, pursuant to the terms of
an Asset Purchase Agreement, dated as of October 17, 1997, by and among Buyer,
Registrant, SSG, Gary Durday, Michael Harle and Kenneth Montler.
The acquisition is NOT MATERIAL to the Registrant and as such is not filed under
Item 2.
Number Exhibit
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2.1 Asset Purchase Agreement, dated as of October 17, 1997 by and among
Swissray Medical Systems, Inc., Swissray International, Inc.,
Service Support Group, LLC, Gary Durday, Michael Harle and Kenneth
Montler.
2.2 Registration Rights Agreement, dated as of October 17, 1997, by and
among Swissray International, Inc., Service Support Group, LLC, Gary
Durday, Michael Harle and Kenneth Montler.
99.1 Press release announcing the acquisition.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SWISSRAY INTERNATIONAL, INC.
Dated: November 4, 1997 By: /s/ Ruedi G. Laupper
--------------------
RUEDI G. LAUPPER
Chairman of the Board,
President and Chief Executive Officer
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Exhibit 2.1
ASSET PURCHASE AGREEMENT
DATED AS OF OCTOBER 17, 1997
BY AND AMONG
SWISSRAY MEDICAL SYSTEMS, INC.
SWISSRAY INTERNATIONAL, INC.
SERVICE SUPPORT GROUP, LLC
GARY DURDAY
MICHAEL HARLE
AND
KENNETH MONTLER
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I
<S> <C>
PURCHASE AND SALE OF ASSETS..............................................................................5
1.1 Assets..........................................................................................5
1.2 Liabilities.....................................................................................8
1.3 Purchase Price; Allocation; Adjustment.........................................................10
1.4 Shared Accounts................................................................................10
1.5 Further Assurances; Post-Closing Cooperation...................................................11
ARTICLE II
DELIVERIES..............................................................................................12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
SELLERS AND THE COMPANY.................................................................................12
3.1 Organization...................................................................................12
3.2 Authority......................................................................................13
3.3 No Violation...................................................................................13
3.4 Financial Statements...........................................................................13
3.5 Taxes..........................................................................................14
3.6 Governmental Approvals and Filings.............................................................14
3.7 Legal Proceedings..............................................................................14
3.8 Compliance With Laws and Orders................................................................14
3.9 Intellectual Property..........................................................................14
3.10 Contracts......................................................................................15
3.11 Permits........................................................................................16
3.12 Liens..........................................................................................16
3.13 No Adverse Change..............................................................................16
3.14 Entire Business................................................................................17
3.15 Restrictions on Conduct of Business............................................................17
3.16 Other Negotiations; Brokers....................................................................18
3.17 Benefit Plans, ERISA...........................................................................18
3.18 Employees; Labor Relations.....................................................................19
3.19 Real Property..................................................................................19
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
3.20 Tangible Personal Property.....................................................................20
3.21 Environmental Matters..........................................................................20
3.22 Accounts Receivable............................................................................20
3.23 Inventory......................................................................................20
3.24 Disclosure.....................................................................................20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER.............................................................21
4.1 Authority......................................................................................21
4.2 No Violation, Etc..............................................................................21
4.3 Financial Statements...........................................................................21
4.4 Disclosure.....................................................................................22
ARTICLE V
PUT OPTION..............................................................................................22
ARTICLE VI
NON-COMPETE; NO SOLICITATION............................................................................23
6.1 Non-Compete....................................................................................23
6.2 No Solicitation................................................................................23
ARTICLE VII
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS................................................................................24
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification................................................................................24
8.2 Method of Asserting Claims.....................................................................25
ARTICLE IX
EMPLOYEE BENEFITS MATTERS...............................................................................27
9.1 Hiring of Employees............................................................................27
9.2 Cessation of Transferred Employees Participation in Benefit Plans..............................27
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
9.3 No Assumption of Benefit Plans or Funds Therefrom..............................................27
9.4 Sellers, and the Company's Retention of Employment and Benefits Liability......................27
9.5 No Employee Rights.............................................................................28
ARTICLE X
INVESTMENT REPRESENTATIONS..............................................................................28
ARTICLE XI
DEFINITIONS.............................................................................................29
ARTICLE XII
MISCELLANEOUS ..........................................................................................36
12.1 Expenses.......................................................................................36
12.2 Binding Effect.................................................................................36
12.3 Severability...................................................................................36
12.4 Amendment......................................................................................36
12.5 Entire Agreement...............................................................................36
12.6 No Third Party Beneficiaries...................................................................36
12.7 Headings.......................................................................................37
12.8 Governing Law..................................................................................37
12.9 Aribtration....................................................................................37
12.10 Remedies.......................................................................................37
12.11 Counterparts...................................................................................37
</TABLE>
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of October 17, 1997, by and
among SWISSRAY MEDICAL SYSTEMS, INC., a Delaware corporation ("Purchaser"),
SWISSRAY INTERNATIONAL, INC., a New York corporation ("Parent"), SERVICE SUPPORT
GROUP, LLC, a limited liability company organized under the laws of the State of
Washington (the "Company"), GARY DURDAY ("Durday"), MICHAEL HARLE ("Harle") and
KENNETH MONTLER ("Montler" and together with Durday and Harle, the "Sellers").
WHEREAS, Sellers presently own all of the issued and
outstanding membership interests in the Company; and
WHEREAS, Sellers and the Company intend to sell to Purchaser,
and Purchaser intends to purchase from Sellers, all of the assets of the
Company.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements and the representations and warranties herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Assets. (a) Assets Transferred. On the terms and subject
to the conditions set forth in this Agreement, the Closing Sellers and the
Company will sell, transfer, convey, assign and deliver to the Purchaser, and
the Purchaser will purchase from Sellers and the Company, free and clear of all
Liens, all of the Company's right, title and interest in, to and under all of
the Assets of the Company, whether or not reflected in the books and records of
the Company, except as otherwise provided in Section 1.1(b) (collectively, the
"Acquired Assets"), including without limitation, the following:
(i) Cash and Investment Assets. all cash, commercial paper,
certificates of deposit and other bank deposits, treasury bills and
other cash equivalents, all investment assets and all bank accounts,
brokerage accounts and other accounts in which any of the foregoing is
held ("Cash Equivalents");
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(ii) Inventory. All inventories, irrespective of whether or
not recorded in the Company's books and notwithstanding how classified
in the financial records of the Company, of raw materials,
work-in-process, finished goods, products under research and
development, demonstration equipment, office and other supplies, parts,
packaging materials and other accessories related thereto which are
held at, or are in transit from or to, the locations at which the
Company conducts its business, or located at customers' premises on
consignment or otherwise, or warehoused or otherwise stored by third
parties on behalf of the Company including, without limitation, any of
the foregoing purchased subject to any conditional sales or title
retention agreement in favor of any other Person, together with all
rights of the Company against suppliers of such inventories (the
"Inventory") and all software, computer records, electronic data and
other records relating to Inventory;
(iii) Accounts Receivable. All trade accounts receivable and
all notes, bonds and other evidences of Indebtedness owing to the
Company and rights to receive payments arising out of sales occurring
in the conduct of the business or operations of the Company and the
security agreements related thereto including, but not limited to,
those listed in Section 1.1(a)(iii) of the Disclosure Schedule, and
including any rights of the Company with respect to any third party
collection procedures or any other Actions or Proceedings which have
been commenced in connection therewith and all software, computer
records, electronic data and other records relating to accounts
receivable (the "Accounts Receivable");
(iv) Prepaid Items; Deferred Charges. All prepaid items and
deferred charges including, but not limited to, those listed in Section
1.1(a)(iv) of the Disclosure Schedule (the "Prepaid Expenses");
(v) Tangible Personal Property. All furniture, fixtures,
building improvements (including, without limitation, those located at
5775 Soundview Drive, Suite 103A, Gig Harbor, WA 98335), equipment,
machinery, vehicles and other tangible personal property of the Company
(other than Inventory which is the subject of clause (ii) of this
Section 1.1(a)) whether or not at the locations at which the Company
conducts its business or at customers' premises on consignment, or
otherwise, including, without limitation, the items listed in Section
1.1(a)(v) of the Disclosure Schedule, and including, without
limitation, any of the foregoing purchased subject to any conditional
sales or title retention agreement in favor of any other Person and all
software, computer records, electronic data and other records relating
to thereto (the "Tangible Personal Property");
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(vi) Business Contracts. All Contracts relating to the
Company's business including, without limitation, those described in
Section 1.1(a)(vi) of the Disclosure Schedule to which the Company is a
party, including without limitation, leases of personal property or
real property as to which the Company is either the lessor, sublessor,
lessee or sublessee, Contracts relating to suppliers, sales
representatives, dealers, distributors, purchase orders, marketing
arrangements, maintenance agreements, manufacturing arrangements,
confidentiality agreements and non-compete agreements (the "Business
Contracts");
(vii) Intangible Personal Property. All Intellectual Property
of Sellers and the Company (including without limitation Sellers' and
the Company's goodwill therein) utilized in or applicable to the
Company's business and all rights, privileges, claims, causes of action
and options relating or pertaining to the Company's business or the
Acquired Assets, including, without limitation, the items listed in
Section 1.1(a)(vii) of the Disclosure Schedule and all drawings,
blueprints, sketches and specifications relating thereto (the "Acquired
Intangible Personal Property");
(viii) Permits. All Permits utilized in the conduct of the
Company's business, other than general licenses or qualifications to do
business in a particular jurisdiction including, without limitation,
the Permits listed in Section 1.1(a)(viii) of the Disclosure Schedule
(the "Business Permits");
(ix) Books and Records. All Books and Records used or held for
use in the conduct of the business or operations of the Company or
otherwise relating to the Acquired Assets or the Company's business,
other than the tax records and the minute books of the Company (the
"Books and Records"); and
(x) Other Assets and Properties. All other Assets and
Properties of the Company except as otherwise provided in Section
1.1(b) (the "Other Assets").
(b) Excluded Assets. Notwithstanding anything in this
Agreement to the contrary, the following Assets and Properties of the Company
(the "Excluded Assets") shall be excluded from and shall not constitute Acquired
Assets:
(i) Corporate Records. The tax records and minute books of the
Company;
(ii) Employee Benefit Plans. All assets owned or held by or
for or with respect to any Benefit Plans of the Company; and
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(iii) Certain Rights. Sellers' and the Company's rights under
this Agreement.
(c) Nonassignable Agreements.
(i) To the extent that any Business Contract or Business
Permit is not assignable or transferable without the consent or waiver
of the other party thereto or the issuer thereof or any third party
(including, but not limited to, any Governmental Authority), or if such
assignment or transfer or attempted assignment or transfer would
constitute a breach thereof or a violation of any Law or Order, this
Agreement shall not constitute an assignment or transfer, or an
attempted assignment or transfer thereof until such consent or waiver
has been obtained.
(ii) Sellers and the Company shall use their best efforts, and
the Purchaser shall reasonably cooperate therewith, to obtain the
consents and waivers referred to in Section 1.1(c)(i). To the extent
that any consent or waiver referred to in Section 1.1(c)(i) is not
obtained by Sellers prior to the date hereof, Sellers and the Company
shall (A) use their best efforts to provide to the Purchaser the
benefits of any such Business Contract or Business Permit; (B)
cooperate in any reasonable and lawful arrangement requested by the
Purchaser designed to provide such benefits to the Purchaser; and (C)
at the request of the Purchasers, enforce for the account of the
Purchaser any right of the Company arising from any such Business
Contract or Business Permit, described in Section 1.1(c)(i) against
such issuer or the other party or parties thereto.
(iii) To the extent that the Purchaser is provided the
benefits pursuant to this Section 1.1(c) of any such Business Contract
or Business Permit, the Purchaser shall perform for the benefit of the
issuer thereof or the other party or parties thereto, the obligations
of the Company thereunder or in connection therewith.
