EXHIBIT 4.1
SECURITIES PURCHASE AGREEMENT
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SECURITIES PURCHASE AGREEMENT dated as of June 21, 2007 (this "Agreement")
by and between Vasomedical, Inc., a Delaware corporation (the "Company"), and
▇▇▇▇▇ Manufacturing Corp., a New York corporation (the "Purchaser").
WHEREAS, representatives of the Purchaser and Living Data Technology
Corporation, a New York corporation ("Living Data"), on the one hand, and the
Company, on the other hand, have been parties to discussions regarding the
future of the Company and the relationship of the parties;
WHEREAS, in furtherance of those discussions, Living Data and the Company
are, concurrently with the execution and delivery of this Agreement, entering
into a distribution agreement in the form of Exhibit A annexed hereto (the
"Distribution Agreement");
WHEREAS, in furtherance of those discussions, Living Data and the Company
are, concurrently with the execution and delivery of this Agreement, entering
into a supplier agreement in the form of Exhibit B annexed hereto (the "Supplier
Agreement");
WHEREAS, in furtherance of those discussions, the Purchaser has agreed to
buy, and the Company desires to sell to the Purchaser, shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), and a warrant (in
the form attached hereto as Exhibit C), to purchase shares of the Common Stock
equal to twenty (20%) percent of the number of shares purchased (the "Warrant"),
all upon the terms and conditions set forth in this Agreement; and
WHEREAS, subject to the provisions set forth herein, the Purchaser has
agreed to give to the Company the right to put additional shares of the Common
Stock to the Purchaser;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
premises, covenants, representations and warranties herein contained, it is
hereby agreed as follows:
1. Purchase and Sale of Units/Closing.
1.1. Issuance and Sale of Common Stock and Warrants.
1.1.1. Subject to the terms and conditions of this Agreement, the
Purchaser agrees to purchase at the Closing (as hereinafter
defined), and the Company agrees to issue and sell to the
Purchaser, 21,428,572 shares of the Common Stock (the "▇▇▇▇▇
Shares") and the Warrant to purchase 4,285,714 shares of the
Common Stock for an aggregate purchase price of One
Million-Five-Hundred-Thousand ($1,500,000) Dollars (the "Purchase
Price").
1.1.2. The Warrant shall have an initial exercise price for each share
of the Common Stock represented thereby of $0.08 per share
1.2. Closing.
1.2.1. The closing of the purchase and sale of $1,500,000 of the ▇▇▇▇▇
Shares and the Warrant under this Agreement (the "Closing") shall
be held at the offices of ▇▇▇▇▇▇▇ & Maysr, LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ (or remotely via the exchange of
documents and signatures), on June 21, 2007 (the date of the
Closing is hereinafter referred to as the "Closing Date").
1.2.2. At the Closing, the Company shall deliver to the Purchaser the
▇▇▇▇▇ Shares and the Warrant against payment of the Purchase
Price to the Company.
1.2.3. Conditions precedent to the Closing are that, concurrently with
the execution of this Agreement, (a) the Company, the Purchaser
and Living Data have executed an agreement pursuant to which the
Company grants "piggyback" registration rights to each of the
Purchasers and Living Data (the "Registration Rights Agreement");
(b) the Company and Living Data have executed the Distribution
Agreement; and (c) the Company and Living Data have executed the
Supplier Agreement.
2. Option of Company to Put Additional Common Stock
2.1. Additional Commitment to Purchase. At the option of the Company,
exercisable from time to time at any time on and after December 31,
2007 and prior to June 30, 2008 by notice given to the Purchaser as
provided in Section 7.3 hereof (the "Notice of Sale"), the Purchaser
irrevocably agrees and commits to purchase from the Company, for an
aggregate purchase price of up to $1,000,000, additional shares of the
Common Stock (the "Additional Shares") at a purchase price per share
equal to 85% of the Market Value on the date of the Notice of Sale,
but not more than $.09 per share.
2.1.1. As used herein, the term "Market Value" shall be deemed to be
the average of the last reported sale prices of the Common Stock
for the last five (5) trading days immediately preceding the date
the Notice of Sale is delivered by the Company to the Purchaser,
as officially reported by the principal securities exchange or
the NASD's OTC Bulletin Board on which the Common Stock is then
listed or admitted for trading, or, if the Common Stock is not so
reported, the average of the closing bid prices as furnished by
Pink Sheets LLC or similar organization if Pink Sheets LLC is no
longer reporting such information.
2.1.2. Any closing of the purchase and sale of the Additional Shares
shall take place on the tenth business day following delivery of
the Notice of Sale, and the Company and the Purchaser shall be
deemed with respect to the Additional Shares to have made the
same representations and warranties they made with respect to the
Shares and the Warrant, as set forth in Articles 3 and 4 hereof,
respectively.
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2.2. Condition Precedent to Demand. The only condition precedent to
delivery of a Notice of Sale to the Purchaser is that the Company
demonstrates to the Purchaser, by financial data reasonably
satisfactory to the Purchaser, that the Company, on a consolidated
basis, has had, for the three (3) months immediately preceding the
month in which the Notice of Sale is delivered, either (a) income from
operations or (b) operating revenues from equipment and services
exceeding $1,800,000.
2.3. Additional Shares: The parties acknowledge that the Company may not
have sufficient authorized shares of the Common Stock to deliver all
shares of the Additional Shares which may be issuable pursuant to this
Article 2. If the Company elects to put such shares, the Purchaser
agrees to deliver funds against the obligation of the Company (a) to
promptly cause an Amendment to the Company's Certificate of
Incorporation to be submitted to the stockholders of the Company for
their consideration changing the authorized capital to provide for
such shares, (b) to use commercially reasonable efforts to cause the
stockholders of the Company to approve the Amendment, (c) upon
approval by the stockholders, to file the Amendment with the Secretary
of State of Delaware reflecting such approval within three (3)
Business Days of stockholders' approval and (d) to issue the
Additional Shares to the Purchaser within three (3) Business Days of
such filing. As used herein, the term "Business Day" mean any day
other than Saturday, Sunday or any day on which the Transfer Agent for
the Common Stock is not open for business.
3. Representations and Warranties of the Company. The Company represents and
warrants to the Purchaser as follows:
3.1. Corporate Status. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of ---------------- the
State of Delaware, and has all requisite corporate power and authority
to carry on its business as now conducted. The Company's subsidiaries
(the "Subsidiaries") are duly organized in their respective
jurisdictions of organization, validly existing and in good standing
in such respective jurisdictions and each has the power and authority
to carry on its respective business as now conducted. The Company and
the Subsidiaries are duly qualified to transact business and are in
good standing in each jurisdiction in which the failure so to qualify
would not have a Material Adverse Effect on the Company's business or
properties. For the purposes of this Agreement, the term "Material
Adverse Effect" shall mean any change or effect that is, or could
reasonably be expected to be, materially adverse to the assets and
liabilities (taken together as a whole), capitalization or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as
a whole, other than any change or effect (a) relating to the economy
in general or (b) relating to the industry in which the Company and
its Subsidiaries operate in general and not specifically to the
Company or any Subsidiary.
3.2. Authorization. The Company has the corporate power and authority to
execute and deliver this Agreement, the Registration Rights Agreement,
the Distribution Agreement, and the Supplier Agreement (together with
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this Agreement, the Warrant, the Registration Rights Agreement, the
Distribution Agreement and the Supplier Agreement being collectively
referred to as the "Transaction Documents") and to carry out its
obligations hereunder and thereunder. The execution, delivery and
performance by the Company of the Transaction Documents and the
consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of
the Company and this Agreement and each of the other Transaction
Documents constitutes the valid and legally binding obligation of the
Company enforceable against the Company in accordance with its
respective terms, except as the same may be limited by bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of
creditors' rights generally now or hereafter in effect and subject to
the application of equitable principles and the availability of
equitable remedies.
3.3. No Conflicts. The execution, delivery and performance of this
Agreement and the other Transaction Documents and the consummation of
the transactions contemplated hereby and thereby by the Company do not
and will not with or without the giving of notice or the passage of
time or both, violate or conflict with or result in a breach or
termination of any provision of, or constitute a default under, the
Certificate of Incorporation or the By-Laws of the Company or any
order, judgment, decree, statute, regulation, contract, agreement or
any other restriction of any kind or description to which the Company
or its assets may be bound or subject. Neither the Company nor any
Subsidiary is in violation of or (with or without notice or lapse of
time or both) in default under, any material term or provision of its
Certificate of Incorporation or By-Laws or of any indenture, loan or
credit agreement, note agreement, mortgage, security agreement or
other agreement, lease or other instrument, commitment or arrangement
to which the Company or a Subsidiary is a party or by which the
Company's or the Subsidiary's assets are bound.
3.4. Fully Paid and Non-Assessable. Upon issuance of the ▇▇▇▇▇ Shares and
the Warrant and payment therefor pursuant to the terms hereof, each
share of the Common Stock issued as part of the ▇▇▇▇▇ Shares and the
Warrant shall be validly issued, fully paid and non-assessable and,
upon exercise of the Warrant and payment therefor, each share of the
Common Stock issuable upon exercise of the Warrant (a "Warrant Share")
shall be validly issued, fully paid and non-assessable.
3.5. Certificate and Bylaws. The copies of the Certificate of Incorporation
and Bylaws of the Company which have been delivered to the Purchaser
prior to the execution of this Agreement are true and complete and
have not been amended or repealed.
3.6. Capital Stock. As of the Closing Date, prior to the issuance and sale
of the ▇▇▇▇▇ Shares and the Warrant to the Purchaser and the issuance
of shares of the Common Stock to Living Data pursuant to the
Distribution Agreement, the authorized capital stock of the Company
will consist of (a) 1,000,000 shares of preferred stock, par value
$.001 per share (the "Preferred Stock"), of which no shares shall be
outstanding, and (b) 110,000,000 shares of the Common Stock, of which
65,198,592 shares shall be outstanding and 8,995,688 shares shall be
reserved for issuance upon the exercise of outstanding options. All
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such outstanding shares of the Common Stock have been duly authorized
and validly issued and are fully paid and nonassessable.
3.7. Binding Obligations.
3.7.1. This Agreement and the other Transaction Documents each
constitutes the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with its
respective terms, except as such enforcement is limited by
bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors' rights generally and by general
equitable principles.
3.7.2. The ▇▇▇▇▇ Shares, the Warrant and the Warrant Shares
(collectively, the "Securities") are duly authorized and, when
issued and paid for in accordance with the terms of this
Agreement, will be duly authorized, validly issued and
outstanding, fully paid and nonassessable and free and clear of
all liens, security interests and restrictions, other than liens
or security interests that might have been created or suffered by
the Purchaser with respect to the Securities and restrictions
imposed by the Securities Act, as defined below, state securities
laws or this Agreement.
3.7.3. The Warrant Shares, when issued and paid for in accordance with
the terms of the Warrant, will be duly authorized, validly issued
and outstanding, fully paid and nonassessable and free and clear
of all liens, security interests and restrictions, other than
liens or security interests that might have been created or
suffered by the Purchaser with respect to the Warrant or the
Warrant Shares and restrictions imposed by the Securities Act of
1933, as amended (the "Securities Act"), state securities laws or
this Agreement.
3.8. Financial Statements. Included in the Form 10-Q of the Company for the
nine months ended February 28, 2007 (the "Form --------------------
10-Q") filed with the Securities and Exchange Commission (the "SEC")
are the Company's consolidated unaudited balance sheet (the "Balance
Sheet") as of February 28, 2007 (the "Balance Sheet Date") and the
unaudited condensed consolidated statement --------------
------------------- of operations for the three and nine-month periods
then ended. Included in its Annual Report on Form 10-K for the year
ended May 31, 2006 (the "Annual Report") filed with the SEC are the
Company's audited consolidated balance sheet as of May 31, 2006 and
the audited consolidated statements of operations, cash flow and
changes of stockholders' equity for the period then ended, together
with the related report of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Company LLP, independent
certified public accountants. The foregoing financial statements (a)
are complete and correct in all material respects and are in
accordance with the books and records of the Company, (b) present
fairly the consolidated financial condition of the Company and its
Subsidiaries at the Balance Sheet Date and other dates therein
specified and the results of operations and changes in financial
position of the Company and its Subsidiaries for the periods therein
specified, and (c) have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with
prior accounting periods, except that the unaudited financial
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statements are subject to year-end audit adjustments and do not
contain complete footnotes or statements of stockholders equity. The
Company and its Subsidiaries have no liabilities or obligations,
either acquired or absolute, contingent or otherwise, of a type
required by generally accepted accounting principles to be reflected
on, or reserved against in, a balance sheet, which are not reflected
or provided for in the financial statements and related notes except
liabilities arising after the Balance Sheet Date which were incurred
in the ordinary course of business.
3.9. Changes. Since the Balance Sheet Date, except as disclosed in the Form
10-Q, there has been no event which would have a Material Adverse
Effect. Since the Balance Sheet Date, except as disclosed in the Form
10-Q , neither the Company nor any of its Subsidiaries has (a)
mortgaged, pledged or subjected to lien any of its material assets,
tangible or intangible, (b) sold, transferred or leased a material
portion of its assets, (c) cancelled or compromised any material debt
or claim, or waived or released any right, of material value, (d)
suffered any physical damage, destruction or loss (whether or not
covered by insurance) having a material effect, (e) declared or paid
any dividends on or made any other distributions with respect to, or
purchased or redeemed, any of its outstanding equity securities, or
(f) suffered or experienced any Material Adverse Change or loss in its
business other than its continuing losses from operations.
3.10. Material Agreements of the Company. Neither the Company nor any of
its Subsidiaries is a party to or otherwise bound by any written or
oral agreement, instrument or arrangement that is material to the
Company except for those agreements referenced in or included as
exhibits to the Annual Report or the Form 10-Q ("Material Contracts").
The Company has furnished or made available to the Purchaser true and
complete copies of all such agreements and all other agreements,
instruments and other documents requested by the Purchaser or its
authorized representative. The Company is not in default in any
material provision of any Material Contract.
3.11. Litigation. Except as disclosed in the Form 10-Q, there is no action
pending and, to the best knowledge of the Company, there is no
material action threatened against the Company, its Subsidiaries or
their properties or assets. Neither the Company nor any Subsidiary is
in default with respect to any order, writ, judgment, injunction,
decree, determination or award of any court or of any governmental
entity.
3.12. Disclosure. The representations and warranties of the Company
contained herein, when read together with the Form 10-Q and the Annual
Report, do not contain any untrue statement of material fact or omit
to state a material fact necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading.
3.13. Intellectual Property.
3.13.1. To the best of the Company's knowledge, the Company and each
of its Subsidiaries has sufficient title to and ownership of or
rights to all patents, patent rights, patent applications,
inventions, trademarks, service marks, trade names, copyrights
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and information, proprietary rights and processes necessary for
the conduct of its business, and the use by the Company of the
foregoing does not conflict with or constitute an infringement of
the rights of others.
3.13.2. The Company and each of its Subsidiaries has sufficient
licenses, permits and other governmental authorizations required
for the conduct of its business as currently conducted and is not
in default with respect thereto, except as the failure to have
any such license, permit or authorization or any default with
respect thereto would not have a Material Adverse Effect.
3.13.3. The Company has not received any communications alleging that
it or any of its Subsidiaries has violated, has no knowledge that
the Company or any of its Subsidiaries has violated, or by
conducting its business, each of the Company and its Subsidiaries
will not, to the best of its knowledge, violate, any of the
patents, patent applications, inventions, trademarks, service
marks, trade names, copyrights or trade secrets, confidential
information, proprietary rights or processes of any other person.
3.14. No Governmental Consent or Approval Required. Based in part on the
representations made by the Purchaser in this Agreement, no
authorization, consent, approval or other order of, declaration to, or
registration, qualification, designation or filing with, any federal,
state or local governmental agency or body is required by or from the
Company for the valid and lawful authorization, execution and delivery
by the Company of this Agreement or any other agreement entered into
by the Company in connection with this Agreement, and consummation of
the transactions contemplated hereby or thereby, or for the valid and
lawful authorization, issuance, sale and delivery of the Securities or
for the valid and lawful authorization, reservation, issuance, sale
and delivery of the Securities, other than the qualification (or
taking of such action as may be necessary to secure an exemption from
qualification, if available) of the offer and sale of the Securities
under the New York Securities Law and applicable federal securities
laws, which filings and qualifications, if required, will be
accomplished in a timely manner so as to comply with such
qualification or exemption from qualification requirements.
3.15. Bulletin Board Compliance. The Common Stock is registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and is eligible for quotation on the NASD's OTC
Bulletin Board.
3.16. Reporting Status. The Company has filed in a timely manner all
documents that the Company was required to file under the Exchange Act
during the 12 months preceding the date of this Agreement and such
documents complied as to form in all material respects with the SEC's
requirements as of their respective filing dates, and the information
contained therein as of the date thereof did not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein in
light of the circumstances under which they were made not misleading.
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3.17. Brokers. Except as set forth below in Section 5 hereof, no broker,
investment banker or other person is entitled to any broker's,
finder's or other similar fee or commission payable by the Company in
connection with the transactions contemplated by this Agreement or the
other Transaction Documents.
4. Representations and Warranties of the Purchaser. The Purchaser represents
and warrants to the Company as follows:
4.1. Status. The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York
with full corporate power and authority to execute, deliver and
perform its obligations under this Agreement.
4.2. Authority for Agreements. The Purchaser has the corporate power and
authority to execute and deliver this Agreement and to carry out its
obligations hereunder. The execution, delivery and performance by the
Purchaser of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary action
on the part of the Purchaser and this Agreement constitutes the valid
and legally binding obligation of the Purchaser, enforceable against
the Purchaser in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally now or
hereafter in effect and subject to the application of equitable
principles and the availability of equitable remedies.
4.3. No Conflicts. The execution, delivery and performance of this
Agreement and the other instruments and agreements to be executed,
delivered and performed by the Purchaser pursuant hereto and the
consummation of the transactions contemplated hereby and thereby by
the Purchaser does not and will not with or without the giving of
notice or the passage of time or both, violate or conflict with or
result in a breach or termination of any provision of, or constitute a
default under, the Certificate of Incorporation or the By-Laws of the
Purchaser or any order, judgment, decree, statute, regulation,
contract, agreement or any other restriction of any kind or
description to which the Purchaser is a party or by which the
Purchaser may be bound.
4.4. Accredited Investor. The Purchaser is an "accredited investor" within
the meaning of Rule 501(a) of Regulation D of the SEC, as presently in
effect.
4.5. Investor Representations and Acknowledgments.
4.5.1. The Purchaser is acquiring the Securities for the Purchaser's
own account for investment only and not with a view to, or for
sale in connection with, a distribution of the Securities or its
components and with no present intention of selling,
transferring, granting a participation in or otherwise
distributing, the Securities or its components, all within the
meaning of the Securities Act and the rules and regulations
thereunder and any applicable state securities or blue-sky laws
and the rules and regulations thereunder.
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4.5.2. The Purchaser is not a party or subject to or bound by any
contract, undertaking, agreement or arrangement with any person
to sell, transfer or pledge the Securities or any part thereof to
any person, and has no present intention to enter into such a
contract, undertaking, agreement or arrangement.
4.5.3. The Purchaser acknowledges to the Company that:
4.5.3.a. The Company has advised the Purchaser that the
Securities have not been registered under the Securities Act
or under the laws of any state on the basis that the
issuance thereof contemplated by this Agreement is exempt
from such registration;
4.5.3.b. The Company has advised the Purchaser that a purchase of
the Securities involves a high degree of risk and is
suitable only for persons of substantial financial means who
have no need for liquidity in their investments;
4.5.3.c. The Company's reliance on the availability of such
exemption is, in part, based upon the accuracy and
truthfulness of the Purchaser's representations contained
herein;
4.5.3.d. The Purchaser is aware that the ▇▇▇▇▇ Shares, the
Warrant and the Warrant Shares that are being purchased are
characterized as "restricted securities" under the
Securities Act inasmuch as they are being acquired from the
Company in a transaction not involving a public offering,
and that under the Securities Act and applicable rules and
regulations such securities may be resold without
registration under the Securities Act only in certain
limited circumstances. In this connection, the Purchaser
represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations
imposed thereby and by the Securities Act.
