U. S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB
Surgical Safety Products, Inc.
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(Name of Small Business Issuer in its charter)
New York 65-0565144
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2018 Oak Terrace
Sarasota, Florida 34231
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (941) 927-7874
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class to be registered
None
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Securities to be registered under Section 12(g) of the Act:
Common Stock, $.001 par value
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(Title of class)
Copies of Communications Sent to:
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
Tel: (561) 832-5696
Fax: (561) 659-5371
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Item 1: Description of Business:
(a) Business Development
Surgical Safety Products, Inc. (the "Company" or "Surgical")
is incorporated in the State of New York and qualified to do business as a
foreign corporation in the State of Florida. Surgical Safety Products, Inc.
originally was incorporated under the laws of the State of Florida on May 15,
1992. On November 28, 1994 the Company merged into Sheffeld Acres Inc., a New
York shell corporation which had approximately 1,100 shareholders, but had never
commenced operations. Although Sheffeld Acres, Inc. was technically the
surviving entity, the Company changed its name after the merger to Surgical
Safety Products, Inc. Articles of Merger were filed with the State of Florida on
October 12, 1994 and a Certificate of Merger was filed with the State of New
York on February 8, 1995. The Company filed to do business as a foreign
corporation on April 11, 1995 in the State of Florida. The Company
publically-trades on the OTC Bulletin Board under the symbol "SURG". The
Company's executive offices are presently located at 2018 Oak Terrace, Sarasota,
Florida 34231, its telephone number is (941) 927-7874 and its facsimile number
is (941) 925-0515.
The Company is filing this Form 10-SB on a voluntary basis so
that the public will have access to the required periodic reports on the
Surgical's current status and financial condition. The Company will file
periodic reports in the event its obligation to file such reports is suspended
under the Securities and Exchange Act of 1934 (the "Exchange Act".)
The Company was formed for the initial purpose of combating
the potential spread of bloodborne pathogen infections, such as HIV and
hepatitis. The founding philosophy arose from a concern regarding the
occupational risks of healthcare workers in the operating room. Since inception,
the Company has broadened its mission to include the research, development and
production of innovative products and services which create and maintain a safe
surgical environment for medical and hospital staff, healthcare workers and
patients, as well as enhance the level of surgical care available to patients.
The Company is engaged in product development, sales and
services for the medical industry. The Company is currently engaged in one line
of business which is divided into three (3) divisions each of which is involved
with specialty medical product research and development: (1) a division which
develops various medical-related services to be marketed to healthcare
facilities, including an entire family of computer software applications
designed to evaluate, track, organize and manage infection control data for
healthcare facilities and to provide multi-media information centers for a
facility's healthcare workers ("Data Systems Division"); (2) a division which
researches and develops medical products for sale in the marketplace ("Medical
Products Division"); and (3) a division which provides confidential consultation
services to third party developers of medical products, usually physicians and
healthcare technicians ("Medical Products Consultation Division"). The common
thread interwoven into each area requires medical research, education and a
commitment to safety issues. It is the Company's intention to gradually make the
transition from a research and development-oriented medical device company into
a multi-product device manufacturer and distributor.
In addition to its current activities, the Company also had operated a
diagnostic clinic specializing in women's health. On September 28, 1994 the
Company formed a wholly- owned subsidiary, Women's Diagnostic Center, Inc.
("WDC") under the laws of the State of Florida. WDC immediately acquired certain
personnel and assets, consisting of a diagnostic clinic specializing in women's
health, the Women's Ambulatory Services, Inc., a Florida corporation. WDC
catered exclusively to women and their specific healthcare needs. Patients
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were attended to by an all female staff in order to provide a uniquely personal
and caring atmosphere while emphasizing women's healthcare education and
awareness. WDC specialized in mammography, ultrasounds, osteoporosis testing,
chest x-rays and comprehensive laboratory testing.
To focus the Company's growth efforts in the medical products
and services industry, the equipment, furniture, accounts receivable, trade name
and goodwill, net of related liabilities of WDC, were sold to Sarasota Memorial
Hospital on June 13, 1996. All business operations of WDC had ceased and the
corporation liquidated by December 31, 1996.
On May 30, 1995, the Company completed the preparation of a
self-directed private placement memorandum offering shares of the Company's
Common Stock and Warrants. This offering was conducted pursuant to Section 3(b)
of the Securities Act of 1933, as amended (the "Act"), and Rule 506 of
Regulation D promulgated thereunder ("Rule 506"). The offering was amended on
October 30, 1995. Initially, the offering required a minimum investment of
$5,000 in exchange for which an investor would receive 5,000 shares of common
stock, $.001 par value per share (the "Common Stock") and three-year warrants to
purchase 2,500 shares of the Company's Common Stock at an exercise price of
$1.50. Pursuant to this offering, the Company received gross proceeds in the
amount of $37,500, $5,000 of which was subsequently refunded. By agreement with
the investors, in lieu of the unit arrangement, the investors each acquired
shares at $.50 per share. A total of 65,000 shares of the Company's Common Stock
were issued pursuant to this offering. (See Part II, Item 4. "Recent Sales of
Unregistered Securities.")
On December 8, 1997, the Company acquired all of the assets
of Endex Systems, Inc., d/b/a Interactive PIE ("Endex"), a Florida corporation.
The assets of Endex were valued at approximately $14,000 for which the Company
issued 250,000 shares of restricted common stock. Endex was a medical multimedia
software company, experienced in computer graphics related to the medical
industry. The acquisition was made to implement the Company's Data Systems
Division's development of its surgical safety, touch-screen network known as
OASiS. The President and Chief Executive Officer ("CEO") of Endex, Donald
Lawrence, became the Vice President of Sales and Marketing of the Company. Mr.
Lawrence has an employment contract with the Company which is renewable
annually. (See Part I, Item 6. "Executive Compensation" and Part I, Item 7.
"Certain Relationships and Related Transactions and Part II, Item 4. Recent
Sales of Unregistered Securities.")
From March through June 1998, the Company received gross
proceeds in the amount of $999,000 from the sale or exchange for services of a
total of 920,000 shares of Common Stock in four (4) offerings . The Company
undertook its first offering of 400,000 shares of Common Stock pursuant to Rule
504 of Regulation D ("Rule 504") on March 1, 1998, exchanging shares with
Stockstowatch and its legal advisor in exchange for services; its second
offering of 400,000 shares of Common Stock pursuant to Rule 504 on April 1, 1998
upon the exercise of an option granted pursuant to a Stock Option Agreement; its
third offering of 60,000 shares of Common Stock pursuant to Rule 504 on June 8,
1998; and its fourth offering of 60,000 shares of Common Stock pursuant to Rule
504 on June 18, 1998. While no offering memorandum was used in connections with
these offerings, the business plan of the Company, which was disclosed to each
prospective investor, was for the provision of product development, sales and
services for the medical industry. (See Part I, Item 7. "Certain Relationships
and Related Transactions" and Part II, Item 4. "Recent Sales of Unregistered
Securities.")
In April 1998, the Company issued 2,500 shares of restricted
stock subject to Rule 144 of the Act to an outside consultant in exchange for
computer consulting services valued at $4,375. (See Part I, Item 7. "Certain
Relationships and Related Transactions" and Part II, Item 4. "Recent Sales of
Unregistered Securities.")
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See (b) "Business of Issuer" immediately below for a
description of the Company's business.
(b) Business of Issuer.
General
The Company was formed in 1992, and until 1996, was primarily
engaged in medical research and product development with a focus on
safety-related products geared to the reduction of occupational risks to
healthcare workers. To date, the Company has received four (4) patents on two
(2) products, is seeking patent protection on other products and is in the
process of developing or acquiring the rights to approximately nine (9)
additional medical products intended to be marketed to the healthcare community.
The concepts and designs of the additional medical products are at various
stages of development or negotiation. The Company has an exclusive five (5) year
manufacturing and supply agreement for a line of protective prescription
eyeglasses. The Company markets its product lines under the trademark,
Compliance Plus(TM). (See Part I, Item 1. "Description of Business - (b)
Business of Issuer Medical Products Division - and - Patents, Trademarks and
Copyrights.")
The Company's premiere product in the Compliance Plus line,
marketed under the trade name, SutureMate(R), is a disposable Food and Drug
Administration ("FDA") approved, multi-function, suturing safety device for
surgery. Three (3) of the patents apply to this product. The original instrument
and its developmental variations facilitate advanced surgical techniques, which
increase surgical efficiency and reduce the occupational risk of exposure to
bloodborne pathogens such as HIV and hepatitis. The original product is
currently being re-released. The product has been re-engineered and updated
after feedback from over 4,000 surgeons and surgical technologists. New clinical
advantages and significantly lower manufacturing costs create potential for this
patented, disposable surgical assist device which was originally designed to
facilitate the preferred one-handed suturing technique. (See Part I, Item 1.
"Description of Business - (b) Business of Issuer - Medical Products Division -
and - Patents, Trademarks and Copyrights.")
The Company also markets under the trade name, Prostasert(R),
a FDA listed product which was developed to improve the preparation of pregnant
patients for labor by providing a mechanism for applying and maintaining a
pharmaceutical gel to the cervix and vagina. One (1) of the patents applies to
this product. (See Part I, Item 1. "Description of Business - (b) Business of
Issuer - Medical Products Division - and - Patents, Trademarks and Copyrights.")
The Company has an exclusive marketing and supply agreement
for a semi- disposable, custom-made prescription protective eyewear for
healthcare workers which it markets under the trademark, MediSpecs Rx(TM). In
addition, the Company markets an infection control equipment kit for healthcare
workers under the trademark, IcePak(TM). (See Part I, Item 1. "Description of
Business - (b) Business of Issuer - Medical Products Division - and - Patents,
Trademarks and Copyrights.")
The Company has two (2) additional products in the
development stage: Prepwiz(TM), which is a revolutionary surgical prep and drape
system and FingerSafe(TM), which is a multi-featured surgical thimble. (See Part
I, Item 1. "Description of Business - (b) Business of Issuer - Medical Products
Division.")
The Company aggressively protects its intellectual properties
through patents, trademarks and copyrights, as well as by proprietary software
designs (flow charts, algorithms,
<PAGE>
reports and databases). In addition to the utility and design patents already
issued to the Company, the Company has many other products in various stages of
development which have patent potential. (See Part I, Item 1. "Description of
Business - (b) Business of Issuer - Medical Products Division - Research and
Development.")
The Company had executed distributorship agreements for
SutureMate(R) with (1) Johnson & Johnson Medical Pty., Ltd with respect to the
territories of Australia, New Zealand, Papua, New Guinea in April 1995; (2)
Medicor Corporation with respect to the Netherlands in March 1995; and (3) ISC
Group, a company organized under the laws of the country of Saudi Arabia, with
respect to Saudi Arabia and the so-called GCC Nations (comprising of Oman,
Yemen, United Arab Emirates, Qatar, Bahrain and Kuwait) in December 1994. In
December 1996, the Company executed an exclusive seven (7) year distribution
agreement for SutureMate(R) for the European market with Noesis Capital Group
("Noesis") under which Noesis was to recruit, hire and train European master
distributors and distributor/dealer networks throughout the European continent.
In August, 1997, the Company entered into a distribution agreement for the State
of Florida for its MediSpecs Rx(TM) prescriptive eyewear with Hospital News of
Florida. (See Part I, Item 1. "Description of Business - (b) Business of Issuer
- - Sales and Marketing - Distribution of Products.")
In 1997, the Company focused on the creation and
establishment of an information system for multiple applications within
healthcare. Formerly named Surgical Safety Network, this information system is
now marketed under the name OASiS which is the acronym for Occupational
Automated Services Information System. In April 1998, the Company filed for two
(2) patents on this system, one related to this touch-access information system
and the other related to a technology transfer application. This touch access
system has developed into a platform for initially managing three areas of need:
(1) exposure (to bloodborne pathogen) management; (2)healthcare training; and
(3) healthcare risk management. Effective January 30, 1998, the Company entered
a ten (10) year lease arrangement with a leading Florida medical facility under
which four (4) OASiS kiosks were installed at the healthcare site. (See Part I,
Item 1. "Description of Business - (b) Business of Issuer - Data Systems
Division - and - Patents, Trademarks and Copyrights - and - Dependence on Major
Customers.")
In January 1998, the Company entered into a clinical products
testing agreement with a leading Florida medical facility whereby such facility
will provide clinical testing of designated products of the Company for a term
of five (5) years. (See Part I, Item 1. "Description of Business - (b) Business
of Issuer - Medical Products Division.")
In February 1998, the Company executed a letter of intent to
joint venture with U.S. Surgical Corporation ("U S. Surgical"), a major
manufacturer of surgical products which distributes its products worldwide, for
the marketing of the OASiS system. The Company sent a proposed final agreement
to US Surgical for review. (See Part I, Item 1. "Description of Business - (b)
Business of Issuer - Data Systems Division; Sales and Marketing - Distribution
of Products; and - Dependence on Major Customers.")
In March 1998, the Company entered into an agreement with Stockstowatch to
provide investor relations services as a media consultant to the Company. (See
Part I, Item 1. "Description of Business - (b) Business of Issuer - Employees
and Consultants; Part I, Item 7. "Certain Relationships and Related
Transactions"; and Part II, Item 4. "Recent Sales of Unregistered Securities.")
In June 1998, the Company executed a letter of intent with Ad-vantagenet,
Inc. for the development of Version 2.0 software for the OASiS system. (See Part
I, Item 1. "Description of Business - (b) Business of Issuer - Data Systems
Division.")
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The Company's other products and concepts in development
generally fall into the categories of occupational safety, infection control,
obstetrics and gynecology, and new "minimally invasive" surgery devices and
techniques. Most of these development projects originated from within the
Company, although several are being co-developed with outside third party
inventors who are mainly physicians and medical technicians for whom the Company
provides consulting services in new product development. (See Part I, Item 1.
"Description of Business - (b) Business of Issuer - Medical Products
Consultation Division.") The Company markets its line of products under the
trade name of Compliance Plus(TM).
The FDA lists Surgical as a medical device specifier. Under
FDA Registration No. 1056687, as a medical device specifier, Surgical is
permitted to control the specifications of its products. The Company spent its
formative years in research and development and in obtaining patent protection
on its core products and services. Tangential to its core competency, the
Company had found it necessary to diversify its offerings, but has, over the
past twelve (12) to sixteen (16) months, refocused its efforts towards the
commercialization of its existing product lines. Additionally, the Company has
enhanced its product lines with the development of the touch-access information
system, OASiS.
Surgical efficiency is highly valued in today's healthcare
climate. With the looming threat of bloodborne diseases such as HIV and
hepatitis, safety issues are also of critical importance. Hospitals and surgical
teams have required, and now demand, constant improvement in available products
and technology. In this rapidly growing market, new options for personal
protective equipment are not only valued by the surgical team and appreciated by
patients, but mandated by government agencies such as the Occupational Safety
and Health Administration ("OSHA"). (See Part I, Item 1. "Description of
Business - (b) Business of Issuer - Sales and Marketing - Market Overview, Size
and Occupational Safety.")
The changing healthcare environment requires aggressive
measures to improve efficiency in medical care. This is especially true in
high-tech areas such as surgery, obstetrics, and emergency care. Time saving
products and techniques that improve patient care quality are of extreme value.
Surgical's medical device lines are designated for
wholesaling to international distributors. These products are focused on
improved efficiency and safety. Clinical research on the original Compliance
Plus(TM) product, SutureMate(R), has demonstrated dramatic reductions in sharps
injuries (sharps injuries are injuries to healthcare workers or patients caused
by suture needles, syringes, intravenous catheters, scalpels, screws, wires and
other sharp instruments in the operating room) and a 60% to 85% decrease in
bloodborne pathogen exposure, while at the same time improving procedure
efficiency. Surgical is attempting to secure a research-backed, OSHA mandate
status for its OASiS information system which would make the availability of
Compliance Plus(TM) required in hospitals and other medical facilities.
The Company now is positioned to commercialize Compliance
Plus(TM) product lines and its proprietary OASiS system through its alliance
with U.S. Surgical and their full size international sales force. The Company is
preparing other alliances with one or more established industry leaders in
healthcare. The Company believes that recurring multiple revenue streams and a
"cookie cutter" program and network will allow for potentially rapid growth in
the number of OASiS system installations.
The Company is seeking debt or equity financing in the amount
of between $2,000,000 and $5,000,000. In the event the Company is successful in
securing equity financing, the Company is unable to project the number of
additional shares of its Common Stock which will be required to secure such
financing. The Company currently has no short term debt. In the event that the
Company is successful in securing debt financing, the amount of such financing,
<PAGE>
depending upon its terms, would increase either the short or long term debt of
the Company or both.
Subject to the availability of additional financing, of which there can be
no assurance, the Company plans (1) to facilitate implementation of its sales
strategies, (2) to apply additional funding to existing new technology; and (3)
to apply additional funding to complimentary products and services through
corporate acquisition and exclusive licensing. (See Part I, Item 1. "Description
of Business - (b) Business of Issuer - Risk Factors - 3. Need for Additional
Capital; and 12. Future Capital Requirements.")
The Company currently employs eight (8) people, including its
President, and Vice President and Treasurer. Total employee salaries for the
year ending December 31, 1997 were $121,177 of which $63,841 was paid as
Executive Compensation. (See Part I, Item 6. "Executive Compensation.") The
Company's executive officers and directors devote such time and effort as are
necessary to participate in the day-to-day management of the Company. (See Part
I, Item 5. "Directors, Executive Officers, Promoters and Control Persons -
Executive Officers and Directors."). During the fourth quarter of 1998, the
Company plans to employ two (2) additional individuals in the area of computer
systems and has no plans add any additional staff beyond these two (2)
individuals in the foreseeable future.
The Company is dependent upon the services of three of its
officers and directors. Dr. G. Michael Swor, the founder and Chairman of the
Board and the Treasurer of the Company, is responsible for inventing all four
(4) of the patents, which patents were assigned to the Company in exchange for
stock. Dr. Swor is responsible for the overall corporate policy and the
financing activities of the Company. The Company is the beneficiary of a
"key-man" insurance policy currently owned by Dr. Swor. In addition to his
duties with the Company, Dr. Swor is a board certified, practicing physician
with a specialty in Obstetrics and Gynecology. Frank M. Clark, a Director and
President and Chief Executive Officer, is responsible for the day to day
management of the Company and new product development and the manufacturing of
the Company's products. In addition, he manages new ventures for the Company
including, mergers, acquisitions, joint ventures, strategic alliances and
licensing/distribution agreements. After a nineteen (19) year career with
Johnson & Johnson, Mr. Clark became the president of R. P. Scherer and then went
on to become a senior partner in a consulting firm with responsibilities for
business development with Fortune 100 corporations. Donald K. Lawrence, a
Director and Executive Vice President, Sales and Marketing, is responsible for
sales management, market planning, advertising for the Company and acts as the
Executive Director of OASiS. Mr. Lawrence in addition to nearly ten (10) years
in medical device sales, has extensive experience in computer graphics,
multi-media and computer equipment leasing programs. The Company plans to
continue to use to its advantage the reputations and skills of these three
officers in the medical industry. Nevertheless, while these officers have been
successful in the past, there can be no assurance that they will be successful
in the continued development of the Company which is needed for a successful
operation of the Company. (See Part I, Item 1. "Description of Business" (b)
"Business of Issuer - Risk Factors" and "Part I, Item 5. "Directors, Executive
Officers, Promoters and Control Persons - Executive Officers and Directors.")
Data Systems Division
In 1997, the Company saw an opportunity to establish a
landmark information system for multiple applications within the healthcare
industry. This proprietary surveillance network, called OASiS, was originally
designed to export and tract occupational safety emergencies such as
needlesticks and fluid exposures. The new Version 2 OASiS provides information
consolidation in a secure network of touchports located throughout a health care
facility. At each on-site location, a healthcare worker has touch access to
multi-media information. The OASiS system at its current level of development,
is designed to function in
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three areas: (1) exposure (to bloodborne pathogens) management; (2) healthcare
training; and (3) healthcare risk management.
In the area of exposure management, the healthcare industry is
in need of a standardized, efficient method for tracking, managing and analyzing
occupational safety emergencies such as needlesticks and other fluid exposures.
Standardized and accurate reporting methods result in superior prevention
controls and better post-exposure management for follow-up and counseling.
Information relating to the spread of bloodborne pathogens through exposures
varies widely and OASiS allows for cross-facility standardization. Healthcare
workers need and are now insisting they receive accurate, timely information
relating to exposures. Sharps injuries and other exposures occur frequently.
Current reporting protocols incorporated into the OASiS system
involve a typical chain of events necessary to create an estimated risk
assessment and to provide access to testing, treatment and follow-up.
Under current non-computerized protocols, after an exposure,
the injured worker may be required to complete an incident report (provided by
risk management), meet with a supervisor and then leave the worksite to seek
evaluation, testing and treatment at an employee health facility or the
emergency room. Evaluation techniques, testing and available treatment and
follow-up recommendations are inconsistent, inefficient, not timely and breech
the employee's confidentiality due to the multiple points of contact which are
involved.
With the use of OASiS, the injured worker is provided with
confidential access to information, statistics and a preliminary risk
assessment. The healthcare worker begins the reporting process by "touching"
their way through a very detailed, yet easy to use, Occupational Safety
Emergency Report. Data collection for the exposure incident is mutually
exclusive and exhaustive. The system calculates the risk level based on data
inputted into the system directly by the healthcare worker. The worker receives
a printed data sheet with risk assessment (weighted towards higher risk) and a
recommended testing, treatment and follow-up plan. The worker then is directed
to employee health or emergency care for direct, complete and thorough
assessment by a facility staff member designated in that capacity. If the worker
decides not to proceed, full confidentiality is maintained while critical
information for decision making is provided and documented. If the worker
proceeds, then complete incident data is already collected in the system, sent
to the appropriate locations within the facility and printed for use by the
provider of counseling and treatment.
In the area of employee training, current training systems
involve a number of methods including small groups, large groups, video and
other audiovisuals. Staff training on required courses is commonly done in small
groups. New surgical equipment and techniques are typically done by way of small
groups by product representatives or other trainers and often are enhanced or
reinforced with printed materials or videotapes.
Practice also requires annual training on various subjects
such as modes of disease transmission, information on the epidemiology of
disease, procedures to follow in the event of a potential exposure, use of
personal protective equipment and standard precautions. Training is provided at
the time of job entry, at annual retraining and whenever tasks are modified
which alter the hazards posed. The person conducting the training must be
knowledgeable not only on the subject matter but also on how it relates to the
emergency response personnel.
The Association of Operating Room Nurses ("AORN") recently
issued a list of training recommendations. One such recommendation was a
proposal to develop and evaluate continuing education requirements to assure the
continuing competence of regulated healthcare professionals. Because of the
rapid development of technologic and scientific advances, AORN
<PAGE>
believes that one of the greatest challenges is ensuring the continued
competence of the workers providing nursing care. The competent use of
technology involves not only the understanding of the equipment but also the
decision making/critical thinking skills needed to use the equipment
effectively, safely and appropriately.
Inadequate training has been implicated as a common cause of
patient safety incidents. This issue has gained increased publicity among
consumer advocacy groups. Recent surveys by the National Patient Safety
Foundation at the American Medical Association ("AMA") indicate that 42% of
those surveyed said they were involved in situations where a medical mistake was
made. Of these mistakes, 22% were made during a medical procedure. The causes
cited by the respondents included what they believed to be carelessness,
improper training and poor communications. The survey was commissioned by the
AMA to evaluate the need for initiatives to reduce errors in the healthcare
industry.
With the use of OASiS, the worker has access to a directory of
various succinct multimedia interactive training modules. The Company produces
these modules using multimedia material provided by outside agencies,
organizations and product suppliers. Quick reference is accessible to important
safety-related features and key user information on medical devices and new
techniques. The system was designed to decrease the need for personal training
and to improve patient and worker safety by increasing the availability of
critical information. Improved awareness of new techniques and devices by
healthcare workers has shown improvement in the quality of care provided by the
facility.
The Company believes that the use of the OASiS system benefits
device distributors and critical care departments and that better trained users
of devices should lower the rate of incidents occurring due to misuse of a
device. The system also provides a mechanism whereby alleged defective products
may be efficiently reported to the facility and manufacturer. This aspect is
expected to assist product distributors and manufacturers with field reporting.
OASiS training programs are designed to provide not only a thorough and cost
effective method for employee training, but also to provide the documentation of
the learner's comprehension of the subject. Further, an established network of
OASiS terminals within a facility also acts as a point-of-sale for the Company's
other medical devices such as MediSpecs Rx(TM) semi disposable prescription eye
protection.
Each OASiS system involves "touch access" to a computer
terminal designed as a stand-alone kiosk. In essence, kiosks are computers
equipped with software designed to guide people to information, help them
accomplish a task, or effect a transaction. Kiosks can provide text information,
graphical presentations, and video and sound clips.
Each OASiS touch point strategically located within the
hospital environment and is linked to a main center for accumulation of hospital
data. The system is designed to provide healthcare workers with previously
unavailable access to a wide variety of pertinent information. Unlike
traditional systems which require a certain level of computer aptitude (even if
only using a mouse or keyboard), OASiS' distinct advantage is its foundational
design in a "touch access" format. Virtually every command or task on OASiS is
performed by touching a user friendly icon driven interface. In other words, if
one can point to and touch a picture on a screen, then one has access to a world
of valuable and potentially life saving information through the OASiS network.
Upon approaching OASiS, the healthcare worker may select from
a menu of icon based options including exposure reporting, hospital exposure
policies, device inservices, safety training, communicable disease information
and safety news and events. Each of these areas is accessed and navigated by a
simple touch of the screen. The graphic design of the system is designed to
accommodate workers with minimal reading skills and little computer experience.
<PAGE>
The uniqueness of OASiS is not only the fact that it is a
touch access system, but that it is the first nationwide network for healthcare
which is totally independent of the facility's existing information system. Once
thought to be a disadvantage, the absence of integration into the facility's
existing systems is actually one of the features of OASiS which has gained
praise for the system.
The Company has applied for two (2) patents on the OASiS
system which cover propriety aspects of the software, algorithms and reports, as
well as the inservice training modules which are owned by the Company. OASiS is
powered by a Windows NT platform with full-multimedia, Pentium 233 processors
operating at each station. The stations connect to the OASiS server by way of
the Internet and send and receive data at prescheduled times. This allows the
OASiS server to send new information, training or updates to single stations or
on a broadcast basis to the entire network.
Hospitals employing OASiS will use an average of three (3)
units initially. The units are strategically placed in varying hospital
departments. Pricing is structured so as to simplify the hospital's approval
process. The OASiS system will be leased to the hospitals on a three-year
contract arranged through Rockford Industries, Inc. of Santa Ana, California
("Rockford"), which acts as the third party lessor. After early stage
discounting to the hospital, the Company expects that leasing fees, industry
content production and use fees and software subscription fees will combine for
a per unit revenue of $10,200 initially and $2,200 per month. After the
three-year period expires, the residual value of each OASiS will be added to the
Company's assets. The OASiS system will be upgraded at that time and it is
anticipated that an additional $400 per month will be added to gross revenue for
each unit in place.
Under the leasing arrangement with Rockford, lease approval
will be based upon the credit-worthiness of the lessee hospital. Once approved,
the Company receives a discounted present value of the lease income stream in
advance as the supplier of the equipment. It is these funds which the Company
will use to cover the acquisition costs of the OASiS hardware delivered to the
lessee.
Fees also are anticipated in the future on a percentage of the
product sales made through the OASiS platform and on information sales of
generic occupational safety data. Market share is expected to increase for the
Company as it brings on additional facility users, additional industry content
providers and added on plug-in program modules developed by the Company in house
or through Company acquisitions.
As an information system, OASiS production consists of an
integration of proprietary software with hardware from original equipment
manufacturers ("OEM's"). The Company designed and is the sole owner of the
software portion of OASiS. This was as a result of approximately three (3) years
of research and development. The software presentation consists of the frontline
user interface, the programs and all supporting database gathering programs and
administrative "back office" facilities. The software exists as a user ready or
standardized foundation with widespread adaptability as the system is installed
at the hospital's facility. As of January 1998, Version 1.1 was fully
operational at the initial installation and ready for installation in additional
facilities. Plans for upgraded versions are in progress and are being adapted to
the needs of the end-user market as they are discovered.
Within the original site installation, OASiS is being used for
exposure reporting, inservices and new technology, communicable disease
information, news and events, safety education and hospital policies. New
installations will add user identification log on capability, additional levels
of news and events and training with certification. The Company plans to further
expand the system with software plug-in integrations and advanced data reporting
and management.
<PAGE>
In initially designing a system for a hospital facility, the
Company completes a site survey to determine the needs of the facility regarding
OASiS and system installation, as well as other pertinent information related to
station location within the facility and available telecommunication resources.
The site survey also includes details for customizing the software for the
specific facility's application.
The Company has determined that the most economical way to
deliver the integrated hardware/software product to the customer is through a
full service integration specialist (the "Integration Specialist"). The services
and responsibilities covered by such specialist will be: (1) hardware
installation into the OASiS kiosk and configuring the components; (2) software
installation; (3) software configuration; (4) 24-hour "burn in" and testing; (5)
hardware disassembly, packing and shipping; (6) on-site installation; (6)
on-site testing; and (7) three-year 24 hour turn around warranty on all
hardware. Many potential integrators exist and the Company has entered into
preliminary agreements with two initial candidates. The Company expects to use
no fewer than two integrators on a regular basis to ensure the quality, service
and performance required in a competitive situation.
The production cycle begins at the end of the initial sales
cycle with the completion of the site survey. Information regarding
communications availability, station location and on-site coordinator data is
integrated into the customization process. A purchase order is placed with the
Integration Specialist who in turn orders components from the various OEM's. The
site survey is then used by the integration house for coordination of on-site
services such as station location, service subcontractors and others.
Effective January 30, 1998, the Company entered into a Prepaid
Capital Lease Agreement with Community Health Corporation (the "Lessee"), a
Florida not-for-profit corporation which acts in support of the Sarasota
Memorial Hospital ("SMH") ( the "SMH Lease Agreement"). SMH is the site of the
initial OASiS installation. Pursuant to the terms of the SMH Lease Agreement,
SMH leased four (4) OASiS kiosks and accompanying software and technical support
for a term of ten (10) years commencing on a date which was to follow an initial
trial period. The Company was required to install the kiosks within five (5)
days of the execution of the SMH Lease Agreement. SMH was entitled to review the
performance of the installations for a period of thirty (30) days after
installation. Provided the systems performed in accordance with pre-established
standards during such trial period, the SMH Lease Agreement term would commence
at the time of acceptance. Pursuant to the SMH Agreement, at acceptance, the
Lessee agreed to prepay all rent payments for the term of the SMH Lease
Agreement, which sum amounted to $250,000. The Company is obligated during the
term of the SMH Lease Agreement to provide software maintenance, improvements
and updates to the OASiS system and training for the use of the units to SMH's
personnel. In addition, the Company is required to carry comprehensive general
and products liability insurance in the amount of $2,000,000 covering the use of
the OASiS system and naming SMH and the Lessee as co-insured parties. And
further, the Company agreed to indemnify the Lessee and SMH against any liens,
liabilities or other damages incurred by the Lessee or SMH as a result of the
installation or use of the OASiS system. At the end of the term, the Lessee has
an option to purchase the four (4) OASiS kiosks for the sum of $1. Neither party
to the SMH Lease Agreement may assign nor delegate any of the rights or
obligations contained in the agreement The units were installed and are
operational. At the current time the SMH Lease Agreement is in full force and
effect. The Company received the payment due under the SMH Lease Agreement on
January 30, 1998.
Following a presentation before the Association of Infection
Control Professionals and Epidemiologist ("APIC") in May, 1998, the Company
received nearly a dozen applications from multi-facility hospital systems
wanting to be a part of the next wave of OASiS installations.
<PAGE>
And, the Company received inquires for at least four times that many facilities
seeking more information about the development of OASiS.
From March 31st through April 2nd, 1998, the Company, in
conjunction with U S Surgical, demonstrated the OASiS touch-access information
system at the AORN convention in Orlando, Florida. This is the largest nursing
convention in the world. OASiS accounted for over 21% of all leads generated by
US Surgical at AORN. Based upon the evaluation forms competed by the nurses, it
was found that (1) the most useful section of OASiS, as it now exists, is the
device inservices; (2) most of the nurses characterized the system as a
convenient way to receive inservices, while a few of them viewed it as a sales
and marketing tool for device manufacturers; (3) an overwhelming number of the
nurses who responded stated that they would rely on OASiS on a daily basis; (4)
the most requested additional features were a Surgeons' Preference Card which is
scheduled for version 2.x testing, electronic PDR and Latex sensitivity which is
under development; and (5) most of the nurses would recommend OASiS for their
operating room.
Following the AORN convention, the Company and US Surgical
agreed to terms for the further presentation of OASiS. At the current time the
parties are preparing a long-term agreement under which US Surgical will arrange
for the installation of ten (10) OASiS systems in hospital facilities which US
Surgical defines as "Centers of Excellence." Each system will include thirty
(30) inservice training modules. Following an initial nine (9) month trial at
each of these facilities and subject to satisfactory performance by the system
and the technical support group, US Surgical will have approximately one hundred
(100) additional systems installed in other healthcare facilities nationwide. US
Surgical will finance the development and installation of the ten (10) systems.
The Company will receive a fee in the amount of $36,000 for the initial ten (10)
installations during the testing period and a fee in the amount of $108,000 for
the balance of a three (3) year term for such initial installations. In
addition, the Company will earn profits on the sales of its products through the
point-of-sale facility in the OASiS system and from the fees it receives from
other device providers and training companies through the use of the inservice
modules (the "Long Term US Surgical Agreement."). (See Part I, Item 1.
"Description of Business - (b) Business of Issuer - Sales and Marketing -
Distribution of Products - and Dependence on Major Customers.")