1.2 Liabilities. (a) Assumed Liabilities. In connection with the sale,
transfer, conveyance, assignment and delivery of the Acquired Assets pursuant to
this Agreement, on the terms and subject to the conditions set forth in this
Agreement and except as otherwise provided in Section 1.2(b), on the date
hereof, the Purchaser will assume and agree to pay, perform and discharge when
due the following obligations of the Company, as the same shall exist on the
date hereof, which are not Retained Liabilities (as hereafter defined) (the
"Assumed Liabilities"), and no others:
(i) Accounts Payable. All obligations of the Company to pay
the accounts payable arising in the ordinary course of business
consistent with past practices after the date hereof;
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(ii) Obligations under Contracts and Licenses. All obligations
of the Company under the Business Contracts and Business Permits
transferred to the Purchaser pursuant to this Agreement and arising and
to be performed on or after the date hereof, and excluding any such
obligations arising or to be performed prior to the date hereof;
(iii) Accrued Expenses. All obligations of the Company with
respect to accrued expenses incurred in the ordinary course of business
consistent with past practices all as listed in Section 1.2(a)(iii) of
the Disclosure Schedule, including accrued vacation pay, sick leave and
payroll taxes with respect to Transferred Employees.
(b) Retained Liabilities. Notwithstanding anything to the
contrary set forth in this Agreement, the Purchaser shall not assume any other
Liabilities or other contingencies of the Company, the Sellers, or any Affiliate
of any of the foregoing (and the same shall not constitute Assumed Liabilities)
whether or not reflected or reserved for in the financial statements of the
Company, including, without limitation, Liabilities (i) which arise out of or
relate to any tort or breach of contract (including, without limitation, any
breach of any Contract occurring prior to the date hereof and any and all of the
Company's Liabilities, if any, arising out of or in connection with that certain
lawsuit among Joseph Hansbauer, as Plaintiff, Serviscope Corporation, as
defendant and third-party plaintiff, and the Company et al., as third-party
defendants, Case No. C- 1-97-884 filed in the Untied States District Court of
Ohio, Western Division), (ii) to any present or former employee, agent,
director, officer, member, contractor or consultant or any of the Sellers or any
Affiliate of any Seller arising prior to or as a result of the date hereof or
any Governmental Authority under or in connection with any Benefit Plan and any
other pension, welfare or profit sharing plan or other employee benefit plan or
arrangement, including, without limitation, all Liabilities and other
contingencies retained by the Company pursuant to Section 9.4 of this Agreement
and any obligation to provide, other than accrued vacation, sick leave and
payroll taxes with respect to Transferred Employees specifically assumed in
accordance with Section 1.2(a)(iii) hereof, consultant severance pay, (iii)
arising under or pursuant to any Environmental Law, (iv) for Taxes of Sellers,
the Company, any Affiliate of Sellers or the Company, or the Assets of any of
the foregoing, (v) relating to or arising in connection with any defect in
construction or design of any product manufactured, designed, licensed,
distributed or sold by the Company or any Affiliate of the Company or any
predecessor thereof, (vi) relating to or arising in connection with the Excluded
Assets or (vii) relating to or arising in connection with this Agreement and the
transactions contemplated hereby (including, without limitation, any legal fees
or fees of any other consultants or accountants incurred by the Company in
connection with this Agreement or the transactions contemplated hereby) (the
foregoing, collectively, the "Retained Liabilities"). In addition, except for
the Assumed Liabilities, the Purchasers shall not assume by virtue of this
Agreement or the transactions contemplated hereby, and shall have no liability
for, any Liabilities or other contingencies of the Company, Sellers or any
Affiliate of any
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of the foregoing (including, without limitation, those related to the Company's
business) of any kind, character or description whatsoever, known or unknown,
contingent or otherwise, asserted or unasserted, including without limitation,
those Liabilities, whenever asserted, arising out of events occurring or facts
existing prior to the date hereof. Sellers and the Company shall discharge in a
timely manner or otherwise make adequate provision for all of the Retained
Liabilities.
1.3 Purchase Price; Allocation; Adjustment.
(a) Purchase Price. The aggregate purchase price for the
Acquired Assets (the "Purchase Price") shall consist of: (i) $621,892.42 (the
"Cash Portion"), which shall be payable in cash on the date hereof; (ii) 333,333
shares of Parent Common Stock (the "Stock Portion"); (iii) an amount equal to
50% of (A) the accounts receivable listed on Schedule 1.4(a) and (B) the
accounts receivable listed on Schedule 1.4(b) hereto net of the accounts payable
directly related thereto (collectively, the "Shared Accounts") to the extent
actually collected by Purchaser and net of any business and occupation taxes
owed thereon, payable in the manner set forth in Section 1.4; and (iv) the
assumption by the Purchasers of the Assumed Liabilities.
(b) Allocation of Purchase Price. The parties hereto
acknowledge and agree that the purchase and sale of the Acquired Assets is an
"applicable asset acquisition" within the meaning of Section 1060(c) of the
Code. The Purchase Price (including for this purpose the Assumed Liabilities)
shall be allocated among the Acquired Assets as set forth in Section 1.3(b) of
the Disclosure Schedule and the parties agree to be bound by, and shall file Tax
Returns consistent with, such allocations.
1.4 Shared Accounts.
Within 5 days of the end of each month during which Purchaser shall
collect funds with respect to any Shared Accounts, Purchaser shall pay to the
Company an amount equal to 50% of the aggregate amount collected with respect to
Shared Accounts net of any business and occupation taxes owed thereon and with
respect to the accounts receivable listed on Schedule 1.4(b) net of the accounts
payable directly related thereto during the immediately preceding month until
the earlier of (i) such time as all Shared Accounts shall have been collected by
Purchaser or (ii) the parties hereto shall have jointly determined that any
Shared Accounts remaining are no longer collectable.
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1.5 Further Assurances; Post-Closing Cooperation.
(a) At any time or from time to time after the date hereof, at
the Purchaser's request and without further consideration, each Seller and the
Company shall execute and deliver to the Purchaser such other instruments of
sale, transfer, conveyance, assignment and confirmation, provide such materials
and information and take such other actions as the Purchaser may reasonably deem
necessary or desirable in order more effectively to transfer, convey and assign
to the Purchaser, and to confirm the Purchaser's title to, all of the Acquired
Assets, and, to the fullest extent permitted by Law, to put the Purchasers in
actual possession and operating control of the Acquired Assets and the Company's
business and to assist the Purchaser in exercising all rights with respect
thereto.
(b) Effective on the date hereof, each Seller and the Company
hereby constitutes and appoints the Purchaser the true and lawful attorney of
each Seller and the Company, with full power of substitution, in the name of
each Seller and the Company, but on behalf of and for the benefit of the
Purchaser: (i) to demand and receive from time to time any and all of the
Acquired Assets and to make endorsements and give receipts and releases for and
in respect of the same and any part thereof; (ii) to institute, prosecute,
compromise and settle any and all Actions or Proceedings that the Purchaser may
deem proper in order to collect, assert or enforce any claim, right or title of
any kind in or to the Acquired Assets; (iii) to defend or compromise any or all
Actions or Proceedings in respect of any of the Acquired Assets; and (iv) to do
all such acts and things in relation to the matters set forth in the preceding
clauses (i) through (iii) as the Purchaser shall deem desirable. Each Seller and
the Company hereby acknowledges that the appointment hereby made and the powers
hereby granted are coupled with an interest and are not and shall not be
revocable by it in any manner or for any reason. Each Seller and the Company
shall deliver to the Purchaser at date hereof an acknowledged power of attorney
to the foregoing effect executed by each Seller and the Company.
(c) At any time after the date hereof upon the written request
of the Purchaser to either Seller, or either Seller to the Purchaser, stating
the need therefor for litigation, Tax or accounting purposes, the party
receiving such request shall (i) make or cause to be made available to the other
party, its related companies or successors, and permit such other party and its
agents to inspect and copy, the books and records of the party receiving such
request (which for purposes hereof will be limited to the Books and Records
included in the Acquired Assets if the Purchaser is the party receiving such
request); and (ii) assist in arranging discussions with (and calling as
witnesses) officers, employees and agents of the party receiving such request on
matters relating to the Acquired Assets, the Assumed Liabilities, the Excluded
Assets and the Retained Liabilities, subject to the reimbursement of the party
receiving such request for any actual out-of-
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pocket expenses incurred by the party receiving such request in the performance
of its obligations under this Section 1.5(c).
ARTICLE II
DELIVERIES
2.1 Deliveries
Simultaneously with the execution of this Agreement on the
date hereof,, (a) Sellers and the Company are delivering to Purchaser (i) a duly
executed Bill of Sale and Assignment Agreement, substantially in the form of
Exhibit A hereto (the "Bill of Sale and Assignment Agreement"), (ii) a duly
executed Assumption Agreement, substantially in the form of Exhibit B hereto
(the "Assumption Agreement"), (iii) duly executed Employment Agreements between
the Purchaser and Gary Durday and Kenneth Montler, as well as between Swissray
Healthcare, Inc. and Michael Harle, substantially in the forms of Exhibit C
hereto (the "Seller Employment Agreements"), (iv) a duly executed copy of the
Registration Rights Agreement substantially in the form of Exhibit D hereto (the
"Registration Rights Agreement") and (v) such other instruments of conveyance,
assignment and transfer, in form and substance reasonably satisfactory to
Purchaser as may be reasonably requested by Purchaser, and (b) Purchaser is
delivering to the Company (i) the aggregate Cash Portion, (ii) one or more
certificates representing 333,333 shares of Parent Common Stock and (iii) duly
executed Bill of Sale and Assignment Agreement, Assumption Agreement, Seller
Employment Agreements and the Registration Rights Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
SELLERS AND THE COMPANY
Each of the Sellers and the Company hereby jointly and
severally represent and warrant to Purchaser as follows:
3.1 Organization. The Company is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Washington. The Company has full power and authority to (i) own or
lease its properties and to operate its business as presently conducted, and
(ii) enter into this Agreement and the Transaction Documents to which it is a
party, to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The Company is qualified as a
foreign corporation in, and is in good standing under the laws of, each
jurisdiction where the character of the Acquired Assets or
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the nature of its business makes such qualification necessary and in which the
failure to so qualify or be in good standing would have a material adverse
effect on the Company's business or the financial position, results of
operations, properties or prospects of its business or the Acquired Assets.
Seller has heretofore provided to Purchaser true and complete copies of the
certificate of incorporation and by-laws of the Company.
3.2 Authority. The execution and delivery of this Agreement
and the Transaction Documents by the Company, and the performance by the Company
of its respective obligations hereunder and thereunder, have been duly
authorized by all necessary action. This Agreement has been duly and validly
executed and delivered by each of the Sellers and the Company and constitutes
the legal, valid and binding obligation of each of the Sellers and the Company,
enforceable against each of the Sellers and the Company in accordance with its
terms. Upon execution and delivery of such of the Transaction Documents to which
they are a party by the Sellers and the Company, such Transaction Documents will
constitute the legal, valid and binding obligations of each of the Sellers and
the Company, enforceable against each of the Sellers and the Company in
accordance with their respective terms.
3.3 No Violation. The execution and delivery by each of the
Sellers and the Company of this Agreement and the Transaction Documents to which
they are party does not, and the performance by the Sellers and the Company of
their respective obligations hereunder and thereunder and the consummation of
the transactions contemplated hereby and thereby will not, conflict with, result
in any violation of or default under, or result in any person having the right
to terminate or modify, (i) the certificate of formation or the limited
liability company agreement of the Company, (ii) any note, bond, mortgage or
other Contract, commitment or arrangement to which any Seller or the Company is
a party or by which any of the Acquired Assets is bound or (iii) any Order or
Law applicable to the Company or to any of the Acquired Assets. No consent,
approval, license, permit, order or authorization of, or registration,
declaration or filing with, any Governmental Authority is required to be
obtained or made by any Seller or the Company in connection with the execution
and delivery of this Agreement or the Transaction Documents to which they are a
party or the consummation of the transactions contemplated hereby or thereby.
None of the Sellers or the Company is bound by any agreement, restriction or
encumbrance (such as a right of first refusal, right of first offer, proxy,
voting agreement, voting trust, etc.) with respect to the sale, transfer or
conveyance of the Acquired Assets or voting of any interest in the Company
(whether outstanding or issuable upon conversion or exercise of outstanding
securities).
3.4 Financial Statements. Section 3.4 of the Disclosure Schedule
contains balance sheets as of May 31, 1997 and September 30, 1997 and income
statements and statements of cash flow for the 9 month period ended May 31, 1997
and for the 12 month period ended September 30, 1997.
