Re : FACILITY OFFER

1.      they must comply with drawdown requirements we specify from time to time and any other drawdown requirements in this offer.

2.      the following things must be provided to us

2.1      the securities (as detailed below)

2.2      Copy of loan statements from Astarra Capital Limited As Trustee For The Professional Pension PST - Pension for the previous twelve (12) months.

2.3      Full and completed Audited Financial Statements as at 30th June 2008 for AMI Australia Holdings Pty Limited to be received prior to any facility availability and to be to the Bank’s satisfaction.

2.4      Confirmation from your external accountants that all taxation obligations are paid and up to date.

1.      Quarterly Interim Management Accounts (Balance Sheet and Profit & Loss Statements) to be forwarded to the Bank within 45 days of each quarters end (ie: end of March, June, September and December) with the following:

a.      Quarterly Asset Certificate with Aged Receivable summary;

b.      Confirmation from your external accountants that all taxation obligations are up to date;

c.      Certification by Directors that:

-      Interest Times Cover is no less than 20 Times;

-      Average Aged Debtors are less than 75 days.

d.      A Debenture Certificate providing details of Inventory, Inventory-in-Transit, Aged Debtors, Employee numbers and other Statutory Declarations.

2.      St George Limited is to be satisfied with the value of AMI Australia Holdings Pty Limited’s security on an ongoing basis. At all times, the minimum value of AMI Australia Holdings Pty Limited securities is to be greater than the total amount owing under the facilities.

3.      Cash to be received from the sale of Whygo Video Conferencing Pty Limited is to be placed toward principal reductions on the Commercial Bill Facility as follows:

a.      $100,000-00 on 15th December 2008;

b.      $100,000-00 on 30th June 2009.

Please note, these principal reductions are in addition to the monthly Principal & Interest repayment of $50,000-00

4.      The borrower will not, without the Bank’s prior written consent, repay any moneys owed by it to Advanced Medical Institute Inc, prior to the repayment of the Bank’s facility.

5.      The client undertakes to restrict any dividend payment to 50% of any net profit after tax less principal debt reductions.

6.      Unless the Bank otherwise consents in writing, during the term of the facility the borrower must:

i.      Not make any material changes to its business or dispose of any of its core assets or undertakings;

ii.      Not dispose of its Australian premature ejaculation or impotence business or its interest in PE Patent Holdco Pty Limited, Worldwide PE Patent Holdco Pty Limited or Intelligent Medical Technologies Pty Limited and not permit those entities to dispose of their assets;

iii.      Not make changes to the Board or managing director of the company;

iv.      Not permit any group company to issue, agree to issue or grant any option to issue any equity or any security convertible into any such equity;

v.      Not subscribe or agree to subscribe for any equity interest in any party;

vi.      Not repay any loan in priority to payment of this loan;

vii.      Not enter into any joint venture agreement or other arrangement which gives any party an interest in the profits of its business; or

viii.      Not grant any encumbrance to any party.

7.      The Bank will release Whygo Videoing Conferencing Pty Limited as guarantor on the following basis:

a.      Principal reductions on the Commercial Bills facility from the sale of the business as follows:

i.      $100,000-00 on the 15th December 2008;

ii.      $100,000-00 on the 30th June 2009.

b.      The sale is completed with transfer of full ownership (directors/ shareholders) to the new owners.

The security for each facility is:

1.      First registered fixed and floating charge over all the assets and undertaking of AMI Australia Holdings Pty Limited (Proposed).

2.      Deed of Subordination with payables due to the parent entity of AMI Australia Holdings Pty Ltd being subordinated to lending facilities held with St.George Bank Limited given by AMI Australia Holdings Pty Limited (Proposed).

3.      First registered fixed and floating charge over the all assets and undertaking of AMI International Pty Limited and AMI Management Services Pty Limited and PE Patent Holdco Pty Limited and Advanced Medical Institute Pty Limited and Intelligent Medical Technologies Pty Limited and Whygo Video Conferencing Pty Limited and Worldwide PE Patent Holdco Pty Limited (Proposed).

4.      Cross Guarantee & Indemnity Limited to the amount of $2,400,000, given by AMI International Pty Limited and AMI Management Services Pty Limited and PE Patent Holdco Pty Limited and Advanced Medical Institute Pty Limited and Intelligent Medical Technologies Pty Limited and Whygo Video Conferencing Pty Limited and Worldwide PE Patent Holdco Pty Limited (Proposed).

5.      Letter of Comfort given by Advanced Medical Institute Inc (Proposed).

Unless indicated otherwise in this facility offer:

a)      the amounts secured by the securities include the sum of the total amount owing for all facilities listed in this facility offer and other amounts; and

b)      there are no limits on the amounts secured.

·       An Establishment fee of $15,000 is now due and payable.

·       Legal fees and other costs for preparing the security documents and this agreement and reviewing documents presented to us under this agreement. In addition, all other statutory charges such as stamp duty, ASIC fees and title office charges are for your account.

·       “Business Lending and Finance Facilities, Fees and Charges for specific services and loan accounts” booklet,

·       “Corporate and Business Accounts and Payment Services, Fees and Charges and how to minimise them” booklet,

·       “Business Accounts and Payment Services, Fees and Charges and how to minimise them” booklet.

a)      annual accountant prepared financial statements and taxation returns if you are a company

b)      consolidated financial statements if you are a member of a group of companies

c)      for each non-company, an annual asset and liability statement and taxation returns

d)      a budget and cash flow forecast for your business and for the business of your group if you are a member of a group of companies, for the next 12 month period.