-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VQjCU5x1uKrQJ+nCBIFbrAh7x5v+jv2aGNpWGl5/jrUkcUhPeC/606h/yu1um26s 3hUfi6j75Bz88zbZNDy/xA== /in/edgar/work/0001077357-00-000342/0001077357-00-000342.txt : 20000930 0001077357-00-000342.hdr.sgml : 20000930 ACCESSION NUMBER: 0001077357-00-000342 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000928 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDICAL TECHNOLOGY & INNOVATIONS INC /FL/ CENTRAL INDEX KEY: 0000847464 STANDARD INDUSTRIAL CLASSIFICATION: [7900 ] IRS NUMBER: 652954561 STATE OF INCORPORATION: FL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 333-01950 FILM NUMBER: 731425 BUSINESS ADDRESS: STREET 1: 615 CENTERVILLE ROAD CITY: LANCASTER STATE: PA ZIP: 17601 BUSINESS PHONE: 7178926770 MAIL ADDRESS: STREET 1: 615 CENTERVILLE ROAD CITY: LANCASTER STATE: PA ZIP: 17601 10KSB 1 0001.txt ANNUAL REPORT U.S. SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-KSB (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required) For the fiscal year ended June 30, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required) For the transition period from to --------------- ---------- Commission File Number: 33-27610-A MEDICAL TECHNOLOGY & INNOVATIONS, INC. (Exact name of small business issuer as specified in its charter) Florida 65-2954561 - --------------------------- ------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3725 Investment Lane, Riviera Beach, FL 33404 - ----------------------------------------- -------------------------- (Address of principal executive offices) (Zip Code) (561) 844-3486 (Issuer's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Common Stock, no par value (Title of each class) Securities registered pursuant to Section 12(g) of the Act: None (Title of Class) Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] No [ ] Check if there is no disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ] The issuer's revenues for its most recent fiscal year were $4,607,945. The aggregate market value of the voting stock held by non-affiliates computed by reference to the price at which the stock was sold or the average bid and asked prices of such stock as of September 20, 2000 was approximately $3,997,027. As of June 30, 2000 34,017,248 shares of Common Stock, no par value, of the registrant were outstanding. DOCUMENTS INCORPORATED BY REFERENCE: None Transitional Small Business Disclosure Format (Check One): Yes [ ] No [X] [GRAPHIC?OMITTED] 2 PART I Item 1. Description of Business General Medical Technology & Innovations, Inc., f/k/a SouthStar Productions, Inc. (the "Company") was incorporated in the state of Florida in January 1989. The Company operates through its wholly- owned subsidiary, Medical Technology, Inc. ("MTI"). MTI was incorporated in the state of Iowa in April 1993. The Company acquired control of MTI in October of 1995 under the terms of a Share Exchange Plan ("the Plan") with SouthStar Productions, Inc. ("SouthStar"). The Company manufactures and distributes the PhotoScreener, which is a specialized Polaroid-type instant film camera designed to detect conditions that lead to amblyopia ("lazy eye") and other eye disorders. On August 1, 1996 the Company acquired the net assets of Steridyne Corporation, a Florida Corporation ("Steridyne"). Steridyne is a manufacturer and distributor of thermometer sheaths, probe covers, and anti-decubitus gel cushions. Steridyne also distributes both glass and digital thermometers. Effective April 1, 1999 the Company acquired certain key operating assets of the thermometer business of Florida Medical Corporation ("Florida Medical"), a former manufacturer of glass thermometers and distributor of digital thermometers. Florida Medical has been in business for over twenty years and brings a substantial customer base in the retail market. The purchase requires that both Companies equally split the profit for the next several years. No up front cash or stock was required to be issued as part of the purchase price. Product Lines The PhotoScreener is designed to take a photograph of a child's eye and detect factors which can lead to amblyopia (lazy eye), including strabismus (misalignment of the eye), cataracts (cloudy lenses), and asymmetric or other abnormal refractive errors, including myopia (nearsightedness), hyperopia (farsightedness), and astigmatism. The PhotoScreener consists of a single flash placed close to the center of the lens of the subject's eye to accentuate the "red eye" appearance of a subject for diagnostic purposes. By placing the flash close to the lens aperture, abnormal refractive errors of the eye are imaged as white crescents in the red eye reflex, a process scientifically known as "photo refraction". The PhotoScreener consists of approximately 40 components, plus screws and fasteners. Major components include molded plastic parts, optic lenses, printed circuit boards, an instant film back, a strobe flash, optic mirrors, a battery pack, a power supply, and a battery charger. Steridyne's primary professional product line is the Steritempa sterile thermometer sheath and Steritemp II probe cover, a universal probe cover for the small hand-held electronic thermometer. These clinical products are packaged in over 30 distinct put-ups for the varied marketplace. This 3 includes Steritempa's own branded electronic thermometer and probe cover kits. A non-sterile economy sheath/probe cover line, Value BrandO, was recently introduced. Steridyne's retail products include glass thermometer kits, electronic thermometer kits, sheath/probe covers, and forehead temperature indicators. Steridyne has two extensive wound management product lines in the home healthcare market: Zero- GO and SofSeatO, a range of gel flotation cushions offering full support at economical price levels. Certain geographic segment information is described in Note 16 to the Company's financial statements included as Item 7 of this Form 10-KSB. Marketing and Distribution The Company markets the PhotoScreener domestically and internationally through a combination of direct sales representatives and independent distributors. The Company markets the PhotoScreener to pediatricians, public health and education departments, preschools, day care centers, family and general physicians, eye doctors, hospitals, volunteer organizations, managed care and health maintenance organizations, and national eye care chains. Steridyne products are distributed through an authorized dealer network utilizing sales representatives throughout the nation. There are three divisions: professional (ethical), home healthcare and retail. The independent sales representatives are directed by a sales executive of Steridyne. Competition The vision screening business has attracted several companies, both domestic and foreign. Although other vision screening devices currently exist and are on the market, the Company believes the PhotoScreener has competitive advantages over all other such devices. These advantages include instant film capability, relatively low cost, portability, and ease of interpretation and use. The Company's temperature taking and wound management products operate in a highly competitive retail market in which the Company has a minor share. The business is split about 50 percent retail and 50 percent in the clinical area where it is estimated that it has about 25% of the U.S. market. Although the Company believes its products have advantages over competing products, no assurances can be made that current competitors or new entrants into the market will not develop more competitive products. Such potential competitors would most likely have considerably more financial resources than the Company. Patents and Trademarks In 1993, the Company obtained rights to U.S. Patent No. 4,989,968 for a photoscreening camera system, which is now known as the PhotoScreener. The above patent was initially granted to Dr. Howard Freedman and subsequently assigned to the Company. The Company has filed patent applications in Canada, Europe, and Japan. As a result of the acquisition of Steridyne in August 1996, the Company has obtained rights to 4 patents No. 4672700, No. 4753705, No. 4967758, No. 4614442, and No. 4593699, covering thermometer sheaths and probe covers, decubitus cushions and disposable liners for blood pressure cuffs. Steridyne's trademarks include Steritemp, Zero-G, Dr. T.Rex and Sofseat. As part of the acquisition of Florida Medical, the Company obtained the right to use the trademarks RECOVER and TEMCOM with devices for taking temperatures including glass and digital thermometers. Government Regulation Certain aspects of the Company's business, principally the manufacture and sale of the PhotoScreener and the Steridyne products are subject to regulation by the U.S. Food and Drug Administration (FDA) as a medical device. The Company has received a 510(k) clearance to market the PhotoScreener and all of the Steridyne products with the exception of the gel floatation cushions and sheaths which only require listing with the FDA and that has been accomplished. The Company believes that it has completed all necessary governmental processes to market the PhotoScreener. However, if the FDA should determine the Company has not complied with its regulations, the FDA has the authority to order the Company to cease production of its products and recall products already sold. Employees As of June 30, 2000 and 1999, the Company employed 29 and 38 full-time employees, respectively. None of the Company's employees are represented by a labor union, and the Company considers its employee relations to be good. Item 2. Description of Properties The Company's principal executive and administrative offices are located in Riviera Beach, Florida. The Company's manufacturing and distribution functions for Steridyne Corporation and MTI are also conducted at this facility. The facility is subject to a mortgage of approximately $219,000. The Company believes that its properties are well maintained, and its manufacturing equipment is in good operating condition and sufficient for current production. Item 3. Legal Proceedings In November 1997 the Company initiated a lawsuit against Faisal Finance (Switzerland) S.A. to recover damages related to restructuring the conversion rights of its Series A Preferred Convertible shares and associated financial transactions. That action was filed in Pennsylvania and subsequently Faisal Finance challenged the jurisdiction of the court and filed an action against the Company in Florida. The Company then joined the two actions in Florida. The Company alleged that Faisal Finance breached its agreement to provide funding for, as well as to participate as an investor in, the restructuring, purposefully delayed the transactions knowing the precarious financial condition of the Company at the time and allowed conflicting interests to interfere with their obligations as a financial advisor to the Company. Faisal claimed damages of $750,000 for the alleged failure of the Company to fulfill its obligations under the original conversion rights and investment banking fees for alleged services in connection with the restructuring. 5 In December of 1998, the Company settled this action by agreeing to pay Faisal an amount approximately equal to the amount they would have received had they originally tendered their shares in October of 1997. On February 15, 2000 the Company filed a lawsuit in the Common Pleas court of Dauphin County, Pennsylvania against LensCrafters, Inc. (LensCrafters) and its parent, Luxottica Group S.P.A. (Luxottica). The Company entered into a business relationship with LensCrafters to provide more than 600 of its PhotoScreener devices for use in the retail facilities of LensCrafters. In a written agreement dated August 25, 1998, LensCrafters committed that it would conduct a national marketing campaign in excess of $5 million to promote vision screening through the PhotoScreener. As part of that transaction, LenCrafters insisted on obtaining the right to purchase up to 1.2 million shares of the Company's stock because both LensCrafters and the Company believed that the introduction of the PhotoScreener in LensCrafters' retail facilities would greatly benefit the Company. The Company's complaint provides that the Company delivered the PhotoScreeners to LensCrafters, but LensCrafters has failed to meet its promotional and marketing commitments. LensCrafters has not proceeded with the national promotional campaign, nor has it distributed the PhotoScreener units to its retail stores. The Complaint asserts that Luxottica, which owns LensCrafters, has directed LensCrafters to break its agreement with the Company. The complaint seeks substantial monetary damages from both Luxottica and LensCrafters. It asserts legal claims for breach of contract by LensCrafters, for misrepresentation and fraud by LensCrafters, and for intentional interference with contract by Luxottica. LensCrafters has removed the case to Federal Court, where it is now pending. LensCrafters also moved to refer the case to arbitration. Luxottica has filed a challenge to the jurisdiction of the Court. The Company vigorously contests both motions. A decision on these motions is expected in the near future. As of January 1, 2000 the Company entered into an Agreement with a company affiliated with the Chairman and Chief Executive Officer to provide litigation management services with regards to the proceedings against LensCrafters et al. This company is paying or advancing all attorney's fees and other litigation costs and expenses incurred by the Company to pursue this litigation against Lenscrafters et al. Assuming that the Company is successful in receiving a judgment or award or settlement from this litigation, all litigation cost and expenses paid will be reimbursed and 10% of the gross judgment, award or settlement will be paid to the company affiliated with the Chairman and Chief Executive Officer. No costs or expenses will be due in the event the litigation is unsuccessful. MTI, the Company and Steridyne are also parties to other pending legal proceedings in the ordinary course of their business. The Company does not expect these legal proceedings to have a material adverse effect on the Company's financial condition. Item 4. Submission of Matters to a Vote of Security Holders The following items were considered and acted upon at the Company's 1999 annual meeting of stockholders which was held April 28, 2000: 1. The following directors were elected, along with his respective votes received: Director Term Votes For Votes Against Votes Abstain - ------------------- ------- ---------- ------------- --------------- Joseph Del Vecchio 3 yr. 16,794,941 0 306,710 Mathew Crimmins 3 yr. 16,794,941 0 306,710 6 2. Simon Lever & Company was ratified as the independent certified public accountants by a vote of 17,044,891 in favor, 49,700 votes against and 7,060 abstain votes. PART II Item 5. Market for Common Equity and Related Stockholder Matters The Company's common stock is listed on the Over the Counter Electronic Bulletin Board under the symbol "MTEN." Prior to October 1995, the Company's common stock was neither listed nor traded on any market. The following table sets forth the range of the high and low bid prices for the common stock during the periods indicated, and represents interdealer prices, which do not include retail mark-ups and mark-downs, or any commission to the broker-dealer, and may not necessarily represent actual transactions. Quarter Ending High Low Quarter Ending High Low September 30, 1999 $ .18 $ .06 September 30, 1998 $.27 $.25 December 31, 1999 .09 .03 December 31, 1998 .20 .08 March 31, 2000 .48 .04 March 31, 1999 .18 .15 June 30, 2000 .27 .09 June 30, 1999 .15 .15
As of June 30, 2000, there were approximately 679 recordholders of common stock. Such amounts do not include common stock held in "nominee" or "street" name. The Company has not paid cash dividends on its common stock since its inception. At the present time, the Company's anticipated working capital requirements are such that it intends to follow a policy of retaining any earnings in order to finance the development of its business. Item 6. Management's Discussion and Analysis or Plan of Operation This analysis should be read in conjunction with the consolidated financial statements and notes thereto. This form 10-KSB includes " forward looking statements" concerning the future operations of the Company. It is management's intent to take advantage of the "safe harbor" provision of the Private Securities Litigation Reform Act of 1995. This statement is for the express purpose of availing the Company of the protections of such safe harbor with respect to all "forward looking statements" contained in this Form 10-KSB. We have used "forward looking statements" to discuss future plans and strategies of the Company. Management's ability to predict results or the effect of future plans is inherently uncertain. Factors that could effect results include, without limitation, competitive factors, general economic conditions, customer relations, relationships with vendors, the interest rate environment, governmental regulation and supervision, seasonality, distribution networks, product introductions, acceptance, technological change, changes in industry practices and one-time events. These factors should be considered when evaluating the "forward looking statements" and undue reliance should not be placed on such statements. Should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein. 7 Results of Operations Fiscal Year Ended June 30, 2000 as Compared to June 30, 1999 Revenues for the fiscal year 2000 were $4,607,945, compared to $5,443,604 for the comparable period in fiscal 1999, or a decrease of $835,659 or 15%. Revenues for Steridyne Corporation were $4,151,177 compared to $3,442,747 for an increase of $708,430 or 21% mainly due to the inclusion of the Florida Medical thermometers customers for a full twelve months. Revenues for Medical Technology were $456,768 compared to $2,000,857 for a decrease of $1,544,089 or 77%. This decline resulted because the Company shipped over $1,500,000 of PhotoScreeners and accessories to LensCrafters in the fiscal year 1999 with no comparable sales occurring in fiscal 2000. Management is currently completing negotiations on several supply contracts which would effectively increase Photoscreener sales to core levels achieved prior to the fulfillment of the Lenscrafter offer. Gross profit for the fiscal year 2000 of $1,844,784, compared to $2,228,357 for the comparable period in fiscal 1999, or a decrease of $383,573 or 17% and is entirely due to the shortfall in sales of the PhotoScreener, offset by improved margins in the Steridyne line of products. The Steridyne Product group has now been profitable for the past several months and the Photoscreener Product group is now profitable based upon the present level of business. The Company has recently announced its acquisition of the manufacturing and distribution rights to a state of the art urological device for female patients. It is expected that this new product will further help to bolster revenues and profit margins for the Company. Operating expenses during the fiscal year 2000 were $2,591,342, compared to $2,692,684 for fiscal 1999, or a decrease $101,342, or 4%. Management expects to see further reductions in operating expenses as we see a full year effect of the cutbacks made in corporate salaries, services and facility costs as part of the recently completed reorganization. Interest expense of $236,306 for fiscal 2000 increased by $50,006 or 26% versus fiscal 1999. Information about the Company's Industry Segments is included in Note 16 to the Notes to Consolidated Financial Statements. Liquidity and Capital Resources At June 30, 2000, the Company had cash of $161,018 and working capital of ($176,251) as compared to $90,581 and ($613,415) at June 30, 1999. The increase in the working capital is mostly due to the decrease of $459,984 of accounts payable, as a result of the $1,000,000 financing closed in January 2000. During the quarter ending March 31, 2000, the Company borrowed over $1,000,000 from an affiliate of the Chief Executive Officer and Chairman of the Company to support the working capital needs of the Company. This loan is secured by substantially all of the assets of the Company and is guaranteed by the Company's subsidiaries. At June 30, 2000, $1,090,999 was outstanding and included in the balance sheet as of the same date. The interest rate for the loan is a fixed rate of twelve percent (12%) per annum, however, interest may be added to the loan principal at two times the interest payment due at the option of the Company with the written consent of the lender. During the first eighteen months of the loan the Company will pay only interest monthly. During the remaining forty-two (42) months of the loan the Company will pay principal, amortized over twenty years, and interest monthly, commencing on the first day