4.5.3.e. The Purchaser has evaluated the merits and risks of
purchasing the Securities, and has such knowledge and
experience in financial and business matters that the
Purchaser is capable of evaluating the merits and risks of
such purchase, is aware of and has considered the financial
risks and financial hazards of purchasing the Securities,
and is able to bear the economic risk of purchasing the
Securities, including the possibility of a complete loss
with respect thereto;
4.5.3.f. The Purchaser has had access to such information
regarding the business and finances of the Company and its
Subsidiaries, and has been provided the opportunity to
discuss with the Company's management the business, affairs
and financial condition of the Company and its Subsidiaries
and such other matters with respect to the Company and its
Subsidiaries as would concern a reasonable person
considering the transactions contemplated by this Agreement
and/or concerned with the operations of the Company; and
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4.5.3.g. All of the Purchaser's representations and warranties
set forth herein are correct and complete as of the date of
this Agreement, shall be true and correct as of the Closing,
shall survive the Closing and, if there should be any
material change in such information prior to the sale to the
Purchaser of the Securities, the Purchaser will immediately
furnish such revised or corrected information to the
Company.
5. Agency; Other Fees. Each party represents that it neither is nor will be
obligated for any finders' or brokers' fee or commission in connection with
this transaction; provided, however, that, in the event the Closing is
consummated, the Company shall be obligated to and shall pay to Life
Science Group, Inc. fees of 6% of the Purchase Price (and of the purchase
price of such Additional Shares that Company elects to put to Purchaser, as
provided for herein) plus common stock purchase warrants on terms
substantially similar to the Warrant but without registration rights
covering a number of shares equal to 2% of the number of shares being
purchased by the Purchaser at the Closing.
6. Vasomedical Covenants Post-Closing.
6.1. Directorship. Concurrently with the Closing, Vasomedical has elected
each of ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇ as a director of Vasomedical and has
agreed to nominate each of them for reelection at least at the next
two Annual Meetings of Stockholders of Vasomedical and the then
directors shall use their best efforts to solicit proxies for the
election of each of them at such meetings.
6.2. Preferred Stock. During the three-year period following the Closing,
Vasomedical shall not issue any shares of the Preferred Stock without
the prior written consent of the Purchaser, which consent shall not be
unreasonably withheld.
7. Miscellaneous.
7.1. Entire Agreement; Survival of Provisions. The Transaction Documents
and the SEC reports referenced herein and therein constitute the
entire agreement of the parties with respect to the transactions
contemplated hereby and supersede all prior agreements and
understandings with respect thereto, whether written or oral. All of
the covenants of the parties made herein shall remain operative and in
full force and effect pursuant to their respective terms regardless of
acceptance of the Securities and payment therefor. The representations
and warranties set forth herein shall survive the execution and
delivery of this Agreement and the issuance of the Securities in each
case until the third anniversary of the date of this Agreement (the
"Expiration Date"), and shall in no way be affected by any
investigation of the subject matter thereof made --------------- by or
on behalf of the Purchaser or the Company. Notwithstanding the
preceding sentence, any representation or warranty in respect of which
an indemnity may be sought hereof shall survive the time at which it
would otherwise terminate pursuant to the preceding sentence if a
claim for indemnification shall have been given to the party against
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whom such indemnity may be sought prior to the Expiration Date. The
agreements and covenants of the parties set forth in a Transaction
Document shall survive for the term of the Transaction Document. The
representations, warranties, agreements and covenants made in the
Transaction Documents shall be deemed to have been relied upon by the
parties hereto.
7.2. No Waiver; Modifications in Writing. No failure or delay by a party in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power
or remedy preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. Except as otherwise expressly provided
herein with respect to any right of indemnification, the remedies provided
for herein are cumulative and are not exclusive of any remedies that may be
available to any party at law or in equity or otherwise. No waiver of or
consent to any departure by a party from any provision of this Agreement
shall be effective unless signed in writing by the party entitled to the
benefit thereof. No amendment, modification or termination of any provision
of this Agreement shall be effective unless signed in writing by all
parties. Any amendment, supplement or modification of or to any provision
of this Agreement, any waiver of any provision of this Agreement, and any
consent to any departure from the terms of any provision of this Agreement,
shall be effective only in the specific instance and for the specific
purpose for which made or given.
7.3. Notices. All notices, demands and other communications provided for
hereunder shall be in writing, shall be given by (a) registered or
certified mail, return receipt requested, (b) telecopy with electronic
confirmation of such transmission, (c) national courier service or (d)
personal delivery and shall be deemed delivered (a) three business days
after deposit with the U.S. Postal Service, (b) the date given by
electronic or e-mail delivery, (c) on the business day next following
deposit with a courier service for overnight delivery with written
confirmation of such delivery or (d) upon personal delivery, addressed to
the parties, as follows:
If to the Company, to:
Vasomedical, Inc..
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
with a copy to (which shall not constitute notice):
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
Suite 1313, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
If to the Purchaser, to:
▇▇▇▇▇ Manufacturing Corp.
▇▇-▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
with a copy to (which shall not constitute notice):
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ & Masyr, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇)▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
or to such other address as any party shall designate in writing in
compliance with the provisions of this Section 7.3.
7.4. Execution in Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement. The
parties agree that they may rely on the facsimile signature of any party
with respect to this Agreement or any waiver, amendment, supplement or
consent relating thereto, with the same effect as if such signature was an
original.
7.5. Binding Effect; Assignment. The rights and obligations of the parties under
this Agreement may not be assigned or otherwise transferred to any other
person or entity, without the prior written consent of the other party
hereto. Except as expressly provided in this Agreement, this Agreement
shall not be construed so as to confer any right or benefit upon any person
or entity other than the parties to this Agreement and their respective
successors and permitted assigns. This Agreement shall be binding upon and
shall inure to the benefit of the Company, the Purchaser and their
respective permitted successors and assigns.
7.6. Governing Law. This Agreement shall be deemed to be a contract made under
and shall be governed by and construed in accordance with the internal laws
of the State of New York without giving effect to the principles of
conflict of laws; provided, however, that the due authorization, issuance
and enforceability of the terms of the Common Stock and the Warrant or the
due authorization and issuance of the Warrant Shares, or any requirement of
-12-
stockholder approval or the validity or invalidity of any action by the
Board of Directors or compliance by the Company or any Subsidiary with its
Certificate of Incorporation or Bylaws or any of their corporate authority,
shall be governed by, and construed in accordance with, the laws of the
State of Delaware without giving effect to the principles of the conflict
of laws.
7.7. Consent to Jurisdiction and Service of Process. Any suit, action or
proceeding arising out of or relating to the Transaction Documents or the
transactions contemplated hereby or thereby may be instituted in any
federal court situated in the Southern or Eastern Districts of New York or
any state court of the State of New York, in each case, in the Borough of
Manhattan, City of New York, or Nassau County in the State of New York, and
each party agrees not to assert, by way of motion, as a defense or
otherwise, in any such suit, action or proceeding, any claim that it is not
subject personally to the jurisdiction of such court, that the suit, action
or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that the Transaction Documents or
the subject matter hereof or thereof may not be enforced in or by such
court. Each party further irrevocably submits to the jurisdiction of such
court in any such suit, action or proceeding. Any and all service of
process and any other notice in any such suit, action or proceeding shall
be effective against any party if given personally or by registered or
certified mail, return receipt requested if sent to such party at the
address for such party set forth herein, or by any other means of mail that
requires a signed receipt, postage fully prepaid, mailed to such party as
herein provided. Nothing herein contained shall be deemed to affect the
right of any party to serve process in any manner permitted by law or to
commence legal proceedings or otherwise proceed against any other party in
any other jurisdiction.
7.8. Waiver of Jury Trial. The parties hereto hereby irrevocably waive all right
to a trial by jury in any action, proceeding or counterclaim arising out of
or relating to this Agreement or any other Transaction Document or the
transactions contemplated hereby or thereby.
7.9. Further Assurances. Each of the parties hereto shall execute and deliver
such documents, instruments and agreements and take such further actions as
may be reasonably required or desirable to carry out the provisions of the
Transaction Documents and the transactions contemplated hereby and thereby,
and each of the parties hereto shall cooperate with each other in
connection with the foregoing.
7.10. Severability of Provisions. Any provision hereof that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent
permitted by law, the parties hereto waive any provision of law that
renders any such provision prohibited or unenforceable in any respect.
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7.11. Headings. The Article, Section and subsection headings used or contained
in this Agreement are for convenience of reference only and shall not
affect the construction of this Agreement.
7.12. Costs and Expenses. Each of the Company and the Purchaser shall pay their
respective costs and expenses incurred with respect to the negotiation,
execution, delivery and performance of this Agreement and the other
Transaction Documents. If any action at law or in equity is necessary to
enforce or interpret the terms of the Transaction Documents, the prevailing
party shall be entitled to reasonable attorney's fees, costs, and necessary
disbursements in addition to any other relief to which such party may be
entitled.
SIGNATURE PAGE FOLLOWS
BALANCE OF PAGE LEFT BLANK INTENTIONALLY
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SIGNATURE PAGE
To
Securities Purchase Agreement
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Company: Purchaser:
VASOMEDICAL, INC. ▇▇▇▇▇ MANUFACTURING CORP.
By: /s/ ▇▇▇▇ ▇ ▇ ▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------- -------------
Name: ▇▇▇▇ ▇ ▇ ▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Executive Officer Title: Chairman of the Board
-15-
EXHIBIT A TO
SECURITIES PURCHASE
AGREEMENT
DISTRIBUTION AGREEMENT
----------------------
DISTRIBUTION AGREEMENT (this "Agreement") made and entered into as of the
21st day of June, 2007 by and between Living Data Technology Corporation, a
corporation incorporated under the laws of the State of New York ("Living
Data"), with executive offices at ▇▇-▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇,
and Vasomedical, Inc., a corporation incorporated under the laws of the State of
Delaware ("Vasomedical"), with executive offices at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
WHEREAS, Vasomedical has engaged, pursuant to a Supplier Agreement of even
date herewith by and between the parties hereto (the "Supplier Agreement") as
the exclusive supplier of (1) Vasomedical Products (as therein defined) for sale
or distribution by Vasomedical to customers throughout the world and (2) Living
Data Products for sale or distribution by Vasomedical; and
WHEREAS, Living Data desires to engage Vasomedical as its exclusive
distributor of certain Living Data products to customers in the Territory (as
hereinafter defined) on the terms and conditions hereinafter set forth; and
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, the parties hereto hereby agree
as follows:
1. Definitions.
(a) When used in this Agreement, the following terms shall have the
meanings set forth in this Section 1(a):
(i) "Affiliate" of any Person shall mean any Person that directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with such Person. For the purpose of this definition,
"control" when used with respect to any Person means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
(ii) "Anticipated Delivery Date" shall mean the anticipated date for
delivery of Products pursuant to an Order confirmed by Living Data.
(iii) "Business Day" shall mean any day other than Saturday, Sunday or any
other day on which commercial banks are authorized to close and do close in New
York City.
(iv) "CE Marking" shall mean that certification issued by an authorized
Notified Body (as defined by a directive from the European Union) in the
European Union.
(v) ""cGMP" shall mean current good manufacturing practices as that term is
defined by the FDA from time to time.
(vi) "Contract Year" shall mean each 12-month period of the Term from June
1st through May 31st, provided that with respect to the first Contract Year of
the Term, the Contract Year shall be from June 21, 2007 until May 31, 2008.
(vii) "FDA" shall mean the Food and Drug Administration of the United
States of America.
(viii) "Net Sales" shall mean the gross sales by Vasomedical, less cost of
sales, arising from the sale or distribution of Products to customers pursuant
to this Agreement as determined in accordance with generally accepted accounting
principles ("GAAP"), consistently applied, as GAAP is in effect, from time to
time, in the United States.
(ix) "Person" shall mean an individual, a corporation, a limited liability
company, a partnership, an unincorporated association, a trust, a joint venture
or any other entity or organization of whatever nature.
(x) "Products" shall mean all of the AngioNew ECP systems used to assist
the heart by applying positive or negative pressure to one or more of the body's
limbs in synchrony with the heart cycle, whether now offered or hereafter
developed by Living Data during the Term, and any improvements or modifications
thereto. The current AngioNew ECP systems are the AngioNew-V, a mobile system,
and the AngioNew-VI, a table type system.
(xi) "Quarter-Annual Period" shall mean each three (3)-month period ending
on February 28, May 31, August 31 and November 30 of each Contract Year during
the Term.
(xii) "Term" shall have the meaning set forth in Section 6.1(a) hereof.
(xiii) "Territory" shall mean the United States, Puerto Rico and all other
territories and possessions administered by the United States.
(xiv) "Vasomedical Products" shall mean all of the ECP therapy systems
which are marketed under the registered trademark "EECP" and which utilize
fundamental hemo-dynamic principles to augment coronary blood flow and at the
same time reduce the work load of the heart while improving the overall vascular
function, whether now offered or hereafter developed by Vasomedical during the
Term, and any improvements or modifications thereto. The current EECP therapy
systems are EECP-Lumenair, EECP-TS3 and EECP-TS4.
(b) As used in this Agreement pronouns shall refer to male or female
persons or entities where such construction is required to give meaning to a
provision contained herein. Whenever a singular or plural number is used herein,
the same shall refer to the plural or singular, as applicable, as well. Unless
the context clearly requires otherwise, the words "hereof," "herein" and
"hereunder to" and words of similar import shall refer to this Agreement as a
whole and not to any particular provision hereof. The headings of the Articles
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and Sections of this Agreement are inserted for convenience only and shall not
constitute a part hereof or affect in any way the meaning or interpretation of
this Agreement. Each party acknowledges that it has been represented by counsel
and that it has actively participated in the review, negotiation and
finalization of this Agreement and documents relating hereto. Accordingly, in
the event of a dispute, the drafting of any particular term or provision hereof
shall not be a factor in the determination of the construction or interpretation
of such term or provision.
2. Issuance of Vasomedical Shares.
2.1 Issuance. As additional consideration for Living Data entering into
this Agreement, Vasomedical shall, on the date of the closing (the "Closing
Date") to be held pursuant to the Securities Purchase Agreement (as hereinafter
defined), issue to Living Data such number of shares of its Common Stock, $.001
par value (the "Common Stock"), as is equal to ten percent of the outstanding
shares of the Common Stock on a fully diluted basis as of the Closing Date (the
"Living Data Shares"). In making such calculation of the number of shares of the
Common Stock to be issued Vasomedical shall include the shares issuable pursuant
to a warrant to be issued to Life Science Group, Inc. on the Closing Date and
shall exclude (a) the shares of the Common Stock to be sold to ▇▇▇▇▇
Manufacturing Corp., a New York corporation ("▇▇▇▇▇"), (b) those shares issuable
upon the exercise of a warrant to ▇▇▇▇▇, (c) those shares as to which there is a
put, all pursuant to the Securities Purchase Agreement of even date herewith by
and between Vasomedical and ▇▇▇▇▇ (the "Securities Purchase Agreement"), and (d)
those shares reserved for issuance on options (i) held by terminated employees
which options expire within 60 days of the date hereof plus (ii) which have an
exercise price in excess of $.75 per share. In the event any of the options
described in (d) shall hereafter be executed within one year of the Closing
Date, Vasomedical shall, within five Business Days after any such exercise,
issue to Living Data ten percent of the shares of the Common Stock issued upon
such exercise.
2.2 Confirmation of Calculation. Together with the delivery to Living Data
of the stock certificate for the Living Data Shares, Vasomedical shall furnish a
schedule showing how the ten percent calculation was made. Living Data shall
have five Business Days to challenge such calculation and, if it does so by
notice to Vasomedical, the parties shall promptly in good faith seek to
reconcile the difference. If Living Data successfully demonstrates to
Vasomedical's satisfaction that additional shares of the Common Stock should
have been issued to it, then Vasomedical shall promptly direct the Transfer
Agent for the Common Stock to issue a stock certificate to Living Data for the
additional shares. If the parties cannot agree on the number of the Living Data
Shares, the issue shall be resolved pursuant to the Conciliation Procedure set
forth in Section 10.1 hereof.
2.3 Investment Representation by Living Data. Living Data represents and
warrants to Vasomedical that it shall acquire the Living Data Shares for
investment and not with a view toward, or in connection with, any distribution
as such term is contemplated by the Securities Act of 1933, as amended (the
"Securities Act").
2.4 Restricted Stock. Living Data acknowledges that the Living Data Shares
are restricted securities as such term is defined in Rule 144(a)(3) under the
Securities Act and that, accordingly, any certificate evidencing the Living Data
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Shares will bear the standard Securities Act restrictive legend used by the
Transfer Agent for the Common Stock.
2.5 Representations by Vasomedical. Vasomedical represents and warrants to
Living Data that the Living Data Shares have been duly authorized, are validly
issued and fully paid, are free of any preemptive or similar rights and will be
delivered to Living Data free and clear of any liens, security interests or
other encumbrances other than those created by Living Data, but subject to any
restrictions created by the Securities Act or applicable state securities laws.
3. Distribution.
3.1 Vasomedical's Obligations. (a) During the Term, Vasomedical shall sell
and distribute Products to customers in accordance with the terms and provisions
of this Agreement and of any applicable Annual Marketing Plan (as hereinafter
defined). Vasomedical agrees that it shall not sell or distribute Products to
any subdistributor without Living Data's prior written approval and until such
subdistributor signs an undertaking in substantially the form attached hereto as
Exhibit A which names Living Data as a third-party beneficiary. Vasomedical
shall deliver a fully executed copy of each such undertaking promptly to Living
Data and shall not make any material changes to the form without Living Data's
prior consent.
(b) Vasomedical agrees that, during the Term, it shall not, directly or
indirectly, sell or distribute any Product (a) outside of the Territory or (b)
to any Person that Vasomedical knows, or reasonably should know, intends to sell
or distribute Products (directly or indirectly) outside of the Territory.
Notwithstanding the foregoing, Living Data acknowledges that there are legal and
practical restrictions on Vasomedical's ability to prevent the resale of
Products outside of the Territory by Vasomedical's customers inside of the
Territory. Accordingly, Vasomedical shall not be liable to Living Data for any
commission, compensation or other payment or for any damage or loss suffered by
Living Data whatever arising out of, or in connection with, any sales or
shipments of Products by any distributor, jobber, retailer or other party to a
Person outside the Territory unless such sales or shipments shall have been
expressly and knowingly authorized by Vasomedical.
(c) Vasomedical agrees that, during the Term, it shall not, directly or
indirectly, sell or distribute any product providing therapy similar to the
Products other than the Vasomedical Products and the Living Data Products.
3.2 Restriction on Living Data's Rights. (a) Except as hereinafter
provided, during the Term, Living Data shall not directly or indirectly sell or
distribute Products to customers in the Territory, but may continue to sell
Products outside the Territory and fulfill its outstanding purchase orders in
the Territory as of the date hereof. Subject to Vasomedical's full, faithful and
prompt performance of Vasomedical's duties and obligations hereunder, the rights
regarding distribution of Products by Vasomedical to customers granted hereby
shall be exclusive in the Territory during the Term. Notwithstanding the
foregoing, Vasomedical acknowledges that there are legal and practical
restrictions on Living Data's ability to prevent the resale of Products into the
Territory by Living Data's customers outside of the Territory. Accordingly,
Living Data shall not be liable to Vasomedical for any commission, compensation
-4-
or other payment or for any damage or loss suffered by Vasomedical whatever
arising out of, or in connection with, any sales or shipments of Products by any
distributor, jobber, retailer or other party to a Person in the Territory unless
such sales or shipments shall have been expressly and knowingly authorized by
Living Data. Notwithstanding anything to the contrary in this Section 3.2(a),
Living Data shall not be liable to Vasomedical for any sales or shipments of any
existing inventory of Products by Living Data in the Territory as of the date of
this Agreement and the continued sales and distribution of such inventory
subject to subsection (b) of this Section 3.2. Living Data shall, within 30
Business Days after commencement of the Term, furnish Vasomedical with a listing
of existing inventory.
(b) Because as provided in Section 4.1(d) hereof Vasomedical, in
collaboration with Living Data, shall be developing a marketing plan for the
Living Data Products during the three months following the commencement of the
Term, Living Data may continue to sell and distribute Living Data Products in
the Territory during such three-month period. Thereafter, Living Data shall have
the right, but not the obligation, to turn over to Vasomedical on a consignment
basis for distribution its remaining inventory of Products in the Territory at
the sales price per unit provided in the Supplier Agreement. Notwithstanding the
foregoing, nothing herein shall prevent Living Data from maintaining an
inventory of Products for sale and distribution outside the Territory.
