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 0000 Xxxxxxxxxx Xxxx, Xxxxxxx Xxxxx,
Xxxxxxx 00000 (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:
Xxxxxxx Xxxxxxxxx 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.
0000 Xxxxxxxxxx Xxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
(2) To the Lender at:
International Investment Partners, Ltd.
00 Xxxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
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/ Xxxxxx X. XxxXxxxxxx
------------------------------
Name: Xxxxxx X. XxxXxxxxxx
Title: Ex V.P. /COO
INTERNATIONAL INVESTMENT PARTNERS, LTD.
By /s/ Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