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All such financial statements fairly present the financial condition, results of
operations, changes in stockholders' equity and cash flow of the Company as of
the respective dates thereof and for the respective periods covered thereby
(subject, in the case of interim financial statements, to year-end adjustments).
3.5 Taxes. The Company (i) has duly and timely filed or caused
to be filed all federal, state and local Tax returns required to be filed on or
before the date hereof and each such Tax return correctly and completely
reflects the income, franchise or other Tax liability and all other information
required to be reported thereon and (ii) has, or (with respect to items of
income, gain, loss or deduction attributable to their membership interest in the
Company) the members of the Company have, paid all Taxes owed (whether or not
shown on such Tax returns) by the Company. In connection with amounts paid or
owing to any employee, creditor, independent contractor, shareholder, customer,
supplier or other third party, the Company has timely withheld, deposited and
paid in full such Taxes. There are no Liens for Taxes upon the Acquired Assets.
3.6 Governmental Approvals and Filings. No consent, approval
or action of, filing with or notice to any Governmental Authority on the part of
any Seller or the Company is required in connection with the execution, delivery
and performance of this Agreement or any of the Transaction Documents to which
it, or he, is a party or the consummation of the transactions contemplated
hereby or thereby.
3.7 Legal Proceedings. Except for the litigation referenced in
Section 1.2(b)(i), there are no Actions or Proceedings pending or, to the
knowledge of the Sellers or the Company, threatened against, relating to or
affecting the Company, its business or the Acquired Assets. There are no facts
or circumstances known to any Seller or the Company that could reasonably be
expected to give rise to any Action or Proceeding against the Company or the
Acquired Assets. None of the Sellers or the Company has received notice of or is
aware of any Orders outstanding against the Company or against any Seller with
respect to the Acquired Assets.
3.8 Compliance With Laws and Orders. None of the Sellers or
the Company is or has at any time since the Company's organization been, or has
received any notice that it is or has been, in violation of or in default under
any Law or Order applicable to the Company, its business or the Acquired Assets.
3.9 Intellectual Property. The Company has all right, title
and interest in or a valid, binding and enforceable license to use all of the
Intellectual Property included in the Intangible Personal Property (the
"Acquired Intellectual Property"). No Intellectual Property is used or necessary
to conduct the Company's business as presently conducted and as proposed to be
conducted by Purchaser following transfer of the Acquired Assets to it. With
respect to the Acquired Intellectual Property (i) the Company has the exclusive
right to use, and transfer to
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Purchaser, and upon such transfer Purchaser will have the exclusive right to
use, the Acquired Intellectual Property, (ii) all registrations on behalf of the
Company or Sellers with, and applications to, all Governmental or Regulatory
Authorities in respect of the Acquired Intellectual Property are valid and in
full force and effect and are not subject to the payment of any Taxes or
maintenance fees or the taking of any other actions by Sellers or the Company to
maintain their validity or effectiveness; (iii) Sellers and the Company have
delivered to Purchaser prior to the execution of this Agreement true and
complete copies of all registrations, applications and other filings with
Governmental or Regulatory Authorities in respect of the Acquired Intellectual
Property and all other documentation with respect to any invention, process,
design, computer program or other know-how or trade secret included in the
Acquired Intellectual Property, which other documentation is accurate in all
material respects and reasonably sufficient in detail and content to identify
and explain such invention, process, design, computer program or other know-how
or trade secret, (iv) the Company has taken all necessary measures (including,
but not limited to all necessary patent, trademark and copyright applications
and all other intellectual property applications and related filings) to protect
the secrecy, confidentiality and value of all inventions, processes, designs,
computer programs or other know-how or trade secrets in respect of the Acquired
Assets, and (v) none of the Sellers or the Company has any knowledge that the
Acquired Intellectual Property is being infringed upon by any other Person. The
Acquired Intellectual Property does not infringe upon any Intellectual Property
of any other Person, and no claim is pending or, to the knowledge of the Sellers
or the Company, has been threatened to such effect.
3.10 Contracts.
(a) Other than the Business Contracts, there are no Contracts
or other arrangements which are necessary for, or material to, the Company's
business. True and complete copies or, in the case of oral Contracts,
descriptions of all Business Contracts, together with all amendments and
supplements thereto and all waivers of any terms thereof, have been delivered to
Purchaser prior to the execution of this Agreement. Each Business Contract is on
an arm's-length basis on competitive terms.
(b) Each Business Contract is in full force and effect and
constitutes a legal, valid and binding agreement, enforceable in accordance with
its terms, of each party thereto. None of the Sellers or the Company, nor to the
knowledge of the Sellers or the Company, any other party to such Business
Contract, has received notice that it is, in violation or breach of or default
under any such Business Contract, or with notice or lapse of time or both, would
be in violation or breach of or default under any such Business Contract. There
are no restrictions on the assignment or transfer to the Company of any Business
Contract and, upon such assignment or transfer to Purchaser, Purchaser will have
all of the rights of the assignor or transferor under each Business Contract.
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3.11 Permits. The Business Permits constitute all Permits used
in and material to the Company's business. Prior to the execution of this
Agreement, Seller has delivered to Purchaser true and complete copies of all
Business Permits. Seller owns or validly holds all Business Permits. Each
Business Permit is valid, binding and in full force and effect. The Company is
not, the Sellers or the Company have not received any notice that the Company
is, in default, or with the giving of notice or lapse of time or both, would be
in default under any such Permit. There are no restrictions on the assignment or
transfer of any Business Permits to the Company, and upon the assignment thereof
to Purchaser, will have all of the rights of the assignor or transferor under
all Business Permits.
3.12 Liens. None of the Acquired Assets is subject to any
Liens other than Permitted Liens.
3.13 No Adverse Change. No material adverse change in the
condition (financial or otherwise) or results of operations of the Company
(except for any changes as a consequence of directing business to Purchaser
under the Consulting Agreement, dated as of June 1, 1997 by and between the
Company and Purchaser) or the Acquired Assets has occurred since May 31, 1997.
In addition, without limiting the foregoing, except as disclosed in Section 3.13
of the Disclosure Schedule, there has not occurred since May 31, 1997;
(a) any declaration, setting aside or payment of any dividend
or distribution of profits, or other distribution in respect of the capital, of
the Company or any redemption or acquisition by the Company of any in the
capital of the Company;
(b) any increase in the salary, wages or other compensation of
any officer, employee or consultant of the Company whose annual salary is, or
after giving effect to such change would be, $100,000 or more; or (ii) any
establishment, amendment, modification or termination (partial or complete) of
any Benefit Plan, employment Contract or other employee compensation
arrangement;
(c) (i) incurrence by the Company of Indebtedness in excess of
$25,000 in the aggregate or (ii) any voluntary purchase, cancellation,
prepayment or complete or partial discharge in advance of a scheduled payment
date with respect to, or waiver of any right of the Company under, any
Indebtedness of or owing to the Company;
(d) any physical damage, destruction or other casualty loss
(whether or not covered by insurance) affecting any of the real or personal
property or equipment of the Company;
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<PAGE> 17
(e) any material change in (i) any pricing practice or policy
of the Company, (ii) accounting, financial reporting, inventory, credit,
allowance or Tax practice or policy of the Company, (iii) any method of
calculating any bad debt, contingency or other reserve of the Company for
accounting, financial reporting or Tax purposes or (iv) the fiscal year of the
Company;
(f) any write-off or write-down of or any determination to
write off or write-down any of the Assets of the Company in an aggregate amount
exceeding $25,000;
(g) any acquisition of any Assets of any Person or disposition
of, or incurrence of a Lien (other than a Permitted Lien) on, any Assets of the
Company, other than acquisitions or dispositions of inventory in the ordinary
course of business of Sellers consistent with past practice and the terms of
this Agreement;
(h) any entering into, amendment, modification, termination
(partial or complete) or granting of a waiver under or giving any consent with
respect to (i) any Business Contract (or any Contract which would be a Business
Contract) or (ii) any license with respect to any Intellectual Property;
(i) any capital expenditures or commitments for additions to
property, plant or equipment of the Company constituting capital assets in an
aggregate amount exceeding $25,000;
(j) any commencement, termination or change by the Company of
any line of business;
(k) any transaction by the Company with any Seller, officer,
director, employee, consultant, contractor or other Affiliate of the Company or
the Sellers or any Affiliate of any such officer, director or Affiliate; or
(l) entering into of an agreement to do or engage in any of
the foregoing.
3.14 Entire Business. The transfer of the Acquired Assets by
the Company to Purchaser pursuant to this Agreement will effectively convey to
Purchaser all the Assets of the Company other than the Excluded Assets.
3.15 Restrictions on Conduct of Business. Except as provided
in this Agreement, the Company is not, and upon transfer of the Acquired Assets
to Purchaser, Purchaser will not be, prohibited or otherwise restricted from
conducting the business conducted by the Company by any Contract, any
Governmental Authority or any Law or Order.
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3.16 Other Negotiations; Brokers. None of the Sellers, the
Company or any of their respective Affiliates (nor any investment banker,
financial advisor, attorney, accountant or other Person retained by or acting
for or on behalf of any Seller, the Company or any such Affiliate (i) has
entered into any Contract that conflicts with any of the transactions
contemplated by this Agreement or the Transaction Documents or (ii) has entered
into any Contract or had any discussions with any third party regarding any
transaction involving the Company, its business or any of the Acquired Assets.
No agent, broker, finder, investment banker, financial advisor or other similar
Person will be entitled to any fee, commission or other compensation in
connection with any of the transactions contemplated by this Agreement or the
Transaction Documents on the basis of any act or statement made or alleged to
have been made by any Seller, the Company or any of their respective Affiliates,
or any investment banker, financial advisor, attorney, accountant or other
Person retained by or acting for or on behalf of any Seller, the Company or any
such Affiliate.
3.17 Benefit Plans; ERISA. All Benefit Plans of the Company
are listed in Section 3.17 of the Disclosure Schedule, and copies of all
documentation relating to such Benefit Plans have been delivered or made
available by the Company to the Purchaser. Except as disclosed in Section 3.17
of the Disclosure Schedule:
(a) each Benefit Plan and the administration thereof complies,
and has at all times complied, in all material respects with the requirements of
all applicable Law, including ERISA and the Code and each Benefit Plan intended
to qualify under section 401(a) of the Code has at all times since its adoption
been so qualified, and each trust which forms a part of any such plan has at all
times since its adoption been tax-exempt under section 501(a) of the Code, and
there are no facts which may impact adversely such qualification or tax-exempt
status;
(b) the Company is not now, and at no time have been, a member
of a controlled group, as defined in Section 412(n)(6)(B) of the Code, with any
other enterprise, and there exists no ERISA Affiliates of the Company;
(c) the Company does not presently maintain or contribute to,
and at no time has maintained or contributed to, any single-employer plan
(within the meaning of section 4001(a)(15) of ERISA) or any multiemployer plan
(within the meaning of section 4001(a)(3) of ERISA), and neither Seller nor
Principal could have liability to any Person under Title IV of ERISA;
(d) the Company has not incurred any liability for any tax
imposed under section 4971 through 4980B of the Code or civil liability under
section 502(i) or (l) of ERISA.
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<PAGE> 19
(e) no benefit under any Benefit Plan, including, without
limitation, any severance or parachute payment plan, program or agreement, will
be established or become accelerated, vested or payable by reason of the
transactions contemplated under this Agreement;
(f) no Benefit Plan provides health or death benefit coverage
beyond the termination of an employee's employment, except as required by Part 6
of Subtitle B of Title I of ERISA or section 4980B of the Code;
(g) no suit, actions or other litigation (excluding claims for
benefits incurred in the ordinary course of plan activities) have been brought
against or with respect to any Benefit Plan; and
(h) all contributions to Benefit Plans that were required to
be made under such Benefit Plans have been made as of the date hereof, and all
benefits accrued under any unfunded Benefit Plan will have been paid, accrued or
otherwise adequately reserved in accordance with GAAP as of such date and the
Company will have performed by the date hereof all obligations required to be
performed as of such date under all Benefit Plans.
