SWISSRAY INTERNATIONAL, INC.
Proxy for 1999 Annual Meeting
This Proxy is Solicited by the Board of Directors
KNOW ALL MEN BY THESE PRESENTS that I (we), the undersigned
Stockholder(s) of SWISSRAY International, Inc. (the "Company"), do hereby
nominate, constitute and appoint Ruedi G. Laupper and Josef Laupper or either of
them (with full power to act alone), my (our) true and lawful attorney(s) with
full power of substitution, for me (us) and in my (our) name, place and stead to
vote all the Common Stock of said Company, standing in my (our) name on the
books on the record date, April __, 2000, at the Annual Meeting of its
Stockholders to be held at the Swissotel New York, The Drake, 440 Park Avenue,
New York, New York, on June __, 2000, at 3:00 p.m., local time, or at any
postponement or adjournments thereof, with all the powers the undersigned would
possess if personally present.
This Proxy, when properly executed, will be voted as directed below. In
the absence of any direction, the shares represented hereby will be voted for
the (a) election of the nominees listed, (b) ratification of the appointment of
the auditors, (c) approval of the proposal to ratify the issuance of restrictive
shares of Company Common Stock to its President in exchange for and in
consideration of cancellation of certain bonus provisions contained in
employment agreement, (d) approval of the proposal to ratify the issuance of
restrictive shares of Company Common Stock to certain of its employees as
partial consideration under recently enacted employment agreements and (e)
approval of the proposal to adopt the Company's 2000 Stock Option Plan.
[ ] Please mark your votes in this example.
1. Election of Directors, Election of the five nominees, Ruedi G. Laupper,
Josef Laupper, Dr. Erwin Zimmerli, Ueli Laupper and Dr. Sc. Dov Maor.
[ ] For All Nominees [ ] Withhold From All Nominees
The Board of Directors recommends a vote FOR the Nominees. If you do not wish
your shares voted FOR a particular nominee, draw a line through that person's
name above.
2. Approval of the appointment of Feldman Sherb Horowitz & Co., P.C., as
independent auditors of the Company for the fiscal year ending June 30,
2000.
[ ] For [ ] Against [ ] Abstain
The Board of Directors recommends a vote FOR approval.
3. Approval of the proposal to ratify the issuance of restrictive shares
of Company Common Stock to its President in exchange for and in
consideration of cancellation of certain bonus provisions contained in
employment agreement.
[ ] For [ ] Against [ ] Abstain
The Board of Directors recommends a vote FOR approval.
4. Approval of the proposal to ratify the issuance of restrictive shares
of Company Common Stock to certain of its employees as partial
consideration under recently enacted employment agreements.
[ ] For [ ] Against [ ] Abstain
The Board of Directors recommends a vote FOR approval.
5. Approval of the proposal to adopt the Company's 2000 Stock Option Plan.
[ ] For [ ] Against [ ] Abstain
The Board of Directors recommends a vote FOR approval.
6. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before such meeting or adjournment or
postponement thereof.
SIGNATURE(S) ________________________
------------------------
DATE ________________________________
NOTE: Please sign exactly as the name(s) appear hereon. Joint owners should
sign. When signing as attorney, executor, administrator, trustee, or
guardian, please give full title as such.
<PAGE>
SWISSRAY INTERNATIONAL, INC.
320 West 77th Street, Suite 1A
New York, New York 10024
April , 2000
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting (the
"Annual Meeting") of Stockholders of SWISSRAY International, Inc. (the
"Company"), which will be held at the Swissotel New York, The Drake, 440 Park
Avenue, New York, New York on Wednesday, June __, 2000, commencing at 3:00 p.m.
(local time). By attending the meeting, you will have an opportunity to hear a
report on the operations of your Company and to meet your directors and
executives. We look forward to greeting as many of our stockholders as are able
to be with us.
At the Annual Meeting, you will be asked to (1) elect five directors of
the Company to serve until the next Annual Meeting and until their successors
are duly elected and qualified; (2) ratify the Board of Directors' action of its
appointment of Feldman Sherb Horowitz & Co., P.C. as the Company's independent
public accountants for the fiscal year ending June 30, 2000; (3) consider and
act upon a proposal to ratify the issuance of restrictive shares of Company
Common Stock to its President in exchange for and in consideration of
cancellation of certain bonus provisions contained in employment agreement; (4)
consider and act upon the proposal to ratify the issuance of restrictive shares
of Company Common Stock to certain of its employees as partial consideration
under recently enacted employment contracts; (5) consider and act upon a
proposal to adopt the SWISSRAY International, Inc. 2000 Stock Option Plan; and
(6) transact such other business as may properly come before the meeting and any
adjournment thereof.
We hope you will find it convenient to attend the meeting in person.
Whether or not you expect to attend, to assure your representation at the
meeting and the presence of a quorum, please read the Proxy Statement, then
complete, date, sign and mail promptly the enclosed proxy card (the "Proxy"),
for which a return envelope is provided. No postage need be affixed to the Proxy
if it is mailed in the United States. After returning your Proxy, you may, of
course, vote in person on all matters brought before the meeting.
The Company's Annual Report to Stockholders for the fiscal year ended
June 30, 1999 (the "Annual Report") is being mailed to you together with the
enclosed proxy materials.
Yours sincerely,
Ruedi G. Laupper
Chairman of the Board,
Chief Executive Officer and President
<PAGE>
SWISSRAY INTERNATIONAL, INC.
320 West 77th Street, Suite 1A
New York, New York 10024
----------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On June __, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of SWISSRAY International, Inc., a New York corporation (the
"Company"), will be held at the Swissotel New York, The Drake, 440 Park Avenue,
New York, New York on Wednesday, June __, 2000, at 3:00 p.m. (local time) for
the purpose of considering and voting upon the following matters:
(1) To elect five directors of the Company to serve until the next
Annual Meeting and until their successors are duly elected and
qualified;
(2) To ratify the Board of Directors' action of its appointment of
Feldman Sherb Horowitz & Co., P.C. as the Company's independent
public accountants for the fiscal year ending June 30, 2000;
(3) To consider and act upon a proposal to ratify the issuance of
restrictive shares of Company Common Stock to its President in
exchange for and in consideration of cancellation of certain
provisions contained in employment agreement.
(4) To consider and act upon a proposal to ratify the issuance of
restrictive shares of Company Common Stock to certain of its
employees as partial consideration under recently enacted
employment agreements.
(5) To consider and act upon a proposal to adopt the SWISSRAY
International, Inc. 2000 Stock Option Plan; and
(6) To transact such other business as may properly come before the
meeting and any adjournment thereof.
The accompanying proxy is solicited by the Board of Directors of the
Company. A copy of the Company's Annual Report to Stockholders for the fiscal
year ended June 30, 1999, Proxy Statement and form of proxy are enclosed.
Only stockholders of record as of the close of business on April __,
2000 are entitled to notice of, and to vote at, the Annual Meeting and any
adjournment thereof. Such stockholders may vote in person or by proxy.
You are cordially invited to be present at the Annual Meeting. It is
important to you and the Company that your shares be voted at the Annual
Meeting.
By Order of the Board of Directors
Ruedi G. Laupper
Chairman of the Board,
Chief Executive Officer and President
April , 2000
IMPORTANT NOTICE:
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
URGED TO READ THE ATTACHED PROXY STATEMENT CAREFULLY AND THEN TO SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED STAMPED AND ADDRESSED ENVELOPE. AS
SET FORTH IN THE PROXY STATEMENT, THE GIVING OF THE PROXY WILL NOT AFFECT YOUR
RIGHT TO ATTEND AND TO VOTE AT THE ANNUAL MEETING.
<PAGE>
SWISSRAY INTERNATIONAL, INC.
------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON June __, 2000
This Proxy Statement and the accompanying form of proxy ("Proxy") are
being furnished to the stockholders of SWISSRAY International, Inc. , a New York
corporation (the "Company"), in connection with the solicitation of Proxies by
the Board of Directors of the Company for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at the Swissotel New York, The
Drake, 440 Park Avenue, New York, New York on Wednesday, June __, 2000, at 3:00
p.m. (local time) and at any adjournment thereof. Only stockholders of record as
of the close of business on April __, 2000 (the "Record Date") will be entitled
to notice of, and to vote at, the Annual Meeting.
This Proxy Statement and the accompanying Proxy, together with a copy
of the Company's Annual Report to Stockholders for the fiscal year ended June
30, 1999 (the "Annual Report"), are being sent or given to the stockholders on
or about April , 2000.
At the Annual Meeting, the Stockholders of the Company will be asked
to: (1) elect five directors of the Company to serve until the next Annual
Meeting and until their successors are duly elected and qualified; (2) ratify
the Board of Directors' action of its appointment of Feldman Sherb Horowitz &
Co., P.C. as the Company's independent public accountants for the fiscal year
ending June 30, 2000; (3) consider and act upon a proposal to ratify the
issuance of restrictive shares of Company Common Stock to its President in
exchange for and in consideration of cancellation of certain bonus provisions
contained in employment agreement; (4) consider and act upon the proposal to
ratify the issuance of restrictive shares of Company Common Stock to certain of
its employees as partial consideration under recently enacted employment
agreements; (5) consider and act upon a proposal to adopt the SWISSRAY
International, Inc. 2000 Stock Option Plan (the "Stock Option Plan"); and (6)
transact such other business as may properly come before the meeting and any
adjournments thereof.
Principal executive offices of the Company are located at Turbistrasse
25-27, CH-6280 Hochdorf, Switzerland and at 320 West 77th Street, Suite 1A, New
York, New York 10024. The Company's telephone number in Switzerland is
011-41-41-914-1200 and in the United States is 917-441-7841.
STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ACCOMPANYING
FORM OF PROXY AND RETURN IT PROMPTLY TO THE COMPANY IN THE ENCLOSED POSTAGE PAID
ENVELOPE.
GENERAL
Solicitation of Proxies
If the accompanying Proxy is properly executed and returned, the shares
represented thereby will be voted in accordance with the instructions specified
in the proxy. In the absence of instructions to the contrary, such shares will
be voted to (1) elect five directors to the Company to serve until the next
Annual Meeting and until their successors are duly elected and qualified; (2)
ratify the appointment of Feldman Sherb Horowitz & Co., P.C. as the Company's
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<PAGE>
independent public accountants for the fiscal year ending June 30, 2000; (3)
ratify the issuance of restrictive shares of Company Common Stock to its
President in exchange for and in consideration of cancellation of certain bonus
provisions contained in employment agreement; (4) ratify the issuance of
restrictive shares of Company Common Stock to certain of its employees as
partial consideration under recently enacted employment agreements; (5) adopt
the SWISSRAY International, Inc. 2000 Stock Option Plan; and (6) transact such
other business as may properly come before the Annual Meeting and any
adjournment thereof. The Board of Directors does not currently intend to bring
any other matters before the Annual Meeting and is not aware of any matters that
will come before the Annual Meeting other than as described herein. In the
absence of instructions to the contrary, however, it is the intention of each of
the persons named in the accompanying proxy to vote all properly executed
Proxies on behalf of the stockholders they represent in accordance with their
discretion with respect to any such other matters properly coming before the
Annual Meeting. The expenses with respect to this solicitation of Proxies will
be paid by the Company.
Revocation of Proxies
Any stockholder may revoke such stockholder's Proxy at any time prior
to the voting thereof on any matter (without, however, affecting any vote taken
prior to such revocation). A Proxy may be revoked by written notice of
revocation received prior to the Annual Meeting, by attending the Annual Meeting
and voting in person or by submitting a signed proxy bearing a subsequent date.
