Name Dated Amount Maturity Date
--------------------------------------- ------------ ---------- ---------------
Dominion Capital Fund Ltd.* Dec. 14, 1998 $ 540,400 MAR. 14, 1999
Sovereign Partners LP. Dec. 14, 1998 $ 540,000 MAR. 14, 1999
* This document has been filed.
PROMISSORY NOTE
$540,000.00 Hochdorf, Switzerland
December 14, 1998
FOR VALUE RECEIVED, the undersigned, SWISSRAY INTERNATIONAL, INC., a
New York corporation, (the "Borrower"), hereby promises to pay to the order of
SOVEREIGN PARTNERS LIMITED PARTNERSHIP (the "Lender"), the principal amount of
$540,000.00 in lawful money of the United States of America in same day or other
immediately available funds, together with interest at the rate hereinafter set
forth, payable on or before March 14, 1999.
Interest on the principal balance of this Note from time to time
outstanding and unpaid shall be computed on the basis of a 360-day year for the
actual number of days elapsed at a simple interest rate per annum equal to eight
percent (8%) commencing on December 14, 1998.
Principal and all accrued interest, at the rate of eight percent (8%)
per annum, shall be payable without the necessity for demand or notice on March
14, 1999. All payments of principal and interest shall be paid by wire transfer
per the written instructions of ▇▇▇▇▇▇. As further consideration for this loan,
▇▇▇▇▇▇▇▇ agrees to issue to Lender a Warrant to purchase 25,000 shares of the
Borrower's common stock, par value $0.01 per share, exercisable at the bid price
per share on date of closing for a period of five (5) years.
The Borrower, in ▇▇▇▇▇▇▇▇'s sole discretion, may extend the term of
this Note for an additional sixty (60) day period at an additional 2% interest
rate per annum. Borrower must send written notice of its election to extend the
term of this Note. Said written notice must be sent by facsimile pursuant to the
notice provisions of this Note, on or before March 12, 1999. Borrower shall not
be entitled to extend the term of this Note beyond May 13, 1999.
In the event the Promissory Note is not paid in full on or before its
due date, then in such event the terms of the Contingent Subscription Agreement,
Debenture and Registration Rights Agreement, which are incorporated herein by
reference and made a part hereof, shall apply and control.
The obligations of Borrower under this Note are secured under the
provisions of that certain Security Agreement dated December 14, 1998, by
the "Inventory" as that term is defined in the Security Agreement and by a
second mortgage on real estate owned by the Borrower and located in
Switzerland (the "Security"). The Security is being provided as an inducement
for Lender to enter into this loan transaction and so as to secure Lender
position in prior financings in
which Lender have been unable to convert their debentures into shares
of the Borrower's common stock due to NASDAQ delisting and absence of
established trading market. The Security shall remain in effect throughout the
term of this loan so long as any portion of the Borrower's indebtedness to
Lender continues in effect and such Security shall be reduced utilizing
the following formula:
A. Reducing the Borrower's indebtedness (evidenced by convertible debentures
aggregating $12,500,000: when such $12,500,000 indebtedness is reduced to
$10,000,000 then (i) 25% of secured inventory shall be released from lien and
(ii) 25% of second mortgage on land and building shall similarly be released
from lien.
B. For each further reduction of an additional $2,500,000 in Borrower's
indebtedness from $10,000,000 to $5,000,000 releases from lien shall be
accomplished on a pro-rata basis in the same manner as indicated in A above,
i.e., each $2,500,000 reduction in indebtedness shall result in release of 25%
of each lien amount: and
C. When indebtedness is reduced to $5,000,000 or less, then the second
mortgage on land and building shall be release in its entirety and inventory
collateral shall continue to be reduced on a pro-rata basis in the same manner
as indicated in paragraphs designated A. and B. above.
