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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
AMENDMENT NO. 1 TO FORM 10-KSB
|X| ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1996
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-10986
MISONIX, INC.
(Name of Small Business Issuer in its charter)
New York 11-2148932
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1938 New Highway, Farmingdale, New York 11735
(Address of principal executive offices) Zip Code
Issuer's telephone number: (516) 694-9555
Securities registered under Section 12(b) of the Exchange Act:
Title of class Name of Each Exchange on Which Registered
Common Stock, $.01 par value Boston Stock Exchange
Redeemable Stock Purchase Warrants Boston Stock Exchange
Securities registered under Section 12(g) of the Exchange Act: None
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 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 in response to Item 405 of
Regulation S-B contained and no disclosure will be contained in this form, 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. [ ]
Issuer's revenues for the fiscal year ending June 30, 1996: $9,913,136
The aggregate market value of the voting stock held by non-affiliates of the
registrant (computed by reference to the average bid and asked prices of such
stock) on September 18, 1995 was approximately $5,280,000.
As of September 18, 1996, there were 2,800,000 shares of Common Stock
outstanding.
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Documents Incorporated By Reference
None.
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Purpose
This Amendment is designed to transmit certain exhibits inadvertently omitted
from prior filing on EDGAR.
Item 13. Exhibits and Reports on Form 8-K.
(a) Documents filed as part of this report:
1. Financial Statements:
Independent Auditors' Report
Consolidated Financial Statements of Misonix, Inc. and subsidiaries
Report of Independent Auditors
Consolidated Balance Sheet - June 30, 1996
Consolidated Statements of Operations - Years Ended June 30, 1996
and 1995
Consolidated Statements of Stockholders' Equity - Years Ended
June 30, 1996 and 1995
Consolidated Statements of Cash Flows - Years Ended June 30, 1996
and 1995
Notes to Consolidated Financial Statements
2. Financial Statement Schedules
Financial Statement schedules have been omitted because the required
information is inapplicable because the information is presented in the
financial statements or related notes.
3. Exhibits and Index:
3(a) Restated Certificate of Incorporation of the Company.
(Incorporated by reference to Exhibit 3.1 to the
registrant's Registration Statement on Form S-1,
File No. 33-43585 (the "Registration Statement").
3(b) By-laws of the Company. (Incorporated by reference to Exhibit
3.2 to the Registration Statement.)
4(a) Warrant Agreement. (Incorporated by reference to Exhibit 4.1 to
the Registration Statement.)
4(b) Specimen of Redeemable Warrant Certificate. (Incorporated by
reference to Exhibit 4.2 to the Registration Statement.)
10(a) Lease extension and modification agreement dated October 31, 1992.
10(b) Stock Option Plan. (Incorporated by reference to Exhibit 10.2 to
the Registration Statement.)
10(c) Employment Agreement dated September 1, 1991 between the Company
and Michael Juliano. (Incorporated by reference to Exhibit 10.4
to the Registration Statement.)
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10(d) Employment Agreement dated September 1, 1991 between the Company
and Howard Alliger. (Incorporated by reference to Exhibit 10.5
to the Registration Statement.)
10(e) Employment Agreement dated September 1, 1991 between the
Company and Joseph Librizzi. (Incorporated by reference to
Exhibit 10.6 to the Registration Statement.)
10(f) Financial Advisory and Investment Banking Agreement between the
Company and Josephthal Lyon & Ross Incorporated. (Incorporated
by reference to Exhibit 10.7 to the Registration Statement.)
10(g) Settlement and License Agreement dated March 12, 1984 between
the Company and Mettler Electronics Corporation. (Incorporated
by reference to Exhibit 10.11 to the Registration Statement.)
10(h) Know-How, Trademark and License Agreement dated July 25, 1983,
between the Company and Astec Environmental Systems, Ltd.
(Incorporated by reference to Exhibit 10.12 to the Registration
Statement.)
10(j) Assignment Agreement between the Company and Robert Ginsburg.
(Incorporated by reference to exhibit 10(j) of Form 10-K for the
fiscal year ended June 30, 1992)
10(k) Subscription Agreement between the Company and Labcaire.
(Incorporated by reference to exhibit 10(k) of Form 10-K for the
fiscal year ended June 30, 1992)
10(l) Option Agreements between the Company and each of Graham Kear,
Geoffrey Spear, John Haugh, Martin Keeshan and David Stanley.
(Incorporated by reference to exhibit 10(l) of Form 10-K for
the fiscal year ended June 30, 1992)
10(m) Stock Option Contract between the Company and Michael Juliano
(Incorporated by reference to exhibit 10(m) of Form 10-K for
the fiscal year ended June 30, 1992)
10(n) Stock Option Contract between the Company and Joseph Librizzi
(Incorporated by reference to exhibit 10(n) of Form 10-K for the
fiscal year ended June 30, 1992)
10(o) Form of Director's Indemnification Agreement. (Incorporated by
reference to exhibit 10(o) of Form 10-K for the fiscal year
ended June 30, 1992)
10(p) Stock Option Contract between the Company and Peter Gerstheimer.
10(q) Stock Option Contract between the Company and Ronald Manna.
10(r) Severance Agreement between the Company and Peter Gerstheimer.
10(s) Severance Agreement between the Company and Ronald Manna.
10(t) Employee Agreement dated September 1, 1995 between the Company
and Joseph Librizzi.
10(u) Option Agreement dated September 11, 1995 between the Company
and Medical Device Alliance Inc.
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10(v) Consent of independent public accountants to inclusion of report
in Form S-8 Registration Statement.
10(w) Amendment to agreement with principal shareholders of Labcaire
Systems Ltd.
10(x) Employee Agreement dated July 24, 1996 between the company and
Joseph Librizzi.
22 Subsidiaries of the Company (Incorporated by reference to
exhibit 22 of Form 10-K for the fiscal year ended June 30, 1992)
b. No reports on Form 8-K have been filed by the registrant during the
fiscal quarter ended June 30, 1996.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.
Date: September , 1997
Misonix, Inc.
By: /s/ Joseph Librizzi
----------------------------
Joseph Librizzi,
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Gary Gelman Chairman of the Board September 10, 1997
- ----------------------- and Director
Gary Gelman
/s/ Joseph Librizzi President, Chief Executive September 10, 1997
- ----------------------- Officer, and Director
Joseph Librizzi (principal executive officer)
/s/ Peter Gerstheimer Vice President and September 10, 1997
- ----------------------- Chief Financial Officer
Peter Gerstheimer (principal financial and
accounting officer)
/s/ Howard Alliger Director September 10, 1997
- -----------------------
Howard Alliger
/s/ Arthur Gerstenfeld Director September 10, 1997
- -----------------------
Arthur Gerstenfeld
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STOCK OPTION PLAN (EXHIBIT 10P)
INCENTIVE STOCK OPTION CONTRACT
THIS INCENTIVE STOCK OPTION CONTRACT entered into as of the 26th day
of June 1995, between MISONIX, INC., a New York corporation (the "Company"),
and Peter Gerstheimer (the"Optionee").
W I T N E S S E T H:
1. The Company, in accordance with the allotment made by the Stock Option
Committee (the "Committee") and subject to the terms and conditions of the
Stock Option Plan of the Company (the "Plan"), grants as of the date hereof to
the Optionee an option to purchase an aggregate of 20,000 shares of the Common
Stock, $.01 par value per share, of the Company ("Common Stock") at $0.75 per
share, being at least 100% of the fair market value of such shares of Common
Stock on the date hereof.
2. The term of this option shall be 10 years from the date hereof,
subject to earlier termination as provided in the Plan. This option shall be
exercisable on the date here of as to 100% of the total number of shares of
Common Stock subject hereto. Notwithstanding the foregoing, in no event may a
fraction of a share of Common Stock be purchased under this option.
3. This option shall be exercised by giving written notice to the Company
at its principal office, presently 1938 New Highway, Farmingdale, New York
11735, Attention: Stock Option Committee, stating that the Optionee is
exercising this incentive stock option, specifying the number of shares being
purchased and accompanied by payment in full of the aggregate purchase price
therefore (a) in cash or by certified check, (b) with previously acquired shares
of Common Stock, or (c) a combination of the foregoing.
4. Notwithstanding the foregoing, this option shall not be exercisable
by the Optionee unless (a) a registration statement under the Securities Act of
1933, as amended (the "Securities Act") with respect to the shares of Common
Stock to be received upon the exercise of the option shall be effective and
current at the time of exercise or (b) there is an exemption from registration
under the Securities Act for the issuance of the shares of Common Stock upon the
exercise. At the request of the Committee, the Optionee shall execute and
deliver to the Company his representation and warranty, in form and substance
satisfactory to the Committee, that the shares of Common Stock to be issued upon
the exercise of the option are being acquired by the Optionee for his own
account, for investment only and not with a view to the resale or distribution
thereof. In addition, the Committee may require the Optionee to represent and
warrant to the Company in writing that any subsequent resale or distribution of
shares of Common Stock by him will be made only pursuant to (i) a Registration
Statement under the Securities Act which is effective and current with respect
to the Shares of Common Stock being sold, or (ii) a specific exemption from the
registration requirements of the Securities Act, but in claiming such exemption,
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the Optionee shall prior to any offer of sale or sale of such shares of Common
Stock provide the Company with a favorable written opinion of counsel, in form
and substance satisfactory to the Company, as to the applicability of such
exemption to the proposed sale or distribution.