A written notice revoking a previously executed Proxy should be sent to the
Company at 320 West 77th Street, Suite 1A, New York, New York 10024, Attention:
Secretary. Attendance at the Annual Meeting will not in and of itself constitute
a revocation of a Proxy.
Voting Securities and Beneficial Ownership
Only holders of record of the Common Stock of the Company as of the
close of business on the Record Date will be entitled to vote at the Annual
Meeting. Each share of Common Stock entitles the registered holder thereof to
one vote on each matter to come before the Annual Meeting. As of the close of
business on April __, 2000, there were __________ shares of the Common Stock
outstanding.
The presence, in person or by proxy, of stockholders entitled to cast a
majority of all votes entitled to be cast at the Annual Meeting will constitute
a quorum. Each outstanding share is entitled to one vote at the meeting for all
items set forth in the Notice and Proxy. Cumulative voting for the nominees for
directors is not permitted. Assuming a quorum, the nominees receiving a majority
of the votes cast at the Annual Meeting for the election of directors will be
elected as directors.
Ratification of Proposals 2, 3 and 4 as well as stockholder approval of
Proposal 5 each require the affirmative vote of a majority of the shares of
Common Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote.
Votes that are withheld will be counted for purposes of determining the
presence or absence of a quorum but will have no other effect. Abstention and
broker non-votes, if any, will similarly be counted for purposes of determining
the presence or absence of a quorum but will have no other effect on the vote.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of April __, 2000 (except where otherwise
noted) with respect to (a) each person known by the Registrant to be the
beneficial owner of more than five percent of the outstanding shares of Common
Stock, (b) each director of the Registrant, (c) the Registrant's executive
officers and (d) all officers and directors of the Registrant as a group. Except
as indicated in the footnotes to the table, all of such shares of Common Stock
are owned with sole voting and investment power. As of the date indicated above
Ruedi G. Laupper, President of the Registrant, has sole voting rights over
approximately __% of all outstanding shares. See footnotes 7 and 10 below. The
title of class of all securities indicated below is Common Stock with $.01 par
value per share.
<TABLE>
<CAPTION>
No. Of Shares Percentage of
Beneficially Shs. Beneficially
Name and Address of Beneficial Owner ^ Owned (1) Owned (1)
- ------------------------------------ ----------------------- ---------------------
<S> <C> <C>
Ruedi G. Laupper (2)(10) _________ _____%
c/o SWISSRAY International, Inc.
Turbistrasse 25-27
CH 6280 Hochdorf
Switzerland
Josef Laupper (3) _______ ___%
c/o SWISSRAY International, Inc.
Turbistrasse 25-27
CH 6280 Hochdorf
Switzerland
Erwin Zimmerli (4) _______ ____%
c/o SWISSRAY International, Inc.
Turbistrasse 25-27
CH 6280 Hochdorf
Switzerland
Ueli Laupper (11) _______ ____%
320 West 77th Street
New York, New York 10024
Dov Maor (13) ______ *
c/o SWISSRAY International, Inc.
Turbistrasse 25-27
CH 6280 Hochdorf
Switzerland
Michael Laupper (12) _______ *
c/o SWISSRAY International, Inc.
Turbistrasse 25-27
CH 6280 Hochdorf
Switzerland
Dominion Capital Fund, Ltd. ^ _________ (5) ____%
c/o Thomson Kernaghan & Co. Ltd.
365 Bay Street
Toronto, Ontario M5H 2V2
Canada
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Sovereign Partners LP ^ _________ (6) ____%
90 Grove Street - Suite 01
Ridgefield, New Jersey 06877
Liviakis Financial Communications, Inc. (LFC)^ 3,000,000 (7) _____%
495 Miller Avenue - 3rd Floor
Mill Valley, California 94914
Rolcan Finance Ltd. ^ 800,000 (8) ____%
Seestrasse 17
P.O. Box 53
CH 8702 Zollikon 2
Switzerland
Parkdale LLC (14) ________ (14) ____%
c/o Thomson Kernaghan & Co. Ltd.
365 Bay Street
Toronto, Ontario M5H 2V2
Canada
All directors and officers as
a group (six persons) _________ (9) _____%
</TABLE>
* Represents less than 1% of the _____ shares outstanding as of April __,
2000.
(1) Unless otherwise indicated, the Company believes that all persons named
in the table have sole voting and investment power with respect to all
shares of the Common Stock beneficially owned by them. A person is
deemed to be the beneficial owner of securities which may be acquired
by such person within 60 days from the date indicated above upon the
exercise of options, warrants or convertible securities. Each
beneficial owner's percentage ownership is determined by assuming that
options, warrants or convertible securities that are held by such
person (but not those held by any other person) and which are
exercisable within 60 days of the date indicated above, have been
exercised.
(2) Includes (i) 37,500 shares owned indirectly by Ruedi G. Laupper through
SR Medical Equipment Ltd., a corporation which is wholly owned by him;
(ii) 460,324 shares owned indirectly by Ruedi G. Laupper through
Tomlinson Holding Inc., a corporation which is wholly owned by him,
(iii) 12,000 shares which may be acquired upon exercise of immediately
exercisable options, which options are owned indirectly by Ruedi G.
Laupper through SR Medical Equipment Ltd., a corporation which is
wholly owned by him and (iv) an additional 156,250 shares which may be
acquired upon exercise of balance of immediately exercisable options
issued in October 1999.
(3) Includes 175,000 shares which may be acquired upon exercise of balance
of immediately exercisable options issued in October 1999.
(4) Includes 168,750 shares which may be acquired upon exercise of balance
of immediately exercisable options.
As of ^ April __, 2000, an aggregate principal outstanding balance
(exclusive of interest) for those Convertible Debentures referred to below
amounts to $__________. None of these convertible debentures are owned by
officers and/or directors of the Company.
(5) Includes _______ shares currently owned as well as up to _______ shares
which normally could be issued (inclusive of ______ shares as may be
issued for interest earned), at any time, upon conversion of previously
issued convertible debentures (the "Convertible Debentures"). The
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<PAGE>
person or persons having voting control are Livingstone Asset
Management Ltd., Navigator Management Ltd. (President) and David Sims
(director of Navigator) - British Virgin Islands.
(6) Includes _______ shares currently owned as well as up to _______ shares
which normally could be issued (inclusive of ______ shares as may be
issued for interest earned), at any time, upon conversion of previously
issued convertible debentures (the "Convertible Debentures"). The
person or persons having voting control are Southridge Capital
Management LLC, P.P., Steven Hicks (President) - Connecticut.
The foregoing information contained in footnotes 5 and 6 above assumes
conversion based on 18% - 20% discount from market (dependent upon debenture)
based upon the last reported sales price on April __, 2000. This number of
shares, if issued, would require disclosure of beneficial ownership of in excess
of 5%. However, pursuant to terms of Convertible Debentures, the holders thereof
may not beneficially own more than 4.99% of outstanding Company shares (other
than as a result of mandatory conversion provisions). The 4.99% limitation is
only contractual in nature. The 4.99% limitation does not apply and,
accordingly, would not limit beneficial ownership in any manner in the event
that (a) 50% or more of the Company is acquired, (b) the Company is merged into
another company or (c) a change of control occurs.
(7) Pursuant to written Agreement, the Registrant's President, Ruedi G.
Laupper, has sole voting rights with respect to these shares without
any limitation thereon so long as same are owned by LFC. LFC in turn
may not sell any of such shares for a period of one year subsequent to
commencement of ownership and then only in accordance and subject to
volume limitations imposed in accordance with the applicable provisions
of Rule 144 under the Securities Act of 1933.
(8) Roland Kaufmann, Managing Director and a control person of this firm
has voting control over these shares.
(9) Includes _______ shares issuable upon option exercise.
(10) When taking into account the number of shares owned beneficially by
Ruedi G. Laupper (_________) as well as those shares over which he
exercises voting control (as indicated in footnote 7
above) Ruedi G. Laupper exercises voting control over approximately __%
of all voting shares as of April __, 2000.
(11) Includes 193,750 shares which may be acquired upon exercise of balance
of immediately exercisable options issued in October 1999.
(12) Includes 100,000 shares which may be acquired upon exercise of balance
of immediately exercisable options issued in October 1999.
(13) Includes 31,250 shares which may be acquired upon exercise of
immediately exercisable options issued in October 1999.
(14) Includes ______ shares currently owned as well as up to _______ shares
which normally could be issued (inclusive of ______ shares as may be
issued for interest earned), at any time, upon conversion of previously
issued convertible debentures (the "Convertible Debentures").The person
or persons having voting control are Livingstone Asset Management Ltd.,
Navigator Management Ltd. (President) and David Sims (director of
Navigator) - British Virgin Islands.
As heretofore indicated the person or person having voting control over
Dominion Capital, Dominion Investment and Parkdale are Livingston Asset
Management Ltd., Navigator Management Ltd. (President) and David Sims (director
of Navigator) - British Virgin Islands. These persons or firms having voting
control do not own any Company shares of record but rather have been given the
right to vote by Dominion Capital, Dominion Investment and Parkdale with respect
to those shares owned by such entities. Accordingly, such persons and/or firms
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<PAGE>
exercise, in the aggregate, the right to vote over _________ shares owned in the
aggregate by Dominion Capital, Dominion Investment and Parkdale.
Restrictive Shares Issued in Accordance With Consulting Agreement
Consulting Agreement with Liviakis Financial Communications, Inc.
On March 29, 1999 the Company entered into a one year Consulting
Agreement ^ with Liviakis Financial Communications, Inc. ("LFC") In accordance
with the terms and conditions of the Consulting Agreement, the Consultant agreed
to provide certain specified consulting services in a diligent and thorough
manner in return for which and as full and complete compensation thereunder, the
Company is required to compensate the Consultant through its issuance and
delivery of 3,000,000 fully vested, and non-forfeitable shares of the Company's
restrictive common stock. As regards such shares of common stock, Consultant has
agreed that throughout the period of time that it retains beneficial ownership
of all or any portion of such shares that it shall (a) vote such shares in favor
of Ruedi G. Laupper continuing to maintain his current position(s) with the
Company and (b) give Ruedi G. Laupper and/or his designee the right to vote
Consultant's shares at all Company shareholder meetings. Notwithstanding the
fact that the March 29, 1999 agreement permitted the Company to extend same (for
an additional year) under the same terms and conditions excepting for annual
remuneration, the Company and LFC agreed to renegotiate remuneration. As a
result thereof the parties entered into a new one year "Consulting Agreement",
which Agreement is virtually identical to the initial Agreement (including but
not limited to voting rights on shares issued as referred to directly above)
excepting that the "Remuneration" section provides for the issuance of 490,000
fully vested non-forfeitable shares of the Company's common stock and further
provides for the issuance of 3,000 restrictive shares of Company common stock
per month throughout the period of Consultant's performance. Since both the
initial Agreement referred to above and the new Agreement entered into are
identical in all material respects excepting for the new compensation indicated,
such Consulting Agreements are hereinafter referred to collectively as
"Consulting Agreement". The foregoing does not purport to set forth each of the
terms and conditions of the aforesaid Consulting Agreement but rather is
designed to summarize what management considers to be pertinent portions
thereof.