4. Marketing of the Products.
4.1 Annual Marketing Plan. (a) Before the start of each Contract Year,
commencing with the Contract Year commencing on June 1, 2008, Vasomedical shall
develop an annual marketing plan (the "Annual Marketing Plan") in the format
provided by Living Data for each Contract Year. Such format shall be submitted
to Vasomedical for its approval in the exercise of its commercially reasonable
judgment. Each Annual Marketing Plan shall set forth the sales and other
marketing objectives for the Contract Year covered thereby, and without limiting
the generality of the foregoing, each such Plan shall include an annual purchase
forecast (the "Forecast") setting forth (by product code and unit) each Product
that Vasomedical anticipates purchasing during that year and levels of inventory
to be maintained by Vasomedical. The Forecast shall be updated by Vasomedical,
not later than 90 days prior to the beginning of each Quarter-Annual Period, to
set forth Vasomedical's then anticipated Product purchases for each of the
immediately succeeding four Quarter-Annual Periods. In addition, the Annual
Marketing Plan shall set forth a full and complete description of proposed
promotional expenditures and formats for the subject Contract Year including
Vasomedical's "Advertising and Promotional Plan" for such Contract Year showing,
to the maximum extent feasible, the locations, dates and times of all proposed
promotional events and the amounts that shall be expended therefor during such
Contract Year.
(b) Living Data shall review each proposed Annual Marketing Plan submitted
to it pursuant to subsection (a) of this Section 4.1 and shall advise
Vasomedical of such changes and revisions as Living Data shall deem appropriate,
in the exercise of its commercially reasonable judgment. Vasomedical shall
thereafter in good faith review the proposed Annual Marketing Plan, and shall
furnish to Living Data the revised (final) Annual Marketing Plan not later than
four weeks after Living Data advises Vasomedical of such requested changes and
revisions. Where the parties cannot come to agreement on the final Annual
Marketing Plan, such disagreement shall be resolved pursuant to the Conciliation
Procedure set forth in Section 10.5 hereof.
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(c) If there shall be any inconsistencies between any provisions contained
in any Annual Marketing Plan and the provisions of this Agreement, the
provisions of this Agreement shall control unless otherwise explicitly agreed in
writing by the parties hereto.
(d) Notwithstanding anything to the contrary in this Section 4.1,
Vasomedical, in collaboration with Living Data, shall develop, during the three
months following commencement of the Term, a marketing plan for Living Data
Products for the remainder of the Contract Year ending May 31, 2008. Vasomedical
shall include in such marketing plan a Forecast as to projected sales of
Vasomedical Products during such period.
4.2 Vasomedical's Duties. In furtherance of the duties and obligations of
Vasomedical under this Agreement, during the Term, Vasomedical shall use its
commercial reasonable efforts to (i) promote diligently the sale and
distribution of Products to customers, (ii) meet and satisfy timely and fully
all obligations of Vasomedical under this Agreement and under each Annual
Marketing Plan, and (iii) provide customers with satisfactory services,
including prompt delivery. Without limiting the generality of the foregoing:
(a) Vasomedical shall furnish Living Data with the following (and with such
other information or forms as Living Data may reasonably request from time to
time):
(i) not later than 45 days after the end of each Quarter-Annual Period,
detailed quarterly reports setting forth Net Sales to customers, setting forth
for each customer, gross sales by Product, or Vasomedical Product, gross sales,
returns, discounts, allowances and customer service expenses;
(ii) not later than 45 days after the end of each Quarter-Annual Period,
quarterly reports setting forth (by product code and unit) the Products and
Vasomedical Products held in inventory by Vasomedical as of the end of such
Quarter-Annual Period; and
(iii) not later than 45 days after each May 31 and November 30, a detailed
report setting forth advertising, demonstration and promotional expenditures for
the prior six months.
(b) Vasomedical, at its sole expense, shall comply with all laws,
ordinances, rules, and regulations (including, without limitation, those
pertaining to health, sanitation, fair trade or consumer protection, but
excluding those related to the manufacture of the Products and the Vasomedical
Products, including manufacturing licenses thereof and manufacturing warranties
related thereto, which compliance shall be that of Living Data), obtain all
licenses and permits required by, and pay all taxes, fees, charges, and
assessments imposed or enacted by, any governmental authority solely regarding
the sale of the Products and the Vasomedical Products and not the manufacture
thereof, and shall not take any action which will cause Living Data or
Vasomedical to be in violation of any law of any jurisdiction in which
Vasomedical distributes the Products and the Vasomedical Products. For purposes
of clarification, all obligations related to compliance with FDA manufacturing
regulations (including, without limitation, cGMP satisfaction) and CE
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manufacturing standards are manufacturing obligations for the Products and the
Vasomedical Products.
(c) All advertising and promotional materials will be provided to Living
Data, sufficiently in advance of publication to allow for Living Data's
approval. Such approval must be in writing and shall, insofar as it relates to
Products, be given in Living Data's sole discretion. Vasomedical shall provide
to Living Data, 30 days after the end of each Contract Year, copies of all ads
used in, and a report of advertising and promotion expenditures to the extent
not expended during, such Contract Year.
4.3 Books and Records. Throughout the Term and for one year thereafter,
Vasomedical shall provide to Living Data and its representatives, upon
reasonable notice, for its review (hereby authorizing Living Data and its
representatives to make copies and extracts therefrom) all of its books and
records of account, invoices, statements, agreements, correspondence and other
data relative to this Agreement, reasonably requested by Living Data respecting
the quarterly reports, the marketing of Products and other obligations of
Vasomedical under this Agreement and under each Annual Marketing Plan.
4.4 Access. Vasomedical shall make available to representatives of Living
Data access during normal business hours to its warehouses, upon reasonable
notice, for their inspection no more than twice in any 12-month period.
4.5 Living Data Advertising. Vasomedical acknowledges that Living Data or
its Affiliates may conduct local, national and/or international advertising
campaigns with respect to the Products, and Vasomedical shall have the
unrestricted right to utilize such advertising or promotion materials of Living
Data or any of its Affiliates solely for the purposes of satisfying the goals of
the Annual Marketing Plan.
4.6 Warranty by Living Data. Living Data shall provide, pursuant to a
written policy, a full 12-month warranty on parts, commencing with acceptance of
installation of a unit at an end-user.
5. Intellectual Property. Living Data markets its ECP systems under its
registered trademark "AngioNew" (the "▇▇▇▇.")
5.1 Acknowledgement of Rights. Vasomedical acknowledges that the ▇▇▇▇ has
acquired a valuable secondary meaning and goodwill in the minds of the trade and
the public and those goods, including Products, bearing the ▇▇▇▇ have acquired a
-7-
reputation for high quality and style. Vasomedical acknowledges that it is not
the owner of any right, title or interest in and to the ▇▇▇▇ in any form or
embodiment thereof, and it is not the owner of the goodwill attached to the ▇▇▇▇
in connection with the business and goods in relation to which the same has been
and may in the future be used and shall not acquire any such right, title or
interest in the ▇▇▇▇ except as provided in Section 5.2 hereof.
5.2 Licenses. Living Data hereby grants to Vasomedical a non-exclusive
license during the Term to use the ▇▇▇▇ in its advertising material for
marketing the Products in the Territory (the "Advertising Materials"). The
grants of these non-exclusive licenses are on the condition that the ▇▇▇▇ is
identified as that of the owner and subject to the other terms and conditions
set forth in this Article 5 and in Section 9.3 hereof. Any use of a ▇▇▇▇ shall
require the prior written approval of the owner of that ▇▇▇▇.
5.3 Compliance. Vasomedical shall comply with all notice requirements of
any law or regulation applicable or reasonably necessary in connection with its
activities hereunder for the protection of the ▇▇▇▇ in connection with Products.
Sales by Vasomedical of Products shall be deemed for the purposes of the
acquisition of the trademark rights and the purposes of trademark registration
to have been made by and for the benefit of Living Data as the owner of the
▇▇▇▇. Vasomedical will not, at any time, do any act or thing which may, in any
way, impair the rights of Living Data in and to the ▇▇▇▇ of the other party or
which may affect the validity of the ▇▇▇▇ of the other party or which may
depreciate the value of the ▇▇▇▇ of the other party or its prestige and good
will.
5.4 No Registration Right. Vasomedical acknowledges that it may not acquire
a registration or file and prosecute a trademark application or applications to
register the ▇▇▇▇ for any items or services, including Products, anywhere in the
world.
5.5 Assignment. (a) To the extent any rights in and to the ▇▇▇▇ are deemed
to accrue to Vasomedical pursuant to this Agreement or otherwise, Vasomedical
hereby assigns any and all such rights, at such time as they may be deemed to
accrue to Living Data. Vasomedical shall execute any and all documents and
instruments required by the owner of the ▇▇▇▇ which the owner may deem
necessary, proper or appropriate to accomplish or confirm the foregoing. Any
such assignment, transfer or conveyance shall be without consideration other
than the mutual agreements contained herein. Upon expiration or termination of
this Agreement for any reason whatsoever, Vasomedical will forthwith execute and
file any and all documents requested by Living Data terminating any and all
trademark registrations, registered user agreements, if any, and other documents
regarding the ▇▇▇▇.
(b) All right, title and interest to any intellectual property associated
with any Product or Advertising Materials (including, without limitation, all
artwork, designs, prototypes, packaging and promotion materials and any other
trademarks, designs, patents and copyrights) shall vest in Living Data upon
submission of same by Vasomedical to Living Data in accordance with the
provisions of this Agreement and shall entitle Living Data to the ownership and
use of such intellectual property in any manner Living Data may deem beneficial
anywhere in the world in perpetuity. In furtherance thereof, Vasomedical agrees
and acknowledges that all trademarks, designs, patents, copyrights and all other
intellectual property (the "Property") created by or for Vasomedical and
utilized in conjunction with the Products and/or Advertising Materials, whether
or not created by Vasomedical or any third party during the Term, are and shall
remain the property of Living Data notwithstanding the expiration or termination
of this Agreement and Living Data shall have the unrestricted right to utilize
the Property in any manner that it deems appropriate
(c) In furtherance of the provisions set forth in Section 5.5(b),
Vasomedical hereby assigns and transfers to Living Data all of its right, title
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and interest, including, without limitation, ownership of all rights under any
trademarks, copyrights, trade dress, patents and/or design patents created for
or associated in any way with the Products and Advertising Materials, and any
copyright in and to all advertisements of any kind, including without
limitation, television or radio commercials, labels, packaging, promotion pieces
or any other Advertising Material produced or created hereafter by or for the
Living Data which may related to the Products or which may bear or contain the
▇▇▇▇. The effective date of such transfer and assignment shall be the date on
which the Advertising Materials were created. To the extent that rights in any
of such Advertising Materials produced for Vasomedical may be in third persons,
Vasomedical will obtain and deliver to Living Data assignments of said rights
from said third persons to Living Data effective as of the date of creation of
such Advertising Materials in order that such rights in such Advertising
Materials will fully vest in Living Data. If Vasomedical will fail or refuse to
sign any such documents which may be required pursuant to this Agreement
(including without limitation any assignments of copyrights), then Living Data
will be entitled to sign such documents for and on behalf of Vasomedical and,
for this purpose, Vasomedical hereby irrevocably appoints Living Data its
attorney-in-fact with power of substitution to sign all such documents as may be
required. This power-of-attorney is coupled with an interest and is irrevocable.
5.6 No Challenge or Contest. Vasomedical agrees never (a) to challenge the
validity or ownership of the ▇▇▇▇ or any application for registration thereof,
or any trademark registrations thereof in any jurisdiction, nor (b) to contest
the fact that any party's rights under this Agreement are solely those provided
for herein, and terminate upon termination or expiration of this Agreement.
5.7 Limit on Use. Vasomedical shall not use the ▇▇▇▇ as part of a corporate
or business name or as a service ▇▇▇▇ and shall not use the ▇▇▇▇ in any form
without the owner's prior written consent.
5.8 Survival of Provisions. The provisions of this Article 5 shall survive
the termination or expiration of this Agreement.
6. Term and Termination.
6.1 Term. The term of this Agreement (the "Term") shall commence on June
21, 2007 and will continue, subject to the termination provisions set forth in
this Article 6, for an initial term ending May 31, 2012, provided that this
Agreement will automatically renew for additional one-year periods unless either
party give written notice to the other not to extend the Term not less than 90
days prior to the then next upcoming expiration date.
6.2 Termination by Living Data. This Agreement may be terminated
immediately upon notice from Living Data if: (a) Vasomedical is unable to pay
its debts as and when the same becomes due, (b) Vasomedical files a petition in
bankruptcy, or a petition is filed against Vasomedical and is not removed in 60
days, (c) Vasomedical makes an assignment for the benefit of Vasomedical's
creditors, (d) Vasomedical makes any extraordinary arrangement with its
creditors, (e) Vasomedical is subject to the appointment of a receiver for
Vasomedical which is not cured in 60 days, (f) Vasomedical fails to perform any
of its material covenants hereunder after 30 days' prior written notice to cure
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and Vasomedical does not in fact cure within such 30-day period, (g) Products
are resold directly by Vasomedical or an Affiliate outside the Territory and
Vasomedical has had 30 days to correct the situation and has failed to do so,
(h) Vasomedical is convicted of any crime in any jurisdiction which materially
and adversely reflects on Living Data, or (i) any of the reports or forms which
Vasomedical submits to Living Data are found to be materially false or
fraudulent. Notwithstanding anything in subsection (f) of this Section 6.2 to
the contrary, after the initial Contract Year, if Vasomedical's failure to
perform is its failure to market Products in an amount at least equal to the
minimum amount projected in the Annual Marketing Plan (or such standard as may
then be in effect) and such failure is not a result of the failure of Living
Data to provide Products on a timely basis pursuant to the Supplier Agreement,
after notice from Living Data to such effect, Living Data shall have the right
at the end of the second quarter to render Vasomedical's distribution rights
non-exclusive within the Territory and shall have the right to grant other
Persons (including Living Data) the right to distribute Products in the
Territory and may not terminate this Agreement until such failure has continued
for at least four successive Quarter-Annual Periods. In no event may Vasomedical
manufacture, or cause to be manufactured by a Person other than Living Data, any
Product.
6.3 Termination by Vasomedical. This Agreement may be terminated
immediately upon notice from Vasomedical if: (a) Living Data is unable to pay
its debts as and when the same becomes due, (b) Living Data files a petition in
bankruptcy, or a petition is filed against Living Data and is not removed in 60
days, (c) Living Data makes an assignment for the benefit of Living Data's
creditors, (d) Living Data makes any extraordinary arrangement with its
creditors, (e) Living Data is subject to the appointment of a receiver for
Living Data which is not cured in 60 days, (f) Living Data fails to perform any
of its material covenants hereunder after 30 days' prior written notice to cure
and Living Data does not in fact cure within such 30-day period, and (g) Living
Data is convicted of any crime in any jurisdiction which materially and
adversely reflects on Vasomedical
6.4 No Further Use. Vasomedical acknowledges that any use of the ▇▇▇▇ or
the Advertising Materials after the date that termination is effective shall
constitute an infringement of the intellectual property rights of Living Data.
Upon the expiration or termination of this Agreement, Vasomedical shall return
to Living Data, at Vasomedical's cost, all of Living Data's Confidential
Information (as defined in Section 9.2), Products and Advertising Materials in
its possession and Vasomedical shall certify to Living Data that it has not
retained or made copies of any of the foregoing. If instructed to do so in
writing by Living Data, Vasomedical shall destroy the Advertising Materials and
Living Data's Confidential Information in its possession and be required to
deliver a certificate to Living Data evidencing such destruction. Upon the
expiration or termination of this Agreement, Living Data shall return to
Vasomedical, at Living Data's cost, all of Vasomedical's Confidential
Information in its possession and Living Data shall certify to Vasomedical that
it has not retained or made copies of any of the foregoing. If instructed to do
so in writing by Vasomedical, Living Data shall destroy the Vasomedical's
Confidential Information in its possession and be required to deliver a
certificate to Vasomedical evidencing such destruction.
7. Representations and Warranties.
7.1 Living Data represents and warrants to Vasomedical, as of the date
hereof, as follows, in each case subject to the exceptions set forth in the
disclosure statement delivered by Living Data to Vasomedical prior to the
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execution of this Agreement (the "Living Data Disclosure Statement"). The Living
Data Disclosure Statement is arranged in Schedules corresponding to the numbered
and lettered subsections of this Section 7.1, and the disclosure in any Schedule
of the Living Data Disclosure Statement shall qualify only the corresponding
subsection of this Section 7.1.
(a) Organization. Living Data is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and has
all requisite corporate power and authority to own, lease and operate its
properties and assets in the manner in which such properties and assets are now
owned, leased and operated and to carry on the business in which it is now
engaged.
(b) Good Standing. Living Data is duly qualified as a foreign corporation
to do business, and is in good standing, in each jurisdiction where the
character of its owned or leased properties or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
or in good standing would not, individually or in the aggregate, reasonably be
expected to have a Living Data Material Adverse Effect (as defined in subsection
(e)(ii) of this Section 7.1).
(c) Validity. Living Data has full corporate power and authority to execute
and deliver this Agreement and all of the other agreements and documents
referred to herein, executed in connection herewith or contemplated hereby to
which Living Data is or will be a party and to perform its obligations hereunder
and to consummate the transactions contemplated hereby. This Agreement
constitutes the valid and binding obligation of Living Data, enforceable in
accordance with its terms, subject to bankruptcy, insolvency or other laws
affecting creditors' rights generally and general principles of equity affecting
remedies. The execution and delivery of this Agreement by Living Data and the
consummation of the transactions contemplated hereby have been duly authorized
by the board of directors of Living Data and such execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not require the consent, approval or authorization of any other Person,
including, without limitation, its shareholders or any public authority or
self-regulatory authority.
(d) No Conflict. The execution and delivery of this Agreement by Living
Data and the performance of its obligations hereunder (a) are not in violation
or breach of, and will not conflict with, or constitute a default under, any of
the terms of the Living Data certificate of incorporation or the Living Data
bylaws, or any note, debt instrument, security agreement, deed of trust or
mortgage or any other contract, agreement or commitment binding upon Living Data
or any of its assets or properties, (b) will not result in the creation or
imposition of any lien, security interest, encumbrance, equity or restriction in
favor of any third party upon any of the assets or properties of Living Data,
and (c) will not conflict with or violate any applicable law, regulation,
judgment, order or decree of any government, governmental instrumentality,
self-regulatory authority or court having jurisdiction over Living Data or any
of its assets or properties.
(e) Absence of Certain Changes or Events Since December 31, 2006. Since
December 31, 2006:
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(i) Living Data has not sustained any damage, destruction or loss
(including, without limitation, by reason of revocation of license or right to
do business, total or partial termination, suspension, default or modification
of contracts, governmental or self-regulatory restriction, regulation,
investigation or inquiry).
(ii) No Living Data Material Adverse Effect (as defined herein) has
occurred. For purposes of this Agreement, "Living Data Material Adverse Effect"
shall mean any change or effect that is, or could reasonably be expected to be,
materially adverse to the business, operations, assets and liabilities (taken
together as a whole), capitalization, results of operations or condition
(financial or otherwise) of Living Data, other than any change or effect (i)
relating to the economy in general or (ii) relating to the industry in which
Living Data operates in general and not specifically relating to Living Data.
(iii) Living Data has no agreement, arrangement or understanding with
respect to any of the foregoing.
(f) Environmental.
(i) No Hazardous Materials (as hereinafter defined) have been used, stored
or otherwise handled in any manner by Living Data or any Affiliate on, under,
in, from or affecting any of the real property owned or leased by Living Data
during the past five years (the "Living Data Property"), other than in
compliance with Environmental Laws (as hereinafter defined). To Living Data's
knowledge, no prior or current owner or occupant of the Living Data Property has
used Hazardous Materials on, under, in, from or affecting the Living Data
Property.
(ii) No Hazardous Materials have at any time been released into, stored or
deposited by Living Data or any Affiliate within or on the Living Data Property,
by Living Data or any Affiliate into any water systems on or below the surface
of the Living Data Property, or by Living Data or any Affiliate directly or
indirectly onto any property or water system adjoining, adjacent to or abutting
the Living Data Property, or have been used by Living Data or any Affiliate in
the construction of any improvements located on or about the Living Data
Property.
(iii) Neither Living Data nor any Affiliate has received any notice of any
violations (nor is any of them aware of any existing violations) of any
applicable laws or regulations governing the use, storage, treatment,
transportation, manufacture, refinement, handling, production or disposal of
Hazardous Materials on, under, in, from or affecting the Living Data Property
and there are not any legal actions or proceedings commenced or, to Living
Data's knowledge, threatened by any Person with respect to any such violations.
(iv) The Living Data Property is currently being, and has in the past been,
operated by Living Data in accordance with, and in compliance with, all
applicable Environmental Laws.