of the nineteenth month and continuing on 8 for forty-two months thereafter. The balance of the loan is due in full at the end of sixty months. At any time, at the option of the lender, the outstanding principal plus accrued and unpaid interest and expenses due may be paid in an amount of common stock of the Company at the rate of one share for every four cents owed to the lender (the "Conversion Rate"). The Conversion Rate had been determined at the time of the negotiations, based upon the previous sixty day average closing price per share of the Company's common stock as quoted on the Over-The-Counter Bulletin Board. The Conversion Rate will be adjusted for all stock splits subsequent to the loan agreement. In the event the conversion occurs it would change the ownership of the Company significantly. The Chief Executive Officer and a former Director of the Company personally signed a guarantee with a local bank to provide a $250,000 line of credit to the Company, which terminated in February of 2000. Both individuals were granted options to acquire 50,000 shares of the Company's common stock at an exercise price of $0.50 per share. The Chief Executive Officer pledged a $235,000 Certificate of Deposit to the local bank who provided the line of credit to the Company. As a result, the bank released the former Director as guarantor of the borrowing facility. The Company continues to make interest payments on the line of credit. In consideration the Chief Executive Officer was granted options to acquire 100,000 shares of the Company's common stock at an exercise price of $0.25 per share. Management has completed the process of consolidating its operations into a single location and cutting back on administrative staff in line with present sales levels. The reorganization has been completed as of March 31, 2000. In September of 1997 the Company reached an agreement with the holders of the Series A Preferred shares issued in July of 1996 to amend certain terms and conditions of the issue subject to the Company completing the required financing. All Series A Preferred shareholders were given the choice of electing ("Option 1") a cash payment of $3,800 per share or ("Option 2") 10,000 shares of the Company's common stock and a new Series B Preferred share with a $6,000 face in exchange for 1 share of the original Series A Preferred. All Series A Preferred shareholders also had the exercise price reduced on all warrants applicable to tendered Series A Preferred Shares from $2.72 to $1.00. The new Series B Preferred Stock was convertible into common stock of the Company from October 1, 1998 at a fixed price of $1.00. Conversion is limited to 10% of the holding for the first four months following October 1, 1998 then it is increased to 20% per month thereafter. The Series B Preferred stock can be redeemed by the Company at any time in cash at 110% of the face value or in common stock at 120% of the face value, with mandatory redemption required by September 30, 2000. Management is in the process of making a proposal to redeem all Series B Preferred Stock with a new Series C Preferred Stock or cash in lieu of converting the entire issue into shares of the Company's Common stock. The Company believes that the issuance of additional common shares at this time is not in the best interest of all shareholders. Management expects that the provisions of this restructuring will be agreed between the parties within the next few months. For the past several years the Company has financed a portion of its operations through private sales of securities and revenues from the sale of its products. Since June of 1993 the Company has received net proceeds of approximately $11.0 million from the private sale of securities and debt. The Company may raise additional capital through private and/or public sales of securities in the future. As of January 1, 2000 the Company entered into an Agreement with a company affiliated with the Chairman and Chief Executive Officer to provide litigation management services with regards to the proceedings against LensCrafters et al. This company is paying or advancing all attorney's fees and 9 other litigation costs and expenses incurred by the Company to pursue this litigation against Lenscrafters et al. Assuming that the Company is successful in receiving a judgment or award or settlement from this litigation, all litigation cost and expenses paid will be reimbursed and 10% of the gross judgment, award or settlement will be paid to the company affiliated with the Chairman and Chief Executive Officer. No costs or expenses will be due in the event the litigation is unsuccessful. Year 2000 Compliance The Company was aware of the issues associated with the programming code in existing computer systems as the millennium (Year 2000) approached. All software used for the Company systems has been supplied by software vendors or outside service providers. The Company has confirmed with such providers that its present software is Year 2000 compliant. The Company believes, after investigation, that all software and hardware products that it is currently in the process of developing (directly or through vendors) are Year 2000 compliant. The Company believes, after investigation, that its own software operating systems are Year 2000 compliant and in fact, has experienced no Year 2000 problems since January 1, 2000. Further the Company has experienced no difficulties or adverse effects due to untimely conversion or failure to convert by any other company upon which it relies. The Company believes that it has disclosed all required information relative to Year 2000 issues relating to its business and operations. Item 7. Financial Statements Index to Consolidated Financial Statements: Page Report of independent auditors for the years ended June 30, 2000 and 1999 F-1 Consolidated balance sheets as of June 30, 2000 and 1999 F-2 Consolidated income statements for the years ended June 30, 2000 and 1999 F-3 Consolidated statements of stockholders' equity for the years ended June 30, 2000 and 1999 F-4 Consolidated statements of cash flows for the years ended June 30, 2000 and 1999 F-5 Notes to consolidated financial statements F-6 10 INDEPENDENT AUDITORS' REPORT To the Board of Directors Medical Technology & Innovations, Inc. Riviera Beach, Florida We have audited the accompanying consolidated balance sheets of Medical Technology & Innovations, Inc. and subsidiaries as of June 30, 2000 and 1999, and the related consolidated statements of income, stockholders' equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Medical Technology & Innovations, Inc. and subsidiaries as of June 30, 2000 and 1999, and consolidated results of their operations and their consolidated cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ SIMON LEVER & COMPANY Lancaster, Pennsylvania September 25, 2000 F-1
Medical Technology & Innovations, Inc. Consolidated Balance Sheets June 30 Assets 2000 1999 ------------ ----------- Current Assets: Cash and Equivalents $ 161,018 $ 90,581 Accounts Receivable, less allowances of $30,030 and $21,174, respectively 572,160 438,207 Inventory 542,892 513,358 Prepaid Expenses 46,696 91,002 ------------ ---------- Total Current Assets 1,322,766 1,133,148 ---------- ---------- Fixed Assets: Land 182,000 182,000 Property & Equipment 1,153,512 1,163,166 Less accumulated depreciation (623,897) (494,006) --------- --------- Fixed Assets, net 711,615 851,160 ---------- ---------- Other Assets: Intangible Assets 1,897,120 2,134,155 --------- --------- Total Assets $3,931,501 $4,118,463 ========== ========== Liabilities and Stockholders' Equity Current Liabilities: Accounts Payable $ 448,155 $908,139 Accrued Liabilities Payroll and payroll taxes 189,303 180,472 Royalties 185,130 147,961 Other 188,678 94,155 Current Maturities of Long-Term Debt 487,751 415,836 ---------- --------- Total Current Liabilities 1,499,017 1,746,563 Long-Term Debt, Net of Current Maturities 1,432,681 1,321,158 --------- --------- Total Liabilities 2,931,698 3,067,721 --------- --------- Stockholders' Equity Common Stock, no par value, authorized 700,000,000 shares, outstanding 34,017,248 and 27,548,334 shares, respectively 11,122,017 10,190,092 Series A Convertible Preferred Stock, $100 par value, authorized 70,000 shares, outstanding nil shares - 0 - - 0 - Series B Convertible Preferred Stock, $100 par value, authorized 1000 shares, outstanding 266 shares 1,596,000 1,596,000 Preferred Stock, authorized 100,000,000 shares $1,000 par value, 12%, noncumulative, outstanding 22.5 shares 22,500 22,500 Treasury Stock, at cost (1,973,531 shares) (436,799) (436,799) Accumulated Deficit (11,303,915) (10,321,051) ------------ ------------ Total Stockholders' Equity 999,803 1,050,742 -------------- ------------- Total Liabilities and Stockholders' Equity $ 3,931,501 $ 4,118,463 ============== ===========
The accompanying notes are an integral part of the financial statements. F-2
Medical Technology & Innovations, Inc. Consolidated Income Statements For the Years Ended June 30 2000 1999 ------ ---- Revenues $4,607,945 $5,443,604 Cost of Goods Sold 2,763,161 3,215,247 ----------- ----------- Gross Profit 1,844,784 2,228,357 ----------- Operating Expenses Advertising 31,551 7,764 Selling, General, and Administrative 2,559,791 2,684,920 ---------- Total Operating Expenses 2,591,342 2,692,684 ---------- (Loss) from Operations (746,558) (464,327) Interest Expense, Net 236,306 186,300 ----------- Net (Loss) from Operations ($ 982,864) ($650,627) =========== ========== Net (Loss) per common share ($.035) ($.029) =========== (basic and diluted)(*) Weighted Average Outstanding Shares 31,795,545 27,087,143 ========== ==========
(*) Calculated including Series B Preferred Stock accretion of $127,680 and $128,160 for the fiscal years ended June 30, 2000 and 1999; respectively. The accompanying notes are an integral part of the financial statements. F-3
Medical Technology & Innovations, Inc. Consolidated Statements of Stockholders' Equity For the Years Ended Series A Series B Convertible Convertible Total Common Common Preferred Preferred Preferred Treasury Accumulated Stockholders' Shares Stock Stock Stock Stock Stock Deficit Equity ---------- ----------- ------------- ---------- -------- ----------- ------------ ------------ Balance at June 30, 1997 16,730,729 $6,755,260 $4,407,810 $22,500 ($309,742) ($8,183,060) $2,692,768 Net Loss (1,487,364) (1,487,364) Issuance of Common Stock 144,509 25,000 25,000 Stock Issued for Services 1,156,864 296,113 296,113 Conversion of Series A Preferred Stock into common stock 7,853,177 1,531,647 (1,531,647) Conversion of subscribed Series A Preferred Stock into common stock 500,000 76,000 (76,000) Gain on Restructuring of Series A Preferred Stock 948,163 (1,198,163) (250,000) Issuance of Series B Preferred In exchange for Series A Preferred (1,602,000) 1,602,000 ---------- ----------- ------------- ---------- -------- ----------- ------------ ------------ Balance at June 30, 1998 26,385,279 $9,632,183 $ - 0 - $1,602,000 $22,500 ($309,742) ($9,670,424) $1,276,517 Purchase of Treasury Shares (600,000) (127,057) (127,057) Net Loss (650,627) (650,627) Stock Issued for Services 983,974 172,409 172,409 Conversion of Series B Preferred Stock into common stock 54,081 6,000 (6,000) Conversion of Subordinated Notes into common stock 725,000 379,500 379,500 ---------- ----------- ------------- ---------- -------- ----------- ------------ ------------ Balance at June 30, 1999 27,548,334 $10,190,092 $ - 0 - $1,596,000 $22,500 ($436,799) ($10,321,051) $ 1,050,742 Conversion of Debentures Into Common stock 5,436,773 822,601 822,601 ========== =========== ============= ========== ======== ========== =========== ============ Stock Issued for Services 1,032,141 109,324 109,324 Net Loss (982,864) (982,864) ---------- ----------- ------------- ---------- -------- ---------- ----------- ------------ Balance at June 30, 2000 34,017,248 $11,122,017 $ - 0 - $1,596,000 $22,500 ($436,799) ($11,303,915) $ 999,803 ========== =========== ============= ========== ======== ========== =========== ============
The accompanying notes are an integral part of the financial statements. F-4
Medical Technology & Innovations, Inc. Consolidated Statements of Cash Flows For the Years Ended June 30 2000 1999 ---- ---- Cash flows from operating activities: Net Loss $982,864) ($650,627) Adjustments to reconcile net loss to net cash (used) provided in operating activities: Depreciation and Amortization 376,580 368,085 (Increase) in Accounts Receivable (133,953) (151,093) (Increase) in Inventory (29,534) (120,210) Decrease (Increase) in Prepaid Expenses 44,306 (60,261) (Decrease) Increase in Accounts Payable (459,984) 402,315 Increase in Accrued Liabilities 140,123 52,030 Stock issued for services 109,324 172,409 Conversion of interest to debt 90,999 -0- ---------- -------------- Net cash (used) provided in operating activities (845,003) 12,648 Cash flows from investing activities: Sale of Headquarters Land and Building -0- 232,725 Purchase of Fixed Assets -0- (29,060) [GRAPHIC?OMITTED] [GRAPHIC?OMITTED] Net cash provided (used) in investing activities -0- 203,665 Cash flows from financing activities: Proceeds from revolving credit facility -0- 235,000 Acquisition of Treasury Stock -0- (127,057) Proceeds from issuance of Notes Payable 1,000,000 -0- Repayment of Notes Payable (84,560) (271,922) ---------- ----------- Net cash (used) provided from financing activities 915,440 (163,979) ---------- ----------- Net increase (decrease) in cash and equivalents 70,437 52,334 Cash and equivalents at beginning of year 90,581 38,247 ---------- ------------ Cash and equivalents at end of year $ 161,018 $ 90,581 ========== =========== Supplemental Disclosure: Cash paid during the year for interest $ 108,745 $ 159,915 ========== ========== Conversion of subordinated notes into common stock $ 822,601 $ 379,500 ========== ==========
The accompanying notes are an integral part of the financial statements. F-5 Medical Technology & Innovations, Inc. Notes to Consolidated Financial Statements 1 Organization. Medical Technology & Innovations, Inc. (the Company), f/k/a SouthStar Productions, Inc., is a Florida corporation engaged in the design, manufacture, and distribution of medical screening devices for medical professionals primarily involved in vision screening through its wholly-owned subsidiary, Medical Technology, Inc. (MTI). The Company's other subsidiary, Steridyne Corporation, distributes digital and glass thermometers, and manufactures and distributes probe covers, sheaths, and anti-decubitus devices for hospitals, medical offices, nursing homes and retail outlets. The Company derives the majority of its revenues from sales of Steridyne's products. 2. Summary of Significant Accounting Policies. Principles of Consolidation. The consolidated financial statements include the Company and its wholly owned subsidiaries. All significant intercompany items have been eliminated. Revenue Recognition. Revenue from product sales are recognized at the time product is shipped. Cash and Equivalents. Cash and equivalents include cash, deposits and marketable securities. Inventories. Inventories are stated at the lower of cost or market, with cost determined under the first-in, first-out (FIFO) method. Property and Equipment. Property and equipment are stated on the basis of cost less accumulated depreciation. The Company provides for depreciation over the estimated useful lives of property and equipment using the straight-line method. Intangible Assets. Intangible assets consist primarily of goodwill of $2,262,708 associated with the acquisition of Steridyne which is being amortized over fourteen years and patents which are amortized on a straight-line basis over their estimated remaining lives. Accumulated amortization on intangible assets totals $959,280 and $854,963 at June 30, 2000 and 1999, respectively. Income Taxes. Deferred income taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Advertising. Advertising costs are expensed as incurred. Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Long-Lived Assets. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may F-6 not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset and long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. Impairment losses are recognized when the aggregated future cash inflows (less outflows) to be generated by an asset, are less than an asset's carrying value. Future cash inflows include an estimate of the proceeds from eventual disposition of the assets. For purposes of this comparison, future cash flows are determined without reference to their discounted present value. Management believes that the Company's projected results of future operations, the period of the forecasts and the trend of the results over the forecast period are its best estimate and are indicative that the carrying value of long-lived assets is not impaired. 3. Inventories. Inventories consisted of the following at June 30, 2000 and 1999: 2000 1999 ----------- ----------- Raw materials $503,726 $314,693 Work in process 0 39,712 Finished goods 39,166 158,953 ----------- ----------- $542,892 $513,358 4. Fixed Assets. Fixed assets consisted of the following at June 30, 2000 and 1999: 2000 1999 --------- ----------- Plant & equipment $860,510 $865,525 Land 182,000 182,000 Computer equipment and software 177,414 179,714 Furniture and fixtures 115,588 117,927 ----------- ----------- 1,335,512 1,345,166 Less: Accumulated Depreciation (623,897) (494,006) ----------- ----------- $711,615 $851,160 In July of 1998, the Company sold its facility in Lancaster, PA and repaid the $234,000 mortgage on the realty. 5. Long-Term Debt. Long-Term Debt consisted of the following at June 30, 2000 and 1999: 2000 1999 ------------ ------------ 12% convertible note due to an affiliate of the Chief $ 1,090,999 $ -0- Executive Officer and Chairman of the Company, due January 21, 2005, interest payable monthly, principal amortized over twenty years, commencing the nineteenth month and continuing for forty-two months, balance to be paid at the end of sixty months, secured by substantially all of the assets of theCompany and is guaranteed by the Company's subsidiaries. 8.0% convertible notes, due March 1999, interest payable -0- 822,601 quarterly, secured by certain assets of a subsidiary, guaranteed by the Company 11.25% note, due September 1999, principal and interest 51,624 51,624 payable monthly, secured by substantially all of the assets of a subsidiary of the Company, except for the Company's patent, and guaranteed by the Company's Chief Executive Officer and major stockholder
F-7 11.25% note, due March 2001, principal and interest payable 82,808 82,808 monthly, secured by substantially all of the assets of a subsidiary of the Company, except for the Company's patent and guaranteed by the Company's Chief Executive Officer and major stockholder. 10.0% convertible note, due March 2001, interest 80,816 80,816 payable quarterly 10.0% convertible note, due March 2002, interest payable 80,816 80,816 quarterly Revolving $235,000 credit line, due on demand, 235,000 235,000 interest payable monthly at 10.5%, facility guaranteed by the Company's Chief Executive Officer and major stockholder and secured by certain of his personal assets. 9.5% note, due December 2011, principal and interest payable 218,766 228,725 monthly, secured by mortgage Variable rate note payable, interest payable monthly at prime -0- 35,339 rate plus 7%, secured by Company's inventory Unsecured notes payable, due various dates,interest payable at various rates from 0% to 10% 79,603 119,265 ------------ ----------- Total notes payable 1,920,432 1,736,994 Less: amounts due in one year (487,751) (415,836) ------------ ------------ $ 1,432,681 $1,321,158 ============ ============