3.18 Employees; Labor Relations. (i) Section 3.18(a) of the
Disclosure Schedule contains a list of the name of each full-time employee of
the Company, together with such person's position or function, annual base
salary or wages and any benefits, incentives and bonus arrangement with respect
to such person. None of the Sellers or the Company has received any information
that would lead it, or him, to believe that any employees will cease to be
employees, or will refuse offers of employment from Purchaser, because of the
consummation of the transactions contemplated by this Agreement and the
Transaction Documents.
(i) No employee of the Company is presently a member of a
collective bargaining unit and, to the knowledge of Sellers and the Company,
there are no threatened or contemplated attempts to organize for collective
bargaining purposes any of the employees of the Company and (ii) no unfair labor
practice complaint or sex or age discrimination claim has been brought against
the Company before the National Labor Relations Board or any other Governmental
Authority. There has been no work stoppage, strike or other concerted action by
employees of the Company. The Company has complied in all material respects with
all applicable Laws relating to the employment of labor, including without
limitation those relating to wages, hours and collective bargaining.
3.19 Real Property. Section 1.1(a)(vi) of the Disclosure
Schedule contains a true and correct list of all real property leases and any
amendments, modifications or extensions thereto. The Company does not have fee
simple title to or any other interests in any real property.
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<PAGE> 20
the Company has delivered to the Purchaser prior to the execution of this
Agreement true and complete copies of (i) all such leases (including any
amendments and renewal letters).
3.20 Tangible Personal Property. The Company is in possession
of and has good and marketable title to, or has valid leasehold interests in or
valid rights under Contract to use, all the Tangible Personal Property. All the
Tangible Personal Property is free and clear of all Liens, and is in good
working order and condition, ordinary wear and tear excepted, and its use
complies in all material respects with all applicable Laws.
3.21 Environmental Matters. The Company has obtained all
Permits which are required in respect of the Company's business, operations or
the Acquired Assets under applicable Environmental Laws. The Company and its
operations and properties, are and have been in compliance in all material
respects with the terms and conditions of all such Permits and with any
applicable Environmental Law.
3.22 Accounts Receivable. (a) Except as set forth in Section
3.22 of the Disclosure Schedule, the accounts receivable of the Company
reflected on the Company's financial statements delivered to the Purchaser prior
to the execution of this Agreement, all accounts receivable arising subsequent
to May 31, 1997 and the Accounts Receivable (i) arose from bona fide
transactions in the ordinary course of business consistent with past practice
and are payable on ordinary trade terms, (ii) are legal, valid and binding
obligations of the respective debtors enforceable in accordance with their
respective terms, (iii) are not subject to any valid set-off or counterclaim,
(iv) do not represent obligations for goods sold on consignment, on approval or
subject to any repurchase or return arrangement, (v) are collectible in the
ordinary course of business consistent with past practice in the aggregate
recorded amounts thereof, net of any applicable reserve reflected in the balance
sheet, and (vi) are not the subject of any Actions or Proceedings brought by or
on behalf of the Company.
3.23 Inventory. All inventory of the Company reflected on the
Company's balance sheet as of May 31, 1997 included in the financial statements
of the Company previously delivered to Purchaser consisted and the Inventory
consists, of a quality and quantity usable and salable in the ordinary course of
business without discount, loss or markdown. Except as disclosed in Section 3.23
of the Disclosure Schedule, all items included in the Inventory are the property
of the Company free and clear of any Lien other than Permitted Liens, have not
been pledged as collateral, are not held by the Company on consignment from
others, and conform in all material respects to all standards applicable to such
inventory or its use or sale imposed by Governmental or Regulatory Authorities.
3.24 Disclosure. All material facts regarding the Company, its
business and the Assets have been disclosed to Purchaser by Sellers and the
Company in or in connection with this
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<PAGE> 21
Agreement. No representation or warranty by or on behalf of Sellers or the
Company contained in this Agreement, and no statement contained in Schedules 1.1
or 1.2 hereto or in any certificate, list or other writing furnished to
Purchaser by or on behalf of Sellers or the Company pursuant to any provision of
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements herein or
therein, in the light of the circumstances under which they were made, not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
4.1 Authority. Purchaser has the requisite power and authority
to execute and deliver this Agreement and the Transaction Documents, to perform
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. This Agreement has been duly and validly
executed and delivered by Purchaser. This Agreement constitutes, and upon
execution and delivery thereof by Purchaser, the Transaction Documents to which
it is a party will constitute, the legal, valid and binding obligations of
Purchaser, enforceable against Purchaser in accordance with their respective
terms.
4.2 No Violation, Etc. The execution and delivery by Purchaser
of this Agreement and the Transaction Documents to which it is a party does not,
and the performance by Purchaser of its obligations hereunder and thereunder and
the consummation of the transactions contemplated hereby and thereby will not,
conflict with, result in any violation of or default under, or result in any
Person having the right to terminate or modify, (i) the certificate of
incorporation or by-laws of Purchaser, (ii) any note, bond, mortgage or other
Contract, commitment or arrangement to which Purchaser is a party or by which
any of its properties or assets are bound or (iii) any Order or Laws applicable
to Purchaser or to any of the property or assets of Purchaser. No consent,
approval, license, permit, order or authorization of, or registration,
declaration or filing with, any Governmental Authority is required to be
obtained or made by Purchaser in connection with the execution and delivery by
Purchaser of this Agreement and the Transaction Documents to which it is a party
or the consummation of the transactions contemplated hereby or thereby.
4.3 Financial Statements. The financial statements contained
in Parent's Forms 10-KSB or Forms 10-QSB filed with the Securities and Exchange
Commission ("SEC") since May 31, 1995 fairly present the financial condition,
results of operations, changes in stockholders' equity and cash flow of the
Parent on a consolidated basis as of the respective dates hereof and
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for the respective periods covered thereby (subject in the case of interim
financial statements to year-end adjustments).
4.4 Disclosure. Parent's annual report on Form 10-KSB as of
September 30, 1997 discloses all material facts regarding Parent as of the date
thereof. No representation or warranty of Purchaser or Parent contained in this
Agreement and no statement contained in any certificate or other writing (other
than any documents prepared by or in cooperation with, or based (in whole or in
part) on information provided by Sellers or the Company or their respective
agents) furnished to Sellers or the Company by or on behalf of Parent or
Purchaser pursuant to any provision of this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements herein or therein, in the light of the
circumstances under which they were made, not misleading.
ARTICLE V
PUT OPTION
5.1 Put Option
(a) During the time period commencing on June 30, 1998 and
ending on the 18th monthly anniversary hereof, each Seller shall be entitled to
require Parent to purchase any or all of the shares of Parent Common Stock
constituting the Stock Portion at a purchase price (the "Exercise Price") equal
to $4.50 per share (subject to adjustment as set forth in Section 5.1(b)) by
giving Parent notice in writing. Upon receipt of such notice from any Seller,
the Company shall within 90 days pay the aggregate purchase price for the shares
requested to be purchased by such Seller against delivery of the share
certificates therefor duly endorsed in blank; provided that such purchase price
shall be payable within 45 days of such request if the aggregate purchase price
payable with respect to such request plus all other requests by any Seller
pursuant to this Section 5.1 made within the 90-day period immediately preceding
such request is an amount less than $500,000.
(b) If at any time the Parent Common Stock is divided into a
greater number of shares or a dividend or other distribution is paid to holders
of the Parent Common Stock in the form of shares of Parent Common Stock, the
Exercise Price in effect immediately prior to such subdivision shall be
proportionately reduced. If at any time the Parent Common Stock is combined into
a smaller number of shares, the Exercise Price in effect immediately prior to
such combination shall be proportionately increased.
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ARTICLE VI
NON-COMPETE; NO SOLICITATION
6.1 Non-Compete. For a period of (i) two (2) years following
the date hereof (the "Restricted Period"), neither Sellers nor the Company will
directly or indirectly, own, manage, operate, join, or have a financial interest
in, control or participate in the ownership, management, operation or control
of, or be employed as an employee, agent or consultant, or in any other
individual or representative capacity whatsoever, or use or permit his name to
be used in connection with, or be otherwise connected in any manner with (i) any
business or enterprise engaged within any portion of the United States (whether
or not such business is physically located within the United States) in the
design, development, manufacture, distribution, lease, rental or sale of any
products, or the provision of any services, which the Company was designing,
developing, manufacturing, distributing, leasing, renting, selling or providing
at any time up to and including the date hereof or (ii) any business which is
competitive with the business carried on or planned by Purchaser following the
date hereof; provided that the foregoing restriction shall not be construed to
prohibit the ownership by any Seller of not more than two percent (2%) of any
class of securities of any corporation which is engaged in any of the foregoing
businesses, having a class of securities registered pursuant to the Securities
Exchange Act of 1934, which securities are publicly owned and regularly traded
on any national exchange or in the over-the-counter market; provided, further,
that such ownership represents a passive investment and that neither such Seller
nor any group of persons including such Seller in any way, either directly or
indirectly, manages or exercises control of any such corporation, guarantees any
of its financial obligations, otherwise takes part in its business other than
exercising his rights as a shareholder, or seeks to do any of the foregoing.
6.2 No Solicitation. During the Restricted Period, neither the
Seller nor the Company shall directly or indirectly, whether for their own
account or for the account of any other individual or entity, solicit or canvas
the trade, business or patronage of, or sell to, any individuals or entities
that were either customers of the Company prior to the date hereof or of
Purchaser or any of its Affiliates following the date hereof, or prospective
customers with respect to whom a sales effort, presentation or proposal was made
by the Company or its affiliates. Each of Seller and the Company further agrees
that during the Restricted Period, he shall not, directly or indirectly, (i)
solicit, induce, enter into any agreement with, or attempt to influence any
individual who was an officer or consultant of Purchaser at any time during the
Restricted Period was employed by Purchaser, to terminate his or her employment
relationship with Purchaser or any such Affiliate or to become employed by
Seller or the Company or any individual or entity by which any Seller is
employed or (ii) interfere in any other way with the employment, or other
relationship, of any officer or consultant of Purchaser or any of its
Affiliates.
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ARTICLE VII
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
7.1 Survival of Representations, Warranties, Covenants and
Agreements. Notwithstanding any right of Purchaser (whether or not exercised) to
investigate the affairs of Sellers or the Company or any right of any party
hereto (whether or not exercised) to investigate the accuracy of the
representations and warranties of any other party hereto contained in this
Agreement, Seller and the Company, on the one hand, and Purchaser, on the other
hand, have the right to rely fully upon the representations, warranties,
covenants and agreements of the other contained in this Agreement. None of the
representations and warranties of Parent, Purchaser, Seller or the Company
contained in this Agreement shall survive the date hereof (other than the
representations and warranties contained in Articles III and IV hereof, which
shall survive the execution of this Agreement for a period of one (1) year). The
covenants and agreements contained in this Agreement shall survive the execution
of this Agreement for the period of time specified or, if not specified,
indefinitely.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification.
(a) Each of the Sellers and the Company shall jointly
and severally indemnify Purchaser and the officers, directors, employees, agents
and Affiliates of Purchaser (the "Purchaser Indemnified Parties") in respect of,
and hold each of them harmless from and against, any and all Losses (after
giving effect to any net proceeds from insurance actually received by the
Indemnified Parties) suffered, incurred or sustained by any of them or to which
any of them becomes subject, resulting from, arising out of or relating to (i) a
breach of any of the representations or warranties contained in Article III or
nonfulfillment of or failure to perform any covenant or agreement on the part of
any Seller or the Company contained in this Agreement, or (ii) the operation of
the Company's business or the use or ownership of the Acquired Assets on or
prior to the date hereof; provided that if and to the extent that any
indemnification hereunder is finally determined by a court of competent
jurisdiction to be unenforceable, Sellers and the Company shall make the maximum
contributions to the payment and satisfaction of the indemnified Losses as shall
be permissible under applicable laws.