5. Notwithstanding anything herein to the contrary, if at any time the
Committee shall determine in its discretion that the listing or qualification of
the shares of Common Stock subject to this option on any securities exchange or
under any applicable law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of an option, or the issue of shares of Common Stock
thereunder, this option may not be exercised in whole or in part unless such
listing, qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Committee.
6. Nothing in the Plan or herein shall confer upon the Optionee any right
to continue in the employ of the Company, its Parent or any of its
Subsidiaries, or interfere in any way with the right of the Company, it Parent
or its Subsidiaries to terminate such employment at any time for any reason
whatsoever without liability to the Company, its Parent or any of its
Subsidiaries.
7. The Company may affix appropriate legends upon the certificates for
shares of Common Stock issued upon exercise of this option and may issue such
"stop transfer" instructions to its transfer agent in respect of such shares as
it determines, in its discretion, to be necessary or appropriate to (a) prevent
a violation of, or to perfect an exemption from, the registration requirements
of the Securities Act, (b) implement the provision of the Plan or any agreement
between the Company and the Optionee with respect to such shares of Common
Stock, or (c) permit the Company to determine the occurrence of the
"disqualifying disposition," as described in Section 421(b) of the Internal
Revenue Code, of the shares of Common Stock transferred upon the exercise of
this option.
8. As provided in the Plan, the Company may withhold cash and/or shares
of Common Stock in the amount necessary to satisfy its obligation to withhold
taxes or may require the Optionee to pay the Company such amount in cash. In the
event of any disposition of the shares of Common Stock acquired pursuant to the
exercise of this option within two years from the date hereof or one year from
the date of transfer of such shares to him, the Optionee shall notify the
Company thereof in writing within 30 days after such disposition. In addition,
the Optionee shall provide the Company on demand with such information as the
Company shall reasonably request in connection with determining its obligation
to withhold any Federal, state and local income taxes or other taxes incurred by
reason of such disqualifying disposition, including the amount thereof, and
shall pay the Company in cash on demand the amount, if any, which the Company
determines is necessary to satisfy
2
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such obligation.
9. The Company and the Optionee agree that they will both be subject to
and bound by all of the terms and conditions of the Plan, a copy of which is
attached hereto and made a part hereof. In the event the employment of the
Optionee terminates or in the event of his death or disability (as defined in
the Plan), his rights hereunder shall be governed by and be subject to the
provisions of the Plan. In the event of a conflict between the terms of this
Contract and the terms of the Plan, the terms of the Plan shall govern.
10. The Optionee represents and agrees that he will comply with all
applicable laws relating to the Plan and the grant and exercise of the option
and the disposition of the shares of Common Stock acquired upon exercise of the
option, including without limitation, federal and state securities and 'blue
sky" laws.
11. This option is not transferable otherwise than by will or the laws
of descent and distribution and may be exercised, during the lifetime of the
Optionee, only by him or his legal representatives.
12. This Contract shall be binding upon and inure to the benefit of any
successor or assign of the Company and to any heir, distributee, executor,
administrator or legal representative entitled by law to the Optionee's rights
hereunder.
13. This Contract shall be governed by and construed in accordance with
the laws of the State of New York.
14. The invalidity or illegality of any provision herein shall not affect
the validity of any other provision.
15. The Optionee agrees that the Company may amend the Plan and the
options granted to the Optionee under the Plan, subject to the limitations
contained in the Plan.
IN WITNESS WHEREOF, the parties hereto have executed this Contract on the
day and year first above written.
MISONIX, INC
By:
----------------------------------- -----------------------------
Joseph Librizzi Peter Gerstheimer (Optionee)
President and
Chief Executive Officer -----------------------------
-----------------------------
3
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(EXHIBIT 10Q)
STOCK OPTION PLAN
INCENTIVE STOCK OPTION CONTRACT
THIS INCENTIVE STOCK OPTION CONTRACT entered into as of the
26th day of June 1995, between MISONIX, INC., a New York corporation (the
"Company"), and Ronald Manna (the"Optionee").
W I T N E S S E T H:
1. The Company, in accordance with the allotment made by the
Stock Option Committee (the "Committee") and subject to the terms and conditions
of the Stock Option Plan of the Company (the "Plan"), grants as of the date
hereof to the Optionee an option to purchase an aggregate of 20,000 shares of
the Common Stock, $.01 par value per share, of the Company ("Common Stock") at
$0.75 per share, being at least 100% of the fair market value of such shares of
Common Stock on the date hereof.
2. The term of this option shall be 10 years from the date
hereof, subject to earlier termination as provided in the Plan. This option
shall be exercisable on the date here of as to 100% of the total number of
shares of Common Stock subject hereto. Notwithstanding the foregoing, in no
event may a fraction of a share of Common Stock be purchased under this option.
3. This option shall be exercised by giving written notice to
the Company at its principal office, presently 1938 New Highway, Farmingdale,
New York 11735, Attention: Stock Option Committee, stating that the Optionee is
exercising this incentive stock option, specifying the number of shares being
purchased and accompanied by payment in full of the aggregate purchase price
therefore (a) in cash or by certified check, (b) with previously acquired shares
of Common Stock, or (c) a combination of the foregoing.
4. Notwithstanding the foregoing, this option shall not be
exercisable by the Optionee unless (a) a registration statement under the
Securities Act of 1933, as amended (the "Securities Act") with respect to the
shares of Common Stock to be received upon the exercise of the option shall be
effective and current at the time of exercise or (b) there is an exemption from
registration under the Securities Act for the issuance of the shares of Common
Stock upon the exercise. At the request of the Committee, the Optionee shall
execute and deliver to the Company his representation and warranty, in form and
substance satisfactory to the Committee, that the shares of Common Stock to be
issued upon the exercise of the option are being acquired by the Optionee for
his own account, for investment only and not with a view to the resale or
distribution thereof. In addition, the Committee may require the Optionee to
represent and warrant to the Company in writing that any subsequent resale or
distribution of shares of Common Stock by him will be made only pursuant to (i)
a Registration Statement under the Securities Act which is effective and current
with respect to the Shares of Common Stock being sold, or (ii) a specific
exemption from the registration requirements of the Securities Act, but in
claiming such exemption,
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the Optionee shall prior to any offer of sale or sale of such shares of Common
Stock provide the Company with a favorable written opinion of counsel, in form
and substance satisfactory to the Company, as to the applicability of such
exemption to the proposed sale or distribution.
5. Notwithstanding anything herein to the contrary, if at any
time the Committee shall determine in its discretion that the listing or
qualification of the shares of Common Stock subject to this option on any
securities exchange or under any applicable law, or the consent or approval of
any governmental regulatory body, is necessary or desirable as a condition of,
or in connection with, the granting of an option, or the issue of shares of
Common Stock thereunder, this option may not be exercised in whole or in part
unless such listing, qualification, consent or approval shall have been effected
or obtained free of any conditions not acceptable to the Committee.
6. Nothing in the Plan or herein shall confer upon the
Optionee any right to continue in the employ of the Company, its Parent or any
of its Subsidiaries, or interfere in any way with the right of the Company, it
Parent or its Subsidiaries to terminate such employment at any time for any
reason whatsoever without liability to the Company, its Parent or any of its
Subsidiaries.
7. The Company may affix appropriate legends upon the
certificates for shares of Common Stock issued upon exercise of this option and
may issue such "stop transfer" instructions to its transfer agent in respect of
such shares as it determines, in its discretion, to be necessary or appropriate
to (a) prevent a violation of, or to perfect an exemption from, the registration
requirements of the Securities Act, (b) implement the provision of the Plan or
any agreement between the Company and the Optionee with respect to such shares
of Common Stock, or (c) permit the Company to determine the occurrence of the
"disqualifying disposition," as described in Section 421(b) of the Internal
Revenue Code, of the shares of Common Stock transferred upon the exercise of
this option.
8. As provided in the Plan, the Company may withhold cash
and/or shares of Common Stock in the amount necessary to satisfy its obligation
to withhold taxes or may require the Optionee to pay the Company such amount in
cash. In the event of any disposition of the shares of Common Stock acquired
pursuant to the exercise of this option within two years from the date hereof or
one year from the date of transfer of such shares to him, the Optionee shall
notify the Company thereof in writing within 30 days after such disposition. In
addition, the Optionee shall provide the Company on demand with such information
as the Company shall reasonably request in connection with determining its
obligation to withhold any Federal, state and local income taxes or other taxes
incurred by reason of such disqualifying disposition, including the amount
thereof, and shall pay the Company in cash on demand the amount, if any, which
the Company determines is necessary to satisfy
2
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such obligation.
9. The Company and the Optionee agree that they will both be
subject to and bound by all of the terms and conditions of the Plan, a copy of
which is attached hereto and made a part hereof. In the event the employment of
the Optionee terminates or in the event of his death or disability (as defined
in the Plan), his rights hereunder shall be governed by and be subject to the
provisions of the Plan. In the event of a conflict between the terms of this
Contract and the terms of the Plan, the terms of the Plan shall govern.