In accordance with the terms of the aforementioned consulting
agreement, LFC has agreed that it will generally provide the following
consulting services: (a) advise and assist the Company in developing and
implementing appropriate plans and materials for presenting the Company and its
business plans, strategy and personnel to the financial community, establishing
an image for the Company in the financial community, and creating the foundation
for subsequent financial public relations efforts, (b) advise and assist the
Company in communicating appropriate information regarding its plans, strategy
and personnel to the financial community; (c) assist and advise the Company with
respect to its (i) stockholder and investor relations, (ii) relations with
brokers, dealers, analysts and other investment professionals, and (iii)
financial public relations generally, (d) perform the functions generally
assigned to investor/stockholder relations and public relations departments in
major corporations, (e) upon the Company's approval, (i) disseminate information
regarding the Company to shareholders, brokers, dealers, other investment
community professionals and the general investing public and (ii) conduct
meetings with brokers, dealers, analysts and other investment professionals to
advise them of the Company's plans, goals and activities and (f) otherwise
perform as the Company's financial relations and public relations consultant.
6
<PAGE>
The agreement further provides that in the event LFC introduces SRMI
(a) to a lender or equity purchaser, not already having a preexisting
relationship with SRMI, with whom SRMI ultimately finances or causes the
completion of such financing, SRMI shall compensate LFC for such services with a
"finder's fee" in the amount of 2.5% of total gross funding provided by such
lender or equity purchaser or (b) to an acquisition candidate, either directly
or indirectly through another intermediary, not already having a preexisting
relationship with SRMI, with whom SRMI ultimately acquires or causes the
completion of such acquisition, SRMI shall compensate LFC for such services with
a "finder's fee" in the amount of 2% of total gross consideration provided by
such acquisition. The compensation to LFC is to be payable in cash and is to be
paid in full at the time the financing or acquisition is closed. It is
specifically understood that LFC is not nor does it hold itself out to be a
Broker/Dealer, but is rather merely a "Finder" in reference to the Company
procuring financing sources and acquisition candidates.
LFC, founded in 1985 by John Liviakis, its President, is a full service
investor relations firm, providing services principally to micro through mid-cap
public companies listed on the Nasdaq, American, New York Stock and OTCBB
Exchanges. Such services include financial community and media relations,
editorial services and interactive communications, as well as administrative,
consulting and advisory services. The overall purpose of LFC is to enhance its
corporate clients' recognition in the financial community, the media and among
shareholders. In furtherance of its agreement with the Company and in addition
to and/or in conjunction with those consulting services referred to above and in
the consulting agreement between the parties, LFC has performed the following
services on behalf of the Company in its efforts to assist and advise the
Company with respect to its stockholder and investor relations as well as its
relations with brokers, dealers, analysts and other investment professionals.
Specifically LFC has performed the following services:
1) pro-actively soliciting sponsorship for the Company's common stock from
stockholders, institutions, and analysts;
2) accepting incoming investor calls from brokers, shareholders and financial
institutions;
3) assisting the Company in packaging its investor relations materials;
4) assisting the Company in the writing and dissemination of its press releases;
5) assisting the Company in media relations; and
6) generally advising the Company, upon request, on matters of a corporate
financial nature.
Additionally, LFC has introduced the Company and subsequently entered
into an investment banking relationship with Raymond James & Associates in order
to assist the Company in evaluating strategic alternatives including, but not
limited to, identifying proposals from potential suitors or strategic partners
as well as supporting the Company's financing requirements.
Consulting Agreement with Rolcan Finance Ltd.
Additionally, on March 29, 1999 the Company entered into a five year
Consulting Agreement with Rolcan Finance Ltd. ("Rolcan"), pursuant to which
Rolcan agreed to provide certain business and consulting services outside the
United States and in return for which the Company became obligated to issue as
full and complete compensation thereunder, 800,000 fully vested, and
non-forfeitable restrictive shares of its common stock.
In accordance with terms of aforementioned consulting agreement, Rolcan
has agreed to facilitate the endeavors of the Company's medium and long term
7
<PAGE>
business plans through services, including but not limited to, introducing
Company management (i) to potential financial partners, financial brokers, and
assist in developing market awareness within the financial community with an
emphasis upon introductions to offshore investors in Europe, the Middle East and
the Far East and to the extent practicable assisting the Company in having its
stock listed on various European exchanges and (ii) continuing to discuss
Company financial requirements and types of financing which may be available
and/or appropriate under then existing circumstances.
Rolcan has advised that it is currently continuing to conduct due
diligence activities with respect to locating international banking enterprises
on behalf of the Company with a view towards obtaining financial backing in
areas of lines of credit, equipment leasing, receivable and inventory financing
and areas of a similar nature. Such efforts if successful, are intended to
alleviate cash flow difficulties that may arise as a result of substantial and
significant increase in the Company's business activities (and most specifically
in its recent major increase in contracting for the sale of 32 of its
ddRMulti-Systems to Romania. Rolcan, established in 1993 by its Managing
Director and control stockholder, Roland Kaufmann, is a business consulting firm
primarily engaged in the types of activities enumerated above with its principal
activities being conducted outside the U.S.
The issuance of the above referenced restrictive shares to LFC and
Rolcan was based upon the then bid price of $0.375 per share as quoted on the
date (March 22, 1999) that the parties each agreed to the terms and conditions
of their respective Consulting Agreements, notwithstanding the fact that when
such binding oral agreements were reduced to writing and executed on March 29,
1999 the closing bid price had risen to $0.906 per share. The factors considered
by the Company's Board in determining the 33% discount from the bid price of
$.375 per share when issuing the above reference shares to LFC and Rolcan was
based upon the Board's determination that there is a substantial and significant
difference between the valuation of free trading securities and restricted
shares. The principal differences considered relate to the facts that (a)
restricted shares may not be sold in the open market and (b) restrictive legend
appearing on such restricted shares may not be removed for a period of at least
one year absent registration and then only in accordance with Rule 144 (assuming
the Company continues to meet necessary reporting requirements for utilization
of Rule 144). The Board further considered the fact that even if the above
referenced Rule 144 requirements were met the holder of restricted shares
remained subject to specific volume limitations (usually 1% of outstanding
common stock) with respect to sales made within a 3 month period subsequent to 1
year holding period. In addition to all of the above, the Board also considered
the fact that the Company's shares have had a history of substantial and
significant volatility.
The foregoing summarizes certain pertinent terms and conditions
contained in the Agreements entered into by the Company with LFC and Rolcan but
does not purport to be a complete summary of such Agreements. Copies of such
Agreements are filed with the SEC in the Company's Form S-1 Registration
Statement under SEC file number 333-59829. Accordingly, further information may
be obtained through the Commission's World Wide Web site utilized for Issuers
(such as the Company) that file electronically with the Commission. The address
of such site is http:\\www.sec.gov.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The directors are elected annually by the stockholders of the Company.
The By-laws of the Company provide that the number of directors shall be no less
than three or more than seven unless and until otherwise determined by vote of a
majority of the entire Board of Directors. In accordance therewith, a total of
8
<PAGE>
five persons have been designated by the Board of Directors as nominees for
election at the Annual Meeting and are being presented to the stockholders for
election. The directors to be elected at the Annual Meeting shall be determined
by a majority vote of the shares present in person or by proxy, entitled to vote
at the Annual Meeting.
The By-Laws of the Company permit the Board of Directors by a majority
vote, between annual meetings of the stockholders, to increase the number of
directors and to appoint qualified persons to fill the vacancies created
thereby.
The persons named below are being proposed as nominees for election as
directors for the term expiring at the next annual meeting currently intended to
be held in late 2000, and until their successors are elected and qualify. Each
nominee is currently a director of the Company. The persons named in the
enclosed proxy intend to vote for such nominees for election as directors, but
if the nominees should be unable to serve, proxies will be voted for such
substitute nominees as shall be designated by the Board of Directors to replace
such nominees. It is believed that each nominee will be available for election.
The names of the nominees for election and certain information as to each of
them are as follows:
<TABLE>
<CAPTION>
Principal Occuption
During Past Five Number of Common Percentage
Years Or More and Director Shares Benefically of Shares
NAME BIRTH OTHER DIRECTORSHIPS SINCE OWNED ON 04//00 OUTSTANDING
- ----------------- -------- ------------------- -------- ----------------- -----------
<S> <C> <C> <C> <C> <C>
Ruedi G. Laupper 4-22-50 See below 1995 (a) 15.59%
Josef Laupper 7-22-45 See below 1995 (a) * %
Dr. Erwin Zimmerli 7-22-47 See below 1995 (a) * %
Ueli Laupper 4-04-70 See below 1997 (a) -- %
Dr. Sc. Dov Maor 12-06-46 See below 1998 (a) -- %
</TABLE>
(a) The information under this caption regarding ownership of securities is
based upon statements by the individual nominees, directors, and officers as
reported and reflected hereinabove under the section entitled "Security
Ownership of Certain Beneficial Owners and Management".
* Represents less than 1% of the __________ shares outstanding as of April __,
2000.
INFORMATION CONCERNING NOMINEES FOR DIRECTOR
Nominees
The following information is submitted concerning the nominees for
election as directors:
Ruedi G. Laupper has been President, Chief Executive Officer and a
director of the Registrant since May 1995 and Chairman of the Board of Directors
since March 1997. In addition, he is Chairman of the Board of Directors and
President of the Company's principal operating subsidiaries. Ruedi G. Laupper is
the founder of the predecessors of the Company and was Chief Executive Officer
of SR Medical AG from its inception in June 1988 until May 1995. He has
approximately 23 years of experience in the field of radiology. Ruedi G. Laupper
is the brother of Josef Laupper and the father of Ueli and Michael Laupper.
9
<PAGE>
Josef Laupper has been Secretary, Treasurer (until January 1998 and
recommencing January 1999) and a director of the Registrant since May 1995 (with
the exception of not having served as Secretary from December 23, 1997 to
February 23, 1998). He has held comparable positions with SR Medical Holding AG,
SR-Medical AG, and their respective predecessors since 1990. He is principally
in charge of the Company's administration. Josef Laupper has approximately 19
years of experience within the medical device business.
Ueli Laupper has overall Company responsibilities in the area of
international marketing and sales with approximately eight years of experience
within the international X-ray market. He has been a Vice President of the
Company since March 1997 and a director of the Registrant since March 1997. He
was Chief Executive Officer of SR Medical AG from July 1995 until June 30, 1997
having previously been employed by the Company from January 1993 to July 1995 as
Export Manager. Since the beginning of July 1998 he has been in charge of the
Company's U.S. operations and currently serves as CEO of both Swissray America
Inc. since its formation in September 1998 and Swissray Healthcare, Inc.
Dr. Erwin Zimmerli has been a director of the Registrant since May 1995
and, since March 1998, a member of the Registrant's Independent Audit Committee.
Since receiving his Ph.D. degree in law and economics from the University of St.
Gall, Switzerland in 1979, Dr. Zimmerli has served as head of the White Collar
Crime Department of the Zurich State Police (1980-86), as an expert of a Swiss
Parliamentary Commission for penal law and Lecturer at the Universities of St.
Gall and Zurich (1980-87), Vice President of an accounting firm (1987-1990) and
Executive Vice President of a multinational aviation company (1990-92). Since
1992 he has been actively engaged in various independent consulting capacities
primarily within the Swiss legal community.
Dr. Sc. Dov Maor, was appointed as a member of the Registrant's Board
of Directors and a member of its Independent Audit Committee effective March 26,
1998. Dr. Sc. Dov Maor currently holds the position of Vice President for
Technology with ELBIT Medical Imaging, Haifa. Dr. Sc. Dov Maor is well
experienced in the field of Nuclear Medicine and medical imaging and has been
employed for over 10 years in a leading position in Research & Development.
Additionally, he was working in conjunction with the Max Planck Institute for
Nuclear Physics in Heidelberg within his field of experience. In addition to his
technical knowledge, Dr. Sc. Dov Maor is experienced in the commercial sector of
the industry.