On June 30, 1998, the Company executed a letter of intent with
Ad-vantagenet Inc. of Sarasota, Florida ("Ad-vantagenet"). Under the terms of
the letter of intent, Ad- vantagenet will assist in the creation of version 2.0
OASiS software, including creating the art and graphics. Version 2.0 is designed
to allow for more dynamic features on the system including instant updates,
information-gathering and editing features. The Company chose Ad- vantagenet to
complete Version 2.0 after unsatisfactory results were achieved by Gambit, Inc.,
d/b/a MediaWorks. The functions Ad-vantagenet is currently incorporating into
Version 2.0 include features which had been requested of MediaWorks but were not
provided. The total projected cost of the Ad-vantagenet project is one-fourth of
the cost which MediaWorks projected. The Company is in litigation with
MediaWorks over the termination of their agreement. (See Part II, Item 2. "Legal
Proceedings.") Subject to the successful completion of the letter of intent
project with Ad-vantagenet, the Company intends to enter into a more structured,
long-term agreement for further OASiS development.
The Company knows of only one other system which is designed
to accumulate exposure data. (See "Part I, Item 1. "Description of the Business
- - (b) Business of the Issuer Competition.") The Company believes that OASiS is
the superior product and that it represents the leader in the industry at this
time.
<PAGE>
Medical Products Division
Compliance Plus(TM) is the designation under which all the
Company's products are developed. The Company trademarked this term in order to
indicate that the criteria used in the research and development of every
Surgical product and service meets or exceeds compliance mandates set forth by
the OSHA, the Centers for Disease Control and Prevention ("CDC") and other
governing bodies. It is the goal of the Company to exceed existing standards in
order to assume a leadership role in the area of medical prevention and safety
products.
The Compliance Plus(TM) Exposure Prevention Program includes
several safety engineered products dedicated to reducing exposure and cross
contamination in the operating room. These exposure prevention products are
designed to maximize surgical efficiency while reducing bloodborne pathogen
exposure to healthcare workers and improving patient care in a wide range of
applications. The Company has already introduced the first two Compliance
Plus(TM) products into the market - MediSpecs Rx(TM) and SutureMate(R).
Additional Compliance Plus(TM) products are scheduled for release in 1998. The
remainder of the proposed Compliance Plus(TM) line will be added through further
in-house development and acquisitions, which are already in process.
The Compliance Plus(TM) devices include: SutureMate(R), a
patented single-patient- use surgical assist device for safe and efficient
suturing; MediSpecs Rx(TM), a disposable prescription protective eyewear for
healthcare workers; Prostasert(TM), a patented obstetrics/gynecology ("OB/GYN")
pharmaceutical applicator; IcePak(TM), an infection control equipment kit for
healthcare workers; PrepWiz(TM), a revolutionary surgical preparation and drape
system (in development); and FingerSafe(TM), a Multi-featured surgical thimble
(in development).
The Company believes that the use of Surgical's Compliance
Plus(TM) exposure prevention strategy provides numerous direct and indirect
benefits. These benefits relate to a significant reduction in bloodborne
pathogen exposure from needlesticks and glove perforations, as well as improved
procedural efficiency. The Company believes that prevention through the use of
its products reduces expenditures in employee health post-exposure work-up and
treatment, and lost employee time. The Company further believes that there are
also benefits from improved employee morale, community relations, and reduced
liability and workers' compensation costs.
In January 1998, the Company executed a clinical products
testing agreement with SMH for a term of five (5) years. Under the terms of the
agreement, Surgical will submit ten (10) surgical and medical products to SMH
for clinical testing (the "SMH Clinical Testing Agreement.") Surgical will
reimburse SMH for certain designated budgeted costs and pay a fixed amount of
$25,000 for each study, payable in monthly increments over the term of each
study. In addition, SMH will receive one half of one percent (.5%) of the
proceeds received by the Company from the sale of the products tested. The
products to be tested include SutureMate(R), MediSpecs Rx(TM), Prostasert(TM),
PrepWiz(TM), FingerSafe(TM) and five (5) other products in various stages of
development.
SutureMate(R)
SutureMate(R), a patented, disposable, surgical assist device,
was introduced in 1993. Its unique design facilitates the highly recommended
one-handed suturing technique which is advocated by occupational safety experts.
When one-handed suturing is not used, extra steps are required by the surgeon or
the assistant in cutting the needle free of the suture thread and extra time and
hand movements are required of the surgeon in manually adjusting needles while
using a needle holder in most suturing processes. SutureMate(R) allows the
surgeon to use a safer, more efficient method of surgical stitching. The product
has features which include a foam needle-cushion, and a suture cutting slot.
<PAGE>
SutureMate(R) can be used in a wide variety of specialties,
including surgery, OB/GYN, emergency room treatment, plastic surgery, podiatry
and dentistry. It was designed by Dr. Swor, the Company's Chairman, who is a
surgeon himself for use by surgeons and surgical assistants. The Company is not
aware of any comparable product on the market. New applications for its use are
being devised regularly and several variations of the original product are in
development, including a laparoscopic version, for use in the fast growing field
of minimally invasive surgery.
The product acts as a needle bank for temporarily "parking"
suture needles, and a cutting slot for removing the needle from the suture
thread. Using the SutureMate(R) device enables the user to "free-up" the
non-dominant hand to engage in additional tasks such as holding instruments and
exposing tissues.
Data from the CDC indicates that seventy-seven percent (77%)
of sharps injuries are caused by suture needles. In one-third of all injuries to
surgeons, the sharp instrument was re-exposed to the patient. When one-handed
suturing is not used, the surgeon's non-dominant hand is particularly
vulnerable. Sixty-six (66%) percent of all suture needlesticks occur to the
first two fingers of the non-dominant hand. This is where SutureMate(R)'s
application is most significant.
Clinical data suggests that SutureMate(R) dramatically
decreases needlestick injuries and other exposures such as glove perforations.
The cutting slot feature enables the user to efficiently remove the needle from
the suture thread without the need for an assistant, and with greater efficiency
than traditional methods.
SutureMate(R) has been cited by safety advocates and infection
control specialists in several publications and manuals. A study from Canada by
Drs. Bebbington and Treissman was published in the October 1996 issue of the
American Journal of Obstetrics and Gynecology, Volume 175, No. 1, Part I. This
study concluded that there was a 71% reduction in glove perforations when
SutureMate(R)n was used and stated that the "surgical assist device
[SutureMate(R)] appeared to be useful in decreasing glove perforations
regardless of the degree of training and expertise of the operator." The study
concluded that the "use of this device significantly reduced the number of glove
perforations that occurred curing vaginal repair after delivery. Therefore it
can be of benefit to the safety of operators during an all-too-frequent
procedure in obstetrics. This is especially true when universal precautions are
being advocated for all patients. A decrease in glove perforations deceases the
exposure to potential pathogens." This study was supported by the Company. The
need for sharps management in surgery has generated a number of articles. In an
article by Dr. Mark Davis which was published in the April 1995 issue of
Infection Control & Sterilization Technology, Volume 1, No. 1, Dr. Davis stated
that "most percutaneous injuries can be prevented by the use of currently
available safetyengineered devices and by the application of known safety
protocols and techniques...Other techniques such as double gloving and suturing
with a device requiring one hand, offers some protection against the growing
threat of HIV, and hepatitis B and C." The one-handed suturing device discussed
in the article is SutureMate(R) which was being evaluated by the surgical and
OB/GYN staff at Dr. Davis' institution. Dr. Davis served on the Scientific
Advisory Board of the Company. (See Part I, Item. 5. "Description of Business -
Directors, Executive Officers, Promoters and Control Persons - Scientific
Advisory Board.")
SutureMate(R) research findings have been presented to
several major medical organizations including: the American College of Surgeons
and Center of Disease Control and Prevention ("CDC") at a joint meeting on the
prevention of bloodborne pathogens in surgery and obstetrics which was held in
Atlanta, Georgia in February 1994 (the "February 1994 Conference"); at the
annual meeting of the Society of Hospital Epidemiologist of America in Santa
Clara, California in March 1994; at the annual meeting of the Association of
Surgical
<PAGE>
Technologists in Atlanta, Georgia in May 1995; at the annual meeting of the
Society of Perinatal Obstetricians in Vancouver, Canada in February 1996; at the
annual meeting of the Association of Surgical Technologists in Atlanta, Georgia
in June 1996 and at the annual meeting of the ACORN in Atlanta, Georgia in April
1997. (See Part I, Item. 5. "Description of Business - Directors, Executive
Offiers, Promoters and Control Persons - Scientific Advisory Board.")
The February 1994 Conference was the first joint conference of
the American College of Surgeons and the CDC. Donna J. Haiduven, an infection
control specialist and a member of the Company's Scientific Advisory Board, and
Dr. Maria D. Allo of Santa Clara Valley Medical Center presenting an abstract
entitled "Evaluation of a one-handed surgical suturing device to decrease
intraoperative needlestick injuries and glove perforations." The study concluded
that the "[u]se of "Suture Mate" facilitates one-handed suturing technique,
resulting in less likelihood of glove perforations and intra-operative
needlestick injuries" and "[t]he "Suture Mate" device obviates the need for
two-handed suturing and provides a safe place to "bank" needles on the surgical
field."
The use of SutureMate(R) eliminates the need for the more
expensive "control release-type" sutures. By virtue of improved surgical safety
efficiency, the Company believes that the patient will experience significant
savings through reduced anesthesia and operating room time. In addition, the
Company believes that this product reduces cross contamination which can save
expenses related to surgical wound infection.
SutureMate(R) has recently been re-released. The product has
been re-engineered and updated after feedback from over 4,000 surgeons and
surgical technologists who have used or reviewed the product since its
inception. As a result of the re-design, the Company believes that there will be
new clinical advantages and that the product can be produced at a significantly
lower manufacturing cost.
Currently, the re-designed SutureMate(R) is manufactured by
the Hansen Plastic Division of Tuthill Corporation at their plant located in
Clearwater, Florida ("Tuthill"). Tuthill manufactures each non-sterile unit at a
cost of $.902 per unit. The non-sterile product is then shipped to Gamma
Services, Inc. in Lakeland, Florida for sterilization. The cost per unit for the
sterilization process is $.172. This results in a total cost per unit of $1.074.
The Company currently is considering other manufacturing sources. (See Part I,
Item 1. "Description of Business - (b) Business of Issuer - Sources and
Availability of Raw Materials.")
MediSpecs Rx(TM)
MediSpecs Rx(TM) is a prescription protective eyewear which
Surgical co- developed for use in the operating room and related areas. The
Company has an exclusive, renewal 5-year, distribution agreement which covers
the United States with Morrison International, Inc., a Pennsylvania corporation
with its principal place of business in Sarasota, Florida ("Morrison"). Under
the terms of the agreement with Morrison executed in September, 1996, the
Company has the right to purchase, promote, resell and distribute Morrison's
trademarked glasses under the Company's private label trademark, MediSpecs
Rx(TM). The price for the product is fixed for the initial five-year term and
requires minimum purchases which are scaled over the first five-year period from
2,750 units the first year to 56,000 the fifth year. Under the agreement, the
Company its entitled to distribute the product either directly or through other
dealers. (See Part I, Item 1. "Description of Business - (b) Business of Issuer
- - Sources and Availability of Raw Materials.")
MediSpecs Rx(TM) are featherweight prescription glasses with
OSHA- recommended protective side shields. A proprietary manufacturing and
assembling process minimizes the cost of production and allows healthcare
workers to purchase prescription
<PAGE>
protective eyeglasses for dedicated use in an occupational setting. The Company
believes that users will purchase multiple pairs of glasses. It is anticipated
that each pair will have an average life of approximately 50-100 uses. While an
average pair of prescription eyeglasses costs over $150, MediSpecs Rx(TM)
glasses are being sold for approximately $25 a pair and can be ordered by mail.
The cost to the Company under the Morrison agreement is $6.98 per pair.
MediSpecs Rx(TM) glasses protect against splashing of blood
and bodily fluids into the user's eyes, thus further reducing exposure risk.
Medi-Specs Rx(TM) are ultra lightweight, making it unnecessary to the user to
wear the more cumbersome Eyewear currently available for eye protection.
In August 1997, the Company entered into a distribution
agreement for the sale of MediSpecs Rx(TM) in the State of Florida. This
agreement is with Hospital News, a Florida corporation with its principal place
of business in Tampa, Florida ("Hospital News"). SMH and Doctors Hospital of
Sarasota are excluded from the agreement and remain under the distributorship of
the Company. The initial term of the Hospital News agreement was through
December 1997, and is renewable by the parties for successive one (1) year
periods. The price for the product is fixed for the initial term at $12.95 per
pair and requires minimum purchases which are scaled over the first six (6)
months from 0 units the first month to 800 the sixth month. Under the agreement,
Hospital News its entitled to distribute the product either directly or through
other dealers. Although Hospital News did not meet its quota during the initial
period, the Company has elected to extend this arrangement for an additional one
(1) year period. (See Part I, Item 1. "Description of Business - (b) Business of
Issuer - Distribution of Products.")
Due to the price at which MediSpecs Rx(TM) may be offered to
users and the prevention of cross-case contamination, the Company believes that
there is a large international market available for the use of this product.
Prostasert(TM)
Prostasert(TM) , originally named LaborMate, is a patented,
disposable, obstetrical/gynecological specialty device with many potential uses,
including use for patients undergoing the induction of labor. The product
provides a vaginal application of a precise dosage of pharmaceutical gel which
is designed to shorten and improve the labor and delivery process. Although
simple in design, the Company believes that Prostasert(TM) is unique in that it
differs from its competitors by allowing for a more site-specific application
and improved maintenance of the pharmaceutical gel used. Prostasert(TM), a FDA
listed device, is a specially designed medication delivery and maintenance
system which allows a physician to deliver the proper dosage and maintain that
dosage precisely. With over four (4) million births annually in the United
States alone, the Company estimates the potential market for obstetrical use of
this product to be approximately 200,000 to 400,000 cases annually. Alternate
uses and other applications for this product are under development.
No FDA clearance was needed for this product because it is
assembled from FDA approved parts. The product was listed by the FDA in June
1994. Prostasert(TM) was approved for clinical research by the Institutional
Review Board of the SMH where it has been undergoing clinical trials for the
past three (3) to four (4) years to document the clinical usefulness of the
product. Once such trials are completed and provided additional funding is
available (of which there can be no assurance), the Company intends to make
final engineering adjustments and then commence manufacturing for initial market
entry in the United States by the end of 1999. The Company is seeking a
distribution outlet while the additional clinical trials are developed.
<PAGE>
Icepak(TM)
The Company is researching patent protection for this
specialty product and its accessory components. This product is a belt which is
designed to carry various infection control-related products providing
healthcare workers with easy access to personal protective supplies. The belt
itself is a durable, reusable product with consumable supplies attached. The
Company intends to market and sell this product primarily through catalogs, with
a focus on distribution to nurses. The Company is in the process of developing
arrangements with suppliers of the consumable supplies to be used in the belt. A
prototype has been manufactured and the product is expected to enter the market
before the end of calendar 1999 if the required agreements with potential
manufacturers/suppliers have been completed and if additional funding is
available (of which there can be no assurance).
Research and Development
The Company engages in extensive research and development of
new medical technology. Many product concepts and partially developed designs
have been accumulated from internal and external sources. As funding becomes
available, of which there can be no assurance, new products will be brought
through the development process. Initial products in development include:
RD91862: PrepWiz(TM): This is a multiple product for preparing
the patient's surgical site. The Company anticipates that this product will
potentially solve major efficiency, costs and safety problems. The Company
currently plans to co-develop this product line with a major medical
manufacturer and subsequently license it for sales and distribution. Currently,
pattern designs are in process and the Company expects to receive non-sterile
samples for evaluation by October 30, 1998. The samples will be provided to a
contract converter who will produce non-sterile disposable samples to be used in
finalization of the design.
RD121096: Finger-Safe(TM) Surgical Thimble: The Company is
seeking patent protection on this fingertip protection device. It is expected
that this product can be added to the Compliance Plus(TM) product line in the
event that Company secures additional capital, of which there can be no
assurance. This product is used much like a thimble for sewing, but has special
features that facilitate the suturing technique and also has special safety
features and a storage component. The product is designed to reduce further the
risk of needlesticks and glove perforations to the non-dominant hand.
Advanced Surgical Techniques
The Company has several products in development that are
designed to contribute to the rapidly growing market of "minimally invasive"
surgery with increasing emphasis on small incisions, laparoscopy, laser
treatment, and more efficient post-surgery convalescence. The Company believes
that there is a significant demand for improved technology to facilitate these
newly developed procedures. The Company has several concepts and projects in
development related to this type of surgery, and many of the new product ideas
presented to the Medical Products Consultation Division by third parties are
included in this group.
Medical Consultation Division
The Medical Consultation Division provides consulting services to
individual inventors on a fee basis. Currently Dr. Swor, Mr. Clark and Mr.
Stuart, a Director of the Company, provide such services depending upon the type
of expertise required. The principal function of the division is to find new
ideas and potential products which compliment the Company's product mix.
<PAGE>
This division has been retained to conduct several research
evaluations of various proprietary medical products and has completed two such
projects, one for London International U.S. Holdings, Inc. (a study to determine
the spermicidal activity of several concentrations of nonoxynol-9 lubricated
condom products) and another for Purely Cotton (a study of a tissue made from
cotton rather than paper to determine whether the product was less irritating to
people with chronic skin conditions). Based upon the initial evaluation of these
products, the Company believes that one or more could be very successful and
lead to additional business for the Company.
Business Strategy
The Company's business strategy, which is dependent upon its
obtaining sufficient additional financing with which to enhance the
commercialization of existing and future products of the Compliance Plus(TM)
exposure prevention and surgical efficiency product line and the OASiS
information system (of which there is no assurance), is to provide innovative
products and services which create and maintain a safe surgical environment for
medical and hospital staff, healthcare workers and patients, as well as to
enhance the level of surgical care available to patients. The Company's revenues
are based upon lease payments from its Data Systems Division, sale of its
products and distribution fees from the Medical Products Division and consulting
fees earned by the Medical Consultation Division. The Company's revenues are
dependent on the volume of sales from its products.
Revenues from sales are recognized in the period in which
sales are made. The Company's gross profit margin will be determined in part by
its ability to estimate and control direct costs of manufacturing and its
ability to incorporate such costs in the price charged to clients.
The Company's objective is to become a dominant provider of
medical devices and systems which improve occupational safety, advance surgical
techniques and provide greater efficiency. To achieve this objective, and
assuming that sufficient operating capital becomes available, the Company
intends to: (i) develop international distribution channels and comarketing
alliances for the Company's products and services; (ii) continue research and
development and acquisitions of synergistic products and software programs; and
(iii) frequently fine tune market strategies based upon ongoing evaluations of
customer needs, capital budgeting opportunities and market economy fluctuations.
Management believes that Surgical is posed to lead in the
ever developing surgical and medical safety market and plans to capitalize on
the opportunity while providing significant benefits to its customers and
improving overall patient care. Management expects, in the event Surgical
continues to achieve product acceptance, to increase the Company's market
penetration through additional acquisitions and potential merger opportunities
with appropriate bases of business development. However, such expansion presents
certain challenges and risks and there could be no assurance that Surgical, even
if it were successful in acquiring other bases of business development, would be
successful in profitably penetrating these potential markets.
Sales and Marketing
The following discussion of the medical industry, as it
relates to the Company's objectives, is of course pertinent only if the Company
is successful in obtaining sufficient debt and/or equity financing to
commercialize its existing products and OASiS, to add additional key personnel
and to supplement new product and software program development. In addition, the
Company must be able to generate significant profits from operations (which are
not expected in the foreseeable future) and/or additional financing to continue
expanding the business and/or to
<PAGE>
fund the anticipated growth, assuming Surgical's proposed expanded business is
successful. There can be no assurance such financing can be obtained or that the
Company's proposed expanded business will be successful.
Background
According to the World Health Organization, forty (40)
million people will be infected with HIV by the year 2000. There are nearly ten
(10) million people worldwide currently infected, including close to one (1)
million children. Over four (4) million Americans carry the HIV virus.
Approximately ten percent (10%) of individuals will contract this very serious
illness when exposed by way of a sharps injury.
Auto Immune Deficiency Syndrome ("AIDS") is now the top
killer of men age 17 to 54 in the United States. The CDC and the National
Institutes of Health ("NIH") have focused a great deal of effort and research
into improving occupational safety and decreasing the risk of bloodborne
pathogens in the healthcare setting. The American Hospital Association reports
that needlestick injuries are the most common injury to healthcare workers and
represent the greatest risk of occupational exposure to AIDS, Hepatitis, and
other viral diseases. There are over two (2) dozen diseases that have been
involved in documented transmission by way of exposure. Over one and a quarter
million (1,250,000) Americans have chronic Hepatitis B and when their blood is
exposed to a healthcare worker's intact skin, the transmission rate is thirty
percent (30%). Since operating room personnel and surgeons are in particular
high risk categories, the Company has committed itself to developing products
and techniques to decrease the potential for deadly viral transmission to and
from healthcare workers and patients.
Market Overview, Size and Occupational Safety
Healthcare workers need secure and safe working conditions as
much as life's other necessities. Surgical seeks to provide solutions to meet
that need in the critical care setting. Value is built into Surgical's products
by reducing costs of inefficient surgery, occupational exposures and patient
risks. Exposure to bloodborne diseases occurs in up to fifty percent (50%) of
surgical cases, with needlesticks and other sharps injuries magnifying the risk.
Up to 75% of sharps injuries in the operating room are related to suturing.
Currently used safety measures are inadequate, with an unbelievable 23% exposure
rate documented even in known or suspected HIV cases. Hepatitis C is a new,
incurable threat and HIV is now the number one cause of death in 25 to 44
year-olds in the United States. Significant resources are devoted to
occupational risks, with over $3 billion expended annually in the United States
on sharps injuries and bloodborne exposures. According to the Canadian Medical
Association Journal, treating one HIV-infected healthcare worker may cost in
excess of $500,000. In addition to the risk of exposure, significant pressures
have been made to reduce costs in surgery and in critical care units.
With the increased prevalence of HIV, hepatitis and other
deadly diseases, OSHA has set increasingly strong standards. Despite the
standard use of protective gloves and clothing, operating room personnel and
surgeons are at a particularly high risk. According the United States Department
of Health and Human Services, healthcare workers contract more than 15,000
bloodborne infections from occupational exposure per year, resulting in 300
deaths and thousands of illnesses. Surgical wound infections are relatively
common and result in increased costs, longer hospital stays and increased
morbidity in patients. A Yale University study found that visible contact with
patient's blood occurred in 63% of surgical cases and sharps injury rates range
from 7% to 50%, depending on the type of case. At current rates, researchers
from major medical institutions have estimated the lifetime career risk of
occupational HIV infractions for surgeons as high as 20%, depending on the
patient population. Despite this data, HIV is overshadowed by Hepatis B and C
which are 100 times more infective.
<PAGE>
Due to increased awareness of these problems, there has been a movement
from healthcare workers themselves for facilities to provide adequate protection
and safety engineered technology. Hospitals also benefit from improved
technology and can significantly decrease post-exposure follow-up and treatment.
A large body of research and statistical evidence has been
accumulated over the last ten (10) years regarding the significant risk of
bloodborne disease to healthcare workers. Similar kinds of risks exist regarding
the transmission of disease from health workers to patients. Since the AIDS
virus was discovered and blood testing became available in 1985, even greater
awareness has been focused on these problems. The Company has focused its
efforts on identifying occupational risks in the healthcare industry and seeking
to provide solutions to various problems regarding these risks.
As noted, the bloodborne pathogens which have received the
most attention are AIDS and Hepatitis. There are an estimated ten (10) million
people infected with the AIDS virus worldwide, and because of the nature of the
disease, it is impossible to determine infected individuals with certainty, even
with blood tests. Hepatitis is even more widespread and, according to medical
experts, much more contagious. These diseases and others are transmitted by
contact with blood or bodily fluids and reports of infection through
needlesticks, sharps injuries, and skin to skin contact are accumulating. The
American Hospital Association, in 1992, reported over 800,000 occupational
needlestick injuries in the United States each year, and estimated that
approximately 16,000 were contaminated by HIV. They also estimated that as many
as 60 healthcare workers may become infected annually with HIV as a result of
occupational exposure. There have been estimates as high as 12,000 Hepatitis B
infections annually to healthcare workers. A newer form of Hepatitis, Hepatitis
C, is rapidly becoming even more important and more serious.
OSHA now has strict guidelines for personal protective
equipment, such as gloves, gowns, and eye wear. However, with a reported rate of
glove perforation in surgery of up to 50%, sharps injuries of up to 25% and
concerns regarding the prevention of bloodborne pathogen transmission,
healthcare professionals, workers and patients are requesting more protection.
Most professionals agree that many sharps injuries in surgery are preventable
with changes in techniques and the use of new devices and protective equipment.
The cost of these types of exposures is also a significant
factor in the Company's business. The direct financial burden that facilities
bear for medical evaluation and follow-up after a single needlestick injury is
estimated to be $200 to $1,300 ($3 billion in the United States)
According to the United States Department of Health and Human Services, the
average cost of treating an accidental needlestick is $1,300. These costs do not
include factors such as worker's lost time and potential liability litigation.
This figure does not include indirect costs such as time lost from work, medical
expense and potential liability loss. With annual expenditures in the United
States on medical and surgical supplies estimated by current medical journals at
more than $6 billion annually, there would appear to be a large budget for
safety-related products. Surprisingly, there have been few significant advances
in new technology regarding bloodborne pathogens. The Company is focusing its
research and development efforts directly on improvements in this area with
operating room, infection control, and personal safety equipment product lines.
The Company's initial product, SutureMate(R) was designed
primarily to reduce the risk of needlestick and glove perforation during
suturing. Infection can also be transmitted by skin to skin (mucocutaneous)
contact, and the Company's Infection Control Equipment Pack (IcePak(TM)) product
was developed from the need to reduce this hazard.
<PAGE>
Customer demand for the Company's' products and services is
expected to be stimulated further by recent scientific data suggesting that the
risks related to these hazards were originally underestimated. In addition, new
serious viral diseases are discovered regularly. In a 1994 study of 260
patients, over 87% indicated concerns about cross-contamination and bloodborne
diseases in surgery. The majority of those surveyed expressed a willingness to
add cost to surgery if exposure could be reduced.
With an estimated 25 million surgical procedures and 4
million births annually in the United States alone, and a fertile international
market as well, the Company is focused upon the development of innovative
protective equipment, efficiency related instruments, and cost efficient
supplies for furthering the concept for cost conscious safety in healthcare.
Hospitals are under increasing pressure to evaluate and adopt
the use of safety- related technology, especially with regards to sharps
injuries. New regulations, hospital policies, and federal guidelines will
encourage any efficient means of improving safety, especially with regard to HIV
transmission. Because of the size and demands of these markets, the Company
believes that this is an area of potentially significant growth if it can
continue to strengthen the market niche is has created.
Markets
The primary medical industry markets include hospitals,
healthcare facilities, surgeons, nurses, technologists in procedure-oriented
specialties, including obstetricians, dentists, emergency room personnel and
other medical professionals.
The total global medical products market is $100 billion
annually and such market is growing at the rate of 18% to 25% per year. It is
estimated that the needle protection safety healthcare market is growing at the
rate of approximately 17% per year. Internet supported information technology is
growing at triple digit rates. In 1996, it was forecasted that the healthcare
industry would spend $15 billion annually on information technology during the
following five years and that this number would increase by 19% in 1997. The
potential global market for Surgical's products (devices and information
systems) is estimated at over $1.3 billion.
The initial target market areas for the product side of the
Company's business are in the major metropolitan centers in the United States
and abroad that presently have large teaching programs, higher disease
prevalence and acute problem awareness. Entry into these target areas is
expected by the Company to significantly ease general market penetration.
The Company plans to continue to export its products
worldwide to markets including Europe, South America and Asia, the Middle East
and the Pacific Rim. Previously it had exclusive distributorship agreements with
Johnson & Johnson Medical Pty. Ltd. with respect to the territories of
Australia, New Zealand, Papua, New Guinea and Fiji, with Medicor Corp. with
respect to the Netherlands and with ISC Group with respect to Saudi Arabia and
the so-called GCC Nations which expired principally due to the Company's
financial inability to sustain sufficient levels of production under prior
manufacturing arrangement. Although technically in force, the agreement with
Noesis relative to Europe is inactive. The Company believes that it will be able
to reactivate these distribution arrangements with the re-designed SutureMate(R)
under the manufacturing arrangement with Tuthill or other suitable suppliers
under consideration, provided additional funding is available to Company to
manufacturer adequate inventory. There can be no assurance that such
distribution arrangements can be re-established nor that there will additional
funding available to the Company. (See Part I, Item 1. "Description of Business
- - (b) Business of Issuer - Distribution of Products.")
<PAGE>
OASiS has been foundationally designed to accept
multi-lingual applications. The Company expects that this will not only
facilitate acceptance in the cosmopolitan markets within the United States, but
also will enable instant adaptations to international markets which
traditionally follow the United States leadership in developments of safety and
exposure guidelines.
A major portion of the safety products and services currently
ready for marketing by the Company are unique and have little or no competition.
In most cases, Surgical's state-of- the-art products, techniques and services
position the Company as a pioneer in new markets. This is a direct result of the
Company election to avoid the typical commodity sales of gloves, gowns, shields,
and other products of that type and to focus on innovative, safety related
products such as SutureMate(R), which was the first device of its kind to
provide for lower risk, one-handed suturing.
The market for Surgical's products is divided into three (3)
segments: end users, healthcare risk managers and medical-related companies.
The primary end user market for the products and services of
Surgical include 8,000 hospitals, 100,000 surgeons and over 1,000,000 surgical
nurses and technologists. Secondary end user markets include out-patient
clinics, dental offices, emergency medical services, fire and rescue
organizations, medical offices and laboratories. This segment of the Company's
market will be the ultimate user of both the medical devices and OASiS and it is
particularly defined by the need for protection against bloodborne diseases from
body fluids and sharps injuries, such as needlesticks.
The healthcare risk manager market is defined by similar
statistics as the end user market. The major difference is that this segment is
represented at an administrative level. Additionally, it encompasses insurance
companies and other parties interested in capturing safety and occupational
injury data. This segment of the market focuses on ensuring a safer, more
efficient workplace for the healthcare worker and in obtaining previously
unavailable information about actual occurrences of bloodborne pathogen exposure
and the management thereof.
The market segment for medical-related companies consists of
approximately 11,600 medical device manufacturers, 360 pharmaceutical companies
and 1,260 training and educational organizations. The Company believes that this
is a significant segment for them for three reasons. First, these companies will
be enlisted as content providers (a content provider supplies OASiS with device
information and other educational components)("Content Providers"). Content
Providers are potential customers for the Company because they pay a reoccurring
fee to broadcast their information on OASiS. Secondly, this market segment is
desirous of the data collected by OASiS as it relates to the information
surrounding exposure occurrences. The Company already has received requests for
access to this (yet-to-be collected) data. The third reason the Company believes
this segment to be significant is that these companies are a key component to
the Company's sales strategy for its medical devices. The Company anticipates
that it may develop a relationship with a strategic partner based on the
integration of OASiS and the Company's Compliance Plus(TM) line of products.
The Company believes that the criteria for an appropriate
strategic partner for an alliance with the Company would have a worldwide
presence, maintain a dedicated, highly trained sales force with access to the
operating room, be a respected and acknowledged leader in the industry, be among
the Fortune 500 companies or equivalent and have an interest in diversification
of its existing product lines. In this regard, the Company believes that its
proposes long term arrangement with US Surgical establishes a strategic alliance
with a company which meets these criteria.
<PAGE>
Distribution of Products
SutureMate(R), MediSpecs Rx(TM) and OASiS are currently the
Company's only products in the marketplace. With reference to such products, the
Company has entered into a number of agreements regarding their distribution.
See Part I, Item 1. "Description of Business - (b) Business of Issuer - Risk
Factors."
In December 1994, the Company entered into a distributorship
agreement for a period of one (1) year with ISC Group, a corporation organized
under the laws of the country of Saudi Arabia, for the exclusive right to
purchase, inventory, promote and re-sell SutureMate(R) in Saudi Arabia and the
GCC Nations. An initial order was placed and shipped.
In March 1995, the Company entered into a distribution
agreement with Medicor Corporation for the exclusive right to purchase and sell
SutureMate(R) in the Netherlands. An initial order was shipped pursuant to this
agreement in April 1995. The agreement had no term and the parties were awaiting
evaluation of the product in the marketplace.
In April 1995, the Company entered into a distributorship
agreement with Johnson & Johnson Medical Pty. Ltd. ("J&J") to exclusively sell
SutureMate(R) in Australia, New Zealand, Papua, New Guinea and Fiji. An initial
order was placed. Under the terms of the agreement, J&J had no sales quota for
the first ninety (90) days and the parties were to agree by July 1995 as to the
sales quota for the remaining term. J&J had a right to terminate this agreement
on sixty (60) days notice.
ISC Group, Medicor Corporation and Johnson & Johnson Medical
Pty., Ltd. are not currently distributing Surgical's product. The Company has
not actively pursued additional business from these companies since it has
placed such business on hold pending further developments in the Company. The
Company believes that it can reinstate these agreements at any time. However,
since each of these companies distribute many other products, there can be no
assurance that they will agree to distribute SutureMate(R) at such time as the
Company is ready for such additional distribution. Further, although the Company
currently plans to proceed with attempting to re-establish these relationship at
such time as the Company has sufficient funding to fully supply the
re-engineered SutureMate(R), there can be no assurance that such funding will be
available to it.
In December 1996, the Company entered into an exclusive
distribution agreement with Noesis Capital Corporation ("Noesis"), a Florida
corporation, for a term of seven (7) years for the European market under which
Noesis was to recruit, hire and train European master distributors and
distributor/dealer networks throughout the Continent for sales of SutureMate(R).
Under the terms of the agreement, the parties were to set minimum annual
quantities which had to be sold. The price per unit to Noesis was set at the
greater of $1.50 or, in the event of a cost increased to the Company for
manufacturing, 150% of the Company's revised cost. Although still technically in
force, this contract is not currently active and has been placed on hold by the
Company pending further developments, including the availability of the
re-designed SutureMate(R) currently being manufactured by Tuthill.