(b) Each of Parent and Purchaser shall jointly and
severally indemnify the Company and the officers, directors, employees, agent
and Affiliates of the Company (the
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"Seller Indemnified Parties" and together with the Purchasers Indemnified
Parties, the "Indemnified Parties") in respect of, and hold each of them
harmless from and against, any and all Losses (after giving effect to any net
proceeds from insurance actually received by the Indemnified Parties) suffered,
incurred or sustained by any of them or to which any of them becomes subject,
resulting from, arising out of or relating to (i) a breach of any of the
representations or warranties contained in Article IV or nonfulfillment of or
failure to perform any covenant or agreement on the part of Parent or Purchaser
contained in this Agreement, or (ii) the operation of the Company's business or
the use or ownership of the Acquired Assets after the date hereof; provided that
if and to the extent that any indemnification hereunder is finally determined by
a court of competent jurisdiction to be unenforceable, Parent and Purchaser
shall make the maximum contributions to the payment and satisfaction of the
indemnified Losses as shall be permissible under applicable laws.
8.2 Method of Asserting Claims. All claims for indemnification
by any Indemnified Party under Section 8.1 will be asserted and resolved as
follows:
(b) In order for an Indemnified Party to be entitled to any
indemnification provided for under Section 8.1 in respect of, arising out of or
involving a claim or demand made by any Person not a party to this Agreement
against the Indemnified Party (a "Third Party Claim"), the Indemnified Party
must deliver a Claim Notice to the Indemnifying Party within 30 Business Days
after receipt by such Indemnified Party of written notice of the Third Party
Claim; provided, however, that failure to give such Claim Notice shall not
affect the indemnification provided hereunder except to the extent the
Indemnifying Party shall have been actually prejudiced as a result of such
failure.
(c) If a Third Party Claim is made against an Indemnified
Party, the Indemnifying Party shall be entitled to participate in the defense
thereof and, if it so chooses, to assume the defense thereof with counsel
selected by the Indemnifying Party, which counsel must be satisfactory to the
Indemnified Party. Should the Indemnifying Party so elect to assume the defense
of a Third Party Claim, the Indemnifying Party shall not be liable to the
Indemnified Party for legal expenses subsequently incurred by the Indemnified
Party in connection with the defense thereof, but shall continue to pay for any
expenses of investigation or any Loss suffered. If the Indemnifying Party
assumes such defense, the Indemnified Party shall have the right to participate
in the defense thereof and to employ counsel, at its own expense, separate from
the counsel employed by the Indemnifying Party. If (i) the Indemnifying Party
shall not assume the defense of a Third Party Claim with counsel satisfactory to
the Indemnified Party within five Business Days of any Claim Notice, or (ii)
legal counsel for the Indemnified Party notifies the Indemnifying Party that
there are or may be legal defenses available to the Indemnified Party or to
other Indemnified Parties which are different from or additional to those
available to the Indemnifying Party, which, if the Indemnified Party and the
Indemnifying Party were to be represented by the same counsel,
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would constitute a conflict of interest for such counsel or prejudice
prosecution of the defenses available to such Indemnified Party, or (iii) if the
Indemnifying Party shall assume the defense of a Third Party Claim and fail to
diligently prosecute such defense, then in each such case the Indemnified Party,
by notice to the Indemnifying Party, may employ its own counsel and control the
defense of the Third Party Claim and the Indemnifying Party shall be liable for
the reasonable fees, charges and disbursements of counsel employed by the
Indemnified Party; and the Indemnified Party shall be promptly reimbursed for
any such fees, charges and disbursements, as and when incurred. Whether the
Indemnifying Party or the Indemnified Party controls the defense of any Third
Party Claim, the parties hereto shall cooperate in the defense thereof. Such
cooperation shall include the retention and provision to the counsel of the
controlling party of records and information which are reasonably relevant to
such Third Party Claim, and making employees available on a mutually convenient
basis to provide additional information and explanation of any material provided
hereunder. The Indemnifying Party shall have the right to settle, compromise or
discharge a Third Party Claim (other than any such Third Party Claim in which
criminal conduct is alleged) without the Indemnified Party's consent if such
settlement, compromise or discharge (i) constitutes a complete and unconditional
discharge and release of the Indemnified Party, and (ii) provides for no relief
other than the payment of monetary damages and such monetary damages are paid in
full by the Indemnifying Party.
(d) In the event any Indemnified Party should have a claim
under Section 8.1 against any Indemnifying Party that does not involve a Third
Party Claim, the Indemnified Party shall deliver an Indemnity Notice with
reasonable promptness to the Indemnifying Party. The failure by any Indemnified
Party to give the Indemnity Notice shall not impair such party's rights
hereunder except to the extent that an Indemnifying Party demonstrates that it
has been materially prejudiced thereby. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim described in such Indemnity
Notice or fails to notify the Indemnified Party within the Dispute Period
whether the Indemnifying Party disputes the claim described in such Indemnity
Notice, the Loss in the amount specified in the Indemnity Notice will be
conclusively deemed a liability of the Indemnifying Party under Section 8.1 and
the Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand. If the Indemnifying Party has timely disputed its liability
with respect to such claim, the Indemnifying Party and the Indemnified Party
will proceed in good faith to negotiate a resolution of such dispute, and if not
resolved through negotiations within the Resolution Period, such dispute shall
be resolved by litigation in a court of competent jurisdiction.
(e) The rights accorded to Indemnified Parties hereunder shall
be in addition to any rights that any Indemnified Party may have at law or in
equity, under federal and state securities laws, by separate agreement
(including, without limitation, under the Transaction Agreements) or otherwise.
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ARTICLE IX
EMPLOYEE BENEFITS MATTERS
9.1 Hiring of Employees. The Purchaser has determined to offer
employment to those employees of the Company identified in Section 9.1 of the
Disclosure Schedule on such terms and conditions as shall be mutually agreeable
to the Purchaser and such employees. All such employees who accept such
employment with the Purchaser are hereinafter referred to as the "Transferred
Employees." Sellers and the Company shall use their reasonable best efforts to
assist the Purchaser in hiring such employees, and shall not offer employment
(or arrange to have another Person or firm offer employment) to any such
employee without the prior written consent of the Purchaser.
9.2 Cessation of Transferred Employees Participation in Benefit Plans.
Effective as of the date hereof, Sellers and the Company shall take all such
action as may be necessary to cause all Transferred Employees to cease to
participate in all Benefit Plans.
9.3 No Assumption of Benefit Plans or Funds Therefrom. The Purchaser
shall neither adopt, maintain, contribute to, nor become a sponsoring employer
of, nor have any other obligations, responsibilities or Liabilities whatsoever
thereunder or with respect to, any Benefit Plans, and neither the Purchaser nor
the Plans maintained, sponsored or contributed to by the Purchaser shall accept
payments, contributions (whether in the form of rollover contributions or
otherwise), or funds of any type from, with respect to, or on behalf of, any
Benefit Plans.
9.4 Sellers, and the Company's Retention of Employment and Benefits
Liability. Sellers and the Company shall be solely responsible for, and shall
jointly and severally indemnify each Purchaser against, any and all Liabilities
which have arisen or may arise in connection with (i) any Benefit Plan,
including, but not limited to, Liabilities arising from prohibited transactions,
income or excise tax assessments, participant benefit claims, fiduciary conduct,
Governmental Authority claims or proceedings, Title IV of ERISA, or any other
Liabilities whatsoever, (ii) any and all Liabilities which have arisen or may
arise in any way whatsoever from the employment (or service, as the case may
be), compensation or benefits of any director, officer, employee, agent, or
independent contractor (including former directors, officers, employees, agents,
or independent contractors) of the Company or of any predecessor or Affiliate of
the Company, or the termination thereof (including, but not limited to, claims
arising in connection with employees or former employees who are not employed by
the Purchaser, for any reason, as of the date hereof pursuant to Section 9.1
hereof), (iii) any liability or obligation arising out of or relating to any act
or omission by such director, officer, employee, agent, or independent
contractor (including former directors, officers, employees, agents, or
independent contractors) of the Company or of
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any predecessor or Affiliate of the Company or Sellers, including, but not
limited to, any violation of or non-compliance with or obligation arising under
any applicable law respecting employment, compensation or benefits, and (iv) any
and all costs, Liabilities and obligations for severance pay, accrued vacation
pay, sick pay, medical benefits, and any other compensation or benefits relating
to any period of employment or service of any kind with the company or any
predecessor or Affiliate of the Company, except to the extent specifically
included in Assumed Liabilities. In addition, Sellers and the Company shall be
responsible for providing continuation health coverage under Part 6 of Subtitle
B of Title I of ERISA with respect to (i) any employees of the Company (or
former employees, as the case may be) not employed by the Purchasers pursuant to
Section 9.1 hereof as of the date hereof, and (ii) any Transferred Employee not
covered under, or who may be affected by any pre-existing condition clause
contained in, any group health plan that may be established by the Purchasers,
in their discretion.
9.5 No Employee Rights. Nothing in this Article IX express or implied
shall confer upon any Transferred Employee or other Person or legal
representative thereof any rights or remedies, including any right to
employment, continued employment for any specified period, or compensation or
benefits of any nature or kind whatsoever under or by reason of this Agreement.
ARTICLE X
INVESTMENT REPRESENTATIONS
10.1 Investment Representations.
(a) Each of the Sellers and the Company represents to
Purchaser that it is its present intention to acquire the Parent Common Stock
issued as part of the Stock Portion for its own account (and it will be the sole
beneficial owner thereof) and that such shares of Parent Common Stock are being
acquired by it for the purpose of investment and not with a view to distribution
or resale thereof. Each of the Sellers and the Company further represents that
it understands and agrees that, until registered under the Securities Act of
1933, as amended (the "Securities Act"), or transferred pursuant to the
provisions of Rule 144 or Rule 144A as promulgated by the Securities and
Exchange Commission, all certificates evidencing any of the Shares of Parent
Common Stock, whether upon initial issuance or upon any transfer thereof, shall
bear a legend, prominently stamped or printed thereon, reading substantially as
follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 or applicable
state securities laws. These securities have been acquired for
investment and not with a view to distribution or resale.
These securities may not be offered for sale or
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transferred in the absence of an effective registration
statement covering such shares under such Act and any
applicable state securities laws, unless, in the opinion of
counsel of the holder reasonably satisfactory to Swissray, an
exemption from registration thereunder is applicable to the
proposed transaction."
(b) Each of the Sellers and the Company acknowledges
that the shares of Parent Common Stock issued as part of the Stock Portion have
not been registered under the Securities Act or applicable state securities laws
and are being offered and sold in reliance on exemptions from the registration
requirements of the Securities Act and such laws. Each of the Seller and the
Company further acknowledges that the Securities are subject to restrictions on
transferability and resale and may not be transferred or resold except as
permitted under the Securities Act and applicable state securities laws pursuant
to registration or exemption therefrom.
(c) Each of the Sellers and the Company represents
that it, either alone or with its representative, has such knowledge and
experience in business and financial matters that it is capable of evaluating
the merits and risks of its investment. Each of the Sellers and the Company has
received and reviewed all information it has requested from Parent (financial or
otherwise), and it has been given the opportunity to obtain any additional
information or documents and to ask questions and receive answers about such
documents, Parent and the business and prospects of Parent which it deems
necessary to evaluate the merits and risks related to the investment in the
Securities. Each of the Sellers and the Company is an "Accredited Investor" as
that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act. ARTICLE XI
DEFINITIONS
11.1 Definitions. As used in this Agreement, the following
defined terms shall have the meanings indicated below:
"Accounts Receivable" has the meaning ascribed thereto in
Section 1.1.
"Actions or Proceedings" means any action, suit, proceeding,
arbitration or Governmental Authority investigation or audit.
"Affiliate" means, as applied to any Person, (a) any other
Person directly or indirectly controlling, controlled by or under common control
with, that Person, ((b) any other Person that owns or controls (i) 5% or more of
any class of equity securities of that Person or any of its Affiliates or (ii)
5% or more of any class of equity securities (including any equity securities
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issuable upon the exercise of any option or convertible security) of that Person
or any of its Affiliates,) or (c) any director, partner, officer, agent,
employee or relative of such Person. For the purposes of this definition,
"control" (including with correlative meanings, the terms "controlling",
"controlled by", and "under common control with") as applied to any Person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that Person, whether through
ownership of voting securities or by contract or otherwise.
"Acquired Assets" has the meaning ascribed thereto in Section
1.1.
"Acquired Intellectual Property" has the meaning ascribed
thereto in Section 3.9.