Vote Required for Approval
The five nominees receiving a majority of the votes cast at the Annual
Meeting for the election of directors will be elected as directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR EACH OF ITS NOMINEES TO THE BOARD OF DIRECTORS
Compensation of Directors
Directors of the Company receive $10,000 annually for serving as
directors except for Josef Laupper, who receives $12,000 and Ruedi G. Laupper,
the Chairman of the Board of Directors, who receives $15,000.
Board and Committee Meetings
12
<PAGE>
During the fiscal year which ended June 30, 1999, there were sixteen
meetings of the Board of Directors. Four of the five incumbent directors
attended all sixteen meetings of the Board while one incumbent director attended
fourteen meetings. The Board of Directors does not currently have a standing
nominating nor compensation committee or any committee or committees performing
similar functions. It established an independent audit committee effective as of
March 26, 1998. The Board of Directors has performed all of the functions that
might otherwise be performed by such committees (excepting for the aforesaid
independent audit committee).
The aforesaid independent audit committee was established so as to
comply with maintenance standards for the Nasdaq SmallCap Market, on which the
Company's Common Stock was quoted until delisting on October 26, 1998. For
certain information with respect to such delisting reference is herewith made to
the accompanying 1999 Annual Report to Stockholders and in particular to
subsection (d) to "Market Information" entitled "Recent NASDAQ Delisting".
EXECUTIVE OFFICERS
The executive officers of the Company are appointed by the Board of
Directors of the Company and serve at the discretion of the Board of Directors.
Information concerning each executive officer's age, position and certain other
information with respect to each executive officer can be found herein under the
section entitled "Election of Directors" excepting for information with respect
to Michael Laupper (who serves as a Company officer) which summarized
information is as follows:
Michael Laupper (27) assumed the position of Interim Chief Financial
Officer of the Company effective January 1, 1999, having previously worked in
conjunction with the Company's former CFO and has been the Company's CFO since
August 1999. Michael Laupper completed his commercial education in the chemical
industry in 1991 in Switzerland and has additionally completed studies in
finance and accounting (in the United States during 1996-97). He has served the
Company in various management positions at SR Management AG and SR Medical AG,
Company subsidiaries, since 1991 and prior to assuming his current position.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth certain information
for the years ended June 30, 1997, 1998 and 1999 concerning the cash and
non-cash compensation earned ^by or awarded to the Chief Executive Officer of
the Registrant, the three other most highly compensated executive officers of
the Registrant as of June 30, 1999 and the former Chairman of the Board of
Directors (the "Named Executive Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- --------------------------
Fiscal Other Annual Stock All Other
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- --------------------------- ---- -------- ----- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ruedi G. Laupper 1999 $194,121 $8,377 $ 755,000 (1)(8) --- ---
President and Chief Executive 1998 $173,587 $16,057$ 15,000 (1) --- ---
Officer, Chairman of the 1998 --- --- $1,122,973 (7) --- ---
Board of Directors 1997 $146,983 --- $ 15,000 (1) 12,000(5) ---
Josef Laupper 1999 $ 83,566 $6,494 $ 12,000 (1) --- ---
Secretary, Treasurer 1998 $ 94,669 --- $ 12,000 (1) --- ---
1997 $ 96,861 --- $ 12,000 (1) --- ---
Ueli Laupper 1999 $ 94,924 $7,077 $ 10,000 (1) --- ---
11
<PAGE>
Vice President International 1998 $ 95,685 --- $ 10,000 (1) --- ---
Sales (2) 1997 $ --- --- $ --- --- ---
Herbert Laubscher 1998 $ 79,244 --- $ --- --- ---
Chief Financial Officer (2)(3) 1997 $ --- --- $ --- --- ---
Ulrich R. Ernst (4) 1997 $ 96,979 --- $ 10,000 (1) --- ---
Erich A. Kalbermatter 1999 $153,439 --- $ --- --- ---
Chief Operating Officer (6) 1998 $ 33,652 --- $ --- --- ---
- --------------------
</TABLE>
(1) Fees for service on the Board of Directors of the Company.
(2) Compensation did not exceed $100,000 in any fiscal year.
(3) Herbert Laubscher joined the Company in August of 1996 and served as
Treasurer from January 1998 until his resignation effective December 31,
1998.
(4) Ulrich R. Ernst was Chairman of the Board of Directors from May 1995 until
March 18, 1997.
(5) The options, which were fully vested on date of grant (6/13/97), were
issued in exchange for services to the Company as Chairman of the Board of
Directors.
(6) Erich A. Kalbermatter joined the Company on April 14, 1998 and resigned in
February 1999.
(7) Compensation paid in equivalent of 48,259 post reverse split shares of
Common Stock for cancellation of Common Stock held by officer, as follows:
Ruedi G. Laupper, the Company's President, surrendered for cancellation an
aggregate of 1,608,635 shares of common stock owned by him in order for the
Company to meet its obligations with respect to various warrantees and
representations made by it regarding availability of a sufficient number of
authorized but unissued shares to timely meet convertible debenture
conversions and avoid Company default (regarding financings which occurred
in or about September 1996 and January 1997). By surrendering such shares
Ruedi G. Laupper lost his holding period under Rule 144 which at that point
would have entitled him to utilize Rule 144 every three months to sell such
restrictive shares (as free trading) subject to volume limitation imposed
by Rule 144. In exchange for losing such valuable right and once
stockholders had increased the number of authorized shares of Company
common stock at a Special Meeting called for such purposes, Mr. Laupper, as
previously agreed to, received a number of shares equal to 30% (48,259 post
reverse split shares) more than those previously canceled (creating a brand
new holding period for him for purposes of Rule 144 transactions).At the
time that the Company's President surrendered his aforesaid 1,608,635
shares for cancellation (to wit: March 7, 1997) the bid price of the
Company's common stock was $2.6875 while at the time that such individual
received the 48,259 post split shares referred to above (on June 30, 1997)
the bid price for the Company's common stock was $2.421875.
(8) Dollar value assigned to the 2,000,000 shares of Common Stock issued
for relinquishment of EBIT bonus based upon Board members agreement that
such price would be based upon 90% of bid price at the time proposal was
initially made, i.e., 90% of $0.50 bid price on March 12, 1999.
12
<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
With respect to the Named Executive Officers there was no granting of
stock options under any of the Company's Stock Option Plans (the "Plans") during
the fiscal year ended June 30, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES (1)
NUMBER OF
VALE OF UNEXERCISED SECURITIES UNDERLYING
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
NAME AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
(A) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
------------------ ------------------------- -------------------------
Ruedi G. Laupper 12,000/0(3) $1.79/0
Josef Laupper(4) 0/0 0/0
Ueli Laupper(4) 0/0 0/0
Herbert Laubscher(4) 0/0 0/0
Ulrich R. Ernst(4)(5) 0/0 0/0
(1) No options were exercised by a Named Executive Officer during the
fiscal year ended June 30, 1997 and 1998.
(2) Options are in-the-money if the fair market value of the underlying
securities exceeds the exercise price of the option.
(3) Includes 12,000 options which are owned indirectly by Mr. Laupper
through SR Medical Equipment Ltd., a corporation which is wholly owned
by Mr. Laupper.
(4) These individuals own no stock options of the Registrant.
(5) Mr. Ernst was Chairman of the Board of Directors from May 1995 until
March 18, 1997.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION included herein shall
not be incorporated by reference into any such filings.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Board of Directors, the members of which are Ruedi G. Laupper,
Josef Laupper, Ueli Laupper, Erwin Zimmerli and Dov Maor, has furnished the
following report on executive compensation:
To: The Stockholders of SWISSRAY International, Inc.
The Corporation's executive compensation is supervised by the Board of
Directors. Compensation paid to the Company's executive officers, including the
Company's President, Chief Executive Officer and Chairman of the Board of
Directors, is intended to reflect the responsibility associated with each
13
<PAGE>
executives position, the past performance of the specific executive and the
goals of management.
The Board's goal is to develop executive compensation policies and
programs which are consistent with, linked to, and supportive of the strategic
objectives of growing the Company's business and maximizing stockholder value. A
strong link should exist between executive compensation and management's ability
to maximize stockholder value.
The Board believes that, amongst other factors, continued revenue
growth as well as continued improvements in cash flows should be recognized in
considering compensation levels along with improvements in overall
effectiveness, productivity and return on investment.
Based salaries for executives are set at levels (where practicable and
where funds are available) which are intended to reflect the competitive
marketplace for companies that are of comparable size and complexity and would
be considered competitors in attracting and retaining quality executives. Where
time and effort devoted to work exceeds expectations and where insufficient
funds are available to adequately compensate therefore, the Company has issued
(as additional compensation) restrictive shares of its common stock to certain
of its personnel. See proposals 3 and 4 below which reflect such policy.
Salaries of the named officers are reviewed with an assessment made of each
executive's experience and performance. The employment agreements for Ruedi
Laupper, Josef Laupper, Ueli Laupper and Erich Kalbermatter set minimum salary
levels which attempt to adequately compensate executives with salaries that
commensurate with their abilities and comparable to those paid by competitors
within the industry but limited, to an extent, to Company capital available
therefore, without creating material cash flow difficulties.
The Board of Directors has no existing policy with respect to the
specific relationship of corporate performance to executive compensation.
Accordingly, Ruedi G. Laupper's compensation in fiscal 1998 was not specifically
tied to any measures of return on equity or earnings targets.
The foregoing report has been furnished by:
Ruedi G. Laupper
Joseph Laupper
Ueli Laupper
Erwin Zimmerli
Dov Maor
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total
shareholder return on the Company's Common Stock with the cumulative total
return (including reinvested dividends) of the Nasdaq Composite Index and the
Standard & Poor's 500 Index, for the period commencing June 1, 1995, when the
Company as registered under Section 12 of the Securities Exchange Act of 1934,
as amended, and the Company's Common Stock began publicly trading and ending
June 30, 1999. The graph is based on an initial investment of $100.
14
<PAGE>
Stock Performance Graph and Table
Comparison of Five-Year
Cumulative Total Returns Among
SWISSRAY International, Inc., Nasdaq Compsite Index
and S&P 500 Index
<TABLE>
<CAPTION>
SWISSRAY
Measurement Period International, Nasdaq Composite Standard & Poor's
(Fiscal Year Covered) Inc. Index 500 Index
<S> <C> <C> <C>
June 30, 1995 100.00 100.00 100.00
June 30, 1996 100.00 101.00 109.00
June 30, 1997 50.00 177.76 161.32
June 30, 1998 15.50 211.53 174.23
June 30, 1999 22.32 279.23 235.20
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company had no Compensation Committee during the last completed
fiscal year. The Corporation's executive compensation was supervised by all
members of the Company's Board of Directors and the following directors were
concurrently officers of the Company in the following capacities: Ruedi G.
Laupepr (Chairman of the Board of Directors, President and Chief Executive
Officer); Josef Laupper (Secretary and Treasurer and director) and Ueli Laupper
(Vice President and director). No executive officer of the Company served as a
member of the Board of Directors or compensation committee of any entity which
has one or more executive officers who serve on the Company's Board of
Directors.
The Company did not issue any shares of its Common Stock to any of its
officers during fiscal year ended June 30, 1999 excepting for the issuance of
2,000,000 restrictive shares to Ruedi G. Laupper in exchange for and in
consideration of cancellation of certain bonus provisions contained in
employment contract.