(v) For purposes of this Agreement (A) "Hazardous Materials" means any
hazardous materials, hazardous wastes, hazardous constituents, hazardous or
toxic substances or petroleum products (including gasoline, crude oil or any
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fraction thereof), defined or regulated as such in or under any Environmental
Law, including, without limitation, asbestos, polychlorinated biphenyls and urea
formaldehyde insulation, and (B) "Environmental Laws" are any and all federal,
state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any governmental authority or other
requirements of law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human health or the
environment.
(g) Proprietary Rights. Schedule 7.1(g) of the Living Data Disclosure
Statement contains a full and complete list of all material Proprietary Rights
(as herein defined) owned, possessed or used by Living Data. The operations of
Living Data do not now conflict with or infringe, and have not in the past
conflicted with or infringed, any Proprietary Rights owned, possessed or used by
any third party. There are no third parties whose operations conflict with or
infringe, nor has anyone asserted that such operations conflict with or
infringe, any Proprietary Rights owned, possessed or used by Living Data. For
purposes of this Agreement, "Proprietary Rights" means trademarks, trade names,
service marks, copyrights and patents, or applications therefor, or other
intellectual property.
(h) Litigation. There is no claim, dispute, action, proceeding, suit or
appeal or investigation or inquiry, at law or in equity, involving Living Data,
or any of its officers and directors (in their capacities as such) before any
court, agency, authority, self-regulatory authority, arbitration panel or other
tribunal, which, if decided adversely to Living Data, would have a Living Data
Material Adverse Effect, and, to the knowledge of Living Data, none has been
threatened or is in prospect against Living Data or its officers and directors
(in their capacity as such). To the knowledge of Living Data, there are no facts
which, if known to shareholders, customers, governmental authorities,
self-regulatory authorities, regulators, bondholders or other investors or other
persons, would form the basis of any such claim, dispute, action, proceeding,
suit, appeal, investigation or inquiry, and Living Data is not subject to any
order, writ, injunction or decree of any court, agency, authority, arbitration
panel or other tribunal.
(i) Brokers or Finders. Living Data has not incurred, and will not incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or the
transactions contemplated hereby.
(j) Foreign Corrupt Practices Act. Neither Living Data nor any Affiliate
and none of Living Data's officers or directors, or, to Living Data's knowledge,
any employees, agents, distributors or representatives acting on behalf of
Living Data or any Affiliate, has paid, given or received, or has offered or
promised to pay, give or receive, any bribe or other unlawful payment of money
or other thing of value, any unlawful discount, or any other unlawful
inducement, to or from any Person (including any government entity) in the
United States or elsewhere in connection with or in furtherance of the business
of Living Data (including, without limitation, any unlawful offer, payment or
promise to pay money or other thing of value (i) to any foreign official,
political party (or official thereof) or candidate for political office for the
purposes of influencing any act, decision or omission in order to assist Living
Data in obtaining business for or with, or directing business to, any Person, or
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(ii) to any Person, while knowing that all or a portion of such money or other
thing of value will be offered, given or promised unlawfully to any such
official or party for such purposes). The business of Living Data is and was not
in any manner dependent upon the making or receipt of such payments, discounts
or other inducements. Neither Living Data nor any Affiliate has otherwise taken
any action that could cause Living Data to be in violation of the Foreign
Corrupt Practices Act of 1977, as amended, the regulations thereunder, or any
applicable law or regulation of similar effect.
(k) Disclosure of Material Facts. Living Data has disclosed to Vasomedical
all material facts relating to the operations of Living Data as to which
Vasomedical has made inquiry. The representations and warranties contained in
this Section 7.1 and in the Living Data Disclosure Statement, and any other
documents or information furnished to Vasomedical by or on behalf of Living Data
in connection with this Agreement do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements contained herein or therein not misleading.
7.2 Vasomedical represents and warrants to Living Data, as of the date
hereof, as follows, in each case subject to the exceptions set forth in the
disclosure statement delivered by Vasomedical to Living Data prior to the
execution of this Agreement (the "Vasomedical Disclosure Statement"). The
Vasomedical Disclosure Statement is arranged in Schedules corresponding to the
numbered and lettered subsections of this Section 7.2, and the disclosure in any
Schedule of the Vasomedical Disclosure Statement shall qualify only the
corresponding subsection of this Section 7.2.
(a) Organization. Vasomedical is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to own, lease and operate its
properties and assets in the manner in which such properties and assets are now
owned, leased and operated and to carry on the business in which it is now
engaged.
(b) Subsidiaries. Vasomedical does not own any equity interest, directly or
indirectly, in any corporation, partnership, limited liability company, joint
venture, firm or other entity other than in its subsidiaries listed in Schedule
7.2(b) of the Vasomedical Disclosure Statement (herein collectively referred to
as the "Vasomedical Subsidiaries" and individually as a "Vasomedical
Subsidiary"). Each Vasomedical Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the state or other
jurisdiction in which it was incorporated and has all requisite corporate power
and authority to own, lease and operate its properties and assets in the manner
in which such properties and assets are now owned, leased and operated and to
carry on the business in which it is now engaged.. Each Vasomedical Subsidiary
is wholly-owned by Vasomedical except as set forth in Schedule 7.2(b) of the
Vasomedical Disclosure Statement.
(c) Good Standing. Each of Vasomedical and the Vasomedical Subsidiaries is
duly qualified as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of its owned or leased properties or
the nature of its activities makes such qualification necessary, except where
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the failure to be so qualified or in good standing would not, individually or in
the aggregate, reasonably be expected to have a Vasomedical Material Adverse
Effect (as defined in subsection (j)(ii) of this Section 7.2).
(d) Validity. Vasomedical has full corporate power and authority to execute
and deliver this Agreement and all of the other agreements and documents
referred to herein, executed in connection herewith or contemplated hereby to
which Vasomedical is or will be a party and to perform its obligations hereunder
and to consummate the transactions contemplated hereby. This Agreement
constitutes the valid and binding obligation of Vasomedical enforceable in
accordance with its terms, subject to bankruptcy, insolvency or other laws
affecting creditors' rights generally and general principles of equity affecting
remedies. The execution and delivery of this Agreement by Vasomedical and the
consummation of the transactions contemplated hereby have been duly authorized
by the board of directors of Vasomedical and such execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not require the consent, approval or authorization of any other Person,
including, without limitation, its stockholders or any public authority or
self-regulatory authority, except with respect to the offer and issuance of the
Shares as to which Vasomedical will take such action on a timely basis as is
necessary to secure an exemption under the Securities Act and the New York State
▇▇▇▇▇▇ Act and to file such reports as are required by the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
(e) No Conflict. The execution and delivery of this Agreement by
Vasomedical and the performance of its obligations hereunder (a) are not in
violation or breach of, and will not conflict with, or constitute a default
under, any of the terms of the Vasomedical certificate of incorporation or the
Vasomedical bylaws, or any note, debt instrument, security agreement, deed of
trust or mortgage or any other contract, agreement or commitment binding upon
Vasomedical or any Vasomedical Subsidiary or any of their assets or properties,
(b) will not result in the creation or imposition of any lien, security
interest, encumbrance, equity or restriction in favor of any third party upon
any of the assets or properties of Vasomedical or any Vasomedical Subsidiary,
and (c) will not conflict with or violate any applicable law, regulation,
judgment, order or decree of any government, governmental instrumentality,
self-regulatory authority or court having jurisdiction over Vasomedical or any
Vasomedical Subsidiary or any of their assets or properties.
(f) Capitalization. Vasomedical's authorized capital stock consists of (a)
110,000,000 shares of the Common Stock, of which 65,198,592 shares are currently
issued and outstanding, and 1,000,000 shares of Preferred Stock, $.001 par
value, of which no shares are currently issued and outstanding. All of the
issued and outstanding shares of the Common Stock have been duly authorized,
validly issued and fully paid, are nonassesable and are free of any preemptive
or similar rights.
(g) Obligations with respect to Capital Stock. Vasomedical has no
commitment or obligation to issue, deliver or sell, under any offer,
subscription, stock option agreement, stock bonus agreement, stock purchase
plan, incentive compensation plan, warrant, call, conversion right otherwise,
any shares of its capital stock or other securities, except as contemplated
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under this Agreement, under the Securities Purchase Agreement or as disclosed in
Schedule 8.2(g) of the Vasomedical Disclosure Statement. There are no
stockholder agreements, voting agreements, voting trusts or other similar
arrangements which may have the effect or restricting or limiting the transfer,
voting or other rights associated with the capital stock of Vasomedical.
(h) Financial Statements. Each of the financial statements (including, in
each case, any related notes thereto) (the "Vasomedical Financial Statements")
contained in the Vasomedical SEC Reports (as defined in subsection (k) of this
Section 7.2 hereof) filed by Vasomedical with the Securities and Exchange
Commission (the "SEC") (i) was prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited interim financial statements, as
may be permitted by the SEC on Form 10-Q under the Securities Exchange Act; and
(u) fairly presented the consolidated financial position of Vasomedical as at
the respective dates thereof and the consolidated results of its operations and
cash flows for the periods indicated, consistent with the books and records of
the Vasomedical and the Vasomedical Subsidiaries, except that the unaudited
statements were or are subject to normal and recurring year-end adjustments
which were not, or are not expected to be, material in amount.
(i) No Undisclosed Liabilities. Neither Vasomedical nor any Vasomedical
Subsidiary has any liabilities (absolute, accrued, contingent or otherwise)
other than liabilities or obligations (a) included in the Vasomedical Financial
Statements, (b) incurred since February 28, 2007 in the ordinary course of
business consistent with past practice, which, individually or in the aggregate,
would not reasonably be expected to have a Vasomedical Material Adverse Effect,
(c) under this Agreement, or (d) as disclosed in Schedule 7.2(i) of the
Vasomedical Disclosure Statement, which, individually or in the aggregate, would
not reasonably be expected to have a Vasomedical Material Adverse Effect.
(j) Absence of Certain Changes or Events Since February 28, 2007. Since
February 28, 2007:
(i) Neither Vasomedical nor any Vasomedical Subsidiary has sustained any
damage, destruction or loss (including, without limitation, by reason of
revocation of license or right to do business, total or partial termination,
suspension, default or modification of contracts, governmental or
self-regulatory restriction, regulation, investigation or inquiry).
(ii) No Vasomedical Material Adverse Effect (as defined herein) has
occurred. For purposes of this Agreement, "Vasomedical Material Adverse Effect"
shall mean any change or effect that is, or could reasonably be expected to be,
materially adverse to the assets and liabilities (taken together as a whole),
capitalization or condition (financial or otherwise) of Vasomedical and the
Vasomedical Subsidiaries, taken as a whole, other than any change or effect (i)
relating to the economy in general or (ii) relating to the industry in which
Vasomedical and the Vasomedical Subsidiaries operate in general and not
specifically to Vasomedical or any Vasomedical Subsidiary.
(iii) Vasomedical has not purchased, redeemed or otherwise acquired or
committed itself to acquire, directly or indirectly, any shares of the capital
stock of Vasomedical.
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(iv) Neither Vasomedical nor any Vasomedical Subsidiary has mortgaged,
pledged or otherwise encumbered or subjected to lien any Vasomedical or
Vasomedical Subsidiary assets or properties, tangible or intangible, except for
liens for current taxes which are not yet due and payable and other liens
arising out of the ordinary course of business.
(v) Vasomedical has not made any change in accounting methods or principles
used for financial reporting purpose, except as required by a change in GAAP or
pursuant to changes in, or additions to, FASB or SEC pronouncements and
concurred with by its independent registered public accounting firm.
(vi) Neither Vasomedical nor any Vasomedical Subsidiary has any agreement,
arrangement or understanding with respect to any of the foregoing.
(k) SEC Filings. Vasomedical has filed with the SEC all forms, reports,
registration statements and documents required to be filed by it with the SEC
under the Exchange Act after January 1, 2006 (collectively, all such forms,
reports, registration statements and documents so filed are referred to in this
Agreement as the "Vasomedical SEC Reports"). All of the Vasomedical SEC Reports
were timely filed and complied as to form, when filed (if amended or superseded
by filing prior to the date of this Agreement, then on the date of such amended
or superseding filing), in all material respects with the applicable provisions
of the Securities Act, the Exchange Act and the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as
the case may be. The Vasomedical SEC Reports (including all exhibits and
schedules thereto and documents incorporated by reference therein) did not, at
the time they were filed (or, if amended or superseded by filing prior the date
of this Agreement, then on the date of such amended or superseding filing),
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. To the
knowledge of Vasomedical, except as disclosed in the Vasomedical SEC Reports,
each of Vasomedical officers and directors has complied with all filing
requirements under Section 16(a) of the Exchange Act.
(l) Environmental.
(i) No Hazardous Materials have been used, stored or otherwise handled in
any manner by Vasomedical or any Vasomedical Subsidiary on, under, in, from or
affecting any of the real property owned or leased by Vasomedical or any
Vasomedical Subsidiary during the past five years (the "Vasomedical Property"),
other than in compliance with Environmental Laws. To Vasomedical's knowledge, no
prior or current owner or occupant of the Vasomedical Property has used
Hazardous Materials on, under, in, from or affecting the Vasomedical Property.
(ii) No Hazardous Materials have at any time been released into, stored or
deposited by Vasomedical or any Vasomedical Subsidiary within or on the
Vasomedical Property, by Vasomedical or any Vasomedical Subsidiary into any
water systems on or below the surface of the Vasomedical Property, or any
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Vasomedical Subsidiary directly or indirectly onto any property or water system
adjoining, adjacent to or abutting the Vasomedical Property, or have been used
by Vasomedical or any Vasomedical Subsidiary in the construction of any
improvements located on or about the Vasomedical Property.
(iii) Neither Vasomedical nor any Vasomedical Subsidiary nor any Affiliate
of either has received any notice of any violations (nor is any of them aware of
any existing violations) of any applicable laws or regulations governing the
use, storage, treatment, transportation, manufacture, refinement, handling,
production or disposal of Hazardous Materials on, under, in, from or affecting
the Vasomedical Property and there are not any legal actions or proceedings
commenced or, to Vasomedical's knowledge, threatened by any Person with respect
to any such violations.
(iv) The Vasomedical Property is currently being, and has in the past been,
operated by Vasomedical and the Vasomedical Subsidiaries in accordance with, and
in compliance with, all applicable Environmental Laws.
(m) Licenses and Permits. Each of Vasomedical and the Vasomedical
Subsidiaries had obtained, and is in compliance with, all necessary licenses,
permits, consents, approvals, orders, certificates, authorizations, declarations
and filings required by all federal, state, local and other governmental,
self-regulatory or regulatory bodies and all courts and other tribunals for the
conduct of the business and operations of Vasomedical and the Vasomedical
Subsidiaries as now conducted or as conducted in the past, except where the
failure to obtain or comply would not have Vasomedical Material Adverse Effect.
(n) Compliance with Law. The businesses of Vasomedical and the Vasomedical
Subsidiaries at all times have been conducted in all material respects in
accordance with all applicable laws, rules, regulations, orders and other
requirements of governmental and self-regulatory authorities, including, without
limitation, ERISA, all Environmental Laws, all laws, regulations and orders
relating to antitrust or trade regulation, employment practices and procedures,
the health and safety of employees and consumer credit. Neither Vasomedical nor
any Vasomedical Subsidiary nor any Affiliate of either has received any notice
of alleged violations of any laws, rules, regulations, orders or other
requirements of governmental or self-regulatory authorities.
(o) Litigation. There is no claim, dispute, action, proceeding, suit or
appeal or investigation or inquiry, at law or in equity, involving Vasomedical
or any Vasomedical Subsidiary, or any of their officers and directors (in their
capacities as such) before any court, agency, authority, self-regulatory
authority, arbitration panel or other tribunal that would require disclosure
pursuant to Item 103 of the SEC's Regulation S-K and, to the knowledge of
Vasomedical, none has been threatened or is in prospect against Vasomedical or
any Vasomedical Subsidiary or their officers and directors (in their capacities
as such). To the knowledge of Vasomedical, there are no facts which, if known to
stockholders, customers, governmental authorities, self-regulatory authorities,
regulators, bondholders or other investors or other persons, would form the
basis of any such claim, dispute, action, proceeding, suit, appeal,
investigation or inquiry. Neither Vasomedical nor any Vasomedical Subsidiary is
subject to any order, writ, injunction or decree of any court, agency,
authority, arbitration panel or other tribunal.
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(p) Brokers or Finders. Neither Vasomedical nor any Affiliates has
incurred, nor will either of Vasomedical or any Affiliate incur, directly or
indirectly, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement or the transactions
contemplated hereby other than to Life Science Group, Inc., which obligation to
Life Science Group, Inc. shall be paid by Vasomedical.
(q) Foreign Corrupt Practices Act. Neither Vasomedical nor any Affilaite
and none of Vasomedical's or Vasomedical Subsidiaries' officers or directors,
or, to Vasomedical's knowledge, any employees, agents, distributors or
representatives acting on behalf of Vasomedical or any Vasomedical Subsidiary,
has paid, given or received, or has offered or promised to pay, give or receive,
any bribe or other unlawful payment of money or other thing of value, any
unlawful discount, or any other unlawful inducement, to or from any Person
(including any government entity) in the United States or elsewhere in
connection with or in furtherance of the business of Vasomedical or any
Vasomedical Subsidiary (including, without limitation, any unlawful offer,
payment or promise to pay money or other thing of value (i) to any foreign
official, political party (or official thereof) or candidate for political
office for the purposes of influencing any act, decision or omission in order to
assist Vasomedical or the Vasomedical Subsidiaries in obtaining business for or
with, or directing business to, any Person, or (ii) to any Person, while knowing
that all or a portion of such money or other thing of value will be offered,
given or promised unlawfully to any such official or party for such purposes).
The business of Vasomedical and the Vasomedical Subsidiaries is and was not in
any manner dependent upon the making or receipt of such payments, discounts or
other inducements. Neither Vasomedical nor any Affiliate has otherwise taken any
action that could cause Vasomedical or any Vasmedical Subsidiary to be in
violation of the Foreign Corrupt Practices Act of 1977, as amended, the
regulations thereunder, or any applicable law or regulation of similar effect.
(r) Disclosure of Material Facts. Vasomedical has disclosed to Living Data
all material facts relating to the condition (financial or otherwise), business,
net worth, assets, properties or operations of Vasomedical and the Vasomedical
Subsidiaries as to which Living Data has made inquiry. The representations and
warranties contained in this Section 7.2 and in the Vasomedical Disclosure
Statement, and any other documents or information furnished to Living Data by or
on behalf of Vasomedical in connection with this Agreement do not contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements contained herein or therein not misleading.
(s) Diminish the ▇▇▇▇. Neither Vasomedical nor any Affiliate shall at any
time do any act or thing that may in any way impair the value of the ▇▇▇▇ or the
exclusive ownership rights and interests of Living Data therein. Vasomedical
will not, by any act or omission, use any Marks in any manner that may tarnish,
degrade, disparage or reflect adversely on the ▇▇▇▇ or on Living Data, its
business or reputation, or the Products. Vasomedical will not, by any act or
omission, take any other action which damages Living Data's reputation or which
reflects negatively upon Living Data or the ▇▇▇▇ or the Products.
8. Indemnities
8.1 Living Data's Indemnity. Living Data shall indemnify and hold
Vasomedical harmless from and against, and shall defend promptly Vasomedical
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from, and reimburse Vasomedical for, any and all losses, damages, costs,
expenses, liabilities, obligations and claims of any kind (including, without
limitation, reasonable attorneys' fees and other costs and expenses)
(collectively, "Damages") which Vasomedical may at any time suffer or incur, or
become subject to, as a result of, or in connection with,
(a) any material breach of this Agreement or material inaccuracy of any of
the representations and warranties made by Living Data in or pursuant to this
Agreement;
(b) any material failure by Living Data to carry out, perform, satisfy and
discharge any of its material covenants, agreements, undertakings, liabilities,
or obligations under this Agreement, but excluding any claim based on
non-delivery to third parties of Products;
(c) any claim that the Proprietary Rights of Living Data infringe the
Proprietary Rights of a Person (other than Vasomedical or an Affiliate thereof);
(d) any product liability or warranty claim arising out of a latent defect
in the design of any of the Products;
(e) any claim arising out of an alleged violation of Environmental Laws at
the Living Data Property; and
(f) any other third party claim arising out of Living Data's operation of
its business, both before and after the date of this Agreement.