In July 1997, the Company entered into a distribution
agreement with Hospital News of Florida, a Florida corporation ("HNF"). Pursuant
to this agreement, HNF was granted the exclusive distributorship of the
MediSpecs Rx(TM) eyewear in the State of Florida. SMH was specifically excluded
from this agreement. The original agreement was to terminate on December 31,
1997, but could be renewed if the parties so agreed for successive one (1) year
periods. The price of each pair of eyewear was set at $19.95 plus $4.95 for
shipping and handling. The Company agreed to pay HNF $7.00 for each pair sold
and no commission was due to HNF for any subsequent re-orders from an existing
customer. The agreement required HNF to generate 800 orders by December 1997.
HNF was responsible for soliciting, collecting and delivering completed order
forms on the form designated by the Company. Although HNF did not achieve
<PAGE>
its initial quota, the Company has elected to extend this arrangement for an
additional period of one (1) year.
In February 1998, the Company executed a Letter of Intent
with United States Surgical Corporation ("U S Surgical"). Pursuant to such
letter, U S Surgical stated that, after investigation of the Company, it intends
to pursue a joint venture or equity buy-in relationship, subject to due
diligence review. Part of such due diligence review was to be observation of the
healthcare workers' reactions to the OASiS presentation at the AORN 1998
meeting. The Company granted U S Surgical status as a Charter Sponsor of OASiS
and a 33% discount off the proposed retail value of services provided at the
AORN meeting. OASiS accounted for over 21% of all leaded generated by US
Surgical at AORN meeting.
In July 1998, the parties agreed to the terms of a long term
relationship subject to execution of a contract. Under the terms of the
agreement, US Surgical will arrange for the installation of ten (10) OASiS
systems in hospital facilities which US Surgical defines as "Centers of
Excellence." Each system will include thirty (30) inservice training modules.
Following an initial nine (9) month trial at each of these facilities and
subject to satisfactory performance by the system and the technical support
group, US Surgical will have approximately one hundred (100) additional systems
installed in other healthcare facilities nationwide. US Surgical will finance
the development and installation of the ten (10) systems. The Company will
receive a fee in the amount of $36,000 for the initial ten (10) installations
during the testing period and a fee in the amount of $108,000 for the balance of
a three (3) year term for such initial installations. In addition, the Company
will earn profits on the sales of its products through the point-of-sale
facility in the OASiS system and from the fees it receives from other device
providers and training companies through the use of the inservice modules. A
proposed agreement has been sent to US Surgical by the Company for review. The
Company believes that a fully executed agreement will be completed by the end of
September 1998.
Methods of Distribution
Whether or not the Company is successful in raising
additional capital (of which there can be no assurance), in the event that
Surgical is successful in completing the alliance with US Surgical, the Company
intents to provide sales support to such partner. The partner will manage the
primary sales functions with the Company acting as an additional resource for
sales support. As to the OASiS system, Surgical and its strategic partner will
complete a site survey for each customer facility. As currently structured, in
the event that a final contract cannot be completed with US Surgical, the
Company will seek another strategic partner for these functions. Surgical will
coordinate the necessary follow-through with the Integration Specialist.
Until such time as the US Surgical contract is executed or
the Company establishes such alliance with another strategic partner, Surgical
will continue to rely on a significant database and network of consultants,
international business contacts, researchers, medical advisors and potential
distributors, suppliers and manufacturers for sales of its products. The Company
has accumulated over 3,000 sales leads and customer contacts, with a majority
being United States based surgeons and operating room technologists. The Company
will continue to sell its products direct to hospitals and other medical care
providers.
In addition to sales by distributors, the Company also
solicits orders through direct mail sales, trade publications and advertising by
targeting specific market groups. Since joining the Company, Mr. Clark has begun
an active campaign to establish repeat markets for Surgical's products. Customer
follow-up is currently handled by in-house sales staff of which there are five
(5). Orders obtained can be shipped from in-house inventory or warehousing
arrangements. The Company has the original SutureMate(R) and MediSpecs Rx(TM) in
stock and is finalizing manufacturing, sterilization and inspection procedures
for the re-designed SutureMate(R) so that
<PAGE>
inventory can be established. Customers may return defective merchandise for a
full refund, credit or replacement. In recent years, such returns have been
insignificant.
Status of Publicly Announced Products and Services
Based upon feedback from surgeons and operating room
technologists since the introduction of SutureMate(R) in 1993, this product has
been re-engineered and is currently readied for distribution, subject to the
availability of additional funding, of which there can be no assurance. The
original SutureMate(R) is available and on the market. The Company is seeking
additional distribution channels for this product.
MediSpecs Rx(TM) currently is available and on the market.
The Company is seeking additional distribution channels for this product.
Once trials are completed and subject to the availability of
additional funding, the Company intends to make final engineering adjustments to
Prostasert(TM) and then commence manufacturing for initial market entry in the
United States by the end of 1999.
The OASiS system is fully operational at its initial sight at
SMH in Sarasota, Florida and the Company is ready for additional installations
at other locations, including the ten (10) Centers of Excellence which are part
of the US Surgical arrangement. Version 2.0 will be installed at the US Surgical
sites and is in final stages of test trials.
A prototype of IcePak(TM) has been manufactured and the
product is expected to enter the market before the end of calendar 1999 if the
required agreements with potential manufacturers/suppliers have been completed
and additional funding is available.
Competition
There is intense competition in the markets in which the
Company engages in business. However, the Company believes that there is
relatively little competition for its products at this time.
Notwithstanding its innovative product line, there are many
major companies which could compete with the Company due to their size and
market share in the medical products area. These include such companies as U S
Surgical, Ethicon, Inc. ("Ethicon"), a Johnson & Johnson subsidiary and
Sherwood-Davis & Geck, a division of American Home Products Corporation, all of
which have a wider range of other medical products and dominate much of the
markets for these other products. These companies focus on sutures and related
suturing devices. Traditionally such companies have not focused on safety
related products but they are now modifying the design of some sutures to reduce
needlesticks. Several medical products firms, including Johnson & Johnson and
Graphics Controls, Inc. ("Graphics Control") have operations in the surgical
safety product niche. Graphics Control sells approximately 50% of all safety
devices to the medical industry. The Company believes that these major companies
will continue their efforts to develop and market competitive devices. It is for
this reason that the Company has sought to align itself with a strategic partner
and has entered into the letter of intent with U S Surgical.
A major purveyor of safety devices is Devon Industries
("Devon") which commands about 75% of this market. Devon's product line includes
approximately one hundred "me-too" type products. Specialized Health Products
International, Inc. ("SHPI") designs and develops products to minimize the risk
of accidental needlesticks in order to reduce the spread of bloodborne diseases
in heathcare workers. SHPI's strategy to is become a single source provider for
needle protection devices. Many other device companies market these same
products with
<PAGE>
only slight variations. However, the Company believes that one of the major
pitfalls with these types of companies is that they have no distinctive new
product concepts to distinguish themselves from other companies in their
industry. The Company believes that its product line does distinguish Surgical
from other medical device providers.
There is intense competition in sales of products for use in
gynocological, spinal, vascular, cardiovascular, interventional cardiology,
breast biopsy, urologic, orthopedic and oncological procedures. A broad range of
companies presently offer products or are developing products for the use in
such procedures. Many of these companies have significantly greater capital than
the Company and are expected to devote substantial resources to the development
of newer technologies which would be competitive with products which the Company
may offer. There are also a number of smaller companies which offer such
products which present additional competition.
Many of the large chemical companies market solvents that are
claimed to be useful as a barrier protection to bloodborne pathogen infection.
Some of these companies are being scrutinized by the FDA because of a lack of
proper clinical research and statistics to substantiate barrier effectiveness.
The market for products for minimally invasive surgery is
highly competitive. The Company believes if it enters this market that it could
gain a significant share of the market as the result of its innovative efforts
and superior products. Ethicon, through a division known as Ethicon
Endo-Surgery, markets a line of endoscopic instruments directly competitive with
the Company's proposed products and this company would be Surgical's principal
competitor in minimally invasive surgery. The Company believes that Ethicon
devotes considerable resources to research and development and sales efforts in
this field. Numerous other companies manufacture and distribute single use
endoscopic instruments. In addition, Richard Wolf Medical Instruments Corp. (a
subsidiary of Richard Wolf, GmbH) and Karl Storz Endoscopy-America, Inc. (a
subsidiary of Karl Storz, GmbH), would compete directly with the Company in this
area.
Surgical faces competition in its data service line by a
system developed by the University of Virginia and promoted by the International
Healthcare Worker Safety Center. Designated EpiNet, this is a single system
designed to tract and report bloodborne pathogen exposures in the healthcare
setting. It is installed in approximately seventy (70) healthcare facilities;
however, Company research indicates that EpiNet is actually used in only a
fraction of those facilities. This system has been analyzed by infection and
systems control experts and has been found to be "non-user friendly". Although
this system has been available for several years, it has not achieved large
market acceptance. The Company is encouraged by the fact that EpiNet has been
accepted in so many facilities, but believes that the Company's OASiS system
could find greater acceptance because of its touch access concept.
There are approximately two hundred (200) companies with at
least some products designed to facilitate healthcare training. With a
technology shift toward computer based training ("CBT"), this market is
undergoing some redefinition. Certain companies are shifting from a VCR/booklet
format to multimedia applications. Other companies are new and were formed
specifically to develop CBT programs for healthcare training. The Company
believes that these competitors are relying upon the healthcare facility to
provide the delivery system, a personal computer, for such training programs.
The Company believes that OASiS offers a complete system, software and hardware,
in a touch access format.
The Company's principal methods of competing are the
development of innovative products, the performance and breadth of its products,
its technically trained sales force, and its educational services, including
sponsorship of training programs. Most of the Company's potential major
competitors have greater financial resources than the Company.
<PAGE>
Some of its potential competitors, particularly Ethicon, have engaged in
substantial price discounting and other significant efforts to gain market
share, including bundled contracts for a wide variety of healthcare products
with group purchasing organizations. In the current healthcare environment, cost
containment has become a significant factor in purchasing decisions by hospital.
Additional cost effectiveness was one of the principle factors in the redesign
of SutureMate(R) and a principle consideration in the lease pricing structure
for OASiS.
Surgical's sales force is distinguished from the competition
by their knowledge of healthcare worker safety. More specifically, the Company
is developing a clear and concise understanding of the inherent safety risks
associated with the healthcare worker's everyday work place. This understanding
is accomplished through medical expertise, engineering capabilities,
communication skills with customers, as well as an understanding of the medical
market place and a variety of manufacturing practices. The Company believes that
the end result is that it is able to provide the customer with a unique product
or service specifically developed with individualized safety and utility in
mind, while providing that product or service to the customer so that its value
exceeds its cost.
One of the biggest attractions to the Company of a strategic
alliance with US Surgical is the fact that U S Surgical collaborates with some
of the most prestigious academic medical centers in the world to establish
Centers of Excellence for training in many diverse disciplines. These centers
are devoted to teaching residents and surgeons in the use of new
instrumentation, developing new technologies, conducting preclinical trials and
other research projects. Under the terms of the proposed joint venture between
the Company and U S Surgical, the OASiS system will be introduced to ten (10) of
these Centers of Excellence for an initial six (6) month trial period. At that
end of such trials, if the OASiS performs as expected, U S Surgical intends to
introduce the system into one hundred (100) of these centers. In today's managed
care environment, these multi-center studies are expected to bring into sharper
focus the cost benefits of a wide range of the Company's products.
The Company believes that the advantages of its various
products and its customer assistance programs will continue to provide the best
value to its customers. However, there is considerable competition in the
industry and no assurance can be given as to the Company's competitive position.
The impact of competition will likely have an effect on sales volumes and on
prices charged by the Company. In addition, increased cost consciousness has
revived competition from reusable instruments to some extent. The Company
believes that single use instruments are safer and more cost efficient for
hospitals and the healthcare system than reusable instruments, but it cannot
predict the extent to which reusable instruments will competitively impact the
Company. The Company also offers semi-disposable instruments, components of
which may be reused a certain number of times, to respond to the preferences of
its customers.
Current and future customers were interviewed at major
medical organization exhibits. Overall statistics indicate that 50% of vascular,
thoracic and general surgeons found the Compliance Plus(TM) products to be
useful, safe and potentially cost effective. OB/GYN's urologists and plastic
surgeons gave a 90% favorable evaluations, while over 90% of surgical
technologists gave "high" to "very high" ratings to SutureMate(R) and MediSpecs
Rx(TM). The Company believes that it has chosen a developing market with no
well-established industry leaders at this time. Further it believes that its
products are unique and that by maintaining a relatively narrow market focus,
combined with technical expertise, that it can achieve rapid growth. (See Part
I, Item 1. "Description of Business - (b) Business of the Issuer - Risk
Factors.")
<PAGE>
Sources and Availability of Raw Materials
Raw materials necessary for the hardware requirements of the
OASiS system are available from numerous third-party OEM's. The software
integrated into the assembled system is proprietary to the Company.
Raw materials necessary for the manufacturer of parts,
components and packaging supplies for all of the Company's products manufactured
by the Medical Products Division are readily available from numerous third-party
suppliers.
The Company does not rely on any principal suppliers for any
of its raw materials. However, with regard to MediSpecs Rx(TM), the Company has
entered into a manufacturing agreement with Morrison and, with regard to
SutureMate(R), the Company has received a price quotation from Tuthill for the
manufacture of the redesigned SutureMate(R). (See Part I, Item 1. "Description
of Business - (b) Business of Issuer - Medical Products Division - SutureMate(R)
and, MediSpecs Rx(TM)" and Part I, Item 1. "Description of Business - (b)
Business of the Issuer Risk Factors.")
Dependence on Major Customers
At the current time, Surgical is reliant upon a few major customers for
several of its products. (See Part I, Item 1. "Description of Business - (b)
Business of the Issuer - Risk Factors.")
With regard to the OASiS system, the Company is reliant upon
its agreement for the installation at SMH, its letter of intent with U S
Surgical for sales revenues and further exploitation of the system, its
arrangement with Rockford for the financing of the leasing to facilities and its
arrangement with Ad-vantagenet for completion of the Version 2.0 software. (See
Part I, Item 1. "Description of Business - (b) Business of Issuer - Data Systems
Division.")
SutureMate(R) sales are currently principally reliant upon
in-house distribution and re-establishment of various distribution arrangements
for generating revenues for this product. (See Part I, Item 1. "Description of
Business - (b) Business of Issuer - Medical Products Division - SutureMate(R).")
MediSpecs Rx(TM), in addition to in-house sales efforts, is
reliant upon Hospital News of Florida for sales in the State of Florida. (See
Part I, Item 1. "Description of Business - (b) Business of Issuer - Medical
Products Division - MediSpecs Rx(TM).")
Subject to the availability of additional funding, of which
there can be no assurance, the Company believes that it can increase its
customer base so that the loss of any one client will not adversely impact upon
the financial condition of the Surgical.
Research and Development
The Company believes that research and development is an
important factor in its future growth. The Company engages in a continuing
product research, development and improvement program. The Company's research
and development group (currently consisting of three (3) persons) is actively
working on in excess of nine (9) additional products for the medical and
healthcare community, all of which are in various stages of development, from
prototype to patent. The Company is also devoting a substantial amount of time
to the research and development of products within distinct product lines.
Substantially all of the products in research and development have been
designed, drawn, had preliminary market research conducted and have been
submitted for review to the Company's patent counsel.
<PAGE>
As a natural by-product of an active research and development
department, some product concepts have been generated which do not fit the
Company's chosen focus. Several surgical and obstetrical devices have been
designed and either will be licensed or sold outright to appropriate corporate
entities.
Patents, Copyrights and Trademarks
Patents are significant to the conduct of the Company's business. The
Company owns four (4) patents on two (2) products. Dr. Swor was the inventor who
originally secured the patents which he later assigned to the Company in
exchange for stock. (See Part II, Item 7. "Certain Relationships and Related
Transactions.")
The Company's first medical device patent is United States
Patent No. 4,969,893, issued on November 13, 1990 for SutureMate(R), The patent
was filed on June 16, 1989 and covers a unique surgical suturing device for its
suture cutting and needle rest utility. Additional patents (U. S. Patent No.'s
Des. 353,672 and 5,385,569) were issued on December 20, 1994 and January 31,
1995 and both were filed on May 21, 1993. The additional patents are for
surgical accessories to SutureMate(R) for both design and utility. Patents
number 4969893 and 353,672 are for a term of seventeen (17) years from the
issuance date; while patent number 5,385,569 is for a term of fourteen (14)
years from the issuance date.
Prostasert(TM) is the Company's second medical device on
which a patent was issued. This patent, United States Patent No. 5,364,375, was
issued on November 15, 1994 and filed on September 24, 1993. The patent covers
for a unique device designed to introduce and maintain a precise amount of
pharmaceutical material to the uterine cervix and upper vagina. This patent is
for a term of seventeen (17) years from the issuance date.
The Company filed a Section 501(k) notification of intent to
market SutureMate(R) with the FDA. On May 19, 1998, the Company was granted
permission by the FDA to market this device. Prostasert(TM) was listed with the
FDA under its original name, LaborMate on June 2, 1994. No FDA clearance was
required because the components were each FDA approved prior to assembly in the
Prostasert(TM) format.
On June 1, 1998, the Company filed for two (2) patents on the
OASiS system which includes propriety aspects of the software, algorithms and
reports, as well as the inservice training modules which are owned by the
Company. Neither of these patents have been issued to date.
The Company currently has the rights to several new product
concepts in various stages of development. These products are surgical and
obstetrical devices for which patent protection is in progress or will be
initiated in the near future.
The patents held by the Company have expiration dates ranging
from nine (9) to fourteen (14) years.
The Company has an extensive library of copyrighted
educational and training material related to occupational safety and surgical
techniques. These include the Surgical Safety Manual published in 1994, which
was revised in 1996.
The Company filed on July 1, 1993 for trademark registration
with the United States Patent and Trademark Office for SutureMate(R). This
trademark was registered on April 5, 1994.
<PAGE>
The Company applied for trademark registration on the
Compliance Plus(TM) on December 6,1996. It was published for opposition on June
23, 1998 and the Company is awaiting notice of allowance.
The Company applied for trademark registration for the OASiS
Touch Access Information on April 29, 1998 and the examination of this
application is pending.
The Company is not a party to any actions claiming patent
infringement of any of its products.
Governmental Regulation
FDA Approval
Regulation by governmental authorities in the United States
and foreign countries is a significant factor in the development, manufacture
and marketing of the Company's proposed products and services and in its ongoing
research and product development activities. It is anticipated that virtually
all of the products developed by the Company's Medical Products Division will
require regulatory approval by governmental agencies prior to commercialization.
It is expected that many of the Company's products, as
presently contemplated, will be regulated as medical devices. Prior to entering
commercial distribution, all medical devices must undergo FDA review under one
or two basic review procedures: a Section 510(K) premarket notification
("510(K)") or a premarket approval application ("PMA").
A 510(K) notification is generally a relatively
straightforward filing submitted to demonstrate that the device in question is
"substantially equivalent" to another legally marketed device. Approval under
this procedure is typically granted within ninety (90) days if the product
qualifies, however, this procedure may take longer.
When the product does not qualify for approval under the
510(K) procedure, the manufacturer must file a PMA which shows that the product
is safe and effective based on extensive clinical testing among several diverse
testing sites and population groups, and shows acceptable sensitivity and
specificity. This requires much more extensive prefiling testing than does the
510(K) procedure and involves a significantly longer FDA review after the date
of filing.
In the past, the Company's products have been cleared by the
FDA under the 501(K) expedited form of pre-market review or have not required
FDA approval. While the industry had for several years experienced lengthy
delays in the FDA approval process, more recently, the timeliness of the FDA's
review has improved. Timely product approval is important to the Company's
maintaining and/or obtaining a technological competitive advantage. Other than
FDA product approval waiting periods, the Company has not encountered any other
unusual regulatory impediments to the introduction of new products.
To the extent the Company develops products for use in more
advanced surgical procedures, the regulatory process may be more complex and
time consuming. Some of the Company's potential future products may require
lengthy human clinical trials and the PMA application relating to class III
medical devices. The Company knows of no reason to believe that it will not be
able to obtain regulatory approval for its products, to the extent efficacy,
safety and other standards can be demonstrated, but the lengthy approval process
will require additional capital (of which there is no assurance that the Company
will be able to secure), risk of entry by competitors and risk of changes in the
marketplace prior to market approvals being obtained.
<PAGE>
Overseas, the degree of government regulation affecting the
Company varies considerably among countries, ranging from stringent testing and
approval procedures in certain locations to simple registration procedures in
others, while in some countries there is virtually no regulation of the sale of
the Company's products. In general, the Company has not encountered material
delays or unusual regulatory impediments in marketing its products
internationally. Establishment of uniform regulations for European Economic Area
nations took place on January 1, 1995. The new regulations subject the Company
to a single regulatory scheme for all of the participating countries. The
Company is taking the necessary steps designed to assure ongoing compliance with
these new, more rigorous regulations. The Company expects that it will be able
to market its products in Europe with a single registration applicable to all
participating countries. The Company also is establishing procedures to respond
to various local regulatory requirements existing in all other international
markets in which it intends to market its products.
By letter dated May 19, 1993, the Company received
notifications from the FDA that the 510(K) notification of intent to market
device related to SutureMate(R) had been received and reviewed, and the FDA had
determined that the device was substantially equivalent to the devices marketed
in interstate commerce prior to May 28, 1976. The receipt of this letter allowed
the Company to immediately begin marketing and selling SutureMate(R). The
Prostasert device was listed with the FDA on June 2, 1994 under its original
name, LaborMate.
OSHA Mandatory Reporting of Illness and Injury
Federal rules administered by the OSHA require healthcare
workers to report if they have been accidentally stuck with a needle previously
used by a patient, or splashed by blood or bodily fluids.
On February 11, 1997, in the Federal Register, OSHA issued a
final rule, effective March 13, 1997, that amended the Occupational Injury and
Illness Reporting Regulation (29 CFR Part 1904) established in 1971. Under the
1971 regulation, employers were required to collect and maintain injury and
illness data and have it available for OSHA to examine when they came on site
for an inspection. It was determined that OSHA needed a separate provision for
collection of data by mail.
The final rule requires, employers, upon request, to report
to OSHA their illness and injury data, in addition to the number of workers and
the number of hours worked in a designated period. It establishes a mechanism
for OSHA to conduct an annual survey of ten (10) or more employers by mail or
other remote transmittal. The specific request may come directly from OSHA or
its designee, e.g., the National Institute of Occupational Safety and Health
("NIOSH").
The rule was finalized since OSHA believed that this
comprehensive data on worker injury and illness would provide more reliable data
suited to OSHA's needs than any other available source. The data also is planned
to provide information to target OSHA activities, including workplace
inspections; to evaluate the effectiveness of educational programs; and to
determine the need for additional standards.
Employers have thirty (30) days to submit their data after
the request is received. Regulations set forth the type of information which
needs to be collected. Much of the initial injury and illness information
reported was taken from records that employers already were required to create,
maintain, and post.
The finalized rule provides an additional incentive for
healthcare facilities to implement worker safety and health programs and to
provide the necessary safety equipment and supplies to reduce the risk of
occupational illness and injuries. Those healthcare facilities that have good
health and safety programs will likely benefit from this rule.
<PAGE>
OSHA also initiated a number of partnerships with other
federal and national organizations in an effort to reduce the increasing number
of occupational illness and injuries among workers. This effort was prompted, in
part, by OSHA's inability to inspect and enforce worker safety in the
approximately five million (5,000,000) work sites in the United States and to
collect accurate worker injury and illness data to assist in targeting the
approximately 8,000 annual inspections in the face of continuing shrinking
budgets.
In August 1996, OSHA and the Joint Commission on
Accreditation of Healthcare Organizations ("JCAHO") announced a three-year
partnership to reduce the increasing number of healthcare worker-related
illnesses and injuries. The announced goal of this partnership is to foster
improvement in the management of safety and health issues in healthcare
organizations. The result is that healthcare organizations face an additional
authority testing OSHA compliance.
This partnership does not transfer any authority for
enforcement of OSHA standards to JCAHO. Rather, JCAHO continues to survey a
healthcare organization's performance against JCAHO's standards. JCAHO surveyors
monitor how compliance with JCAHO meshes with OSHA's expectations related to
heath and safety of employees. When deficiencies are identified, the JCAHO
surveyor provides guidance and educational materials.
A specific recommendation based on a JCAHO standard can be
made only when an OSHA citation has already been issued and the healthcare
organization has failed to take corrective action to clear the citation. If an
immediate threat to a worker's safety is found during a survey, the facility is
cited by JCAHO under their application standards. A determination is made
regarding the organization receiving conditional accreditation status in
accordance with JCAHO policies and procedures.
Most hazards to workers in healthcare organizations that have
been identified by both OSHA and JCAHO resulted from injuries and illness
related to patient handling; exposures to bloodborne pathogens, tuberculosis,
hazardous drugs and anesthetic gases; workplace violence; and fire and
electrical hazards.
Example of JCAHO requirements that are linked to OSHA
standards for worker safety include many of the components of the Environment of
Care Standards (safety, hazardous material and waste, emergency preparedness,
life safety, medical equipment, utility systems) and the Infection Control
Standards. The 1997 JCAHO Accreditation Manual for hospitals includes a number
of OSHA-related examples of implementation of JCAHO standards to assist
healthcare organizations with compliance.
Healthcare organizations are able to demonstrate compliance
with JCAHO standards by advising the surveyors how they meet both OSHA and JCAHO
requirements and by showing them OSHA documents and reports such as the OSHA 200
log of occupational illness and injury, lock- out/tag-out procedures, bloodborne
pathogen exposure control plans and records of Hepatitis B vaccination among
workers exposed to blood and body fluids.
In August 1996, OSHA also announced a seven-state initiative
to protect workers in nursing homes and personal care facilities, one of the
nation's largest growing industries. The seven states include Florida, Illinois,
Massachusetts, Missouri, New York, Ohio and Pennsylvania. Nationwide there are
1.6 million nursing home workers in more than 21,000 facilities. It is
anticipated that by the year 2005, the nursing home and personal care facilities
will be one of the largest industries in the United States. Potential nursing
home hazards include back injuries from incorrect and/or strenuous lifting of
residents, slips and falls, workplace violence and risks from bloodborne
pathogens, tuberculosis and other infectious diseases.
<PAGE>
State and Local Licensing Requirements
Other than the governmental regulatory schemes listed above,
the Company is not subject to any other state or local regulations which apply
to the operation and business of the Company.
Effect of Probable Governmental Regulation on the Business
The Company is not currently engaged in the development of
any product which would be categorized as therapeutic. Under the current
regulatory scheme, in the event any product of the Company were defined as
therapeutic, then such therapeutic product will be subject to regulation by the
FDA and will require FDA approval before it may be commercially marketed for
human therapeutic use in the United States. The Company believes that any
therapeutic products to be developed by it will be regulated either as
biological products or as new drugs. New drugs are subject to regulation under
the Federal Food, Drug, and Cosmetic Act (the "FFDC Act"), and biological
products, in addition to being subject to certain provisions of the FFDC Act,
are regulated under the Public Health Service Act. Both statutes and the
regulations promulgated thereunder govern, among other things, the testing,
manufacturing, safety, efficacy, labeling, storage, recordkeeping, advertising
and other promotional practices involving biologics or new drugs as the case may
be. FDA approval or other clearances must be obtained before clinical testing,
and before manufacturing and marketing, of biologics or other products. At the
FDA, the Center for Biological Evaluation and Research ("CBER") is responsible
for the regulation of new biologics and the Center for Drug Evaluation and
Research ("CDER") is responsible for the regulation of new drugs.
Obtaining FDA approval for therapeutic products has
historically been a costly and time consuming process. Generally, in order to
gain approval from the FDA, a developer first must conduct preclinical studies
in the laboratory and in animal model systems to gain preliminary information on
a product's efficacy and to identify any major safety problem. The results of
these studies are submitted as part of an Investigational New Drug ("IND")
application, which the FDA must review before human clinical trials of an
investigational drug can start. The IND application includes a detailed
description of the clinical investigations to be undertaken.
In order to commercialize any therapeutic products, the
Company must first prepare and file an IND application. It must act as the
sponsor of product testing and will be responsible for planning, initiating and
monitoring human clinical studies which must be adequate to demonstrate safety
and efficacy. The Company will be responsible for selecting well-trained
physicians as clinical investigators to supervise the administration and
evaluation of new products. The Company, however will bear the responsibility
for monitoring the studies to ensure that they are conducted in accordance with
the general investigational plan and protocols contained in the IND. Human
clinical trials are normally done in three phases. Phase I trials, which are
concerned primarily with the safety and preliminary effectiveness of the drug,
involve fewer than 100 subjects, and may take from six months to over a year.
Phase II trials normally involve a few hundred patients and are designed
primarily to demonstrate effectiveness in treating or diagnosing the disease or
condition for which the drug is intended, although short-term side effects and
risks in people whose health is impaired may also be examined. Phase III trials
are expanded clinical trials with larger numbers of patients which are intended
to gather the additional information on safety and effectiveness needed to
clarify the drug's benefit-risk relationship, discover less common side effects
and adverse reactions, and generate information for proper dosage and labeling
of the drug. Human clinical trials generally take four to six years, but may
take longer, to complete.
The FDA receives reports on the progress of each phase of
human clinical testing, and it may require the modification, suspension, or
termination of clinical trials if an unwarranted risk is presented to patients.
There can be no assurance as to the length of the clinical trial period or the
number of patients the FDA will require to be enrolled in the clinical trials in
order to establish the safety, efficacy, and potency of the products. In
addition, it is uncertain that the clinical data generated in these studies will
be acceptable to the FDA to support marketing approval.
<PAGE>
After completion of clinical trials of a new therapeutic
product, FDA marketing approval must be obtained. If the product is regulated as
a new biologic, CBER will require the submission and approval of both a Product
License Application ("PLA") and an Establishment License Application ("ELA")
before allowing commercial marketing of the biologic. If the product is
classified as a new drug, the Company must file a New Drug Application ("NDA")
with CDER and receive approval before commercial marketing of the drug. The NDA
or PLA must include results of product development, preclinical studies and
clinical trials. The testing and approval processes require substantial time and
effort and there can be no assurance that any approval will be granted on a
timely basis, if at all. NDA's and PLA's submitted to the FDA can take, on
average, two years to receive approval. If questions arise during the FDA review
process, approval can take longer. Notwithstanding the submission of relevant
data, the FDA may ultimately decide that the NDA or PLA does not satisfy its
regulatory criteria for approval and require additional clinical studies. Even
if FDA regulatory clearances are obtained, a marketed product is subject to
continual review, and later discovery of previously unknown problems or failure
to comply with the applicable regulatory requirements may result in restrictions
on the marketing of a product or withdrawal of the product from the market as
well as possible civil or criminal sanctions.
Cost of Research and Development
For fiscal year 1996 and 1997, the Company expended $9,469
and $107,756 of its revenues, respectively, on research and development. These
expenditures represented 10.12% and 43.32%, respectively, of the total revenues
of the Company for such fiscal years. The principal increase in the cost of
research and development for fiscal 1996 and 1997 was the additional cost, time
and expenses incurred for the rapid development of the OASiS system.
At the current time, none of the costs associates with
research and development are bourne directly by the customer; however there is
no guarantee that such costs will not be bourne by customers in the future and,
at the current time, the Company does not know the extent to which such costs
will be bourne by the customer, if at all.
Cost and Effects of Compliance with Environmental Laws
The Company's business is also subject to regulation under
the state and Federal laws regarding environmental protection and hazardous
substances control, including the Occupational Safety and Health Act, the
Environmental Protection Act, and Toxic Substance Control Act. In 1992, the
United States Congress expressed increasing interest in the issues of sharp
injuries. The House Subcommittee on Regulation held hearings regarding
needlestick injuries and the implementation of mandated guidelines on safer
medical devices. However, the Company is unaware of any bills currently pending
in Congress on this issue. The Company believes that it is in material
compliance with the current and other applicable laws and that its continual
compliance therewith will not have a material adverse effect on its business.
Employees and Consultants
At June 30, 1998, the Company employed six (6) persons. None
of these employees are represented by a labor union for purposes of collective
bargaining. The Company considers its relations with its employees to be
excellent.
On March 30, 1998, the Company entered into a Consulting
Agreement with Stockstowatch whereby Stockstowatch agreed to provide investor
relations services as a media consultant to the Company in exchange for issuance
of 300,000 share of the Company's Common Stock. The agreement was for a term of
six (6) months which is renewable at the option of the Company for an additional
six (6) months. The services are provided on a non-exclusive basis since
Stockstowatch is in the business of providing such services to companies. After
an initial
<PAGE>
due diligence period, Stockstowatch is responsible for all costs associated with
providing the services required under the agreement. (See Part I, Item 7.
"Certain Relationships and Related Transactions"; and Part II, Item 4. "Recent
Sales of Unregistered Securities.")
On June 30, 1998, the Company executed a letter of intent
with Ad-vantagenet. Under the terms of the letter of intent, Ad-vantagenet will
assist in the creation of version 2.0 OASiS software, including creating the art
and graphics. Version 2.0 is designed to allow for more dynamic features on the
system including instant updates, information-gathering and editing features.
The Company chose Ad-vantagenet to complete Version 2.0 after unsatisfactory
results were achieved by Gambit, Inc., d/b/a MediaWorks. The functions
Ad-vantagenet is currently incorporating into Version 2.0 include features which
had been requested of MediaWorks but were not provided. The total projected cost
of the Ad-vantagenet project is one-fourth of the cost which MediaWorks
projected. The Company is in litigation with MediaWorks over the termination of
their agreement. (See Part II, Item 2. "Legal Proceedings.") Subject to the
successful completion of the letter of intent project with Ad-vantagenet, the
Company intends to enter into a more structured, long-term agreement for further
OASiS development.
Facilities
The Company maintains its executive offices at 2018 Oak
Terrace, Sarasota, Florida 34231. Its telephone number is (941) 927-7874 and its
facsimile number is (941) 925- 0515.
The Company leases 3500 square feet for its executive offices
from Savannah Leasing, a company owned by Dr. Swor and his wife. The lease is
for a term of two (2) years and is automatically renewable for an additional one
(1) year period. The Company pays monthly rent in the amount of $3,500 and the
Landlord and the Company share the costs of insurance. The Company is
responsible for maintenance of the parking area, while the Landlord otherwise
maintains the property. The Company is responsible for personal taxes only as
the Landlord pays real estate taxes. Savannah Leasing own several adjacent
properties and the Company has the first right of refusal in the event
additional space is required for the operation of the Company's business. The
Company believes that the rental payment and terms under the lease are
comparable to other properties in the area owned by property owners other than
Dr. Swor. In addition, the Company believes that the leased property is
sufficient for its requirements for the next ten (10) years and that if it
requires additional space, it may due so under the first right of refusal. (See
Part I, Item 3. "Description of Property.")