BENEFIT PLANS
The Swiss and German Subsidiaries, mandated by government regulations,
are required to contribute approximately five (5%) percent of eligible, as
defined, employees' salaries into a government pension plan. The subsidiaries
also contribute approximately five (5%) percent of eligible employee salaries
into a private pension plan. Total contributions charged to operations for the
years ended June 30, 1999, 1998 and 1997, were $509,959, $347,854 and $274,009,
respectively.
CERTAIN TRANSACTIONS
See paragraph 2 above under the heading "COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION" regarding issuance of 2,000,000
restrictive shares to the Company's President during fiscal year ended June 30,
1999. ^The Company's Board of Directors unanimously approved this transaction
with its President and Chairman, Ruedi G. Laupper, abstaining and the Board
considered such transaction to be as fair to the Company as could have been made
with unaffiliated parties.
Subsequent to June 30, 1999 year end 497,824 restrictive shares of
15
<PAGE>
Company common stock were issued to corporations controlled by the Company's
President in consideration of his pledging as collateral (and subsequently
forfeiting) shares of Company common stock owned by corporations controlled by
him in order to enable the Company to obtain financing.
PROPOSAL NO. 2 - PROPOSAL TO RATIFY THE BOARD OF DIRECTORS'
SELECTION OF FELDMAN SHERB HOROWITZ & CO., P.C. AS
INDEPENDENT AUDITORS FOR THE COMPANY
On November 6, 1998 the Board of Directors selected Feldman Sherb
Horowitz & Co., P.C. (formerly known as Feldman Sherb Ehrlich & Co., P.C.) as
the Company's auditors for the fiscal years ending June 30, 1998 and 1999 and is
submitting the selection to stockholders for ratification. Feldman Sherb
Horowitz & Co., PC. has audited the books, records and accounts of the Company
for the fiscal years ended June 30, 1998 and June 30, 1999. Representatives of
Feldman Sherb Horowitz & Co., P.C. are expected to attend the Annual Meeting,
will have the opportunity to make a statement if they so choose and will be
available to respond to appropriate questions.
Feldman Sherb Horowitz & Co., P.C. ("FSH") audited the books, records
and accounts of the Company for the fiscal year ended June 30, 1998 subsequent
to the Company's termination of its relationship with its prior auditors STG-
Coopers & Lybrand AG, which firm did not audit the Company's financial
statements prior to termination or otherwise. The decision to retain FSH was
approved by the Board of Directors.
During the two most recent fiscal years, and subsequent interim period,
if any, there were no disagreements with the former accountants (Bederson & Co.
LLP, who audited the Company's books and records for fiscal years ended June 30,
1996 and 1997) on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure which disagreements (if not
resolved to the satisfaction of the former accountants) would have caused them
to make reference in connection with their report to the subject matter of the
disagreements. The accountants' report on the financial statements of the
Company for each of the past two years did not contain any adverse opinion or
disclaimer of
16
<PAGE>
opinion and was not qualified or modified as to uncertainty or audit scope or
accounting principles.
During the two most recent fiscal years, and any subsequent interim
period neither the Company nor anyone on the Company's behalf consulted the
newly engaged accountants regarding either the application of accounting
principles to a specified transaction, either completed or proposed, or the type
of audit opinion that might be rendered on the Company`s financial statements.
Vote Required for Approval
Ratification of the selection of Feldman Sherb Horowitz & Co., P.C. as
independent public accountants will require the affirmative vote of a majority
of the shares of Common Stock present in person or represented by Proxy at the
Annual Meeting and entitled to vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF FELDMAN SHERB
HOROWITZ & CO., P.C. AS INDEPENDENT ACCOUNTANTS TO EXAMINE THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEAR
ENDED JUNE 30, 2000.
General information with respect to Proposals 3 and 4 below.
While there is no specific limitation on the number of restrictive
shares as may be issued for good and valuable consideration, a possible
exception to such statement may be found in one of NASDAQ's Marketplace Rules as
follows:
NASDAQ Marketplace Rule 4310(c)(25)(H)(i)(a) provides in part that
"Each Issuer shall require shareholder approval.." (a) when a stock option or
purchase plan is to be established or other arrangement made pursuant to which
stock may be acquired by officers or directors, except for warrants or rights
issued generally to security holders of the company or broadly based plans or
arrangements including other employees (e.g. ESOPS). In a case where the shares
are issued to a person not previously employed by the company, as an inducement
essential to the individual's entering into an employment contract with the
company, shareholder approval will generally not be required. The establishment
of a plan or arrangement under which the amount of securities which may be
issued does not exceed the lesser of 1 percent of the number of shares of Common
Stock, 1 percent of the voting power outstanding, or 25,000 shares, will not
generally require shareholder approval".
SRMI is not currently on NASDAQ (see 1999 Annual Report to Shareholders
and in particular subsection (d) to "Market Information" entitled "Recent NASDAQ
Delisting") but nevertheless wishes to obtain stockholders ratification
regarding its issuance of restrictive shares of its Common Stock in amounts
greater than 25,000 shares per person since NASDAQ may consider this issue for
companies who are reapplying for listing (on a case by case basis) absent
stockholder ratification of Proposals 3 and 4 below. The Board of Directors
shall review this matter and in its sole and absolute discretion, may
(notwithstanding failure to obtain stockholder ratification) permit the issuance
(or retention of shares issued as the case may be) of such number of shares (in
excess of 25,000) as it deems appropriate under the circumstances and on a case
by case basis.
In view of the aforementioned NASDAQ Marketplace Rule and the fact that
NASDAQ
17
<PAGE>
may consider issuance of restrictive shares of Company Common Stock referred to
below in Proposals 3 and 4 to be in excess of its guidelines, management of the
Company deems it to be in the Company's best interests to seek stockholder
ratification of the actions described in Proposals 3 and 4.
PROPOSAL NO. 3 - TO RATIFY THE ISSUANCE OF RESTRICTIVE SHARES OF
COMPANY COMMON STOCK TO ITS PRESIDENT IN EXCHANGE FOR AND IN
CONSIDERATION OF CANCELLATION OF CERTAIN BONUS PROVISIONS
CONTAINED IN EMPLOYMENT AGREEMENT
In accordance with Board of Directors resolutions adopted at a June 30,
1999 Special Meeting of the Company's Board (attended by the Company's
President, Ruedi G. Laupper, who absented himself from the meeting prior to vote
upon and adoption of resolutions), the Company's President's employment contract
which commenced December 18, 1997 was revised (as agreed to on March 12, 1999
and reaffirmed at the aforesaid June 30, 1999 Board meeting) to the extent that
2,000,000 shares of restrictive Common Stock were issued to him in exchange for
and in consideration of his agreeing to cancel certain bonus provisions in his
employment contract which otherwise would have entitled the Company's President
to receive 25% of all Company earnings before interest and taxes ("EBIT")
payable in shares of Company Common Stock during each year of such employment
contract, which contract expires December, 2007. The bid price for the Company's
common stock on March 12, 1999 and June 30, 1999 was $.50 and $2.625
respectively while the bid price on April , 2000 was $_____. Based ^upon such
bid price, valuation of the 2,000,000 restrictive shares issued to the Company's
President was $1,000,000, $5,250,000 and $__________ on March 12, 1999, June 30,
1999 and April , 2000 respectively.
At such Board meeting members expressed their consensus that while the
Company had not, as yet, had any earnings, that its business (after significant
and ongoing infusions of capital) had now reached the point where it was
expected that "breakeven" was reasonably foreseeable within the current fiscal
year and that it was further expected that in both the near term (i.e., within
the next two fiscal years) and long term (i.e., the period of time commencing
subsequent to the close of fiscal year ended June 30, 2002) that substantial and
significant earnings would be forthcoming as a result of its development of its
ddRMulti-System (and related products) and the industry's acceptance of same as
reflected by substantial sales increases and the then anticipated sale of a
significant number of its ddRMulti-Systems to the Government of Romania (which
sale has since occurred as a result of the Romanian Bidding Commission having
accepted the Company's tender as made to the Ministry of Health of the
Government of Romania resulting in the Company entering into a contract for the
sale of 32 of its ddRMulti-Systems with a valuation of in excess of
$13,800,000). The initial payment aggregating 15% of the aforesaid total gross
proceeds (i.e. a sum approximating $2,070,400) was received by the Company in
February 2000 with the further expectation that the Company will complete all
delivery requirements within its current fiscal year on or before June 30, 2000
and that pro rata payments of the 85% balance of the gross proceeds due under
such contract will be paid pro rata upon deliveries of Company ddRMulti-Systems.
The term "breakeven" as referred to above refers to earnings before
interest and taxes ("EBIT") being $0.
Based upon the above, Board members (on June 30, 1999) reaffirmed their
March 12,
18
<PAGE>
1999 agreement that it would be in the best interests of all parties concerned
(and especially Company stockholders) to eliminate the above referenced EBIT
provisions so that what might otherwise amount to significant earnings being
paid to the Company's President in stock (pursuant to the 25% of EBIT bonus
provisions) be replaced with a permanent one time solution. It was then resolved
and subsequently accepted by the Company's President that 2,000,000 restrictive
shares of the Company's Common Stock be issued to him in exchange for
cancellation of the above referenced 25% of EBIT bonus provisions and in
accordance with March 12, 1999 original agreement.
The following table sets forth total revenues, cost of sales, operating
expenses and certain other expenses (prior to interest and taxes) for each of
the last three fiscal years as well as for the six month period ended December
31, 1999.
Six Months
Ended Year Ended
December 31, June 30,
1999 1999 1998 1997
---- ---- ---- ----
(In thousands)
Total revenues ..................... 6,957 17,296 22,893 13,151
Cost of sales ...................... 5,333 13,529 18,082 8,445
------- ------- ------- -------
Gross profit ....................... 1,624 3,767 4,811 4,706
Selling, general
and administrative ................. 7,469 15,581 18,748 17,450
------- ------- ------- -------
Loss from continuing operations
(5,845) (11,814) (13,937) (12,744)
Other expenses (income)
(4,148) (40) 281 (319)
------- ------- ------- -------
Earnings before interst
and taxes ("EBIT") ................. (9,993) (11,774) (14,218) (12,425)
======= ======= ======= =======
The above referenced proposal was initially proposed to the Company's
President by its Board of Directors on March 12, 1999 and the key meeting with
respect to discussion thereon occurred on such date and was finalized and
reaffirmed at the Company's June 30, 1999 Board meeting (attended only by Board
members) wherein discussions were basically limited to those set forth above. At
such June 30, 1999 Board meeting, Board members again agreed that valuation
assigned to shares issued would reflect price at time of initial proposal made
on March 12, 1999 as previously agreed to. There were no offers or
counter-offers between the Company and its President but rather directors agreed
to and voted in favor of issuance of the above referenced 2,000,000 restrictive
shares and the Company's President (abstaining himself from such vote) agreed to
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such resolution.
In accordance with such resolution the above referenced 2,000,000
shares were issued to the Company's President. The Company now seeks stockholder
ratification as relates to such issuance. Absent such ratification the Board may
nevertheless determine to leave the agreement in effect, as is. Nevertheless,
such ratification is sought so as to insure compliance with the above referenced
NASDAQ Marketplace Rule 4310(c)(25)(H)(i)(a).
Officers and directors of the Company (excluding its President,
Ruedi G. Laupper) owning an aggregate of _______ shares of common stock as of
April __, 2000 have indicated their intent to vote in favor of this proposal.
Ruedi G. Laupper who owns an additional _________ shares (inclusive of the
2,000,000 restrictive shares which are the subject of this Proposal) will
abstain from voting on this proposal and has waived his voting rights over those
3,000,000 shares owned by LFC (which 3,000,000 shares approximate _____% of all
outstanding shares as of the record date) as relates to voting on this proposal
and so as to permit LFC to exercise its independent judgment with respect to
voting its 3,000,000 shares upon this matter. Management is not currently aware
of how LFC or any other stockholder (other than current officers and directors
of the Company) will vote as relates to this proposal.