10. The Optionee represents and agrees that he will comply
with all applicable laws relating to the Plan and the grant and exercise of the
option and the disposition of the shares of Common Stock acquired upon exercise
of the option, including without limitation, federal and state securities and
'blue sky" laws.
11. This option is not transferable otherwise than by will or
the laws of descent and distribution and may be exercised, during the lifetime
of the Optionee, only by him or his legal representatives.
12. This Contract shall be binding upon and inure to the
benefit of any successor or assign of the Company and to any heir, distributee,
executor, administrator or legal representative entitled by law to the
Optionee's rights hereunder.
13. This Contract shall be governed by and construed in
accordance with the laws of the State of New York.
14. The invalidity or illegality of any provision herein shall
not affect the validity of any other provision.
15. The Optionee agrees that the Company may amend the Plan
and the options granted to the Optionee under the Plan, subject to the
limitations contained in the Plan.
IN WITNESS WHEREOF, the parties hereto have executed this
Contract on the day and year first above written.
MISONIX, INC
By:
--------------------------- -------------------------
Joseph Librizzi Ronald Manna (Optionee)
President and
Chief Executive Officer
-------------------------
-------------------------
3
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(EXHIBIT 10R)
Misonix, Inc.
1938 New Highway
Farmingdale, New York 11735
July , 1996
Mr. Peter Gerstheimer
6 Farm Hollow Court
East Northport, NY 11731
Re: Severance
Dear Peter:
We refer to a previous letter between us dated March 30, 1995, dealing
with severance, which letter is to be superseded in its entirety by this letter.
This letter confirms that, for good and value consideration, the
receipt and sufficiency of which is hereby acknowledged, Misonix, Inc. (the
"Company") hereby agrees that:
1. If your employment by the Company is terminated for any reason
whatsoever, the Company will pay to you upon such termination
a lump sum amount equal to your base salary for six months
prior to such termination.
2. This letter agreement does not confer upon you any right to
continued employment except as may otherwise be agreed
between you and the Company.
If this letter is acceptable to you, please sign where indicated below.
Sincerely,
MISONIX, INC.
by:
------------------------
Joseph Librizzi
President
Accepted and agreed to as of
the date first above written:
- ----------------------------
Peter Gerstheimer
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(EXHIBIT 10S)
Misonix, Inc.
1938 New Highway
Farmingdale, New York 11735
July , 1996
Mr. Ronald R. Manna
101 Ann Street
Valley Stream, NY 11581
Re: Severance
Dear Ron:
We refer to a previous letter between us dated March 30, 1995, dealing
with severance, which letter is to be superseded in its entirety by this letter.
This letter confirms that, for good and value consideration, the
receipt and sufficiency of which is hereby acknowledged, Misonix, Inc. (the
"Company") hereby agrees that:
1. If your employment by the Company is terminated for any reason
whatsoever, the Company will pay to you upon such termination a lump
sum amount equal to your base salary for six months prior to such
termination.
2. This letter agreement does not confer upon you any right to continued
employment except as may otherwise be agreed between you and the
Company.
If this letter is acceptable to you, please sign where indicated below.
Sincerely,
MISONIX, INC.
by:
----------------------------
Joseph Librizzi
President
Accepted and agreed to as of the date first above written:
- ----------------------------
Ronald R. Manna
<PAGE>
EMPLOYMENT AGREEMENT (EXHIBIT 10T)
AGREEMENT dated as of September 1, 1995 between MISONIX, INC., a New
York corporation (hereinafter called the "Company") with offices at 1938 New
Highway, Farmingdale, New York 11735, and JOSEPH LIBRIZZI, residing at 10
Indian Trace, Kings Park, New York 11754 (hereinafter called the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to continue the services of Employee upon
the terms and conditions stated herein, and
WHEREAS, Employee desires to continue his employment by the Company upon
the terms and conditions stated herein.
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
promises contained herein, the parties hereby agree as follows:
1. Employment Term. The Company hereby agrees to employ Employee and
Employee agrees to enter the employ of the Company on the terms and conditions
set forth below for a term commencing on the date hereof and terminating August
31, 1996, unless sooner terminated as herein provided (such term of this
Agreement is herein referred to as the "term"). This Agreement will be
automatically renewed for successive one-year periods (a "Renewal Period")
unless the Company or the Employee elects not to renew by providing written
notice under paragraph 20 hereof to the contrary to the other party within
thirty (30) days preceding the end of the Term or a Renewal Period, unless
sooner terminated as hereinafter provided.
2. Duties. Subject to the authority of the Board of Directors of the
Company and the control and direction of the Company's Chairman of the Board,
Employee shall be employed as the Company's President and Chief Executive
Officer. Employee will perform such other duties and services of an executive
nature, commensurate with his position as the President and Chief Executive
Officer, as may from time to time be assigned to him by such persons.
3. Full Time. Employee agrees that he will devote his full time and
attention during regular business hours to the business and affairs of the
Company and that during the period of such employment, Employee will not,
without the prior permission of the Board of Directors or Chairman of the
Board, engage in any other business enterprise which requires the personal
time or attention of Employee. The foregoing shall not prevent the purchase,
ownership or sale by Employee of investments or securities of publicly held
companies and any other business which is not competitive and does not have
any business relations with the Company or any subsidiary
<PAGE>
of the Company, provided the time or attention devoted by Employee to such
activities does not interfere with the performance of his duties hereunder.
4. Compensation. For the full prompt and faithful performance of all of
the duties and services to be performed by Employee hereunder, the Company
agrees to pay, and Employee agrees to accept, the amounts set forth below.
(a) As a base salary, Employee shall be paid during the Term at a
rate of $160,000 per annum, payable monthly or in such other manner as the
parties hereto shall determine.
(b) Not later that one hundred twenty (120) days after the end of
the fiscal year of the Company, the Company shall pay to Employee, as incentive
compensation, the following:
If operating earnings for fiscal 1996 is
less than $100,000 - None
$100,000 to $249,000 - 2-1/2% of all operating earnings
$250,000 to $499,000 - 5% of all operating earnings
over $500,000 - 10% of all operating earnings
For purposes hereof, "Operating Earnings" of the Company shall
mean, with respect to any fiscal year, the income, if any, of the Company for
such fiscal year as set forth in the audited, financial statements of the
Company included in its Annual Report to Stockholders for such fiscal year,
before deduction of taxes based on income or of the incentive compensation to
be paid to Employee for such fiscal year under this Agreement.
(c) The compensation provided for herein shall be in addition to any
retirement, profit sharing, insurance or similar benefit which may at any time
be payable to Employee pursuant to any plan or policy of the Company relating
to such benefits, which additional benefits shall be made available to Employee
on the same basis as they are generally made available to other employees of the
Company. Such compensation shall be in addition to any options which may be
granted under any Company stock option plan.
(d) The Company shall reimburse Employee in accordance with the
Company's policies for all reasonable travel, hotel, meal, and other expenses
properly incurred by him in he performance of his duties hereunder; provided,
however, that Employee shall be entitled to reimbursement only if lie furnishes
to the Company an itemized account and such other substantiation of such
expenditures as may reasonably be requested by the Company.
5. Vacation. Employee shall be entitled to a reasonable vacation which
shall be for such periods as are consistent with vacation time taken by other
similar employees and which shall be taken at such time or times as shall be
mutually determined by the Company and Employee.
-2-
<PAGE>
6. Death. In the event of the death of Employee during the Term or a
Renewal Period, this Agreement and the employment of Employee hereunder shall
terminate on the date of the death of Employee. The estate of Employee (or such
persons as Employee shall designate in writing) shall be entitled to receive,
and the Company agrees to pay, the base salary of Employee provided,by
paragraph 4(a) and the additional benefits, if any, provided by paragraph 4(c),
in each instance computed up to the end of the sixth month after the month in
which death occurs.
7. Disability. In the event that Employee shall be unable to perform,
because of illness or incapacity, physical or mental, the duties and services to
be performed by him hereunder for a consecutive period of four (4) months, the
Company may terminate this Agreement after the expiration of such period.
Employee shall be entitled to receive the base salary provided by paragraph 4(a)
and the additional benefits, if any, provided by paragraph 4(c), in each
instance computed up to the date of termination.
8. Payment Upon Death or Disability. In the event of the termination @of
this Agreement as provided in paragraph 6 or 7 hereof, the additional benefits
required to be paid need not be paid by the Company until 120 days after the
computation by the Company of the amount due, if any, except where limited
by terms of benefits plans. If any computation or determination shall be
required for any period less than a quarter, such computation or determination
shall be made by taking a proportionate part of the particular quarter.
9. Non-Competition.
(a) Employee covenants and agrees that, during the Term or a Renewal
Period and for a period of one year after he ceases being an employee of the
Company, Employee will not, directly or indirectly, own, manage, operate or
control, or participate in the ownership, management operation or control of,
any business competing directly with the business conducted on the date of
termination hereof by the Company; provided, however, that Employee may own
not more than 1% of the outstanding securities of any class of any corporation
engaged in any such business, if such securities are listed on a national
securities exchange or regularly traded in the over-the-counter market by a
member of a national securities association.