Risk Factors
Before making an investment decision, prospective investors
in the Company's Common Stock should carefully consider, along with other
matters referred to herein, the following risk factors inherent in and affecting
the business of the Company.
1. History of Losses. Although Surgical has been in business
since May 15, 1992 it was in the development stage until July 7, 1993 when it
began commercial shipments of its first product. As of December 31, 1997, the
Company had total assets of $445,235, a net loss of $148,422 on revenues of
$248,760 and stockholders deficit of $59,043. As of June 30, 1998, the Company
had total assets of $856,191, a net loss of $346,681 on revenues of $15,788 and
stockholders equity of $697,650. Due to the Company's operating history and
limited resources, among other factors, there can be no assurance that
profitability or significant revenue will occur in the future. Moreover, the
Company expects to continue to incur operating losses through at least the third
quarter 1999, and there can be no assurance that losses will not continue
thereafter. The Company is subject to all of the risks inherent in the operation
of a development stage
<PAGE>
business and there can be no assurance that the Company will be able to
successfully address these risks. (See Part I, Item 1. "Description of
Business.")
2. Minimal Assets, Working Capital and Net Worth. As of June
30, 1998, the Company's total assets in the amount of $856,191, consisted ,
principally, of the sum of $589,522 in cash. As a result of its minimal assets
and a net loss from operations, in the amount of $346,681, as of June 30, 1998,
the Company had a net worth of $697,650. Further, there can be no assurance that
the Company's financial condition will improve. Even though management believes,
without assurance, that it will obtain sufficient capital with which to
implement its expansion plan, the Company is not expected to proceed with its
expansion without an infusion of capital. In order to obtain additional equity
financing, management may be required to dilute the interest of existing
shareholders or forego a substantial interest of its revenues, if any. (See Part
I, Item 1. "Description of Business")
3. Need for Additional Capital. Without an infusion of
capital or profits from operations, the Company is not expected to proceed with
its expansion as planned. Accordingly, the Company is not expected to overcome
its history of losses unless additional equity and/or debt financing is
obtained. The Company does not anticipate the receipt of increased operating
revenues until management successfully implements its expansion plan, which is
not assured. Further, Surgical may incur significant unanticipated expenditures
which deplete its capital at a more rapid rate because of among other things,
the stage of its business, its limited personnel and other resources and its
lack of a widespread client base and market recognition. Because of these and
other factors, management is presently unable to predict what additional costs
might be incurred by the Company beyond those currently contemplated to obtain
additional financing and achieve market penetration on a commercial scale in its
expanded line of business, i.e. medical device supplier and risk exposure
systems developer. Surgical has no identified sources of funds, and there can be
no assurance that resources will be available to the Company when needed. (See
Part I, Item 1. "Description of Business - (b) Business of Issuer."
4. Dependence on Management. The possible success of the Company is
expected to be largely dependent on the continued services of its Founder,
Chairman and Treasurer, Dr. G. Michael Swor, its President, Frank M. Clark and
its Vice President of Sales & Marketing, Donald K. Lawrence. Virtually all
decisions concerning the marketing, distribution and sales of the Company's
products and services will be made or significantly influenced by the Company's
officers. These officers are expected to devote only such time and effort to the
business and affairs of the Company as may be necessary to perform their
responsibilities as executive officers and directors of Surgical. The loss of
the services of any of these officers, but particularly Dr. Swor, would
adversely affect the conduct of the Company's business and its prospects for the
future. The Company presently has employment agreements with Dr. Swor, Mr. Clark
and Mr. Lawrence and holds no key-man life insurance on the lives of, and has no
other agreement with any of these officers, except that the Company is the named
beneficiary of a key- man life insurance policy currently owned by Dr. Swor.
(See Part I, Item 1. "Description of Business - (b) Business of Issuer and Part
I, Item 5. "Directors, Executive Officers, Promoters and Control Persons."
5. Limited Distribution Capability. The Company's success
depends in large part upon its ability to distribute its products and services.
As compared to Surgical, which lacks the financial, personnel and other
resources required to compete with its larger, better-financed competitors,
virtually all of the Company's competitors have much larger budgets for securing
customers. Although the Company has entered into several distribution
agreements, none are producing significant revenues at this time. Further, the
OASiS system currently is only installed at one (1) location. Depending upon the
level of funding obtained by the Company, management believes, without
assurance, that it will be possible for Surgical to attract additional customers
for its products and services. However, in the event that only limited funds are
obtained, the
<PAGE>
Company anticipates that its limited finances and other resources may be a
determinative factor in the decision to go forward with planned expansion. Until
such time, if ever, as the Company is successful in securing additional capital,
of which there is no assurance, it intends to continue marketing its products
through its current distribution arrangements. However, the fact that these
arrangement have not thus far produced significant revenue may adversely impact
the Company's chances for success. (See Part I, Item 1. "Description of
Business," (b) "Business of Issuer Sales and Marketing- Distribution of
Products.")
6. High Risks and Unforeseen Costs Associated with Surgical's
Expanded Entry into the Medical Device and Exposure Reporting Information
Industries. There can be no assurance that the costs for the establishment of a
client base for its products and services will not be significantly greater than
those estimated by Company management. Therefore, the Company may expend
significant unanticipated funds or significant funds may be expended by Surgical
without development of a commercially viable medical device or exposure
reporting information business. There can be no assurance that cost overruns
will not occur or that such cost overruns will not adversely affect the Company.
Further, unfavorable general economic conditions and/or a downturn in customer
confidence could have an adverse affect on the Company's business. Additionally,
competitive pressures and changes in customer mix, among other things, which
management expects the Company to experience in the uncertain event that it
achieves commercial viability, could reduce the Company's gross profit margin
from time to time. Accordingly, there can be no assurance that Surgical will be
capable of establishing itself in a commercially viable position in local,
state, nationwide and international medical device and exposure reporting
information markets. (See Part I, Item 1. "Description of Business," (b)
"Business of Issuer.")
7. Dependency on Securing a Suitable Strategic Partner. The
Company's ability to establish a sufficient customer base at a level sufficient
to meet the larger competition depends in part upon the ability of the Company
to finalize a joint venture with US Surgical or comparable company. Although the
parties have reached a tentative agreement, until such time as such agreement is
executed, it is possible that it will not come to fruition. In such an event,
the Company then will be required to seek another strategic partner. There can
be no assurance that another qualified strategic arrangement will not be found
at the levels which management believes are possible. Further, even if the
Company receives sufficient proceeds from equity and/or debt financing or
otherwise, thus enabling it to go forward with its planned expansion, it will
nevertheless be dependent upon the availability of a qualified strategic partner
to progress at the levels which the Company believes are necessary. Although
management believes that the acceptance of its products and services will
continue to find the market acceptance which has occurred in the past, there can
be no assurance that this will be so. (See Part I, Item 1. "Description of
Business," (b) Business of Issuer - Sales and Marketing.")
8. Significant Customer and Product Concentration. To date, a
limited number of customers and distributors have accounted for substantially
all of the Company's revenues with respect to product sales. The Company
anticipates that the main focus of its selling efforts will be to continue to
sell its products to a relatively small group of medical products distributors
with the objective of having its products distributed on a large national and
international scale. Although the company entered into a letter of intent with
US Surgical, an exclusive distributorship agreement with Hospital News and
believes it can reactivate its distributorship agreements with Johnson & Johnson
Medical Pty Ltd. to sell its SutureMate(R) product (in the territories of
Australia, New Zealand, Papua, New Guinea and Fiji), with the two other
distributors to sell such product in Saudi Arabia and the Netherlands and that
Noesis will generate sales, there is no assurance that the Company will be able
to obtain adequate distribution of its products to the intended end user. Most
medical product distributors carry an extensive line of products (some of which
they manufacture themselves) which they make available to end users (hospitals,
surgeons, healthcare workers) and various of these products may compete with
each other as to function,
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price or other factors. In addition, numerous medical product distributors are
not themselves well capitalized and their financial condition may impact their
ability to properly distribute the Company's products. The Company's ability to
achieve revenues in the future will depend in significant part upon its ability
to obtain orders from, maintain relationships with and provide support to,
existing and new distributors, as well as the condition of its distributors. As
a result, any cancellation, reduction or delay in orders by or shipments to any
customer or the inability of any customer to finance its purchases of the
Company's products may materially adversely affect the Company's business,
financial condition and results of operations. There can be no assurance that
the Company's revenues will increase in the future or that the Company will be
able to support or attract customers. See "Part I, Item. 1. "Description of
Business - (b) Business of Issuer - Sales and Marketing - Distribution of
Products; and - Dependence on Major Customers" and Part I, Item 2. Management's
Discussion and Analysis of Financial Condition or Plan of Operation - Revenues."
9. Fluctuations in Results of Operations. The Company has
experienced and may in the future experience significant fluctuations in
revenues, gross margins and operating results. On the medical products
development side of its business, the introduction of new products and the
manufacture and marketing of most of the Company's products is a lengthy
(ranging from a minimum of six weeks to an estimated maximum of eighteen (18)
months from order to delivery) process and the timing and amount of product
sales is difficult to predict reliably. In addition, a single customer's order
scheduled for shipment in a fiscal quarter can represent a significant portion
of the Company's potential sales for such quarter. As with many developing
businesses, the Company expects to fail to receive expected orders, and delivery
schedules may have to be deferred as a result of changes in customer
requirements, among other factors. As a result, the Company's operating results
for a particular period have, to date, been and may in the future be materially
adversely affected by a delay, rescheduling or cancellation of even one purchase
order. Moreover, purchase orders are often received and accepted substantially
in advance of shipment, and the failure to reduce actual costs to the extent
anticipated or an increase in anticipated costs before shipment could
materially, adversely affect the gross margins for such order, and as a result,
the Company's results of operations. Moreover, a majority of the Company's
anticipated orders could be canceled since orders are expected to be made
substantially in advance of shipment, and even though the Company's contracts do
not typically provide that orders may be canceled, if an important distributor
wishes to cancel an order, the Company may be compelled, due to competitive
conditions, to accede to such request. As a result, backlog, if any, will not
necessarily be indicative of future sales for any particular period.
Furthermore, a substantial portion of net sales may be realized near the end of
each quarter. A delay in a shipment near the end of a particular quarter, due,
for example, to an unanticipated shipment rescheduling, to cancellations or
deferrals by customers or to unexpected manufacturing difficulties experienced
by the Company, may cause net revenues in a particular quarter to fall
significantly below the company's expectations and may materially adversely
affect the Company's operating results for such quarter.
A large portion of the Company's expenses are fixed and
difficult to reduce should revenues not meet the Company's expectations, thus
magnifying the material adverse effect of any revenue shortfall. Furthermore,
announcements by the Company or its competitors of new products and technologies
could cause customers to defer purchases of the Company's products or a
reevaluation of products under development, which would materially adversely
affect the Company's business, financial condition and results of operations.
Additional factors that may cause the Company's revenues, gross margins and
results of operations to vary significantly from period to period include:
product development, patent processing, FDA processing, clinical trials, mix of
products sold; manufacturing efficiencies, costs and capacity; price discounts;
market acceptance and the timing of availability of new products by the Company
or its customers, usage of different distribution and sales channels; warranty
and customer support expenses; customization of systems; and general economic
and political conditions. In addition, the
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Company's results of operations are influenced by competitive factors, including
the pricing and availability of and demand for, competitive products. All of the
above factors are difficult for the company to forecast, and these or other
factors could materially adversely affect the Company's business, financial
condition and results of operations. As a result, the Company believes that
period-to-period comparisons are not necessarily meaningful and should not be
relied upon as indications of future performance. See Part I, Item. 2.
"Management's Discussion and Analysis of Financial Condition or Plan of
Operation."
10. Potential for Unfavorable Interpretation of Government
Regulation. As a medical device specifier, the Company is subject to all
federal, state and local statutes and regulations governing its products, to the
extent applicable. The Company will not be subject to additional regulation
unless it elects to produce therapeutic drugs, in which case Surgical will be
required to conduct extensive clinical trials for FDA clearance which are not
required for the Company's products at this time. In such event the Company
shall have all of the uncertainties such clinical trials present including the
risk of loss of substantial capital in the event a product never receives the
required approvals.
Medical products are subject to extensive regulation by the
United States (U.S. Food and Drug Administration ("FDA") and U.S. Patent
Office), state, local and foreign laws and international treaties. The Company's
products must conform to a variety of domestic and international requirements.
In order for the Company to sell its products in a jurisdiction, it must obtain
regulatory approval and comply with different regulations in each jurisdiction.
The delays inherent in this governmental approval process may cause the
cancellation, postponement or rescheduling of the purchase by the Company's
customers, which in turn may have a material adverse effect on the sale of such
products by the Company to such customers. The failure to comply with current or
future regulations or changes in the interpretation of existing regulations
could result in the suspension or cessation of product sales. Such regulations
or such changes in interpretation could require the Company to modify its
products and incur substantial costs to comply with such time-consuming
regulations and changes.
The regulatory environment in which the Company operates is
subject to change. Regulatory changes, which are affected by political, economic
and technical factors, could significantly impact the Company's operations by
restricting development efforts by the Company and its customers, making current
products obsolete or increasing the opportunity for additional competition. Any
such regulatory changes could have a material adverse effect on the Company's
business, financial condition and results of operations. The Company might deem
it necessary or advisable to alter or modify its products to operate in
compliance with such regulations. Such modifications could be extremely
expensive and, especially if subject to regulatory review and approval,
time-consuming. (See Part I, Item 1. "Description of Business," (b) "Business of
Issuer - Governmental Regulation.")
11. No Assurance of Product Quality. Performance and
Reliability. The Company expects that its distributors and their customers will
continue to establish demanding specifications for quality, performance and
reliability. Although the Company attempts to only deal with manufacturers who
adhere to good manufacturing practice standards, there can be no assurance that
problems will not occur in the future with respect to quality, performance,
reliability and price. If such problems occur, the Company could experience
increased costs, delays in or cancellations or rescheduling of orders or
shipments and product returns and discounts, any of which would have a material
adverse effect on the Company's business, financial condition or results of
operations.
12. Future Capital Requirements. The Company's future capital requirements
will depend upon many factors, including the development of new medical
products, requirements to maintain adequate manufacturing facilities, the
progress of the Company's
<PAGE>
research and development efforts, expansion of the Company's marketing and sales
efforts and the status of competitive products and services. The Company
believes that it will require additional funding in order to fully exploit its
plan for operations. There can be no assurance, however, that the Company will
secure such additional financing. There can be no assurance that any additional
financing will be available to the Company on acceptable terms, or at all. If
additional funds are raised by issuing equity securities, further dilution to
the existing stockholders will result. If adequate funds are not available, the
Company may be required to delay, scale back or eliminate its research and
development or manufacturing programs or obtain funds through arrangements with
partners or others that may require the Company to relinquish rights to certain
of its existing or potential products or other assets. Accordingly, the
inability to obtain such financing could have a material adverse effect on the
Company's business, financial condition and results of operations. See Part I,
Item 2. "Management's Discussion and Analysis of Financial Condition or Plan of
Operation."
13. Uncertainty Regarding Protection of Proprietary Rights.
The Company attempts to protect its intellectual property rights through
patents, trademarks, secrecy agreements, trade secrets and a variety of other
measures. However, there can be no assurance that such measures will provide
adequate protection for the Company's trade secrets or other proprietary
information, that disputes with respect to the ownership of its intellectual
property rights will not arise, that the Company's trade secrets or proprietary
technology will not otherwise become known or be independently developed by
competitors or that the Company can otherwise meaningfully protect its
intellectual property rights. There can be no assurance that any patent owned by
the Company will not be invalidated, circumvented or challenged, that the rights
granted thereunder will provide competitive advantages to the Company or that
any of the Company's pending or future patent applications will be issued with
the scope of the claims sought by the Company, if at all. Furthermore, there can
be no assurance that others will not develop similar products, duplicate the
Company's products or design around the patents owned by the Company or that
third parties will not assert intellectual property infringement claims against
the Company. In addition, there can be no assurance that foreign intellectual
property laws will adequately protect the Company's intellectual property rights
abroad. The failure of the Company to protect its proprietary rights could have
a material adverse effect on its business, financial condition and results of
operations.
Litigation may be necessary to protect the Company's
intellectual property rights and trade secrets, to determine the validity of and
scope of the proprietary rights of others or to defend against claims of
infringement or invalidity. Such litigation could result in substantial costs
and diversion of resources and could have a material adverse effect on the
Company's business, financial condition and results of operations. There can be
no assurance that infringement, invalidity, right to use or ownership claims by
third parties or claims for indemnification resulting from infringement claims
will not be asserted in the future. If any claims or actions are asserted
against the Company, the Company may seek to obtain a license under a third
party's intellectual property rights. There can be no assurance, however, that a
license will be available under reasonable terms or at all. In addition, should
the Company decide to litigate such claims, such litigation could be extremely
expensive and time consuming and could materially adversely affect the Company's
business, financial condition and results of operations, regardless of the
outcome of the litigation. See Part I, Item 1. Description of Business - (b)
Business of Issuer - Patents, Copyrights and Trademarks."
14. Ability to Grow. The Company expects to grow through one
or more strategic alliances, acquisitions, internal growth and by granting
licenses for products which are not within the focuses defined by management.
There can be no assurance that the Company will be able to create a greater
market presence, or if such market is created, to expand its market presence or
successfully enter other markets. The ability of the Company to grow will depend
on a number of factors, including the availability of working capital to support
such growth, existing and
<PAGE>
emerging competition, one or more qualified strategic alliances and the
Company's ability to maintain sufficient profit margins in the face of pricing
pressures. The Company must also manage costs in a changing regulatory
environment, adapt its infrastructure and systems to accommodate growth within
the niche market which it has created.
The Company also plans to expand its business, in part,
through acquisitions. Although the Company will continuously review potential
acquisition candidates, it has not entered into any agreement, understanding or
commitment with respect to any additional acquisitions at this time. There can
be no assurance that the Company will be able to successfully identify suitable
acquisition candidates, complete acquisitions on favorable terms, or at all, or
integrate acquired businesses into its operations. Moreover, there can be no
assurance that acquisitions will not have a material adverse effect on the
Company's operating results, particularly in the fiscal quarters immediately
following the consummation of such transactions, while the operations of the
acquired business are being integrated into the Company's operations. Once
integrated, acquisitions may not achieve comparable levels of revenues,
profitability or productivity as at then existing Company-owned locations or
otherwise perform as expected. The Company is unable to predict whether or when
any prospective acquisition candidate will become available or the likelihood
that any acquisitions will be completed. The Company will be competing for
acquisition and expansion opportunities with entities that have substantially
greater resources than the Company. In addition, acquisitions involve a number
of special risks, such as diversion of management's attention, difficulties in
the integration of acquired operations and retention of personnel, unanticipated
problems or legal liabilities, and tax and accounting issues, some of all of
which could have a material adverse effect on the Company's results of
operations and financial condition. (See Part I, Item 1. "Description of
Business (b) "Business Issuer.")
15. Potential Legal Liability. Providers of medical devices may be subject
to claims relating to their product. In addition, under the terms of the
agreement with SMH, the Company is required to indemnify and hold harmless SMH
and the Lessee against any and all claims regarding the use of the OASiS system.
Management has adopted and implemented policies and guidelines to reduce its
exposure to these risks; principally in the area of its initial product research
and development. However, the failure of any product to meet such policies and
guidelines may result in governmental intervention, negative publicity,
injunctive relief and the payment by the Company of money damages or fines.
There can be no assurance that the Company will not experience such problems.
(See - 8. "Potential for Unfavorable Interpretation of Government Regulations"
and Part I, Item 1. "Description of Business" (b) "Business of Issuer-Government
Regulation.")
At such time as the Company enters into licensing agreements
for certain products which it feels are not a proper mix but deserve
exploitation, the Company may be subject to claims asserting that it is
vicariously liable for the damages allegedly caused by the products produced by
the licensees. Generally, liability for the acts or inactions of its licensees
are based on agency and products liability concepts. The Company intends for its
license agreements to state that the parties are not agents and that the
licensees control the manufacturer and production of the product. And that any
modifications are the sole responsibility of the licensee. Despite these efforts
to minimize the risk of liability, there can be no assurance that a claim will
not be made against the Company.
16. Competition. The medical products and devices industry is
highly competitive, with several major companies involved. The exposure
reporting information industry has only one (1) known competitor at this time.
The Company will be competing with larger competitors in international,
national, regional and local markets. In addition, the Company may encounter
substantial competition from new market entrants. Many of the Company's
competitors have significantly greater name recognition and have greater
marketing, financial and other resources than the Company. There can be no
assurance that the Company will be able to
<PAGE>
complete effectively against such competitors in the future. (See Part I. Item
1. "Description of Business," (b) "Business of Issuer-Competition.")
17. Requirement for Response to Rapid Technological Change
and Requirement for Frequent New Product Introductions. The market for surgical
safety products and services is subject to rapid technological change, frequent
new product introductions and enhancements, product obsolescence and changes in
end-user requirements. The Company's ability to be competitive in this market
will depend in significant part upon its ability to successfully develop,
introduce and sell new innovative proprietary products, services and
enhancements thereof on a timely and cost-effective basis that respond to
changing customer requirements. Any success of the Company in developing new and
enhanced products and services will depend upon a variety of factors, including
new product selection, timely and efficient compliance with and completion of
the regulatory process (FDA and the U.S. Patent and Trademark Office), timely
and efficient completion of design, timely and efficient implementation of
manufacturing and assembly process, its cost reduction program and the
development, completion, performance, quality and reliability and development of
competitive products and services by competitors. The Company may experience
delays from time to time in completing development and introduction of new
products and services. Moreover, there can be no assurance that the Company will
be successful in selecting, developing, manufacturing and marketing new products
and services. There can be no assurance that defects will not be found in the
Company's products and services after commencement of commercial shipments,
which could result in the loss of or delay in market acceptance. The inability
of the Company to introduce in a timely manner new products and services that
contribute to revenues could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Part I, Item. 1.
"Description of Business (b) Business of Issuer - Competition."
18. Possible Adverse Affect of Fluctuations in the General
Economy and Business of Customers. Historically, the general level of economic
activity has significantly affected the demand for new, disposable products. As
demands for economy have increased, reusable products have seen a resurgence of
demand. There can be no assurance that an economic downturn would not adversely
affect the demand for the Company's products and services. Further, hospitals
and other healthcare facilities have been required to adopt cost effective
policies which may cause them to reject any new information gathering system,
notwithstanding the need to collect accurate data. There can be no assurance
that such cost cutting factors will not adversely affect the development and
market penetration of the OASiS system.
19. Lack of Working Capital Funding Source. Other than
revenues from the sale of its products, which revenues have yet to produce a net
profit, the Company has no current source of working capital funds, and should
the Company be unable to secure additional financing on acceptable terms, its
business, financial condition, results of operations and liquidity would be
materially adversely affected.
20. Dependence on Contract Manufacturers; Reliance on Sole or
Limited Sources of Supply. As of the date hereof, the Company has no internal
manufacturing capacity. The Company has been utilizing contract manufacturers to
produce its products. In the case of SutureMate(TM), Tuthill and in the case of
MediSpecs Rx(TM), the Company has an agreement with Morrison. The Company may
also rely on outside vendors to manufacture certain components. Certain
necessary components and services anticipated to be necessary for the
manufacture of the Company's products could be required to be obtained from a
sole supplier or a limited group of suppliers. There can be no assurance that
the Company's contract manufacturers, will be sufficient to fulfill the
Company's orders.
Should the Company be required to rely solely on contract
manufacturers and a limited group of suppliers, such increasing reliance
involves several risks, including a potential
<PAGE>
inability to obtain an adequate supply of finished products and required
components, and reduced control over the price, timely delivery, reliability and
quality of finished products and components. The Company does not believe that
it is currently necessary to have any long-term supply agreements with its
manufacturers or suppliers but this may change in the future. The Company has
from time to time experienced and may in the future experience delays in the
delivery of and quality problems with its products and certain components from
vendors. Certain of the Company's suppliers have relatively limited financial
and other resources. Any inability to obtain timely deliveries of acceptable
quality or any other circumstances that would require the Company to seek
alternative sources of supply, or to manufacture its finished products
internally, could delay the Company's ability to ship its products which could
damage relationships with current or prospective customers and have a material
adverse effect on the Company's business, financial condition and operating
results. See "Part I, Item 1. "Description of Business - (b) Business of
Issuer."
21. Declining Average Selling Prices. The Company believes
that average selling prices and gross margins for its products may decline in
the long term as such products are in use in the market, as volume price
discounts in existing and future contracts take effect and as competition
intensifies, among other factors. To offset declining average selling prices,
the Company believes that it must successfully introduce and sell new products
and services or adaptations of products and services on a timely basis, develop
new products and services with features that can be sold at higher average
selling prices and reduce the costs thereof through design improvements,
component cost reduction and in-house manufacturing, among other actions. To the
extent that new products and services are not developed in a timely manner, do
not achieve customer acceptance or do not generate higher average selling
prices, and the Company is unable to offset declining average selling prices,
the Company's gross margins will decline, and such decline will have a material
adverse effect on the Company's business, financial condition and results of
operations. The Company believes that the re-design of SutureMate(R) will result
in a reduction in costs. See "Pat I, Item. 1. "Description of Business - (b)
Business of Issuer - Medical Products Division - Research and Development" and
Part I, item. 2. "Management's Discussion and Analysis of Financial Condition or
Plan of Operations - Research and Development."
22. Uncertainty of Market Acceptance. The future operating
results of the Company depend to a significant extent upon the continued
development of products and services deemed necessary, useful, convenient,
affordable and competitive by medical professionals and their patients. There
can be no assurance that the Company has the ability to continuously introduce
propriety products and services into the marketplace which will achieve the
market penetration and acceptance necessary for the Company to grow and become
profitable on a sustained basis, especially given the fierce competition that
exists from companies more established and well financed than the Company. See
"Part I, Item 1. "Description of Business - (b) Business of Issuer -
Competition."
To date, substantially all of the Company's product sales
have been to customers within the United States with a small portion of such
sales generated internationally. The Company's future results of operations will
be dependent in significant part on its ability to penetrate markets in the
United States and foreign countries in which the Company has not yet established
a meaningful presence. There can be no assurance that the Company will be
successful in penetration these additional markets.
23. International Operations; Risks of Doing Business in
Developing Countries. Substantially all of the Company's revenues from product
sales to date have been made to customers located inside of the United States.
The Company anticipates that international sales will, as a result of various
distribution agreements entered into, account for more of its revenues from
product sales for the foreseeable future. The Company's international sales may
be denominated in foreign or United States currencies. The Company does not
currently engage in
<PAGE>
foreign currency hedging transactions. As a result, a decrease in the value of
foreign currencies relative to the United States dollar could result in losses
from transactions denominated in foreign currencies. With respect to the
Company's international sales that are United States dollar-denominated, such a
decrease could make the Company's products less price-competitive. Additional
risks inherent in the Company's international business activities include
changes in regulatory requirements, costs and risks of local customers in
foreign countries, availability of suitable export financing, timing and
availability of export licenses, tariffs and other trade barriers, political and
economic instability, difficulties in staffing and managing foreign operations,
difficulties in managing distributors, potentially adverse tax consequences,
foreign currency exchange fluctuations, the burden of complying with a wide
variety of complex foreign laws and treaties and the possibility of difficulty
in accounts receivable collections. Some of the Company's customer purchase
agreements may be governed by foreign laws, which may differ significantly from
U.S. laws. Therefore, the Company may be limited in its ability to enforce its
rights under such agreements and to collect damages, if awarded. There can be no
assurance that any of these factors will not have a material adverse effect on
the Company's business, financial condition and results of operations.
Some of the Company's potential markets consist of countries
that have not yet developed the technological and medical know-how to properly
utilize the Company's products, in which event the development of demand for the
Company's products in those countries will be limited or delayed. In doing
business in some of these markets, the Company may also face economic, political
and foreign currency fluctuations that are more volatile than those commonly
experienced in the United States and other areas. See "Part I, Item 1.
"Description of Business - (b) Business of Issuer - Sales and Marketing -
Distribution of Products."
24. No Dividends. While payments of dividends on the Common Stock rests
with the discretion of the Board of Directors, there can be no assurance that
dividends can or will ever be paid. Payment of dividends is contingent upon,
among other things, future earnings, if any, and the financial condition of the
Company, capital requirements, general business conditions and other factors
which cannot now be predicted. It is highly unlikely that cash dividends on the
Common Stock will be paid by the Company in the foreseeable future. (See Part I,
Item 8. "Description of Securities - Description of Common Stock - Dividend
Policy.")
25. No Cumulative Voting. The election of directors and other questions
will be decided by a majority vote. Since cumulative voting is not permitted and
one-third of the Company's outstanding Common Stock constitute a quorum,
investors who purchase shares of the Company's Common Stock may not have the
power to elect even a single director and, as a practical matter, the current
management will continue to effectively control the Company. (See Part I, Item
8. "Description of Securities - Description of Common Stock.")
26. Control by Present Shareholders. The present shareholders of the
Company's Common Stock will, by virtue of their percentage share ownership and
the lack of cumulative voting, be able to elect the entire Board of Directors,
establish the Company's policies and generally direct its affairs. Accordingly,
persons investing in the Company's Common Stock will have no significant voice
in Company management, and cannot be assured of ever having representation on
the Board of Directors. (See Part I, Item 4. "Security Ownership of Certain
Beneficial Owners and Management.")
27. Potential Anti-Takeover and Other Effects of Issuance of Preferred
Stock May Be Detrimental to Common Shareholders. Potential Anti-Takeover and
Other Effects of Issuance of Preferred Stock May Be Detrimental to Common
Shareholders. The Company is authorized to issue shares of preferred stock.
("Preferred Stock"); none of which has been issued to date. The issuance of
Preferred Stock does not require approval by the shareholders of the Company's
Common Stock. The Board of Directors, in its sole discretion, has the power to
issue shares of
<PAGE>
Preferred Stock in one or more series and to establish the dividend rates and
preferences, liquidation preferences, voting rights, redemption and conversion
terms and conditions and any other relative rights and preferences with respect
to any series of Preferred Stock. Holders of Preferred Stock may have the right
to receive dividends, certain preferences in liquidation and conversion and
other rights; any of which rights and preferences may operate to the detriment
of the shareholders of the Company's Common Stock. Further, the issuance of any
shares of Preferred Stock having rights superior to those of the Company's
Common Stock may result in a decrease in the value of market price of the Common
Stock provided a market exists, and additionally, could be used by the Board of
Directors as an anti-takeover measure or device to prevent a change in control
of the Company. (See Part I, Item 1. "Description of Securities - Description of
Preferred Stock.")
28. No Secondary Trading Exemption. Secondary trading in the
Common Stock will not be possible in each state until the shares of Common Stock
are qualified for sale under the applicable securities laws of the state or the
Company verifies that an exemption, such as listing in certain recognized
securities manuals, is available for secondary trading in the state. There can
be no assurance that the Company will be successful in registering or qualifying
the Common Stock for secondary trading, or availing itself of an exemption for
secondary trading in the Common Stock, in any state. If the Company fails to
register or qualify, or obtain or verify an exemption for the secondary trading
of, the Common Stock in any particular state, the shares of Common Stock could
not be offered or sold to, or purchased by, a resident of that state. In the
event that a significant number of states refuse to permit secondary trading in
the Company's Common Stock, a public market for the Common Stock will fail to
develop and the shares could be deprived of any value. The Company was listed in
Moody's OTC Industrial on April 28, 1998.
29. Possible Adverse Effect of Penny Stock Regulations on
Liquidity of Common Stock in any Secondary Market. Although trading volume
indicates that a secondary trading market has developed to a certain extent for
the shares of Common Stock of the Company, the Common Stock is expected to come
within the meaning of the term "penny stock" under 17 CAR 240.3a51- 1 because
such shares are issued by a small company; are low-priced (under five dollars);
and are not traded on NASDAQ or on a national stock exchange. The Securities and
Exchange Commission has established risk disclosure requirements for
broker-dealers participating in penny stock transactions as part of a system of
disclosure and regulatory oversight for the operation of the penny stock market.
Rule 15g-9 under the Securities Exchange Act of 1934, as amended, obligates a
broker-dealer to satisfy special sales practice requirements, including a
requirement that it make an individualized written suitability determination of
the purchaser and receive the purchaser's written consent prior to the
transaction. Further, the Securities Enforcement Remedies and Penny Stock Reform
Act of 1990 require a broker-dealer, prior to a transaction in a penny stock, to
deliver a standardized risk disclosure instrument that provides information
about penny stocks and the risks in the penny stock market. Additionally, the
customer must be provided by the broker-dealer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and the
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer's account. For so long as the
Company's Common Stock is considered penny stock, the penny stock regulations
can be expected to have an adverse effect on the liquidity of the Common Stock
in the secondary market, if any, which develops.
Item 2. Management's Discussion and Analysis or Results of Operations.
Discussion and Analysis
The Company was founded in 1992 to combat the potential
spread of bloodborne pathogenic infections such as HIV and hepatitis. It has
broadened its mission to research, develop, manufacture, market and sell medical
products and services to the healthcare community.
<PAGE>
The Company was in the development stage until 1993 when it
began commercial shipments of SutureMate(R), its first product. From inception
in June, 1992 through June 30, 1998, the Company generated revenues of
approximately $1,100,000 from a limited number of customers. Since inception
through June 30, 1998, the Company has generated cumulative losses of
approximately $1,239,865. Although the Company has experienced a significant
percentage growth in revenues and gross profit from fiscal 1992 to fiscal 1997,
the Company does not believe prior growth rates are indicative of future
operating results, especially in light of the anticipated growth of the Data
System Division because of the introduction of OASiS. Due to the Company's
operating history and limited resources, among other factors, there can be no
assurance that profitability or significant revenues on a quarterly or annual
basis will occur in the future. Moreover, the Company expects to continue to
incur operating losses through at least the third quarter 1998, and there can be
no assurance that losses will not continue after such date.