The 12% note, due January 21, 2005 is convertible at any time at the option of the lender, into shares of the Company's Common Stock at the rate of one share for every four cents owed to the lender (the "Conversion Rate"). The Conversion Rate had been determined at the time of negotiations, based upon the previous sixty day average closing price per share of the Company's common stock as quoted on the Over-The-Counter Bulletin Board. The Conversion Rate will be adjusted for all stock splits subsequent to the loan agreement. In the event the conversion occurs it would change the ownership of the Company. During fiscal 2000, the Company opted not to make certain interest payments then due and rolled $90,999 into the principal amount due in accordance with the provisions of the Loan Agreement. The 10.0% convertible note due March 2001 and the 10.0% convertible note due March 2002 are convertible, at the election of the note holder, into 158,010 shares and 131,675 shares respectively adjusted for certain antidilutive events upon the earlier of: (1) March 1, 1998, (2) an initial public offering of the Company's Common Stock, or (3) the sale of all or substantially all of the assets of the Company. The terms of the 11.25% notes originally due in September 1999 and March 2001 with principal amounts due at June 30, 2000 of $51,624 and $82,808, respectively, are presently being discussed with the lender in an attempt to extend the payment period and principal amortization. The Company expects to have this resolved in the near term. The 8% convertible notes due in March 1999 were converted at the Company's election into 5,436,733 shares of common stock in October of 1999. The amount of long-term debt maturing in each of the next five fiscal years is $487,751 in 2001, $79,034 in 2002, $58,160 in 2003, $58,160 in 2004, and $999,159 in 2005. F-8 6. Lease Expense. The Company leases various equipment and office space under operating lease agreements. Rent expense for the fiscal years ended June 30, 2000 and 1999 amounted to $58,911 and $81,396 respectively. Future minimum annual rentals for subsequent fiscal years are as follows at June 30, 2000: Fiscal Lease Year Payments ------ -------- 2001 $ 55,362 2002 48,183 2003 46,122 7. Earnings (Loss) Per Share. Earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares and dilutive potential common shares outstanding. The average number of shares used to compute basic earnings per share was 31,795,545 and 27,087,143 for the fiscal years ended June 30, 2000 and 1999 respectively. The Dilutive potential common shares were anti-dilutive for the years ending June 30, 2000 and 1999 and, accordingly, basic and dilutive earnings (loss) per share was approximately the same. 8. Income Taxes. The Company did not incur any income tax expense for its fiscal years ending June 30, 2000 and 1999, respectively. As of June 30, 2000 the Company has sustained in excess of $11 million in net operating losses (NOLs) for tax purposes. These NOLs will expire in various amounts if not utilized between 2004 and 2015 and are subject to limitations should the ownership of the Company significantly change. The deferred tax asset resulting from the above NOL carryforwards has not been recorded in the accompanying financial statements since management believes a valuation allowance is necessary to reduce the deferred tax asset. Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income. 9. Royalty Agreement. The Company is the owner of a patent on a photoscreening device from which MTI derives substantially all of its revenues. The terms of the royalty agreement require the Company to pay a royalty to the inventor of six percent (6.0%) of net PhotoScreener sales, up to December 31,1999 and seven percent (7%) there after. The amount of royalties accrued by the Company were $35,471 and $111,996 for its fiscal years ending June 30, 2000 and 1999, respectively, under this agreement. In accordance with the terms of the purchase agreement with Florida Medical Corporation, the Company and the former owner of Florida Medical Corporation agreed to equally share in the profits resulting from the Company's thermometer sales to former Florida Medical customers. Accordingly, the Company has accrued $165,548 of royalty expense at June 30, 2000 due to the former owner of Florida Medical Corporation. 10. Preferred Stock. The Company has three classes of preferred stock. The $1,000 par value convertible preferred stock is convertible into 14,985 shares of the Company's common stock. The Series A convertible preferred stock was convertible into approximately 30 million shares of the Company's common stock as of September 30, 1997. The Series A preferred stock conversion rate was the lower of the approximate market rate or $2.72. During September During September of 1997, the Company renegotiated terms with the Series A Preferred Shareholders and as a result, Series A Preferred Shares were exchanged for a combination of cash, common stock, a new Series B Preferred stock and an amended warrant certificate with an exercise price of $1.00 per share in cash. Series A Preferred shareholders owning 217 outstanding shares elected to receive $3,800 in cash in exchange for their Series A Preferred shares with a face value of $10,000. The Series A Preferred F-9 shares were eventually converted into 5,425,000 of the Company's Common Stock. Over 60% of the parties who ultimately purchased the Series A Preferred shares and converted them into common shares of the Company agreed not to sell any common shares before April 1, 1998 and limit sales to 8% of the amount purchased per month thereafter with no limit on salability once 360 days have lapsed since the closing. Series A Preferred shareholders owning 267 outstanding shares agreed to exchange their Series A Preferred shares for a new Series B Preferred share with a $100 par value, a face value of $6000 with accretion at 8% from October 1, 1997 plus 10,000 shares of the Company's common stock. The new Series B Preferred stock is convertible into common stock beginning October 1, 1998 at a fixed conversion price of $1.00 per share. Conversion is limited to 10% per month of the shares held until February 28, 1999 and 20% per month thereafter. The conversion feature doubles provided the Company's common stock closing bid price for ten consecutive days is greater than $2.00 per share. Accretion as of June 30, 2000 and 1999 was $351,960 and $224,280, respectively and is not reflected in the Company balance sheets. The Company has the option of redeeming the Series B Preferred shares at any time in cash, at 110% of the original face value of the Series B Preferred shares including accretion, or in the Company's common stock valued at the average closing bid price for the 30 days prior to the redemption at 120% of the original face value of the Series B Preferred shares including accretion. The Company is required to redeem the Series B Preferred stock on September 30, 2000. Management is in the process of making a proposal to redeem all Series B Preferred Stock with a new Series C Preferred Stock or cash in lieu of converting the entire issue into shares of the Company's Common stock. The Company believes that the issuance of additional common shares at this time is not in the best interest of all shareholders. Management expects that the provisions of this restructuring will be agreed between the parties within the next few months. 11. Stock Option Plans. In October of 1995 officers of the Company were granted options to acquire up to 2.0 million shares of common stock at an exercise price of $1.50 per share. The options were exercisable ratably over a trading three year period commencing with the quarter ending June 30, 1996. In April of 1996 the Company's shareholders approved the 1996 Stock Option Plan, which allows the board of directors to grant up to 3.0 million options. During fiscal 2000 and fiscal 1999, 1,220,000 and 120,000 options respectively, have been granted. All options granted in fiscal 2000 are exercisable immediately at a strike price of $.25 per share. Of the 120,000 options granted in fiscal 1999, 20,000 are exercisable ratably over a three-year period commencing with the grant date at an exercise price of $.25 per share. The remaining options granted in fiscal 1999 were exercisable immediately at an exercise price of $.50 per share. In September of 1997 and February of 1998, the Board of Directors reduced the exercise price on all options granted to Company Executives to $.25 per share. The following is a summary of stock option transactions for the years ended June 30, 2000 and 1999: 2000 1999 ---------- ---------- Outstanding, beginning of year 1,380,000 3,239,936 Options granted 1,220,000 120,000 Options exercised 0 0 Options cancelled (900,000) (1,979,936) Outstanding, end of year 1,700,000 1,380,000 Exercisable, end of year 1,693,334 1,199,996 The proforma disclosures required by SFAS 123 "Accounting for Stock-based Compensation", is not applicable due to immateriality. 12. Warrants. The Company has issued warrants to purchase approximately 3.4 million shares of common stock as of June 30, 2000. The warrants relate to grants made in connection with an equity issuance and various services rendered. The warrants can be exercised at prices ranging from $1.00 to $2.72 per share. Approximately 3 million warrants expire in July 2001. Pursuant to terms renegotiated in September of 1997 between the Company and holders of Series A Preferred Shares issued in July of 1996, the exercise price of approximately 1.8 million warrants was reduced from $2.72 to $1.00. 13. Related Party Transactions. The Company and its wholly-owned subsidiaries have had transactions with various entities, certain of whose principals are also officers or directors of the Company or MTI. During the fiscal year ended June 30, 1999 the Company borrowed $40,000 from an affiliate of the Chief Executive Officer and a Director of the Company. On June 30, 1999, the amount was outstanding and included in the balance sheet as of the same date. This amount was repaid in January 2000. In connection with financing required to fund the restructuring of the terms of the Series A Preferred shares in September 1997, the Chief Executive Officer, former Chief Operating Officer and a family member of the former Executive Vice President loaned a subsidiary of the Company approximately $411,000. These loans were repaid in the Company's Common Stock in October 1999. During fiscal 2000, the Company paid consulting fees to Mr. Feakins, the Company's Chairman and Chief Executive Officer amounting to $118,500 and to Mr. Surovcik, the Company's former Chief Financial Officer and Director amounting to $51,250. Both individuals did not receive a salary from the Company during fiscal 2000. The Company paid consulting fees amounting to $20,000 during 2000 to an affiliated company of the Chairman and Chief Executive Officer for accounting and related financial services. During the quarter ending March 31, 2000, the Company borrowed over $1,000,000 from an affiliate of the Chief Executive Officer and Chairman of the Company to support the working capital needs of the Company. This loan is secured by substantially all of the assets of the Company and is guaranteed by the Company's subsidiaries. At June 30, 2000 $1,090,999 was outstanding and included in the balance sheet as of the same date. The interest rate for the loan is a fixed rate of twelve percent (12%) per annum, however, interest may be added to the loan principal at two times the interest payment due at the option of the Company with the written consent of the lender. During the first eighteen months of the loan the Company will pay only interest monthly. During the remaining forty-two (42) months of the loan the Company will pay principal, amortized over twenty years, and interest monthly, commencing on the first day of the nineteenth month and continuing on for forty- two months thereafter. The balance of the loan is due in full at the end of sixty months. At any time, at the option of the lender, the outstanding principal plus accrued and unpaid interest and expenses due may be paid in an amount of common stock of the Company at the rate of one share for every four cents owed to the lender (the "Conversion Rate"). The Conversion Rate had been determined at the time of the negotiations, based upon the previous sixty day average closing price per share of the Company's common stock as quoted on the Over-The-Counter Bulletin Board. The Conversion Rate will be adjusted for all stock splits subsequent to the loan agreement. In the event the conversion occurs it would change the ownership of the Company significantly. The Chief Executive Officer and a former Director of the Company personally signed a guarantee with a local bank to provide a $250,000 line of credit to the Company, which F-10 terminated in February of 2000. Both individuals were granted options to acquire 50,000 shares of the Company's common stock at an exercise price of $0.50 per share. The Chief Executive Officer pledged a $235,000 Certificate of Deposit to the local bank who provided the line of credit to the Company. As a result, the bank released the former Director as guarantor of the borrowing facility. The Company continues to make interest payments on the line of credit. In consideration the Chief Executive Officer was granted options to acquire 100,000 shares of the Company's common stock at an exercise price of $0.25 per share. As of January 1, 2000 the Company entered into an Agreement with a company affiliated with the Chairman and Chief Executive Officer to provide litigation management services with regards to the proceedings against LensCrafters et al. This company is paying or advancing all attorney's fees and other litigation costs and expenses incurred by the Company to pursue this litigation against Lenscrafters et al. Assuming that the Company is successful in receiving a judgement or award or settlement from this litigation, all litigation costs and expenses paid will be reimbursed and 10% of the gross judgement, award or settlement will be paid to the company affiliated with the Chairman and Chief Executive Officer. No costs or expenses will be due in the event the litigation is unsuccessful. 14. Fair Value of Financial Instruments. The estimated fair values of the Company's financial instruments as of June 30, 2000 and 1999 are as follows:
2000 1999 --------------------------- ------------------------ Carrying Amount Fair Value Carrying Amount Fair Value Accounts Receivable $ 572,160 $ 572,160 $ 438,207 $ 438,207 Accounts Payable 448,155 448,155 908,139 908,139 Accrued Expenses 563,111 563,111 422,588 422,588 Long-term Debt 1,920,432 1,920,432 1,736,994 1,736,994
The estimated fair value of long-term debt approximates the carrying amount based upon the borrowing rates currently available to the Company for loans with similar terms and maturities. The fair value of accounts receivable, accounts payable, and accrued expenses approximates their carrying amount. 15. Major Customers. For the fiscal year ended June 30, 2000 the Company had no major customer that accounted for more than 10% of sales. In fiscal 1999, the Company had one major customer that accounted for more than 27% of sales. 16. Industry Segments. Statements of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information", requires the presentation of description information about reportable segments which is consistent with that made available to the management of the Company to assess performance. Since the Company subsidiaries operate in separate distinct industry segments, management of the overall business is conducted by separate subsidiaries. The Corporate segment includes salary and fringe benefits of the Chairman and a portion of similar costs related to the Chief Financial Officer, financial public relations costs and other costs not directly related to the operations of the business segments. F-11
Medical Steridyne Fiscal 2000 Technology, Inc. Corporation Corporate Total ----------- ---------------- ----------- --------- ----------- Revenues $ 456,768 $4,151,177 - 0 - $4,607,945 Operating Income (Loss) (719,716) 184,853 ($211,695) (746,558) Net Interest 157,448 78,858 - 0 - 236,306 Pre Tax Income (Loss) (877,164) 105,995 (211,695) (982,864) Net Income (Loss) (877,164) 105,995 (211,695) (982,864) Assets 251,238 3,680,263 - 0 - 3,931,501 Depreciation and amortization 35,466 331,460 - 0 - 366,926 Addition to long-lived assets - 0 - - 0 - - 0 - - 0 -
Medical Steridyne Fiscal 1999 Technology, Inc. Corporation Corporate Total ----------- ---------------- ----------- --------- ----------- Revenues $ 2,000,857 $3,442,747 - 0 - $5,443,604 Operating Income (Loss) 166,117 (218,522) ($411,922) (464,327) Net Interest 63,387 98,955 23,958 186,300 Pre Tax Income (Loss) 102,730 (317,477) (435,880) (650,627) Net Income (Loss) 102,730 (317,477) (435,880) (650,627) Assets 480,640 3,628,545 9,278 4,118,463 Depreciation and amortization 46,129 321,868 - 0 - 367,997 Additions to long-lived assets 19,782 - 0 - 9,278 29,060
United Geographic Area Information States Europe Asia Total ----------- ---------------- ----------- --------- ----------- 2000 Sales $4,522,945 $22,500 $62,500 $4,607,945 Long-lived Assets 2,608,735 - 0 - - 0 - $2,608,735 1999 Sales $5,367,805 $23,791 $52,008 $5,443,604 Long-lived Assets $2,985,315 - 0 - - 0 - $2,985,315
17. Subsequent Event. In September 2000, the Company obtained an assignment of all rights, title and interests in four medical devices and related technology. The Company will seek to obtain patent protection for these devices and obtain approvals necessary to develop, produce and market the products. As consideration for the assignment of this technology, the Company is required to provide 5.5 million shares of the Company's unrestricted common stock to the assignor over a three-year period ending September 2002. Item 8. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure There were no disagreements between the Company and their independent accountants F-12 PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act POSITION WITH DATE ELECTED NAME COMPANY DIRECTOR TERM OF OFFICE AGE - ---------------- ----------------- ------------- --------- ----- Jeremy Feakins Director, Chief April 1999 3 years 46 Executive Officer Dennis Surovcik Director April 1999 3 years 53 Mathew Director April 2000 3 years 68 Crimmins Joseph Director, Chief April 2000 3 years 59 DelVecchio Operating Officer BUSINESS EXPERIENCE OF DIRECTORS Mr. Feakins was originally elected to the board in April of 1996. Since 1989, he has served as President of Medical Technology, Inc. (MTI) and in October 1995, became the President and Chief Executive Officer of Medical Technology & Innovations, Inc. From 1980 to 1986, he was the managing Director of Craft Master, Limited, a South African corporation, which was a manufacturer and exporter of point of purchase display systems. Mr. Feakins received his degree in accounting and computer studies from the Royal Naval Secretarial and Accounting College, Chatham, Great Britain. Mr. Surovcik was employed by the Company from January 1998 to January 2000 as Senior Vice President, Chief Financial Officer and Secretary and has since been employed as Senior Vice president of Net2 Speak.Com. Inc., an internet telecommunication start-up company. He was a senior accountant for Price Waterhouse in New York from 1968 to 1973. From 1974 to 1993 he was employed as Audit Director and Group Controller for Dentsply International, Inc. ("Dentsply") a worldwide manufacturer and distributor of dental and medical products (NASDAQ: XRAY). Mr. Surovcik, a CPA, was President and Owner of DBK Distributors, Inc., from 1994 to 1997, a small distribution company serving over 1,000 grocery stores in the Mid Atlantic States. Mr. Surovcik received a BS in accounting from Susquehanna University. Mr. Crimmins has been a director since April 1996. From 1965 to 1995, he was with Polaroid Corporation where he held a number of executive positions with responsibility in many functional areas including, commercial, technical, and manufacturing operations. He was a Senior Director of Polaroid at retirement. Mr. Crimmins received a B.S. (Physics) degree from Holy Cross, a M.S. (Electrical Engineering) degree from Northeastern, and a M.B.A. from Boston College. Mr. Joseph Del Vecchio joined the Company in November 1998 as Senior Vice President and General Manager of Steridyne Corporation. Mr. Del Vecchio was previously employed by Sulzer Oscar, Inc. He started as a technical, sales and marketing consultant in 1988, was appointed Vice President/General Manager in August 1991 and President in April 1998. He had responsibility for manufacturing, facility operation, and distribution of class III and class II medical devices. Corporate marketing, administrative, technical, regulatory and production personnel were also under his direction. Mr. Del Vecchio's organization achieved ISO-9000 certification for the facility in 1996. Mr. Del Vecchio is a CMR Graduate from the Certified Medical Representative Institute, Roanoke Virginia. COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT Section 16(a) of the Securities Exchange Act of 1934 requires the Company's officers and directors, 24 and persons who own more than ten percent of its Common Stock, to file reports of ownership and changes of ownership with the Securities and Exchange Commission (SEC). Officers, directors, and greater than ten-percent stockholders are required by SEC regulation to furnish the Company with copies of all ownership forms they file. Based solely on its review of the copies of such form received by it, or based upon representations that no Form 5 was required, Messrs. Feakins and Joseph Del Vecchio did not timely file Forms 3,4, or 5 for the fiscal year ending June 30, 2000 as follows: Name No. of Late Reports Jeremy Feakins 1 Joseph Del Vecchio 1 Item 10. Executive Compensation SUMMARY COMPENSATION TABLE The following table sets forth information concerning the compensation of the Company's Executive Officers whose compensation exceeded $100,000 for the fiscal years ending June 30, 2000 and 1999.