(b) Employee covenants and agrees that, throughout the Term or a
Renewal Period and for a period of one year after lie ceases being an employee
of the Company, he will not directly or indirectly induce any person associated
with or employed by the Company or any subsidiary of the Company to leave the
employ of or terminate his association with the Company, or any subsidiary of
the Company, or solicit the employment of any such person on his own behalf or
on behalf of any other business enterprise.
(c) If any term of this paragraph 9 is found by any court having
jurisdiction to be too broad, then and in that case, such term shall
nevertheless remain effective, but shall be considered amended (as to the time
or area or otherwise, as the case may be) to a point considered by said court as
reasonable, and as so amended shall be fully enforceable.
-3-
<PAGE>
(d) In the event that Employee shall violate any provision of this
Agreement (including but not limited to the provisions of this paragraph 9),
then Employee hereby consents to the granting of a temporary or permanent
injunction against him by any court of competent jurisdiction prohibiting
him from violating any provision of this Agreement. In any proceeding for
an injunction and upon any motion for a temporary or permanent injunction,
Employee agrees that his ability to answer in damages shall not be a bar or
interposed as a defense to the granting of such temporary or permanent
injunction against Employee. Employee further agrees that the Company will not
have an adequate remedy at law in the event of any breach by Employee
hereunder and that the Company will suffer irreparable damage and injury if
Employee breaches any of the provisions of this Agreement.
10. Termination for Cause. The Company may terminate this Agreement
without liability (other than for payments accrued to the date of Termination)
if Employee's employment is terminated "for cause". The term "for cause" shall
mean, for the purposes of this Agreement (i) a material breach by Employee of
the provisions of this Agreement, (ii) the commission by Employee of a fraud
against the Company or the conviction of Employee for committing, aiding or
abetting a felony, a fraud, a crime involving moral turpitude or a business
crime, or (iii) the knowing possession or use of illegal drugs or prohibited
substances, unless pursuant to a prescription authorized by a licensed medical
practitioner, the excessive drinking of alcoholic beverages which impairs
Employee's ability to perform his duties hereunder, and the appearance
(reasonably determined) during hours of employment of being under the influence
of such drugs, substances or alcohol.
11. Severance. If the Company terminates this Agreement or the
Employee's employment with the Company for any reason whatsoever, the Company
shall pay to the Employee as a lump sum payment an amount equal to the salary of
the Employee for the immediately preceding six (6) months. This Section 11
shall survive any termination or expiration of this Employment Agreement.
12. Change of Control. In the event there shall be a change in the
present Company as hereinafter defined, or in any person directly or indirectly
presently controlling the Company, as hereinafter defined, Employee shall have
the option, exercisable within six (6) months of his becoming aware of such
event, to terminate this Agreement forthwith. Upon such termination, Employee
shall have the right to immediately receive as a lump sum payment an amount
equal to the salary of the Employee for the immediately preceding six (6)
months.
For purposes of this Agreement, a change in control of the Company,
or in any person directly or indirectly controlling the Company, shall mean:
(a) a change in control as such term is presently defined in Rule
12b-2 under the Securities Exchange Act of 1934 ("Exchange Act"); or
(b) if any "person" (as such term is used in Section 13(d) and 14(d)
of the Exchange Act) other than the Company or any "person" who on the date of
this Agreement is a
-4-
<PAGE>
director or officer of the Company, become tire "beneficial owner" (as
defined in Rule 13(d)-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing twenty percent (20%) of the voting power
of the Company's then outstanding securities; or
(c) if during any period of two (2) consecutive years during the
term of this Agreement, individuals who at the beginning of such period
constitute the Board of Directors cease for any reason to constitute at
least a majority thereof, unless the election of each director who is
not a director at the beginning of such period has been approved in advance by
directors representing at least two-thirds (2/3) of the directors then in
office who were directors at the beginning of the period."
13. No Impediments. Employee warrants and represents that he is free
to enter into this Agreement and to perform the services contemplated thereby
and that such actions will not constitute a breach of, or default under, any
existing agreement.
14. No Waiver. The failure of any of the parties hereto to enforce any
provision hereof on any occasion shall not be deemed to be a waiver of any
preceding or succeeding breach of such provision or of any other provision.
15. Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties hereto and no amendment, modification or waiver of
any provision herein shall be effective unless in writing, executed by the party
charged therewith.
16. Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with, and shall be governed by, the laws of the State of
New York applicable to agreements to be wholly performed therein without giving
effect to principles of conflicts of law.
17. Binding Effect. This Agreement shall bind and inure to the benefit
of the parties, their successors and assigns.
18. Assignment and Delegation of Duties. This Agreement may not be
assigned by the parties hereto except that the Company shall have the right to
assign this Agreement in connection with a sale or transfer of all or
substantially all of its assets, a merger or consolidation. This Agreement is
in the nature of a personal services contract and the duties imposed hereby are
non-delegable.
19. Paragraph Headings. The paragraph headings herein have been inserted
for convenience of reference only and shall in no way modify or restrict any of
the terms or provisions hereof.
20. Notices. Any notice under the provisions of this Agreement shall be
given by registered or certified mail, return receipt requested, directed to
the addresses set forth above, unless notice of a new address has been sent
pursuant to the terms of this paragraph.
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<PAGE>
21. Unenforecability; Severability. If any provision of this Agreement
is found to be void or unenforceable by a court of competent jurisdiction, the
remaining provisions of this Agreement shall nevertheless be binding upon the
parties with the same force and effect as though the unenforceable part has
been severed and deleted.
22. Counterparts. This Agreement may be executed in one or more
counterpart, all of which shall be deemed to be duplicate originals.
IN WITNESS WHEREOF, The parties hereby have caused this Agreement to be
executed as of the date first above written.
MISONIX, INC.
By: /s/ Peter Gerstheimer V.P.
----------------------------
----------------------------
JOSEPH LIBRIZZI
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<PAGE>
(EXHIBIT 10U)
Medical Device Alliance Inc.
September 12, 1995
Via: Federal Express
- --- ---------------
Joseph Librizzi, Ph.D.
President and CEO
Misonix Incorporated
1938 New Highway
Farmingdale, New York 11735
Re: Letter of Agreement between Medical Device Alliance, Inc. and Misonix
Incorporated
Dear Joe:
Enclosed please find an executed fax by Medical Device Alliance, Inc., in regard
to the above referenced agreement. Also enclosed is an executed acknowledgment
of the Side Letter. A further enclosure is a cashiers check in the amount of
twenty-five thousand dollars to initiate the Exclusive Option Period.
We have faxed copies of the above to you as well as to Edward I. Tishelman,
Hartman & Craven LLP. The originals and the check will be sent to your attention
today by Federal Express - Priority Overnight
I will contact you Wednesday, September 13 to discuss any further details.
Yours truly,
MEDICAL DEVICE ALLIANCE, INC.
Donald K. McGhan Chairman
DKM/md
enclosures
cc: Edward I. Wishelman Hartman & Craven LLP
3315 E. RUSSELL ROAD, SUIT H193. LAS Vegas, NEVADA 89120
PHONE (702) 791-5107 FAX (702) 791-5365
<PAGE>
ORIGINAL
MISONIX INCORPORATED
1938 New Highway
Farmingdale, New York 11735
September 11, 1995
Medical Device Alliance, Inc.
315 East Russell Road
Suite H-193
Las Vegas, Nevada 89120
Gentlemen:
Reference is made to the Letter of Agreement (hereinafter referred to as the
"Agreement"), of even date herewith between Medical Device Alliance (hereinafter
referred to as "MDA"), and Misonix Incorporated (hereinafter referred to as
"Misonix"). All definitions in the Agreement are hereby incorporated by
reference. This shall supplement the Agreement as follows:
1. Misonix has received a check drawn to its order by MDA in the amount of
twenty-five thousand dollars ($25,000.00), representing payment for the
exclusive option period under Section , paragraph C of the Agreement. However,
MDA has been advised and agrees that the effectiveness of the Agreement, and the
binding nature of the same is subject to the approval of the Board of Directors
of Misonix at a meeting to be held September 18, 1995. In order to assist the
Misonix Board in its review and evaluation, you shall supply us with a balance
sheet of MDA at least two days prior to the Board meeting showing that MDA has a
net worth of at least eight hundred thousand dollars ($800,000.00), at the date
hereof. In the event that the Misonix Board approves the Agreement, we shall
deposit your check in our account, and the Agreement shall be immediately
effective. If the Misonix Board fails to approve the Agreement, the Agreement
shall be void, the parties shall have no rights or obligations hereunder (except
for the Confidentiality Disclosure Agreement) and the check shall be forthwith
returned to you.
2. Misonix has informed MDA that two of the co-inventors of the patent,
who have assigned all interest therein to Misonix (Drs. Liang and Narayanan),
are now challenging the validity of the assignment, and asserting that Misonix
does not have exclusive rights to the patent. Misonix has contested this
assertion, and is vigorously challenging the contentions of these two persons.