The Company is currently marketing two (2) products and the
OASiS System, expects to introduce other products by the end of 1999, and
expects to continue to invest significant resources in at least nine (9) new
products and enhancements prior to 1999.
Upon implementation of its agreement with U.S. Surgical and
reactivation of its various distribution agreements, the Company expects to
experience a period of growth, which requires it to significantly increase the
scale of its operations. This increase will include the hiring of additional
personnel in all functional areas and will result in significantly higher
operating expenses. The increase in operating expenses is expected to be matched
by a concurrent increase in revenues. However, the Company's net loss may
continue to increase even if revenues increase and that operating expenses will
continue to increase. Expansion of the Company's operations may cause a
significant strain on the Company's management, financial and other resources.
The Company's ability to manage recent and any possible future growth, should it
occur, will depend upon a significant expansion of its accounting and other
internal management systems and the implementation and subsequent improvement of
a variety of systems, procedures and controls. There can be no assurance that
significant problems in these areas will not occur. Any failure to expand these
areas and implement and improve such systems, procedures and controls in an
efficient manner at a pace consistent with the Company's business could have a
material adverse effect on the Company's business, financial condition and
results of operations. As a result of such expected expansion and the
anticipated increase in its operating expenses, as well as the difficulty in
forecasting revenue levels, the Company expects to continue to experience
significant fluctuations in its revenues, costs and gross margins, and therefore
its results of operations. (See Part I, Item 1. "Description of the Business -
(b) Business of the Issuers - Risk Factors Fluctuations in Results of
Operations".)
Results of Operations - Full Fiscal Years
Revenues
To date, a limited number of customers and distributors have
accounted for substantially all of the Company's revenues with respect to
product sales. The Company anticipates that the main focus of its selling
efforts will be to focus on the U.S. Surgical arrangement and to continue to
sell its products to a relatively small group of medical products distributors
with the objective of having its products distributed on a large national and
international scale. Although the Company had entered into an exclusive
distributorship agreement with Johnson & Johnson Medical Pty Ltd. to sell its
SutureMate(R) product (in the territories of Australia, New Zealand, Papua, New
Guinea and Fiji), Noesis for sales in Europe, and with two other distributors to
sell such product in Saudi Arabia and the Netherlands, none of these
arrangements are currently active. And, although the Company is currently
engaged in a marketing test agreement with U.S. Surgical, there is no assurance
that the Company will be able to obtain adequate distribution of its products to
the intended end user. Most medical product
<PAGE>
distributors carry an extensive line of products (some of which they manufacture
themselves) which they make available to end users (hospitals, surgeons,
healthcare workers) and various of these products may compete with each other as
to function, price or other factors. In addition, numerous medical product
distributors are not themselves well capitalized and their financial condition
may impact their ability to properly distribute the Company's products.
The Company's ability to achieve revenues in the future will
depend in significant part upon its ability to obtain orders from, maintain
relationships with and provide support to, existing and new customers, as well
as the condition of its customers. As a result, any cancellation, reduction or
delay in orders by or shipments to any customer or the inability of any customer
to finance its purchases of the Company's products may materially adversely
affect the Company's business, financial condition and results of operations.
There can be no assurance that the Company's revenues will increase in the
future or that the Company will continue to provide significant volume price
discounts to its major foreign distributor which are expenses to lower the
average selling price of a particular product line as more units are sold. In
addition, the Company expects that the average selling price of a particular
product line will also decline as such products mature, and as competition
increases in the future. Accordingly, the Company's ability to maintain or
increase revenues will depend in part upon its ability to increase unit sales
volumes of its products and to introduce and sell products at prices sufficient
to compensate for reduced revenues resulting from declines in the average
selling price of the Company's more mature products. ( See Part I, Item 1.
"Description of the Business - (b), Business of the Issuers - Risk Factors -
Significant Customer and Product Concentration, Fluctuations in Results of
Operations, Declining Average Selling Prices and International Operations; Risks
of Doing business in Developing Countries.")
Gross Profit
On the product side of its business, the Company's cost of
revenues consists primarily of costs related to contracted manufacturing. For
the year ended December 31, 1997, gross profit was $226,758 or approximately
91.2% of product sales. For the year ended December 31, 1996, gross profit was
$89,313 or approximately 95.5% of product sales. Such improvement is associated
with the introduction of OASiS, product design improvements and economies of
scale, but there can be no assurance that such improvements will continue.
The Company has an ongoing program to reduce the costs of
manufacturing its products. As part of this program, the Company has been
attempting to achieve cost reductions principally through engineering and
manufacturing improvements, product economies and utilization of third party
subcontractors for the manufacture of the Company's products. The Company also
intends to implement other costs reduction programs in order to favorably affect
gross profit in the future, including the possible acquisition of manufacturing
facilities. There can be no assurance that the Company's ongoing or future
programs can be accomplished or that they will increase gross profits.
To the extent the Company is unable to reduce its production
costs or introduce new products with higher margins, the Company's gross margins
and results of operations could be materially adversely affected. The Company's
gross profit may also be affected by a variety of other factors, including mix
of products and services sold; production, reliability or quality problems;
price competition; and warranty expenses and discounts.
Operating Expenses
Sales and Marketing: These expenses consist of advertising, meetings and
conventions and entertainment related to product exhibitions and the related
travel expenses. Since inception, the Company has spent approximately $256,000
on sales and marketing expenses. For
<PAGE>
the years ended December 31, 1996 and December 31, 1997, sales and marketing
expenses were $21,709 and $30,682, respectively. In 1997, the Company increased
its advertising particularly with reference to OASiS. The Company intends to
invest significant resources to expand its sales and marketing effort, including
the hiring of additional personnel and to establish the infrastructure necessary
to support future operations. The Company expects that such expenses in 1998
will increase in absolute dollars as compared to 1997.
General and Administrative. These expenses consist primarily
of the general and administrative expenses for salaries, contract labor and
other expenses for management and finance and accounting, legal and other
professional services including ongoing expenses as a publicly owned Company
related to legal, accounting and other administrative services and expenses.
Since inception, the Company has spent approximately $1,480,000 on general and
administrative expenses. For the years ended December 31, 1996 and December 31,
1997, general and administrative expenses were $189,846 and $218,510,
respectively. The Company expects general and administrative expenses to
increase in absolute dollars in 1998 as compared to 1997, as the Company
continues to expand its operations.
Research and Development
These expenses consist primarily of costs associated with
personnel and equipment costs and field/clinical trials. The Company's research
and development activities include the development of the OASiS system and more
than nine (9) operating room, OB/GYN, advanced surgical and protective related
products.
Since inception, the Company has spent approximately $150,000
on research and development. For the years ended December 31, 1996 and December
31, 1997, research and development expenses were approximately $9,468 and
$107,756, respectively. During 1997, research and development expenses increased
as the Company concentrated on the OASiS System. The Company intends to continue
to invest significant resources to continue the development of new products and
expects that research and development expenses in 1998 will increase in absolute
dollars as compared to 1997.
Interest and Other Income (Expense), Net
Interest and other income (expense), net consists primarily
of interest expenses accrued on the direct loan to the Company under a line of
credit agreement for $100,000, miscellaneous income, underwriting costs and a
private placement cost write-off relative to the return of the investment made
by one of the investors in the 1995 private placement. Effective May 1997, the
Company has a line of credit in the amount of $100,000 with a financial
institution at 1.5% above the prime rate, interest only payments are due monthly
with an expiration date of May 2, 2017. The line is due on demand and is secured
by inventory, accounts receivable and equipment. The outstanding balance as of
December 31, 1997 was $100,000. As of June 30, 1998, the outstanding balance on
this line of credit was zero since part of the proceeds from the sale of the
Company's Common Stock during March through June 1998 was used to pay the amount
drawn down to date under a revolving credit arrangement. The interest rate at
December 31, 1997 was 10.0%. The line of credit is personally guaranteed by Dr.
Swor. (See Part I, Item 2. "Management's Discussion and Analysis or Results of
Operations - Financial Condition, Liquidity and Capital Resources.")
The Company did not report any foreign currency gains or
losses for the year ended December 31, 1997 since the contracts negotiated in
foreign currencies were insignificant for that period. In the event its contract
with Johnson & Johnson Medical Pty. Ltd., Noesis and the Company's distribution
arrangements in the Netherlands and in Saudi Arabia are reactivated, the Company
may in the future be exposed to the risk of foreign currency gains or losses
depending
<PAGE>
upon the magnitude of a change in the value of a local currency in an
international market. The Company does not currently engage in foreign currency
hedging transactions, although it may implement such transactions in the future.
Financial Condition, Liquidity and Capital Resources
At December 31, 1997, the Company had assets totaling
$445,235 and liabilities totaling $504,278. Since its inception in June of 1992,
the Company has financed its operations and met its capital requirements through
sales of its products, fees from OASiS, common stock offerings aggregating
approximately $834,141, through borrowing from current shareholders and through
the $100,000 line of credit with the financial institution which is guaranteed
by Dr. Swor.
Operating activities used net cash of $241,257 and $215,334 in 1996 and
1997, respectively.
At December 31, 1997, the Company had a working capital
deficiency of approximately $242,411, including $250,125 of accounts receivable
and $11,742 of inventory.
At December 31, 1997, substantially all of the Company's
outstanding indebtedness consisted of a revolving Loan Agreement with SouthTrust
Bank dated May 2, 1997 under which the Company executed a Promissory Note in the
amount of $100,000 and a Security Agreement which grants the bank a security
interest in inventory, accounts receivables, intangibles, instruments, chattel
papers and equipment. Such revolving loan requires payment on the earlier of May
2, 2017, a default or notice from the bank of its election to terminate the
availability of new loans under the agreements. The purpose of the loan was for
short-term working capital. This loan is personally guaranteed by Dr. Swor and
his wife. As of June 30, 1998, the outstanding balance of this line of credit
was zero since part of the proceeds from the sale of the Company's Common Stock
during the period March 1998 through June 1998 was used to pay the amount drawn
down to date.
The Company's principal commitments for capital expenditures
are those associated with the arrangement with US Surgical under which the
Company will provide initially ten (10) units for installation at Centers of
Excellence designated by US Surgical. The sources of funds to meet these
commitments will be through the leveraged leasing arrangement established with
Rockford. (See Part I, Item 1. "Description of the Business - (b) Business of
Issuer - Date Systems Division.")
In addition, under the terms of the SMH Clinical Testing
Agreement, the Company is obligated to pay $25,000 for each product study. The
sources of funds to meet these commitments will be partially made through cash
on hand, revenues generated by the Long Term U.S. Surgical Agreement, if
executed, and other revenues which the Company believes it will generate over
the five (5) year term. (See Part I, Item 1. "Description of Business - (b)
Business of Issuer - Medical Products Division.")
The Company's future capital requirements will depend upon
many factors, including the continued development of OASiS, its current products
and new products and services, the extent and timing of acceptance of the
Company's products and services in the market, requirements to maintain adequate
manufacturing arrangements, the progress of the Company's research and
development efforts, expansion of the Company's marketing and sales efforts, the
Company's results of operations and the status of competitive products and
services. The Company believes that cash on hand, cash flow from operations, if
any, and funds available from OASiS will be adequate to fund its operations for
at least the next twelve months. There can be no assurance, however, that the
Company will not require additional financing prior to such date to fund its
operations. In addition, the Company may require additional financing after such
date
<PAGE>
to fund its operations. There can be no assurance that any additional financing
will be available to the Company on acceptable terms, or at all, when required
by the Company. If additional funds are raised by issuing equity securities,
further dilution to the existing stockholders will result. If additional funds
are raised by issuing debt securities future interest expense will be incurred.
If adequate funds are not available, the Company may be required to delay, scale
back the development of OASiS or scale back or eliminate one or more of its
research and development or manufacturing programs or obtain funds through
arrangements with partners or others that may require the Company to relinquish
rights to certain of its products or potential products or other assets that the
Company would not otherwise relinquish. Accordingly, the inability to obtain
such financing could have a material adverse effect on the Company's business,
financial condition and results of operations.
Results of Operations for the Six Months Ended June 30, 1998 and 1997
Overview
From its inception, the Company has incurred losses from
operations. As of June 30, 1998, the Company had cumulative net losses totaling
$1,189,865. Through fiscal 1997, the Company focused primarily on the design and
development of its propriety products, as well as providing consulting services.
During the current fiscal year, management has shifted its focus to aggressively
marketing its proprietary products.
Financial Position
The Company had $589,522 in cash as of June 30, 1998. This
represented an increase of $603,506 from December 31, 1997. Working capital as
of June 30, 1998 increased to $469,477 as compared to a working capital deficit
of $242,411 at December 31, 1997. This increase is due to the acquisition of
additional equity of $939,000 during the six months ended June 30, 1998. The
Company used a portion of the new equity to pay off its short-term debt of
$333,720 outstanding at December 31, 1997. This included the pay off of (i)
$100,000 which had been drawn down under the revolving Loan Agreement with
SouthTrust Bank and accrued interest, (ii) payments of approximately $38,400
including principal and interest on outstanding loans due to Savannah Leasing
under the terms of a Revolving Note in the amount of $40,000 dated January 1,
1997 which bears interest at the rate of ten percent (10%) per annum and which
is due and payable on demand and (iii) payments of approximately $246,200
including principal and interest on outstanding loans due to Dr. Swor under the
terms of a Revolving Note in the amount of $250,000 dated January 1, 1997 which
bears interest at the rate of ten percent (10%) per annum and which is due and
payable on demand.
Revenues
For the six months ended June 30, 1998 and 1997, the Company
had total revenues of $15,788 and $15,706, respectively. Revenues for the six
months ended June 30, 1997 are comprised primarily of medical consulting
services. For the six months ended June 30, 1998, revenues are comprised of fees
received for services provided for U. S. Surgical at the AORN convention held
between March 31 and April 2, 1998 at which the OASiS system was demonstrated.
Selling, General, and Administrative Expenses
For the six months ended June 30, 1998, operating expenses
increased by approximately $185,000 or 200% from $116,000 for the six months
ended June 30, 1997. This increase is primarily related to sales and marketing
personnel hired in fiscal 1998 for the purpose of aggressively marketing the
Company's proprietary disposable products, SutureMate, as well as
<PAGE>
the OASiS system. Payroll and related expenses increased $72,000 to $114,000 for
the six months ended June 30, 1998 from $42,000 during the six months ended June
30, 1997. In accordance with the Company's marketing plan for fiscal 1998,
expenses related to promotion, trade shows, and conventions increased $26,000 to
$46,000 for the six months ended June 30, 1998 as compared to $19,000 for the
six months ended June 30, 1997.
In the past, the Company has focused on the design and
development of proprietary products. For fiscal 1998, the Company has launched
an aggressive marketing plan that is designed to increase worldwide sales of its
products. Surgical feels that the increased operating expenses incurred during
the six months ended June 30, 1998 will position the Company to generate
increased product sales in the second half of the fiscal year.
Liquidity and Capital Resources
The Company's operations are being funded primarily from the
cash flow of $939,000 generated from sale of its Common Stock during the six
months ended June 30, 1998. This allowed the Company to pay off debt to Dr. Swor
and Savannah Leasing in the amount of $233,720, in addition to the outstanding
line of credit balance of $100,000 at December 31, 1997. At June 30, 1998, the
Company had approximately $590,000 in cash which will be used to fund operations
for several months.
The Company has a line of credit in the amount of $100,000
which expires in May 2017 and is guaranteed by Dr. Swor and his wife. The line
of credit will be used as necessary to fund operations on a short-term basis.
Net cash used for investing for the six months ended June 30,
1998 was approximately $68,000, representing costs related to the new version of
OASiS which have been capitalized, as well as costs related to new prototype
molds for SutureMate(R).
Sales to two (2) customers, one (1) in each year, represent
97% and 99% of the Company's revenues for the six months ended June 30, 1998 and
1997. These revenues related to services rather than product sales.
It is the Company's intention to pursue additional debt and
or equity financing in the range of $2,000,000 to $5,000,000 during the
remaining part of fiscal 1998, however, there can be no assurance that they will
be successful in their efforts. Surgical believes that cash flows generated from
operations and borrowing capacity, combined with proceeds from future debt or
equity financing, will provide adequate flexibility for funding the Company's
working capital obligations.
Impact of the Year 2000 Issue
The Year 2000 Issue is the result of potential problems with
computer systems or any equipment with computer chips that use dates where the
date has been stored as just two digits (e.g. 98 for 1998). On January 1, 2000,
any clock or date recording mechanism including date sensitive software which
uses only two digits to represent the year, may recognize the date using 00 as
the year 1900 rather than the year 2000. This could result in a system failure
or miscalculations causing disruption of operations, including among other
things, a temporary inability to process transactions, send invoices, or engage
in similar activities.
The Company determined that the Year 2000 impact is not
material to Surgical and that it will not impact its business, operations or
financial condition since all of the internal software utilized by the Company
has the capability of being upgraded to support Year 2000 versions. Further, the
Year 2000 will not impact upon the operation of the OASiS system since the
<PAGE>
software for this system does not rely on legacy applications or subsystems.
OASiS is designed to handle dates in the form of a two digit month and day and a
four digit year, thus avoiding the Year 2000 problem
The Company believes that it has disclosed all required
information relative to Year 2000 issues relating to its business and
operations. However, there can be no assurance that the systems of other
companies on which the Company's systems rely also will be timely converted or
that any such failure to convert by another company would not have an adverse
affect on the Company's systems.
Item 3. Description of Property:
The Company's executive offices are located at 2018 Oak
Terrace, Sarasota, Florida 34231. Its telephone number is (941) 927-7874 and its
facsimile number is (941) 925-0515.
The Company pays rent in the amount of $3500 per month which
consists of 3,500 square feet of office space. The lease is for a term of two
(2) years and is automatically renewable for an additional year. The property is
owned by Savannah Leasing which is owned by Dr. and Mrs. Swor. The Company has a
first right of refusal on surrounding properties owned by Savannah Leasing and
therefore believes that this space will be sufficient for its corporate offices
for the next ten (10) years. (See Part I, Item 1. "Description of Issuer - (b)
Business of Issuer Facilities.")
The Company owns no real property and its personal property
consists of furniture, fixtures and equipment and prototype molds with an
original cost of $121,760 on December 31, 1997.
The Company currently employs its capital reserves in a money
market sweep account. Activity is monitored on a daily basis and for a thirty
(30) day period commencing on July 1, 1998, had returned on average 4.75% on
assets employed. Additionally, Surgical has acquired stock in two (2) privately
owned companies, 25,000 shares in ParView Inc. as part of its acquisition of
Endex Systems Inc. and 3,750 shares in Linters Inc. which was received as
partial compensation for clinical products research completed by the Medical
Consultants Division. It is the Company's strategy to engage in transactions
which minimize dilution of the Company's equity.
Item 4. Security Ownership of Certain Beneficial Owners and Management:
The following table sets forth information as of June 30,
1998, regarding the ownership of the Company's Common Stock by each shareholder
known by the Company to be the beneficial owner of more than five percent (5%)
of its outstanding shares of Common Stock, each director and all executive
officers and directors as a group. Except as otherwise indicated, each of the
shareholders has sole voting and investment power with respect to the share of
Common Stock beneficially owned.
Name and Address of Title of Amount and Nature of Percent of
Beneficial Owner Class Beneficial Owner Class
- --------------------------------------------------------------------------------
Dr. G. Michael Swor Common 3,809,890 (1) 35.45
Frank M. Clark Common 50,000 .47
Donald K. Lawrence Common 250,000 2.33
<PAGE>
James D. Stuart Common 879,745 (2) 8.19
Irwin Newman Common -0- -0-
Sam Norton Common 53,400 .50
David Swor Common 473,445 4.41
Tom DeCesare Common 9,469 .09
All Executive Officers and Directors
as a Group (eight (8) persons) 4,894,689 (3) 45.54 (3)
- ----------
(1) This includes 631,260 owned by Dr. Swor's wife of which he is deemed the
beneficial owner
(2) This include 31,563 which Mr. Stuart owns jointly with his brother and
816,619 which Mr. Stuart received as a gift from Dr. Swor in 1996.
(3) In addition to the shares owned by the Executive Officers and Directors as a
group, said officers and directors own (including those beneficially held)
options to purchase 4,466,316 shares of the Company's Common Stock pursuant to
Employee Stock Option Plans adopted in 1994 and 1998. In the event all such
options to purchase were exercised, this group would own a total of 9,361,005
shares of the Company's Common Stock which would represent 61.53% of the total
shares of Common Stock outstanding. (See Part I, Item 6. "Executive Compensation
- - Employee and Consultant Stock Option Plans.")
There are no arrangements which may result in the change of control of the
Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons:
Executive Officers and Directors
Set forth below are the names, ages, positions, with the
Company and business experiences of the executive officers and directors of the
Company.
Name Age Position(s) with Company
Dr. G. Michael Swor 40 Chairman and Treasurer
Frank M. Clark * 66 Director and President
Donald K. Lawrence * 35 Director, Executive Vice President and
Secretary
James D. Stuart 40 Director
Irwin Newman 50 Director
Sam Norton 39 Director
David Swor 66 Director
<PAGE>
Tom DeCesare 66 Director
* Except for Mr. Clark and Mr. Lawrence, who had no role in founding or
organizing the Company, the above-named persons may be deemed to be "promoters"
and "parents" of the Company, as those terms are defined under the Rules and
Regulations promulgated under the Act.
All directors hold office until the next annual meeting of the
Company's shareholders and until their successors have been elected and qualify.
Officers serve at the pleasure of the Board of Director. The officers and
directors will devote such time and effort to the business and affairs of the
Company as may be necessary to perform their responsibilities as executive
officers and/or directors of the Company.
Family Relationships
There are no family relationships between or among the executive officers
and director of the Company except that David Swor is Dr. G. Michael Swor's
father and Tom DeCesare is Dr. Swor's father-in-law.
Business Experience
G. Michael Swor, M.D., M.B.A, age 40, has served as Chairman
of the Board and Medical/Technical Advisor of the Company since its inception in
1992 and has served as Treasurer to the Company since June, 1998.
Dr. Swor, a board certified, practicing physician with a
specialty in OB/GYN, is the founder of Surgical. From 1992 until June 12, 1998,
Dr. Swor also served as President and CEO. With a Masters in Business
Administration, Dr. Swor's duties for the Company include investor relations,
corporate financing, and overall corporate policy and management. He is a
clinical assistant professor in the OB/GYN department at University of South
Florida. Dr. Swor was the inventor of SutureMate(R) and Prostasert(TM) and the
original holder of the patents issued to each of these products. Dr. Swor has
written numerous articles, published the "Surgical Safety Handbook," and given
numerous lectures on safety and efficiency in the surgical environment. His
professional affiliations include American College of Surgeons, American College
of Obstetrics and Gynecology and the Florida Medical Association. From 1996
until the present, Dr. Swor has acted as an independent consultant for Concise
Advise which provides consulting services related to product development,
patent, research, distribution, joint venture, mergers and other business
issues. From 1994 through 1996, Dr. Swor oversaw the operation of WDC. From 1987
through 1995,Dr. Swor was the managing partner of Women's Care
Specialists/Physicians Services Inc. where he oversaw four (4) physicians, two
(2) practitioners and a staff of over twenty five (25). From 1987 through 1992,
Dr. Swor was a partner and board member of Women's Ambulatory Services, Inc., a
diagnostic testing facility. From 1982 through 1985, Dr. Swor was the President
of University of Florida at Jacksonville, Health Sciences Center resident staff
association with over 200 members. Dr. Swor received a B.A degree in 1978 from
the University of South Florida, a M.D. degree from the University of South
Florida College of Medicine in 1981, and an M.B.A. degree from the University of
South Florida in 1998. From 1981 through 1985 he received his training in OB/GYN
from the University of Florida Department of Obstetrics and Gynecology in
Jacksonville, Florida. He has received several special achievement awards
including being honored by the University of South Florida in May, 1998 with the
Alumni Award for Professional Achievement.
Frank M. Clark, age 66, has served as a Director and President
since June, 1998.
Mr. Clark is responsible for the day to day operations of the Company and
is responsible for new product development and manufacturing and manages new
business ventures,
<PAGE>
including mergers, acquisitions, joint ventures, strategic alliances and
licensing/distribution agreements for the Company. From 1991 to 1997, Mr. Clark
was Chairman and CEO of Corporate Consulting Services Group where his primary
activities were providing consulting services to start-up companies,
under-performing companies and training people in career transitions. From 1984
to 1991, Mr. Clark was COO and Executive Vice President of Right Associates, a
consulting firm with responsibilities for business development with Fortune 100
corporations for which he acted. He acquired a Los Angeles based consulting firm
and became the Managing Principal. From 1981 to 1984, Mr. Clark was a Vice
President of National Medical Care, a subsidiary of W.R. Grace, Inc. where his
innovative marketing leadership helped the company recapture a dominant share of
the dialysis market. From 1978 to 1981, Mr. Clark served as President, Corporate
Vice President and a Director of R.P. Scherer, Inc., the world's leading
producer of soft gelatin capsules where he was in charge of worldwide
businesses. From 1959 to 1984, Mr. Clark was employed by Johnson & Johnson,
Inc., first with Ethicon, Inc. where he served as a Vice President and Director,
then with Ethnor Medical Products where he was a Vice President, General Manager
and a Director and then with Stimulation Technology, where he served as
Executive Vice President and a Director. From 1956 to 1958, Mr. Clark was
employed by Federated Department stores in the executive training program at
Bloomingdales in New York City. Mr. Clark received a certificate from Teachers
College in Connecticut in 1955.
Donald K. Lawrence, age 35, has served as a Director, Vice
President, Sales & Marketing and Secretary since May, 1997 and Executive Vice
President since January, 1998.
Mr. Lawrence's responsibilities include sales management,
market planning, advertising, and management for Compliance PlusTM products and
most recently he has become the Executive Director of OASiS. His arrival to the
Company was facilitated by the Company's acquisition in 1997 of InterActive PIE
Multimedia, Inc., of which Mr. Lawrence was founder and Chief Executive Officer.
From February 1996 until February 1997, Mr. Lawrence was the CEO of InterActive
PIE. From December 1991 until February 1996, Mr. Lawrence was employed by
Ethicon Endo-Surgery/Johnson & Johnson as a surgical sales representative. From
July 1989 until December 1991, Mr. Lawrence acted as a surgical sales
representative for Davis and Geck. Prior to entering the area of medical device
sales, from February 1985 until July 1989, Mr. Lawrence was an account executive
with DHL Worldwide Express. During college, Mr. Lawrence was an independent
dealer for Southwestern Publishing Co. Mr Lawrence received a B.S degree in
Marketing and Communications in 1984 from Appalachian State University.
James D. Stuart, age 40, has served as a Director since 1993,
initially acting as Director of Marketing and Sales.
Mr. Stuart served as Executive Vice President from 1993 until
June, 1998 and initially acted as the Director of Marketing and Sales. During
his time as an officer of the Company, Mr. Stuart was responsible for new
product development and manufacturing and manages new business ventures,
including mergers, acquisitions, joint ventures, strategic alliances and
licensing/distribution agreements for the Company. From November 1994 until July
1996, Mr. Stuart acted as President and CEO of WDC and was responsible for
managing and operating the facility. From March 1986 until May 1993, Mr. Stuart
was employed by Liquid Air Corporation, Buld Gases Division first as a Business
Manager for South Florida and then as a Program Manager for Food Freezing. From
February 1981 until February 1986, Mr. Stuart was employed by NCR Corporation in
the Systemedia Division initially as a Territory Manager and then as a Senior
Account Manager. Mr. Stuart received a B.A. degree in marketing in 1980 from the
University of South Florida.
Irwin Newman, age 50, has served as a Director since 1993
<PAGE>
Currently, Mr. Newman provides financial advisory services to the Board of
Directors. From 1993 until the present, Mr. Newman served as the Senior Vice
President of Finance for Falcon Marketing & Management, Inc. From 1993 to the
present, Mr. Newman has served as the President of Jenex Financial Services,
Inc. ("Jenex"), an affiliate of Falcon Marketing & Management Inc. Mr. Newman is
the principal of Jenex. Mr. Newman is and has been a practicing attorney since
1973. From 1993 to 1998, Mr. Newman served as Vice President and General Counsel
for Boca Raton Capital Corporation, a publicly owned, NASDAQ listed investment
holding company where he completed an Initial Public Offering for a $4 million
subsidiary, completed a $3.5 million secondary offering and was responsible for
shareholder and investor relations. From 1983 to 1988, Mr. Newman served with
the New York Stock Exchange firms of Gruntal & Co. and Butcher and Signer,
specializing in common and preferred stocks, options, municipal and corporate
bonds and GNMA's. During this period, he broadcast a daily television market
comments program over the Financial News Network. Mr. Newman received a B.S.
degree in Business Administration from Syracuse University in 1970 and a J.D.
degree from the University of Florida in 1973.
Sam Norton, age 39, has served as a Director since 1992.
Mr. Norton provides business and legal advisory services to the Board of
Directors. Mr. Norton is an attorney with the firm Norton, Gurley, Hammersley &
Lopez, P.A. in Sarasota, Florida. Mr. Norton practices primarily in the areas of
real estate, banking, corporate and business transactions and is a Florida Bar
board certified real estate specialist, having earned such certification in
1991. He has practiced law in Sarasota since 1985 and is the past Chairman of
the Joint Committee of the Sarasota Board of Realtors/Sarasota County Bar
Association. Mr. Norton is active in Sarasota civic organizations and currently
serves as a member of the Board of Directors of Sarasota Bank. Mr. Norton
graduated from the University of Florida in 1981 and earned a J.D. degree from
Stetson University School of Law in 1884 where he graduated Cum Laude. While in
law school, Mr. Norton was chosen to serve on the Law Review. He was admitted to
the Florida Bar in 1985.
David Swor, age 66, has served as a Director since 1992.
Mr. Swor, who is the father of Dr. Swor, provides business
advisory services for the Board of Directors. From 1985 until the present, Mr.
Swor had been engaged in the real estate brokerage business as the owner of
Swor, Inc. The firm specializes in the development of commercial real estate
properties along with operating other related business interest, holdings and
investment properties. From 1992 to the present, Mr. Swor has been a member of
the Board of Directors of SouthTrust Bank in Sarasota, Florida. From 1974 until
1985, Mr. Swor was a co-owner of the real estate firm of Swor & Santini, Inc.
which specialized in commercial real estate and investments. From 1973 until
1975, Mr. Swor was a realtor with Russ Gorgone, Inc.. From 1971 until 1973, Mr.
Swor was Vice President and co-owner of Carroll Oil Company, which operated a
Texaco distributorship in Fort Myers, Florida. From 1959 until 1971, Mr. Swor
was a salesman for Texaco and from 1958 until 1959, Mr. Swor was in advertising
sales for the Orlando Sentinel Star. Mr. Swor received a B.A. degree from the
University of Kentucky in 1955 and holds teaching certificates from the states
of Kentucky and Florida.
Tom DeCesare, age 66, has served as a Director since 1992.
Mr. DeCesare, who is the father in law of Dr. Swor, provides business
advisory services for the Board of Directors. Mr. DeCesare has been the Mayor of
Madeira Beach, Florida since August 1993. Prior to that time, he served as Vice
Mayor from April 1993 and as a Commissioner from April 1991 until April 1993.
From 1967 until 1987, was employed by Metropolitan Life Insurance Company where
he ended his career as a Vice President. Mr. DeCesare received a Bachelor of
Arts degree from the University of Minnesota in 1959.
<PAGE>
Scientific Advisory Board
In addition to the officers and directors of the Company,
Surgical has a scientific advisory board which has provided advisory input on
products, research and educational projects for the Company. Inactive members of
this board can be called on to address issues which arise in ongoing research
and development projects. Included on such board are the following:
Mark Davis, M.D.
OB/GYN Physician & Safety Consultant
DeKalb Medical Center
Atlanta, Georgia
Donna Haiduven, RN/C.I.C.
Infection Control Specialist
Santa Clara Valley Medical Center
San Jose, California
Robert Morrison, M.D.
Optometrist/Chairman, Morrison International
New York, New York
Gail Lebovic, M.D. (Inactive)
Breast Surgeon
Co-Founder, Bay Area Breast Center
Palo Alto, California
Sharon Tolhurst, RN, MBA
Director, Cape Surgery Center
Sarasota, Florida
John Nora, M.D.
General Surgeon
Sarasota, Florida
George Maroulis, M.D. (Inactive)
Professor, University of South Florida
College of Medicine, Department of OB/GYN
Marguerite Barnett, M.D. (Inactive)
Plastic Surgeon
Venice, Florida
Ruth Dyal, M.D. (Inactive)
OB/GYN, Women's Care Specialists
Sarasota, Florida
Neil Pollack, M.D.
OB/GYN, Women's Care Specialists
Sarasota, Florida
Michael Shroder, M.D.
OB/GYN, Women's Care Specialists
Sarasota, Florida
<PAGE>
Galen Swartzendruber, M.D.
OB/GYN, Women's Care Specialists
Sarasota, Florida
Phyliss Barber
FDA Compliance Consultant
Sarasota, Florida
Anne Johnson, O.R.T.
Surgical Technician
Columbus, Ohio
Andrew Garlisi, M.D.
Emergency Medicine
LaPorte, Indiana
Dr. Nathan Belkin
Former Researcher and Author in the infection control field
Scott Silverstein, M.D.
Occupational Health and Information Systems Specialist
Wilmington, Delaware
Gail Vallone
Operating Room Technologist
Las Vegas, Nevada
OASiS Medical Advisory Panel
In addition to the officers and directors of the Company,
Surgical has a medical advisory panel which approves, edits and contributes to
content information for the OASiS system.