8.2 Vasomedical's Indemnity. Vasomedical shall indemnify and hold harmless
Living Data harmless from and against, and shall defend Living Data from, and
reimburse Living Data for, any Damages which Living Data may at any time suffer
or incur, or become subject to, as a result of, or in connection with,
(a) any material breach of this Agreement or material inaccuracy of any of
the representations and warranties made by Vasomedical in or pursuant to this
Agreement;
(b) any material failure by Vasomedical or any Vasomedical Subsidiary to
carry out, perform, satisfy and discharge any of its material covenants,
agreements, undertakings, liabilities, or obligations under this Agreement;
(c) any claim arising out of an alleged violation of Environmental Laws at
the Vasomedical Property; and
(d) any other third party claim arising out of Vasomedical's operation of
its business, both before and after the date of this Agreement.
8.3 Indemnity Procedure. Living Data or Vasomedical, whichever is
applicable (the 'Indemnified Party"), shall promptly notify the other party (the
"Indemnifying Party") of any claim, demand, action, or proceeding for which
indemnification will be sought under this Article 8 and, if such claim, demand,
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action, or proceeding is a third party claim, demand, action, or proceeding (a
"Proceeding"), the Indemnifying Party shall have the right at its expense to
assume the defense thereof using counsel reasonably acceptable to the
Indemnified Party. The Indemnified Party shall have the right to participate, at
its own expense, with respect to any such Proceeding. In connection with any
such proceeding, the Indemnifying Party and the Indemnified Party shall
cooperate with each other and provide each other with access to relevant books
and records in its possession. Notwithstanding anything in the foregoing to the
contrary, an indemnified Party will have the right to retain its own counsel,
with the fees and expenses to be paid by the Indemnifying Party, if
representation of such Indemnified Party would be inappropriate due to actual or
potential conflict of interests between such Indemnified Party and any other
party represented by such counsel in such Proceeding. No such Proceeding shall
be settled without the prior written consent of both the Indemnified Party and
the Indemnifying Party. If a firm written offer is made to settle any Proceeding
and the Indemnified Party refuses to consent to such settlement, then: (i) the
Indemnifying Party shall be excused from, and the Indemnified Party shall be
solely responsible for, all further defense of such Proceeding and (ii) the
maximum liability of the Indemnifying Party relating to such Proceeding shall be
the amount of the proposed settlement if the amount thereafter recovered from
the Indemnified Party on such Proceeding is greater than the amount of the
proposed settlement.
9. Miscellaneous.
9.1 Independent Contractors. Each of Living Data and Vasomedical is an
independent contractor, and shall not hold itself out as, or be deemed to be, an
employee, agent or partner of the other party. Its authority shall be limited to
the matters expressly set forth in this Agreement. Each shall have no right or
power to enter into any agreement or commitment in the name or on behalf of, or
otherwise to obligate or bind, the other party, and each shall not hold itself
out as having the authority to do so. Neither party to this Agreement shall have
any authority to employ any person on behalf of the other and each shall, with
respect to all persons employed by it, perform all obligations and discharge all
liabilities imposed upon employers under law. This Section 9.1 shall survive any
termination or expiration of this Agreement.
9.2 Confidential Information. "Confidential Information" shall mean all
information which is not public knowledge disclosed heretofore or hereafter by
either party, including without limitation customer and pricing lists, to the
other party (including its attorneys, accountants or other representatives) in
connection with its performance under this Agreement shall be kept confidential
by such other party, and shall not its used by such other party otherwise than
for use as herein contemplated, except to the extent (a) it is or hereafter
becomes public knowledge or becomes lawfully obtainable from other sources,
including from a third party who is under no obligation of confidentiality to
the party disclosing such information or to whom information was released
without restriction, or (b) such other party is compelled to disclose such
information by judicial or administrative process or, in the opinion of its
counsel, by other requirements of law, or (c) such duty as to confidentiality
and non-use is waived by the non-disclosing party. The obligations set forth in
this Section 9.2 shall survive any termination or expiration of this Agreement.
Notwithstanding the foregoing, the parties to this Agreement (and each employee,
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representative or other agent of the parties) may disclose to any and all
persons, without limitation of any kind, the tax treatment and tax structure
provided for therein provided, however, that no party (nor any employee,
representative, or other agent thereof) shall disclose any information to the
extent that such disclosure could result in a violation of any federal or state
securities law.
9.3 Proprietary Rights. Each of Living Data and Vasomedical acknowledges
and recognizes that (i) Living Data solely owns and has exclusive worldwide
right, title and interest in and to all Proprietary Rights listed in Schedule
7.1(h) of the Living Data Disclosure Statement and all derivative works and/or
modifications thereto and (ii) Vasomedical solely owns and has exclusive
worldwide right, title and interest in and to all Proprietary Rights listed in
Schedule 7.2(m) of the Vasomedical Disclosure Statement and all derivative works
and/or modifications thereto. Each agrees that it will not challenge the
validity or enforceability of any of the Proprietary Rights of the other or any
part thereof at any time. In addition, each party will not directly or
indirectly apply for or attempt to register for itself or others any of the
trademarks, service marks, copyrights or similar protection in any county or
area. In the event that either party wishes to obtain additional protection for
its Proprietary Rights anywhere in the world, the other party will fully
cooperate by providing such documents and information and performing such acts
as are reasonably requested by the party seeking the additional protection. This
Section 9.3 shall survive any termination or expiration of the Agreement.
9.4 No Employee Solicitation. Neither party to this Agreement shall solicit
any employee of the other party for employment by it or any Affiliate, nor shall
either party induce any employee of the other party to leave such employment.
9.5 Equitable Remedies. Each of Living Data and Vasomedical recognizes that
the other party's remedy at law for any breach of the provisions of Sections
9.1, 9.2, 9.3 and 9.4 of this Agreement will be inadequate and, accordingly,
each agrees that in addition to such other rights and remedies that may be
available to the other party, in law or in equity, any court of competent
jurisdiction may enjoin, without the necessity of requiring proof of actual
damages or the posting of any bond or other security, any actual or threatened
breach of the provisions of any such Section (whether during or after the Term).
9.6 Notices. Any notice required or intended to be given by either party
hereto to the other, pursuant to this Agreement or any provision of law, shall
be in writing and sent by registered or certified mail, postage paid, or
delivered by hand or overnight courier and acknowledged, or by telecopier and
confirmed by registered or certified mail as follows:
If to Living Data, to:
Living Data Technology Corporation
▇▇-▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to (which shall not constitute notice):
-----------------------------------
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▇▇▇▇▇▇▇ & Masyr, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Vasomedical, to:
Vasomedical, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to (which shall not constitute notice):
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as may be designated by the respective party by notice
given to the other in accordance with this Section 9.6. Each notice given
pursuant to this Section 9.6 shall be deemed delivered: if mailed, three
Business Days after deposit with the United States Post Office; if delivered by
hand or telecopier, when delivered; and if sent by a nationally recognized
overnight courier, one Business Day after deposit with such courier.
9.7 Waivers. No waiver by Living Data or Vasomedical of any of the terms,
conditions, covenants or agreements of this Agreement, or non-compliance
therewith, shall be binding unless in writing and signed by the party to be
charged, and no such waiver shall be deemed or taken as a waiver at any time
thereafter of the same of any other term, condition, covenant or agreement
herein contained, nor of the strict and prompt performance thereof.
9.8 Assignments. Neither this Agreement nor any right, interest or
obligation hereunder shall be assigned by any party hereto without the prior
written consent of the other party. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement is not intended to confer any rights upon any
person other than the parties to this Agreement.
9.9 Entire Agreement. This Agreement (including the Disclosure Agreements),
the Securities Purchase Agreement, the Warrant of even date herewith, the
Registration Rights Agreement of even date herewith and the Supplier Agreement
constitutes the entire agreements of the parties hereto with respect to the
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subject matter hereof. No covenants, representations or warranties other than
those contained, incorporated or referred to herein have been made, given or
received. No course of dealing should be, or be deemed, a waiver of any term or
condition hereof. This Agreement may not be changed, modified or amended except
in writing and signed by the parties to be charged.
9.10 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law. However, if any provision of this Agreement shall be prohibited
by or invalid under such law, it shall be deemed modified to conform to the
minimum requirements of such law or, if for any reason it is not deemed so
modified, it shall be prohibited or invalid only to the extent of such
prohibition or invalidity without the remainder thereof or any other such
provision being prohibited or invalid.
9.11 Governing Law. This Agreement shall be construed (both as to validity
and performance) and enforced in accordance with, and governed by, the laws of
the State of New York applicable to contracts to be performed entirely within
that State, without giving effect to the principles of conflicts of law;
provided, however, that the due authorization, issuance and enforcement of the
terms of the Living Data Shares shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to the
principles of conflicts of law. Subject to compliance with the provisions of
Article 10 relating to Dispute Conciliation and Arbitration, the parties hereto
irrevocably and unconditionally consent to the exclusive jurisdiction and venue
of the federal and state courts located in the State of New York, Counties of
New York or Nassau with respect to any action, suit or proceeding arising out of
this Agreement or the consummation of the transactions contemplated hereby;
provided, however, that no party hereto waives its right to request the removal
of such action, suit or proceeding from the state court to a federal court in
such jurisdictions. The parties hereto each waives any claim that either such
jurisdiction is not a convenient forum for any such action, suit or proceeding
and the defense of lack of personal jurisdiction. The parties agree that service
of process sent as provided for notices hereunder shall be effective service of
process of any action, suit or proceeding against it in any such court. The
parties hereto irrevocably waive all right to a trial by jury in any action,
suit or proceeding arising out of this Agreement or the consummation of the
transactions contemplated hereby.
9.12 Force Majeure. Neither party shall be liable to the other party for
any loss, damage, delay or failure of performance resulting directly or
indirectly from any cause beyond its reasonable control, including force
majeure, strikes, or the laws, regulations, acts, or failure to act of any
governmental authority.
9.13 Exclusion of Certain Damages. Nothing in this Agreement shall obligate
either party for the lost profits, lost revenues or other consequential or
special damages of the other party.
9.14 Counterparts and Facsimile Signatures. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument. The parties
agree that they may rely on facsimile signatures of either party with respect to
this Agreement or any waiver, amendment, supplement or consent relating thereto,
with the same as if such signature was an original.
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9.15 Knowledge. For purposes of this Agreement, "knowledge" as of any date
that a representation or warranty is given by a party shall mean the actual or
constructive knowledge of the management of such party, at the level of vice
president or above, and "knows" shall have a correlative meaning.
9.16 Survival of Representation and Warranties. The representations and
warranties of the parties contained in this Agreement shall survive the date
hereof and shall terminate and be of no further force or effect as of the third
anniversary of the date hereof (the "Expiration Date") and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of either party to this Agreement. Notwithstanding anything in the preceding
sentence to the contrary, any representation or warranty in respect if which an
indemnity may be sought hereof shall survive the time at which it would
otherwise terminate pursuant to the preceding sentence if a claim for
indemnification shall have been given to the Indemnifying Party prior to the
Expiration Date.
10. Dispute Conciliation And Arbitration
10.1 Conciliation. Where specifically provided in this agreement, business
disputes arising from this Agreement, shall be the subject of a request for
settlement by amicable arrangement through conciliation in accordance with the
following.
(a) The party desiring conciliation ("Requesting Party") shall make a
request therefor in writing to the other party ("Recipient"). The request for
conciliation shall consist of a statement of the issue from the point of view of
the Requesting Party and shall be accompanied by copies of relevant papers and
documents.
(b) Upon receipt of a request for conciliation, the Recipient, within five
(5) Business Days, shall submit to the Requesting Party a written statement of
the issue from their point of view, with copies of relevant papers and
documents.
(c) Within five (5) Business Days of the response to the Requesting Party
(the "Convening Date"), the Requesting Party, the Recipient, or their respective
designees or attorneys shall convene a Conciliation Committee.
(i) The Committee shall be composed of three conciliators, one each
appointed by the Requesting Party and the Recipient and a Chairman. Unless he is
unable to so act, ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall act as Chairman. In his absence, ▇▇▇▇▇
▇▇▇▇▇▇▇, shall act as Chairman. If neither is available, the Chairman shall be
selected by mutual agreement of the Requesting Party and the Recipient.
(d) The Committee shall acquaint itself with the details of the case and
procure any information required for this purpose by communicating with the
Requesting Party and the Recipient, and shall hear from the parties, if
possible.
(e) The Requesting Party and Recipient may appear before the Committee in
person or be represented by duly accredited agents. They may also be assisted by
counsel.
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(f) After having examined the issue and having heard the parties, if
possible, the Conciliation Committee shall submit, within five (5) Business Days
of the Convening Date suggested terms of resolution to the parties. Should the
parties agree to the suggested settlement, the Conciliation Committee shall draw
up and sign a record of the settlement, and shall communicate the terms of
settlement to the parties and their representatives.
(i) If the parties do not agree to the suggested settlement, the
Conciliation Committee is authorized to direct the settlement, and same shall be
binding on the parties.
(ii) In lieu of directing a settlement, the Conciliation Committee may
direct that the matter at issue be submitted to Arbitration as otherwise
provided in this agreement.
10.2 Arbitration. Should a settlement not result based on the foregoing,
the parties must submit the dispute to be resolved by arbitration in New York in
accordance with the rules of the American Arbitration Association and the award
of the arbitration panel should be binding on the parties. The arbitration panel
shall consist of one arbitrator. Any party may take appropriate legal steps to
enforce the award at a court of law.
(a) No person having participated as a participant of the Conciliation
Committee for the settlement of a dispute may be appointed arbitrator for the
same dispute.
10.3 Costs. Each participant shall bear an equal cost of the conciliation
or arbitration panel. Except for the foregoing sentence, each Party should be
responsible for its own costs and expenses incurred under this Section.
(Balance of page left intentionally blank; Signature Page follows)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
LIVING DATA TECHNOLOGY CORPORATION
By:/s/▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
VASOMEDICAL, INC.
By: /s/▇▇▇▇ ▇▇ ▇▇▇
--------------------
Name: ▇▇▇▇ ▇▇ ▇▇▇
Title: President
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EXHIBIT A
Form of Undertaking
The undersigned entity whose name is set forth below ("Buyer"), in
consideration of the sale of certain ECP/EECP products (the "Products") to it by
Vasomedical, Inc. ("Seller") hereby agrees to the following undertaking (this
"Undertaking"):
1. Buyer shall not, directly or indirectly, at any time, sell, distribute
or advertise, any Products in any country other than United States, Puerto Rico
and the territories or other possessions administered by the United States, but
not including duty-free shops in such country (all other areas, collectively,
the "Prohibited Area"), or sell or distribute any Products to any person who
Buyer knows, or should reasonably have known, intends to sell or distribute, or
arrange or participate, directly or indirectly, in the sale or distribution of,
any Products within the Prohibited Area (collectively, the "Restrictions").
2. Buyer represents and warrants that it will not sell, distribute or
advertise the Products in the Prohibited Area or otherwise act inconsistently
with the Restrictions.
3. Buyer acknowledges that the Restrictions have been imposed in connection
with an arrangement between Seller and Living Data Technology Corporation
("LDTC") and understands, intends and agrees that LDTC is a third party
beneficiary of this Undertaking and shall have all rights hereunder as if it was
a party hereto, including the right to apply for, from any court of competent
jurisdiction, an order enjoining Buyer from breach of this Undertaking.
4. (a) Buyer acknowledges that it is not the owner of any right, title or
interest in and to (i) the trademark in the type face and style used by LDTC
(the "Living Data ▇▇▇▇") in any form or embodiment thereof or the trademarks in
the type face and style used by the Seller (collectively, "Vasomedical Marks")
in any form or embodiment thereof, and Buyer is not the owner of the goodwill
attached to the Living Data ▇▇▇▇ or the Vasomedical Marks or (ii) or any trade
secrets, designs, patents, copyrights and other intellectual property relating
to Products (the "Other Intellectual Property"). Sales by Buyer of Products
shall be deemed for the purposes of the acquistion of trademark rights and the
purpose of trademark registration to have been made by and for the benefit of
LDTC as the owner of the Living Data ▇▇▇▇ or Seller as the owner of the
Vasomedical Marks, whichever is applicable. Buyer will not, at any time, do any
act or thing which may, in any way, impair the rights of LDTC in and to the
Living Data ▇▇▇▇ or the right of Seller in and to the Vasomedical Products or
each of their respective rights to the the Other Intellectual Property, or which
may affect the validity of the Living Data ▇▇▇▇ or the Vasomedical Marks or
which may depreciate the value of the Living Data ▇▇▇▇, the Vasomedical Marks or
its or their prestige and good will.
(b) To the extent any rights in and to the Living Data ▇▇▇▇, the
Vasomedical Marks or Other Intellectual Property are deemed to accrue to Buyer,
Buyer hereby assigns any and all such rights at such time as they may be deemed
to accrue to LDTC or Seller, whichever is applicable.
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(c) Buyer agrees never to challenge the validity or ownership of the Living
Data ▇▇▇▇, the Vasomedical Marks or the Other Intellectual Property, any
application for registration thereof, or any registrations thereof in any
jurisdiction.
(d) Buyer shall not use the Living Data ▇▇▇▇ or any of the Vasomedical
Marks as part of a corporate or business name or as a service ▇▇▇▇ and shall not
use the Living Data ▇▇▇▇ or any of the Vasomedical Marks in any form or use or
attempt to use or exploit the Other Intellectual Property without the prior
written consent of the owner.
(e) The provisions of this paragraph 4 shall survive the termination of the
sale of Products from Seller to Buyer.
5. Buyer agrees to furnish Seller and LDTC with such information or forms
as they may reasonably request regarding Buyer's net sales.
6. Buyer, at its sole expense, shall comply with all laws, ordinances,
rules, and regulations (including, without limitation, those pertaining to
health, sanitation, fair trade or consumer protection), obtain all licenses and
permits required by, and pay all taxes, fees, charges, and assessments imposed
or enacted by, any governmental authority and shall not take any action which
will cause Seller or LDTC to be in violation of any law of any jurisdiction,
including but not limited to the U.S. Foreign Corrupt Practices Act of 1977.
7. Buyer acknowledges that LDTC or Seller may conduct local, national
and/or international advertising campaigns, and Buyer agrees that it may not
utilize any advertising or promotion materials of LDTC or Seller for any purpose
whatsoever, whether such materials appear within or outside of the United
States, without the prior written consent of LDTC or Seller, whichever is
applicable.
8. Buyer agrees that it shall purchase all Products from Seller and that it
shall not sell or distribute any Products to any person unless purchased from
LDTC or Seller.
9. Buyer acknowledges and agrees that either Buyer or Seller may terminate
the sales arrangements between Buyer and Seller without cause upon 30 days'
prior written notice to the other. Buyer acknowledges and agrees that its rights
to sell Products are subordinated and subject to the rights of Seller to sell in
Buyer's territory, and if Seller may no longer sell Products in Buyer's
territory, then Buyer's rights hereunder shall terminate. Buyer further
acknowledges and agrees that Seller may terminate the sales arrangements
immediately if Buyer (i) breaches any term of this Undertaking, (ii) fails to
pay its debts as and when due, (iii) files a petition in bankruptcy by or
against Buyer, (iv) makes an assignment for the benefit of its creditors, (v) is
insolvent or if a receiver is appointed for Buyer, (vi) is convicted of any
crime in any jurisdiction which adversely reflects on LDTC or Seller, or (vii)
submits any financial information or reports to LDTC or Seller which are found
to be fraudulent. Buyer agrees that from and after the date of termination,
Buyer shall not sell or distribute any Products and shall not use the Living
Data ▇▇▇▇ or the Vasomedical Marks or any name, symbol or logo confusingly
similar thereto.
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10. Buyer acknowledges that it may not assign to any person or entity any
of its rights to sell Products on behalf of Seller.
11. Buyer agrees that any disputes governing the sales arrangements between
Buyer and Seller or governing this Undertaking, including the interpretation,
performance or non-performance thereof, shall be governed and interpreted by the
laws of the State of New York without giving effect to any principles of
conflicts of law. Buyer hereby submits to the jurisdiction of the federal and
state courts in the County and State of New York with respect to any such
disputes and agrees to be bound by any competent court of law or equity in such
jurisdiction. Buyer agrees that nothing contained herein is intended to limit
Seller's rights to bring an action in any jurisdiction in which Buyer does
business.
12. Buyer recognizes that Seller's remedy at law for any breach of the
provisions of this Agreement shall be inadequate and, accordingly, Buyer agrees
that in addition to such other rights and remedies that may be available to
Seller, in law or in equity, any court of competent jurisdiction may enjoin,
without the necessity of requiring proof of actual damages or the posting of any
bond or other security, any actual or threatened breach of the provisions of
this Agreement.