However, should Misonix not be successful in this regard, MDA understands that
the patent will not be available for licensing to MDA on an exclusive basis (but
only on a non-exclusive basis), and, in such event Misonix and MDA would revise
the terms of the Licensing Agreement between them to
Page 1 of 2
<PAGE>
reflect the fact that, while Misonix is licensing all of its rights to MDA on an
exclusive basis, other persons may obtain rights to the technology covered by
such patent from Dr. Liang and Narayanan on a non-exclusive basis. Albeit,
without the exclusive rights to U.S. Patent Number 5419761, the value of the
License Agreement may be considered to be reduced thus, MDA and Misonix will
enter good faith negotiations concerning the License payment and/or Royalty
payments provided, however, that notwithstanding the foregoing, the Agreement
shall he regarded as being on an exclusive basis with MDA, and the existing
terms prevail, unless and until a third party has produced and marketed a
medical device based upon a non-exclusive right to the aforesaid U.S. Patent No.
5419761 derived from Dr. Liang and/or Narayanan.
3. The Licensing Agreement shall provide for purchase by MDA from Misonix
the following minimum number of units during the following years.
Number per year Calendar Year
--------------- -------------
75 1996
150 1997
200 1998
4. MDA shall grant Misonix, at the time of entering into the Licensing
agreement, the right and election,* at the option of Misonix for Misonix to
subscribe to purchase two hundred thousand (200,000) shares of a new class of
Series A Preferred shares of MDA, convertible one for one into common Stock of
MDA (there being approximatel y two million (2,000,000) common shares of MDA
outstanding at this time), pursuant to a proposed private placement at preferred
stock by MDA at a price of one dollar ($1.00) per share. Until MDA is publicly
traded, Misonix shall have the right to participate in any and all private
placements of equity securities on the same basis as such shares of securities
are offered to others. In addition, the price per share of the Series A
Preferred shares shall be fully protected against sales of securities of any of
MDA at a lower price. Misonix will execute an Investment Letter consistent with
the attached draft.
5. Upon the exercise of the option described in Paragraph 4 above, Misonix
will have the election to designate one (1) member to the Board of Directors of
MDA until such time as MDA makes its initial public offering. At which time the
share holders will elect the members of the Board of Directors on an annual
basis.
Sincerely, Acknowledged and Accepted:
MISONIX INCORPORATED MEDICAL DEVICE ALLIANCE, INC.
By:
------------------------------ ---------------------------------
Joseph Librizzi, President Donald K. McGhan, Chairman
* For a period of 4 months
<PAGE>
CONFIDENTIAL
MEDICAL DEVICE ALLIANCE INC.
As of September 15, 1995
(Unaudited)
Assets
- ------
Current Assets:
Cash in Bank 50,000
Securites and other cash equivalents 800,000
Notes Receivable 100,000
Total Current Assets: $950,000
Equipment & Leasehold Improvements:
Furniture & Fixtures 15,000
Equipment 40,000
Net Equipment & Leasehold lmprovements. 55,000
Other Assets:
Option on License 25,000
----------
Total Assets $1,030,000
==========
Liabilities & Shareholders' Equity
- ----------------------------------
Current Liabilities:
Accounts Payable 15,000
Total Current Liabilities: 15,000
Long Term Liabilities:
Loans from founders 250,000
Total Long Term Liabilities: 250,000
----------
Total Liabilities 265,000
Shareholders' Equity:
Series A Preferred Stock: Liquidating 20,000,000 shares authorized
750,000 shares outstanding
Common Stock:
50,000,000 shares authorized
2,000,000 shares outstanding 350,000
Accumulated Deficit (85,000)
Total Equity 765,000
----------
Total Liabilities and Shareholders' Equity $1,030,000
==========
<PAGE>
LETTER OF AGREEMENT
THIS LETTER AGREEMENT is made and entered into as of the 11th day
of September, 1995 by and between MISONIX, INC., a New York Corporation with
its principal offices at 1938 New Highway, Farmingdale, New York 11735
(hereinafter referred to as "MISONIX") and MEDICAL DEVICE ALLIANCE, INC.,
("MDA") a Nevada Corporation having its principal offices at 3315 East Russell
Road, Suite H-193, Las Vegas, Nevada 89120 (hereinafter referred to as "MDA").
W I T N E S S E T H:
--------------------
WHEREAS, MISONIX has a business which is, in part, based on the
research, development, and manufacturing of ultrasonic equipment for scientific
and industrial purposes; and
WHEREAS, MDA has a business that has been organized to market and
sell, on a worldwide basis, medical devices specifically designed to improve the
treatment of patients desiring a surgical procedure commonly referred to as
"Liposuction" or "Liposculpturing" (hereinafter referred to as the "Procedure");
and
WHEREAS, MISONIX has already utilized its engineering experience,
ultrasonic technology, and prototype manufacturing capabilities to design and
assemble one or more ultrasonic systems (hereinafter referred to as the
"System") specifically for use in performing the Procedure; and
WHEREAS, MDA has experience in identifying various needs in
marketing and selling to the medical fields on a worldwide basis, especially the
specialties of Plastic and Reconstructive Surgery, Cosmetic Surgery and Surgical
Dermatology; and
WHEREAS, MISONIX desires to continue further technical and
application engineering directed to advanced designs of the System utilizing its
patented technology and, in addition, manufacture the finished product; and
WHEREAS, MDA desires to use its market and selling skills to market
the System on an exclusive worldwide basis.
NOW THEREFORE, in consideration of the premises and promises,
warranties and representations herein contained, the parties hereto agree as
follows:
I. Exclusive Option Period: MISONIX will provide MDA an exclusive
option period to evaluate the System under the following conditions:
A. Length of exclusive option period to be ninety (90) calendar days,
commencing on September 11, 1995.
<PAGE>
B. MISONIX shall deliver to MDA a functional prototype System, of the
latest design, as soon as possible, but in no case, later than
September 24, 1995.
C. MDA will pay MISONIX twenty-five thousand dollars ($25,000.00) upon
executing this Letter Agreement for the Exclusive Option Period.
D. Development funding for the autoclavability (i.e. sterilization) of
the converter and umbilical cable and the manufacturability of the
System will be provided by MDA. It is estimated at a maximum of
thirty thousand ($30,000.00) per month until the start of
production. A fifteen thousand dollar ($15,000) advance will be made
by MDA to MISONIX against future billings (the "Advance") for the
purpose of assuring that MISONIX will implement the start of the
subject development work as soon as possible: MISONIX will invoice
MDA following the end of each month for the actual amount expended,
which is to be paid by MDA within ten (10) working days of
invoicing by MISONIX. In this manner, the Advance will continue to
remain with MISONIX, on a month-to-month basis, as a credit balance
in favor of MDA, until the start of production, when the credit
provisions of the License Agreement (II.D) come into effect.
Estimated time frame will be six months, subject to suggestions of,
and modifications by, technicians for both parties.
E. MDA will pay MISONIX an additional twenty-five thousand dollars
($25,000.00) on November 11, 1995, for the last thirty (30) days of
the Exclusive Option Period unless:
1. MDA notifies MISONIX that it is terminating this Letter of
Agreement and thus forgoing any further rights to market and sell
the System; or
2. MISONIX and MDA have mutually agreed to the final terms and
conditions of the License Agreement that forgoes the remainder of
the Option Agreement, and is effective when an executed original of
the License Agreement, is delivered to both parties.
II. License Agreement: The License Agreement between MISONIX and MDA
shall be executed prior to the conclusion of the ninety (90) day option period
and no later than December 11, 1995, and will be good for a period of ten (10)
years ending on December 31, 2005. The basic terms and conditions of the License
Agreement shall be:
A. MDA To Receive:
1. Exclusive worldwide marketing and sales rights to the System
utilizing MISONIX Ultrasonic Liposuction technology (including
Patent No. 5,419,761; and all improvement patents and foreign
patents now or hereafter held by MISONIX). MISONIX retains the
rights to ultrasonic technologies for non-medical applications.
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<PAGE>
2. Exclusive rights to utilize MISONIX letter, dated October 15,
1993, from the U.S. Food and Drug Administration, which provides
for marketing the System under Section 510(K), based on
substantial equivalence to devices marketed prior to enactment
of the Medical Device Act of 1976.
3. Access to MISONIX technical support and the design history of
the System.
4. Right to modify specifications to meet clinical/market needs at
MDA's cost.
5. Right of name and logo selection by MDA.
6. Commitment by MISONIX to designate and supply a dedicated
product development team to work with MDA market development
team and support staffs for successful project development.
7. First right of license for existing technology improvements or
future medical technology developed by MISONIX (except for
angioplasty) while the License Agreement is in force.
B. MISONIX to Receive:
1. A License Fee payment of three hundred thousand dollars
($300,000.00) upon execution of the License Agreement.
2. MDA will provide market and application development, and a
clinical and marketing plan (milestones) to MISONIX. MDA to be
responsible for planning and funding suitable or necessary
clinical tests of the System.
3. Upon delivery of five (5) prototype units, MDA will pay the cost
of the Systems which is four thousand dollars ($4,000.00) per
unit, plus an additional License Fee of one hundred thousand
dollars ($100,000.00).