Included on such panel are the following:
Michael Abidin, MD
Nathan Belkin, PhD
Trish Carlson, RN, CEN, CFRRN
Dorothy Corrigan, RN
Mark Davis, MD
Donna Haiduven, BSN, MSN, CIC
Pamela Hart, CLS
Richard Howard, MD
James Li, MD
Mark Lipman, MD
James A. McGregor, MD CM
Trista Negele, MD
Heidi M. Stephens, MD
Pam Tenaerts, MD
Steven Weinstein, MT
<PAGE>
Item 6. Executive Compensation:
Executive Compensation
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Name Year Annual Annual Annual LT LT LTIP All
and Comp Comp Comp Comp Comp Payouts Other
Post Salary Bonus Other Rest Options (1)
($) Stock
G. 1996 - 5,280
Michael 1997 - 4,877
Swor, thru
Chair- 8/98 12,500 3,605
man of
the Board
and
Treasurer
(2)
Frank M. 1996 -
Clark 1997 -
President thru
and CEO 8/98 12,731 50,000
(3)
Donald 1996 -
K. 1997 16,675 13,657
Lawrence thru
Executive 8/98 40,608
Vice
President
(4)
James D. 1996 49,536 8,944
Stuart 1997 47,166 5,676
Former thru
Executive 8/98 6,000 4,020
Vice
President
(5)
</TABLE>
(1) All other compensation includes certain health and life insurance
benefits paid by the Company on behalf of its employee.
(2) Dr. Swor did not receive any salary prior to June 1998 at which time
the Company and he executed an Employment Agreement for a salary of
$60,000 per year. Other compensation includes life insurance paid by
the Company.
(3) Mr. Clark executed an Employment Agreement with the Company in June
1998 for an annual salary of $60,000. As a signing bonus, Mr. Clark
received 50,000 shares of restricted stock in the Company which is
valued at $50,000 and options to purchase 200,000 shares of the
Company's Common Stock at an exercise price of $1.75 per share.
The Company's options have no current trading value.
(4) Mr. Lawrence executed an Employment Agreement with the Company in May
1997 for an annual salary of $50,000. As consideration for the
acquisition of the assets of Endex, Mr. Lawrence received 250,000
shares of restricted stock in the Company. Such shares were valued at
the asset value of $13,657. In June 1998, the Company granted Mr.
Lawrence
<PAGE>
options to purchase 100,000 shares of the Company's Common Stock at an
exercise price of $1.75 per share. The Company's options have no
current trading value.
(5) Mr. Stuart acted as the Executive Vice President of the Company until
June, 1998. Other compensation includes a portion of his health
insurance premiums which were paid by the Company and life insurance.
Except for certain shares of the Company's Common Stock issued
and sold to the eight (8) executive officers and/or directors of the Company in
consideration for various cash, loans and services performed for the Company by
each of them, and rent paid to a company controlled by Dr. Swor for the
Company's facility, cash or non-cash compensation in the amount of $281,275 was
awarded to, earned by or paid to executive officers or directors of the Company
for all services rendered in all capacities to the Company since January 1,
1996.
The Company has adopted an Employee Stock Option Plan and a Consultant
Stock Option Plan. See Part I, Item 6. "Executive Compensation - Employee and
Consultants Stock Option Plans."
Employee Contracts and Agreement
The Company has entered into Employee Agreements with Dr. Swor, Mr. Clark
and Mr. Lawrence.
The agreement with Dr. Swor was entered into on June 15, 1998.
Dr. Swor is employed as the Treasurer and Medical Director of the Company at an
annual salary of $60,000. The agreement is for a term of one (1) year, which
term is renewable year to year unless either party provides notice to the other
within fourteen (14) days prior to the expiration that it seeks to terminate the
agreement. Dr. Swor is required to devote such time as is required to fulfill
his duties to the Company. Dr. Swor is reimbursed reasonable and necessary
expenses incurred on behalf of the Company. Prior to the execution of this
agreement, Dr. Swor received no salary for his services to the Company since its
inception.
The agreement with Mr. Clark was entered into on June 15,
1998. Mr. Clark is employed as the President and CEO of the Company for a term
of one (1) year at a salary of $60,000, which term is renewable year to year
unless either party provides notice to the other within fourteen (14) days prior
to the expiration that it seeks to terminate the agreement. Mr. Clark is
required to devote such time as is required to fulfill his duties to the
Company. Mr. Clark is reimbursed reasonable and necessary expenses incurred on
behalf of the Company. Mr. Clark received a signing bonus of 50,000 shares of
restricted stock in the Company and was granted options to purchase 200,000
shares of the Company's Common Stock at an exercise price of $1.75 per share.
The agreement with Mr. Lawrence was entered into on April 1, 1997. Mr.
Lawrence is employed as the Marketing Director of the Company for a term of one
(1) year at a salary of $50,000, which term is renewable year to year unless
either party provides notice to the other within fourteen (14) days prior to the
expiration that it seeks to terminate the agreement. Commencing January 1, 1998,
Mr. Lawrence became the Executive Vice President of the Company. Mr. Lawrence is
required to devote such time as is required to fulfill his duties to the
Company. Mr. Lawrence is reimbursed reasonable and necessary expenses incurred
on behalf of the Company.
<PAGE>
Key Man Life Insurance
The Company currently does not maintain key-man life insurance
coverage on any of its officers or directors. However, the Company is the named
beneficiary of a key-man life insurance policy currently owned by Dr. Swor.
Employee and Consultants Stock Option Plans
Employee Stock Option Plan
On July 21, 1994, the Board of Directors adopted an Employee
Stock Option Plan which is available to employees and Directors of the Company
("ESOP"). Pursuant to the ESOP, employees are given the opportunity to purchase
a designated number of shares of the Company's common stock at a pre-set flat
rate. The options are granted for a period of seven (7) years and are not
transferable except by will or laws of descent and distribution. The options may
not be exercised unless the Company has filed an effective registration
statement on Form S-8 relating to the shares underlying the option. As to
employees who are not also directors, such employees must agree to remain with
the Company for a period of two (2) years from the date the option is granted.
In the event that such employee is terminated during such two (2) year period
for cause or at the request of the employee, to the extent any options have not
been exercised, the options terminate immediately upon the termination of the
employee. If termination is for any other reason, the employee has two (2)
months from the date of termination to exercise. In the case of death, the
options must be exercised within the lesser of (i) three (3) years from the date
of death or (ii) five (5) years from the option issuance date. In the case of
the capital restructure of the Company, the options are effective as if
exercised prior to the capital restructuring event. The employee is limited to
exercise the equivalent of $100,000 of Common Stock in the Company in any
calendar year.
In January, 1998, the Board of Directors revised the term of
the ESOP ("1998 Revised ESOP"). Under the revised plan, the term is now
determined by a Committee.
Pursuant to the ESOP, the Company has granted options to
purchase 4,166,316 shares of the Company's Common Stock representing proceeds on
exercise of $1,320,000 under the 1994 ESOP and 400,000 share of the Company's
Common Stock representing proceeds on exercise of $637,500 under the 1998
Revised ESOP as follows:
<TABLE>
<S> <C> <C> <C> <C>
Employee Date Option No. of Share Exercise Price Term
Granted subject to Exercise Years
1994 ESOP (1)
G. Michael Swor (2) 07/21/94 3,850,686 $.317 7
Irwin Newman (3) 07/21/94 63,126 $.317 7
James D. Stuart 07/21/94 63,126 $.317 7
Samuel Norton 07/21/94 63,126 $.317 7
David Swor 07/21/94 63,126 $.317 7
Thomas DeCesare 07/21/94 63,126 $.317 7
<PAGE>
1998 Revised ESOP
Frank Clark (4) 06/15/98 200,000 $1.75 1
Donald L. Lawrence (4) 06/15/98 100,000 $1.75 7
Stacy Quaid (4) 01/01/98 50,000 $0.50 7
Mike Williams (4) 08/03/98 50,000 $1.75 7
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The options granted under the 1994 ESOP have been adjusted to reflect the
new conversion rate in accordance with the capital restructuring provision which
came into effect when Surgical Safety Products, Inc. of Florida merged into
Sheffeld Acres, Inc., the surviving New York corporation.
(2) Dr. Swor received options for 63,126 shares of the Company's Common Stock as
a Director and options for 3,787,560 shares of the Company's Common Stock in
exchange for transfer of patents and rights to existing patent concepts.
(3) In addition to the options granted to Mr. Newman for 63, 126 shares of the
Company's Common Stock as a Director of the Company, options to purchase up to
315,630 shares of the Company's Common Stock were granted to Jenex Financial
Services, Inc., a company of which Mr. Newman is the principal. Jenex is a
financial service company which was issued the options under the Company's 1994
CSOP.
(5) Each of these four (4) employees received their options as a bonus; Mr.
Clark's as an additional incentive to join the Company as its CEO, Mr. Lawrence
and Ms. Quaid in consideration of outstanding services to the Company for the
prior year and Mr. Williams as an additional incentive to join the Company as
the Sales Manager.
On July 21, 1994, the Board of Directors also adopted a
Consultant Stock Option Plan which is available to certain consultants who
provide services to the Company ("CSOP"). Pursuant to the CSOP, consultants are
given the opportunity to purchase a designated number of shares of the Company's
common stock at a pre-set flat rate. The options are granted for a period of
seven (7) years and are not transferable except by will or laws of descent and
distribution. The options may not be exercised unless the Company has filed an
effective registration statement on Form S-8 relating to the shares underlying
the option. In the event the consultant's services are terminated, such
consultant has two (2) months from the date of termination in which to exercise
and in the case of death, the estate has the lesser of (i) three (3) years from
the date of death or (ii) five (5) years from the option issuance date in which
to exercise. In the case of the capital restructure of the Company, the options
are effective as if exercised prior to the capital restructuring event. There
are no yearly limitation on the amount of options which may be exercised by
consultants.
In January, 1998, the Board of Directors revised the term of
the CSOP ("1999 Revised CSOP"). Under the revised plan, the term is now
determined by a Committee. The 1998 CSOP requires that the options are not
exercisable for a period of two (2) years from issuance
Pursuant to the CSOP, the Company has granted options to
purchase 346,115 shares of the Company's Common Stock representing proceeds of
$110,700 to the Company under the 1994 CSOP and options to purchase 4,000 shares
of the Company's Common Stock representing proceeds of $2,000 to the Company
under the 1998 Revised CSOP as follows:
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Consultant Date Option No. of Share Exercise Price Term
Granted subject to Exercise Years
1994 CSOP(1)
Danielle Chevalier 07/21/94 3,156 $.317 7
Donna Haiduven 07/21/94 15,782 $.317 7
Jenex Financial Services
Inc. (2) 07/21/94 315,630 $.317 7
Leann Swor 07/21/94 6,313 $.317 7
Loren Schuman 07/21/94 4,734 $.480 7
Bruce Cohen 01/24/95 500 $0.90 7
1998 Revised CSOP
Danielle Chevalier 01/01/98 2,000 $0.50 7
Leann Swor 01/01/98 2,000 $.050 7
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The options granted under the 1994 CSOP have been adjusted to reflect the
new conversion rate in accordance with the capital restructuring provision which
came into effect when Surgical Safety Products, Inc. of Florida merged into
Sheffeld Acres, Inc., the surviving New York corporation.
(2) These options were granted to Jenex in exchange for certain financial
services provided to the Company. Mr. Newman, a Director of the Company, is the
principal of Jenex. Mr. Newman is deemed the beneficial owner of these options.
Compensation of Directors
The Company has no standard arrangements for compensating the
directors of the Company for their attendance at meetings of the Board of
Directors.
Item 7. Certain Relationships and Related Transactions:
On June 1, 1992, the Company issued 11,300 shares of the
Company's restricted stock to Dr. Swor and 2,000 shares to Mrs. Swor (of which
Dr. Swor is deemed the beneficial owner) each in exchange for services rendered
to Surgical valued at a total of $1,400. Following the merger with Sheffeld
Acres, Inc., these shares were converted into 4,197,879 shares in the
restructured company. In 1996, Dr. Swor received 478,630 shares of restricted
stock as payment of debt and related interest on loans which Dr. Swor made to
the Company totaling $239,315. In 1996, Dr. Swor gifted 816,619 of his shares to
James D. Stuart. In September, 1996 Savannah Leasing purchased the Company's
executive office building at 2018 Oak Terrace with cash from Dr. Swor and 50,000
shares of his stock which were valued at $0.50 per share. These shares were
transferred to the third party seller. Out of the proceeds of the sale of the
Company's Common Stock during the period of March 1998 through June 1998, Dr.
Swor received approximately $246,200 as repayment of principal and interest of
certain loans made by Dr. Swor to the Company. In addition, at the same time,
Savannah Leasing, a company owned by Dr. and Mrs. Swor, received approximately
$38,400 as repayment of principal and interest on loans Savannah had made to the
Company. Dr. Swor has a year to year employment contract with the Company. (See
Part I, Item 6. "Executive Compensation - Employee Contracts".)
<PAGE>
On June 1, 1992, the Company issued 1,500 shares of restricted
stock to David Swor for which it received $15,000. Following the merger with
Sheffeld Acres, Inc., these shares were converted into 473,445 shares in the
restructured company.
On November 5, 1992, the Company issued 120 shares of the
Company's restricted stock to Sam Norton for which it received $6,000. On March
1, 1993, the Company issued 34 shares of the Company's restricted stock to Sam
Norton for which it received $2,000. Following the merger with Sheffeld Acres,
Inc., these shares were converted into 48,607. In 1996, the Company issued 4,793
shares of the Company's restricted stock to Mr. Norton as payment for legal
services valued at $4,793.
On March 1, 1993, the Company issued 100 shares of the
Company's restricted stock to James D. Stuart and David Stuart jointly for which
it received $6,000. On May 9, 1993, the Company issued 100 shares of the
Company's restricted stock to Mr. Stuart in exchange for services rendered
valued at par. Following the merger with Sheffeld Acres, Inc., these shares were
converted into 63,126. In 1996, Mr. Stuart received 816,619 shares of restricted
stock from Dr. Swor as a gift.
On March 1, 1993, the Company issued 30 shares of the
Company's restricted stock to Tom DeCesare in exchange for services rendered
valued at par. Following the merger with Sheffeld Acres, Inc., these shares were
converted into 9,469.
On July 21, 1994, the Board of Directors adopted the 1994 ESOP
and awarded options to purchase the post-merger equivalent of 63,126 shares of
the Company's Common Stock to each of the Company's six (6) directors at an
exercise price of $.317. There was no value attached to the grant of such
options. At the same time, the Company awarded Dr. Swor options to purchase
3,787,560 shares of the Company's Common Stock at an exercise price of $.317 in
exchange for the transfer of certain patents and rights to previously patented
concepts to the Company, which patents and rights were valued at approximately
$1,200,000.
On July 21, 1994, the Board of Directors also adopted the 1994
CSOP under which it awarded options to purchase the post-merger equivalent of a
total of 346,115 shares of the Company's Common Stock. These options were
granted to consultants in consideration of services valued; however, there was
no value attached to the grant of such options.
On December 8, 1997, the Company acquired all of the assets of
Endex Systems, Inc., d/b/a Interactive PIE ("Endex"), a Florida corporation. The
assets of Endex were valued at approximately $14,000 for which the Company
issued 250,000 shares of restricted common stock. Endex was a medical multimedia
software company, experienced in computer graphics related to the medical
industry. The acquisition was made to implement the Company's Data Systems
Division's development of its surgical safety, touch-screen network known as
OASiS. The President and Chief Executive Officer ("CEO") of Endex, Donald
Lawrence, became the Vice President of Sales and Marketing of the Company. Mr.
Lawrence has a year to year employment contract with the Company. (See Part I,
Item 6. "Executive Compensation - Employee Contracts".) In consideration of
outstanding service to the Company in 1997, Mr. Lawrence was granted an option
to purchase 100,000 shares of the Company's Common Stock at a price of $1.75
under the 1998 Revised ESOP. There was no value attached to the grant of such
options.
In March 1998, the Company entered into an agreement with
Stockstowatch, whereby Stockstowatch agreed to provide investor relations
services as a media consultant to the Company in exchange for issuance of
300,000 shares of the Company's Common Stock valued at $45,000.
<PAGE>
In March 1998, the Company issued 100,000 shares of the
Company's Common Stock valued at $15,000 to Mintmire & Associates in exchange
for legal services.
In April 1998, the Company issued 2,500 shares of restricted
stock to Xavier Calderon in exchange for computer consulting services valued at
$4,375.
On June 15, 1998, the Company engaged Frank M. Clark to act as the
President of the Company. As such he received 50,000 shares of the Company's
Common Stock as a signing bonus and options to purchase up to 200,000 shares of
the Company's Common Stock at a price of $1.75 per share under the 1998 Revised
ESOP. Mr. Clark's shares were valued at $50,000 and there was no value attached
to the grant of his options. Mr. Clark has a year to year employment contract
with the Company. (See Part I, Item 6. "Executive Compensation - Employee
Contracts".)
Item 8. Description of Securities:
Description of Capital Stock
The Company's authorized capital stock consists of 20,000,000
shares of Common Stock, $.001 par value per share. Although the Board of
Directors is authorized to issue shares of Preferred Stock and to set the par
value thereon, none has been authorized to date.
Description of Common Stock
All shares of Common Stock have equal voting rights and, when
validly issued and outstanding, are entitled to one vote per share in all
matters to be voted upon by shareholders. The shares of Common Stock have no
preemptive, subscription, conversion or redemption rights and may be issued only
as fully-paid and non-assessable shares. Cumulative voting in the election of
directors is not permitted; which means that the holders of a majority of the
issued and outstanding shares of Common Stock represented at any meeting at
which a quorum is present will be able to elect the entire Board of Directors if
they so choose and, in such event, the holders of the remaining shares of Common
Stock will not be able to elect any directors. In the event of liquidation of
the Company, each shareholder is entitled to receive a proportionate share of
the Company's assets available for distribution to shareholders after the
payment of liabilities and after distribution in full of preferential amounts,
if any, to be distributed to holders of the Preferred Stock. All shares of the
Company's Common Stock issued and outstanding are fully-paid and nonassessable.
Dividend Policy
Holders of shares of Common Stock are entitled to share pro
rata in dividends and distribution with respect to the Common Stock when, as and
if declared by the Board of Directors out of funds legally available therefore,
after requirements with respect to preferential dividends on, and other matters
relating to, the Preferred Stock, if any, have been met. The Company has not
paid any dividends on its Common Stock and intends to retain earnings, if any,
to finance the development and expansion of its business. Future dividend policy
is subject to the discretion of the Board of Directors and will depend upon a
number of factors, including future earnings, capital requirements and the
financial condition of the Company.
Description of Preferred Stock
Shares of Preferred Stock may be issued from time to time in
one or more series as may be determined by the Board of Directors. The voting
powers and preferences, the relative rights of each such series and the
qualifications, limitations and restrictions thereof shall be
<PAGE>
established by the Board of Directors, except that no holder of Preferred Stock
shall have preemptive rights. The Company has not issued any shares of Preferred
Stock to date. The Board of Directors has no plan to issue any shares of
Preferred Stock for the foreseeable future unless the issuance thereof shall be
in the best interests of the Company.
Transfer Agent and Registrar
The Transfer Agent and Registrar for the Company's Common
Stock is Signature Stock Transfer, Inc. which is located at Office in the Park,
14675 Midway Road, Suite 221, Dallas, Texas 75244, telephone (972) 788-4193,
facsimile (972) 788-4194.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters.
(a) Market Information.
The Common Stock of the Company trades on the OTC Bulletin
Board under the symbol "SURG". The high and low bid information for each quarter
for the years ending December 31, 1996 and December 31, 1997 and for the first
two quarters of 1998 are as follows:
Quarter High Bid Low Bid Average Bid
First Quarter 1996 1/4 3/16 .218
Second Quarter 1996 3/4 1/8 .445
Third Quarter 1996 1/4 1/8 .177
Fourth Quarter 1996 1/4 1/8 .176
First Quarter 1997 1/4 3/32 .135
Second Quarter 1997 1/4 3/32 .106
Third Quarter 1997 3/8 1/8 .183
Fourth Quarter 1997 9/64 1/8 .132
First Quarter 1998 29/32 9/64 .215
Second Quarter 1998 3-1/8 11/16 2.299
(b) Holders.
As of June 30, 1998, the Company has 1,072 shareholders of
record of its 10,746,973 outstanding shares of Common Stock, 6,453,206 of which
are restricted Rule 144 shares and 4,293,767 of which are free-trading. As of
the date hereof, the Company has outstanding options to purchase 4,916,431
shares of Common Stock. Of the Rule 144 shares, 4,594,689 shares have been held
by affiliates of the Company for more than one (1) year.
(c) Dividends.
The Company has never paid or declared any dividends on its
Common Stock and does not anticipate paying cash dividends in the foreseeable
future.
Item 2. Legal Proceedings.
In August 5, 1997, the Company entered into an agreement with
Gambit, Inc., d/b/a MediaWorks ("MediaWorks") as a producer of record of the
Surgical Safety Network, now known as OASiS. Pursuant to the agreement,
MediaWorks estimated the cost of its work on the project at no more than
$217,000, a portion of which was to be paid over a three (3) month period
against
<PAGE>
billable hours, with the balance less $60,000 payable after the third payment at
an amount equal to not less than fifty percent (50%) of Surgical's revenue
stream after operating expenses, sales, marketing and hardware equipment costs
for all installations after the SMH contract. Subject to on-time delivery of the
work to be performed, Surgical agreed to pay, as a performance bonus,
unrestricted Common Stock equal to twenty five percent (25%) of the total cost
of the SMH project, with the number of shares determined by the value of the
Company's Common Stock at the time of issuance. Further, it was understood that
all material and production rights, including source codes and related
documentation, upon completion of the presentation and payment of the
outstanding balance, would become the property of Surgical.
On July 13, 1998, the Company was served with a Summons and
Complaint for an action brought against it by MediaWorks. (Gambit, Inc. d/b/a
MediaWorks v. Surgical Safety Products, Inc., Circuit Court of the Twelfth
Judicial Circuit, Sarasota County, Florida, Case No. 98-4022-CA-01) The
Complaint sets forth three (3) causes of action: an action for specific
performance demanding that Surgical issue 289,720 shares unrestricted shares
based upon the twenty five percent (25%) of the cost of the SMH installation
divided by the share price on February 20, 1998 of the Company's Common Stock;
in the alternative seeking damages in the amount of $732,993 which was the
number of shares determined by the formula multiplied by the share price on July
1, 1998 of the Company's Common Stock; and seeking an accounting based upon a
dissolution of the partnership which MediaWorks alleges was formed with
Surgical.
On or about July 31, 1998, the Company filed Motions to
Dismiss and for a More Definite Statement of Count II of the Company. The
purpose of the Motion for a More Definite Statement is so that the plaintiff
will clarify how they contend they are entitled to the stock bonus so that
Surgical can frame its defense and show defects, delays and deficiencies in the
performance by MediaWorks. Surgical believes that MediaWorks failed to perform
on the contract since the OASiS version 1 software has problems and that
MediaWorks failed to meet performance and delivery requirements as agreed.
Therefore, the Company believes that it has just and meritorious defenses and
counterclaims to this action.
The Company knows of no other legal proceedings to which it is
a party or to which any of its property is the subject which are pending,
threatened or contemplated or any unsatisfied judgments against the Company.
Item 3. Changes in and Disagreements with Accountants:
The Company has used the accounting firm of Kerkering,
Barberio & Co., P.A. since 1993. There address is 1858 Ringling Boulevard,
Sarasota, Florida 34236. This firm began providing audited financial statements
for the Company in 1994. There has been no change in the Company's independent
accountant during the period commencing with the Company's retention of
Kerkering, Barberio & Co., P.A. through the date hereof.
Item 4. Recent Sales of Unregistered Securities:
On May 30, 1995, the Company completed the preparation of a
self-directed private placement memorandum offering shares of the Company's
Common Stock and Warrants. This offering was conducted pursuant to Section 3(b)
of the Act and Rule 506 to not more than thirty five (35) non accredited
investors. The offering was amended on October 30, 1995. Initially, the offering
required a minimum investment of $5,000 in exchange for which an investor would
receive 5,000 shares of Common Stock, $.001 par value per share and three-year
warrants to purchase 2,500 shares of the Company's Common Stock at an exercise
price of $1.50. Pursuant to this offering, the Company received gross proceeds
in the amount of $37,500, $5,000 of which was subsequently refunded. By
agreement with the investors, in lieu of the unit arrangement, the
<PAGE>
investors each acquired shares at $.50 per share. A total of 65,000 shares of
the Company's Common Stock were issued pursuant to this offering.
In 1996, Dr. Swor received 478,630 shares of restricted stock
as payment of debt and related interest on loans which Dr. Swor made to the
Company totaling $239,315 and Sam Norton received 4,793 shares as payment for
legal services valued at $4,793.
On December 8, 1997, the Company acquired all of the assets of
Endex which were valued at approximately $14,000 for which the Company issued
250,000 shares of restricted common stock. Endex was a medical multimedia
software company, experienced in computer graphics related to the medical
industry. The acquisition was made to implement the Company's Data Systems
Division's development of its surgical safety, touch-screen network known as
OASiS. The President and Chief Executive Officer ("CEO") of Endex, Donald
Lawrence, became the Vice President of Sales and Marketing of the Company.
From March through June 1998, the Company received gross
proceeds in the amount of $999,000 from the sale of a total of 920,000 shares of
Common Stock in four (4) offerings . The Company undertook its first offering of
400,000 shares of Common Stock pursuant to Rule 504 on March 1, 1998, exchanging
shares with an independent consultant (Stockstowatch) for the Company and its
legal advisor in exchange for services; its second offering of 400,000 shares of
Common Stock pursuant to Rule 504 on April 1, 1998 upon the exercise of an
option granted pursuant to a Stock Option Agreement; its third offering of
60,000 shares of Common Stock pursuant to Rule 504 on June 8, 1998; and its
fourth offering of 60,000 shares of Common Stock pursuant to Rule 504 on June
18, 1998. While no offering memorandum was used in connections with these
offerings, the business plan of the Company, which was disclosed to each
prospective investor, was for the provision of product development, sales and
services for the medical industry.
In April 1998, the Company issued 2,500 shares of restricted
stock to Xavier Calderon in exchange for computer consulting services valued at
$4,375.
Item 5. Indemnification of Directors and Officers.
Article VI of the Company's Articles of Incorporation contains
provisions providing for the indemnification of directors of the Company as
follows:
"The personal liability of directors to the corporation or its
shareholders for damages for any breach of duty in such capacity is hereby
eliminated except that such personal liability shall not be eliminated if a
judgment or other final adjudication adverse to such director establishes that
his acts or omissions were in bad faith or involved intentional misconduct or a
knowing violation of law or that he personally gained in fact a financial profit
or other advantage to which he was not legally entitled or that his acts
violated Section 719 of the Business Corporation Law.
Article VI of the Company's By-Laws contains provisions
providing for the indemnification of directors and officers of the Company as
follows:
Each director and officer of this corporation shall be
indemnified by the corporation against all costs and expenses actually and
necessarily incurred by him or her in connection with the defense of any action,
suit or proceeding in which he or she may be involved or to which he or she may
be made a party by reason of his or her being or having been such director or
officer, except in relation to matters as to which he or she shall be finally
adjudged in such action, suit or proceeding to be liable for negligence or
misconduct in the performance of duty.
<PAGE>
The Company has no other agreements with any of its directors
or executive offices providing for indemnification of any such persons with
respect to liability arising out of their capacity or status as officers and
directors.
At present, there is no pending litigation or proceeding
involving a director or officer of the Company as to which indemnification is
being sought.
PART F/S
The Financial Statements of Surgical required by Regulation
S-X commence on page F-1 hereof in response to Part F/S of this Registration
Statement on Form 10-SB and are incorporated herein by this reference.
PART III
Item 1. Index to Exhibits
Item No. Description
2.1 * Articles of Incorporation of Surgical Safety Products, Inc., a
Florida corporation filed May 15, 1992,
2.2 * Articles of Amendment filed December 9, 1992
2.3 * Articles of Amendment filed July 19, 1994
2.4 * Articles of Amendment filed October 11, 1994
2.5 * Articles of Incorporation of Sheffeld Acres, Inc., a New York
Corporation filed May 7, 1993
2.6 * Articles of Merger filed in the State of Florida October 12,
1994
2.7 * Certificate of Merger filed in the State of New York February
8, 1995
2.8 * Certificate to Do Business in the State of Florida filed April
11, 1995
2.9 * Certificate of Amendment filed May 1, 1998
2.10 * Bylaws of Sheffeld Acres, Inc., now known as Surgical Safety
Products, Inc.
6.1 * Acquisition of Endex Systems, Inc d/b/a/ InterActive PIE dated
December 8, 1997
6.2 * Prepaid Capital Lease Agreement with Community Health
Corporation relative to Sarasota Medical Hospital OASiS
Installation dated January 30, 1998
6.3 * Letter of Intent with United States Surgical Corporation dated
February 12, 1998
6.4 * Form of Rockford Industries, Inc. Rental Agreement and
Equipment Schedule to Master Lease Agreement
6.5 * Ad-Vantagenet Letter of Intent dated June 19, 1998
6.6 * Distribution Agreement with Morrison International Inc. dated
September 30, 1996
<PAGE>
6.7 * Distribution Agreement with Hospital News dated August 1, 1997
6.8 * Clinical Products Testing Agreement with Sarasota Memorial
Hospital dated January 30, 1998
6.9 * Real Estate Lease for Executive Offices effective June 1, 1998
6.10 * Employment Agreement with Donald K. Lawrence dated April 1,
1997
6.11 * Employment Agreement with G. Michael Swor dated June 15, 1998
6.12 * Employment Agreement with Frank M. Clark dated June 15, 1998
6.13 * Agreement for Consulting Services with Stockstowatch.com Inc.
dated March 30, 1988
6.14 * Form of Employee Option Agreement dated July 1994
6.15 * Form of Employee Option Agreement dated 1998
6.16 * Form of Consultants Option Agreement dated July 1994
6.17 * Form of Consultants Option Agreement dated 1998
6.18 * Confidential Private Offering Memorandum dated May 30, 1995
6.19 * Supplement to Private Offering Memorandum dated October 30,
1995
6.20 * Stock Option Agreement with Bay Breeze Enterprises LLC dated
April 9, 1998
6.21 * Revolving Loan Agreement, Revolving Note, Security Agreement
with SouthTrust Bank dated May 2, 1997
- ----------
(* Filed herewith)
Item 2. Description of Exhibits
The documents required to be filed as Exhibits Number 2 and 6
and in Part III of Form 1-A filed as part of this Registration Statement on Form
10-SB are listed in Item 1 of this Part III above. No documents are required to
be filed as Exhibit Numbers 3 , 5 or 7 in Part III of Form 1-A and the reference
to such Exhibit Numbers is therefore omitted. The following additional exhibits
are filed hereto:
10.1 * Accountants' Consent from Kerkering, Barberio & Co., P.A., etc
10.2 * Publisher's Consent and Article - Michael W. Bebbington, MD,
MHSc and Mark J. Treissman, MD. The Use of a Surgical Assist
Device to Reduce Glove Perforations in Postdelivery Vaginal
Repair: A Randomized Controlled Trial. American Journal of
Obstetrics and Gynecology, Vol. 175, No. 1, Part I, October
1996
10.3 * Author's Consent and Abstract - Donna J. Haiduven, BSN, MSN,
CIC and Maria D. Allo, MD. Evaluation of a One-Handed Surgical
Suturing Device to Decrease
<PAGE>
Intraoperative Needlestick Injuries and Glove Perforations:
Phases I & II, Conference on Prevention of Transmission of
Bloodborne Pathogens in Surgery and Obstetrics Sponsored by
the American College of Surgeons and the Center for Disease
Control and Prevention, February 13-15, 1994, Atlanta, GA.
10.4 * Publisher's Consents and Article - Mark S. Davis, MD. Sharps
Management in Surgery. Infection Control & Sterilization
Technology, Vol. 1, No. 4, April 1995.
- -----------
(* Filed herewith)
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
Surgical Safety Products, Inc.
(Registrant)
Date: September 23, 1998 By:/s/ Frank M. Clark
Frank M. Clark, President
By:/s/ Donald K. Lawrence
Donald K. Lawrence,
Vice President and Secretary
By:/s/ G. Michael Swor
G. Michael Swor, Treasurer
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
INDEPENDENT AUDITORS' REPORT,
FINANCIAL STATEMENTS AND
SUPPLEMENTARY INFORMATION
DECEMBER 31, 1997 AND 1996
<PAGE>
CONTENTS
Page
INDEPENDENT AUDITORS' REPORT F-1
FINANCIAL STATEMENTS
Balance Sheets F-2
Statements of Operations F-3
Statements of Changes in Stockholders' Deficit F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6
SUPPLEMENTARY INFORMATION
Independent Auditors' Report on Supplementary Information F-12
Schedules of Operating Expenses F-13
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Surgical Safety Products, Inc.
We have audited the accompanying balance sheets of Surgical Safety Products,
Inc. as of December 31, 1997 and 1996, and the related statements of income,
changes in stockholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Surgical Safety Products, Inc.
as of December 31, 1997 and 1996, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
/s/Kerkering Barberio & Co
Sarasota, Florida
March 27, 1998
F-1
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
Assets 1997 1996
Current Assets
Cash $ - $ 5,763
Trade receivables 250,125 28,772
Other receivables - related party - 800
Inventory 11,742 5,084
Total current assets 261,867 40,419
Furniture and equipment, net 71,368 12,471
Other Assets
Deferred loan costs, net 412 -
Intangible assets, net 45,102 46,909
Software development costs, net 52,486 -
Investments 13,500 7,500
Deposits 500 500
Total other assets 112,000 54,909
Total Assets $ 445,235 $ 107,799
<PAGE>
Liabilities and Stockholders' Equity (Deficit) 1997 1996
Current Liabilities
Bank overdraft $ 13,984 $ -
Line of credit 100,000 -
Notes payable - related parties 233,720 -
Accounts payable 117,776 14,029
Accrued expenses 21,131 6,000
Accrued interest 17,667 7,048
Stock subscription proceeds payable - 5,000
Total current liabilities 504,278 32,077
Stockholders' Equity (Deficit)
Common stock, $.001 par value,
20,0000,000 shares authorized;
9,774,473 and 9,524,473 shares
issued and outstanding in 1997
and 1996, respectively 9,775 9,525
Additional paid-in capital 824,366 810,959
Accumulated deficit (893,184) (744,762)
Total stockholders' equity (deficit) (59,043) 75,722
Total Liabilities and Stockholders'
Equity (Deficit) $ 445,235 $ 107,799
The accompanying notes are an integral
part of these financial statements.