Borrower hereby waives presentment, protest, notice of protest and
notice of dishonor of this Note. The non-exercise by the Lender of any rights
hereunder in any particular instance shall not constitute a waiver thereof in
that or any other subsequent instance. The Borrower shall not create any class
of indebtedness that ranks senior to this Note.
Nothing contained herein shall be deemed to establish or require the
payment of a rate of interest in excess of the maximum rate permitted by
applicable law. In the event that the rate of interest required to be paid
hereunder exceeds the maximum rate permitted by such law, such rate shall
automatically be reduced to the maximum rate permitted by such law.
The Borrower and any endorsers hereof, for themselves and their
respective representatives, successors and assigns (except as specifically
provided in the Loan Agreement) expressly waive presentment, demand, protest,
notice of dishonor, notice of non-payment, notice of maturity, notice of
protest, diligence in collection, and the benefit of any applicable exemptions,
including, but not limited to, exemptions claimed under insolvency laws.
SECURED CREDITORS. Borrower represents and warrants that it does not have any
outstanding security interests in the inventory or real estate other than those
set forth in Schedule A attached hereto and made a part hereof and it shall not
create
or incur any indebtedness or obligation for borrowed money except for
indebtedness with respect to trade obligations and other normal accruals in the
ordinary course of business not yet due and payable, and shall not grant any
other security interests until payment and performance in full of the
obligations hereunder, unless ▇▇▇▇▇▇ otherwise consents in writing which consent
shall not be unreasonably withheld. Borrower represents, warrants and covenants
that the Collateral and proceeds are not subject to any security interest, lien,
prior assignment, or other encumbrance of any nature whatsoever except for the
security interest created by this Note other than as indicated in attached
Schedule A.
AFFIRMATIVE COVENANTS OF BORROWER. Borrower covenants and agrees that
from the date hereof until payment and performance in full of the obligations
hereunder, unless ▇▇▇▇▇▇ otherwise consents in writing:
(a) Use of Proceeds. The proceeds disbursed under the Note shall be
used primarily for working capital.
(b) Borrower represents and warrants that there are no actions, suits,
investigations or proceedings pending or threatened against or affecting the
validity or enforceability of this Note and there are no outstanding orders or
judgments of any court or governmental authority or awards of any arbitrator or
arbitration board against the Borrower excepting for such law suits or
proceedings as are indicated and summarized in Borrower's Form 10K for fiscal
year ended June 30, 1998.
DEFAULT. If any of the following events occur (a "default"), the terms of the
Contingent Subscription Agreement, Debenture and Registration Rights Agreement
which are incorporated herein by reference and made a part hereof, shall apply
and control:
(a) Borrower fails to pay when due any principal or interest under
this Note;
(b) Borrower fails to observe or perform any covenant or agreement
set forth in this Note or in any instrument, document or agreement concerning
the Collateral;
(c) ▇▇▇▇▇▇▇▇ makes a general assignment for the benefit of its
creditors, files or become the subject of a petition in bankruptcy, for an
arrangement with its creditors or for reorganization under any federal or state
bankruptcy or other insolvency law;
(d) Borrower files or becomes the subject of a petition for the
appointment of a receiver, custodian, trustee or liquidator of the party or of
all or substantially all of its assets under any federal or state bankruptcy or
other insolvency law;
(e) Borrower is voluntarily or involuntarily terminated or
dissolved;
(f) Borrower or any accommodation maker, endorser or guarantor enters
into any merger or consolidation, or sale, lease, liquidation or other
disposition of all or substantially all of its assets or any transaction outside
the ordinary course of its business or for less than fair consideration or
substantially equivalent value without Lender's prior written consent;
(g) Any judgment is entered against Borrower or any attachment upon or
garnishment of any property of Borrower is issued which materially effects
Borrower's ability to repay the Promissory Note; or
(h) Any representation or statement made herein or any other written
representation or statement made or furnished to Lender by Borrower was
materially incorrect or misleading at the time it was made or furnished.
LITIGATION.