Name and All Other Principal Fiscal Compensation Position(1) Year Annual Compensation Long-Term Compensation Other Annual Salary Bonus Comp. Awards Payouts Restricted Stock Options/SARs LTIP Award(s) Payouts - ------------ ---- -------- ----- ------- --------------- ---------- -------- ------------- J. Feakins, 2000 $0 0 0 500,000 0 118,500 Chief Executive 1999 $152,528 0 0 50,000 0 0 Officer D. Surovcik, 2000 $0 0 0 0 0 51,250 Chief Financial 1999 $125,519 0 0 0 0 0 Officer J. Del 2000 $136,260 0 0 0 0 0 Vecchio Chief 1999 $124,730 0 0 0 0 0 Operating Officer
- -------- 1. Each executive is furnished with an automobile for business and personal use. The compensation specified in the preceding table does not include the value of non-business use, as the amount is not material. STOCK OPTION GRANTS IN LAST FISCAL YEAR (Individual Grants) No. of Shares Common % of Total Options Exercise of Base Expiration Stock Underlying Options Granted to Employees in Price ($/share) Date Name Granted Fiscal Year J. Feakins 500,000 41% $0.25 (1)(2) R.Ballheim 400,000 33% $0.25 (3) G. Hartman 320,000 26% $0.25 (3)
25 - ------------- . The expiration dates for 400,000 stock options granted is five (5) years from the date the options were granted. . The expiration date for 100,000 stock options granted is eighteen (18) months after the $235,000 demand credit line has been repaid by the Company. . The expiration date for the options granted are five (5) years from the date the options become exercisable. AGGREGATED OPTION EXERCISES IN THE FISCAL YEAR ENDED JUNE 30, 2000 AND FISCAL YEAR END OPTION VALUES No. of Shares of Value of No. of Shares Common Stock Unexercised in-the- Acquired on Value Underlying Unexercised Exercisable money Options Name Exercise Realized Options @ Fiscal Year /Un-exercisable Exercisable/Un- End exercisable J. Feakins 0 0 690,000 690,000/0 0 R. Ballheim 0 0 540,000 540,000/0 0 G. Hartman 0 0 400,000 400,000/0 0
Item 11. Security Ownership of Certain Beneficial Owners and Management The following table sets forth information concerning all persons known to the Company to be the beneficial owners of more than 5% of the Company's Common Stock, (ii) the ownership interest of each director and nominee, and (iii) by all directors and executive officers as a group calculated as of June 30, 2000. AMOUNT AND NATURE OF NAME POSITION BENEFICIAL PERCENT OF OWNERSHIP OWNERSHIP - ---------------- ---------------- ---------- ---------- Jeremy Feakins Director, Chief 6,644,271 19.5% Executive Officer Joseph Del Vecchio Director, Chief 795,210 2.3% Operating Officer Dennis Surovcik Director 0 0 Mathew Crimmins Director 0 0 All Executive Directors and Officers as a Group 7,439,481 21.8% Item 12. Certain Relationships and Related Transactions During the fiscal year ended June 30, 1999 the Company borrowed $40,000 from an affiliate of the Chief Executive Officer and a Director of the Company. On June 30, 1999, the amount was outstanding and included in the balance sheet as of the same date. The amount was repaid in January 2000. During fiscal 2000, the Company paid consulting fees to Mr. Feakins, the Company's Chairman and Chief Executive Officer amounting to $118,500 and to Mr. Surovcik, the Company's former Chief Financial Officer and Director amounting to $51,250. Both individuals did not receive a salary from the Company during fiscal 2000. The Company paid consulting fees amounting to $20,000 during fiscal 2000 to an affiliated company of the Chairman and Chief Executive Officer for accounting and related financial services. 26 In connection with financing required to fund the restructuring of the terms of the Series A Preferred shares in September 1997, the Chief Executive Officer, Chief Operating Officer and family member, Executive Vice President and a Director loaned a subsidiary of the Company approximately $411,000. These loans were repaid in the Company's common stock in October of 1999. During the quarter ending March 31, 2000, the Company borrowed over $1,000,000 from an affiliate of the Chief Executive Officer and Chairman of the Company to support the working capital needs of the Company. This loan is secured by substantially all of the assets of the Company and is guaranteed by the Company's subsidiaries. At June 30, 2000, $1,090,999 was outstanding and included in the balance sheet as of the same date. The interest rate for the loan is a fixed rate of twelve percent (12%) per annum, however, interest may be added to the loan principal at two times the interest payment due at the option of the Company with the written consent of the lender. During the first eighteen months of the loan the Company will pay only interest monthly. During the remaining forty-two (42) months of the loan, the Company will pay principal, amortized over twenty years, and interest monthly, commencing on the first day of the nineteenth month and continuing on for forty-two months thereafter. The balance of the loan is due in full at the end of sixty months. At any time, at the option of the lender, the outstanding principal plus accrued and unpaid interest and expenses due may be paid in an amount of common stock of the Company at the rate of one share for every four cents owed to the lender (the "Conversion Rate"). The Conversion Rate had been determined at the time of the negotiations, based upon the previous sixty day average closing price per share of the Company's common stock as quoted on the Over-The-Counter Bulletin Board. The Conversion Rate will be adjusted for all stock splits subsequent to the loan agreement. In the event the conversion occurs it would change the ownership of the Company. The Chief Executive Officer and a former Director of the Company personally signed a guarantee with a local bank to provide a $250,000 line of credit to the Company, which terminated in February of 2000. Both individuals were granted options to acquire 50,000 shares of the Company's common stock at an exercise price of $0.50 per share. The Chief Executive Officer pledged a $235,000 Certificate of Deposit to the local bank who provided the line of credit to the Company. As a result, the bank released the former Director as guarantor of the borrowing facility. The Company continues to make interest payments on the line of credit. In consideration the Chief Executive Officer was granted options to acquire 100,000 shares of the Company's common stock at an exercise price of $0.25 per share. As of January 1, 2000 the Company entered into an Agreement with a company affiliated with the Chairman and Chief Executive Officer to provide litigation management services with regards to the proceedings against LensCrafters et al. This company is paying or advancing all attorney's fees and other litigation costs and expenses incurred by the Company to pursue this litigation against Lenscrafters et al. Assuming that the Company is successful in receiving a judgment or award or settlement from this litigation, all litigation cost and expenses paid will be reimbursed and 10% of the gross judgment, award or settlement will be paid to the company affiliated with the Chairman and Chief Executive Officer. No costs or expenses will be due in the event the litigation is unsuccessful. 27 Item 13. Exhibits and Reports on Form 8-K (a) Exhibits: 3.1 Articles of Incorporation of SouthStar Productions, Inc., n/k/a Medical Technology & Innovations, Inc. [Incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-18 (File No. 33-27610-A), filed March 17, 1989] 3.2 Amendment to the Articles of Incorporation for SouthStar Productions, Inc., which changed its name to Medical Technology & Innovations, Inc. [Incorporated by reference to the Company's Current Report on Form 8-K for an event on September 21, 1995] 3.3 Restated Articles of Incorporation for Medical Technology & Innovations, Inc. [Incorporated by reference to the Company's Annual Report on Form 10-KSB (File No. 33-27610-A), filed September 30, 1996] 3.4 By-laws [Incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-18 (File No. 33-27610-A), filed March 17, 1989] 10.1 Share Exchange Plan between SouthStar Productions, Inc. and Medical Technology, Inc. [Incorporated by reference to the Company's Current Report on Form 8-K for an event on August 21, 1995] 10.2 Asset purchase agreement for the purchase and sale of certain assets of Steridyne Corporation [Incorporated by reference to the Company's Current Report on Form 8- K for an event on July 31, 1996] 10.3 Medical Technology & Innovations, Inc. 1996 Stock Option Plan. [Incorporated by reference to the Company's Annual Report on Form 10-KSB (File No. 33-27610- A), filed September 30, 1996.] 10.4 SouthStar Productions, Inc. Stock Purchase Plan 1995a (Financial Public Relations Consulting Agreement) [Incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-8 (File No. 33-27610-A), filed August 23, 1995] 10.5 Medical Technology & Innovations, Inc. 1996b Stock Purchase Plan (Consulting Agreement) [Incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-8 (File No. 33-27610-A), filed April 22, 1996]
28 10.6 Form of Employment Agreement, Covenant not to Compete, and Stock Option Agreement between the Company and key employees. [Incorporated by reference to the company's Annual Report on Form 10-KSB (File No. 33-27610-A), filed September 30, 1996.] 10.7 Purchase Agreement dated January 31, 1996 between the Company and Glenn and Ruth Schultz. [Incorporated by reference to the Company's Annual Report on Form 10-KSB (File No. 33-27610-A), filed September 30, 1996.] 10.8 Purchase Agreement dated March 8, 1999 between Medical Technology & Innovations, Inc., Steridyne Corporation and Florida Medical Industries, Inc. [Incorporated by reference to the Company's Annual Report on Form 10-KSB (File No. 33-27610-A), filed December 17, 1999] 10.9 Loan Agreement dated January 21, 2000 between the Company and International Investment Partners, Ltd. 10.10 Consulting Agreement between the Company and International Investment Partners, Ltd., effective January 1, 2000. 10.11 * Letter of substitution MTEN Loan dated June 6, 2000 10.12 * Lenscrafters Litigation Management Consulting Agreement dated January 1, 2000 10.13 Loan Agreement between Medical Technology, Inc. and International Investment Partners, Ltd dated January 21, 2000 10.14 * Medical Technology, Inc. Note dated January 21, 2000 10.15 * PatentCollateral Assignment and Security Agreement between the Company and International Investment Partners, Ltd., effective January 21, 2000. 10.16 * General Security Agreement between the Company and International Investment Partners, Ltd., effective January 21, 2000. 10.17 * Guaranty and Surety Agreement between Steridyne and International Investment Partners, Ltd., effective January 21, 2000. 10.18 * Guaranty and Surety Agreement between the Company and International Investment Partners, Ltd., effective January 21, 2000. 16.1 Letter on change in certifying accountant [Incorporated by reference to the Company's Current Report on Form 8-K for an event on April 26, 1996] 21.1 Subsidiaries. Medical Technology, Inc. and Steridyne Corporation. 24.1 Powers of Attorney as indicated on Page 27 of this Form 10-KSB. 27.1 * Financial data schedules.*
*(filed herewith, all other exhibits previously filed) (b) Reports on Form 8-K. No reports on Form 8-K were filed during the last quarter of the period covered by this report. 29 Signatures In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AND BY: BY: /s/ JEREMY P. FEAKINS /s/ ALBERT G. DUGAN - -------------------------------- ---------------------------- Jeremy P. Feakins, Chief Executive Officer Albert G. Dugan, Chief Accountant Date: September 25, 2000 In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ JEREMY P. FEAKINS - ----------------------------- Jeremy P. Feakins, Chief Executive Officer, Chairman, and Director /s/ JOSEPH DEL VECCHIO - ----------------------------- Joseph Del Vecchio, Chief Operating Officer /s/ MATHEW CRIMMINS - ----------------------------- Matthew Crimmins, Director /s/ DENNIS A. SUROVCIK - ----------------------------- Dennis A. Surovcik, Director Date: September 25, 2000 30 EX-10.11 2 0002.txt LOAN SUBSTITUTION EXHIBIT 10.11 INTERNATIONAL INVESTMENT PARTNERS, LTD. RICHMOND BUSINESS CENTRE NORTH BRUNSWICK STREET DUBLIN 7, IRELAND Joseph DelVecchio Executive Vice President and Chief Operating Officer Medical Technology & Innovations, Inc. Medical Technology, Inc Steridyne Corporation 3725 Investment Lane Riviera Beach, FL 33404 USA June 6, 2000 Dear Mr. DelVecchio: You have been notified by International Investment Partners, Ltd. (Delaware), located in Lancaster, PA, USA, of its dissolution as of May 30, 2000. As a result of the dissolution, its agency relationship with my company has terminated. That company acted as the agent for my company in the Loan Agreement and associated agreements with your companies, dated January 21, 2000. Because of the termination of that agency relationship, it is necessary to amend those loan documents to substitute my company as the Lender. The relationship between your companies and my company, as the principal under those agreements, continues as before. This letter is to confirm that my company, rather than its former agent, is the Lender in those agreements. Otherwise, there are no changes to the agreements. All obligations of your companies to the Lender (now to be recited as set forth below) remain as before. The Loan Agreement, the Note, the General Security Agreement, the Patent Collateral Assignment and Security Agreement, the Guaranty and Suretyship Agreement of Medical Technology, Inc., and the Guaranty and Suretyship Agreement of Steridyne Corporation do not need to be modified other than to show that the Lender is: International Investment Partners, Ltd Richmond Business Centre North Brunswick Street Dublin 7, Ireland Your acknowledgement of this letter, and your agreement to the substitution of the identity of the Lender, will be adequate to amend those agreements without having to rewrite the entire document group. If you agree with this substitution and amendment, kindly sign both copies of this letter, and return one copy to me. Truly yours, /s/ Harry McGinn Harry McGinn President International Investment Partners, Ltd. ACKNOWLEDGED AND AGREED TO: /s/ Joseph DelVecchio --------------------------------------- Joseph DelVecchio Executive Vice President and Chief Operating Officer Medical Technology & Innovations, Inc. Medical Technology, Inc. Steridyne Corporation EX-10.12 3 0003.txt LITIGATION MANGEMENT CONSULTING AGREEMENT EXHIBIT 10.12 LENSCRAFTERS LITIGATION MANAGEMENT CONSULTING AGREEMENT This Agreement reflects agreements the parties have made, and is made effective as of January 1, 2000, by and between Medical Technology & Innovations, Inc., a Florida corporation with its principal place of business in Riviera Beach, FL ("MTEN"), and International Investment Partners, Ltd., a Delaware corporation with its principal place of business in Lancaster, PA ("Consultant"). Consultant has a background in litigation management and is willing to provide services to MTEN based on this background. MTEN desires to obtain those services from Consultant. Therefore, the parties agree as follows: 1. DESCRIPTION OF SERVICES. Effective January 1, 2000, Consultant has provided and will continue to provide litigation management services to MTEN with respect to the case known as Medical Technology & Innovations, Inc. v. LensCrafters, Inc., et al., filed on February 14, 2000. 2. PERFORMANCE OF SERVICES. Consultant shall determine the manner in which the services are to be performed and the specific hours to be worked by Consultant. MTEN will rely on Consultant to work as many hours as may reasonably be necessary to fulfill Consultant's obligations under this Agreement. 3. PAYMENT. Pursuant to a separate agreement between the parties hereto, Consultant is advancing the attorneys' fees and litigation costs in this case, and its consulting fees and expenses related to the services, which advances do not bear interest, are not secured, and are not reimbursable unless judgment or award or settlement occurs in favor of MTEN. As a result, the parties agree that the consulting fees shall be 10% of the gross judgment(s) or award(s) or settlement(s) payable to MTEN in this litigation, which shall be paid by MTEN in full at the time of its receipt of payment(s) from defendant(s). If payment is made to MTEN other than in one lump sum, payment shall be made to Consultant of its percentage of all payments to MTEN. 4. EXPENSE, FEES AND COST REIMBURSEMENT. In addition to payment of the consulting fees, if judgment or award or settlement occurs in favor of MTEN, MTEN shall reimburse the attorneys' fees and litigation costs, and the expenses related to the services, at the time of receipt of payment from defendant(s) and, if other than in one lump sum, at the time of the first payment. 5. SUPPORT SERVICES. MTEN will provide the following support services for the benefit of Consultant: Access to counsel, witnesses, office, staff and pertinent business and legal records 6. NO RELATIONSHIP TO FINANCIAL AND BUSINESS MANAGEMENT CONSULTING AGREEMENT. Consultant's services under this Agreement are separate from and do not overlap with the services that Consultant provides under the separate Financial and Business Management consulting Agreement. 7. TERM/TERMINATION. Services are to be provided until the end of the litigation, which is when final disposition of the case occurs by settlement or award or judgment from which no further appeal may be taken. 8. RELATIONSHIP OF PARTIES. It is understood by the parties that Consultant is an independent contractor with respect to MTEN, and is not an employee of MTEN, and MTEN will not provide fringe benefits, including health insurance benefits, paid vacation, or any other employee benefit, for the benefit of Consultant. 9. DISCLOSURE. MTEN and Consultant recognize that they are related parties, and that conflicts can arise from such status. Consultant agrees to disclose any conflict that would impair its ability to provide the services. 10. EMPLOYEES. The provisions of this Agreement shall bind consultant's employees who perform services under this Agreement. If requested, Consultant shall provide evidence that such persons are Consultant's employees. 11. INJURIES. Consultant acknowledges its obligation to provide insurance coverage for itself and its employees, and that MTEN does not provide workers' compensation coverage for Consultant or its employees. 12. LIABILITY. Consultant, its employees and agents, shall not be liable to MTEN or to any person or entity who claims any right due to any relationship with MTEN, for any acts or omissions in the provision of services on the part of Consultant or its employees or agents, unless such acts or omissions are determined by the fact-finder in the arbitration set forth in Paragraph 20 hereof to have resulted from gross negligence or willful misconduct. MTEN agrees to indemnify and hold harmless Consultant, its employees and agents from all claims, losses, expenses, fees including attorney fees, costs, and judgments that may be asserted that arise from any other acts or omissions. Damages shall be limited to actual economic loss and shall not exceed the amount of consulting fees actually paid pursuant to this Agreement. 13. ASSIGNMENT. Consultant's obligations under this Agreement may not be assigned to any other person, firm, or corporation without the prior written consent of MTEN. 14. CONFIDENTIALITY. Consultant agrees that any information it receives during the provision of services under this Agreement, concerning the legal, business and financial affairs of MTEN, that is not otherwise public, will be treated by Consultant in full confidence and will not be revealed to any other person. Upon request, Consultant will return all documents in its possession that contain such information. 15. NOTICES. All notices under this Agreement shall be in writing and shall be deemed delivered when delivered in person or deposited in the United States mail, postage prepaid, addressed as follows: Joseph DelVechio, Executive Vice President and Chief Operating Officer Medical Technology & Innovations, Inc. 3725 Investment Lane Riviera Beach, FL 33404 Brian Auchey, Vice President International Investment Partners, Ltd. 80 Abbeyville Road Lancaster, PA 17603 Addresses may be changed by providing written notice to the other party in the manner set forth above. 16. ENTIRE AGREEMENT. This Agreement contains the entire agreement, and supersedes any prior agreements, of the parties as to LensCrafters litigation management consulting. 17. AMENDMENT. This Agreement may be amended only if in writing and signed by both parties. 18. SEVERABILITY. If any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall continue to be valid and enforceable. If a provision is found invalid or unenforceable, but can be limited so as to become valid and enforceable, then it shall be deemed to be rewritten as so limited. 19. NO WAIVER OF CONTRACTUAL RIGHT. The failure of either party to enforce any provision of this Agreement shall not be construed as a waiver or limitation of that party's right subsequently to enforce that or any other provision of this Agreement. 