"Assets" of any Person means all assets and properties of
every kind, nature, character and description (whether real, personal or mixed,
whether tangible or intangible, whether absolute, accrued, contingent, fixed or
otherwise and wherever situated), including the goodwill related thereto,
operated, owned or leased by such Person, including without limitation cash,
cash equivalents, securities, accounts and notes receivable, chattel paper,
documents, instruments, general intangibles, real estate, equipment, inventory,
goods and Intellectual Property.
"Assumed Liabilities" has the meaning ascribed thereto in
Section 1.2.
"Assumption Agreement" has the meaning ascribed thereto in
Section 2.1.
"Benefit Plan" means any Plan, existing at the date hereof or
prior thereto, established or to which contributions have at any time been made
by the Company or any of its Affiliates, or any predecessor of any of the
foregoing, or under which any employee, former employee or director of the
Company or any of its Affiliates or any beneficiary thereof is covered, is
eligible for coverage or has benefit rights.
"Bill of Sale and Assignment Agreement" has the meaning
ascribed thereto in Section 2.1.
"Books and Records" means all files, documents, instruments,
papers, books and records relating to the Company's business, including without
limitation financial statements, Tax Returns and related work papers and letters
from accountants, budgets, pricing guidelines, ledgers, journals, deeds, title
policies, minute books, Contracts, licenses, Permits, customer lists, computer
files and programs, retrieval programs, operating data and plans.
"Business Contracts" has the meaning ascribed to it in Section
1.1.
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"Business Permits" has the meaning ascribed to it in Section
1.1.
"Business Day" means a day other than Saturday, Sunday or any
day on which banks located in the State of New York or the State of Washington
are authorized or obligated to close.
"Cash Equivalents" has the meaning ascribed thereto in Section
1.1.
"Cash Portion" has the meaning ascribed thereto in Section
1.3.
"Claim Notice" means written notification pursuant to Section
8.2(a) of (i) a Third Party Claim as to which indemnity under Section 8.1 is
sought by an Indemnified Party, enclosing a copy of all papers served, if any,
on the Indemnified Party and (ii) the Indemnified Party's claim against the
Indemnifying Party under Section 8.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning ascribed to it in the forepart to
this Agreement.
"Contract" means any agreement, lease, evidence of
indebtedness, mortgage, indenture, security agreement or other contract (whether
written or oral).
"Dispute Period" means the period ending thirty (30) calendar
days following receipt by an Indemnifying Party of an Indemnity Notice.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means any Person who is, or at any time was,
a member of a controlled group (within the meaning of Section 412(n)(6) of the
Code) that includes, or at any time included, the Company or any Subsidiary, or
any predecessor of any of the foregoing.
"Environmental Laws" means any and all laws, statutes,
ordinances, orders, common law, codes, rules, regulations, permits,
authorizations, licenses, policies, guidance documents, judgments, decrees,
injunctions, or agreements with any governmental or regulatory authority,
relating to the protection of health or the environment, worker or public health
and safety, and/or governing the handling, use, generation, treatment, storage,
transportation, disposal, manufacture, distribution, formulation, packaging,
labeling, release, spilling, leaking,
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emitting, discharging, leaching, dumping, disposal of or exposure to any
Hazardous Substance, whether now existing or subsequently amended or enacted.
"Exercise Price" has the meaning ascribed thereto in Section
5.1.
"Excluded Assets" has the meaning ascribed thereto in Section
1.1.
"GAAP" means generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
"Governmental Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
"Indebtedness" of any Person means all obligations of such
Person (i) for borrowed money, (ii) evidenced by notes, bonds, debentures or
similar instruments, (iii) for the deferred purchase price of goods or services
(other than trade payables or accruals incurred in the ordinary course of
business), (iv) under capital leases and (v) in the nature of guarantees of the
obligations described in clauses (i) through (iv) above of any other Person.
"Indemnified Party" has the meaning ascribed to it in Section
8.1.
"Indemnifying Party" means any Person against whom a claim for
indemnification is being asserted under any provision of Article VIII.
"Indemnity Notice" means written notification pursuant to
Section 8.2(c) of a claim for indemnity under Article VIII by an Indemnified
Party, specifying the nature of and basis for such claim, together with the
amount or, if not then reasonably ascertainable, the estimated amount,
determined in good faith, of such claim.
"Intangible Personal Property" has the meaning ascribed
thereto in Section 1.1
"Intellectual Property" means all patents and patent rights,
trademarks and trademark rights, trade names and trade name rights, service
marks and service names and service name rights, brand names, inventions,
processes, formulae, copyrights and copyright rights, trade dress, business and
product names, logos, slogans, trade secrets, industrial models, designs,
methodologies, computer programs (including all source codes) and related
documentation, technical information, manufacturing, engineering and technical
drawings, know-how and all pending applications for and registrations of
patents, trademarks, service marks and copyrights.
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<PAGE> 33
"Inventory" has the meaning ascribed to it in Section 1.1.
"Law" means any law, statute, rule, regulation, ordinance or
other pronouncement having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental Authority.
"Liabilities" means all Indebtedness, obligations and other
liabilities (or contingencies that have not yet become liabilities) of a Person
(whether absolute, accrued, contingent (or based upon any contingencies), known
or unknown, fixed or otherwise, or whether due or to become due).
"Liens" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other encumbrance or
restriction or adverse claim of any kind, or any conditional sale Contract,
title retention Contract or other Contract to give any of the foregoing.
"Loss" means any and all damages, fines, fees, penalties,
deficiencies, losses and expenses, including without limitation, interest,
reasonable expenses of investigation, court costs, reasonable fees and expenses
of attorneys, accountants and other experts or other expenses of litigation or
other proceedings or of any claim, default or assessment (such fees and expenses
to include without limitation fees and expenses of attorneys incurred in
connection with (i) the investigation or defense of any Third Party Claims or
(ii) asserting or disputing any rights under this Agreement against any party
hereto or otherwise). Also included within the meaning of Loss shall be the
diminution in value of Purchaser's interests in the Company.
"Order" means any writ, judgment, decree, injunction or
similar order of any Governmental Authority (in each such case whether
preliminary or final).
"Other Assets" has the meaning ascribed thereto in Section
1.1.
"Parent" means Swissray International Inc., a New York
corporation.
"Parent Common Stock" means common stock, $.01 par value of
Parent.
"Permits" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any Governmental Authority.
"Permitted Lien" means any mechanics', carriers', workmen's,
repairmen's or other like liens arising or incurred in the ordinary course of
business, and other imperfections of title or
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encumbrances, if any, which, either in any case or in the aggregate, are not
substantial in amount, do not materially detract from the value or marketability
of the property subject thereof and do not impair the operation of the Company's
business.
"Person" or "person" means any natural person, corporation,
limited liability company, general partnership, limited partnership,
proprietorship, other business organization, trust, union, association or
Governmental Authority.
"Plan" means any bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, stock purchase, stock option,
stock ownership, stock appreciation rights, phantom stock, leave of absence,
layoff, vacation, day or dependent care, legal services, cafeteria, life,
health, accident, disability, workmen's compensation or other insurance,
severance, separation or other employee benefit plan, practice, policy or
arrangement of any kind, whether written or oral, or whether for the benefit of
a single individual or more than one individual including, but not limited to,
any "employee benefit plan" within the meaning of Section 3(3) of ERISA.
"Prepaid Expenses" has the meaning ascribed thereto in Section
1.1.
"Purchase Price" has the meaning ascribed thereto in Section
1.3.
"Purchaser" has the meaning ascribed to it in the forepart to
this Agreement.
"Purchaser Indemnified Party" has the meaning ascribed to it
in Section 8.1.
"Registration Rights Agreement" has the meaning ascribed
thereto in Section 2.1.
"Resolution Period" means the period ending thirty (30)
calendar days following receipt by an Indemnified Party of a Dispute Notice.
"Restricted Period" has the meaning ascribed thereto in
Section 6.1.
"Retained Liabilities" has the meaning ascribed thereto in
Section 1.2.(b)
"SEC" has the meaning ascribed thereto in Section 4.3.
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"Securities Act" has the meaning ascribed to it in Section
10.1.
"Seller Employment Agreements" has the meaning ascribed to it
in Section 2.1.
"Seller Indemnified Party" has the meaning ascribed to it in
Section 8.1
"Sellers" has the meaning ascribed to it in the forepart to
this Agreement.
"Shared Accounts" has the meaning ascribed to it in Section
1.3.
"Stock Portion" has the meaning ascribed to it in Section 1.3.
"Tangible Personal Property" has the meaning ascribed thereto
in Section 1.1.
"Tax" or "Taxes" means all federal, state, local or foreign
net or gross income, gross receipts, net proceeds, sales, use, ad valorem, value
added, franchise, bank shares, withholding, payroll, employment, excise,
property, alternative or add-on minimum, environmental or other taxes,
assessments, duties, fees, levies or other governmental charges of any nature
whatever, whether disputed or not, together with any interest, penalties,
additions to tax or additional amounts with respect thereto.
"Tax Returns" means any returns, reports or statements
(including any information returns) required to be filed with any Governmental
Authority for purposes of a particular Tax.
"Third Party Claim" has the meaning ascribed to it in Section
8.2.
"Transaction Documents" means the Seller Employment
Agreements, the Bill of Sale and Assignment Agreement, the Assumption Agreement,
the Intellectual Property Assignment Agreement, and any other support,
consulting or service agreement reasonably requested by Purchaser to be entered
into by the Company on or prior to the date hereof, each of the foregoing in
form and substance satisfactory to Purchaser, and any other agreements to be
entered into in connection with the transactions contemplated by this Agreement.
"Transferred Employee" has the meaning ascribed thereto in
Section 9.1.
Unless the context of this Agreement otherwise requires, (i)
words of any gender include each other gender; (ii) words using the singular or
plural number also include the plural or singular number, respectively; (iii)
the terms "hereof," "herein," "hereby" and derivative or similar words refer to
this entire Agreement; and (iv) the terms "Article" or "Section" refer to the
specified
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Article or Section of this Agreement. All accounting terms used herein and not
expressly defined herein shall have the meanings given to them under GAAP.
ARTICLE XII
MISCELLANEOUS
12.1 Expenses. Each party shall bear its own expenses in
connection with the transactions contemplated hereby, except that Purchaser
shall pay all sales, use, stamp, transfer, service, recording and similar taxes
or fees, if any, payable in connection with the consummation of the transactions
contemplated hereby and by the transactions contemplated hereby up to the amount
of $5,000 in the aggregate and thereafter Purchaser and the Company shall
equally share any such taxes.
12.2 Binding Effect. The representations, warranties,
covenants and agreements of each party to this Agreement shall be binding upon,
and any action for a breach thereof may be brought against, such party and its
respective heirs, successors and assigns.
12.3 Severability. The invalidity, illegality or
unenforceability of one or more of the provisions of this Agreement in any
jurisdiction shall not affect the validity, legality or enforceability of the
remainder of this Agreement in such jurisdiction or the validity, legality or
enforceability of this Agreement, including any such provision, in any other
jurisdiction, it being intended that all rights and obligations of the parties
hereunder shall be enforceable to the fullest extent permitted by law.
12.4 Amendment. This Agreement may be amended, modified or
supplemented only by a written instrument executed by or on behalf of each of
the parties hereto.
12.5 Entire Agreement. This Agreement supersedes all prior
discussions and agreements between the parties hereto with respect to the
subject matter hereof and contains the sole and entire agreement between the
parties hereto with respect to the subject matter hereof.
12.6 No Third Party Beneficiaries. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and
their respective successors and assigns, and it is not the intention of the
parties to confer, and no provision hereof shall confer, third party beneficiary
rights upon any other Person other than any Person entitled to indemnity under
Article VIII.
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12.7 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
12.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York.
12.9 Arbitration. The parties hereto agree to submit to
arbitration any and all matters in dispute or in controversy among them
concerning the terms and provisions of this Agreement (including, but not
limited to, claims for indemnification). All such disputes and controversies
shall be determined and adjudged by the decision of a sole arbitrator selected
by the American Arbitration Association (or any other mutually agreed upon body)
upon application made to it for such purpose by either party hereto. The
arbitration procedure shall take place in Seattle, Washington or such other
place as the arbitrator determines more appropriate, and shall reach and render
a decision in writing with respect to the amount, if any, of payment respecting
the disputed matter. Any award rendered shall be final and conclusive upon the
parties and a judgment thereon may be entered in the highest court of the forum,
state or federal, having jurisdiction. The expenses of the arbitration shall be
borne equally by the parties to the arbitration, provided that each party shall
pay for and bear the costs of their own experts, evidence and counsel's fees.