F-2
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
Revenue
Medical services fees $ - $ 46,527
Medical products sales and technical services 248,760 47,044
Total revenue 248,760 93,571
Costs
Cost of medical products sold 22,002 4,258
Total costs 22,002 4,258
Gross profit 226,758 89,313
Operating expenses 249,142 211,555
Research and development expenses 109,413 9,468
Loss from operations (131,797) (131,710)
Other Income (Expense)
Interest expense (15,651) (36,511)
Miscellaneous income 6,626 -
Underwriting costs (7,600) -
Private placement cost write-off - (54,494)
Other income (expense), net (16,625) (91,005)
Loss from continuing operations before
income taxes (148,422) (222,715)
Provision for income taxes - -
Net loss from continuing operations (148,422) (222,715)
Discontinued Operations
Income from operations of Women's Diagnostic
Center, Inc. - 31,080
Gain on disposal of Women's Diagnostic
Center, Inc. - 141,943
Net loss $ (148,422) $ (49,692)
Net loss per share from continuing operations $ (0.016) $ (0.025)
Net loss per share $ (0.016) $ (0.006)
The accompanying notes are an integral
part of these financial statements.
F-3
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
YEARS ENDED DECEMBER 1997 AND 1996
Common Stock
Shares Amount
Balances - December 31, 1995 8,980,843 $ 8,981
Issuance of common stock 543,630 544
Net loss
Balances - December 31, 1996 9,524,473 9,525
Issuance of common stock 250,000 250
Net loss
Balances - December 31, 1997 9,774,473 $ 9,775
<PAGE>
Total
Additional Stockholders'
Paid-in Accumulated Equity
Capital Deficit (Deficit)
$ 539,688 $ (695,070) $ (146,401)
271,271 271,815
(49,692) (49,692)
810,959 (744,762) 75,722
13,407 13,657
(148,422) (148,422)
$ 824,366 $ (893,184) $ (59,043)
The accompanying notes are an integral
part of these financial statements.
F-4
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
Cash Flows From Operating Activities
Net loss $ (148,422) $ (49,692)
Adjustments to reconcile net loss to cash
used in operating activities
Depreciation and amortization 20,557 43,184
Bad debt - 5,280
Write off of private placement costs - 54,494
Gain on disposal of assets (396) (141,943)
Decrease (increase) in operating assets
Receivables (220,553) (39,233)
Inventory (6,658) 6,969
Prepaid expenses - -
Increase (decrease) in operating liabilities
Bank overdraft 13,984 -
Accounts payable 103,747 (71,218)
Accrued expenses 15,131 8,416
Accrued interest 10,619 (32,764)
Deferred revenue - (24,750)
Stock subscription proceeds (5,000)
Total Adjustments (68,569) (191,565)
Net cash used in operating activities (215,334) (241,257)
Cash Flows From Investing Activities
Proceeds from disposition of wholly-owned
subsidiary - 497,128
Proceeds from disposal of assets 1,100 -
Furniture and equipment purchased (65,958) (3,501)
Intangible asset additions (57,634) (2,070)
Net cash provided by (used in) investing
activities (122,492) 491,557
Cash Flow From Financing Activities
Proceeds from related party loans 233,720 -
Advances on line of credit 100,000 -
Repayment of stockholder loans - (207,675)
Repayment of long term debt - (41,854)
Deferred private placement costs incurred - (1,000)
Net cash provided by (used in)financing
activities 333,720 (250,529)
Net decrease in cash (5,763) (229)
Cash at beginning of year 5,763 5,992
Cash at end of year $ - $ 5,763
<PAGE>
1997 1996
Supplemental Cash flow Information:
Cash paid for interest $ 5,032 $ 71,808
For purposes of the statement of cash flows, management considers all deposits
and financial instruments with original maturities of less than three months to
be cash and cash equivalents.
Material non-cash transactions not reflected in the statement of cash flows
include:
Year Ended December 31, 1997
Purchase of assets of Endex Systems, Inc. through issuance of stock valued at
$13,657
Year Ended December 31, 1996
Assumption of liabilities, including capital lease obligation, pursuant to the
sale of wholly-owned subsidiary in the amount of $50,713
Note payable to stockholder in the amount of $239,315 and stock subscription
proceeds in amount of $32,500 at December 31 1995 have been converted to equity
during fiscal 1996
The accompanying notes are an integral
part of these financial statements.
F-5
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998
Note 1 - Summary of Significant Accounting Policies
Business Activities
Surgical Safety Products, Inc. (Company) is engaged in product development,
sales and services for the medical industry. Its wholly-owned subsidiary,
Women's Diagnostic Center of Sarasota, Inc., (WDC) which was incorporated on
September 28, 1994, operated a diagnostic clinic specializing in women's health.
To focus the Company's growth efforts, the equipment, furniture, accounts
receivable, trade name, and goodwill, net of related liabilities, of WDC were
sold to Sarasota Memorial Hospital on June 13, 1996. As of December 31, 1996,
all business operations of WDC have ceased and the corporation has been
liquidated.
Financial Statements
The financial statements and notes are representations of the Company's
management who is responsible for their integrity and objectivity. The
accounting policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial statements.
Preparation of financial statements in accordance with generally accepted
accounting principles requires the use of management's estimates. Actual results
could differ from those estimates.
Deferred Private Placement Costs and Stock Subscription Proceeds
In May, 1995 the Company completed the preparation of a self-directed private
placement memorandum, which was subsequently amended on October 30, 1995, for
the purpose of raising a minimum of $250,000 up to a maximum of $1,000,000 of
equity capital by March 31, 1996. Due to the expiration of the private placement
memorandum, the deferred private placement costs of $54,494 were expensed in
1996.
Of the $37,500 which was raised through efforts associated with the private
placement memorandum, $32,500 or 65,000 shares have been reported on the
Statements of Changes in Stockholders' Deficit of these financial statements as
an increase in equity. The remaining $5,000 is recorded as a liability at
December 31, 1996, and was refunded in 1997.
Accounts Receivable
Accounts receivable consist of amounts due from customers. The balance of
$250,125 at December 31, 1997 is due primarily from one customer in the amount
of $250,000. Management believes that accounts for both years are fully
collectible and therefore has not established a reserve for uncollectible
accounts. As of the date of this report, all receivables at December 31, 1997
and 1996 have been collected.
Inventory
Inventory is stated at the lower of cost (first-in, first-out) or market (net
realizable value) and consists of finished goods.
F-6
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997 AND 1996
Note 1 - Summary of Significant Accounting Policies (Continued)
Investments
Investments are valued at cost and represent shares of common stock in
privately-held companies. Management believes the value of the investments are
not below cost. Fair market value is not determinable.
Furniture and Equipment
Purchases of furniture and equipment are recorded at cost. Expenditures for
maintenance and repairs which extend the useful life are charged to operations
as incurred. Depreciation is provided on an accelerated tax method over the
assets' useful lives which range from five to seven years. The difference
between the tax method and book method of depreciation is not material to these
financial statements.
Intangible Assets
Intangible assets subject to amortization include goodwill, organization costs,
trade names and patent costs. Organization costs are being amortized on the
straight-line method over five years. Patent costs are being amortized on the
straight-line method over seventeen years from the granting of the patent. The
other assets are being amortized on the straight-line method over fifteen years.
Software Development Costs
Certain software development costs are capitalized when incurred. Capitalization
of software development costs begins upon the establishment of technological
feasibility. The establishment of technological feasibility and the ongoing
assessment of recoverability of capitalized software development costs require
considerable judgement by management with respect to certain external factors,
including, but not limited to, anticipated future revenues, estimated economic
life, and changes in software and hardware technologies.
Amortization of capitalized software development costs is calculated using the
straight-line basis over a period of five years.
All other research and development costs are charged to expense in the period
incurred.
Income Taxes
The Company follows Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes" Under the asset and liability method of SFAS 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under SFAS 109, the effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
F-7
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997 AND 1996
Note 1 - Summary of Significant Accounting Policies (Continued)
Net Loss Per Share
Net loss per share has been computed by dividing net loss by the weighted
average number of shares outstanding during the period. Common stock equivalents
have not been included in the computation of weighted average number of shares
outstanding since the effect would have been anti-dilutive.
Note 2 - Disposition
On June 13, 1996, the Company's wholly-owned subsidiary, Women's Diagnostic
Services, Inc., sold its equipment, furniture, accounts receivable, trade name,
and goodwill, net of related liabilities, to Sarasota Memorial Hospital.
The gain on sale of $141,943 was calculated as follows:
Proceeds
Cash $ 497,128
Liabilities assumed
Accrued payroll 3,011
Capital lease obligation 63,500
Total proceeds $ 563,639
Net Assets
Trade name $ 4,444
Office equipment 3,350
Goodwill 219,484
Medical equipment 103,966
Furniture 4,542
Interest expense 16,338
Accounts receivable 69,572
Total net assets 421,696
Gain on sale $ 141,943
Revenues from Women's Diagnostic Center, Inc. amounted to $282,476 for the
period from January 1, 1996 through June 13, 1996.
The related tax expense approximates $28,000. However, due to potential tax
benefits, arising from substantial net loss carryforwards, no expense has been
recognized in the accompanying financial statements (see Note 8).
F-8
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997 AND 1996
Note 3 - Furniture and Equipment
Furniture and equipment consisted of the following at vDecember 31:
1997 1996
Furniture and equipment $ 38,982 $ 14,635
Prototype molds 82,778 23,125
121,760 37,760
Less accumulated depreciation 50,392 25,289
Furniture and equipment, net $ 71,368 $ 12,471
Total depreciation expense of $14,014 and $20,859 for 1997 and 1996,
respectively, includes depreciation of asset rights under capital lease
agreement, which was sold with WDC on June 13, 1996.
Note 4 - Line-of-Credit
Effective May 1997, the Company has a line-of-credit in the amount of $100,000
with a financial institution at 1.5% above the prime rate, interest only
payments are due monthly with an expiration date of May 2, 2017. The line is due
on demand and is secured by inventory, accounts receivable, and equipment. The
outstanding balance at December 31, 1997 was $100,000. The interest rate at
December 31, 1997 was 10.00%. The line-of-credit is personally guaranteed by the
major stockholder.
Note 5 - Related Party Transaction
At December 31, 1997 and 1996, the Company was indebted to the major stockholder
in the amount of $197,720 and $0, respectively. In addition, the Company is
indebted to an affiliated company owned by the major stockholder. The amount
owed at December 31, 1997 and 1996, respectively, is $36,000 and $0. Interest on
the notes is 10.00% and amounted to $15,314 and $36,510, for the years ended
December 31, 1997 and 1996, respectively. All amounts are due in fiscal 1998 and
are unsecured.
During 1996, the Company was indebted to the major stockholder in the amount of
$239,315. The Company's Board of Directors and the major stockholder voted to
effectively convert the related party debt outstanding at December 31, 1996 of
$239,315 to equity by issuing 478,630 shares of restricted common stock at a
value of $.50 per share.
The Company leases office space from an entity owned by a major shareholder.
Rent expense amounted to $6,912 and $6,902 for the years ending December 31,
1997 and 1996, respectively.
F-9
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997 AND 1996
Note 6 - Software Development Costs
For the year ended December 31, 1997, the Company incurred expenditures related
to software development of $162,409, of which $54,653 was capitalized, and the
remainder of $107,756 was expensed. Research costs incurred for the year ended
December 31, 1996 amounted to $9,468 and were expensed. Amortization expense of
software development costs amounted to $2,167 for the year ended December 31,
1997.
Note 7 - Stock Option Plans
On July 21, 1994 the Company adopted two stock option plans. Under one plan
4,955,391 shares of common stock are reserved for the participating employees
and directors of the plan (Employees' Plan). Under the other plan 393,459 shares
of common stock are reserved for outside business consultants and business
advisors to the Company who are participants of the plan (Consultants' Plan).
Both plans provide that options may be exercised only after two years from the
date of grant but not later than seven years from date of grant. Prior to the
exercise of any options, the Company is required to file a Form S-8 with the
Securities Exchange Commission to register the shares.
The following summarizes options outstanding at December 31, 1997:
Date Options Exercise Price
Granted Granted Per Share
Employees' Plan July 21, 1994 4,797,576.0 $ .31563
Sept. 21, 1994 157,815.0 .31563
Consultants' Plan July 21, 1994 392,959.0 .31563
January 24, 1995 500.0 .90
Note 8 - Income Taxes
At December 31, 1997, the Company has net operating loss carryforwards of
approximately $500,000 which expire during the years 2008 through 2011. The 1997
and 1996 tax benefits relating to the losses incurred in each year amounted to
approximately $29,800 and $9,900, respectively. Based on the Company's financial
history, there is no basis to conclude that the tax benefits will be realized.
Therefore, an allowance equal to the tax benefit has been recorded in the
accompanying financial statements for the years ended December 31, 1997 and
1996.
Note 9 - Asset Purchase
On December 8, 1997, the Company purchased the assets of Endex Systems, Inc. for
which it issued 250,000 shares of restricted common stock. The Company purchased
furniture, equipment and investments valued at approximately $14,000.
F-10
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997 AND 1996
Note 10 - Realization of Assets
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate the continuation of
the Company as a going concern. The Company has sustained substantial losses
since inception; is experiencing a cash flow deficiency from operations; and has
a deficit in stockholders' equity and a deficit in working capital at December
31, 1997.
In view of the matters described in the preceding paragraph, recoverability of a
major portion of the recorded asset amounts shown in the accompanying balance
sheet is dependent upon the Company's ability to achieve profitable operations
and to obtain additional equity financing. Management believes the Company's
prospects for profitability are significant, based on the development of OASiS,
a proprietary product, and the recent agreement in which Sarasota Memorial
Hospital has agreed to be the alpha testing site by purchasing four OASiS units
in 1997. The Company plans on aggressively marketing this product in 1998.
Management is considering both equity and debt financing in the range of $2 to
$5 million. Management believes these factors will provide the basis for
significant growth and profitability in the near term.
Note 11 - Commitments
On January 30, 1998, the Company entered into an agreement with a health care
provider in which the provider will perform clinical testing of ten surgical or
medical products submitted by the Company. The agreement is for a term not to
exceed five years and requires the Company to pay the health care provider a
fixed amount of $25,000 for each of the ten studies. The agreement further
provides that the Company is obligated to pay the provider $250,000 over the
term of the agreement in the event the Company determines not to have the
provider perform the clinical testing.
Note 12 - Concentrations
The Company derived 99% of its revenues from one customer during the year ended
December 31, 1997. For the year ended December 31, 1996, there were no
significant concentrations of revenues.
Note 13 - Year 2000 Issue
Management has determined that the Year 2000 issue is not material to the
Company since all of the internal hardware and software utilized by the Company
has the capability of being upgraded to support the Year 2000 transactions.
Furthermore, the Year 2000 will not impact the operation of the OASiS system
since the software for this system does not rely on legacy applications or
subsystems. OASiS is designed to handle dates in the form of a two digit month
and day and a four digit year, thus avoiding the Year 2000 problem.
However, there can be no assurance that the systems of other companies on which
the Company's systems rely also will be timely converted or that any such
failure to convert by another company would not have an adverse effect on the
Company's systems.
F-11
<PAGE>
SUPPLEMENTARY INFORMATION
<PAGE>
INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTARY INFORMATION
The Stockholders
Surgical Safety Products, Inc.
We have audited the accompanying financial statements of Surgical Safety
Products, Inc. as of and for the years ended December 31, 1997 and 1996, and
have issued our report thereon dated March 27, 1998. Our audits were made for
the purpose of forming an opinion on the financial statements taken as a whole.
The supplementary schedules of operating expenses are presented for purposes of
additional information and are not a required part of the financial statements.
Such information has been subjected to the auditing procedures applied in the
examination of the financial statements and, in our opinion, is fairly stated in
all material respects in relation to the financial statements taken as a whole.
/s/Kerkering Barberio & Co
Sarasota, Florida
March 27, 1998
F-12
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
SCHEDULES OF OPERATING EXPENSES
YEARS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
Accounting and legal $ 16,761 $ 13,173
Advertising 12,507 2,636
Contract labor 2,137 1,743
Meetings/conventions 9,749 9,628
Depreciation and amortization 20,557 16,476
Salaries and related expenses 121,177 106,507
Entertainment 6,435 1,713
Freight 5,772 815
Insurance 9,479 10,437
Equipment rental 3,778 2,383
General and administrative 11,428 13,195
Rent 6,912 6,902
Repairs and maintenance 3,810 2,736
Supplies 8,416 5,400
Taxes 998 1,117
Telephone 6,397 8,962
Travel 1,991 7,732
Utilities 838 -
$ 249,142 $ 211,555
F-13
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
ACCOUNTANTS' COMPILATION REPORT AND
FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
F-14
<PAGE>
CONTENTS
Page
ACCOUNTANTS' COMPILATION REPORT F-16
FINANCIAL STATEMENTS
Balance Sheets F-17
Statements of Operations F-18
Statements of Cash Flows F-17
Notes to Financial Statements F-18
F-15
<PAGE>
ACCOUNTANTS' COMPILATION REPORT
The Board of Directors
Surgical Safety Products, Inc.
We have compiled the accompanying balance sheets of Surgical Safety Products,
Inc. (a corporation) as of June 30, 1998 and 1997 and the related statements of
operations and cash flows for the six months then ended, in accordance with
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
/s/Kerkering Barberio & Co
Sarasota, Florida
September 3, 1998
F-16
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
BALANCE SHEETS
JUNE 30, 1998 AND 1997
(UNAUDITED - SEE ACCOUNTANTS' COMPILATION REPORT)
Assets 1998 1997
------ -------------- -------------
Current Assets
Cash $ 589,522 $ 318
Trade receivables - 20,578
Other receivables - related party 1,385 780
Prepaid expenses 22,500 -
Inventory 14,611 4,731
-------------- --------------
Total current assets 628,018 26,407
-------------- --------------
Property and equipment, net 90,220 65,893
-------------- --------------
Other Assets
Intangible assets, net 42,838 47,226
Software development costs, net 81,115 -
Investments 13,500 7,500
Deposits 500 500
-------------- --------------
Total other assets 137,953 55,226
-------------- --------------
Total Assets $ 856,191 $ 147,526
============== ==============
<PAGE>
Liabilities and Stockholders' Equity (Deficit) 1998 1997
- ---------------------------------------------- -------------- --------------
Current Liabilities
Line of credit $ - $ 22,500
Notes payable - related parties - 106,000
Accounts payable 124,618 28,307
Accrued expenses 33,923 11,000
Accrued interest - 10,469
-------------- --------------
Total current liabilities 158,541 178,276
-------------- --------------
Stockholders' Equity (Deficit)
Common stock, $.001 par value,
20,000,000 shares authorized;
10,746,973 and 9,524,473 shares
issued and outstanding in 1998 and
1997, respectively 10,747 9,525
Additional paid-in capital 1,876,768 810,959
Accumulated deficit (1,189,865) (851,234)
-------------- --------------
Total stockholders' equity (deficit) 697,650 (30,750)
-------------- --------------
Total Liabilities and Stockholders' Equity
(Deficit) $ 856,191 $ 147,526
============== ==============
The accompanying notes are an integral
part of these financial statements.
F-17
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED - SEE ACCOUNTANTS' COMPILATION REPORT)
1998 1997
-------------- --------------
Revenue
Medical services fees and product sales $ 15,788 $ 15,706
-------------- --------------
Total revenue 15,788 15,706
-------------- --------------
Costs
Cost of medical products sold 1,278 2,263
-------------- --------------
Total costs 1,278 2,263
-------------- --------------
Gross profit 14,510 13,443
Operating expenses 300,717 116,220
-------------- --------------
Loss from operations (286,207) (102,777)
-------------- --------------
Other Income (Expense)
Interest expense (13,825) (3,695)
Interest income 851
Miscellaneous income 2,500
-------------- --------------
Other income (expense), net (10,474) (3,695)
-------------- --------------
Loss from operations 296,681 (106,472)
Provision for income taxes - -
-------------- --------------
Net loss $ (296,681) $ (106,472)
============== ==============
Net loss per share $ (.029) $ (.011)
============== ==============
The accompanying notes are an integral
part of these financial statements.
F-18
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED - SEE ACCOUNTANTS' COMPILATION REPORT)
1998 1997
-------------- --------------
Cash Flows From Operating Activities
Net Loss $ (296,681) $ (106,472)
-------------- --------------
Adjustments to reconcile net loss to cash
used in operating activities
Depreciation and amortization 23,345 7,851
Common stock issued for services 91,875
Decrease (increase) in operating assets
Receivables 248,740 8,214
Inventory (2,869) 353
Increase (decrease) in operating liabilities
Bank overdraft (13,894)
Accounts payable 6,842 14,278
Accrued expenses 12,792 5,000
Accrued interest (17,667) 3,421
Stock subscription proceeds payable (5,000)
-------------- --------------
Total adjustments 349,164 34,117
-------------- --------------
Net cash (used in) provided by
operating activities 52,483 (72,355)
-------------- --------------
Cash Flows From Investing Activities
Furniture and equipment purchased (31,971) (58,697)
Intangible asset additions (36,270) (2,893)
-------------- --------------
Net cash used in investing activities (68,241) (61,590)
-------------- --------------
Cash Flows From Financing Activities
Proceeds from related party loans 106,000
Advances/(repayments) on line of credit (100,000) 22,500
Repayment of related party loans (233,720)
Issuance of common stock 939,000
-------------- --------------
Net cash provided by financing activities 605,280 128,500
-------------- --------------
Net increase (decrease) in cash 589,522 (5,445)
Cash at beginning of period - 5,763
-------------- --------------
Cash at end of period $ 589,522 $ 318
============== ==============
<PAGE>
1998 1997
-------------- --------------
Supplemental Cash Flow Information:
Cash paid for interest $ 31,492 $ 274
============== ==============
For purposes of the statement of cash flows, management considers all deposits
and financial instruments with original maturities of less than three months to
be cash and cash equivalents.
Material non-cash transactions not reflected in the statements of cash flows:
For the six months ended June 30, 1998
- - Common stock issued for prepaid media consulting services in the amount of
$22,000
There were no material non-cash transactions for the six months ended June 30,
1997.
The accompanying notes are an integral
part of these financial statements.
F-17
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED - SEE ACCOUNTANTS' COMPILATION REPORT)
JUNE 30, 1998 AND 1997
Note 1 - Summary of Significant Accounting Policies
Business Activities
Surgical Safety Products, Inc. (Company) is engaged in product development,
sales and services for the medical industry. Its corporate headquarters are
located in Sarasota, Florida.
Financial Statements
The financial statements and notes are representations of the Company's
management who is responsible for their integrity and objectivity. The
accounting policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial statements.
Preparation of financial statements in accordance with generally accepted
accounting principles requires the use of management's estimates. Actual results
could differ from those estimates.
Accounts Receivable
Accounts receivable consist of amounts due from customers. Management believes
that accounts receivable are fully collectible and therefore has not established
a reserve for uncollectible accounts.
Inventory
Inventory is stated at the lower of cost (first-in, first-out) or market (net
realizable value) and consists of finished goods.
Investments
Investments are valued at cost and represent shares of common stock in
privately-held companies. Management believes the value of the investments are
not below cost. Fair market value is not determinable.
Property and Equipment
Purchases of property and equipment are recorded at cost. Expenditures for
maintenance and repairs which extend the useful life are charged to operations
as incurred. Depreciation is provided on an accelerated tax method over the
assets' useful lives which range from five to seven years. The difference
between the tax method and book method of depreciation is not material to these
financial statements.
Intangible Assets
Intangible assets subject to amortization include goodwill, organization costs,
trade names and patent costs. Intangible assets are being amortized on the
straight-line method over terms ranging from five to seventeen years.
Amortization expense amounted to $2,676 and $2,576 for the six months ending
June 30, 1998 and 1997, respectively.
F-18
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED - SEE ACCOUNTANTS' COMPILATION REPORT)
JUNE 30, 1998 AND 1997
Note 1 - Summary of Significant Accounting Policies (Continued)
Software Development Costs
Certain software development costs are capitalized when incurred. Capitalization
of software development costs begins upon the establishment of technological
feasibility. The establishment of technological feasibility and the ongoing
assessment of recoverability of capitalized software development costs require
considerable judgement by management with respect to certain external factors,
including, but not limited to, anticipated future revenues, estimated economic
life, and changes in software and hardware technologies.
Amortization of capitalized software development costs is calculated using the
straight-line basis over a period of five years. Amortization expense amounted
to $7,641 and $0 for the six months ending June 30, 1998 and 1997, respectively.
All other research and development costs are charged to expense in the period
incurred.
Income Taxes
The Company follows Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes" Under the asset and liability method of SFAS 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under SFAS 109, the effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
Net Loss Per Share
Net loss per share has been computed by dividing net loss by the weighted
average number of shares outstanding during the period. Common stock equivalents
have not been included in the computation of weighted average number of shares
outstanding since the effect would have been anti-dilutive.
Note 2 - Property and Equipment
Property and equipment consisted of the following at June 30:
1998 1997
------------ ------------
Property and equipment $ 70,871 $ 17,429
Prototype molds 82,778 79,029
------------ ------------
153,649 96,458
Less accumulated depreciation 63,429 30,565
------------ ------------
$ 90,220 $ 65,893
============ ============
F-19
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED - SEE ACCOUNTANTS' COMPILATION REPORT)
JUNE 30, 1998 AND 1997
Note 2 - Property and Equipment (Continued)
Total depreciation expense amounted to $13,029 and $5,276 for the six months
ended June 30, 1998 and 1997, respectively.
Note 3 - Line-of-Credit
Effective May 1997, the Company has a line-of-credit in the amount of $100,000
with a financial institution at 1.5% above the prime rate, interest only
payments are due monthly with an expiration date of May 2, 2017. The line is due
on demand and is secured by inventory, accounts receivable, and equipment. The
line-of-credit is personally guaranteed by the major stockholder.
Note 4 - Related Party Transaction
At June 30, 1997 the Company was indebted to the major stockholder in the amount
of $100,000. In addition, the Company is indebted to an affiliated company owned
by the major stockholder in the amount of $6,000. Interest on the notes is
10.00% and amounted to $3,695 for the six months ended June 30, 1997. All
amounts outstanding were paid at June 30, 1998. For the six months ending June
30, 1998, related interest expense amounted to $13,825.
The Company leases office space from an entity owned by a major shareholder.
Rent expense amounted to $9,750 and $3,531 for the six months ended June 30,
1998 and 1997, respectively.
Note 5 - Stockholders' Equity
For the six months ended June 30, 1997, there were no new shares of common stock
issued or repurchased by the Company. The Company recognized a net loss of
$106,472 for the six months ended June 30, 1997.
The following reflects the activity in stockholders' equity for the six months
ended June 30, 1998:
<TABLE>
<S> <C> <C> <C> <C>
Common Stock Additional
Number of Paid-In Accumulated
Shares Amount Capital Deficit
Balances at December 31, 1997 9,774,473 $ 9,775 $ 824,366 $ (893,184)
Common stock issued for
services 452,500 452 113,922
Common stock issued for
cash 520,000 520 938,480
Net loss (296,681)
Balances at June 30, 1998 10,746,973 $ 10,747 $ 1,876,768 $ (1,189,865)
========== ============= ============== ===============
</TABLE>
F-20
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED - SEE ACCOUNTANTS' COMPILATION REPORT)
JUNE 30, 1998 AND 1997
Note 6 - Income Taxes
At June 30, 1998, the company has net operating losses of approximately $700,000
which expire during the years 2008 through 2011. The tax benefits relating to
the losses incurred in each of the six months ended June 30, 1998 and 1997
amounted to approximately $67,000 and $36,000, respectively. Based on the
Company's financial history, there is no basis to conclude that the tax benefits
will be realized. Therefore, an allowance equal to the tax benefit has been
recorded in the accompanying financial statements for the six months ended June
30, 1998 and 1997.
Note 7 - Concentrations
The Company derived 97% and 99% of its revenues from one customer during the six
months ended June 30, 1998 and 1997, respectively.
Note 8 - Commitments
On January 30, 1998, the Company entered into an agreement with a health care
provider in which the provider will perform clinical testing of ten surgical or
medical products submitted by the Company. The agreement is for a term not to
exceed five years and requires the Company to pay the health care provider a
fixed amount of $25,000 for each of the ten studies. The agreement further
provides that the Company is obligated to pay the provider $250,000 over the
term of the agreement in the event the Company determines not to have the
provider perform the clinical testing.
Note 9 - Lease Commitments
On June 1, 1998, the Company entered into an agreement to lease office space
from an affiliated entity. The lease term expires on May 31, 2000 with automatic
one year renewals. Minimum lease payments are as follows:
1998 $ 21,000
1999 $ 42,000
2000 $ 17,500
Note 10 - Contingencies
In July 1998 the Company was named in a complaint brought by one of its vendors
relative to breach of contract for specific performance. Legal counsel of the
Company has filed a motion to dismiss said complaint. As of the date of this
report, a determination cannot be made as to the outcome or potential loss, if
any, to the Company.
F-21
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED - SEE ACCOUNTANTS' COMPILATION REPORT)
JUNE 30, 1998 AND 1997
Note 11 - Realization of Assets
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate the continuation of
the Company as a going concern. The Company has sustained substantial losses
since inception and has accumulated deficits of $1,189,865 as of June 30, 1998.
It also has minimal revenues for the six months ending June 30, 1998.
In view of the matters described in the preceding paragraph, recoverability of a
major portion of the recorded asset amounts shown in the accompanying balance
sheet is dependent upon the Company's ability to achieve profitable operations
and to obtain additional equity financing.
Management believes the Company's prospects for profitability are significant,
based on the development of OASiS, a proprietary product, and an agreement in
which Sarasota Memorial Hospital (SMH) has agreed to be the alpha testing site
by purchasing four OASiS units in 1997. In 1998, the Company introduced a new
version of the OASiS software which is currently being used at Sarasota Memorial
Hospital. With the success and acceptance of the new version of OASiS at SMH,
the Company is now focusing on more aggressively marketing the product to other
medical facilities. Management has hired additional personnel who will be
responsible for the sales and marketing functions. Management is also
considering both equity and debt financing in the range of $2 to $5 million.
Management believes these factors will provide the basis for significant growth
and profitability in the near term.
Note 12 - Year 2000 Issue
Management has determined that the Year 2000 issue is not material to the
Company since all of the internal hardware and software utilized by the Company
has the capability of being upgraded to support the Year 2000 transactions.
Furthermore, the Year 2000 will not impact the operation of the OASiS system
since the software for this system does not rely on legacy applications or
subsystems. OASiS is designed to handle dates in the form of a two digit month
and day and a four digit year, thus avoiding the Year 2000 problem.
However, there can be no assurance that the systems of other companies on which
the Company's systems rely also will be timely converted or that any such
failure to convert by another company would not have an adverse effect on the
Company's systems.
F-22
<PAGE>
EXHIBIT 2.1
ARTICLES OF INCORPORATION
OF
INCORPORATION
SURGICAL SAFETY PRODUCTS, INC.
The undersigned incorporator of these Articles of Incorporation, a natural
person competent to contract, hereby forms a Corporation for profit under the
laws of the State of Florida.
ARTICLE I
NAME: The name of this Corporation is: SURGICAL SAFETY
PRODUCTS, INC., a Florida Corporation.
ARTICLE II
CORPORATE PURPOSES: The corporate purposes are:
To engage in any lawful act or activity for which corporations may be
organized under the laws of the State of Florida.
To purchase, sell, lease, let, demise, and/or subdivide all real or
personal property wheresoever situate; to make, purchase or sell materials for
the construction of buildings; to erect buildings, to own, manage, operate,
lease and sell buildings; to conduct and carry on the business of builders,
developers, subdividers and contractors, for the purpose of building, erecting,
altering, repairing or doing any other work in connection with any and all
classes of buildings and improvements to real property of any kind or nature
whatsoever and in connection with the division, subdivision, and development of
real property, including the locating, laying out and construction of roads,
avenues, docks, slips, sewers, bridges, wells, walls, seawalls, canals and water
and sewer plants, and in general to do and perform all of the foregoing in
connection with all classes of buildings, erections and works, both public and
private, or integral parts thereof.
To conduct a general brokerage, agency and commission business in the
purchase, leasing, sale and the management of real estate and improvements for
others and negotiation of loans and contracts concerning the same; to purchase
and sell for others, personal property, stocks, bonds and notes, to negotiate
<PAGE>
loans thereon for others; to act as Trustee in Deeds of Trust or Mortgages on
real or personal property or any evidence of value to secure the same.
To contract debts and borrow money, issue and sell or pledge bonds,
debentures, notes and other evidences of indebtedness and execute such
Mortgages, transfers of corporate property, or other instruments as are
necessary to secure the payment of corporate indebtedness.
To purchase the corporate assets of any other corporation, and engage
in the same or other character of business.
To loan the monies of the corporation and to take back mortgages as
security therefor on both real and personal property.
To guarantee, endorse, purchase, hold, sell, transfer, mortgage, pledge
or otherwise acquire or' dispose of the shares of the capital stock of, or any
bonds, securities, or other evidences of indebtedness created by any other
corporation of the State of Florida, or any other State or Government, and while
the owner of such stock to exercise all the rights, powers and privileges of
ownership, including the right to vote such stock.
To act as nominee or agent for the purpose of land acquisition,
development, sales and financing.
To act as a General Partner in Limited Partnerships which will engage
in activities contemplated by this Article and to perform all services necessary
or desirable in connection therewith, and to act as nominee for the purpose of
acquiring, financing and transferring real and personal property.
To manufacture, purchase, or otherwise acquire, and to own, mortgage,
pledge, sell, assign, transfer, or otherwise dispose of, and to invest in, trade
in, deal in and with goods, wares, merchandise, real and personal property, and
services of every class, kind and description; except that it is not to conduct
a banking, safe deposit, trust, insurance surety, express, railroad, canal,
telegraph, telephone, cemetery, professional engineering or surveying company, a
building and loan association, mutual fire insurance association, cooperative
loan association, fraternal benefit society, state fair or exposition.
<PAGE>
ARTICLE III
CAPITAL STOCK: The shares of stock of this corporation shall
consist of only one class. The maximum number of shares of Stock
that this Corporation is authorized to have outstanding at any
one time is: 10,000 shares of Common Stock.