Vote Required for Approval
Ratification of Proposal 3 will require the affirmative vote of a
majority of the shares of Common Stock present in person or represented by Proxy
at the Annual Meeting and entitled to vote.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THIS PROPOSAL
AND UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF THE ACTIONS HERETOFORE TAKEN BY THE COMPANY'S
BOARD OF DIRECTORS AS DESCRIBED DIRECTLY ABOVE.
PROPOSAL NO. 4 - TO RATIFY THE ISSUANCE OF RESTRICTIVE SHARES
OF COMPANY COMMON STOCK TO CERTAIN OF ITS EMPLOYEES
AS PARTIAL CONSIDERATION UNDER RECENTLY ENACTED
EMPLOYMENT CONTRACTS.
During October of 1999 and in accordance with unanimous Board approval
the Company entered into employment agreements with a number of its employees,
some of which employment agreements contained provisions for issuance of a
number of restrictive shares of Company Common Stock in excess of 25,000 shares
as partial consideration under the terms and conditions of such employment
agreements.
As of the record date - April __, 2000 - Ruedi G. Laupper, the
Company's President, has sole voting rights over approximately __% of all
outstanding shares. See footnotes 7 and 10 to "Security Ownership of Certain
Beneficial Owners and Management".
Six of such employment agreements provide for the issuance of in excess
of 25,000 restrictive shares of Company Common Stock while five of such
employment agreements (providing for the issuance of an aggregate of 850,000
shares) are with officers and/or directors of the Company, as follows:
21
<PAGE>
Ownership
Percentage After
Issuance
No. Of ------------------------
Name Position Shares (2) Shs. Percentage
- ---- ---------- ---------- --------- ----------
Ruedi G. Laupper Chairman, President & 275,000 _______ _____%
Principal Executive
Officer (1)
Josef Laupper Secretary, Treasurer 150,000 _______ _____%
& a Director (1)
Michael Laupper Chief Financial 150,000 _______ _____%
Officer, Controller
Ueli Laupper Vice President & a 250,000 _______ _____%
Director (1)
Erwin Zimmerli Director (1) 50,000 _______ _____%
(1) These four persons constitutes 80% of the Company's Board. The fifth
director is Dr. Sc. Dov Maor, an independent director. See Proposal No. 1,
subheading "Nominees".
(2) Immediately upon issuance of the 875,000 shares referred to herein,
officers and directors as a group would own _________ shares or
approximately __% of all outstanding shares as of the record date (after
adding such 875,000 shares to those outstanding as of the record date).
In light of above referenced NASDAQ Marketplace Rule 4310(c)(25)(H)(i)
(a)and the possible application of such rule to such issuance of shares, the
Board has determined to request stockholder ratification of its actions with
respect to this matter.
The Board fully believes that its actions in authorizing the issuance
of restrictive shares as partial compensation pursuant to employment agreements
is certainly justified in view of the past contributions made by the employee to
the Company and the expected continuation and anticipated future contributions
that such employee may make to the Company, especially in view of the equity
interest such employee now has in the Company's future.
The Board feels that the persons indicated above have earned such
compensation primarily by virtue of the fact that these persons (excepting Dr.
Erwin Zimmerli who primarily serves as an independent director) have been
working the equivalent to anywhere from 75 to 80 hours per week (and on weekends
where necessary) at cash compensation which the Board deems to be below that
which these persons could otherwise obtain (assuming cash availability) in this
industry. It should also be noted that with the exception of the Company's
President these other 4 individuals, as a group, only owned an aggregate of
50,000 shares of Company common stock or less than one-third of 1% of all
outstanding Company stock. Accordingly, the Board felt more than justified in
authorizing the issuance of the restrictive shares referred to herein.
It is possible that one or more officers or directors of the Company
may, in the future, receive material amounts of common stock as opposed to
regular monetary compensation. Accordingly, the potential for further
stockholder dilution exists notwithstanding the fact that neither the Company`s
officers nor any of its Directors have any current intention to issue material
amounts of common stock to officers or board members.
All officers and directors of the Company who own as a group _________
shares of Company common stock which amounts to _____% of the __________ shares
outstanding as of the record date of April __, 2000 have indicated that they
22
<PAGE>
will abstain from voting upon this proposal. Additionally, the Company's
President, Ruedi G. Laupper, has waived his voting rights over those 3,000,000
shares owned by LFC (which 3,000,000 shares approximate _____% of all
outstanding shares as of the record date) as relates to voting on this proposal
and so as to permit LFC to exercise its independent judgment with respect to its
voting upon this matter.
In the event that Proposal 4 is not ratified, the Board may
nevertheless determine to leave the employment agreements in effect as is.
Nevertheless, such ratification is sought so as to insure compliance with the
above referenced NASDAQ Marketplace Rule 4310(c)(25)(H)(i)(a).
Vote Required for Approval
Ratification of Proposal 4 will require the affirmative vote of a
majority of the shares of Common Stock present in person or represented by Proxy
at the Annual Meeting and entitled to vote.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THIS PROPOSAL
AND UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF THE ACTIONS HERETOFORE TAKEN BY THE COMPANY'S
BOARD OF DIRECTORS AS DESCRIBED DIRECTLY ABOVE.
PROPOSAL NO. 5 - APPROVAL OF THE SWISSRAY INTERNATIONAL, INC.
2000 STOCK OPTION PLAN
The Board of Directors in October 1999 adopted the Company's 2000
Non-Statutory Stock Option Plan so as to provide a critical long-term incentive
for employees, non-employee directors, consultants, attorneys and advisors of
the Company and its subsidiaries. The Board of Directors believes that the
Company's policy of granting stock options to such persons will continue to
provide it with a critical advantage in attracting and retaining qualified
candidates. In addition, the Stock Option Plan is intended to provide the
Company with maximum flexibility to compensate plan participants. It is expected
that such flexibility will be an integral part of the Company's policy to
encourage employees, non-employee directors, consultants, attorneys and advisors
to focus on the long-term growth of stockholder value. The Board of Directors
believes that important advantages to the Company are gained by an option
program such as the 2000 Non-Statutory Stock Option Plan which includes
incentives for motivating employees of the Company, while at the same time
promoting a closer identity of interest between employees, non-employee
directors, consultants, attorneys and advisors on the one hand, and the
stockholders on the other.
The principal terms of the Stock Option Plan are summarized below and a
copy of the Stock Option Plan is annexed to this Proxy Statement as Exhibit A.
The summary of the Stock Option Plan set forth below is not intended to be a
complete description thereof and such summary is qualified in its entirety by
the actual text of the Stock Option Plan to which reference is made.
Summary Description of the SWISSRAY International, Inc. 2000 Non-Statutory Stock
Option Plan
The purpose of the Non-Statutory Stock Option Plan ("Plan"), attached
23
<PAGE>
hereto as Exhibit A, is to provide directors, officers and employees of,
consultants, attorneys and advisors to the Company and its subsidiaries with
additional incentives by increasing their ownership interest in the Company.
Directors, officers and other employees of the Company and its subsidiaries are
eligible to participate in the Plan. Options in the form of Non-Statutory Stock
Options ("NSO") may also be granted to directors who are not employed by the
Company and consultants, attorneys and advisors to the Company providing
valuable services to the Company and its subsidiaries. In addition, individuals
who have agreed to become an employee of, director of or an attorney, consultant
or advisor to the Company and/or its subsidiaries are eligible for option
grants, conditional in each case on actual employment, directorship or attorney,
advisor and/or consultant status. The Plan provides for the issuance of NSO's
only, which are not intended to qualify as "incentive stock options" within the
meaning of Section 422 of the Internal Revenue Code, as amended.
The maximum number of options that may be granted under this Plan shall
be options to purchase 4,000,000 shares of Common Stock.
The Board of Directors of the Company or a Compensation Committee (once
established) will administer the Stock Option Plan with the discretion generally
to determine the terms of any option grant, including the number of option
shares, exercise price, term, vesting schedule and the post-termination exercise
period. Notwithstanding this discretion (i) the term of any option may not
exceed 10 years and (ii) an option will terminate as follows: (a) if such
termination is on account of termination of employment for any reason other than
death, without cause, such options shall terminate one year thereafter; (b) if
such termination is on account of death, such options shall terminate 15 months
thereafter; and (c) if such termination is for cause (as determined by the Board
of Directors and/or Compensation Committee), such options shall terminate
immediately. Unless otherwise determined by the Board of Directors or
Compensation Committee, the exercise price per share of Common Stock subject to
an option shall be equal to no less than 50% of the fair market value of the
Common Stock on the date such option is granted. No NSO shall be assignable or
otherwise transferable except by will or the laws of descent and distribution or
except as permitted in accordance with SEC Release No.33-7646 as effective April
7, 1999 and in particular that portion thereof which expands upon
transferability as is contained in Article III entitled "Transferable Options
and Proxy Reporting" as indicated in Section A 1 through 4 inclusive and Section
B thereof.
The Stock Option Plan may be amended, altered, suspended, discontinued
or terminated by the Board of Directors without further stockholder approval,
unless such approval is required by law or regulation or under the rules of the
stock exchange or automated quotation system on which the Common Stock is then
listed or quoted. Thus, stockholder approval wil not necessarily be required for
amendments which might increase the cost of the Stock Option Plan or broaden
eligibility except that no amendment or alteration to the Plan shall be made
without the approval of stockholders which would (a) increase the total number
of shares reserved for the purposes of the Plan or decrease the NSO price
(except as provided in paragraph 9 of the Plan) or change the classes of persons
eligible to participate in the Plan or (b) extend the NSO period or (c)
materially increase the benefits accruing to Plan participants or (d) materially
modify Plan participation eligibility requirements
23
<PAGE>
or (e) extend the expiration date of the Plan. Unless otherwise indicated the
Stock Option Plan will remain in effect until terminated by the Board of
Directors.
Federal Tax Consequences
The following is a brief description of the federal income tax
consequences generally arising with respect to options that may be granted under
the Stock Option Plan. This discussion is only intended for the information of
stockholders considering how to vote at the Annual Meeting, and not as tax
guidance to individuals who participate in the Stock Option Plan.
The grant of an option will create no tax consequences for the grantee
or the Company. Upon exercising a NSO, the participant must generally recognize
ordinary income equal to the difference between the exercise price and fair
market value of the freely transferable and non-forfeitable stock received. In
such case, the Company will be entitled to a deduction equal to the amount
recognized as ordinary income by the participant.
The participant's disposition of shares acquired upon the exercise of
an option generally will result in capital gain or loss measured by the
difference between the sale price and the participant's tax basis in such
shares.
Additionally, the following tax effects on Stock Option Plan
participation may be considered:
Tax Treatment to the Participants. The Stock Option Plan provides for
the grant of nonqualified stock options. A description of these options and
certain federal income tax aspects associated therewith is set forth below.
Because tax results may vary due to individual circumstances, each participant
in the Stock Option Plan is urged to consult his personal tax adviser with
respect to the tax consequences of the exercise of an option or the sale of
stock received upon the exercise thereof, especially with respect to the effect
of state tax laws.
Federal Income Tax Treatment of Nonqualified Stock Options. No income
is recognized by an optionee when a non-qualified stock option is granted.