20. APPLICABLE LAW AND ARBITRATION. Pennsylvania law shall govern this Agreement. The parties to any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall first negotiate the matter in a good faith attempt to reach settlement. If settlement cannot be reached through negotiation, the matter shall be settled by binding (final and nonappealable) arbitration in Lancaster, PA, by the American Arbitration Association under its Commercial Arbitration Rules. Judgment upon an arbitration award may be entered in any court having jurisdiction thereof. The party submitting a controversy or claim to arbitration shall advance the fees of the arbitrator(s). The arbitrator(s) shall award fees and costs to the prevailing party, and shall charge them to the losing party. Submissions to arbitration must occur within one year of the act or omission that gave rise to the controversy, or the matter shall be barred. IN WITNESS WHEREOF, the parties have executed this Agreement on April 7, 2000. Medical Technology & Innovations, Inc.: By: /s/ Joseph DelVecchio - --------------------------------------- Joseph DelVecchio Executive Vice President and Chief Operation Officer International Investment Partners, Ltd.: By: /s/ Brian Auchey - ---------------------------------------- Brian Auchey Vice President EX-10.13 4 0004.txt LOAN AGREEMENT EXHIBIT 10.13 LOAN AGREEMENT This Loan Agreement is made as of this 21st day of January 2000, by and between Medical Technology & Innovations, Inc., a Florida corporation, (the "Borrower") and International Investment Partners, Ltd., a Delaware corporation (the "Lender"). All current and future subsidiaries of Medical Technology & Innovations, Inc. (the "Guarantors") shall guarantee the loan amount and pledge all of their stock to the Lender. RECITALS The Borrower has applied to the Lender for a secured term loan in the amount of One Million Dollars and the Lender is willing to provide the requested credit accommodation to the Borrower upon the terms and conditions of this Loan Agreement and upon the granting by the Borrower to the Lender of the security interest, liens, guarantees and other assurances of payment provided for in this Loan Agreement and the related documents bearing even date herewith. NOW, THEREFORE, in consideration of the promises, covenants, and agreements of the parties hereinafter set forth, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows: 1. Amounts And Terms of Loan. Subject to all of the terms and conditions hereof, the Lender agrees to lend to the Borrower, or extend its credit on behalf of the Borrower, as follows: A. The Loan Amount. Subject to the terms and conditions of this Agreement, the Lender hereby agrees to lend to the Borrower, and the Borrower hereby agrees to borrow from the Lender and repay the Lender or its Assigns, the amount of $1,000,000.00 (hereinafter called the "Loan"). The obligation of the Borrower to repay the Loan shall be evidenced by a promissory note (hereafter called the "Note") of the Borrower in a form satisfactory to the Lender, dated the date on which the Loan is made (hereafter known as the "Closing Date") payable to the order of the Lender in the amount of $1,000,000.00; B. Term of the Loan. Notwithstanding anything contained herein to the contrary, the Note shall be due and payable in full on January 21, 2005; C. Interest Rate. Subject to the alternatives for payment of interest set forth in subsection 1E, below, interest accruing on the Note shall be due and payable in arrears on the first day of month, commencing on February 1, 2000 (the "Interest Payment Date"). Unless the Default Rate (defined in subsection 1F) is applicable, the outstanding Principal balance of the Note shall bear interest at the rate of twelve percent (12%) per annum; D. Repayment. During the first eighteen (18) months of the Loan the Borrower will pay only interest monthly, commencing on the first day of the month following receipt of such $1,000,000.00 and execution of the Note, and continuing on the first day of the month for eighteen (18) months thereafter. During the remainder of the loan, the Borrower will pay principal, amortized over twenty years (balloon payment at maturity) and interest monthly, commencing on the first day of the nineteenth month and continuing on the first day of the month for forty-two (42) months thereafter. The remaining balance, of principal and accrued interest shall be due and paid in full at the end of sixty (60) months from the date of the Note. All payments shall be applied first to expenses, then interest and then to principal. All payments will be made promptly to the Lender at its address specified in this Loan Agreement, or at such other address as it may designate in writing. Any payment of principal or interest that is delinquent by more than ten (10) days shall draw interest at the rate of eighteen percent (18%) per annum from the date due; E. Payment of Interest, Alternatives. Notwithstanding anything contained herein to the contrary, the Borrower may satisfy its obligation to pay interest due on any Interest Payment Date (except the maturity date of the Loan) as follows: (1) By payment in cash on each Interest Payment Date (and at Maturity); (2) Upon written notice to the Lender, which notice shall be given not less than five (5) business days prior to the Interest Payment Date and approval by the Lender, by adding an amount equal to twice the amount of the interest due on the Interest Payment Date to the outstanding principal of the Loan; F. Default Interest. Upon the occurrence of an Event of Default hereunder, the Borrower agrees to pay to the Lender, without notice or demand, interest on the unpaid amounts due hereunder at the rate of eighteen percent (18%) per annum (the "Default Rate"), whether or not the Lender elects to accelerate the unpaid principal balance as a result of such Event of Default. If judgment is entered against the Borrower on this Note, then the amount of the judgment entered (which may include principal, interest, fees, charges and costs) shall bear interest at the Default Rate. If this Note is referred to an attorney for collection, whether or not judgment has been confessed or suit has been filed, the Borrower shall pay all of the Lender's reasonable costs, fees (including, but not limited to, reasonable attorneys' fees) and expenses resulting from such referral; G. Computation of Interest. Interest accruing on the outstanding principal balance hereunder shall be computed on the basis of the actual number of days elapsed in a year of 360 days; H. Application of Interest. All payments made hereunder shall be applied first to unpaid expenses and charges payable hereunder, then to accrued and unpaid interest, and then to principal (the "Obligations"), or in such other order or proportion as the Lender, in the Lender's sole discretion, may elect from time to time; I. Voluntary Prepayment. The Borrower may prepay the Loan in whole or in part at any time without premium or penalty; J. Alternative for Repayment of the Loan. At any time, at the option of the Lender, the outstanding principal plus accrued and unpaid interest and expenses due may be paid in an amount of common stock of the Borrower at the rate of one share for every four cents owed to the Lender (the "Conversion Rate"). The Conversion Rate had been determined at the time of negotiations, based upon the previous sixty day average closing price per share of the Borrower's common stock as quoted on the Over-The-Counter Bulletin Board (OTC: BB). The Conversion Rate will be adjusted for all stock splits subsequent to this Loan Agreement; K. Use of Proceeds. The Borrower shall use the proceeds for ordinary working capital purposes. 2. Collateral. As security for and to guaranty the full and timely payment and performance of the Obligations, the Borrower hereby pledges, assigns and grants to the Lender a security interest (collectively referred to as the "Security Interest") in the collateral described below (the "Collateral"). A. Guaranty. Medical Technology, Inc. and Steridyne Corporation, the subsidiaries of the Borrower, shall each provide a guaranty of the Loan (the "Guaranty"). The Borrower will deliver to the Lender all of the issued and outstanding capital stock of the Guarantors as collateral, to be returned upon repayment of the Loan in full. In addition, for all future subsidiaries of the Borrower or the Guarantors, similar Guaranty Agreements must be executed and all stock certificates delivered to the Lender, also to be returned upon repayment of the Loan in full. B. Mortgage. The Guarantor Steridyne Corporation shall duly execute and deliver to the Lender a Mortgage creating a second lien in favor of the Lender on property commonly known as 3725 Investment Lane, Riviera Beach, Florida 33404 (the "Mortgaged Property"). C. Security Agreement . The Borrower shall execute a Security Agreement granting to the Lender a security interest in all of the existing or after acquired personal property of the Borrower, including all of the Borrower's accounts receivable, inventory, furniture, fixtures, appliances motor vehicles, machinery, equipment and general intangibles, including but not limited to any and all patents. D. Financing Statement. The Borrower shall deliver executed financing statements describing the Collateral for filing in such jurisdictions as shall be necessary to give Lender a valid, perfected security interest in the Collateral which may be perfected by filing; E. Further Assurances. The Borrower shall, at its cost and expenses, cause all instruments and documents given as security hereunder to be duly recorded where necessary in order to perfect and protect the Lender's mortgage, liens, and security interests. F. Security Documents. As used herein the term "Security Documents" shall mean the Mortgage, the Guaranties, the Security Agreement and any other document delivered to the Lender from time to time to secure the Obligations due under this Loan Agreement, as may be amended, supplemented or restated from time to time. 3. Conditions to Making the Loan. The Lender's willingness to make the loan shall be subject to the condition precedent that the Lender shall have received all of the following (the "Loan Documents"), each in form and the substance satisfactory to the Lender: A. This Loan Agreement, properly executed by the Borrower; B. The Note, properly executed by the Borrower; C. The Security Agreement, properly executed by the Borrower; D. A certificate of the Borrower's Secretary certifying as to (1) the resolution of the Borrower's directors, and if required, shareholders, authorizing the execution, delivery and performance of the Loan Documents, (2) the Borrower's articles of incorporation and bylaws, and (3) the signatures of the Borrower's officers or agents authorized to execute and deliver the Documents and other instruments, agreements and certificates on the Borrower's behalf; E. (1) The Guaranties, properly executed by the subsidiaries of the Borrower; (2) the delivery of all the stock certificates of the subsidiaries of the Borrower; and (3) the Collateral Mortgage on the Mortgaged Property. F. All representations and warranties contained herein shall be true and correct; G. No material adverse change in the financial condition of the Borrower or of the Guarantors shall have occurred and be continuing. 4. Representations of the Borrower. To induce the Lender to make the Loan and enter into the Loan Agreement, the Borrower expressly makes the representations and warranties set forth below. The Borrower acknowledges the Lender's justifiable right to rely upon these representations and warranties. A. Incorporation. The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida and has all requisite corporate power and authority to carry on its business as now being conducted and to own and operate the properties and assets now owned or operated by it. The Borrower owns 100% of the outstanding stock of its subsidiaries. B. Authority. The Borrower has full power, right and authority to enter into and perform its obligations under this Agreement. The execution, delivery, and performance of this Agreement by the Borrower has been duly and properly authorized by proper corporate action in accordance with applicable law and with the Articles of Incorporation and Bylaws of the Borrower and this Agreement constitutes the valid and binding obligation of the Borrower enforceable in accordance with its terms. C. Non-Existence of Defaults. The Borrower is not in default with respect to any of its existing indebtedness, and the making and performance of this Agreement and the Loan Documents will not immediately, or with the passage of time, the giving of notice, or both: (1) violate any laws or result in a default under any contract, agreement or instrument to which the Borrower is a party or by which the Borrower or its property is bound; (2) violate the provisions of the Articles or By-laws of the Borrower and any other governing document of the Borrower; or (3) result in the creation or imposition of any security interest in, or lien or encumbrance upon, any of the assets of the Borrower, except in favor of the Lender. D. Litigation. There are no actions, suits, investigations, or proceedings pending or, in the knowledge of the Borrower, threatened against the Borrower, or the assets of the Borrower, except as specifically disclosed in a writing: Stephen Angelillo has notified the Borrower and the Lender of possible litigation in regards to the Purchase Agreement of Florida Medical Industries Corporation. E. Liabilities or Adverse Changes. The Borrower has disclosed all indebtedness and contingent liabilities known to the Borrower. The Borrower does not know of or expect any adverse change in the assets, liabilities, properties, business or condition, financial or otherwise, of the Borrower due to this Agreement. F. Title to Collateral. The Borrower and its subsidiaries own all the Collateral, free and clear except as indicated here, and the title of the Borrower and its subsidiaries to all property, which is submitted as the Collateral for the Loan, shall be good and marketable. The Lender's liens described herein shall constitute first and indefensible security interests of liens thereon, except to the extent that the Lender in advance expressly agrees in writing to the contrary. G. Validity, Binding Nature and Enforceability of the Documents. The Loan Documents executed by the Borrower are the valid and binding obligations of the Borrower, fully enforceable against the Borrower in accordance with their terms. H. Defaults Under Other Agreements. There is not currently existing any action, event or condition, which would constitute a default on the part of the Borrower under any other Loan Agreement. I. Taxes. The Borrower: (a) has filed all federal, state and local tax returns and other reports which the Borrower is required by law to file prior to the date hereof and which are material to the conduct of the business of the Borrower; (b) has paid or caused to be paid all taxes, assessments and other governmental charges that are due and payable prior to the date hereof; and (c) has made adequate provision for the payment of such taxes, assessments or other charges accruing but not yet payable. The Borrower has no knowledge of any deficiency or additional assessment in a materially important amount in connection with any taxes, assessments or charges not provided for on the Borrower's books of account or reflected in the Borrower's financial reports or statements. J. Compliance with Laws. The Borrower has complied and will comply in all material respects with all applicable laws with respect to: (a) any restrictions, specifications or other requirements pertaining to products that the Borrower sells or to the services it performs; (b) the conduct of its business; (c) the use, maintenance and operation of the real and personal properties owned or leased by it in the conduct of its business; and (d) the obtaining of all necessary licenses and permits necessary to engage in its business. K. Solvency. The Borrower will be solvent at the execution hereof and after closing, after giving full effect to the Loan and all of its indebtedness. The Borrower will maintain such solvent financial condition giving full effect to all of its obligations, as long the Loan remains unsatisfied. The Borrower has sufficient capital to carry on its business and transactions as now conducted and as planned in the future. L. Environmental Compliance. The Borrower has received no notices or information, oral or in writing, from any Federal, State or Local authority or official that any of the Borrower's property, real or personal, is in violation of any existing Federal, State or Local, environmental laws, statutes, ordinances, rules or regulation, and, to the best of the Borrower's knowledge, all of such properties are in full compliance with said laws, statutes, ordinances, rules and regulations. 5. Affirmative Covenants. The Borrower covenants and agrees that, until the Loan is repaid in full, the Borrower shall: A. Financial Statements. Provide to the Lender updated financial statements and any other financial information on a monthly or other basis as may be required by the Lender; B. Compliance with Laws. Comply in all material respects with all applicable laws, rules, regulations and orders, such compliance to include, but not necessarily be limited to, the compliance with all applicable laws, rules, and regulations pertaining to occupation of the Mortgaged premises and the conduct of its business on the mortgaged premised and pertaining to the handling, creating, maintaining, discharge, spillage, disposal, or reports of any substance or condition relating to hazardous or toxic waste or substances; and the paying before the same become delinquent of all taxes, assessments, and governmental charges and fees imposed upon it or upon its property except to the extent contested in good faith upon written notice to the Lender; C. Insurance. Keep all of its properties and the Collateral insured in amounts approved by the Lender, at all times against damage by fire and other hazards; maintain adequate insurance at all times with responsible insurance carriers, approved by the Lender, against liability on account of damage to persons, and property and under all applicable workmen's compensation laws; and maintain adequate insurance covering such other risks as the Lender may reasonably require. All insurance policies shall be endorsed to include the Lender as additional loss payee. The Borrower shall, from time to time, upon request of the Lender, promptly furnish or cause to be furnished, evidence, in form and substance satisfactory to the Lender, of the maintenance, to include proof of the payment of all applicable premiums, of all insurance required; D. Records. Keep adequate records and books of account, in which complete entries will be made in accordance with generally accepted accounting principals consistently applied, reflecting all financial transactions of the Borrower. 6. Negative Covenants. The Borrower covenants and agrees that, until the Obligations are paid in full, the Borrower and the Guarantors shall not: A. Dividends. Declare or pay any dividends on its Common or Preferred Stock without the written consent of the Lender; B. Issuance of Stock. Issue or enter into any agreement to issue any Common or Preferred Stock, including options and warrants, without the written consent of the Lender, which consent shall not be unreasonably withheld. 7. Events of Default. The occurrence of any of the following events shall constitute an Event of Default and shall entitle the Lender to exercise the Lender's rights and remedies under this Loan Agreement, any of the Loan Documents or its Obligations: A. Default in the repayment of the Loan's principal or interest or on any portion thereof when due, time being strictly of the essence; B. Default in payment of any of the Obligations when due and payable; C. A material breach of or default by the Borrower under the terms, covenants and conditions of the Borrower contained in this Loan Agreement; D. A material breach of or default of any of the Security Documents; E. The Borrower, any Guarantor, or any wholly owned subsidiary of the Guarantors of the Loan shall be or become insolvent, or admit in writing its inability to pay its debts as they mature, or make any assignment for the benefit of creditors; or the Borrower, any Guarantor, or any wholly owned subsidiary of any Guarantor of the Loan shall apply for or consent to the appointment of any receiver, trustee, or similar officer for it or for all or any substantial part of its property; or such receiver, trustee or similar officer shall be appointed without the application or consent of the Borrower, such Guarantors, or any wholly owned subsidiary of any Guarantor of the Loan, as the case may be; or the Borrower, any Guarantor, or any wholly owned subsidiary of any Guarantor of the Loan shall institute (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to it under the laws of any jurisdiction; or any such proceeding shall be instituted (by petition, application or otherwise) against the Borrower, any such Guarantor, or any wholly owned subsidiary of any Guarantor of the Loan; or any judgment, writ, warrant of attachment or execution or similar process shall be issued or levied against a substantial part of the property of the Borrower, any Guarantor, or any wholly owned subsidiary of any Guarantor of the Loan; F. A petition shall be filed by or against the Borrower, any Guarantor or against any wholly owned subsidiary of any Guarantor under the United States Bankruptcy Code naming the Borrower or any Guarantor or such wholly owned subsidiary as debtor; G. The Borrower shall liquidate, dissolve, terminate or suspend its business operations or otherwise fail to operate its business in the ordinary course, or sell all or substantially all of its assets, without the Lender's prior written consent. 8. Rights and Remedies. Upon the occurrence of an Event of Default or during any period of time beginning on the date when an Event of Default occurs, the Lender may exercise any or all of the following rights and remedies: A. The Lender may, by notice to the Borrower, declare the Obligations to be forthwith due and payable, whereupon all Obligations shall become and be forthwith due and payable, without presentment, notice of dishonor, protest or further notice of any kind, all of which the Borrower hereby expressly waives; B. The Lender may exercise and enforce any and all rights and remedies available upon default to a secured party under the Uniform Commercial Code as in effect from time to time in the state whose laws shall govern this Agreement, or in any other state whose laws are held to govern this Agreement or any portion thereof, including, without limitation, the right to take without judicial process or by judicial process (without a prior hearing or notice thereof, which the Borrower hereby expressly waives) and the right to sell, lease or otherwise dispose of any or all of the Collateral, and, in connection therewith, the Borrower will on demand assemble the Collateral and make it available to the Lender at a place to be designated by the Lender which is reasonable convenient to both parties; C. The Lender may exercise and enforce its rights and remedies under the Loan Documents; Notwithstanding the foregoing, upon the occurrence of an Event of Default, the Obligations shall be immediately due and payable automatically without presentment, demand, protest or notice of any kind. 9. Miscellaneous. A. Indemnity. The Borrower agrees to indemnify, defend and hold harmless the Lender, its affiliates, successors, and all present and future officers, directors, employees, attorneys and agents of the foregoing (the "Indemnitees") from and against any of the following (collectively, "Indemnified Liabilities"): (1) any and all transfer taxes, documentary taxes, assessments or charges made by any governmental authority by reason of the execution and delivery of the Loan Documents or the making of the Loan; (2) any claims, loss or damage to which any Indemnitee may be subjected if any representation or warranty contained herein proves to be incorrect in any respect or as a result of any violation of the covenant contained herein; (3) any and all other liabilities, losses, damages, penalties, judgments, suits, claims, costs and expenses of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel) in connection with the foregoing and any other investigative, administrative or judicial proceedings, whether or not such Indemnitee shall be designated a party thereto, which may be imposed on, incurred by or asserted against any such Indemnitee, in any manner related to or arising out of or in connection with the making of the Loan and the Loan Documents or the use or intended use of the proceeds of the Loan. 2. If any investigative, judicial or administrative proceeding arising from any of the foregoing is brought against any Indemnitee, upon such Indemnitee's request, the Borrower, or counsel designated by the Borrower and satisfactory to the Indemitee, will resist and defend such action, suit or proceeding to the extent and in the manner directed by the Indemnitee, at the Borrower's sole cost and expense. Each Indemnitee will use its best efforts to cooperate in the defense of any such action, suit or proceeding. If the foregoing undertaking to indemnify, defend and hold harmless may be held to be unenforceable because it violates any law or public policy, the Borrower shall nevertheless make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. The