12.10 Remedies. In the event of a breach by any party to this
Agreement of its obligations under this Agreement, any party injured by such
breach, in addition to being entitled to exercise all rights granted by law,
including recovery of damages and costs (including reasonable attorneys' fees),
will be entitled to specific performance of its rights under this Agreement. The
parties agree that the provisions of this Agreement shall be specifically
enforceable, it being agreed by the parties that any remedy at law, including
monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense in any action for specific
performance that a remedy at law would be adequate is waived.
12.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto either individually or
by their duly authorized representatives have caused this Agreement to be
executed and delivered in their respective names as of the date and year first
above written.
SWISSRAY MEDICAL SYSTEMS, INC.
By: /s/ Ueli Laupper
-------------------------------------
Name: Ueli Laupper
Title: Director and Vice President
SERVICE SUPPORT GROUP LLC
By: /s/ Gary Durday
-------------------------------------
Name: Gary Durday
Title: President and CFO
GARY L. DURDAY
/s/ Gary Durday
----------------------------------------
MICHAEL E. HARLE
/s/ Michael Harle
----------------------------------------
KENNETH R. MONTLER
/s/ Kenneth Montler
----------------------------------------
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Exhibit 2.2
REGISTRATION RIGHTS AGREEMENT
by and among
SWISSRAY INTERNATIONAL, INC.,
SERVICE SUPPORT GROUP LLC,
GARY DURDAY,
MICHAEL HARLE
and
KENNETH MONTLER
Dated as of October 17, 1997
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT, dated as of October 17, 1997, by and
among SWISSRAY INTERNATIONAL, INC., a New York corporation (the "Company"),
Service Support Group, LLC, a limited liability company organized under the laws
of the State of Washington ("SSG"), Gary Durday ("Durday"), Michael Harle
("Harle") and Kenneth Montler ("Montler" and together with SSG, Durday and
Harle, the "Sellers").
WHEREAS, pursuant to an Asset Purchase Agreement, dated as of October
17, 1997 (the "Purchase Agreement"), by and among the Company and the Sellers,
the Company has agreed to purchase all of the assets of SSG.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, the parties hereto hereby agree as follows:
1. Definitions. Unless otherwise defined in context or the context
otherwise requires, capitalized terms used herein are defined below. Such terms
shall be applicable to both the singular and plural forms of any of the terms
herein defined.
"Affiliate" means any Person which directly or indirectly controls, is
controlled by, or is under common control with, the indicated Person.
"Commission" means the United States Securities and Exchange Commission
or any similar agency then having jurisdiction to enforce the Securities Act.
"Common Stock" means the common stock, par value $.01, of the Company,
or any other capital stock of the Company into which such stock may be
reclassified or reconstituted.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar statute of the United States of America, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time. Reference to a particular section of the Exchange Act shall include a
reference to the comparable section, if any, of any such similar statute of the
United States of America.
"Initiating Holder" has the meaning set forth in Section 3.1.
"Person" means a corporation, an association, a partnership, an
organization, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.
"Registrable Securities" means the 333,333 shares of Common Stock
issued to SSG pursuant to the Purchase Agreement. As to any particular
Registrable Securities, once issued, such securities shall cease to be
Registrable Securities when (a) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (b) they shall have been sold pursuant to Rule 144 (or successor
provision) promulgated under the Securities Act, (c)
<PAGE> 3
they shall have been otherwise transferred, new certificates for them not
bearing a legend restricting further transfer under the Securities Act shall
have been delivered by the Company and their subsequent public distribution in
the United States of America shall not require registration of them under the
Securities Act or (d) they shall have ceased to be outstanding.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with Section 3.1 hereof, including, without,
limitation, all registration, filing and National Association of Securities
Dealers, Inc. fees, all listing fees, all fees and expenses of complying with
securities or blue sky laws (including, without limitation, reasonable fees and
disbursements of counsel for the underwriters in connection with blue sky
qualifications of the Registrable Securities or proposed disposition thereof),
all word processing, duplicating and printing expenses, messenger and delivery
expenses, the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of "cold comfort" letters
required by or incident to such performance and compliance, any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities; provided, however, that Registration Expenses shall exclude, and the
sellers of the Registrable Securities being registered shall pay the
underwriting fees and underwriting discounts and commissions and transfer taxes
in respect of the Registrable Securities being registered.
"Requesting Holders" shall mean any Initiating Holder and any other
Seller who has requested to be included in any registration of Registrable
Securities to be effected pursuant to this Agreement.
"Rule 144" means Rule 144 promulgated under the Securities Act or any
similar federal rule under the Securities Act as shall be in effect at the time.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar statute of the United States of America, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.
References to a particular section of the Securities Act shall include a
reference to the comparable section, if any, of an, such similar statute of the
United States of America.
2. Shelf Registration. As soon as the Company becomes eligible to
register securities on Form S-3, the Company shall file with the Commission, at
the Company's expense, a "shelf" registration statement pursuant to Rule 415
under the Securities Act covering all Registrable Securities (the "Shelf
Registration Statement"). The Company shall keep the Shelf Registration
Statement continuously effective until the earliest to occur of (i) the sale or
other disposition of all Registrable Securities by the Sellers, (ii) the
exercise of the put option pursuant to Section 5.1 of the Purchase Agreement, or
(iii) April 16, 1999 (each, a "Termination Event"). Nothing herein shall
obligate the Company to incur or pay the fees and disbursements of underwriters
in connection with a distribution under the Shelf Registration Statement.
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<PAGE> 4
3. Registration Rights.
3.1 Demand Registration. Prior to the date the Company shall
have filed the Shelf Registration Statement and, in the event the Shelf
Registration Statement shall for any reason not have become or cease to be
effective, after such date but prior to the occurrence of a Termination Event,
Sellers representing at least 33% of the Registrable Securities then outstanding
("Initiating Holder") shall have the right (jointly or individually) to require
the Company to effect the registration under the Securities Act of all or part
of the Registrable Securities held by such Initiating Holder by delivering a
request therefor to the Company specifying the number of shares of Registrable
Securities and the intended method of distribution. Upon receipt of such notice,
the Company shall promptly give written notice of such requested registration to
all other Sellers and thereupon use its best efforts to effect the registration
under the Securities Act of the Registrable Securities which the Company has
been requested to register under the Securities Act by the Initiating Holder and
any other Sellers by written request given to the Company within 10 days after
the giving of notice by the Company; provided that the Company shall not be
required to effect more than three registrations of Registrable Securities
pursuant to this Section 3.1.
3.2 Incidental Registration.
(a) Right to Include Registrable Securities. If, at
any time during the Registration Period the Company proposes to register any of
its securities under the Securities Act by registration on Form S-1, S-2 or S-3
or any successor or similar form(s) (except registrations on such Forms or
similar form(s) solely for registration of securities in connection with an
employee benefit plan or dividend reinvestment plan or merger or consolidation
or other acquisition by the Company of capital, stock or assets), whether or not
for sale for its own account, it will, subject to Section 3.8 hereof, each such
time give prompt written notice to all holders of Registrable Securities of its
intention to do so and of such holders' rights under this Section 3.2. Upon the
written request of any such holder made as promptly as practicable and in any
event within 10 days after the receipt of any such notice from the Company,
which request shall specify the number of shares of Registrable Securities
intended to be disposed of by such Requesting Holder, the Company shall, subject
to Sections 3.6 and 3.8 hereof, use reasonable efforts to effect the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by the Requesting Holders. If at any
time after giving written notice of the Company's intention to register any
securities, and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination not to register and
shall be relieved of its obligation to register any Registrable Securities in
connection with such registration.
(b) Priority in Incidental Registrations.
Notwithstanding anything in paragraph (a) above to the contrary, if the managing
underwriter of any underwritten offering covered by paragraph (a), shall inform
the Company in writing of its belief that the number of Registrable Securities
requested to be included in such registration would materially and adversely
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<PAGE> 5
affect such offering, then the Company shall include in such registration, the
number of securities which the Company is so advised can be sold in (or during
the time of) such offering in the following order: (i) first, all securities
proposed by the Company to be sold for its own account, (ii) second, Registrable
Securities requested to be included in such registration pro rata among the
Requesting Holders on the basis of the percentage of the aggregate Registrable
Securities requested to be so included and (iii) third, all other securities of
the Company requested to be included in such registration by any person other
than a Requesting Holder.
3.3 Registration Procedures. If and whenever the Company is
required to effect the registration of any Registrable Securities under the
Securities Act as provided in Section 3.1, the Company shall as expeditiously as
possible:
(i) prepare and file with the Commission the
requisite registration statement to effect such registration and thereafter use
best efforts to cause such registration statement to become effective;
(ii) prepare and file with the Commission 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 to comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by such
registration statement for such period as shall be reasonably required for the
disposition of all of such Registrable Securities, provided, that such period
need not exceed 120 days;
(iii) furnish to each Requesting Holder, such number
of conformed copies of such registration statement and of each such amendment
and supplement thereto (in each case including all exhibits), such number of
copies of the prospectus contained in such registration statement (including
each preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as such Requesting
Holder may reasonably request;
(iv) use its best efforts to register or qualify all
Registrable Securities and other securities covered by such registration
statement under such other securities or Blue Sky laws of such States of the
United States of America where an exemption is not available and as sellers of
Registrable Securities covered by such registration statement shall reasonably
request, except that the Company shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in any jurisdiction
wherein it would not, but for the requirement of this paragraph (iv), be
obligated to be so qualified or to consent to general service of process in any
such jurisdiction;
(v) furnish to each Requesting Holder a signed
counterpart of an opinion of counsel for the Company; and
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<PAGE> 6
(vi) notify each Requesting Holder at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, upon discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, in the light of the circumstances under which they were
made, and at the request of any such Requesting Holder promptly prepare and
furnish to it a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered to any
purchaser of such securities, such prospectus shall not include an 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 not misleading in the
light of the circumstances under which they were made.
The Company may require each Requesting Holder to furnish the Company
such information regarding such Requesting Holder and the distribution of such
securities as the Company may from time to time reasonably request in writing.
The Company may exclude from such registration any Requesting Holder who fails
to timely provide such information.
Each holder of Registrable Securities agrees that upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 3.3(vi), such holder will forthwith discontinue such holder's
disposition of Registrable Securities pursuant to the registration statement
relating to such Registrable Securities until such holder's receipt of the
copies of the supplemented or amended prospectus contemplated by Section 3.3(vi)
and, if so directed by the Company, will deliver to the Company at the Company's
expense all copies, other than permanent file copies, then in such holder's
possession, of the prospectus relating to such Registrable Securities current at
the time of receipt of such notice.
3.4 Holdback Agreements. If any registration of Registrable
Securities hereunder shall be in connection with an underwritten public
offering, each holder of Registrable Securities agrees not to effect any public
or private sale or distribution and not to effect any such sale or distribution
of any other equity security of the Company or of any security convertible into
or exchangeable or exercisable for any equity security of' the Company (in each
case, other than as part of such underwritten public offering) during such
period of time as the managing underwriters retained by the Company, in their
business judgment, may request, provided that each holder of Registrable
Securities shall not be required to agree to any such "holdback" unless a
similar agreement is entered into with holders of all of the Company's equity
securities.
3.5 Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement and their respective
counsel and accountants the opportunity to participate in the preparation of
such registration statement, each prospectus included therein or filed with the
Commission and each amendment thereof or supplement thereto.
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<PAGE> 7
3.6 Limitations, Conditions and Qualifications to Obligations
under Registration Covenants. The obligations of the Company to use its best
efforts to cause the Registrable Securities to be registered under the
Securities Act is subject to the following limitations, conditions and
qualifications: In the event the Company determines to register securities in an
offering, whether pursuant to an underwritten public equity offering or an
acquisition, the Company, upon the advice of its underwriters, shall notify the
holders of Registrable Securities and may request that such holders refrain from
selling Registrable Securities under Rule 144 for a period of (A) up to 90 days
after the closing of the underwriter's public offering or acquisition or (B)
immediately upon the Company's decision to no longer pursue any such transaction
(the "Black Out Period").