Except as described below, upon exercise of a nonqualified stock option, an
optionee is treated as having received ordinary income at the time of exercise
in an amount equal to the difference between the option price paid and the then
fair market value of the Common Stock acquired. The Company is entitled to a
deduction at the same time and in a corresponding amount. The optionee's basis
in the Common Stock acquired upon exercise of a nonqualified stock option is
equal to the option price plus the amount of ordinary income recognized, and any
gain or loss thereafter recognized upon disposition of the Common Stock is
treated as capital gain or loss.
Stock acquired by "insiders' (i.e., officers, directors or persons
holding 10% or more of the stock of the Company who are subject to the
restrictions on short-swing trading imposed by Section 16(b) of the Securities
Exchange Act of 1934) upon exercise of nonqualified stock options constitutes
"restricted property" and, unless the optionee elects otherwise, the recognition
of income upon exercise is deferred to the date upon which the stock acquired
upon exercise may first be sold without incurring Section 16(b) liability
(generally six months after exercise). If such an optionee does not elect to
recognize income upon exercise, the insider will realize ordinary income in an
amount equal to the difference
25
<PAGE>
between the option price and the fair market value on the date the stock may
first be sold without incurring Section 16(b) liability.
Vote Required for Approval
The affirmative vote of a majority of the outstanding shares of the
Common Stock present in persons or represented by Proxy at the Annual Meeting
and entitled to vote is required to approve the adoption of the Stock Option
Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THE ADOPTION OF THE COMPANY'S 2000 STOCK OPTION PLAN
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
officers and persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission (the
"Commission"). Such persons are required by the Commission to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on its
review of the copies of Forms 3, 4 and 5 received by it, the Company believes
that, with the exception of those persons indicated below, all directors,
officers and 10% stockholders complied with such filing requirements.
According to the Company's records, the following filings appear not to
have been timely made: one initial statement of beneficial ownership on Form 3
and three statements of changes in beneficial ownership on Form 5 covering four
transactions (such Form 5 representing a delinquent Form 4) were not filed
timely by Ruedi G. Laupper; one initial statement of beneficial ownership was
not filed timely by Ueli Laupper; one initial statement of beneficial ownership
on Form 3 and two statements of changes in beneficial ownership on Form 5
covering two transactions (such Form 5 representing a delinquent Form 4) were
not filed timely by Tomlinson Holding, Inc.; one initial statement of beneficial
ownership on Form 3 was not filed timely by Josef Laupper; one initial statement
of beneficial ownership was not filed timely by Ulrich Ernst; one initial
statement of beneficial ownership was not filed timely by Berkshire Capital
Management and one initial statement of beneficial ownership and one statement
of changes in beneficial ownership on Form 5 covering one transaction (such Form
5 representing a delinquent Form 4) were not filed timely by Erwin Zimmerli.
OTHER BUSINESS
The Board of Directors does not know of any matters to be presented for
consideration at the Annual Meeting other than the matters described in the
Notice of Annual Meeting, but if other matters are presented, it is the
intention of the persons named in the accompanying Proxy to vote on such matters
in accordance with their judgment.
STOCKHOLDERS PROPOSALS AND NOMINATIONS FOR THE 1999
ANNUAL MEETING OF STOCKHOLDERS
The Company anticipates that the 2000 Annual Meeting will be held on or
about December 15, 2000 and that the proxy materials for the 2000 Annual Meeting
will be mailed
26
<PAGE>
on or before November 15, 2000. If any stockholder wishes a proposal to be
considered for inclusion in the 2000 Proxy Statement, this material must be
received by the Chief Executive Officer no later than September 13, 2000.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended June 30, 1999 is
being mailed on or about April , 2000, together with this Notice of Annual
Meeting of Shareholders, Proxy Statement and Proxy to each stockholder of record
on April __, 2000.
SOLICITATION OF PROXIES
The accompanying Proxy is solicited by the Board of Directors, and the
cost of such solicitation will be borne by the Company. Proxies may be solicited
by directors, officers and employees of the Company, none of whom will receive
any additional compensation for his or her services. Solicitation of Proxies may
be made personally or by mail, telephone, telegraph, facsimile or messenger. The
Company will pay persons holding shares of the Common Stock in their names or in
the names of nominees, but not owning such shares beneficially (such as
brokerage houses, banks and other fiduciaries) for the reasonable expense of
forwarding soliciting materials to their principals.
By Order of the Board of Directors
Ruedi G. Laupper
Chairman of the Board of Directors,
President and Chief Executive Officer
New York, New York
April , 2000
26
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EXHIBIT INDEX
Number Description
Exhibit A 2000 Non-Statutory Stock Option Plan
<PAGE>
Exhibit A
SWISSRAY International, Inc.
2000 NON-STATUTORY STOCK OPTION PLAN
1. Purpose of this Plan.
This Non-Statutory Stock Option Plan (the "Plan") is intended as an
employment incentive, to aid in attracting and retaining in the employ or
service of SWISSRAY International, Inc. (the "Company"), a New York corporation,
and any Affiliated Corporation, persons of experience and ability and whose
services are considered valuable, to encourage the sense of proprietorship in
such persons, and to stimulate the active interest of such persons in the
development and success of the Company. This Plan provides for the issuance of
non-statutory stock options ("NSOs" or "Options") which are not intended to
qualify as "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
2. Administration of this Plan.
The Company's Board of Directors ("Board") may appoint and maintain as
administrator of this Plan the Compensation Committee (the "Committee") of the
Board which shall consist of at least three members of the Board. Until such
time as the Committee is duly constituted, the Board itself shall have and
fulfill the duties herein allocated to the Committee. The Committee shall have
full power and authority to designate Plan participants, to determine the
provisions and terms of respective NSOs (which need not be identical as to
number of shares covered by any NSO, the method of exercise as related to
exercise in whole or in installments, or otherwise), including the NSO price,
and to interpret the provisions and supervise the administration of this Plan.
The Committee may, in its discretion, provide that certain NSOs not vest (that
is, become exercisable) until expiration of a certain period after issuance or
until other conditions are satisfied, so long as not contrary to this Plan.
A majority of the members of the Committee shall constitute a quorum.
All decisions and selections made by the Committee pursuant to this Plan's
provisions shall be made by a majority of its members. Any decision reduced to
writing and signed by all of the members shall be fully effective as if it had
been made by a majority at a meeting duly held. The Committee shall select one
of its members as its chairman and shall hold its meetings at such times and
places as it deems advisable. If at any time the Board shall consist of seven or
more members, then the Board may amend this Plan to provide that the Committee
shall consist only of Board members who shall not have been eligible to
participate in this Plan (or similar stock or stock option plan) of the Company
or its affiliates at any time within one year prior to appointment to the
Committee.
All NSOs granted under this Plan are subject to, and may not be
exercised before, the approval of this Plan by the holders of a majority of the
Company's outstanding shares, and if such approval is not obtained, all NSOs
previously granted shall be void. Each NSO shall be evidenced by a written
agreement containing terms and conditions established by the Committee
consistent with the provisions of this Plan.
3. Designation of Participants.
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<PAGE>
The persons eligible for participation in this Plan as recipients of
NSOs shall include full-time and part-time employees (as determined by the
Committee) and officers of the Company or of an Affiliated Corporation. In
addition, directors of the Company or any Affiliated Corporation who are not
employees of the Company or an Affiliated Corporation and any attorney,
consultant or other adviser to the Company or any Affiliated Corporation shall
be eligible to participate in this Plan. For all purposes of this Plan, any
director who is not also a common law employee and is granted an option under
this Plan shall be considered an "employee" until the effective date of the
director's resignation or removal from the Board of Directors, including removal
due to death or disability. The Committee shall have full power to designate,
from among eligible individuals, the persons to whom NSOs may be granted. A
person who has been granted an NSO hereunder may be granted an additional NSO or
NSOs, if the Committee shall so determine. The granting of an NSO shall not be
construed as a contract of employment or as entitling the recipient thereof to
any rights of continued employment.
4. Stock Reserved for this Plan.
Subject to adjustment as provided in Paragraph 9 below, a total of
4,000,000 shares of Common Stock ("Stock"), of the Company shall be subject to
this Plan. The Stock subject to this Plan shall consist of unissued shares or
previously issued shares reacquired and held by the Company or any Affiliated
Corporation, and such amount of shares shall be and is hereby reserved for sale
for such purpose. Any of such shares which may remain unsold and which are not
subject to outstanding NSOs at the termination of this Plan shall cease to be
reserved for the purpose of this Plan, but until termination of this Plan, the
Company shall at all times reserve a sufficient number of shares to meet the
requirements of this Plan. Should any NSO expire or be canceled prior to its
exercise in full, the unexercised shares theretofore subject to such NSO may
again be subjected to an NSO under this Plan.
5. Option Price.
The purchase price of each share of Stock placed under NSO shall not be
less than fifty percent (50%) of the fair market value of such share on the date
the NSO is granted. The fair market value of a share on a particular date shall
be deemed to be the average of either (i) the highest and lowest prices at which
shares were sold on the date of grant, if traded on a national securities
exchange, (ii) the high and low prices reported in the consolidated reporting
system, if traded on a "last sale reported" system, such as NASDAQ, or (iii) the
high bid and high asked price for over-the-counter securities. If no
transactions in the Stock occur on the date of grant, the fair market value
shall be determined as of the next earliest day for which reports or quotations
are available. If the common shares are not then quoted on any exchange or in
any quotation medium at the time the option is granted, then the Board of
Directors or Committee will use its discretion in selecting a good faith value
believed to represent fair market value based on factors then known to them. The
cash proceeds from the sale of Stock are to be added to the general funds of the
Company.
6. Exercise Period.
(a) The NSO exercise period shall be a term of not more than ten (10)
years from the date of granting of each NSO and shall automatically terminate:
(i) Upon termination of the optionee's employment with the
Company for cause;
2
<PAGE>
(ii) At the expiration of twelve (12) months from the date of
termination of the optionee's employment with the Company for any reason other
than death, without cause; provided, that if the optionee dies within such
twelve-month period, subclause (iii) below shall apply; or
(iii) At the expiration of fifteen (15) months after the date
of death of the optionee.
(b) "Employment with the Company" as used in this Plan shall include
employment with any Affiliated Corporation, and NSOs granted under this Plan
shall not be affected by an employee's transfer of employment among the Company
and any Parent or Subsidiary thereof. An optionee's employment with the Company
shall not be deemed interrupted or terminated by a bona fide leave of absence
(such as sabbatical leave or employment by the Government) duly approved,
military leave, maternity leave or sick leave.
7. Exercise of Options.
(a) The Committee, in granting NSOs, shall have discretion to determine
the terms upon which NSOs shall be exercisable, subject to applicable provisions
of this Plan. Once available for purchase, unpurchased shares of Stock shall
remain subject to purchase until the NSO expires or terminates in accordance
with Paragraph 6 above. Unless otherwise provided in the NSO, an NSO may be
exercised in whole or in part, one or more times, but no NSO may be exercised
for a fractional share of Stock.
(b) NSOs may be exercised solely by the optionee during his lifetime,
or after his death (with respect to the number of shares which the optionee
could have purchased at the time of death) by the person or persons entitled
thereto under the decedent's will or the laws of descent and distribution.