4. At the start of regular production, or one year from the date of
the License Agreement, the additional License Fee of one hundred
thousand dollars ($100,000.00) will be paid by MDA for a total
license fee payment of five hundred thousand dollars
($500,000.00).
5. Furthermore a Royalty Fee of five percent (5%) will be paid on
net sales of the System and accessories sold.
6. MDA to grant MISONIX a security interest in this License
Agreement to secure performance by MDA of its obligations
thereunder.
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<PAGE>
C. Both to Agree:
1. Mutual non-competition clause in Ultrasonic Assisted
Liposuction for the life of this Agreement.
D. Quantity and Price. MISONIX agrees to sell to MDA and MDA
agrees to buy from MISONIX one hundred percent (100%) of MDA's
requirement of the aforesaid Ultrasonic Assemblies in
accordance with the specifications set forth in Schedule A.
Technological changes and variations from the prototype
specifications shall increase the cost appropriately. The prices
can be increased by MISONIX only under one of the following
circumstances: MISONIX may, with written notification to MDA,
increase the price in accordance with the rise in the Official
Consumer Price Index (CPI). Such increase in the price in
accordance with the CPI, can be made once each year during the
term of the Agreement, except during the first year, and
whenever the cost of labor and/or raw material to MISONIX
changes substantially, MISONIX may change the price of the
Ultrasonic Units, with a ninety (90) day advance written notice
to MDA, to reflect such substantially changing and/or raw
material costs. All Ultrasonic Units for MDA will be
manufactured in accordance with the specifications set forth in
Schedule B.
All shipments will be F.O.B. point of origin. MDA will remit
payment within thirty (30) days from the date each invoice is
received by MDA with respect to shipments of Ultrasonic Units.
Credit terms: (a) open account for up to 20 Units at any time
(b) balance by Letter of Credit or fifty percent (50%) cash
payment at time of order. MDA has no obligation to pay for any
shipment of Ultrasonic Units that does not meet the
specifications as set forth in Schedule B and have been returned
to, and accepted by, MISONIX for credit.
E. Delivery. MDA shall submit purchase orders setting forth the
quantities, delivery date and shipping instructions with respect
to each shipment such purchase order to be received by MISONIX
at least ninety (90) days prior to the stipulated delivery date.
MISONIX shall ship each order to MDA or MDA's designee to the
location specified, as instructed by MDA.
F. Quality. It is understood and agreed that all Ultrasonic Units
sold to MDA hereunder will meet the established specifications,
as described in the attached Schedule B, which Schedule may be
revised from time to time by agreement of the parties
hereunder. Furthermore, MISONIX shall be responsible to adhere
to current good manufacturing practice (GMP) and to all
applicable U.S. governmental laws and regulations, as may be
amended from time to time relating to the manufacture, sale and
shipment of Ultrasonic Units sold hereunder. Cost of future
filings and modifications of units necessitated thereby to be
borne by MDA, which shall receive prior notice of proposed
actions and expenditures and shall participate in the decision
making process.
-4-
<PAGE>
G. Quality Assurance. MISONIX will provide MDA with the test
results of all Ultrasonic Units to be shipped to MDA.
Furthermore, MISONIX shall advise MDA of any changes in the
manufacturing process or in materials which have an impact on
the quality or performance of, or regulatory issues relating to,
the Ultrasonic Units purchase hereunder.
All Ultrasonic Units delivered to MDA shall be subject to
acceptance by MDA's quality assurance staff acting reasonable.
Unless MDA gives MISONIX notice to the contrary within ten (10)
working days after receipt of a shipment of a Product, such
shipment shall be deemed to be accepted by MDA. MDA or MDA's
designee shall have the right to reject any shipment made to it
hereunder which does not meet such quality assurance
specifications when such products are received. In the event
that any such shipment is not approved by MDA because it does
not meet said specification, MDA shall advise MISONIX in writing
and MISONIX agrees to replace such shipment at its expense
including charges incurred by MDA for freight and customs
clearance if application, and resubmit to MDA within forty-five
(45) days. At MISONIX'S option, MDA shall return any such
rejected shipment to MISONIX at MISONIX'S expense.
H. Taxes. Any and all taxes imposed upon or with respect to or
measured by the sale or delivery by MISONIX to MDA of Ultrasonic
Units in accordance with MDA's instructions shall be for MDA's
account.
I. Force Majeure. MISONIX'S obligations and any delays in
deliveries hereunder or portion thereof, and MDA's obligations
to take delivery hereunder when due, shall be excused by
strikes, riots, war, invasion, acts of God, fire, explosion,
floods, delay of carrier, shortages or failures in the supply of
materials, acts of government agencies or instrumentality's,
judicial action, delay in constructing manufacturing facilities,
and other contingencies beyond the reasonable control of the
party to be excused. In such event(s), MISONIX will make
reasonable efforts to fulfill MDA's requirements for and MDA
will make reasonable efforts to take delivery of Ultrasonic
Units as defined herein, If for any of the reasons set forth
above, MISONIX shall be unable to delivery any of the agreed
upon quantities of MISONIX Ultrasonic Units when due, MISONIX
shall immediately notify MDA of such inability and of the period
for which such inability is expected to continue. In the event
MDA elects to manufacture or have Ultrasonic Units manufactured
by a third party, MDA may use or release to said third party
MISONIX'S confidential technical information and know-how
relating to Ultrasonic Units under a confidentiality agreement
acceptable to MISONIX, which shall not be unreasonably withheld,
to enable MDA or said third party to manufacture Ultrasonic
Unit for MDA's account.
J. Term. This Agreement shall be effective when signed by both
parties, and shall continue in effect for a period of ten (10)
years. MDA shall have the option to renew this Agreement for
five (5) successive one (1) year periods on the same terms and
conditions, and the price of Ultrasonic Units to be purchased
during
-5-
<PAGE>
each one (1) year period shall also be determined pursuant to
the terms and conditions of this Agreement. MDA must notify
MISONIX that it intends to exercise the option at least sixty
(60) days prior to the expiration of the ten (10) year term of
the present Agreement, and thereafter in each successive year
at least sixty (60) days prior to the expiration of the year in
which the option is being exercised.
K. Termination for Cause. If either party shall at any time fail
to abide by any of the provisions of the Agreement, the other
party shall have the right to terminate this Agreement on sixty
(60) days prior written notice to the defaulting party
specifying the default complained of, provided, however, if said
defaulting party cures the default complained of within the said
sixty (60) day period, or if a non-monetary default which
reasonably would take more than 60 days to cure and the
defaulting party is actively taking steps to cure the same, the
Agreement shall continue in full force and effect as if no
default has occurred. The right of either party to terminate
this Agreement, as hereinabove provided, shall not be affected
in any way by its waiver of, or its failure to take action with
respect to, any previous default. This Agreement may also be
terminated by the other party in the event that a petition of
bankruptcy is filed by or against a party and not dismissed
within 30 days, or a receiver or trustee is appointed for all or
a part of the property of a party or a party makes an assignment
for the benefit of creditors.
L. Rights of Termination. Any termination of this Agreement as
provided herein shall not relieve either party of any
obligation arising hereunder prior to such termination.
M. Inability To Supply Full Requirements. In the event that MISONIX
cannot supply one hundred percent (100%) of MDA's requirement of
Ultrasonic Units, after reasonable prior notice and time to gear
up for this, MDA may either itself manufacture or have a third
party manufacture the amount not supplied by MISONIX during the
period that MISONIX cannot supply the same. MDA may release to
said third party MISONIX'S confidential information and know-how
relating to Ultrasonic Units under a confidentiality agreement
acceptable to MISONIX which shall not be unreasonably withheld,
to enable the third party to manufacture the amount of
Ultrasonic Units not supplied by MISONIX for MDA.
N. Purchase Orders. The provisions of this Agreement shall prevail
over any inconsistent statements of provisions contained in any
document related to this Agreement previously passing between
companies. This Agreement shall supersede and prevail over any
other agreement applicable to the subject matter of this
Agreement between the parties which may be in effect at the time
this Agreement is executed.
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<PAGE>
O. Limited Warranty and Liability
1. MISONIX warrants that the materials described herein shall
meet the specifications as set forth in Schedule B, but DOES
NOT WARRANT THE SUITABILITY OR USES WHICH MAY BE MADE OF THE
SAME OR THE UNITS TO BE PRODUCED HEREUNDER.
2. Except as provided in Paragraph (3) hereafter, MISONIX shall
not be liable for, and MDA assumes responsibility for, and
hereby agrees to indemnify and hold harmless MISONIX for and
against all costs, expenses and damages (including
reasonable attorney's fees arising from any claim for
personal injury and property damage resulting from the
handling of the Ultrasonic Units, following MDA's acceptance
of the Ultrasonic Units after it has completed its testing
as provided in Quality Assurance.