3.7 Indemnification.
(a) Indemnification by the Company. In the event of
any registration of any securities of the Company under the Securities Act, the
Company will, and hereby does, indemnify and hold harmless, in the case of any
registration statement filed pursuant to Section 3.1 or 3.2 hereof, each
Requesting Holder, its directors, officers, partners, agents and affiliates and
each other Person who participates as an underwriter in the offering or sale of
such securities and each other Person, if any, who controls such Requesting
Holder or any such underwriter within the meaning of the Securities Act, insofar
as losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading, and the Company will
reimburse such Requesting Holder and each such director, officer, partner, agent
or affiliate, underwriter and controlling Person for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding; provided, that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus, amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company through an instrument executed by or on behalf of such
seller or underwriter, as the case may be, for use in the preparation thereof;
and provided, further, that the Company shall not be liable to any Person who
participates as an underwriter in the offering or sale of Registrable Securities
or any other Person, if any, who controls such underwriter within the meaning of
the Securities Act, in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of such Person's failure to send or give a copy of the final prospectus, as
the same may be then supplemented or amended, to the Person asserting an untrue
statement or
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<PAGE> 8
alleged untrue statement or omission or alleged omission at or prior to the
written confirmation of the sale of Registrable Securities to such Person if
such statement or omission was corrected in such final prospectus so long as
such final prospectus, and any amendments or supplements thereto, have been
furnished to such underwriter. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such seller or
any such director, officer, partner, agent or affiliate or controlling Person
and shall survive the transfer of such securities by such Requesting Holder.
(b) Indemnification by the Sellers. As a condition to
including any Registrable Securities in any registration statement, the Company
shall have received an undertaking satisfactory to it from the prospective
seller of such Registrable Securities to indemnify and hold harmless (in the
same manner and to the same extent as set forth in subdivision (a) of this
Section 3.7) the Company and its directors, officers, partners, agents and
affiliates, and each other person who participates as an underwriter in the
offering or sale of such Securities and each other person, if any, who controls
the Company within the meaning of the Securities Act, with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such seller for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Company or any such director, officer, partner, agent or affiliate
or controlling Person and shall survive the transfer of such securities by such
seller.
3.8 Limitations on Registrations of Registrable Securities.
The Company shall not be required to effect a particular registration of
Registrable Securities pursuant to Section 3.1 hereof if it shall deliver to the
holder or holders requesting such registration a written opinion of counsel to
the effect that the Registrable Securities requested by such holder to be so
registered may be sold in the U.S. public securities market without restriction
or registration under the Securities Act and any applicable state securities
laws. This limitation shall not affect any other Registrable Securities held by
such holder.
4. Rule 144. With a view to making available the benefits of certain
rules and regulations of the Commission which may at any time permit the sale of
the Registrable Securities to the public without registration, during such time
as the Company has a class of securities registered under the Exchange Act, the
Company agrees to use reasonable efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Exchange Act.
5. Amendments and Waivers. This Agreement may be amended with the
consent of the Company and the Company may take any action herein prohibited, or
omit to perform any act
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<PAGE> 9
herein required to be performed by it, only if the Company shall have obtained
the written consent to such amendment, action or omission to act of the
beneficial owner or owners of at least 50% of the Registrable Securities. Each
beneficial owner of any Registrable Securities at the time or thereafter
outstanding shall be bound by any consent authorized by this Section 5, whether
or not such Registrable Securities shall have been marked to indicate such
consent.
6. Notices. All notices, consents, requests, instructions, approvals
and other communications provided for herein shall be validly given, if in
writing and delivered personally, by confirmed telecopy or sent by registered or
certified mail or nationally recognized air courier service or overnight courier
service, postage prepaid:
(a) if to any Seller, addressed to each at such address as
each shall have furnished to the Company in writing;
(b) if to any other holder of Registrable Securities, at the
address that such holder of Registrable Securities shall have furnished to the
Company in writing or, until any such other holder of Registrable Securities so
furnishes to the Company an address, then to and at the address of the last
holder of Registrable Securities who has furnished an address to the Company;
and
(c) if to the Company, addressed to it at: Swissray
International Inc., Industriestrasse 6, 6285 Hitzkitch, Switzerland, Attn: Chief
Financial Officer, Telecopy: 011-4141-919-9067 or at such other address as the
Company shall have furnished to the Sellers in writing;
and each such notice, request, consent, instruction, approval and other
communication shall for all purposes of this Agreement be treated as being
effective or having been given when delivered, if delivered personally, or, if
sent by mail, at the time of its actual receipt, or if sent by telecopier, when
confirmed, or if sent by air courier, two (2) days after the same has been
deposited with such air courier or if sent by overnight courier, one (1) day
after the same has been deposited with such overnight courier.
7. Assignment; Calculation of Percentage Interests in Registrable
Securities.
(a) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and, with respect to the
Company, its legal representatives, successors and assigns.
(b) For purposes of this Agreement, all references to a
percentage of the Registrable Securities shall be calculated based upon the
number of Registrable Securities outstanding at the time such calculation is
made.
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<PAGE> 10
8. Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
10. Arbitration. The parties hereto agree to submit to arbitration any
and all matters in dispute or in controversy among them concerning the terms and
provisions of this Agreement (including, but not limited to, claims for
indemnification). All such disputes and controversies shall be determined and
adjudged by the decision of a sole arbitrator selected by the American
Arbitration Association (or any other mutually agreed upon body) upon
application made to it for such purpose by either party hereto. The arbitration
procedure shall take place in Seattle, Washington or such other place as the
arbitrator determines more appropriate, and shall reach and render a decision in
writing with respect to the amount, if any, of payment respecting the disputed
matter. Any award rendered shall be final and conclusive upon the parties and a
judgment thereon may be entered in the highest court of the forum, state or
federal, having jurisdiction. The expenses of the arbitration shall be borne
equally by the parties to the arbitration, provided that each party shall pay
for and bear the costs of their own experts, evidence and counsel's fees.
11. Recapitalization, etc. In the event that any capital stock or other
securities are issued in respect of, in exchange for or in substitution of any
Registrable Securities by reason of any reorganization, recapitalization,
reclassification, merger, consolidation, spin-off, partial or complete
liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the shares of Registrable Securities or any other
change in the Company's capital structure, appropriate adjustments shall be made
in this Agreement so as to fairly and equitably preserve, as far as practicable,
the original rights and obligations of the parties hereto under this Agreement.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together shall constitute one and the same instrument.
13. Successors and Assigns. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the parties hereto and their respective successors and assigns, whether so
expressed or not.
14. Entire Agreement. This Agreement supersedes all prior discussions
and agreements between the parties hereto with respect to the subject matter
hereof and contains the sole and entire agreement between the parties hereto
with respect to the subject matter hereof.
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<PAGE> 11
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above written.
SWISSRAY INTERNATIONAL INC.
By: /s/ Ruedi G. Laupper
--------------------
Name: Ruedi G. Laupper
Title: Chief Executive Officer
SERVICE SUPPORT GROUP, LLC
By: /s/ Gary Durday
---------------
Name: Gary Durday
Title: President and CFO
/s/ Gary Durday
---------------
Gary Durday
/s/ Michael Harle
-----------------
Michael Harle
/s/ Kenneth Montler
-------------------
Kenneth Montler
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<PAGE> 1
Exhibit 99.1
Press Release SSG
New York, October 21, 1997 - Swissray International, Inc. (NASDAQ: SRMI)
announced today that on October 17 it acquired substantially all of the assets
of Service Support Group, LLC located in Gig Harbor, Washington ("SSG"), for
approximately $600,000 in cash and 333,333 shares of common stock.
Service Support Group, LLC was founded in October of 1996 by Kenneth Montler,
Michael Harle and Gary Durday and has been in the business of selling and
servicing high-end medical radiology equipment on the West Coast. Together,
Kenneth Montler, Michael Harle and Gary Durday bring over 60 years of experience
within the diagnostic imaging business in the United States, in-depth knowledge
of the market and substantial managerial skills to Swissray. Prior to founding
SSG, Messrs. Montler and Harle held senior positions with Serviscope and Philips
Medical Systems in the United States. Mr. Durday was a founder and CEO of
Northwest Diagnostic Imaging Center Bremerton, Washington.
Under the terms of the agreement between Swissray and SSG, SSG has the right to
request registration of the stock received in the transaction. In addition, SSG
can put the stock back to Swissray at an exercise price of $4.50 per share
during the time period from June 30, 1998 to April 17, 1999. Each of Messrs.
Montler, Harle and Durday have entered into employment agreements with Swissray
for a term of 3 years.
Ruedi G. Laupper, Chairman of the Board and Chief Executive Officer of Swissray
said:
"I am very excited about the acquisition of SSG's business. It will help us to
gain access to the US market, which constitutes over 45% of the worldwide market
for X-ray equipment and related services and obviously is very important to us.
We needed a strong sales platform in the United States for our AddOn Multi
System, the world's first multifunctional direct digital X-ray system, for which
Section 510(k) clearance is pending with the FDA. With their longstanding
excellent reputation in the US medical imaging market and their outstanding
sales and leadership skills, I am convinced that we could not have found better
partners than Ken, Mike and Gary to help us achieve our ambitious goals."
On behalf of SSG, Kenneth Montler, who has been appointed Chief Executive
Officer of Swissray Medical Systems, Swissray's principal marketing arm in the
United States, said: "Mike, Gary and I are thrilled that we are now part of
Swissray's growing business. We are convinced that the direct digital AddOn
Multi-System is the breakthrough long awaited in the industry. There are all
these industry players out there talking about digital radiography and here is a
small Swiss company that just did it. I think the fact that Swissray developed a
functioning direct digital X-ray system in less than 5 years speaks for itself."
<PAGE> 2
When asked about the reasons for their decision to sell, Ken Montler said
: "We were very proud of SSG an the fact that it has developed into a successful
business in less than a year, but we knew that to be successful in the long run
we would need a partner which could provide us with state of the art equipment.
When we met Swissray and saw what the AddOn-Multi-System could do, we knew
instantly that this was a perfect match. They needed our marketing experience in
the United States and we had found a manufacturer with a very exciting product."
When asked whether or not the law suit commenced by Serviscope last week had any
impact on the transaction, Ruedi G. Laupper said: "No. SSG was hit with a
similar complaint by Serviscope 10 days ago, so we knew that something might
happen. Even before this lawsuit, the parties agreed that Swissray would not
assume any liability of this kind at SSG.I would like to stress that this law
suit does not concern our core business, which is the sale of X-ray equipment,
but rather the technology management business, in which we are not yet active
and which we view only as a supporting business in the future. But at least this
law suit shows that we are being taken seriously in the US industry. This is of
course very flattering for a company which has only begun to enter the US
market."
Asked about Swissray's future strategy in the United States, Ken Montler said:
"It is Swissray's strategy to offer its customers a complete package of
products, services and consulting in the field of radiology. As an equipment
manufacturer, the emphasis will be on products, primarily the AddOn-Multi-System
once it has received FDA clearance, PACS and networking and communications
products and directly related services.
Swissray Medical Systems will be the principal marketing aim for the
AddOn-Multi-System and future hardware products. It will also provide the
necessary after-sales support. Swissray Information Solutions, which is headed
by Michael Baker, will focus on PACS and information technology. As a third
pillar we intend to enter the capital planning and technology management market
with Swissray Healthcare. This effort will be headed by Mike Harle. In these
efforts we will be supported by Gary Durday as Chief Financial Officer of
Swissray's US subsidiaries".
Swissray International Inc. is an innovative developer of x-ray technology and
systems. The company is a pioneer of direct digital radiography (ddR) technology
and is becoming with its unique product line, AddOn-Multi-System, one of the
leader in digital x-ray systems.
For further information please contact:
Swissray International Inc., 200 East 32nd St., Suite 34B, New York, N.Y. 10016
Ueli Laupper, Vice President International Sales & Marketing: Tel. 212 545 0095