(c) The purchase price of the shares of Stock as to which an NSO is
exercised shall be paid in full at the time of exercise and no shares of Stock
shall be issued until full payment is made therefor. Payment shall be made
either (i) in cash, represented by bank or cashier's check, certified check or
money order (ii) in lieu of payment for bona fide services rendered, and such
services were not in connection with the offer or sale of securities in a
capital raising transaction, (iii) by delivering shares of the Company's Common
Stock which have been beneficially owned by the optionee, the optionee's spouse,
or both of them for a period of at least six (6) months prior to the time of
exercise (the "Delivered Stock") in a number equal to the number of shares of
Stock being purchased upon exercise of the NSO or (iv) by delivery of shares of
corporate stock which are freely tradeable without restriction and which are
part of a class of securities which has been listed for trading on the NASDAQ
system or a national securities exchange, with an aggregate fair market value
equal to or greater than the exercise price of the shares of Stock being
purchased under the NSO, or (v) a combination of cash, services, Delivered Stock
or other corporate shares. An NSO shall be deemed exercised when written notice
thereof, accompanied by the appropriate payment in full, is received by the
Company. No holder of an NSO shall be, or have any of the rights and privileges
of, a shareholder of the Company in respect of any shares of Stock purchasable
upon exercise of any part of an NSO unless and until certificates representing
such shares shall have been issued by the Company to him or her.
3
<PAGE>
8. Assignability.
No NSO shall be assignable or otherwise transferable (by the optionee
or otherwise) except by will or the laws of descent and distribution or except
as permitted in accordance with SEC Release No.33-7646 as effective April 7,
1999 and in particular that portion thereof which expands upon transferability
as is contained in Article III entitled "Transferable Options and Proxy
Reporting" as indicated in Section A 1 through 4 inclusive and Section B
thereof. No NSO shall be pledged or hypothecated in any manner, whether by
operation of law or otherwise, nor be subject to execution, attachment or
similar process.
9. Reorganizations and Recapitalizations of the Company.
(a) The existence of this Plan and NSOs granted hereunder shall not
affect in any way the right or power of the Company or its shareholders to make
or authorize any and all adjustments, recapitalizations, reorganizations or
other changes in the Company's capital structure or its business, or any merger
or consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stocks ahead of or affecting the Company's Common Stock or the
rights thereof, or the dissolution or liquidation of the Company, or any sale,
exchange or transfer of all or any part of its assets or business, or the other
corporation act or proceeding, whether of a similar character or otherwise.
(b) The shares of Stock with respect to which NSOs may be granted
hereunder are shares of the Common Stock of the Company as currently
constituted. If, and whenever, prior to delivery by the Company of all of the
shares of Stock which are subject to NSOs granted hereunder, the Company shall
effect a subdivision or consolidation of shares or other capital readjustment,
the payment of a Stock dividend, a stock split, combination of shares (reverse
stock split) or recapitalization or other increase or reduction of the number of
shares of the Common Stock outstanding without receiving compensation therefor
in money, services or property, then the number of shares of Stock available
under this Plan and the number of shares of Stock with respect to which NSOs
granted hereunder may thereafter be exercised shall (i) in the event of an
increase in the number of outstanding shares, be proportionately increased, and
the cash consideration payable per share shall be proportionately reduced; and
(ii) in the event of a reduction in the number of outstanding shares, be
proportionately reduced, and the cash consideration payable per share shall be
proportionately increased.
(c) If the Company is reorganized, merged, consolidated or party to a
plan of exchange with another corporation pursuant to which shareholders of the
Company receive any shares of stock or other securities, there shall be
substituted for the shares of Stock subject to the unexercised portions of
outstanding NSOs an appropriate number of shares of each class of stock or other
securities which were distributed to the shareholders of the Company in respect
of such shares of Stock in the case of a reorganization, merger, consolidation
or plan of exchange; provided, however, that all such NSOs may be canceled by
the Company as of the effective date of a reorganization, merger, consolidation,
plan of exchange, or any dissolution or liquidation of the Company, by giving
notice to each optionee or his personal representative of its intention to do so
and by permitting the purchase of all the shares subject to such outstanding
NSOs for a period of not less than thirty (30) days during the sixty (60) days
next preceding such effective date.
(d) Except as expressly provided above, the Company's issuance of
shares of Stock of any class, or securities convertible into shares of Stock of
any class, for cash or property, or for labor or services, either upon direct
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sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into shares of
Stock or other securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number of shares of Stock subject to NSOs
granted hereunder or the purchase price of such shares.
10. Purchase for Investment.
Unless the shares of Stock covered by this Plan have been registered
under the Securities Act of 1933, as amended, each person exercising an NSO
under this Plan may be required by the Company to give a representation in
writing that he is acquiring such shares for his own account for investment and
not with a view to, or for sale in connection with, the distribution of any part
thereof.
11. Effective Date and Expiration of this Plan.
This Plan shall be effective as of February 1, 1999 the date of its
adoption by the Board, subject to the approval of the Company's shareholders,
and no NSO shall be granted pursuant to this Plan after its expiration. This
Plan shall expire on February 1, 2009 except as to NSOs then outstanding, which
shall remain in effect until they have expired or been exercised.
12. Amendments or Termination.
The Board may amend, alter or discontinue this Plan at any time in such
respects as it shall deem advisable in order to conform to any change in any
other applicable law, or in order to comply with the provisions of any rule or
regulation of the Securities and Exchange Commission required to exempt this
Plan or any NSOs granted thereunder from the operation of Section 16(b) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), or in any other
respect not inconsistent with Section 16(b) of the Exchange Act; provided, that
no amendment or alteration shall be made which would impair the rights of any
participant under any NSO theretofore granted, without his consent (unless made
solely to conform such NSO to, and necessary because of, changes in the
foregoing laws, rules or regulations), and except that no amendment or
alteration shall be made without the approval of shareholders which would:
(a) Increase the total number of shares reserved for the purposes of
this Plan or decrease the NSO price provided for in Paragraph 5 (except as
provided in Paragraph 9), or change the classes of persons eligible to
participate in this Plan as provided in Paragraph 3; or
(b) Extend the NSO period provided for in Paragraph 6; or
(c) Materially increase the benefits accruing to participants
under this Plan; or
(d) Materially modify the requirements as to eligibility for
participation in this Plan; or
(e) Extend the expiration date of this Plan as set forth in
Paragraph 11.
13. Government Regulations.
This Plan, and the granting and exercise of NSOs hereunder, and the
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obligation of the Company to sell and deliver shares of Stock under such NSOs,
shall be subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may
be required.
14. Liability.
No member of the Board of Directors, the Committee or officers or
employees of the Company or any Affiliated Corporation shall be personally
liable for any action, omission or determination made in good faith in
connection with this Plan.
15. Miscellaneous.
(a) The term "Affiliated Corporation" used herein shall mean any Parent
or Subsidiary.
(b) The term "Parent" used herein shall mean any corporation owning 50
percent or more of the total combined voting stock of all classes of the Company
or of another corporation qualifying as a Parent within this definition.
(c) The term "Subsidiary" used herein shall mean any corporation more
than 50 percent of whose total combined voting stock of all classes is held by
the Company or by another corporation qualifying as a Subsidiary within this
definition.
16. Options in Substitution for Other Options.
The Committee may, in its sole discretion, at any time during the term
of this Plan, grant new options to an employee under this Plan or any other
stock option plan of the Company on the condition that such employee shall
surrender for cancellation one or more outstanding options which represent the
right to purchase (after giving effect to any previous partial exercise thereof)
a number of shares, in relation to the number of shares to be covered by the new
conditional grant hereunder, determined by the Committee. If the Committee shall
have so determined to grant such new options on such a conditional basis ("New
Conditional Options"), no such New Conditional Option shall become exercisable
in the absence of such employee's consent to the condition and surrender and
cancellation as appropriate. New Conditional Options shall be treated in all
respects under this Plan as newly granted options. Option may be granted under
this Plan from time to time in substitution for similar rights held by employees
of other corporations who are about to become employees of the Company or an
Affiliated Corporation, or the merger or consolidation of the employing
corporation with the Company or an Affiliated Corporation, or the acquisition by
the Company or an Affiliated Corporation of the assets of the employing
corporation, or the acquisition by the Company or an Affiliated Corporation of
stock of the employing corporation as the result of which it becomes an
Affiliated Corporation.
17. Withholding Taxes.
Pursuant to applicable federal and state laws, the Company may be
required to collect withholding taxes upon the exercise of a NSO. The Company
may require, as a condition to the exercise of a NSO, that the optionee
concurrently pay to the Company the entire amount or a portion of any taxes
which the Company is required to withhold by reason of such exercise, in such
amount as the Committee or the Company in its discretion may determine. In lieu
of part or all of any such payment, the optionee may elect to have the Company
withhold from the shares to be issued upon exercise of the option that number of
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shares having a Fair Market Value equal to the amount which the Company is
required to withhold.
18. Transferability in Accordance With Form S-8 as Amended and Effective
April 7, 1999.
Notwithstanding anything to the contrary as may be contained in this
Plan regarding rights as to transferability or lack thereof, all options granted
hereunder may and shall be transferable to the extent permitted in accordance
with SEC Release No. 33-7646 entitled "Registration of Securities on Form S-8"
as effective April 7, 1999 and in particular in accordance with that portion of
such Release which expands Form S-8 to include stock option exercsie by family
members so that the rules governing the use of Form S-8 (a) do not impede
legitimate intra family transfer of options and (b) may facilitate transfer for
estate planing purposes - all as more specifically defined in Article III,
Sections A and B thereto, the contents of which are herewith incorporated by
reference.
SWISSRAY International, Inc.
ATTEST:
By: Ruedi G. Laupper, President
By: Josef Laupper, Secretary
(SEAL)
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CERTIFICATION OF PLAN ADOPTION
I, the undersigned Secretary of this Corporation, hereby certify that
the foregoing 2000 Non-Statutory Stock Option Plan was duly approved by the
requisite number of holders of the issued and outstanding Common Stock of this
corporation as of Decenber , 1999.
Josef Laupper, Secretary
(SEAL)
<PAGE>
OPTION AGREEMENT
The undersigned hereby grants (pursuant to the SWISSRAY
International, Inc. 2000 Non-Statutory Stock Option Plan dated October 15, 1999
attached hereto) an option to purchase shares of SWISSRAY International, Inc.
(the Corporation").
Option Period. This option shall be for a period of ___ years from the date of
this Option Agreement ("Option Period").
Option Price. The option price shall be $ per share for an aggregate of $ if the
entire shares are purchased. The option price of the shares of Common Stock
shall be paid in full at the time of exercise and no shares of Common Stock
shall be issued until full payment is made therefor. Payment shall be made
either (i) in cash, represented by bank or cashier's check, certified check or
money order (ii) in lieu of payment for bona fide services rendered, and such
services were not in connection with the offer or sale of securities in a
capital-raising transaction, (iii) by delivering shares of the undersigned's
Common Stock which have been beneficially owned by the optionee, the optionee's
spouse, or both of them for a period of at least six (6) months prior to the
time of exercise (the "Delivered Stock") in a number equal to the number of
shares of Stock being purchased upon exercise of the Option or (iv) by delivery
of shares of corporate stock which are freely tradeable without restriction and
which are part of a class of securities which has been listed for trading on the
NASDAQ system or a national securities exchange, with an aggregate fair market
value equal to or greater than the exercise price of the shares of Stock being
purchased under the Option, or (v) a combination of cash, services, Delivered
Stock or other corporate shares.
Shareholder Rights. No holder of an Option shall be, or have any of the rights
and privileges of, a shareholder of the Corporation in respect of any shares of
Common Stock purchasable upon exercise of any part of an Option unless and until
certificates representing such shares shall have been issued by the Corporation
to him or her.
Determination of Exercise Date. This Option or a portion of this Option shall be
deemed exercised when written notice thereof, accompanied by the appropriate
payment in full, is received by the Corporation.
Date: ___________, 2000
SWISSRAY International, Inc.
By: Ruedi G. Laupper, President
By: Josef Laupper, Secretary