Borrower's Obligation under this paragraph shall survive the termination of this Loan Agreement and the discharge of the Borrower's other Obligations hereunder. B. Survival. The terms, conditions, and covenants set forth herein and in the Loan Documents shall survive closing and shall constitute a continuing obligation of the Borrower during the course of the transactions contemplated herein. The Obligations of the Borrower under this Loan Agreement shall remain in effect so long as any Obligation is outstanding, unpaid, or unsatisfied between the Borrower and the Lender. C. Binding Effect, Assignment or Transfer. This Loan Agreement shall be binding upon, and inure to the benefit of, the parties, their successors and assigns. Notwithstanding the foregoing to the contrary, the Borrower shall not have the right to assign its rights hereunder, or any interest herein, without the Lender's prior written consent. The interest of the Lender is transferable, subject to applicable limitations. The Lender will submit to the Borrower and to all other such Lenders a written instrument of transfer duly executed by the Lender or the Lender's duly authorized attorney and the surrender to Borrower for transfer of the Note held by such Lender. Thereupon, the Borrower will issue a new Note in the same aggregate principal amount as the Note surrendered for transfer to the designated transferee or transferees. D. Pennsylvania Law Governs. This Loan Agreement shall be governed by, and construed and enforced in accordance with, the laws of the Commonwealth of Pennsylvania. E. Entire Agreement. This Loan Agreement and the Loan Documents contain the final and entire agreement and understanding of the parties, and any terms and conditions not set forth in this Loan Agreement and the Loan Documents are not part of either this Loan Agreement or the understanding of the parties hereto. F. Severability. Any provision of this Loan Agreement, which is prohibited or unenforceable, shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof. G. Amendment. This Loan Agreement may be amended or altered only in writing signed by the parties to be bound by the change or alteration. H. Notices. All notices, requests, consents, and other communication hereunder shall be in writing and shall be mailed first class, postage prepaid, to the respective party at the following addresses: (1) To the Borrower at: Medical Technology & Innovations, Inc. 3725 Investment Lane Riviera Beach, Florida 33404 (2) To the Lender at: International Investment Partners, Ltd. 80 Abbeyville Road Lancaster, Pennsylvania 17603 The date of service of such notice shall be 3 days after the date of mailing if sent by first class mail. IN WITNESS WHEREOF, the parties have set their hands and seals as of the day and year first above written. MEDICAL TECHNOLOGY & INNOVATIONS, INC. By /s/ Joseph R. DelVecchio ------------------------------ Name: Joseph R. DelVecchio Title: Ex V.P. /COO INTERNATIONAL INVESTMENT PARTNERS, LTD. By /s/ Brian A. Auchey ------------------------------ Name: Brian A. Auchey Title: Vice President EX-10.14 5 0005.txt PROMISORY NOTE EXHIBIT 10.14 NOTE $1,000,000.00 January 21, 2000 Lancaster, Pennsylvania FOR VALUE RECEIVED, MEDICAL TECHNOLOGY & INNOVATIONS, INC., a Florida corporation ("Maker"), hereby promises to pay to the order of INTERNATIONAL INVESTMENT PARTNERS, LTD., a Delaware corporation ("Lender"), the principal sum of ONE MILLION and No/100 Dollars ($1,000,000.00), together with interest thereon, as follows: 1. Definitions. Capitalized terms used herein which are not defined herein shall have the meanings assigned to them in the Loan Agreement or in the other Loan Documents. 2. Interest Rates and Payments. (a) Loan Rate. Subject to the alternatives for payment of interest set forth below, the interest rate for the Loan ("Loan Rate") shall be a fixed rate of twelve percent (12%) per annum. (b) Loan Payments. During the first eighteen (18) months of the Loan the Maker will pay only interest monthly, commencing on the first day of the month following receipt of such $1,000,000.00 and execution of this Note, and continuing on the first day of the month for eighteen (18) months thereafter (the "Interest Payment Date"). During the remaining forty-two (42) months of the loan, the Maker will pay principal, amortized over twenty years, and interest monthly, commencing on the first day of the nineteenth month and continuing on the first day of the month for forty-two months thereafter. The loan shall amortize over twenty (20) years. The remaining balance, which shall be in the form of a balloon payment, of principal and accrued interest shall be due and paid in full at the end of sixty (60) months from the date of the Note. All payments shall be applied first to expenses, then interest and then to principal. All payments will be made promptly to the Lender at its address specified in this Note, or at such other address as it may designate in writing. (c) Payment of Interest, Alternatives. Notwithstanding anything contained herein to the contrary, the Maker may satisfy its obligation to pay interest due on any Interest Payment Date (except the maturity date of the Loan) as follows: (i) By payment in cash on each Interest Payment Date (and at Maturity); (ii) Upon written notice to the Lender, which notice shall be given not less than five (5) business days prior to the Interest Payment Date and approval by the Lender, by adding an amount equal to twice the amount of the interest due on the Interest Payment Date to the outstanding principal of the Loan; (d) Default Rate. Upon the occurrence of an Event of Default under any of the Loan Documents, the Maker agrees to pay to the Lender, without notice or demand, interest on the unpaid amounts due hereunder at the rate of eighteen percent (18%) per annum (the "Default Rate"), whether or not the Lender elects to accelerate the unpaid principal balance as a result of such Event of Default. If judgment is entered against the Maker on this Note, then the amount of the judgment entered (which may include principal, interest, fees, charges and costs) shall bear interest at the Default Rate. If this Note is referred to an attorney for collection, whether or not judgment has been confessed or suit has been filed, the Maker shall pay all of the Lender's reasonable costs, fees (including, but not limited to, reasonable attorneys' fees) and expenses resulting from such referral; (e) Calculations. Interest accruing on the outstanding principal balance hereunder shall be computed on the basis of the actual number of days elapsed in a year of 360 days; 1 (f) Maturity Date. Notwithstanding anything to the contrary contained in this Note or elsewhere in the Loan Documents, unless extended by an agreement executed by Maker and Lender, this Note shall mature on January 21, 2005 (the "Maturity Date") without further notice. On the Maturity Date the entire unpaid principal balance hereof, together with accrued interest thereon, and all other sums due and owing under the Loan Documents, shall become due and payable in full. (g) Prepayments. Maker shall have the right at its option to prepay this Note in whole at any time or in part from time to time without premium or penalty, provided that the Maker shall pay accrued interest on the prepaid principal amount to the date of prepayment. Any prepayment of principal shall be applied first to interest and then to principal in inverse order of maturity. (h) Alternative for Repayment of the Loan. At any time, at the option of the Lender, the outstanding principal plus accrued and unpaid interest and expenses due may be paid in an amount of common stock of the Borrower at the rate of one share for every four cents owed to the Lender (the "Conversion Rate"). The Conversion Rate had been determined at the time of negotiations, based upon the previous sixty day average closing price per share of the Borrower's common stock as quoted on the Over-The-Counter Bulletin Board (OTC: BB). The Conversion Rate will be adjusted for all stock splits subsequent to the Loan Agreement. 3. Payments. All payments (including prepayments) to be made in respect of principal, interest or other amounts due from Maker hereunder or under any other Loan Document shall be payable on the day when due. Such payments shall be made to Lender at its office at 80 Abbeyville Road, Lancaster, Pennsylvania 17603, in funds immediately available at such office without set-off, counterclaim or other deduction of any nature. Whenever any payment to be made under this Note or any other Loan Document shall be stated to be due on a day which is not a Business Day, such payment shall be made on the next following Business Day and such extension of time shall be included in computing interest, if any, in connection with such payment. To the extent permitted by law, after there shall have become due (by acceleration or otherwise) interest or any other amounts due from Maker hereunder or under any other Loan Document, such amounts shall bear interest for each day until paid (before and after judgment), payable on demand, at the Default Rate. 4. Late Charge. Any payment of principal or interest that is delinquent by more than ten (10) days shall draw interest at the rate of eighteen percent (18%) per annum from the date due; This charge shall be in addition to, and not in lieu of, any other remedy Lender may have and is in addition to any reasonable fees and charges of any agents or attorneys which Lender is entitled to employ on any default hereunder, whether authorized herein, or by law. 5. Default. The occurrence of an Event of Default under any other Loan Document, or the Maker's failure to pay any sum due hereunder or to otherwise comply with any term hereof after any such grace periods or notices required in the Loan Agreement or Security Agreement shall constitute an Event of Default hereunder. If an Event of Default shall occur under the Security Agreement, Lender may accelerate the indebtedness evidenced hereby in accordance with the provisions of the Loan Agreement and Security Agreement and may exercise the other rights and remedies provided it in the Security Agreement, the Loan Agreement and the other Loan Documents. 6. Miscellaneous. This Note evidences the Loan and all other amounts payable by Maker hereunder or under any other Loan Document. This Note is the "Note" referred to in, and is entitled to the benefits of, the Loan Agreement and the Security Agreement, which among other things provide for the acceleration of the maturity hereof upon the occurrence of certain events and for prepayments in certain circumstances and upon certain terms and conditions. This Note is secured by and is entitled to the benefits of the Security Agreement and the other Loan Documents. The unpaid principal amount of this Note, the unpaid interest accrued hereon, the interest rate or rates applicable to such unpaid principal amount and the duration of such applicability shall at all times be ascertained from the records of Lender, which shall be conclusive absent manifest error. Except as may be expressly provided to the contrary in the Loan Documents, Maker hereby expressly waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note, the Loan Agreement, the Security Agreement and the other Loan Documents, and an action for amounts due hereunder or thereunder shall immediately accrue. 2 All notices, requests, demands, directions and other communications (collectively, "notices") under the provisions hereof shall be in writing unless otherwise expressly permitted hereunder, shall be sent as provided in the Security Agreement and shall be effective when received. Lender may rely on any notice purportedly made by or on behalf of Maker, and shall have no duty to verify the identity or authority of the person giving such notice. If this Note is placed in the hands of an attorney at law for collection by reason of default on the part of Maker, Maker hereby agrees to pay to Lender in addition to the sums stated above, the reasonable costs of collection, including a reasonable sum as attorneys' fees. This Note may not be amended, modified or supplemented orally. If any term or provision of this Note or the application thereof to any Person or circumstance shall to any extent be invalid or unenforceable, the remainder of this Note, or the application of such term or provision to Persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this Note shall be valid and enforceable to the fullest extent permitted by law. This Note shall be governed by, and construed and enforced in accordance with, the laws of the Commonwealth of Pennsylvania. This obligation shall bind Maker and its successors and assigns, and the benefits hereof shall inure to Lender and its successors and assigns. Time is of the essence with respect to matters of performance required of Maker under this Note. THE MAKER HEREBY KNOWINGLY WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY ACTION BROUGHT BY OR AGAINST THE MAKER ON, MENTIONING, RELATED TO OR CONNECTED WITH THIS NOTE, THE LOAN AGREEMENT OR THE LOAN DOCUMENTS. IN WITNESS WHEREOF, Maker has duly executed and delivered this Note as of the date first above written. ATTEST: MEDICAL TECHNOLOGY & INNOVATIONS, INC. By /s/ Annalisa B. Pegg By /s/ Joseph R. DelVecchio - ------------------------ --------------------------------------- Name: Annalisa B. Pegg Name: Joseph R. DelVecchio Title: Office Manager Title: Ex V.P. / COO 3 EX-10.15 6 0006.txt PATENT COLLATERAL ASSIGNMENT EXHIBIT 10.15 PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT THIS AGREEMENT is made as of the 21st day of January, 2000 between Medical Technology & Innovations, Inc., a Florida corporation, having a mailing address at 3725 Investment Lane, Riviera Beach, Florida 33404 ("Assignor"), and International Investment Partners, Ltd., a Delaware corporation, having a mailing address at 80 Abbeyville Road, Lancaster, Pennsylvania 17603 ("Lender"). WHEREAS, Assignor has executed and delivered its promissory note dated January 21, 2000 (the "Note"), to the Lender in the aggregate principal amount of One Million Dollars ($1,000,000), pursuant to a certain Loan Agreement dated January 21, 2000 between Assignor and the Lender and various other loan documents (the "Loan Documents"). To secure the complete and timely satisfaction of all existing and future indebtedness and obligations of the Assignor to Lender (the "Liabilities"), Assignor has agreed to assign to Lender certain patent rights. NOW, THEREFORE, in consideration of the premises, Assignor hereby agrees with Lender as follows: 1. To secure the complete and timely satisfaction and performance of the Liabilities, Assignor hereby grants, assigns and conveys to Lender Assignor's entire right, title and interest in and to the patent applications and patents listed in Schedule A hereto including without limitation all proceeds thereof (such as, by way of example, license royalties and proceeds of infringement suits), the right to sue for past, present and future infringements and all rights corresponding thereto throughout the world and all reissues, divisions, continuations, renewals, extensions and continuations-in-part thereof and any future reissue, division, continuation, renewal, extension, or continuation-in-part of any Patent or any improvement on any Patent, as set forth in Paragraph 4, infra., (collectively called the "Patents"). 2. Assignor covenants and warrants that: (a) The Patents are subsisting and have not been adjudged invalid or unenforceable, in whole or in part; (b) To the best of Assignor's knowledge, each of the Patents is valid and enforceable and Assignor has notified Lender in writing of all prior art (including public uses and sales) of which it is aware; (c) Assignor is the sole and exclusive owner of the entire and unencumbered right, title and interest in and to each of the Patents, free and clear of any liens, charges and encumbrances, including without limitation pledges, assignments, licenses, registered user agreements and covenants by Assignor not to sue third persons; (d) Assignor has the unqualified right to enter into this Agreement and perform its terms and has entered and will enter into written agreements with each of its present and future employees, agents and consultants which will enable it to comply with the covenants herein contained, including but not limited to agreements obligating them to assign present and future inventions to the Assignor. 3. Assignor agrees that, until all of the Liabilities shall have been satisfied in full, it will not enter into any license or any other agreement which is inconsistent with Assignor's obligations under this Agreement, without Lender's prior written consent. 4. If, before the Liabilities shall have been satisfied in full, Assignor shall obtain rights to any new patentable inventions, or become entitled to the benefit of any patent application or patent for any reissue, division, continuation, renewal, extension, or continuation-in-part of any Patent or any improvement on any Patent, the provisions of paragraph 1 shall automatically apply thereto and Assignor shall give to Lender prompt notice thereof in writing. 5. Assignor authorizes Lender to modify this Agreement by amending Schedule A to include any future Patents and Patent applications which are Patents under paragraph 1 or paragraph 4 hereof. 6. Assignor agrees to pay all maintenance fees for all Patents listed in Schedule A in a timely manner. 7. Unless and until there shall have occurred and be continuing a default hereunder or under any of the Loan Documents Lender hereby grants to Assignor the exclusive, nontransferable right and license under the Patents to make, have made for it, use and sell the inventions disclosed and claimed in the Patents for Assignor's own benefit and account and for none other. Assignor agrees not to sell the license, or grant any sublicense under, the license granted to Assignor in this paragraph 6, without the prior written consent of Lender. 8. If any default shall have occurred and be continuing hereunder or any of the Loan Documents, Assignor's license under the Patents as set forth in paragraph 6, shall terminate thereupon, and the Lender shall have, in addition to all other rights and remedies given it by this Agreement, those allowed by law and the rights and remedies of a secured party under the Uniform Commercial Code as entered in any jurisdiction in which the Patents may be located and, without limiting the generality of the foregoing, the Lender may immediately, without demand of performance and without other notice (except as set forth next below) to Assignor, all of which are hereby expressly waived, and without advertisement, sell at public or private sale or otherwise realize upon, in Pennsylvania, or elsewhere, all or from time to time any of the Patents, or any interest which the Assignor may have therein, and after deducting from the proceeds of sale or other disposition of the Patents all expenses (including all reasonable expenses for brokers' fees and legal services), shall apply the residue of such proceeds toward the payment of the Liabilities. Any remainder of the proceeds after payment in full of the Liabilities shall be paid over to the Assignor. Notice of any sale or other disposition of the Patents shall be given to Assignor at least five (5) days before the time of any intended public or private sale or other disposition of the Patents is to be made, which Assignor hereby agrees shall be reasonable notice of such sale or other disposition. At any such sale or other disposition, any holder of the Note or Lender may, to the extent permissible under applicable law, purchase the whole or any part of the Patents sold, free from any right of redemption on the part of Assignor, which right is hereby waived and released. 9. If any default shall have occurred and be continuing hereunder or under any of the Loan Documents, Assignor hereby authorizes and empowers Lender to make, constitute and appoint any officer or agent of Lender, as Lender may select in its exclusive discretion, as Assignor's true and lawful attorney-in-fact, with the power to endorse Assignor's name on all applications, documents, papers and instruments necessary for Lender to use the Patents, or to grant or issue any exclusive or non-exclusive license under the Patents to any third person, or necessary for Lender to assign, pledge, convey or otherwise transfer title in or dispose of the Patents to any third person. Assignor hereby ratifies all that such attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This power of attorney shall be irrevocable for the life of this Agreement. 10. At such time as Assignor shall completely satisfy all of the Liabilities, this Agreement shall terminate and Lender shall execute and deliver to Assignor all deeds, assignments and other instruments as may be necessary or proper to re-vest in Assignor full title to the Patents, subject to any disposition thereof which may have been made by Lender pursuant hereto. 11. Any and all reasonable fees, costs and expenses, of whatever kind or nature, including attorneys' fees and legal expenses incurred by Lender in connection with the enforcement of any of the provisions of this Agreement and all other documents relating hereto and the consummation of the transaction contemplated by the Loan Documents, the filing or recording of any documents (including all taxes in connection therewith) in public offices, the payment or discharge of any taxes, counsel fees, maintenance fees, encumbrances or otherwise protecting, maintaining or preserving the Patents, or in defending or prosecuting any actions or proceedings arising out of or related to the Patents, shall be borne and paid by Assignor on demand by Lender and until so paid shall be added to the principal amount of the Liabilities and shall bear interest at the highest rate prescribed in the Note. 12. Assignor shall have the duty, through counsel acceptable to Lender, to prosecute diligently any patent applications of the Patents pending as of the date of this Agreement or thereafter until the Liabilities shall have been paid in full, to make federal application on unpatented but patentable inventions and to preserve and maintain all rights in patent applications and patents of the Patents, including without limitation the payment of all maintenance fees. Any expenses incurred in connection with the Patents shall be borne by Assignor. The Assignor shall not abandon any right to file a patent application, or any pending patent application or patent, without the consent of the Lender, which consent shall not be unreasonably withheld. 13. Assignor shall have the right, with the consent of Lender, which will not be unreasonably withheld, to bring suit in its own name, and to join Lender, if necessary, as a party to such suit so long as Lender is satisfied that such joinder will not subject it to any risk of liability, to enforce the Patents and any licenses thereunder. Assignor shall promptly, upon demand, reimburse and indemnify Lender for all damages, costs and expenses, including legal fees,incurred by Lender pursuant to this paragraph 12. 14. If Assignor fails to comply with any of its material obligations hereunder, Lender may do so in Assignor's name or in Lender's name, but at Assignor's expense, and Assignor hereby agrees to reimburse Lender in full for all expenses, including reasonable attorneys' fees incurred by Lender in protecting, defending and maintaining the Patents. 