(a) Forum Selection and Consent to Jurisdiction. Any litigation based
on or arising out of, under, or in connection with, this Promissory Note shall
be brought and maintained exclusively in the courts of Switzerland. The parties
hereby expressly and irrevocably submit to the jurisdiction of the state and
federal courts of Switzerland for the purpose of any such litigation as set
forth above and irrevocably agree to be bound by any final judgment rendered
thereby in connection with such litigation. The Borrower further irrevocably
consents to the service of process by registered mail, postage prepaid, or by
personal service within or without Switzerland. The Borrower hereby expressly
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may have or hereafter may have to the laying of venue of any such
litigation brought in any such court referred to above and any claim that any
such litigation has been brought in any inconvenient forum. To the extent that
the Borrower has or hereafter may acquire any immunity from jurisdiction of any
court or from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution or otherwise) with respect to
itself or its property, the Borrower hereby irrevocably waives such immunity in
respect of its obligations under this agreement and the other loan documents.
(b) Waiver of Jury Trial. The Lender and the Borrower hereby knowingly,
voluntarily and intentionally waive any rights they may have to a trial by jury
in respect of any litigation based hereon, or arising out of, under, or in
connection with, this agreement, or any course of conduct, course of dealing,
written statements or actions of the Lender or the Borrower. The Borrower
acknowledges and agrees that it has received full and sufficient consideration
for
this provision and that this provision is a material inducement for the Lender
entering into this agreement.
MISCELLANEOUS.
(a) All pronouns and any variations thereof used herein shall be deemed
to refer to the masculine, feminine, impersonal, singular or plural, as the
identity of the person or persons may require.
(b) Neither this Promissory Note nor any provision hereof shall be
waived, modified, changed, discharged, terminated, revoked or canceled, except
by an instrument in writing signed by the party effecting the same against whom
any change, discharge or termination is sought.
(c) Notices required or permitted to be given hereunder shall be
in writing and shall be deemed to be sufficiently given when personally
delivered or sent by registered mail, return receipt requested, addressed: (i)
if to the Borrower, c/o ▇▇▇▇ ▇. ▇▇▇▇▇, Esq. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ , ▇▇▇▇ ▇▇▇▇▇, ▇▇,
▇▇ ▇▇▇▇▇ with a facsimile copy sent on the dame date and (ii) if to Lender c/o
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
(d) This Promissory Note shall be enforced, governed and construed in
all respects in accordance with the laws of Switzerland, as such laws are
applied by Switzerland courts to agreements entered into, and to be performed
in, Switzerland by and between residents of Switzerland, and shall be binding
upon the undersigned, the undersigned's heirs, estate, legal representatives,
successors and assigns and shall inure to the benefit of the Lender, its
successors and assigns. If any provision of this Promissory Note is invalid or
unenforceable under any applicable statue or rule of law, then such provisions
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any
provision hereof that may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision hereof.
THE BORROWER ACKNOWLEDGES THAT THE TRANSACTIONS IN CONNECTION WITH
WHICH THIS NOTE WAS EXECUTED AND DELIVERED AND WHICH ARE CONTEMPLATED BY THE
TERMS OF THE AGREEMENT ARE, IN ALL CASES, COMMERCIAL TRANSACTIONS; AND THE
BORROWER HEREBY EXPRESSLY WAIVES ANY AND ALL CONSTITUTIONAL RIGHTS IT MAY HAVE
AS NOW CONSTITUTED OR HEREAFTER AMENDED, WITH REGARD TO NOTICE, ANY JUDICIAL
PROCESS AND ANY AND ALL OTHER RIGHTS IT MAY HAVE, AND THE LENDER MAY INVOKE ANY
PREJUDGMENT REMEDY AVAILABLE TO IT OR ITS SUCCESSORS OR ASSIGNS.
SWISSRAY INTERNATIONAL, INC.
By/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ its Chairman
and President duly authorized