3. Except as provided in paragraph (5) hereof, MDA shall not
be liable for, and MISONIX assumes responsibility for and
agrees to indemnify and save harmless, MDA, for all personal
injury and property damages which occur during MISONIX'S
manufacturing process of Ultrasonic Units or which
Ultrasonic Units are being delivered to MDA or its designees
or for claims based on violations of Federal, State or local
laws or regulations applicable to employee or environmental
protection in such manufacture or delivery by MISONIX; e.g.,
a claim based on MISONIX'S violations of environmental
standards, standards dealing with providing a safe place to
work, or the transportation of hazardous materials.
4. Either party, upon learning of the claim or lawsuit, under
Paragraphs (2) or (3) of this Article, shall notify the
other, but MDA's attorneys shall handle and control such
claims or suits which fall under Paragraph on Limited
Warranty and Liability (2) and MISONIX'S attorneys shall
handle and control such claims or suits which fall under
Paragraph on Limited Warranty and Liability (3).
5. Notwithstanding the foregoing provisions hereof, MDA
shall secure product liability insurance coverage covering
personal injury and property damage for the products
produced hereunder, at the full cost and expense of MDA, in
an amount of not less than five million dollars ($5,000,000)
with a deductible of approximately two hundred thousand
dollars ($200,000), covering both MISONIX and MDA for any
and all liability. At the time of commercial sales of the
Units, the face amount of such insurance coverage shall be
increased to not less than $10,000,000.
P. Arbitration. All disputes between the parties arising hereunder
shall be finally settled by arbitration in the City of New York,
by the American Arbitration Association, by a board of three
arbitrators one of whom is selected by each party
-7-
<PAGE>
and the third selected by the two arbitrators, or if they cannot
agree, from the lists of the American Arbitration Association.
Q. Notices. Any notice or request required or permitted to be given
under or in connection with this Agreement shall be deemed to
have been sufficiently given if in writing and delivered to an
officer of such party or sent by registered airmail, telex or
telegram, prepaid, to the party for which such notice is
intended, at the address set forth for such party below:
In the case of MDA:
President
Medical Device Alliance, Inc.\
3515 East Russell Road
Suite H-393 Las Vegas, Nevada 89120
In the case of MISONIX:
President
Misonix, Incorporated
1938 New Highway
Farmingdale, NY 11735
or to such other address for such party as it shall have
therefore furnished in writing to the other party. If sent by
mail, telex or telegram, the date of mailing or transmission
shall be deemed to be the date on which such notice or request
has been given.
R. Assignment. MDA or MISONIX may assign rights under this
Agreement in whole or in part to any of their respective
affiliates or subsidiaries. Upon the other party's request, the
assigning party shall enter into a separate counterpart
agreement with any such affiliate or subsidiary, it being
expressly agreed that assignor shall remain bound by the
obligations hereof. Such counterpart agreement shall be in the
same form as this Agreement, except for necessary changes to
reflect the extent of the assignment, the substitution of the
affiliate's or subsidiary's name, the effective date of the
assignment and the inclusion of a new provision enabling the
non-assigning party to terminate such separate counterpart
agreement in the event that the assignee ceases to be an
affiliate or subsidiary of the assigning party. This Agreement
shall not otherwise be assignable by either party without the
prior written consent of the other party.
S. Entire Agreement. This Agreement sets forth the entire Agreement
and understanding between the parties as to the subject matter
hereof and merges all prior discussions and negotiations between
them, and neither of the parties shall be bound by any
conditions, definitions, warranties, understandings or
representations with respect to such subject matter other than
as expressly provided herein or as duly set for the on or
subsequent to the date hereof in
-8-
<PAGE>
writing and signed by a proper and duly authorized officer or
representative of the party to be bound thereby.
T. Governing Law. This Agreement shall be construed in accordance
with the laws of the Sate of New York.
U. Confidentiality. After execution of the License Agreement,
MISONIX shall disclose to MDA all technical information
reasonably necessary to use Ultrasonic Units or their
equivalents, and MDA shall hold such information except as
provided in Paragraphs dealing with Force Majeure and Inability
To Supply Full Requirement of this Agreement. MISONIX shall also
release to MDA all technical information and know-how which are
reasonably necessary to manufacture Ultrasonic Units, and MDA
may use such information the manner set forth in the
aforementioned Paragraphs of this License Agreement to
manufacture Ultrasonic Units or to have such devices
manufactured by a third party only as permitted in this License
Agreement. In addition to and not in lieu hereof, the parties
re-affirm the provisions of the confidential Disclosure
Agreement dated 8/11/95 which remains in effect and is annexed
as Schedule C hereto.
Information which is necessary for obtaining or maintaining approval of
Ultrasonic Units or its equivalents by any regulatory agency of any foreign
country shall be an exception to the above confidentiality obligations, but only
to the extent necessary and provided said confidentiality is maintained to the
fullest extent possible by MDA.
IN WITNESS WHEREOF, this Letter Agreement has been entered into as of
the day and year first above written.
Very truly yours,
ACCEPTED AND AGREED:
MISONIX, INCORPORATED MEDICAL DEVICE ALLIANCE, INC.
By: By:
------------------------------- ------------------------
Joseph Librizzi Donald K. McGhan
Its: President and CEO Its: Chairman
-9-
<PAGE>
Schedule A
Breakdown of estimated pricing of System components
Item Price
- ---- --------------------------------------------------
For Minimum of 200 100 or more Units
or more Units -----------------
------------------
Generator $2,330 $2,950
Convertor 1,400 2,050
RF Cable 700 700
Tools 50 50
Manuals 20 20
------- -------
Total System Cost $4,500* $5,770*
* Estimate as of 8/10/95
Tips and Sheaths
5MM Probe 500 750
5MM Sheath 100 150
7MM Probe 500 750
7MM Sheath 100 150
(A) Costs based upon initial commitment of 200 units
(A) All prices based upon designs and costs developed as of 9/94
(A) Costs subject to change as design is finalized
-10-
<PAGE>
SCHEDULE B
Specifications of Ultrasonic system
Generator Model xxxx
Controls and Displays Timer: elapse time with US on resettable
Output power +/- 3%
Power Setting
On/Off switch with pilot light
Fault indicator/shut down (possible audible)
Time Totalizer (rear)
================================================================================
Output Control Adjusts amplitude of power output 0 to 100%
Rear Connector foot switch control
================================================================================
Horn Frequency 20Khz+/-__ Khz and Output power ultrasonic __ Watts
================================================================================
Line Voltage Line Selectable Models for World Wide Distribution
100/120/220/240 VAC 48-60 Hz _____VA UL approval
================================================================================
Mechanical Weight __lbs _____in. L x ___ in. W x ___ in. H
================================================================================
Temperature Operating 10 degrees C to 40 degrees C
================================================================================
Tuning Factor Set with Matched converter & probe
================================================================================
Converter Weight ___ ozs. __ in. max dia. w/o cable Autoclavable*
- ---------
================================================================================
Probe style Type 7mm-25cm length Weight ___ ozs. Autoclavable*
- ----- -----
Titanium Type 5mm-25cm length Weight ___ ozs. Autoclavable*
ELI alloy Type 7mm-16cm length Weight ___ ozs. Autoclavable*
Type 5mm-16cm length Weight ___ ozs. Autoclavable*
================================================================================
Sheath style Type 7mm-25cm__ ozs. 16cm ___ ozs. Autoclavable*
- ------ ----- Type 5mm-25cm__ ozs. 16cm ___ ozs. Autoclavable*
================================================================================
Umbilical cable Weight ___ lbs Length 12 Ft. Autoclavable*
- --------- -----
================================================================================
* Autoclavable 200 cycles (500 cycle goal) by Flash sterilizer for 3 minutes at
270 degrees and 30 PSI or Normal cycle sterilizer for 30 minutes at
250 degrees F and 15 PSI
================================================================================
-11-
<PAGE>
ERNST & YOUNG (EXHIBIT 10V)
395 North Service Road
Melville New York 11747
Phone: 516 752 6100
We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to the registration of 250,000
shares of Common Stock pursuant to the Misonix, Inc. (formerly
Medsonic Inc.) 1991 Stock Option Plan, of our report dated August
20, 1993, with respect to the consolidated financial statements
of Medsonic, Inc. included in the Annual Report (Form-10KSB) for
the year ended June 30, 1993, filed with the Securities and
Exchange Commission.
Ernst & Young
Melville, New York
December 21, 1993
<PAGE>
Nassau West Corporate Center II (EXHIBIT 10V)
50 Charles Lindbergh Boulevard
Mitchel Field. New York 11 553
Telephone: (516) 222-7000 Fax: (516) 222-8017
Accountants and Consultants
CONSENT OF BDO SEIDMAN
To the Board of Directors and Stockholders
of MedSonic, Inc.
Farmingdale, New York
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated
August 28, 1992, relating to the consolidated financial statements and
schedules of MedSonic, Inc. and subsidiaries appearing in the Company's
Annual Report on Form 10-K for the year ended June 30, 1993.
December 10, 1993
Internationally
BDO
BINDER
<PAGE>
EXHIBIT 10 (W)
Amendment To Agreement with Principal Shareholders of Labcaire Systems, Ltd.