15. No course of dealing between Assignor and Lender, nor any failure to exercise, nor any delay in exercising, on the part of Lender, any right, power or privilege hereunder or under the Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. 16. All of Lender's rights and remedies with respect to the Patents, whether established hereby or by the Loan Documents, or by any other agreements or by law shall be cumulative and may be exercised singularly or concurrently. 17. The provisions of this Agreement are severable, and if any clause or provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction, and shall not in any manner affect such clause or provision in any other jurisdiction or any other clause or provision of this Agreement in any jurisdiction. 18. This Agreement is subject to modification only by a writing signed by the parties, except as provided in paragraph 5. 19. The benefits and burdens of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties. 20. The validity and interpretation of this Agreement and the rights and obligations of the parties shall be governed by the laws of the Commonwealth of Pennsylvania. WITNESS the execution hereof, under seal, as of the day and year first above written. ATTEST: ASSIGNOR: MEDICAL TECHNOLOGY & INNOVATIONS, INC. By /s/ Annalisa B. Pegg By /s/ Joseph R. DelVecchio - ------------------------ ----------------------------------------- Name: Annalisa B. Pegg Name: Joseph R. DelVecchio Title: Office Manager Title: Ex V.P. / COO ATTEST: LENDER: INTERNATIONAL INVESTMENT PARTNERS, LTD. By /s/ Annalisa B. Pegg By /s/ Brian A Auchey - ------------------------ ----------------------------------------- Name: Annalisa B. Pegg Name: Brian A Auchey Title: Office Manager Title: Vice President EX-10.16 7 0007.txt GENERAL SECURITY AGREEMENT EXHIBIT 10.16 GENERAL SECURITY AGREEMENT This Security Agreement is made and entered into this 21st day of January, 2000, by and between Medical Technology & Innovations, Inc., a Florida corporation, having a mailing address at 3725 Investment Lane, Riviera Beach, Florida 33404 (hereinafter the "Debtor"), and International Investment Partners, Ltd., a Delaware corporation, having a mailing address at 80 Abbeyville Road, Lancaster, Pennsylvania 17603 (the "Secured Party"). RECITALS A. Pursuant to the Loan Agreement dated as of January 21, 2000 (the Loan Agreement), the Secured Party has agreed to make available to the Debtor a term loan of One Million Dollars ($1,000,000) (the "Loan") and has agreed to accept in evidence thereof a Term Loan Note dated as of even date herewith in the original aggregate principal amount of One Million Dollars ($1,000,000) (the "Note"); B. The Debtor has agreed to issue the Note and enter into this Security Agreement to induce the Secured Party to make the Loan to Debtor. NOW, THEREFORE, subject to the mutual covenants and promises contained herein and with intent to be legally bound, the parties agree as follows: 1. Security Interest. The Debtor hereby grants to the Secured Party a security interest in all of Debtor's tangible and intangible assets, including, but not limited to, the following: (a) Accounts, Chattel Paper, Documents, Equipment, Inventory ( whether held for sale or lease or to be furnished under contracts of service, including raw materials and work in process), Furniture, Fixtures, General Intangibles, Patents, goodwill, supplies, Goods, Instruments, Machinery, motor vehicles, Securities, books and records (including, but not limited to, manual records, computer runs, print outs, tapes, disks, software, programs, source codes and other computer prepared information and equipment of any kind); (b) all other tangible and intangible personal property, whether now owned or hereafter acquired, including policies of insurance thereon and all insurance proceeds and unearned premium in connection therewith, together with all accessions, additions to, replacements for and substitutions of Collateral and all cash and non-cash Proceeds and products thereof, whether now owned or hereafter acquired (hereinafter referred to as the "Collateral"), to secure: (i) all existing and future extensions of credit to the Debtor from the Secured Party; (ii) all expenditures by Secured Party for taxes, insurance, repairs to and maintenance of the Collateral and all costs and expenses incurred by Secured Party in the collection and enforcement of the indebtedness of Debtor. (iii) Debtor's payment obligations under the Note; and (iv) all liabilities of Debtor to Secured Party now existing or hereafter incurred, matured or unmatured, direct or contingent, and any renewals and extensions thereof and substitutions therefor, including without limitation, liabilities under certain Guaranty Agreements executed and delivered by Debtor and its principals contemporaneously herewith. 2. Debtor's Covenants. The Debtor warrants, covenants and agrees as follows: 1 (a) Title. Except for the security interest hereby granted, Debtor has full fee simple title to the Collateral free from any lien, security interest, encumbrance, or claim, and the Debtor will, at the Debtor's cost and expense, defend any action which may affect the Secured Party's security interest in, or the Debtor's title to, the Collateral except such priority lien as may be evidenced by Financing Statements filed by First Capital Corporation or by financing statements included as exhibits hereto. (b) Financing Statement. No Financing Statement covering the Collateral or any part thereof or any proceeds thereof is on file in any public office except those filed in favor of First Capital Corporation and as attached hereto, and, at the Secured Party's request, the Debtor will join in executing all necessary Financing Statements in form satisfactory to the Secured Party and will pay the cost of filing the same and will further execute all other necessary instruments deemed necessary by the Secured Party and pay the cost of filing the same. (c) Sale, Lease, or Disposition of Collateral. The Debtor will not, without the written consent of the Secured Party or in the ordinary course of business, sell, contract to sell, lease, encumber, or dispose of the Collateral or any interest therein until this Security Agreement and all debts secured thereby have been fully satisfied. (d) Insurance. The Debtor will insure the Collateral with companies acceptable to the Secured Party against such casualties and in such amounts as the Secured Party shall require with a clause in favor of the Debtor and Secured Party as their interests may appear, and the Secured Party is hereby authorized to collect sums which may become due under any of said policies and apply the same to the obligations hereby secured. (e) Protection of Collateral. The Debtor will keep the Collateral in good order and repair and will not waste or destroy the Collateral or any part thereof. The Debtor will not use the Collateral in violation of any statute or ordinance and the Secured Party will have the right to examine and inspect the Collateral at any reasonable time. (f) Taxes. The Debtor will pay promptly when due all taxes and assessments on the Collateral or for its use and operation. (g) Location and Identification. The Debtor will keep the Collateral separate and identifiable and at its principal place of business as shown above and will not remove the Collateral from said address without notifying the Secured Party. 3. Additional Security Interest. The Debtor hereby grants to the Secured Party a security interest in and to all proceeds, increases, substitutions, replacements, additions, and accessions to the Collateral. This provision shall not be construed to mean that the Debtor is authorized to sell, lease, or dispose of the Collateral without the consent of the Secured Party. 4. Decrease in Value of Collateral. The Debtor shall, if in the Secured Party's judgment the Collateral has materially decreased in value or if the Secured Party shall at any time deem that the Secured Party is insecure, either provide enough additional collateral to reasonably satisfy the Secured Party or reduce the total sum owed to Secured Party by an amount sufficient to reasonably satisfy the Secured Party. 5. Reimbursement of Expenses. At the option of the Secured Party, the Secured Party may discharge taxes, liens, interest, or perform or cause to be performed for and on behalf of the Debtor any actions and conditions, obligations, or covenants which the Debtor has failed or refused to perform and may pay for the repair, maintenance, and preservation of the Collateral, and all sums so expended, including but not limited to, attorney's fees, court costs, agent's fees, or commissions, or any other costs or expenses shall bear interest from the date of payment at the rate of six percent (6%) per annum and shall be payable at the place designated in the above-described Note and shall be secured by this Security Agreement. 6. Payment. The Debtor will pay any indebtedness hereby secured in accordance with the terms and provisions thereof and will repay immediately all sums expended by the Secured Party in accordance with the terms and provisions of this Security Agreement. 2 7. Change of Residence. The Debtor will promptly notify the Secured Party of any change of the Debtor's principal place of business. 8. Attorney in Fact. The Debtor hereby appoints the Secured Party as the Debtor's attorney in fact to do any and every act which the Debtor is obligated by this Security Agreement to do, and to exercise all rights of the Debtor in the Collateral and to make collections and to execute any and all property and papers and instruments and to do all other things necessary to preserve and protect the Collateral and to make collections and to protect the Secured Party's security interest in said Collateral. 9. Time of Performance and Waiver. In performing any act under this Security Agreement, time shall be of the essence. The Secured Party's acceptance of partial or delinquent payments, or the failure of the Secured Party to exercise any right or remedy shall not be a waiver of any obligation of the Debtor or right of the Secured Party or constitute a waiver of any other similar default subsequently occurring. 10. Default. The Debtor shall be in default under this Security Agreement on the happening of any of the following events or conditions: (a) Default in the payment or performance of any material obligation, covenant, or liability contained or referred to herein, or in any other agreement with Secured Party; (b) Any warranty, representation, or statement made or furnished to the Secured Party by or on behalf of the Debtor proves to have been false in any material respect when made or furnished; (c) Any event which results in the acceleration of the maturity of the indebtedness of the Debtor to others under any indenture, agreement, or undertaking; (d) Loss, theft, substantial damage, destruction, sale, or encumbrance to or of a substantial part of the Collateral, or the making of any levy thereon or seizure thereof; (e) Any time the Secured Party believes that the prospect of payment of any indebtedness secured hereby or the performance of this Security Agreement is impaired; or (f) Death, dissolution, termination of existence, insolvency, business failure, appointment of a receiver, assignment for the benefit of creditors or the commencement of any pro ceeding under any bankruptcy or insolvency law by or against the Debtor or any guarantor or surety for the Debtor. 11. Remedies. On the occurrence of any such event of default, and at any time thereafter, the Secured Party may declare all obligations secured hereby immediately due and payable and may proceed to enforce payment of the same and exercise any and all of the rights and remedies provided by the Uniform Commercial Code as well as other rights and remedies possessed by the Secured Party. The Secured Party shall have the right to remove the Collateral from the premises of the Debtor and, for purposes of removal and possession, the Secured Party or its representatives may enter any premises of the Debtor without legal process and the Debtor hereby waives and releases the Secured Party of and from any and all claims in connection therewith. The Secured Party may require the Debtor to assemble the Collateral and make it available to the Secured Party at any place to be designated by the Secured Party which is reasonably convenient to both parties. Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Secured Party will give the Debtor reasonable notice of the time and place of any public sale thereof or of the time after which any private sale or any other intended disposition thereof is to be made. The requirements of reasonable notice shall be met if such notice is mailed, postage prepaid, to the address of the Debtor shown at the beginning of this Security Agreement at least five days before the time of the sale or disposition. 3 Upon default, Debtor shall reimburse the Secured Party for any expenses incurred in retaking, holding, preparing for sale, or selling the Collateral, or the like, or in collecting obligations owed by Debtor to Secured Party, including the Secured Party's reasonable attorney's fees and legal expenses. 12. Miscellaneous Provisions. (a) Pennsylvania Law to Apply: This Agreement shall be construed under and in accordance with the Pennsylvania Uniform Commercial Code and other applicable laws of the State of Pennsylvania. (b) Parties Bound: This Agreement shall be binding upon respective heirs, executors, administrators, legal representatives, successors, and assigns where permitted by this Agreement. (c) Legal Construction: In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision thereof and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein. (d) Prior Agreements Superseded: This Agreement constitutes the sole and only agreement of the parties hereto and supersedes any prior understandings or written or oral agreements between the parties respecting the within subject matter. (e) Definitions: All terms used herein which are defined in the Uniform Commercial Code of Pennsylvania shall have the same meaning herein as in said Code. Dated: January 21, 2000. ATTEST: MEDICAL TECHNOLOGY & INNOVATIONS, INC. By /s/ Annalisa B. Pegg By /s/ Joseph R. DelVecchio - ------------------------ ----------------------------------------- Name: Joseph R. DelVecchio Title: Ex V.P. / COO ATTEST: INTERNATIONAL INVESTMENT PARTNERS, LTD. By /s/ Annalisa B. Pegg By /s/ Brian A Auchey - ------------------------ ----------------------------------------- Name: Brian A Auchey Title: Vice President 4 EX-10.17 8 0008.txt GUARANTY AND SURETYSHIP AGREEMENT EXHIBIT 10.17 GUARANTY AND SURETYSHIP AGREEMENT THIS GUARANTY AND SURETYSHIP AGREEMENT (this "Guaranty"), made this 21st day of January, 2000, by Steridyne Corporation, a Florida corporation (the "Guarantor"), in favor of International Investment Partners, Ltd., a Delaware corporation (the "Lender"), recites and provides as follows: RECITALS: A. By Note of even date herewith made by Steridyne Corporation, a Florida corporation (the "Borrower"), and payable to the order of the Lender (as the same may be amended, modified or supplemented from time to time, the "Note"), the Lender has agreed to make a Loan of $1,000,000 to the Borrower (capitalized terms which are not defined herein shall have the meanings assigned to them in the Note and the other Loan Documents). B. The Guarantor has received and reviewed copies of the Note and the other Loan Documents. C. The execution and delivery by the Guarantor of this Guaranty is a condition to the Lender's obligation to make the Loan to Borrower pursuant to the Note. D. The Guarantor expects to derive financial benefit from the making of the Loan by the Lender to the Borrower. GUARANTY AND SURETYSHIP: NOW, THEREFORE, in consideration of $10.00 and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Guarantor, and intending to be legally bound, the Guarantor hereby agrees as follows: 1. The Guaranty. (a) Guaranteed Obligations. The Guarantor hereby unconditionally and irrevocably guarantees to the Lender and becomes surety to the Lender for the due, punctual and full payment and performance of, and covenants with the Lender to duly, punctually and fully pay and perform, the following (collectively, the "Guaranteed Obligations"): (1) All indebtedness of the Borrower to the Lender evidenced by the Note, both principal and interest, and all other amounts due or to become due under the Note and the other Loan Documents, and any refinancing or refunding thereof, whether now existing or hereafter arising, contracted or incurred; and (2) All covenants, agreements, obligations and liabilities of the Borrower under the Note and the other Loan Documents, whether now existing or hereafter arising, contracted or incurred, as and when such payment or performance shall become due (whether by acceleration or otherwise) in accordance with the terms of the Loan Documents. (b) Unconditional Guaranty. The obligations of the Guarantor hereunder are continuing, absolute and unconditional, irrespective of any circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a guarantor or surety. Without limiting the generality of the foregoing, the obligations of the Guarantor hereunder shall remain in full force and effect without regard to, and shall not be released, discharged or in any way affected by: (1) Any amendment, modification or supplement to the Note or any other Loan Document; (2) Any exercise or nonexercise of or delay in exercising any right, remedy, power or privilege under or in respect of this Guaranty, the Note or any other Loan Document (even if any such right, remedy, power or privilege shall be lost thereby), or any waiver, consent, indulgence or other action or inaction in respect thereof; (3) Any bankruptcy, insolvency, arrangement, composition, assignment for the benefit of creditors or similar proceeding commenced by or against the Borrower; (4) Any failure to perfect or continue perfection of, or any release or waiver of, any rights given to the Lender in any property as security for the performance of any of the Guaranteed Obligations; (5) Any extension of time for payment or performance of any of the Guaranteed Obligations; (6) The genuineness, validity or enforceability of the Loan Documents; (7) Any limitation of liability of the Borrower or any other Guarantor contained in any Loan Document; (8) Any defense that may arise by reason of the failure of the Lender to file or enforce a claim against the estate of the Borrower in any bankruptcy or other proceeding; (9) Any voluntary or involuntary liquidation, dissolution, sale of all or substantially all of the property of the Borrower, or any marshalling of assets and liabilities, or other similar proceeding affecting, Borrower or any of its assets; (10) The release of the Borrower or any other Guarantor from performance or observance of any of the agreements, covenants, terms or conditions contained in the Loan Documents by operation of law; or (11) The failure of the Lender to keep the Guarantor advised of Borrower's financial condition, regardless of the existence of any duty to do so. No set-off, claim, reduction or diminution of any obligation, or any defense of any kind or nature which the Borrower or the Guarantor now has or hereafter may have against the Lender, shall be available hereunder to the Guarantor against the Lender. C. No Notice or Duty to Exhaust Remedies. The Guarantor hereby waives diligence, presentment, demand, protest, the benefits of the homestead and all other exemptions provided to the Guarantor and all notices of any kind, and waives any requirement that the Lender exhaust any right or remedy, or proceed first or at any time, against the Borrower or any other guarantor of, or any security for, any of the Guaranteed Obligations. This Guaranty constitutes an agreement of suretyship as well as of guaranty, and the Lender may pursue its rights and remedies under this Guaranty and under the other Loan Documents in whatever order, or collectively, and shall be entitled to payment and performance hereunder notwithstanding such other Loan Documents and notwithstanding any action taken by the Lender or inaction by the Lender to enforce any of its rights or remedies against any other guarantor or any other person or property whatsoever. (d) WAIVER OF SUBROGATION. GUARANTOR HEREBY WAIVES AND RELEASES ANY AND ALL RIGHTS OF SUBROGATION AND WAIVES ANY RIGHT TO ENFORCE ANY REMEDY WHICH LENDER NOW HAS OR MAY HEREAFTER HAVE AGAINST BORROWER AND ANY BENEFIT OF, ANY RIGHT TO PARTICIPATE IN, ANY SECURITY NOW OR HEREAFTER HELD BY LENDER. E. No Waivers Generally. The Lender shall not be deemed to have waived any of its rights or remedies hereunder unless such waiver is express and in writing. No delay or failure by the Lender on any one or more occasions to exercise its rights hereunder or at law or in equity (including, without limitation, the right of acceleration) shall be construed as a novation of this Guaranty or shall waive or prevent the subsequent exercise of such rights. An express waiver of any right shall not be construed as a waiver of the Lender's right to insist thereafter upon strict compliance with the terms hereof. No exercise of any right by the Lender shall constitute or be deemed to constitute an election of remedies by the Lender precluding the subsequent exercise by the Lender of any or all of the rights, powers and remedies available to it hereunder or at law or in equity. No course of dealing of the Lender in exercising any right, power or privilege under this Guaranty, the Note or under any other Loan Document shall affect any other exercise thereof or exercise of any other right, power or privilege. 2. Representations and Warranties. (a) Contained in the Loan Documents. The Guarantor represents, warrants and certifies to the Lender that the representations and warranties made by the Borrower with respect to such Guarantor under the Note and the other Loan Documents are true and correct on the date hereof. (b) Corporate Existence. The Guarantor is a corporation duly created, validly existing and in good standing under the laws of the State of Iowa. (c) Power, Authority and Binding Effect. The Guarantor has the corporate power to execute and deliver this Guaranty and the persons executing this Guaranty on behalf of the Guarantor have been duly authorized so to do. This Guaranty constitutes the valid, legal and binding obligations of the Guarantor, enforceable in accordance with its terms. 3. Covenants. The Guarantor hereby covenants to the Lender that: (a) Promptly upon becoming aware thereof, the Guarantor shall give the Lender notice of (i) the commencement, existence or threat of any proceeding by or before any Governmental Authority against or affecting Guarantor which, if adversely decided, would have a material adverse effect on the business, operations, condition (financial or otherwise) or prospects of the Guarantor or on its ability to perform obligations hereunder or (ii) any material adverse change in the business, opera tions, condition (financial or otherwise) or prospects of the Guarantor. (b) The Guarantor shall permit such persons as the Lender may designate to examine Guarantor's books and records relating to the Guarantor's financial condition and take copies and extracts therefrom and to discuss the affairs of Guarantor with its officers, employees and independent accountants at such times and as often as the Lender may reasonably request. The Guarantor hereby authorizes such officers, employees and independent accountants to discuss with the Lender the affairs of the Guarantor. (c) The Guarantor shall not dissolve, merge or consolidate with any other person or entity or sell, transfer or otherwise dispose of all or a substantial part of its assets, and shall continue to engage in its business substantially as currently conducted and operated and shall not engage in any other business. (d) There shall be no change in the ownership of the Guarantor from the date hereof. 