[Name of Buyer]
By: ____________________________
Authorized Signature
Address:
Person signing:
Title:
Telex or Phone:
EXHIBIT B TO
SECURITIES PURCHASE
AGREEMENT
SUPPLIER AGREEMENT
SUPPLIER AGREEMENT (this "Agreement") made and entered into as of the 21st
day of June, 2007 by and between Living Data Technology Corporation, a
corporation incorporated under the laws of the State of New York ("Living
Data"), with executive offices at ▇▇-▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇,
and Vasomedical, Inc., a corporation incorporated under the laws of the State of
Delaware ("Vasomedical"), with executive offices at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
WHEREAS, Living Data has engaged, pursuant to a Distribution Agreement of
even date herewith by and between the parties hereto (the "Distribution
Agreement"), Vasomedical as its exclusive distributor of Living Data Products
(as hereinafter defined) to customers in the Territory (as therein defined) on
the terms and conditions therein set forth; and
WHEREAS, Vasomedical desires to engage Living Data, on the terms and
conditions hereinafter set forth, as the exclusive supplier of (1) Vasomedical
Products (as hereinafter defined) for sale or distribution by Vasomedical to
customers throughout the world and (2) Living Data Products for sale or
distribution by Vasomedical pursuant to the Distribution Agreement;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, the parties hereto hereby agree
as follows:
1. Definitions.
(a) When used in this Agreement, the following terms shall have the
meanings set forth in this Section 1(a):
(i) "Affiliate" of any Person shall mean any Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with such Person. For the purpose of this definition,
"control" when used with respect to any Person means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
(ii) "Anticipated Delivery Date" shall mean the anticipated date for
delivery of Products or parts pursuant to an Order confirmed by Living Data.
(iii) "Business Day" shall mean any day other than Saturday, Sunday or any
other day on which commercial banks are authorized to close and do close in New
York City.
(iv) "CE Marking" shall mean that certification issued by an authorized
Notified Body (as defined by a directive from the European Union) in the
European Union.
(v) "cGMP" shall mean current good manufacturing practices as that term is
defined by the FDA from time to time.
(vi) "Contract Year" shall mean each 12-month period of the Term from June
1st through May 31st, provided that, with respect to the first Contract Year of
the Term, the Contract Year shall be from June 21, 2007 until May 31, 2008.
(vii) "FDA" shall mean the Food and Drug Administration of the United
States of America.
(viii) "Forecast" shall mean a projection by Vasomedical to Living Data,
delivered at least 90 days before the start of a Quarter-Annual Period, as to
the number of Products that Living Data may be requested to produce for the
immediately succeeding Quarter-Annual Period.
(ix) "Living Data Products" shall mean all of the AngioNew ECP systems used
to assist the heart by applying positive or negative pressure to one or more of
the body's limbs in synchrony with the heart cycle, whether now offered or
hereafter developed by Living Data during the Term, and any improvements or
modifications thereto. The current AngioNew ECP systems are the AngioNew-V, a
mobile system, and the AngioNew-VI, a table type system.
(x) "Order" shall mean any purchase order for Products or parts placed by
Vasomedical with Living Data.
(xi) "Person" shall mean an individual, a corporation, a limited liability
company, a partnership, an unincorporated association, a trust, a joint venture
or any other entity or organization of whatever nature.
(xii) "Products" shall mean Living Data Products and Vasomedical Products.
(xiii) "Quarter-Annual Period" shall mean each three (3)-month period
ending on February 28, May 31, August 31 and November 30 of each Contract Year
during the Term.
(xiv) "Term" shall have the meaning set forth in Section 4.1(a) hereof.
(xv) "Vasomedical Products" shall mean all of the ECP therapy systems which
are marketed under the registered trademark "EECP" and which utilize fundamental
hemo-dynamic principles to augment coronary blood flow and at the same time
reduce the work load of the heart while improving the overall vascular function,
whether now offered or hereafter developed by Vasomedical during the Term, and
any improvements or modifications thereto. The current EECP therapy systems are
EECP-Lumenair, EECP-TS3 and EECP-TS4.
(b) As used in this Agreement pronouns shall refer to male or female
Persons or entities where such construction is required to give meaning to a
provision contained herein. Whenever a singular or plural number is used herein,
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the same shall refer to the plural or singular, as applicable, as well. Unless
the context clearly requires otherwise, the words "hereof," "herein" and
"hereunder to" and words of similar import shall refer to this Agreement as a
whole and not to any particular provision hereof. The headings of the Articles
and Sections of this Agreement are inserted for convenience only and shall not
constitute a part hereof or affect in any way the meaning or interpretation of
this Agreement. Each party acknowledges that it has been represented by counsel
and that it has actively participated in the review, negotiation and
finalization of this Agreement and documents relating hereto. Accordingly, in
the event of a dispute, the drafting of any particular term or provision hereof
shall not be a factor in the determination of the construction or interpretation
of such term or provision.
2. Purchasing and Pricing.
2.1 Exclusive Manufacturing Right. (a) Vasomedical hereby grants to Living
Data the exclusive right to manufacture, or cause to be manufactured, the
Vasomedical Products except as otherwise provided in this Agreement.
(i) To facilitate such right, Vasomedical shall, not later than 30 Business
Days after commencement of the Term, begin to furnish Living Data specifications
and such technical assistance relating to manufacturing the Vasomedical Products
as Living Data may reasonably request. Vasomedical shall also make available to
Living Data access to such of its personnel as are appropriate to facilitate the
transition process.
(ii) Vasomedical acknowledges that Living Data may rely on various
suppliers to furnish components for the Products and that the Living Data
Products currently are, and the Vasomedical Products will be, manufactured at
the Living Data facility located in the Peoples Republic of China. Living Data
represents and warrants to Vasomedical that such facility is in full compliance
with FDA cGMP requirements and is ISO 9001 and ISO 13485 certified. In the
event, however, should Living Data in the future seek to have the Vasomedical
Products manufactured by a third party at a facility other than that of Living
Data, Living Data shall first seek the approval by Vasomedical of such third
party manufacturers, which approval shall not be unreasonably withheld. A
condition precedent to any such approval shall be the written commitment by such
third party manufacturer to comply with all of the manufacturing obligations of
Living Data hereunder, including, without limitation, those obligations relating
to quality control, compliance with all governmental rules and regulations
(including, without limitation, those relating to CE Marking and a satisfaction
of FDA manufacturing requirements, including, without limitation, cGMP) and
pricing.
(iii) Living Data acknowledges that Vasomedical shall have the right to
utilize the inventory held by it, as of the date hereof, to have the Vasomedical
Products manufactured as it may determine by any party selected by it or by
itself, that Vasomedical may acquire generic additional parts as needed to
complete the manufacturing process and that Vasomedical may use such inventory
as parts for repairs or otherwise as Vasomedical may elect; provided, however
that Vasomedical may not acquire or manufacture generic additional parts to
create entirely new finished units of Vasomedical Products not contemplated by
the current inventory.
-3-
(b) Vasomedical shall have the right, at any time, to propose changes to
Vasomedical Product designs, specifications, and materials. Living Data agrees
to use reasonable commercial efforts to evaluate Vasomedical's requests under
this Section 2.1(b); provided, however, that Living Data shall notify
Vasomedical within 30 days if Living Data is not able to meet such request. If
any such changes cause an increase or decrease in the cost, or the time required
for performance, an equitable adjustment in pricing shall be made and this
Agreement shall be modified in writing accordingly. Failure to comply with a
request shall be subject to the Conciliation Procedure described in Section 8.1
hereof.
(c) Living Data and Vasomedical agree to actively pursue a program of
continuous improvement in regards to the Products and their relationship on both
technical and commercial levels. Each party shall promptly advise the other of
any changes to raw material, manufacturing, process or any other reasonably
available technological advances which the disclosing party becomes aware of and
which may result in Product improvements or cost reductions, providing that the
disclosure party has no third party restrictions on the sharing of such
information. Living Data agrees to use reasonable commercial efforts to reduce
the cost of supply of the Products and to incorporate, to the extent
practicable, cost improvement techniques developed or suggested by Vasomedical.
(d) To facilitate Living Data's manufacturing right Vasomedical hereby
grants to Living Data during the Term a non-exclusive license, with no
royalties, to use the Vasomedical patents in its manufacturing of the
Vasomedical Products.
2.2 Vasomedical's Obligations. (a) Except as provided in Section
2.1(a)(iii), Section 2.2(d) and Section 4.3 hereof, all Products to be
distributed by Vasomedical during the Term, and all parts for servicing, shall
be purchased by Vasomedical from Living Data, and no such Products or parts
shall be purchased from any other source whatsoever without Living Data's prior
written consent.
(i) Living Data shall deliver to Vasomedical, whenever requested after
commencement of the Term, specifications and technical drawings relating to the
current parts. Only if there is a change in the specifications and technical
drawings and materials of parts shall Living Data, within 30 Business Days of a
change, provide to Vasomedical specifications and technical drawings and
materials relating to such changed parts so that Vasomedical can effectively
price or replace such changed parts where Living Data does not provide the same
as set forth herein.
(b) Commencing with the Quarter-Annual Period commencing June 1, 2008,
Vasomedical shall provide Living Data with a Forecast, not later than 90 days
prior to the commencement of each Quarter-Annual Period, for the Products set
forth in the Forecast for the immediately succeeding Quarter-Annual Period.
Living Data shall, within ten days after receipt of such Forecast, advise
Vasomedical in writing as to the extent, if any, such Forecast as to quantities
and types cannot be fulfilled in the immediately succeeding Quarter-Annual
Period, which notice shall indicate the reason for any such proposed changes to
-4-
the Forecast. In the event that Living Data does so advise Vasomedical, the
parties shall in good faith negotiate any change to the Forecast. In the event
the parties shall disagree as to the proposed changes, such dispute shall be
resolved in accordance with the Conciliation Procedure described in Section 8.1
hereof.
(i) Notwithstanding the foregoing, Vasomedical shall use commercially
reasonable efforts to advise Living Data of its on-going manufacturing needs
during the first Contract Year not later than three months after the effective
date of this Agreement.
(c) Thereafter, Vasomedical shall deliver to Living Data an Order, at least
75 days prior to the delivery date it is requesting in the Order, setting forth
therein, among other items, (i) the quantities and types of Products requested,
(ii) the delivery date requested and (iv) whether the Products are to be
delivered directly to a named customer location or to a pre-designated
Vasomedical location. If no customer delivery location is designated, Living
Data shall make delivery pursuant to the Order to the pre-designated Vasomedical
location. Living Data shall, within ten days of receipt of the Order, confirm to
Vasomedical the Anticipated Delivery Date or Dates for the Products in the
Order. Vasomedical shall use only Order forms and other forms approved by Living
Data to order Products and shall follow all of Living Data procedures in
connection therewith as shall be in effect from time to time. Living Data agrees
that such forms and procedures will at all times be in compliance with the terms
and conditions of this Agreement which shall supersede the provisions of such
forms and procedures. Any issues related to same shall be subject to the
Conciliation Procedure described in Section 8.1 hereof.
(d) Notwithstanding anything in this Section 2.2 to the contrary, Living
Data acknowledges that, as of the date of this Agreement, Vasomedical has an
existing inventory of Vasomedical Products and, accordingly, Vasomedical desires
to sell such inventory, whether in the Territory or elsewhere, as parts or after
manufacture into finished goods. Vasomedical shall, within 30 Business Days
after the commencement of the Term, deliver to Living Data a list of such
inventory. The parties acknowledge that Vasomedical has represented to Living
Data that such inventory may meet all of Vasomedical's needs in connection with
the sale, manufacture and service of Vasomedical Products for approximately 12
months.
2.3 Sales Price to Vasomedical. The sales price to be charged by Living
Data to Vasomedical for each unit of the current Products purchased hereunder
shall be (i) during the period ending May 31, 2009, the amount provided on
Schedule A hereto and (ii) thereafter such sales price for each unit of a
Product as to which the parties mutually agree. On or prior to February 28 of
each Contract Year, Living Data shall, by written notice to Vasomedical, set a
sales price for each Product commencing June 1 of that Contract Year. In the
event that Vasomedical accepts such sales price or does not respond within 30
days of receipt of Living Data's notice, such sales price shall be the sales
price commencing June 1 of that Contract Year. In the event that Vasomedical
objects to such proposed sales price, the parties shall negotiate in good faith
a sales price, failing which the issue of sales price shall be subject to the
Conciliation Procedure described in Section 8.1 hereof. It is specifically
understood that the time frame for providing any Forecast shall be tolled for
that period of time until the sales price has been settled as such Forecast is
dependent thereon.
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(a) The initial sale price from Living Date to Vasomedical for any new
Product hereafter developed shall be such price as the parties shall mutually
agree, failing which agreement the sales price shall be subject to the
Conciliation Procedure described in Section 8.1 hereof. Thereafter, the sales
price in any subsequent Contract Year shall be determined as provided above.
(b) Living Data represents and warrants that the pricing for the Products
is no greater than the lowest price at which similar products are sold by Living
Data in similar quantities to any other competitive customer in the Territory.
Living Data further covenants that, during the Term of this Agreement and any
renewal periods, if Living Data grants to any competitive customer a price which
is less than the price then in effect for Vasomedical, Living Data shall make
such lower price immediately available to Vasomedical without action or request
by Vasomedical.
2.4 Furnishing of Parts. Other than Vasomedical's right to use its current
inventory during the Term, Living Data shall have the exclusive right to furnish
such parts for the Products as shall be necessary for Vasomedical to service the
Products. The parts shall be furnished to Vasomedical at Living Data's standard
prices, subject to the pricing limitations set forth in Section 2.3 hereof,
including resolution of any dispute as to pricing of parts pursuant to the
Conciliation Procedure described in Section 8.1 hereof..
(a) To the extent feasible, Vasomedical shall include in each of its
Forecasts its anticipated requirements for parts during such immediately
succeeding Quarter-Annual Period. Vasomedical shall deliver to Living Data an
Order for parts, at least 75 days prior to the first delivery date it is
requesting in the Order, setting forth therein, among other items: (i) the
quantities and types of parts requested, (ii) the delivery date or dates
requested and (iii) the Vasomedical location to which the parts are to be
delivered. Living Data shall, within ten days of receipt of the Order, confirm
the Anticipated Delivery Date or Dates for the parts in the Order. Living Data
shall use its commercially reasonably efforts to fulfill Orders from Vasomedical
for parts on an emergency basis.
2.5 Living Data's Warranties. (a) Living Data warrants to Vasomedical (i)
that all Products furnished by it hereinunder will be of good quality in
material and workmanship and, only in the case of Living Data Products, design,
suitable for their intended purpose and, in the case of the Vasomedical
Products, Living Data will, to the extent possible, comply with Vasomedical's
guidelines, specifications, standards and design; (ii) that no injurious,
deleterious, or toxic substances will be used in or on the Products; (iii) that
such Products will not cause harm when used as instructed and with ordinary care
for their intended purpose; (iv) that all Products will be manufactured and sold
in compliance with all applicable laws and regulations; and (v) that all
Products will be manufactured in compliance with and fulfilling all applicable
rules and regulations to satisfy FDA obligations and meet and secure cGMP
qualification if marketed in the Territory and CE Marking qualification if
marketed in the European Union countries.
(b) Living Data shall provide, pursuant to a written policy, a full
12-month warranty on parts (not including consumables and accessories that may
be included in the shipment), commencing with acceptance of installation of a
unit at an end-user.
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(c) Vasomedical acknowledges that, except as set forth in this Section 2.5,
neither Living Data nor any other Person has made, and Vasomedical has not
relied upon, any warranty or representation, express or implied, with respect to
manufacture by Living Data of the Products or parts thereof other than (i)
Living Data's standard warranty for parts and (ii) Living Data's standard
warranty to end-user customers. Vasomedical's exclusive remedy with respect to
defective Products, if any, shall be the return of such Products for repayment
of the purchase price therefor, or the repair or replacement of such Products,
in Living Data's discretion.
2.6 Quantities. Living Data (a) will manufacture Products in the quantities
necessary during the Term to comply with the Forecasts prepared by Vasomedical
and approved by Living Data as provided in Section 2.2 (b) hereof; (b) will use
all commercially reasonable efforts to fill Orders on a timely basis; and (c)
will have responsibility for sourcing all materials and goods and for making all
decisions regarding the supply chain.
2.7 Returns. Other than as provided for breakage, loss and damage returns
as described in Section 2.8 hereof, Vasomedical shall not be permitted to return
any Product to Living Data unless: (i) not later than 90 days from and after the
date of installation of such Product by Vasomedical at its end-user location,
Vasomedical notifies Living Data of any deficiencies in such Product, (ii) such
deficiencies render the subject Product unusable for the purpose intended, and
(iii) such deficiencies are (in the commercially reasonable judgment of Living
Data) directly attributable to the manufacturing and/or packaging of such
Product. Returns shall be made in accordance with Living Data's standard return
authorization procedures as from time to time in effect.
2.8 Title and Risk of Loss. All Products shall be shipped by Living Data
F.O.B., Living Data's facility located at Brooklyn, New York ("Departure
Origin"). As packaging is an obligation of Living Data, risk of loss shall pass
to Vasomedical upon receipt and acceptance by Vasomedical of each Order, at its
destination, and all of Living Data's responsibility with respect to breakage,
damage or loss shall only cease upon such delivery, subject to the inspection
and rejection rights set forth in this Section 2.8. Vasomedical shall be
responsible for all costs of shipping, duty, freight and all charges whatsoever
in connection with the shipments by Vasomedical from the Departure Origin.
Vasomedical shall inspect each Product within five Business Days of delivery for
breakage, damage or loss, and if breakage, loss or damage is discovered,
Vasomedical shall promptly notify Living Data and the carrier within that time
period in writing. If no claim as to breakage, damage or loss is made by
Vasomedical within such time period, the Product will be deemed to be in
acceptable condition (subject to Section 2.5) and Living Data shall have no
further responsibility or obligation with respect to such Product for breakage,
damage or loss.
2.9 Vasomedical Insurance. Vasomedical shall bear all costs of insurance to
cover all shipments of the Products from the Departure Origin. Vasomedical shall
maintain insurance for such purpose in an amount per Product at least equal to
Vasomedical's purchase price therefor. In addition, Vasomedical shall maintain
such other insurance coverage as a distributor and as the designer of the
Vasomedical Products similar to the coverage provided for Living Data in Section
2.10 hereof. Copies of such insurance policies shall be made available for
inspection by Living Data and, where appropriate, Living Data (and its
Affiliates) shall be a named insured thereunder. Whenever there is a change in
the insurance coverage Vasomedical shall notify Living Data and furnish the
latter with a copy of such change.
-7-
2.10 Living Data Insurance. Commencing, no later than 30 days after the
commencement of the Term, Living Data shall, during the Term and for three years
thereafter, maintain the following insurance coverage ("Required Living Data
Insurance"), at its sole cost and expense, issued by a nationally recognized
insurance carrier acceptable to Vasomedical, which consent shall not be
unreasonably withheld, with an A.M. Best Rating or A or better.
Coverage Limits
--------------------------------------------------------------------------------
Statutory Worker's Compensation and
Employer's Liability Insurance $500,000
--------------------------------------------------------------------------------
Comprehensive general and product
liability including but not limited to
personal injury, property damage, products/
completed operations, and contractual
liability.
$5,000,000
Combined Single Limit, for
Bodily injury (including personal
injury) or property damage, each
occurrence
--------------------------------------------------------------------------------
(b) Additional Insureds. Living Data shall include Vasomedical, the
Vasomedical Subsidiaries (as such term is hereinafter defined) and Affiliates as
additional insureds under its liability policies, including the provisions of
such policies insuring Living Data's obligations under the indemnity provisions
of this Agreement.
(c) Certificates of Insurance. Upon Vasomedical's request Living Data shall
provide evidence of such insurance in the form of certificates of insurance
which shall include provision for 30 days' prior notice to Vasomedical of any
change or cancellation of the policy.
(d) No Limitation by Insurance Living Data's indemnities and obligations
under this Agreement shall not be limited or defined in any fashion whatsoever
by the amount of Required Living Data Insurance, or by any policy limitations or
restriction on the amount or type of damages.
(e) Change on Coverage. Whenever there is a change in the insurance
coverage Living Data shall notify Vasomedical and furnish the latter with a copy
of such change. Objections to any such change in coverage shall be subject to
the Conciliation Procedure set forth in Section 8.1 hereof.
2.11 Invoicing. Living Data will endeavor to deliver all or a portion of
each Order on a regular basis and Living Data will invoice Vasomedical for the
Products contained in each such delivery. All Products shall be purchased on a
net 30-day basis from the actual date of delivery for each shipment, with
payment to be made by Vasomedical on or prior to the 30th day after the date of
-8-
actual delivery. Payment shall be made in U.S. Dollars regardless of to where
the Products are shipped.