This Agreement entered into on the 28th day of June, 1996 is supplemental to a
certain agreement dated May 21, 1992 (the "Original Agreement") between Misonix,
Inc., [previously known as Medsonic, Inc.] with principal offices at 1938 New
Highway, Farmingdale, New York 11735 ("Investor" or "Misonix") and each of David
Patrick Stanley, John Anthony Haugh, Graham Mostyn Kear, Martin Joseph Keeshan,
Geoffrey William Spear and Labcaire Systems Limited ("Labcaire" or the
"Company").
W I T N E S S E T H
i. Reference is made to the Original Agreement, the provisions of which are
hereby incorporated by reference and made a part hereof; unless otherwise
specified, the definitions in the Original Agreement shall have the same
meanings when used herein except that "the Management Team" shall not
include John Anthony Haugh.
ii. John Anthony Haugh, having sold the balance of his shares of Labcaire to
the Investor, is not becoming a party to this Agreement and is not
affected hereby.
iii. Clause 6 of the Original Agreement, referring to "Management Team
Options," is hereby modified by striking out clauses 6.1, 6.2 and 6.4 in
their entirety, retaining Clause 6.3 and adding certain new clauses, so
that Clause 6, as hereby amended and restated, shall read as follows in
its entirety:
"Purchase of Management Team Shares
Each of the Management Team hereby agrees to sell his Total Holding of Labcaire
shares to the Investor and the Investor hereby agrees to purchase the same in
accordance with the following: one-seventh (1/7th) of the Total Holding of each
person is to be sold (the "Partial Purchase") in each of the next seven
consecutive years, commencing with 1996 and ending in 2002, so that the final
1/7th of the Total Holding shall be sold in the Partial Purchase taking place in
2002.
6.1 Each Partial Purchase shall occur on a date which is 60 days from the
adoption of financial statements for the preceding financial period.
One-seventh (1/7th) of the Total Holding of each member of the Management
Team, whose name and shares are as set forth on Schedule A attached
hereto, shall be purchased by the Investor at the Deemed Value thereof.
6.2 At closing, the Investor shall, upon receipt of a duly completed share
transfer form and the relevant share certificate, pay to that member of
the Management Team the Deemed Value of the Labcaire ordinary shares
being purchased pursuant to such Partial Purchase.
6.3 The parties hereto will do all such acts and things as may be required
to effect such transfer of shares including but not limited to the
appropriate exercise or waiver of their rights under the Articles of
Association of the Company.
<PAGE>
6.4 The first Partial Purchase shall occur in 1996 based upon the audited
accounts of the Company for the financial period ending June 30, 1996
(the "1996 Purchase").
The purchase price for the 1996 Purchase shall be paid by the Investor
to each selling member of the Management Team in cash at the closing,
against delivery of certificates representing the Labcaire Ordinary
shares being sold.
The purchase price to be paid for each Partial Purchase shall be
computed as follows: The Deemed Value of each Labcaire Ordinary share,
as defined in Clause 1(1), shall refer to the Company's earnings
before interest, tax and management charges shown in the audited
statements for the immediately preceding fiscal period.
In no event, however, shall the price to be paid by the Investor for an
Ordinary share at any Partial Purchase after the 1996 Purchase be less
than 50% of the price per Ordinary share in the 1996 Purchase, as
calculated upon a like number of Labcaire shares in issue and fully paid
on each such date.
6.5 Any one or more members of the Management Team may, at his sole
election, transfer his Total Holding of Labcaire Ordinary shares, only
to the extent of the shares to be included in the current year's Partial
Purchase, for any consideration or for no consideration, to his spouse
and/or children provided, however, that any transferee agrees to be
bound by this Agreement (including the obligations of sale of such
Ordinary shares pursuant hereto) as if one of the Management Team in
the respect of the Labcaire Ordinary shares so transferred.
iv. The provisions of Clause 7, denominated as "Investor's Option," are
hereby stricken in their entirety.
v. The Option Agreements described in Clause 2.7 of the Original Agreement,
relating to the purchase of Misonix shares, are hereby cancelled.
vi. In Clause 1 of the Service Agreements dated May 21, 1992 between the
Company, on the one hand, and each of Messrs. Kear, Keeshan and Spear,
on the other, the reference to "three calendar months" is hereby changed
to "six calendar months."
<PAGE>
IN WITNESS HEREOF, this Agreement has been signed by or on behalf of
the parties on and as of the day and year first above written.
Misonix, Inc.
By:
--------------------------------------
Joseph Librizzi, President - duly
authorized for Misonix Inc. in the presence of:
--------------------------------------
- ----------------------- -----------------------
David Patrick Stanley Martin Joseph Keeshan
- ----------------------- -----------------------
Graham Mostyn Kear Geoffrey William Spear
Labcaire Systems Limited
By:
------------------------------------
Duly authorized for Labcaire Systems
Limited in the presence of:
-------------------------
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Shares covered by each partial purchase
(1/7th of total)*
--------------------------------------------
Percentage ownership of Each Partial
Labcaire shares at date of 1996 Purchase after
Management Term amended agreement Purchase 1996 Purchase
- --------------------------------- ------------------------------------- ------------------ -------------------------
<S> <C> <C> <C>
Patrick Stanley 30.76% (20,000 shares) 2,858 2,857
Graham Kear 23.08% (15,000 shares) 2,142 2,143
Martin Keeshan 23.08% (15,000 shares) 2,142 2,143
Geoffrey Spear 23.08% (15,000 shares) 2,142 2,143
Total issued and outstanding
shares of Labcaire: 350,000 shares
</TABLE>
All shares repurchased by Investor are to be regarded as issued and
outstanding for purposes of calculation of total number of shares in issue and
fully paid on the last day of a financial period for purposes of calculation of
the Deemed Value.
*In order to eliminate fractional shares, the numbers being purchased
in the 1996 Purchase and in each Partial Purchase subsequent thereto will vary
slightly.
<PAGE>
EXHIBIT 10(X)
Amendment to Employment Agreement
Amendment entered into on the 24th day of July, 1996 ("Amendment") to a
certain Employment Agreement dated September 1, 1995 the ("Employment
Agreement") between MISONIX, INC., a New York corporation (hereinafter called
the "Company") with offices at 1938 New Highway, Farmingdale, New York 11735 and
JOSEPH LIBRIZZI, residing at 10 Indian Trace, Kings Park, New York 11754
(hereinafter called the "Employee").
W I T N E S S E T H:
WHEREAS, the Company and the Employee desire to continue the services
of Employee upon the terms and conditions contained in the Employment Agreement,
as hereby amended.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and promises contained herein, the parties hereby agree as follows:
1. Terms and References
Unless otherwise expressly provided in this Amendment, all terms,
definitions and references in the Employment Agreement shall have the same
meanings when used herein.
2. Terms of Employment
The term of employment provided in this Amendment shall be for the 12
months commencing September 1, 1996 and ending August 31, 1997. Accordingly, the
reference in paragraph 1 of the Employment Agreement in the third line thereof
shall be to the 12 month period ending August 31, 1997; the balance of paragraph
1 of the Employment Agreement shall remain in effect.
3. Paragraph 4 of the Employment Agreement,
dealing with Compensation, is hereby amended as follows:
(a) The base salary provided in paragraph 4(a) shall be $160,000
per annum;
(b) The incentive compensation provided in paragraph 4(b) of the
Employment Agreement shall be modified to read as follows for
all years after Fiscal 1996:
"(b) Not later than one hundred twenty (120) days after the
end of the fiscal year of the Company ending on the 30th day
of June immediately prior to the August 31st expiration date
of that year for employment (so that, for example, the results
of the Company's fiscal year ending June 30, 1997 shall be
applicable to the initial year of employment under this
Amendment) the Company shall pay to Employee, as incentive
compensation:
<PAGE>
If Pretax Operating Earnings for fiscal year are:
Incentive Compensation Payment
------------------------------
less than $1,000,000 - None
$1,000,000 to $1,400,000 - 5% of pretax operating earnings
in this range
In excess of $1,400,000 - 10% of such excess pretax
operating earnings
For purposes hereof, "Pretax Operating Earnings" of the Company shall
mean, with respect to any fiscal year, the operating income and including
royalties and license fees, if any, of the Company for such fiscal year as set
forth in the audited, financial statements of the Company included in its Annual
Report to Stockholders for such fiscal year, before deduction of (i) taxes based
on income or (ii) of the incentive compensation to be paid to Employee for such
fiscal year under this Agreement.
For each Renewal Period hereunder, the calculation of incentive
compensation shall be made upon the results of the Company's fiscal year
expiring on the 30th day of June during such Renewal Period. In the event of a
change of the Company's fiscal year, the calculation period for the incentive
bonus shall be equitably adjusted.
Subparagraphs (c) and (d) of paragraph 4 shall remain as presently
stated in the Agreement.
4. Change of Control
Paragraph 12 of the Employment Agreement, dealing with change of
control of the Company, is hereby stricken in its entirety.
5. Except as expressly modified by this Amendment, the terms and
conditions of the Employment Agreement shall remain in full force and effect. In
the event of any conflict or inconsistency between the Employment Agreement and
this Amendment, the terms of this Amendment shall prevail.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment on the day and year first above written.
MISONIX, INC.
BY:
--------------------------
--------------------------
JOSEPH LIBRIZZI