4. Effect of Bankruptcy Proceedings. This Guaranty shall continue to be effective, or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the Guaranteed Obligations is rescinded or must otherwise be restored or returned by the Lender as a preference, fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar law, all as though such payment had not been made. If a default or an Event of Default at any time shall have occurred and be continuing and declaration of default or acceleration under or with respect to any of the Loan Documents shall at such time be prevented by reason of the pendency against the Borrower of a case or proceeding under any bankruptcy or insolvency law, the Guarantor agrees that, for purposes of this Guaranty and the Guarantor's obligations hereunder, such Loan Documents shall be deemed to have been declared in default or accelerated with the same effect as if such Loan Documents had been declared in default and accelerated in accordance with the terms thereof, and the Guarantor shall forthwith pay the Guaranteed Obligations in full without further notice or demand. 5. Further Assurances. From time to time upon the request of the Lender, the Guarantor shall promptly and duly execute, acknowledge and deliver any and all such further instruments and documents as the Lender may deem necessary or desirable to confirm this Guaranty, to carry out the purpose and intent hereof or to enable the Lender to enforce any of its rights hereunder. 6. Notices. All notices, requests, demands, directions and other communications (collectively, "notices") under the provisions of this Guaranty shall be in writing and shall be sent (i) by first- class or first-class express mail, certified with return receipt requested, or (ii) by fax with confirmation in writing mailed first-class, or (iii) by guaranteed overnight delivery service with receipt therefor, or (iv) by hand, in all cases with charges prepaid, and any such properly given notice shall be effective when received or when such delivery is refused. All notices shall be sent, If to the Lender: International Investment Partners, Ltd. 80 Abbeyville Road Lancaster, Pennsylvania 17603 Att'n: Brian Auchey FAX: (717) 892-6788 If to the Guarantor: Steridyne Corporation 3725 Investment Lane Riviera Beach, Florida 33404 Att'n: _________________________________ FAX: (___) ___-____ or in accordance with the last unrevoked written direction from such party to the other party hereto. The Lender may rely on any notice (including telephoned communication) purportedly made by or on behalf of the Guarantor, and shall have no duty to verify the identity or authority of the person giving such notice. 7. Miscellaneous. (a). Amendments. This Guaranty cannot be amended, modified or terminated except by an instrument in writing signed by both parties. (b) Expenses; Taxes; Attorneys' Fees. The Guarantor agrees to pay or cause to be paid and to save the Lender harmless against liability for the payment of all reasonable out-of-pocket expenses, including reasonable fees and expenses of counsel for the Lender, incurred by the Lender from time to time, (i) in connection with the preparation, execution, delivery and performance of this Guaranty or any other Loan Document, (ii) relating to any requested amendments, waivers or consents to this Guaranty or any other Loan Document and (iii) in connection with the Lender's enforcement or preservation of rights under this Guaranty or any other Loan Document, (iv) in defense of any claim relating to or affecting any Loan Document, (v) the perfection of any liens on or security interests in any collateral for the Note or this Guaranty, and (vi) the preservation, care and custody of any collateral for the Note or this Guaranty and the collection of insurance proceeds or condemnation awards related thereto. The Guarantor agrees to pay all stamp, document, transfer, recording or filing taxes or fees and similar impositions now or hereafter determined by the Lender to be payable in connection with this Guaranty or any other Loan Documents, and the Guarantor hereby indemnifies and saves the Lender harmless from and against any and all present or future claims, liabilities or losses with respect to or resulting from any omission to pay or delay in paying any such taxes, fees or impositions. All amounts payable by the Guarantor under this paragraph shall be paid within five (5) days after demand by the Lender with interest, until paid, at the Default Rate, if any, specified in the Note or, otherwise, at the rate of interest provided in the Note. (c) Severability. If any term or provision of this Guaranty or the application thereof to any person or circumstance shall to any extent be invalid or unenforceable, the remainder of this Guaranty, or the application of such term or provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this Guaranty shall be valid and enforceable to the fullest extent permitted by law. (d) Governing Law. This Guaranty shall be governed by, and construed in accordance with, the laws of the Commonwealth of Pennsylvania. (e) Time of Essence; Duration; Survival. Time is of the essence with respect to all of the Guarantor's obligations under this Guaranty. All representations and warranties of the Guarantor contained herein or in any other Loan Document or made in connection herewith or therewith shall survive the making, execution and delivery of this Guaranty or the other Loan Documents, any investigation by the Lender or the making of any loan advance under the Loan Documents. All covenants and agreements of the Guarantor contained herein or in any other Loan Document shall continue in full force and effect from and after the date hereof until payment in full of all the Guaranteed Obligations. (f) WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY KNOWINGLY WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY ACTION BROUGHT BY OR AGAINST THE GUARANTOR RELATED TO OR ARISING OUT OF THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS. (g) Successors and Assigns. This Guaranty shall apply to, inure to the benefit of and bind each of the parties hereto and their respective successors and assigns. IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed by its duly authorized representative. ATTEST: STERIDGYNE CORPORATION By /s/ Annalisa B. Pegg By /s/ Joseph R. DelVecchio - ------------------------ ------------------------------ Name: Joseph R. DelVecchio Title: Ex V.P. / COO EX-10.18 9 0009.txt GUARANTY AND SURETYSHIP AGREEMENT EXHIBIT 10.18 GUARANTY AND SURETYSHIP AGREEMENT THIS GUARANTY AND SURETYSHIP AGREEMENT (this "Guaranty"), made this 21st day of January, 2000, by Medical Technology, Inc., an Iowa corporation (the "Guarantor"), in favor of International Investment Partners, Ltd., a Delaware corporation (the "Lender"), recites and provides as follows: RECITALS: A. By Note of even date herewith made by Medical Technology & Innovations, Inc., a Florida corporation (the "Borrower"), and payable to the order of the Lender (as the same may be amended, modified or supplemented from time to time, the "Note"), the Lender has agreed to make a Loan of $1,000,000 to the Borrower (capitalized terms which are not defined herein shall have the meanings assigned to them in the Note and the other Loan Documents). B. The Guarantor has received and reviewed copies of the Note and the other Loan Documents. C. The execution and delivery by the Guarantor of this Guaranty is a condition to the Lender's obligation to make the Loan to Borrower pursuant to the Note. D. The Guarantor expects to derive financial benefit from the making of the Loan by the Lender to the Borrower. GUARANTY AND SURETYSHIP: NOW, THEREFORE, in consideration of $10.00 and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Guarantor, and intending to be legally bound, the Guarantor hereby agrees as follows: 1. The Guaranty. (a) Guaranteed Obligations. The Guarantor hereby unconditionally and irrevocably guarantees to the Lender and becomes surety to the Lender for the due, punctual and full payment and performance of, and covenants with the Lender to duly, punctually and fully pay and perform, the following (collectively, the "Guaranteed Obligations"): (1) All indebtedness of the Borrower to the Lender evidenced by the Note, both principal and interest, and all other amounts due or to become due under the Note and the other Loan Documents, and any refinancing or refunding thereof, whether now existing or hereafter arising, contracted or incurred; and (2) All covenants, agreements, obligations and liabilities of the Borrower under the Note and the other Loan Documents, whether now existing or hereafter arising, contracted or incurred, as and when such payment or performance shall become due (whether by acceleration or otherwise) in accordance with the terms of the Loan Documents. (b) Unconditional Guaranty. The obligations of the Guarantor hereunder are continuing, absolute and unconditional, irrespective of any circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a guarantor or surety. Without limiting the generality of the foregoing, the obligations of the Guarantor hereunder shall remain in full force and effect without regard to, and shall not be released, discharged or in any way affected by: (1) Any amendment, modification or supplement to the Note or any other Loan Docu ment; (2) Any exercise or nonexercise of or delay in exercising any right, remedy, power or privilege under or in respect of this Guaranty, the Note or any other Loan Document (even if any such right, remedy, power or privilege shall be lost thereby), or any waiver, consent, indulgence or other action or inaction in respect thereof; (3) Any bankruptcy, insolvency, arrangement, composition, assignment for the benefit of creditors or similar proceeding commenced by or against the Borrower; (4) Any failure to perfect or continue perfection of, or any release or waiver of, any rights given to the Lender in any property as security for the performance of any of the Guaranteed Obligations; (5) Any extension of time for payment or performance of any of the Guaranteed Obligations; (6) The genuineness, validity or enforceability of the Loan Documents; (7) Any limitation of liability of the Borrower or any other Guarantor contained in any Loan Document; (8) Any defense that may arise by reason of the failure of the Lender to file or enforce a claim against the estate of the Borrower in any bankruptcy or other proceeding; (9) Any voluntary or involuntary liquidation, dissolution, sale of all or substantially all of the property of the Borrower, or any marshalling of assets and liabilities, or other similar proceeding affecting, Borrower or any of its assets; (10) The release of the Borrower or any other Guarantor from performance or observance of any of the agreements, covenants, terms or conditions contained in the Loan Documents by operation of law; or (11) The failure of the Lender to keep the Guarantor advised of Borrower's financial condition, regardless of the existence of any duty to do so. No set-off, claim, reduction or diminution of any obligation, or any defense of any kind or nature which the Borrower or the Guarantor now has or hereafter may have against the Lender, shall be available hereunder to the Guarantor against the Lender. (c) No Notice or Duty to Exhaust Remedies. The Guarantor hereby waives diligence, presentment, demand, protest, the benefits of the homestead and all other exemptions provided to the Guarantor and all notices of any kind, and waives any requirement that the Lender exhaust any right or remedy, or proceed first or at any time, against the Borrower or any other guarantor of, or any security for, any of the Guaranteed Obligations. This Guaranty constitutes an agreement of suretyship as well as of guaranty, and the Lender may pursue its rights and remedies under this Guaranty and under the other Loan Documents in whatever order, or collectively, and shall be entitled to payment and performance hereunder not withstanding such other Loan Documents and notwithstanding any action taken by the Lender or inaction by the Lender to enforce any of its rights or remedies against any other guarantor or any other person or property whatsoever. (d) WAIVER OF SUBROGATION. GUARANTOR HEREBY WAIVES AND RELEASES ANY AND ALL RIGHTS OF SUBROGATION AND WAIVES ANY RIGHT TO ENFORCE ANY REMEDY WHICH LENDER NOW HAS OR MAY HEREAFTER HAVE AGAINST BORROWER AND ANY BENEFIT OF, ANY RIGHT TO PARTICIPATE IN, ANY SECURITY NOW OR HEREAFTER HELD BY LENDER. No Waivers Generally. The Lender shall not be deemed to have waived any of its rights or remedies hereunder unless such waiver is express and in writing. No delay or failure by the Lender on any one or more occasions to exercise its rights hereunder or at law or in equity (including, without limitation, the right of acceleration) shall be construed as a novation of this Guaranty or shall waive or prevent the subsequent exercise of such rights. An express waiver of any right shall not be construed as a waiver of the Lender's right to insist thereafter upon strict compliance with the terms hereof. No exercise of any right by the Lender shall constitute or be deemed to constitute an election of remedies by the Lender precluding the subsequent exercise by the Lender of any or all of the rights, powers and remedies available to it hereunder or at law or in equity. No course of dealing of the Lender in exercising any right, power or privilege under this Guaranty, the Note or under any other Loan Docu ment shall affect any other exercise thereof or exercise of any other right, power or privilege. 2. Representations and Warranties. (a) Contained in the Loan Documents. The Guarantor represents, warrants and certifies to the Lender that the representations and warranties made by the Borrower with respect to such Guarantor under the Note and the other Loan Documents are true and correct on the date hereof. (b) Corporate Existence. The Guarantor is a corporation duly created, validly existing and in good standing under the laws of the State of Iowa. (c) Power, Authority and Binding Effect. The Guarantor has the corporate power to execute and deliver this Guaranty and the persons executing this Guaranty on behalf of the Guarantor have been duly authorized so to do. This Guaranty constitutes the valid, legal and binding obligations of the Guarantor, enforceable in accordance with its terms. 3. Covenants. The Guarantor hereby covenants to the Lender that: (a) Promptly upon becoming aware thereof, the Guarantor shall give the Lender notice of (i) the commencement, existence or threat of any proceeding by or before any Governmental Authority against or affecting Guarantor which, if adversely decided, would have a material adverse effect on the business, operations, condition (financial or otherwise) or prospects of the Guarantor or on its ability to perform obligations hereunder or (ii) any material adverse change in the business, operations, condition (financial or otherwise) or prospects of the Guarantor. (b) The Guarantor shall permit such persons as the Lender may designate to examine Guarantor's books and records relating to the Guarantor's financial condition and take copies and extracts therefrom and to discuss the affairs of Guarantor with its officers, employees and independent accountants at such times and as often as the Lender may reasonably request. The Guarantor hereby authorizes such officers, employees and independent accountants to discuss with the Lender the affairs of the Guarantor. (c) The Guarantor shall not dissolve, merge or consolidate with any other person or entity or sell, transfer or otherwise dispose of all or a substantial part of its assets, and shall continue to engage in its business substantially as currently conducted and operated and shall not engage in any other business. (d) There shall be no change in the ownership of the Guarantor from the date hereof. 4. Effect of Bankruptcy Proceedings. This Guaranty shall continue to be effective, or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the Guaranteed Obligations is rescinded or must otherwise be restored or returned by the Lender as a preference, fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar law, all as though such payment had not been made. If a default or an Event of Default at any time shall have occurred and be continuing and declaration of default or acceleration under or with respect to any of the Loan Documents shall at such time be prevented by reason of the pendency against the Borrower of a case or proceeding under any bankruptcy or insolvency law, the Guarantor agrees that, for purposes of this Guaranty and the Guarantor's obligations hereunder, such Loan Documents shall be deemed to have been declared in default or accelerated with the same effect as if such Loan Documents had been declared in default and accelerated in accordance with the terms thereof, and the Guarantor shall forthwith pay the Guaranteed Obligations in full without further notice or demand. 5. Further Assurances. From time to time upon the request of the Lender, the Guarantor shall promptly and duly execute, acknowledge and deliver any and all such further instruments and documents as the Lender may deem necessary or desirable to confirm this Guaranty, to carry out the purpose and intent hereof or to enable the Lender to enforce any of its rights hereunder. 6. Notices. All notices, requests, demands, directions and other communications (collectively, "notices") under the provisions of this Guaranty shall be in writing and shall be sent (i) by first- class or first-class express mail, certified with return receipt requested, or (ii) by fax with confirmation in writing mailed first-class, or (iii) by guaranteed overnight delivery service with receipt therefor, or (iv) by hand, in all cases with charges prepaid, and any such properly given notice shall be effective when received or when such delivery is refused. All notices shall be sent, If to the Lender: International Investment Partners, Ltd. 80 Abbeyville Road Lancaster, Pennsylvania 17603 Att'n: Brian Auchey FAX: (717) 892-6788 If to the Guarantor: Medical Technology, Inc. 3725 Investment Lane Riviera Beach, Florida 33404 Att'n: _________________________________ FAX: (___) ___-____ or in accordance with the last unrevoked written direction from such party to the other party hereto. The Lender may rely on any notice (including telephoned communication) purportedly made by or on behalf of the Guarantor, and shall have no duty to verify the identity or authority of the person giving such notice. 7. Miscellaneous. (a) Amendments. This Guaranty cannot be amended, modified or terminated except by an instrument in writing signed by both parties. (b) Expenses; Taxes; Attorneys' Fees. The Guarantor agrees to pay or cause to be paid and to save the Lender harmless against liability for the payment of all reasonable out-of-pocket expenses, including reasonable fees and expenses of counsel for the Lender, incurred by the Lender from time to time, (i) in connection with the preparation, execution, delivery and performance of this Guaranty or any other Loan Document, (ii) relating to any requested amendments, waivers or consents to this Guaranty or any other Loan Document and (iii) in connection with the Lender's enforcement or preservation of rights under this Guaranty or any other Loan Document, (iv) in defense of any claim relating to or affecting any Loan Document, (v) the perfection of any liens on or security interests in any collateral for the Note or this Guaranty, and (vi) the preservation, care and custody of any collateral for the Note or this Guaranty and the collection of insurance proceeds or condemnation awards related thereto. The Guarantor agrees to pay all stamp, document, transfer, recording or filing taxes or fees and similar impositions now or hereafter determined by the Lender to be payable in connection with this Guaranty or any other Loan Documents, and the Guarantor hereby indemnifies and saves the Lender harmless from and against any and all present or future claims, liabilities or losses with respect to or resulting from any omission to pay or delay in paying any such taxes, fees or impositions. All amounts payable by the Guarantor under this paragraph shall be paid within five (5) days after demand by the Lender with interest, until paid, at the Default Rate, if any, specified in the Note or, otherwise, at the rate of interest provided in the Note. (c) Severability. If any term or provision of this Guaranty or the application thereof to any person or circumstance shall to any extent be invalid or unenforceable, the remainder of this Guaranty, or the application of such term or provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this Guaranty shall be valid and enforceable to the fullest extent permitted by law. (d) Governing Law. This Guaranty shall be governed by, and construed in accordance with, the laws of the Commonwealth of Pennsylvania. (e) Time of Essence; Duration; Survival. Time is of the essence with respect to all of the Guarantor's obligations under this Guaranty. All representations and warranties of the Guarantor contained herein or in any other Loan Document or made in connection herewith or therewith shall survive the making, execution and delivery of this Guaranty or the other Loan Documents, any investigation by the Lender or the making of any loan advance under the Loan Documents. All covenants and agreements of the Guarantor contained herein or in any other Loan Document shall continue in full force and effect from and after the date hereof until payment in full of all the Guaranteed Obligations. (f) WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY KNOWINGLY WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY ACTION BROUGHT BY OR AGAINST THE GUARANTOR RELATED TO OR ARISING OUT OF THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS. (g) Successors and Assigns. This Guaranty shall apply to, inure to the benefit of and bind each of the parties hereto and their respective successors and assigns. IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed by its duly authorized representative. ATTEST: MEDICAL TECHNOLOGY & INNOVATIONS, INC. By /s/ Annalisa B. Pegg By /s/ Joseph R. DelVecchio - ------------------------ ----------------------------------------- Name: Annalisa B. Pegg Name: Joseph R. DelVecchio Title: Office Manager Title: Ex V.P. / COO EX-27 10 0010.txt FDS --
5 0000847464 MEDICAL TECHNOLOGY & INNOVATIONS, INC. 1 U.S.Currency 12-mos Jun-30-1999 Jul-01-1999 Jun-30-2000 1 161,018 0 572,160 0 542,892 1,322,766 1,335,512 (623,897) 3,931,501 1,499,017 0 0 1,618,500 11,122,017 999,803 3,931,501 4,607,945 1,844,784 2,763,161 2,763,161 2,591,342 0 236,306 (982,864) 0 0 0 0 0 (982,864) (0.035) (0.035)
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