2.12 Failure to Deliver. In the event that Living Data fails to deliver a
shipment of an Order within 15 days of the Anticipated Delivery Date specified
in an Order for such shipment, then Vasomedical shall be free to accept or
reject such shipment of such Order.
2.13 Access. Living Data shall make available to representatives of
Vasomedical access during reasonable business hours to its facility, upon
reasonable notice, for their inspection, but not more than twice during any
Contract Year. Notwithstanding the foregoing limitation, Vasomedical shall have
unlimited access in the event that the FDA asserts a failure to meet its
requirements.
3. Vasomedical Trademarks. Vasomedical markets its devices under the
registered trademark EECP and also uses the trademarks MC, TS and Lumenair. Each
of these trademarks shall be referred to herein as a "▇▇▇▇."
3.1 Acknowledgement of Rights. Living Data acknowledges that each ▇▇▇▇ has
acquired a valuable secondary meaning and goodwill in the minds of the trade and
the public and that goods, including Vasomedical Products, bearing the ▇▇▇▇ have
acquired a reputation for high quality and style. Living Data acknowledges that
it is not the owner of any right, title or interest in and to any ▇▇▇▇ in any
form or embodiment thereof, and it is not the owner of the goodwill attached to
any ▇▇▇▇ in connection with the business and goods in relation to which the same
has been and may in the future be used and shall not acquire any such right,
title or interest in any ▇▇▇▇ except as provided in Section 3.2 hereof.
3.2 Licenses. Vasomedical hereby grants to Living Data a non-exclusive
license during the Term to use the Marks on the Vasomedical Products that Living
Data manufactures as directed by Vasomedical. The grant of this non-exclusive
license is on the condition that the ▇▇▇▇ is identified as that of Vasomedical
as the owner and subject to the other terms and conditions set forth in this
Section 3 and in Section 7.3 hereof. Any use of a ▇▇▇▇ shall require the prior
written approval of Vasomedical.
3.3 Compliance. Living Data shall comply with all notice requirements of
any law or regulation applicable or reasonably necessary in connection with its
activities hereunder for the protection of any ▇▇▇▇ in connection with
Vasomedical Products and, in connection with any ▇▇▇▇ generally to the extent
the same shall be reasonably necessary in the judgment of Vasomedical for the
protection of any ▇▇▇▇ in any country. Manufacture by Living Data of Vasomedical
Products shall be deemed for the purposes of the acquisition of trademark rights
and the purposes of trademark registration to have been made by and for the
benefit of Vasomedical as the owner of the Marks. Living Data will not, at any
time, do any act or thing which may, in any way, impair the rights of
Vasomedical in and to any ▇▇▇▇ or which may affect the validity of any ▇▇▇▇ or
which may depreciate the value of any ▇▇▇▇ or its prestige and good will.
3.4 No Registration Right. Living Data acknowledges that it may not acquire
a registration or file and prosecute a trademark application or applications to
register any ▇▇▇▇ for any items or services, including Vasomedical Products,
anywhere in the world.
-9-
3.5 Assignment. To the extent any rights in and to any ▇▇▇▇ are deemed to
accrue to Living Data pursuant to this Agreement or otherwise, Living Data
hereby assigns any and all such rights, at such time as they may be deemed to
accrue, to Vasomedical as owner of the ▇▇▇▇. Living Data shall execute any and
all documents and instruments required by Vasomedical which Vasomedical may deem
necessary, proper or appropriate to accomplish or confirm the foregoing. Any
such assignment, transfer or conveyance shall be without consideration other
than the mutual agreements contained herein. Upon expiration or termination of
this Agreement for any reason whatsoever, Living Data will forthwith execute and
file any and all documents requested by Vasomedical as the owner of any ▇▇▇▇
terminating any and all trademark registrations, registered user agreements, if
any, and other documents regarding the ▇▇▇▇.
3.6 No Challenge or Contest. Living Data agrees never (a) to challenge the
validity or ownership of any ▇▇▇▇ or any application for registration thereof,
or any trademark registrations thereof in any jurisdiction, nor (b) to contest
the fact that Living Data's rights under this Agreement are solely those
provided for herein, and terminate upon termination or expiration of this
Agreement.
3.7 Limit on Use. Living Data shall not use any ▇▇▇▇ of Vasomedical as part
of a corporate or business name or as a service ▇▇▇▇ and shall not use any ▇▇▇▇
in any form without Vasomedical's prior written consent.
3.8 Survival of Provisions. The provisions of this Article 3 shall survive
the termination or expiration of this Agreement.
4. Term and Termination.
4.1 Term. The term of this Agreement (the "Term") shall commence on June
21, 2007 and will continue, subject to the termination provisions set forth in
this Article 4, for an initial term ending May 31, 2012, provided that this
Agreement will automatically renew for additional one year periods unless either
party give written notice to the other not to extend the Term not less than 90
days prior to the then next upcoming expiration date.
4.2 Termination by Living Data. This Agreement may be terminated
immediately upon notice from Living Data if: (a) Vasomedical is unable to pay
its debts as and when the same becomes due, (b) Vasomedical files a petition in
bankruptcy, or a petition is filed against Vasomedical and is not removed in 60
days, (c) Vasomedical makes an assignment for the benefit of Vasomedical's
creditors, (d) Vasomedical makes any extraordinary arrangement with its
creditors, (e) Vasomedical is subject to the appointment of a receiver for
Vasomedical which is not cured in 60 days, (f) Vasomedical fails to perform any
of its material covenants hereunder after 30 days' prior written notice to cure
and Vasomedical does not in fact cure within such 30-day period, or (g)
Vasomedical is convicted of any crime in any jurisdiction which materially and
adversely reflects on Living Data.
4.3 Termination by Vasomedical. (a) This Agreement may be terminated
immediately upon notice from Vasomedical if: (a) Living Data is unable to pay
its debts as and when the same becomes due, (b) Living Data files a petition in
bankruptcy, or a petition is filed against Living Data and is not removed in 60
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days, (c) Living Data makes an assignment for the benefit of Living Data's
creditors, (d) Living Data makes any extraordinary arrangement with its
creditors, (e) Living Data is subject to the appointment of a receiver for
Living Data which is not cured in 60 days, (f) Living Data fails to perform any
of its material covenants hereunder after 30 days' prior written notice to cure
and Living Data does not in fact cure within such 30-day period, and (g) Living
Data is convicted of any crime in any jurisdiction which materially and
adversely reflects on Vasomedical. Notwithstanding anything in subsection (f) of
this Section 4.3 to the contrary, if Living Data's failure to perform its
material covenants is (x) that it misses deliveries of Products in accordance
with the Forecasts or (y) the returns of Products in any Contract Year not
meeting the quality standard as provided in Section 2.5(a) hereof exceeds ten
percent of the units of Products delivered, provided that at least ten units
were delivered in such Contract Year, in each case after notice by Vasomedical
to such effect, Vasomedical may not terminate this Agreement until either such
failure or both such failures have continued for at least four successive
quarters; provided, however, after the second quarter, Vasomedical may
manufacture the Vasomedical Products, or order the same from a Person other than
Living Data, until the earlier of (x) Living Data delivering Products consistent
with the Forecasts and Section 2.5(a) hereof or (y) the expiration of four
successive quarters with such continued failure or failures by Living Data. In
no event may Vasomedical manufacture, or cause to be manufactured by a Person
other than Living Data, any Living Data Products.
(b) Notwithstanding anything to the contrary in subsection (a) of this
Section 4.3, Vasomedical reserves the right, if, during any warranty year, its
labor costs of servicing customers with respect to units of Living Data Products
exceeds $4,000 per unit of Product, to submit to Living Data appropriate
documentation and, if Living Data concurs with such computation, Living Data
shall pay to Vasomedical the amount of any excess. If the parties cannot agree,
the dispute shall be submitted for resolution pursuant to the Conciliation
Procedure set forth in Section 8.1 hereof.
4.4 No Further Use. Living Data acknowledges that any use of any ▇▇▇▇ after
the date that termination is effective shall constitute an infringement of the
intellectual property rights of Vasomedical. Upon the expiration or termination
of this Agreement, Living Data shall return to Vasomedical, at Living Data's
cost, all of Vasomedical's Confidential Information (as defined in Section 7.2),
Vasomedical Products, Vasomedical Product parts and components in its possession
and Living Data shall certify to Vasomedical that it has not retained or made
copies of any of the foregoing. Vasomedical shall pay Living Data within ten
days of receipt for any Vasomedical Products, parts and components delivered by
Living Data at the sales prices in effect at the time of termination or
expiration. If instructed to do so in writing by Vasomedical, Living Data shall
destroy Vasomedical's Confidential Information in its possession and be required
to deliver a certificate to Vasomedical evidencing such destruction. Upon the
expiration or termination of this Agreement, Vasomedical shall return to Living
Data, at Vasomedical's cost, all of Living Data's Confidential Information in
its possession and Vasomedical shall certify to Living Data that it has not
retained or made copies of any of the Confidential Information. If instructed to
do so in writing by Living Data, Vasomedical shall destroy the Living Data
Confidential Information in its possession and be required to deliver a
certificate to Living Data evidencing such destruction.
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5. Representations and Warranties.
5.1 Living Data represents and warrants to Vasomedical, as of the date
hereof, as follows, in each case subject to the exceptions set forth in the
disclosure statement delivered by Living Data to Vasomedical prior to the
execution of this Agreement (the "Living Data Disclosure Statement"). The Living
Data Disclosure Statement is arranged in Schedules corresponding to the numbered
and lettered subsections of this Section 5.1, and the disclosure in any Schedule
of the Living Data Disclosure Statement shall qualify only the corresponding
subsection of this Section 5.1.
(a) Organization. Living Data is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and has
all requisite corporate power and authority to own, lease and operate its
properties and assets in the manner in which such properties and assets are now
owned, leased and operated and to carry on the business in which it is now
engaged.
(b) Good Standing. Living Data is duly qualified as a foreign corporation
to do business, and is in good standing, in each jurisdiction where the
character of its owned or leased properties or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
or in good standing would not, individually or in the aggregate, reasonably be
expected to have a Living Data Material Adverse Effect. For purposes of this
Agreement, "Living Data Material Adverse Effect" shall mean any change or effect
that is, or could reasonably be expected to be, materially adverse to the
business, operations, assets and liabilities (taken together as a whole),
capitalization, results of operations or condition (financial or otherwise) of
Living Data, other than any change or effect (i) relating to the economy in
general or (ii) relating to the industry in which Living Data operates in
general and not specifically relating to Living Data.
(c) Validity. Living Data has full corporate power and authority to execute
and deliver this Agreement and all of the other agreements and documents
referred to herein, executed in connection herewith, or contemplated hereby to
which Living Data is or will be a party and to perform its obligations hereunder
and to consummate the transactions contemplated hereby. This Agreement
constitutes the valid and binding obligation of Living Data, enforceable in
accordance with its terms, subject to bankruptcy, insolvency or other laws
affecting creditors' rights generally and general principles of equity affecting
remedies. The execution and delivery of this Agreement by Living Data and the
consummation of the transactions contemplated hereby have been duly authorized
by the board of directors of Living Data and such execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not require the consent, approval or authorization of any other Person,
including, without limitation, its shareholders or any public authority or
self-regulatory authority.
(d) No Conflict. The execution and delivery of this Agreement by Living
Data and the performance of its obligations hereunder (i) are not in violation
or breach of, and will not conflict with, or constitute a default under, any of
the terms of the Living Data certificate of incorporation or the Living Data
bylaws, or any note, debt instrument, security agreement, deed of trust or
mortgage or any other contract, agreement or commitment binding upon Living Data
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or any of its assets or properties, (ii) will not result in the creation or
imposition of any lien, security interest, encumbrance, equity or restriction in
favor of any third party upon any of the assets or properties of Living Data,
and (iii) will not conflict with or violate any applicable law, regulation,
judgment, order or decree of any government, governmental instrumentality,
self-regulatory authority or court having jurisdiction over Living Data or any
of its assets or properties.
(e) Environmental.
(i) No Hazardous Materials (as hereinafter defined) have been used, stored
or otherwise handled in any manner by Living Data or any Affiliate on, under,
in, from or affecting any of the real property owned or leased by Living Data
during the past five years (the "Living Data Property"), other than in
compliance with Environmental Laws (as hereinafter defined). To Living Data's
knowledge, no prior or current owner or occupant of the Living Data Property has
used Hazardous Materials on, under, in, from or affecting the Living Data
Property.
(ii) No Hazardous Materials have at any time been released into, stored or
deposited by Living Data or any Affiliate within or on the Living Data Property,
by Living Data or any Affiliate into any water systems on or below the surface
of the Living Data Property, or by Living Data or any Affiliate directly or
indirectly onto any property or water system adjoining, adjacent to or abutting
the Living Data Property, or have been used by Living Data or any Affiliate in
the construction of any improvements located on or about the Living Data
Property.
(iii) Neither Living Data nor any Affiliate has received any notice of any
violations (nor is any of them aware of any existing violations) of any
applicable laws or regulations governing the use, storage, treatment,
transportation, manufacture, refinement, handling, production or disposal of
Hazardous Materials on, under, in, from or affecting the Living Data Property
and there are not any legal actions or proceedings commenced or, to Living
Data's knowledge, threatened by any Person with respect to any such violations.
(iv) The Living Data Property is currently being, and has in the past been,
operated by Living Data in accordance with, and in compliance with, all
applicable Environmental Laws.
(v) For purposes of this Agreement (A) "Hazardous Materials" means any
hazardous materials, hazardous wastes, hazardous constituents, hazardous or
toxic substances or petroleum products (including gasoline, crude oil or any
fraction thereof), defined or regulated as such in or under any Environmental
Law, including, without limitation, asbestos, polychlorinated biphenyls and urea
formaldehyde insulation, and (B) "Environmental Laws" are any and all federal,
state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any governmental authority or other
requirements of law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human health or the
environment.
(f) Licenses and Permits. Living Data has obtained, and is in compliance
with, all necessary licenses, permits, consents, approvals, orders,
certificates, authorizations, declarations and filings required by all federal,
state, local and other governmental, self-regulatory or regulatory bodies and
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all courts and other tribunals for the conduct of the business and operations of
Living Data as now conducted or as conducted in the past, except where the
failure to obtain or comply would not have a Living Data Material Adverse
Effect.
(g) Labor and Employment. Living Data is not a party to any union contract
or other collective bargaining agreement, nor to the knowledge of Living Data
are there any activities or proceedings of any labor union to organize any of
the employees of Living Data. Living Data is in material compliance with all
applicable (i) laws, regulations and agreements respecting employment and
employment practices, (ii) terms and conditions of employment, and (iii)
occupational health and safety requirements. There are no controversies pending
or, to the knowledge of Living Data threatened, between Living Data, on the one
hand, and any of its employees, on the other hand, which controversies would
reasonably be expected to have, individually or in the aggregate, a Living Data
Material Adverse Effect. There are no labor controversies pending or threatened
against Living Data.
(h) Compliance with Law. The business of Living Data has been conducted in
all material respects in accordance with all applicable laws, rules,
regulations, orders and other requirements of governmental and self-regulatory
authorities, including, without limitation, ERISA, all Environmental Laws, all
laws, regulations and orders relating to antitrust or trade regulation,
employment practices and procedures, the health and safety of employees and
consumer credit, except where the failure to so conduct its business would not
have a Living Data Material Adverse Effect. Neither Living Data nor any
Affiliate has received any notice of alleged violations by Living Data of any
laws, rules, regulations, orders or other requirements of governmental or
self-regulatory authorities.
(i) Litigation. There is no claim, dispute, action, proceeding, suit or
appeal or investigation or inquiry, at law or in equity, involving Living Data,
or any of its officers and directors (in their capacities as such) before any
court, agency, authority, self-regulatory authority, arbitration panel or other
tribunal, which, if decided adversely to Living Data, would have a Living Data
Material Adverse Effect, and, to the knowledge of Living Data, none has been
threatened or is in prospect against Living Data or its officers and directors
(in their capacity as such). To the knowledge of Living Data, there are no facts
which, if known to shareholders, customers, governmental authorities,
self-regulatory authorities, regulators, bondholders or other investors or other
persons, would form the basis of any such claim, dispute, action, proceeding,
suit, appeal, investigation or inquiry, and Living Data is not subject to any
order, writ, injunction or decree of any court, agency, authority, arbitration
panel or other tribunal.
(j) Brokers or Finders. Living Data has not incurred, and will not incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or the
transactions contemplated hereby.
(k) Foreign Corrupt Practices Act. Neither Living Data nor any Affiliate
and none of Living Data's officers or directors, or, to Living Data's knowledge,
any employees, agents, distributors or representatives acting on behalf of
Living Data or any Affiliate, has paid, given or received, or has offered or
promised to pay, give or receive, any bribe or other unlawful payment of money
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or other thing of value, any unlawful discount, or any other unlawful
inducement, to or from any Person (including any government entity) in the
United States or elsewhere in connection with or in furtherance of the business
of Living Data (including, without limitation, any unlawful offer, payment or
promise to pay money or other thing of value (i) to any foreign official,
political party (or official thereof) or candidate for political office for the
purposes of influencing any act, decision or omission in order to assist Living
Data in obtaining business for or with, or directing business to, any Person, or
(ii) to any Person, while knowing that all or a portion of such money or other
thing of value will be offered, given or promised unlawfully to any such
official or party for such purposes). The business of Living Data is and was not
in any manner dependent upon the making or receipt of such payments, discounts
or other inducements. Neither Living Data nor any Affiliate has otherwise taken
any action that could cause Living Data to be in violation of the Foreign
Corrupt Practices Act of 1977, as amended, the regulations thereunder, or any
applicable law or regulation of similar effect.
(l) Disclosure of Material Facts. Living Data has disclosed to Vasomedical
all material facts relating to the operations of Living Data as to which
Vasomedical has made inquiry. The representations and warranties contained in
this Section 5.1 and in the Living Data Disclosure Statement, and in any other
documents or information furnished to Vasomedical by or on behalf of Living Data
in connection with this Agreement do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements contained herein or therein not misleading.
5.2 Vasomedical represents and warrants to Living Data, as of the date
hereof, as follows, in each case subject to the exceptions set forth in the
disclosure statement delivered by Vasomedical to Living Data prior to the
execution of this Agreement (the "Vasomedical Disclosure Statement"). The
Vasomedical Disclosure Statement is arranged in Schedules corresponding to the
numbered and lettered subsections of this Section 5.2, and the disclosure in any
Schedule of the Vasomedical Disclosure Statement shall qualify only the
corresponding subsection of this Section 5.2.
(a) Organization. Vasomedical is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to own, lease and operate its
properties and assets in the manner in which such properties and assets are now
owned, leased and operated and to carry on the business in which it is now
engaged.
(b) Subsidiaries. Vasomedical does not own any equity interest, directly or
indirectly, in any corporation, partnership, limited liability company, joint
venture, firm or other entity other than in its subsidiaries listed in Schedule
5.2(b) of the Vasomedical Disclosure Statement (herein collectively referred to
as the "Vasomedical Subsidiaries" and individually as a "Vasomedical
Subsidiary"). Each Vasomedical Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the state or other
jurisdiction in which it was incorporated and has all requisite corporate power
and authority to own, lease and operate its properties and assets in the manner
in which such properties and assets are now owned, leased and operated and to
carry on the business in which it is now engaged. Each Vasomedical Subsidiary is
wholly-owned by Vasomedical except as set forth in Schedule 5.2 (b) of the
Vasomedical Disclosure Statement.
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(c) Good Standing. Each of Vasomedical and the Vasomedical Subsidiaries is
duly qualified as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of its owned or leased properties or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified or in good standing would not, individually or in
the aggregate, reasonably be expected to have a Vasomedical Material Adverse
Effect. For purposes of this Agreement, "Vasomedical Material Adverse Effect"
shall mean any change or effect that is, or could reasonably be expected to be,
materially adverse to the assets and liabilities (taken together as a whole),
capitalization or condition (financial or otherwise) of Vasomedical and the
Vasomedical Subsidiaries, taken as a whole, other than any change or effect (i)
relating to the economy in general or (ii) relating to the industry in which
Vasomedical and the Vasomedical Subsidiaries operate in general and not
specifically to Vasomedical or any Vasomedical Subsidiary.
(d) Validity. Vasomedical has full corporate power and authority to execute
and deliver this Agreement and all of the other agreements and documents
referred to herein, executed in connection herewith, or contemplated hereby to
which Vasomedical is or will be a party and to perform its obligations hereunder
and to consummate the transactions contemplated hereby. This Agreement
constitutes the valid and binding obligation of Vasomedical enforceable in
accordance with its terms, subject to bankruptcy, insolvency or other laws
affecting creditors' rights generally and general principles of equity affecting
remedies. The execution and delivery of this Agreement by Vasomedical and the
consummation of the transactions contemplated hereby have been duly authorized
by the board of directors of Vasomedical and such execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not require the consent, approval or authorization of any other Person,
including, without limitation, its stockholders or any public authority or
self-regulatory authority.
(e) No Conflict. The execution and delivery of this Agreement by
Vasomedical and the performance of its obligations hereunder (a) are not in
violation or breach of, and will not conflict with, or constitute a default
under, any of the terms of the Vasomedical certificate of incorporation or the
Vasomedical bylaws, or any note, debt instrument, security agreement, deed of
trust or mortgage or any other contract, agreement or commitment binding upon
Vasomedical or any Vasomedical Subsidiary or any of their assets or properties,
(b) will not result in the creation or imposition of any lien, security
interest, encumbrance, equity or restriction in favor of any third party upon
any of the assets or properties of Vasomedical or any Vasomedical Subsidiary,
and (c) will not conflict with or violate any applicable law, regulation,
judgment, order or decree of any government, governmental instrumentality,
self-regulatory authority or court having jurisdiction over Vasomedical or any
Vasomedical Subsidiary or any of their assets or properties.
(f) Environmental.
(i) No Hazardous Materials have been used, stored or otherwise handled in
any manner by Vasomedical or any Vasomedical Subsidiary on, under, in, from or
affecting any of the real property owned or leased by Vasomedical or any
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Vasomedical Subsidiary during the past five years (the "Vasomedical Property"),
other than in compliance with Environmental Laws. To Vasomedical's knowledge, no
prior or current owner or occupant of the Vasomedical Property has used
Hazardous Materials on, under, in, from or affecting the Vasomedical Property.
(ii) No Hazardous Materials have at any time been released into, stored or
deposited by Vasomedical or any Vasomedical Subsidiary within or on the
Vasomedical Property, by Vasomedical or any Vasomedical Subsidiary into any
water systems on or below the surface of the Vasomedical Property, or any
Vasomedical Subsidiary directly or indirectly onto any property or water system
adjoining, adjacent to or abutting the Vasomedical Property, or have been used
by Vasomedical or any Vasomedical Subsidiary in the construction of any
improvements located on or about the Vasomedical Property.
(iii) Neither Vasomedical nor any Vasomedical Subsidiary nor any Affiliate
of either has received any notice of any violations (nor is any of them aware of
any existing violations) of any applicable laws or regulations governing the
use, storage, treatment, transportation, manufacture, refinement, handling,
production or disposal of Hazardous Materials on, under, in, from or affecting
the Vasomedical Property and there are not any legal actions or proceedings
commenced or, to Vasomedical's knowledge, threatened by any Person with respect
to any such violations.
(iv) The Vasomedical Property is currently being, and has in the past been,
operated by Vasomedical and the Vasomedical Subsidiaries in accordance with, and
in compliance with, all applicable Environmental Laws.
(g) Proprietary Rights. Schedule 5.2(g) of the Vasomedical Disclosure
Statement contains a full and complete list of all material Proprietary Rights
owned, possessed or used by Vasomedical. The operations of Vasomedical and the
Vasomedical Subsidiaries do not now conflict with or infringe, and have not in
the past conflicted with or infringed, any Proprietary Rights owned, possessed
or used by any third party. There are no third parties whose operations conflict
with or infringe, nor has anyone asserted that such operations conflict with or
infringe, any Proprietary Rights owned, possessed or used by Vasomedical or any
Vasomedical Subsidiary.
(h) Litigation. There is no claim, dispute, action, proceeding, suit or
appeal or investigation or inquiry, at law or in equity, involving Vasomedical
or any Vasomedical Subsidiary, or any of their officers and directors (in their
capacities as such) before any court, agency, authority, self-regulatory
authority, arbitration panel or other tribunal that would require disclosure
pursuant to Item 103 of the Regulation S-K of the Securities and Exchange
Commission and, to the knowledge of Vasomedical, none has been threatened or is
in prospect against Vasomedical or any Vasomedical Subsidiary or their officers
and directors (in their capacities as such). To the knowledge of Vasomedical,
there are no facts which, if known to stockholders, customers, governmental
authorities, self-regulatory authorities, regulators, bondholders or other
investors or other persons, would form the basis of any such claim, dispute,
action, proceeding, suit, appeal, investigation or inquiry. Neither Vasomedical
nor any Vasomedical Subsidiary is subject to any order, writ, injunction or
decree of any court, agency, authority, arbitration panel or other tribunal.
-17-
(i) Brokers or Finders. Neither Vasomedical nor any Affiliates has
incurred, nor will either of Vasomedical or any Affiliate incur, directly or
indirectly, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement or the transactions
contemplated hereby other than to Life Science Group, Inc., which obligation to
Life Science Group, Inc. shall be paid by Vasomedical.
(j) Disclosure of Material Facts. Vasomedical has disclosed to Living Data
all material facts relating to the condition (financial or otherwise), business,
net worth, assets, properties or operations of Vasomedical and the Vasomedical
Subsidiaries as to which Living Data has made inquiry. The representations and
warranties contained in this Section 5.2 and in the Vasomedical Disclosure
Statement, and in any other documents or information furnished to Living Data by
or on behalf of Vasomedical in connection with this Agreement do not contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements contained herein or therein not misleading.
6. Indemnities
6.1 Living Data's Indemnity. Living Data shall indemnify and hold
Vasomedical harmless from and against, and shall defend promptly Vasomedical
from, and reimburse Vasomedical for, any and all losses, damages, costs,
expenses, liabilities, obligations and claims of any kind (including, without
limitation, reasonable attorneys' fees and other costs and expenses)
(collectively, "Damages") which Vasomedical may at any time suffer or incur, or
become subject to, as a result of, or in connection with,
(a) any material breach of this Agreement or material inaccuracy of any of
the representations and warranties made by Living Data in or pursuant to this
Agreement;
(b) any material failure by Living Data to carry out, perform, satisfy and
discharge any of its material covenants, agreements, undertakings, liabilities,
or obligations under this Agreement, but excluding any claim based on
non-delivery to third parties of Products;
(c) any product liability or warranty claim arising out of Living Data's
manufacture of any Vasomedical Products, except claims based on the design and
the underlying specifications therefor;
(d) any product liability or warranty arising out of Living Data's
manufacture of any of the Living Data Products before and after it assumes
manufacturing responsibility for all Products pursuant to this Agreement;
(e) any product liability or warranty claim arising out of a latent defect
in the design of any of the Living Data Products;
(f) any claim arising out of an alleged violation of Environmental Laws at
the Living Data Property; and
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(g) any other third party claim arising out of Living Data's operation of
its business, both before and after the date of this Agreement.
6.2 Vasomedical's Indemnity. Vasomedical shall indemnify and hold harmless
Living Data harmless from and against, and shall defend Living Data from, and
reimburse Living Data for, any Damages which Living Data may at any time suffer
or incur, or become subject to, as a result of, or in connection with,
(a) any material breach of this Agreement or material inaccuracy of any of
the representations and warranties made by Vasomedical in or pursuant to this
Agreement;
(b) any material failure by Vasomedical or any Vasomedical Subsidiary to
carry out, perform, satisfy and discharge any of its material covenants,
agreements, undertakings, liabilities, or obligations under this Agreement;
(c) any claim that the Proprietary Rights of Vasomedical infringe the
Proprietary Rights of a Person (other than Living Data or an Affiliate thereof);
(d) any product liability or warranty claim arising out of a latent defect
in the design of any of the Vasomedical Products;
(e) any claim arising out of an alleged violation of Environmental Laws at
the Vasomedical Property; and
(f) any other third party claim arising out of Vasomedical's operation of
its business, both before and after the date of this Agreement.
6.3 Indemnity Procedure. Living Data or Vasomedical, whichever is
applicable (the `Indemnified Party"), shall promptly notify the other party (the
"Indemnifying Party") of any claim, demand, action, or proceeding for which
indemnification will be sought under this Article 9 and, if such claim, demand,
action, or proceeding is a third party claim, demand, action, or proceeding (or
"Proceeding" the Indemnifying Party shall have the right at its expense to
assume the defense thereof using counsel reasonably acceptable to the
Indemnified Party. The Indemnified Party shall have the right to participate, at
its own expense, with respect to any such Proceeding. In connection with any
such Proceeding, the Indemnifying Party and the Indemnified Party shall
cooperate with each other and provide each other with access to relevant books
and records in its possession. Notwithstanding anything in the foregoing to the
contrary, an Indemnified Party will have the right to retain its own counsel,
with the fees and expenses to be paid by the Indemnifying Party, if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential conflict of
interests between such Indemnified Party and any other party represented by such
counsel in such Proceeding. No such Proceeding shall be settled without the
prior written consent of both the Indemnified Party and the Indemnifying Party.
If a firm written offer is made to settle any such Proceeding and the
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Indemnified Party refuses to consent to such settlement, then: (i) the
Indemnifying Party shall be excused from, and the Indemnified Party shall be
solely responsible for, all further defense of such Proceeding and (ii) the
maximum liability of the Indemnifying Party relating to such Proceeding shall be
the amount of the proposed settlement if the amount thereafter recovered from
the Indemnified Party on such Proceeding is greater than the amount of the
proposed settlement.
7. Miscellaneous.
7.1 Independent Contractors. Each of Living Data and Vasomedical is an
independent contractor, and shall not hold itself out as, or be deemed to be, an
employee, agent or partner of the other party. Its authority shall be limited to
the matters expressly set forth in this Agreement. Each shall have no right or
power to enter into any agreement or commitment in the name or on behalf of, or
otherwise to obligate or bind, the other party, and each shall not hold itself
out as having the authority to do so. Neither party to this Agreement shall have
any authority to employ any person on behalf of the other and each shall, with
respect to all persons employed by it, perform all obligations and discharge all
liabilities imposed upon employers under law. This Section 7.1 shall survive any
termination or expiration of this Agreement.
7.2 Confidential Information. "Confidential Information" shall mean all
information which is not public knowledge disclosed heretofore or hereafter by
either party to the other party (including its attorneys, accountants or other
representatives) in connection with its performance under this Agreement shall
be kept confidential by such other party, and shall not be used by such other
party otherwise than for use as herein contemplated, except to the extent (a) it
is or hereafter becomes public knowledge or becomes lawfully obtainable from
other sources, including from a third party who is under no obligation of
confidentiality to the party disclosing such information or to whom information
was released without restriction, or (b) such other party is compelled to
disclose such information by judicial or administrative process or, in the
opinion of its counsel, by other requirements of law, or (c) such duty as to
confidentiality and non-use is waived by the non-disclosing party. The
obligations set forth in this Section 7.2 shall survive any termination or
expiration of this Agreement. Notwithstanding the foregoing, the parties to this
Agreement (and each employee, representative or other agent of the parties) may
disclose to any and all persons, without limitation of any kind, the tax
treatment and tax structure provided for therein provided, however, that no
party (nor any employee, representative, or other agent thereof) shall disclose
any information to the extent that such disclosure could result in a violation
of any federal or state securities law.
7.3 Proprietary Rights. Living Data acknowledges and recognizes that
Vasomedical solely owns and has exclusive worldwide right, title and interest in
and to all Proprietary Rights listed in Schedule 5.2(j) of the Vasomedical
Disclosure Statement and all derivative works and/or modifications thereto.
Living Data agrees that it will not challenge the validity or enforceability of
any of the Proprietary Rights of Vasomedical or any part thereof at any time. In
addition, Living Data will not directly or indirectly apply for or attempt to
register for itself or others any of the trademarks, service marks, copyrights
or similar protection in any county or area. In the event that Vasomedical
wishes to obtain additional protection for its Proprietary Rights anywhere in
the world, Living Data will fully cooperate by providing such documents and
information and performing such acts as are reasonably requested by the party
seeking the additional protection. This Section 7.3 shall survive any
termination or expiration of the Agreement.
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7.4 No Employee Solicitation. Neither party to this Agreement shall solicit
any employee of the other party for employment by it or any Affiliate, nor shall
either party induce any employee of the other party to leave such employment.
7.5 Equitable Remedies. Each of Living Data and Vasomedical recognizes that
the other party's remedy at law for any breach of the provisions of Sections
7.1, 7.2, 7.3 and 7.4 of this Agreement will be inadequate and, accordingly,
each agrees that in addition to such other rights and remedies that may be
available to the other party, in law or in equity, any court of competent
jurisdiction may enjoin, without the necessity of requiring proof of actual
damages or the posting of any bond or other security, any actual or threatened
breach of the provisions of any such Section (whether during or after the Term).
7.6 Notices. Any notice required or intended to be given by either party
hereto to the other, pursuant to this Agreement or any provision of law, shall
be in writing and sent by registered or certified mail, postage paid, or
delivered by hand or overnight courier and acknowledged, or by telecopier and
confirmed by registered or certified mail as follows:
If to Living Data, to:
Living Data Technology Corporation
▇▇-▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to (which shall not constitute notice):
▇▇▇▇▇▇▇ & Masyr, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Vasomedical, to:
Vasomedical, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to (which shall not constitute notice):
-▇▇-
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as may be designated by the respective party by notice
given to the other in accordance with this Section 7.6. Each notice given
pursuant to this Section 7.6 shall be deemed delivered: if mailed, three
Business Days after deposit with the United States Post Office; if delivered by
hand or telecopier, when delivered; and if sent by a nationally recognized
overnight courier, one Business Day after deposit with such courier.
7.7 Waivers. No waiver by Living Data or Vasomedical of any of the terms,
conditions, covenants or agreements of this Agreement, or non-compliance
therewith, shall be binding unless in writing and signed by the party to be
charged, and no such waiver shall be deemed or taken as a waiver at any time
thereafter of the same of any other term, condition, covenant or agreement
herein contained, nor of the strict and prompt performance thereof.
7.8 Assignments. Neither this Agreement nor any right, interest or
obligation hereunder shall be assigned by any party hereto without the prior
written consent of the other party. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement is not intended to confer any rights upon any
Person other than the parties to this Agreement.
7.9 Entire Agreement. This Agreement (including the Disclosure Agreements),
the Securities Purchase Agreement of even date herewith, the Warrant of even
date herewith, the Registration Rights Agreement of even date herewith and the
Distribution Agreement constitutes the entire agreements of the parties hereto
with respect to the subject matter hereof. No covenants, representations or
warranties other than those contained, incorporated or referred to herein have
been made, given or received. No course of dealing should be, or be deemed, a
waiver of any term or condition hereof. This Agreement may not be changed,
modified or amended except in writing and signed by the parties to be charged.
7.10 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law. However, if any provision of this Agreement shall be prohibited
by or invalid under such law, it shall be deemed modified to conform to the
minimum requirements of such law or, if for any reason it is not deemed so
modified, it shall be prohibited or invalid only to the extent of such
prohibition or invalidity without the remainder thereof or any other such
provision being prohibited or invalid.
7.11 Governing Law and Dispute Resolution. This Agreement shall be
construed (both as to validity and performance) and enforced in accordance with,
and governed by, the laws of the State of New York applicable to contracts to be
performed entirely within that State, without giving effect to the principles of
conflicts of law. Subject to compliance with the provisions of Article 8 hereof
relative to Dispute Conciliation and Arbitration, the parties hereto irrevocably
and unconditionally consent to the exclusive jurisdiction and venue of the
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federal and state courts located in the State of New York, Counties of New York
or Nassau with respect to any action suit or proceeding arising out of this
Agreement or the consummation of the transactions contemplated hereby; provided,
however, that no party hereto waives its right to request the removal of such
action, suit or proceeding from the state court to a federal court in such
jurisdictions or vice versa. The parties hereto each waives any claim that
either such jurisdiction is not a convenient forum for any such action, suit or
proceeding and the defense of lack of personal jurisdiction. The parties agree
that service of process sent as provided for notices hereunder shall be
effective service of process of any action, suit or proceeding against it in any
such court. The parties hereto irrevocably waive all right to a trial by jury in
any action, suit or proceeding arising out of this Agreement or the consummation
of the transactions contemplated hereby.
7.12 Force Majeure. Neither party shall be liable to the other party for
any loss, damage, delay or failure of performance resulting directly or
indirectly from any cause beyond its reasonable control, including force
majeure, strikes, or the laws, regulations, acts, or failure to act of any
governmental authority.
7.13 Exclusion of Certain Damages. Nothing in this Agreement shall obligate
either party for the lost profits, lost revenues or other consequential or
special damages of the other party.
7.14 Counterparts and Facsimile Signatures. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument. The parties
agree that they may rely on facsimile signatures of either party with respect to
this Agreement or any waiver, amendment, supplement or consent relating thereto,
with the same as if such signature was an original
7.15 Knowledge. For purposes of this Agreement, "knowledge" as of any date
that a representation or warranty is given by a party shall mean the actual or
constructive knowledge of the management of such party, at the level of vice
president or above, and "knows" shall have a correlative meaning.
7.16 Survival of Representation and Warranties. The representations and
warranties of the parties contained in this Agreement shall survive the date
hereof and shall terminate and be of no further force or effect as of the third
anniversary of the date hereof (the "Expiration Date") and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of either party to this Agreement. Notwithstanding anything in the preceding
sentence to the contrary, any representation or warranty in respect of which an
indemnity may be sought hereof shall survive the time at which it would
otherwise terminate pursuant to the preceding sentence if a claim for
indemnification shall have been given to the Indemnifying Party prior to the
Expiration Date.
8. Dispute Conciliation And Arbitration
8.1 Conciliation. Where specifically provided in this Agreement, business
disputes arising from this Agreement, shall be the subject of a request for
settlement by amicable arrangement through conciliation in accordance with the
following process:
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(a) The party desiring conciliation (the "Requesting Party") shall make a
request therefor in writing to the other party (the "Recipient"). The request
for conciliation shall consist of a statement of the issue from the point of
view of the Requesting Party and shall be accompanied by copies of relevant
papers and documents.
(b) Upon receipt of a request for conciliation, the Recipient, within five
Business Days, shall submit to the Requesting Party a written statement of the
issue from its point of view, with copies of relevant papers and documents.
(c) Within five Business Days of the response to the Requesting Party (the
"Convening Date"), the Requesting Party, the Recipient, or other respective
designees or attorneys shall convene a Conciliation Committee.
(i) The Committee shall be composed of three conciliators, one each
appointed by the Requesting Party and the Recipient and a Chairman. Unless he is
unable to so act, ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall act as Chairman. In his absence, ▇▇▇▇▇
▇▇▇▇▇▇▇ shall act as Chairman. If neither is available the Chairman shall be
selected by mutual agreement of the Requesting Party and the Recipient.
(d) The Committee shall acquaint itself with the details of the case and
procure any information required for this purpose by communicating with the
Requesting Party and the Recipient, and shall hear from the parties, if
possible.
(e) The Requesting Party and Recipient may appear before the Committee in
person or be represent by duly accredited agents. They may also be assisted by
counsel.
(f) After having examined the issue and having heard the parties, if
possible, the Conciliation Committee shall submit, within five Business Days of
the Convening Date suggested terms of resolution to the parties. Should the
parties agree to the suggested settlement, the Conciliation Committee shall draw
up and sign a record of the settlement, and shall communicate the terms of
settlement to the parties and their representatives.
(i) If the parties do not agree to the suggested settlement, the
Conciliation Committee is authorized to direct the settlement, and same shall be
binding on the parties.
(ii) In lieu of directing a settlement, the Conciliation Committee may
direct that the matter at issue be submitted to Arbitration as otherwise
provided in Section 8.2 hereof.
8.2 Arbitration. Should a settlement not result based on the foregoing, the
parties must submit the dispute to be resolved by arbitration in New York in
accordance with the rules of the American Arbitration Association and the award
of the arbitration panel should be binding on the parties. The arbitration panel
shall consist of one arbitrator. No person having participated as a participant
of the Conciliation Committee for the settlement of a dispute may be appointed
arbitrator for the same dispute. Any party may take appropriate legal steps to
enforce the award at a court of law.
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8.3 Costs. Each participant shall bear an equal cost of the conciliation or
arbitration panel. Except for the foregoing sentence, each Party should be
responsible for its own costs and expenses incurred under this Article 8.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
LIVING DATA TECHNOLOGY CORPORATION
By: /s/▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
VASOMEDICAL, INC.
By: /s/▇▇▇▇ ▇▇ ▇▇▇
--------------------
Name: ▇▇▇▇ ▇▇ ▇▇▇
Title: President
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