ARTICLE IV
INITIAL CAPITAL: The amount of capital with which this
corporation will begin business will not be less than $500.00.
ARTICLE V
TERM OF EXISTENCE: This Corporation is to exist
perpetually.
ARTICLE VI
REGISTERED OFFICE AND AGENT: The initial street address of
the registered office of this Corporation in the State of Florida
is: 4485 South Shade Avenue, Sarasota, Florida .34231. The Board
of Directors may from time to time move the registered office to
any other address in Florida. The initial registered agent at the
aforesaid address shall be G. Michael Swor. The mailing address
of the corporation is the same as the Registered Office.
ARTICLE VII
DIRECTORS: This Corporation shall have five (5) Directors.
The number of Directors may be modified from time to time by
Bylaws adopted by the Stockholders.
ARTICLE VIII
INCORPORATOR: The name and street address of the
incorporator to these Articles of Incorporation is as follows:
NAME ADDRESS
G. Michael Swor 4485 South Shade Avenue
Sarasota, Florida 34231
ARTICLE IX
SHAREHOLDER'S PREEMPTIVE RIGHTS: The Corporation elects to
have preemptive rights and each shareholder of any class of stock
of this Corporation shall be entitled to full preemptive rights to
<PAGE>
purchase any unissued or treasury shares of the Corporation and securities of
the Corporation convertible into or carrying a right to subscribe to or acquire
shares of any such unissued or treasury shares.
ARTICLE X
AMENDMENT: These Articles of Incorporation may be amended by Resolution
adopted by the Board of Directors, proposed by them to the Stockholders and
approved at a Stockholders Meeting by a majority of the Stock entitled to vote
thereon.
The undersigned Incorporator has executed these Articles this 13th day of May
1992.
/s/ G.Michael Swor
G. Michael Swor
"INCORPORATOR"
STATE OF FLORIDA
COUNTY OF SARASOTA
The foregoing instrument was acknowledged before me this 13th
day of May, 1992, by G. Michael Swor as Incorporator of Surgical Safety
Products, Inc. a Florida corporation, on behalf of the corporation he/she is
personally known to me or has produced as identification and who did (did not
take an oath.
/s/ Sam D. Norton
Name: Sam D. Norton
Notary Public
My Commission Expires: SAM D. NORTON
MY COMMISSION EXPIRES
March 31,1993
BONDED THRU NOTARY PUBLIC UNDERWRITERS
Having been named Registered Agent to accept service of process for the
above stated corporation at registered office designated in the articles, I
hereby accept such designation and agree to serve as Registered Agent.
/s/ G. Michael Swor
G. Michael Swor
STATE OF FLORIDA
COUNTY OF SARASOTA
The foregoing instrument was acknowledged before me this 13th day of May 1992,
by G. Michael Swor, as registered agent, who is personally known to me or who
has produced N/A as identification and did (did not)take an oath.
/s/ Sam D.Norton
Name: Sam D. Norton
Notary Public
My Commission Expires:
SAM D. NORTON
My COMMISSION EXPIRES
March 31, 1993
BONDED THRU NOTARY PUBLIC UNDERWRITERS
<PAGE>
FLORIDA DEPARTMENT OF STATE
Jim Smith
Secretary of State
December 17, 1992
SAM D. NORTON
1819 MAIN ST., SUITE 610
SARASOTA, FL 34236
Re: Document Number V36535
The Articles of Amendment to the Articles of Incorporation of SURGICAL SAFETY
PRODUCTS, INC., a Florida corporation, were filed on December 9,1992.
Should you have any questions regarding this matter, please telephone
(904)487-6050, the Amendment Filing Section.
Velma Shepard
Corporate Specialist
Division of Corporations
Letter Number: 792AO0009185
Division of Corporations P.O.BOX 6327 Tallahassee, FL 32314
<PAGE>
EXHIBIT 2.2
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF SURGICAL SAFETY PRODUCTS, INC.
Pursuant to Florida Statute Section 607.1006, the Articles a
Incorporation of the above-named corporation (the "Corporation") are hereby
amended, pursuant to a written consent in lieu of meeting executed by all of the
stockholders and directors of the Corporation dated the 1st day of June 1992, as
follows:
1. The name of the corporation is:
SURGICAL SAFETY PRODUCTS, INC.
2. Article III of the Articles of Incorporation of the corporation
entitled "Capital Stock" is hereby deleted in its entirety and replaced with the
following in its place and stead:
Article III. CAPITAL STOCK
The shares of stock of this Corporation shall consist of only on*
class. The Corporation shall not authorize the issuance of shares in
series. The maximum number of shares of stock that the corporation is
authorized to have outstanding at any one time is 20,000 shares of
common stock.
3. Article IX entitled "Shareholders Preemptive Rights"
is hereby deleted in its entirety.
4. The foregoing amendments were adopted on the 1st day of
June 1992.
5. The foregoing amendments were approved by unanimous consent of all
stockholders and directors entitled to vote pursuant to Section 607.1006 of
Florida Statutes.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment to the Articles of Incorporation of the Corporation this 1st
day of June 1992.
/s/ G. Michael Swor
G. Michael Swor
President and Director
STATE of FLORIDA
COUNTY of SARASOTA
The foregoing instrument was acknowledged before me this 1st day of
June, 1992, by G. Michael Swor, President and Director of SURGICAL SAFETY
PRODUCTS, INC.,a Florida corporation on behalf of said corporation. He is
personally known to me ____________________as identification and (did not) take
an oath.
/s/ Nancy Reeves
Notary Public
My Commission Expires:
NOTARY PUBLIC STATE OF FLORIDA
<PAGE>
EXHIBIT 2.3
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF SURGICAL SAFETY PRODUCTS, INC.,
Pursuant to Florida Statute Section 607.1006, the Articles of
Incorporation of the above-named corporation (the "Corporation") are hereby
amended, pursuant to a written consent in lieu of meeting executed by the
stockholder holding the majority of the outstanding shares of stock and by all
of the director of the Corporation dated the 6th day of July, 1994, as follows:
1. The name of the Corporation is:
SURGICAL SAFETY PRODUCTS, INC.
2. Article III of the Articles f Incorporation, as amended, entitled
"Capital Stock" is hereby deleted in its entirety and replaced with the
following in tits place and stead:
Article II. CAPITOL STOCK
The shares of stock of this Corporation shall consist of only
one class. The Corporation shall not authorize the issuance of shares
in series. The maximum number of shares of stock that the corporation
is authorized to have outstanding at any one time is 100,000 shares of
common stock.
3. The foregoing amendments were adopted on the 6th day of
July, 1994.
4. The number of votes cast for the amendment by the
shareholders was sufficient for approval pursuant to Section
607.1006 of Florida Statutes.
IN WITNESS WHEREOF, the undersigned has executed these Articles of Amendment to
the Articles of Incorporation of the Corporation this 6th day of July, 1994.
/s/ G. Michael Swor
G. Michael Swor
President and CEO
STATE OF FLORIDA
COUNTY OF SARASOTA
The foregoing instrument was acknowledged before me this 6th day of July, 1994,
by G. Michael Swor, President and CEO of Surgical Safety Products, Inc., a
Florida corporation on behalf of said corporation. He is personally known to me
or has produced _____ ________ as identification and did (did not) take an oath.
/s/ E.Jane Hall
E. Jane Hall
Notary Public
My Commission Expires: (Notary Stamp)
E. JANE HALL
My Comm Exp 6/01/98
Bonded by Service, Inc,
No. CC377490
<PAGE>
EXHIBIT 2.4
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF SURGICAL SAFETY PRODUCTS, INC.
Pursuant to Florida Statue Section 607.1006, the Articles of
Incorporation of the above-named corporation (the "Corporation") are hereby
amended, pursuant to a written consent in lieu of meeting executed by a majority
of the stockholders and directions of the Corporation dated the 6th day of
October, 1994, as follows:
1. The name of the corporation is:
SURGICAL SAFETY PRODUCTS, INC.
2. Article III of the Articles of Incorporation of the
corporation, as amended, entitled "Capital Stock" is hereby
deleted in its entirety and replaced with the following in its
place and stead:
Article III. CAPITAL STOCK
The shares of stock of this Corporation shall consist of only one
class. The Corporation shall not authorize the issuance of shares in series. The
maximum number of shares of stock that the corporation is authorized to have
outstanding at any one time is 20,000,000 shares of common stock, having a par
value of $.001 dollars per share.
3. Article IV of the Articles of Incorporation of the corporation, as
amended, entitled "Directors" is hereby deleted in its entirety and replaced
with the following in its place and stead:
Article IV. DIRECTORS
This Corporation shall have six (6) directors. The number of directors
may be modified from time to time by the Bylaws adopted by the
stockholders.
4. The foregoing amendments were adopted on the 6th day of
OCTOBER, 1994.
5. The number of votes cast by the members of shareholders
was sufficient for approval.
<PAGE>
6. The foregoing amendments were approved by the majority consent of
all stockholders and unanimous consent for all directors entitled to vote
pursuant to Section 607.1006 of the Florida Statutes.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment to the Articles of Incorporation of the Corporation this 6th day of
OCTOBER, 1994.
\s\ G. Michael Swor
G. Michael Swor
President and Director
STATE OF FLORIDA
COUNTY OF SARASOTA
The foregoing instrument was acknowledged before me this 6th day of
October, 1994, by G. MICHAEL SWOR, President and Director of SURGICAL SAFETY
PRODUCTS, INC., a Florida corporation on behalf of said corporation. He is
personally known to me or had produced ___________________ as identification and
did (did not) take an oath.
/s/ Sam D.Norton
Notary Public
My Commission Expires: (Notary Stamp)
SAM D. NORTON
MY COMMISSION #00282101
EXPIRES MARCH 31, 1997
Bonded thru Notary Public Underwriters
<PAGE>
EXHIBIT 2.5
ARTICLES OF INCORPORATION OF
SHEFFELD ACRES, INC.
Under Section 402 of the Business Corporation Law.
KNOWN ALL PERSONS BY THESE PRESENTS, that the undersigned, for the purpose of
forming a corporation pursuant to Section 402 of the Business Corporation Law of
the State of New York, does hereby certify and set forth:
ARTICLE I -- Name
The name of this corporation is SHEFFELD ACRES, INC.
ARTICLE II -- Purposes and Powers
Section 1. Purpose. The purpose(s) for which the corporation is
formed are:
To engage in any lawful act or activity for which corporation may be
organized under the business corporation law, provided that the corporation is
not formed to engage in any act or activity which requires the act or approval
of any state official, department, board, agency or other body without such
approval or consent first being obtained.
To carry on a general mercantile, industrial, investing and trading
business in all its branches; to devise, invent, manufacture, fabricate,
assemble, install, service, maintain, alter, buy, sell, import, export, license
as licenser or licensee, leases lessor or lessee, distribute, job, enter into,
negotiate, execute, acquire, and assign contracts in respect of, acquire,
receive, grant, and assign licensing arrangements, portions, franchises, and
other rights in respect of and generally deal in and with at wholesale and
retail, as principal, and as sales, business, special, or general agent,
representative, broker, factor, merchant, distributor, jobber, advisor, or in
any other lawful capacity, goods, wares, merchandise, commodities, and
unimproved, improved, finished,
<PAGE>
processed and other real, personal and mixed property of any and all kinds,
together with the components, resultants and by-products thereof..
To create, manufacture, contract for, sell, import, export, distribute,
job and generally deal in and with, whether at wholesale or retail, and as
principal, agent, broker, factor, commission merchant, licenser, licensee or
otherwise, any and all kinds of goods, wars, and merchandise, and in connection
therewith or independent thereof, to establish and maintain, by any manner or
means, buying offices, distribution centers, specialty and other shops, stores,
mail-order establishments, concessions, leased departments, and any and all
other departments, sites and location necessary, convenient or useful in the
furtherance of any business of the corporation.
To acquire by purchase, subscription, underwriting or otherwise, and to
own, hold for investment, or otherwise, and to use, sell, assign, transfer,
mortgage, pledge, exchange or otherwise dispose of real and personal property of
every sort and description and wheresoever situated, including shares of stock,
bonds, debentures, notes, scrip, securities, evidences of indebtedness,
contracts or obligations of any corporation or association, whether domestic or
foreign, or of any firm or individual or of the United States or any state,
territory or dependency of the United States or any foreign country, or any
municipality or local authority within or without the United States, and also to
issue in exchange therefore, stocks, bonds or other securities or evidences of
indebtedness of this corporation and, while the owner or holder of any such
property, to receive, collect and dispose of the interest, dividends and income
on or from such property and to possess and exercise in respect thereto all of
the rights, powers and privileges of ownership. Including all voting powers
thereon.
To construct, build purchase, lease or otherwise acquire, equip, hold,
own, improve, develop, manage, maintain, control, operate, lease, mortgage,
create liens upon, sell convey or otherwise dispose of and turn to account, any
and all plants, machinery, works, implements and things or property, real and
personal, of every kind and description, incidental to, connected with, or
suitable, necessary or convenient for any of the purposes enumerated herein,
including all or any part or parts of the properties, assets, business and good
will of any persons, firms, associations or corporations.
The powers, right and privileges provided in this
<PAGE>
certificate are not to be deemed to be in limitation of similar, other or
additional powers, rights and privileges granted or permitted to a corporation
by the Business Corporation Law, it being intended that this corporation shall
have all the rights, powers and privileges granted or permitted to a corporation
by such statute.
ARTICLE III -- Corporation Office
The office of the corporation is to be located in the County of Monroe,
State of New York.
ARTICLE IV -- Number of Shares
The aggregate number of shares which the corporation shall have the
authority to issue is Twenty Million (20,000,000), all of which shall have a par
value of One ($.001) Mill.
ARTICLE V -- Agent for the Corporation
The Secretary of State is designated as agent of the corporation upon
whom process against it may be served. The post office address to which the
Secretary of State shall mail a copy of any process against the corporation
served upon him is:
87 Armstrong Road
Rochester, New York 14616
ARTICLE VI -- Directors Liability
The personal liability of directors to the corporation or its
shareholders for damages for any breach of duty in such capacity is hereby
eliminated except that such personal liability shall not be eliminated if a
judgment or other final adjudication adverse to such director establishes that
his acts or omissions were in bad faith or involved intentional misconduct or a
knowing violation of law or that he personally gained in fact a financial profit
or other advantage to which he was not legally entitled or that his acts
violated Section 719 of the Business Corporation Law.
No shareholder of this corporation shall have a preemptive right
because of his shareholdings to have first offered to him
<PAGE>
any part of any of the presently authorized shares of this corporation hereafter
issued, optioned or sold, or any part of any debentures, bonds, notes or
securities of this corporation convertible into shares hereafter issued,
optioned or sold by the corporation. This provision shall operate to defeat
rights in all shares and classes of shares now authorized and in all debentures,
bonds, notes or securities of the corporation which may be convertible in to
shares and also to defeat preemptive rights in any and all shares and classes of
shares and securities convertible into shares which this corporation may be
hereafter authorized to issue by any amended certificate duly filed.
IN WITNESS WHEREOF, this certificate has been subscribed to this 4th
day of May 1993 by the undersigned, who affirms that the statements made herein
are true under the penalties of perjury.
/S/ Morris Diamond
MORRIS DIAMOND
105 SOUTHERN PARKWAY
ROCHESTER, NEW YORK 14618
<PAGE>
EXHIBIT 2.6
ARTICLES OF MERGER OF
SURGICAL SAFETY PRODUCTS, INC.
The undersigned corporations, pursuant to Section 907 of the
New York Business Corporation Law and Sections 607.1101 et. seq.
of the Florida statutes, hereby execute the following Articles of
Merger and set forth:
ONE
See Plan of Merger attached hereto.
TWO
The Articles of Merger shall become effective at 12:00 am on Monday,
October 10, 1994.
THREE
(a) The Plan of Merger was adopted by the shareholders of
Sheffeld Acres, Inc. on September 26, 1994.
(b) The Plan of Merger was adopted by the shareholders of
Surgical Safety Products, Inc. on September 26, 1994.
The undersigned Secretary of Surgical Safety Products, Inc.
declares that the facts herein stated are true.
\s\ Jim Stuart
Surgical Safety Products, Inc.
By: Jim Stuart, Secretary
The undersigned Secretary of Sheffeld Acres, Inc. declares
that the facts herein stated are true.
\s\ Jim Stuart
Surgical Safety Products, Inc.
By: Jim Stuart, Secretary
<PAGE>
PLAN OF MERGER
SHEFFELD ACRES INC. WITH AND
INTO SURGICAL SAFETY PRODUCTS, INC.
Plan of merger, dated September 26, 1994, between Surgical Safety
Products, Inc., a Florida corporation (herein sometimes referred to as "SSP" or
"the surviving corporation"), and Sheffeld Acres Inc., a New York corporation,
(herein sometimes referred to as "Sheffeld" or the "merged corporation").
WHEREAS, SSP is a corporation organized and existing under
and by the virtue of the laws of the State of Florida and;
WHEREAS, Sheffeld is a corporation organized and existing under and by
the virtue of the laws of the State of New York and;
WHEREAS, the board of directors of SSP and Sheffeld, the parties
hereto, deem it desirable and in the best interests of the corporations and
their shareholders that Sheffeld be merged into SSP.
NOW, THEREFORE and in consideration of the foregoing and the mutual
promises and covenants, and subject to the conditions herein set forth, the
constituent corporations agree as follows:
1. The names of the constituent corporations are Surgical
Safety Products, Inc., and Sheffeld Acres Inc.
2. The name of the surviving corporation is Surgical
Safety Products, Inc.
3. As to each constituent corporation, the designation and
number of outstanding shares of each class and series and the
voting rights, are as follows:
SURGICAL SAFETY PRODUCTS, INC.
Classes and
Classes and series entitled
series entitled to vote
Designation Number to vote as to class
Common stock 21,383 Common stock only Common stock only
<PAGE>
SHEFFELD ACRES INC.
Classes and
Classes and series entitled
series entitled to vote
Designation Number to vote as to class
Common stock 8,936,440 Common stock only Common stock only
4. Upon such merger, the separate corporate existence of Sheffeld shall
cease and the surviving corporation shall become the owner, without other
transfer, of all the rights and property of the constituent corporations, and
the surviving corporation shall become subject to all the liabilities.
Obligations and penalties of the constituent corporations.
5. The purposes, county where the principal office for the transaction
of business shall be located, number of directors, and capital stock of the
surviving corporation shall be as appears in the Articles of Incorporation of
the surviving corporation as amended and as herein set forth.
6. The Articles of Incorporation of Surgical Safety Products, Inc.,
shall on the effective date of the merger be amended to read as herein set forth
in Exhibit A attached hereto.
7. The bylaws of Surgical Safety Products, Inc., as in effect on the
effective date, shall be the bylaws of the surviving corporation until the same
shall be altered, amended, or repealed, or until new bylaws are adopted as
provided therein.
8. The names and addresses of the persons who shall constitute the
board of directors of the surviving corporation, and who shall hold office until
the first annual meeting of the shareholders of the surviving corporation are
attached hereto as Exhibit B.
9. The manner of converting the shares of constituent corporations into
shares of these surviving corporation shall be as follows:
(a) Each share of common stock of the par value of $0.001 per
share of Sheffeld, issued and outstanding on the effective date of the merger
shall continue to be one share of common stock of no par value per share of the
surviving corporation, and
<PAGE>
(b) Each share of common stock of no par value per share of
SSP, issued and outstanding on the effective date of the merger shall be changed
and converted into 308 shares of common stock, no par value per share of the
surviving corporation, which shares of common stock of the surviving corporation
shall thereupon be issued and outstanding, provided, however, that no fractional
shares to which any holder of the common stock of SSP would otherwise be
entitled as a result of the conversion, a payment in cash shall be made equal to
the value of such fraction, based on the market value of such common stock on
the effective date.
(c) any and all shares of common stock of Sheffeld held by
Sheffeld in its treasury on the effective date of the merger shall forthwith be
surrendered to the surviving corporation for cancellation, and no shares of the
surviving shall be issued or issuable in respect thereof.
(d) After the effective date of the merger, holders of
certificates for shares of common stock in Sheffeld shall surrender them to the
surviving corporation, or its duly appointed agent, in such manner as the
surviving shall legally require. On receipt of said share, certificates, the
surviving corporation shall issue in exchange therefor a certificate of shares
of common stock in surviving corporation representing the number of shares of
such stock to which such holder shall be entitled as herein above set forth.
(e) In addition such shareholder shall be entitled to receive
any dividends on such shares of common stock of the surviving corporation which
may have been declared and paid between the effective date of the merger and the
issuance to the shareholder of the certificate of such common stock.
certificates of common stock of Sheffeld shall not be entitled to dividends
payable on shares of stock in the surviving corporation unless and until said
shareholders of such certificates have been issued certificates of common stock
in surviving corporation as herein above provided.
10. The surviving corporation shall not, prior to the effective date of
the merger, engage in any activity or transaction other than in the ordinary
course of business, except as contemplated by this plan.
11. This merger shall be submitted to the shareholders of the
constituent corporations for their approval in the manner provided or the
applicable laws of the States New York and
<PAGE>
Florida, at meeting to be held on or before September 26, 1994, or at such other
time as the boards of directors of the constituent corporations shall agree
12. The directors of either constituent corporation may, in their
discretion, abandon this merger subject to the rights of third parties under
contracts relating thereto, without further action or approval by the
shareholders of the corporation, at any time the merger has been completed.
This plan of merger may be executed in any number of counterparts, and
all such counterparts and copies shall be and constitute an original instrument.
In witness whereof, the parties hereto have caused this plan of merger
to be executed by their respective officers and directors and have caused their
respective corporation seals to impressed hereon on this 9th day of September,
1994.
Dated 9 September, 1994.
SURGICAL SAFETY PRODUCTS, INC. SHEFFELD ACRES INC.
By:\s\ G. Michael Swor By:\s\ G. Michael Swor
President President
<PAGE>
STATE OF FLORIDA
Department of State
I certify that the attached is a true and correct copy of the Articles of
Incorporation of SURGICAL SAFETY PRODUCTS, INC., a corporation organized under
the Laws of the State of Florida, filed on May 15, 1992, as shown by the records
of this office.
The document number of this corporation is V36535.
Given under my hand and the
Great Seal of the State of
Florida at Tallahassee, the
Capital, this the 15th day
of May, 1992
(SEAL)
\s\ Jim Smith
Jim Smith
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
SURGICAL SAFETY PRODUCTS, INC.
The undersigned subscriber to these Articles of Incorporation, a
natural person competent to contract, hereby forms a Corporation for profit
under the laws of the State of Florida.
ARTICLE I. NAME
The name of the Corporation is: SURGICAL SAFETY
PRODUCTS, INC, a Florida Corporation.
ARTICLE II. NATURE OF BUSINESS
CORPORATE PURPOSES: The corporate purposes are:
To engage in any lawful act or activity for which corporations may be
organized under the laws of the State of Florida.
To purchase, sell, lease, let, demise, and/or subdivide all real or
personal property wheresoever situate; to make, purchase or sell materials for
the construction of buildings; to erect buildings, to own, manage, operate,
lease and sell buildings; to conduct any carry on the business of builders,
developers, subdividers and contractors, for the purpose of building, erecting,
altering, repairing or doing any other work in connection with any and all
classes of buildings and improvements to real property of any kind or nature
whatsoever and in connection with the division, subdivisions, and development of
real property, including the locating, laying out and construction of roads,
avenues, docks, slips, sewers, bridges, wells, walls, seawalls, canals and water
and sewer plants, and in general to do and perform all of the foregoing in
connection with all classes of buildings erection and works, both public and
private, or integral parts thereof.
To conduct a general brokerage, agency and commission business in the
purchase, leasing, sale and the management of
<PAGE>
real estate and improvements for others and negotiation of loans and contracts
concerning the same; to purchase and sell for others, personal property, stocks,
bonds and notes, to negotiate loans thereon for others; to act as Trustee in
Deeds of Trust or Mortgages on real or personal property or any evidence of
value to secure the same.
To contract debts and borrow money, issue and sell or pledge bonds,
debentures, notes and other evidence of indebtedness and execute such Mortgages,
transfers of corporate property, or other instruments as are necessary to secure
the payment of corporate indebtedness.
To purchase the corporate assets of any other corporation, and engage
in the name or other character of business.
To loan the monies of the corporation and to take back mortgages as
security therefor on both real and personal property.
To guarantee, endorse, purchase, hold, sell, transfer, mortgage, pledge
or otherwise acquire or dispose of the shares of the capital stock of, or any
bonds, securities, or other evidences of indebtedness created by any other
corporation of the State of Florida, or any other State or Government, and while
the owner of such stock to exercise all the rights, powers and privileges of
ownership, including the right to vote such stock.
To act as nominee or agent for the purpose of land acquisition,
development, sales and financing.
To act as a General Partner in Limited Partnerships which will engage
in activities contemplated by this Article and to perform all services necessary
or desirable in connection therewith, and to act as nominee for the purpose of
acquiring, financing and transferring real and personal property.
To manufacture, purchase, or otherwise acquire, and to own, mortgage,
pledge, sell ,assign, transfer, or otherwise dispose of, and to invest in, trade
in, deal in and with goods, wares, merchandise, real and personal property, and
services of every class, kind and description; except that it is not to conduct
a banking, safe deposit, trust, insurance surety, express, railroad, canal,
telegraph, telephone, cemetery, professional
<PAGE>
engineering or surveying company, a building and loan association, mutual fire
insurance association, cooperative loan association, fraternal benefit society,
state fair or exposition.
ARTICLE III
CAPITAL STOCK: The shares of stock of this corporation shall
consist of only class. The maximum number of shares of Stock
that this Corporation is authorized to have outstanding at any
one time is: 10,000 shares of Common Stock.
ARTICLE IV
INITIAL CAPITAL: The amount of capital with which this
corporation will begin business will not be less than $500.00.
ARTICLE V
TERM OF EXISTENCE: This corporation is to exist
perpetually.
ARTICLE VI. DIRECTORS
REGISTERED OFFICE AND AGENT: The initial street address of the
registered office of this Corporation in the State of Florida: 4485 South Shade
Avenue, Sarasota, Florida 34231. The Board of Directors may from time to time
move the registered office to any other address in Florida. The initial
registered agent at the aforesaid address shall be G. Michael Swor. The mailing
address of the Corporation is the same s the Registered Office.
ARTICLE VII. INCORPORATOR
DIRECTORS: This Corporation shall have five (5) Directors. The number
of Directors may be modified from time to time by Bylaws adopted by the
Stockholders.
ARTICLE VIII
INCORPORATOR: The name and street address of the incorporator to these
Articles of Incorporation is as follows:
NAME ADDRESS
G. Michael Swor 4485 South Shade Avenue
Sarasota, Florida 34231
<PAGE>
ARTICLE IX
SHAREHOLDER'S PREEMPTIVE RIGHTS: The Corporation elects to have
preemptive rights and each shareholder of any class of stock of this corporation
shall be entitled to full preemptive rights to purchase any unissued or treasury
shares of the Corporation and securities of the Corporation convertible into or
carrying a right to subscribe to or acquire shares of any such unissued or
treasury shares.
ARTICLE X
AMENDMENT: These Article of Incorporation may be amended by Resolution
adopted by the Board of Directors, proposed by them to the Stockholders and
approved at the Stockholders Meeting by a majority of the Stock entitled to vote
thereon.
The undersigned Incorporator has executed these Articles this 13th day
of May, 1992.
\s\ G. Michael Swor
G. Michael Swor
"INCORPORATOR"
STATE OF FLORIDA
COUNTY OF SARASOTA
The foregoing instrument was acknowledged before me this 13th day of
May, 1992, by G. Michael Swor as corporation, on behalf of the corporation.
He/she is personally identification and who did (did not) take an oath.
\s\ Sam D. Norton
Name: Sam D. Norton
Notary Public
My Commission Expires: (Seal/Stamp)
Having been named Registered Agent to accept service of process fort h
above stated corporation at registered office designated in the Articles, I
hereby accept such designation and agree to serve as Registered Agent.
\s\ G. Michael Swor
G. Michael Swor
The foregoing instrument was acknowledge before me this 13th day of
May, 1992, by G. Michael Swor, as registered agent, who is personally known to
me or who has produced __________n/a_________ as identification and who did (did
not) take an oath.
\s\Sam D. Norton
Name: Sam D. Norton
Notary Public
My Commission Expires: (Seal/Stamp)
(SEAL)
<PAGE>
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF SURGICAL SAFETY PRODUCTS, INC.
Pursuant to Florida Statute Section 607.1006, the Articles of
Incorporation of the above-named corporation (the "Corporation") are hereby
amended, pursuant to a written consent in lieu of meeting executed by all of the
stockholders and directors of the Corporation dated the 1st day of June, 1992,
as follows:
1. The name of the corporation is:
SURGICAL SAFETY PRODUCTS, INC.
2. Article III of the Articles of Incorporation of the
corporation entitled "Capital Stock" is hereby deleted in its entirety and
replaced with the following in its place and stead:
Article III. CAPITAL STOCK
The shares of stock of this Corporation shall consist of only one
class. Th Corporation shall not authorize the issuance of shares in
series. The maximum number of shares of stock that the corporation is
authorized to have outstanding at any one time is 20,000 shares of
common stock.
3. Article IX entitled "Shareholders Preemptive
Rights" is hereby denied in its entirety.
4. The foregoing amendments were adopted on the 1st
day of June, 1992.
5. The foregoing amendments were approved by unanimous consent
of all stockholders and directors entitled to vote pursuant to Section 607.1006
of Florida Statutes.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment to the Articles of Incorporation of the Corporation this 1st day of
June, 1992.
\s\ G. Michael Swor
G. Michael Swor
President and Director
STATE OF FLORIDA
COUNTY OF SARASOTA
The foregoing instrument was acknowledge before me this 1st day of
June, 1992, by G. Michael Swor, President and Director of SURGICAL SAFETY
PRODUCTS, INC., a Florida corporation on behalf of said corporation. He is
personally known to me and did not take an oath.
\s\ Nancy M.Reeves
Notary Public
My Commission Expires: (Stamp)
(SEAL)
<PAGE>
(SEAL)
FLORIDA DEPARTMENT OF STATE
Jim Smith
Secretary of State
July 19, 1994
CIS
DANNY
TALLAHASSEE, FL
Re: Document Number V36535
The Articles of Amendment to the Articles of Incorporation for SURGICAL SAFETY
PRODUCTS, INC., a Florida corporation, were filed on July 19, 1994.
The certification requested in enclosed Should you have any questions regarding
this matter, please telephone (904) 487-6050, the Amendment Filing Section.
Joy Moon-French
Corporate Specialist
Division of Corporations Letter Number: 094A00033233
Division of Corporations P.O. Box 6327 Tallahassee, FL 32314
<PAGE>
STATE OF FLORIDA
Department of State
I certify that the attached is a true and correct copy of the Articles of
Amendment, filed on July 19, 1994 to Articles of Incorporation for SURGICAL
SAFETY PRODUCTS, INC., a Florida corporation, as shown by the records of this
office.
The document number of this corporation is V36535.
Given under my hand and the
Great Seal of the State of
Florida at Tallahassee, the
Capital, this the Nineteeth
day of July, 1994
(SEAL)
\s\ Jim Smith
Jim Smith
Secretary of State
<PAGE>
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF SURGICAL SAFETY PRODUCTS, INC.
Pursuant to Florida Statue Section 607.1006, the Articles of Incorporation of
the above-named corporation (the "Corporation") are hereby amended, pursuant to
a written consent in lieu of meeting executed by the stockholder holding the
majority of the outstanding shares of stock and by all of the directors of the
Corporation dated the 6th day of July, 1994, as follows:
5. The name of the Corporation is:
SURGICAL SAFETY PRODUCTS, INC.
6. Article III of the Articles of Incorporation, as amended, entitled
"Capital stock"is hereby deleted in its entirety and replaced with the
following in its place and stead:
Article II. CAPITAL STOCK
The shares of stock of this Corporation shall consist of only one
class. The Corporation shall not authorize the issuance of shares in
series. The maximum number of shares of stock that the corporation is
authorized to have outstanding at any one time 100,000 shares of common
stock.
7. The foregoing amendments were adopted on the 6th day of
July, 1994.
8. The number of votes cast for the amendment by the
shareholders was sufficient for approval pursuant to Section
607.1006 of Florida Statues.
IN WITNESS WHEREOF, the undersigned has executed these Articles of Amendment to
the Articles of Incorporation of the Corporation this 6th of July, 1994.
/s/ G.Michael Swor
G. Michael Swor
President and CEO
STATE OF FLORIDA
COUNTY OF SARASOTA
The foregoing instrument was acknowledges before me this 6th day of July, 1994,
by G. Michael Swor, President and CEO of Surgical Safety Products, Inc., a
Florida corporation on behalf of said corporation. He is personally known to me
and did not take an oath.
\s\E.Jane Hall
Name: E. Jane Nall
Notary Public
My Commission Expires:
(SEAL/STAMP)
<PAGE>
MINUTES OF ACTIONS OF DIRECTORS OF
SURGICAL SAFETY PRODUCTS, INC., TAKEN AS OF
JUNE 1, 1993, WRITTEN CONSENT OF ALL DIRECTORS
IN LIEU OF A SPECIAL MEETING OF THE BOARD OF DIRECTORS
The undersigned, being all of the Directors of SURGICAL SAFETY
PRODUCTS, INC. ("Corporation") pursuant to Section 607.0821 of the Florida
Business Corporation Act, do hereby consent to the adoption of, and do hereby
confirm, approve, adopt and ratify the actions of set forth in this document
)the "Unanimous Consent"). This Unanimous Consent shall be dated and shall be
effective as of the date first above written. The within actions by written
consent constitute a special meeting of the Directors of the Corporation.
The undersigned approve the actions taken by the Corporation or to be
taken by the Corporation, ad the following resolutions are hereby unanimously
adopted:
RESOLVED, that the number of Directors of the Corporation shall be
increased from five (5) to six (6).
RESOLVED, that the vacancy in the Board occurring by reason of an
increase in the number of Directors, be filled by JAMES STUART, until
his successor is duly appointed and elected.
IN WITNESS WHEREOF, the undersigned Directors of the Corporation have executed
this Consent as of the date and year first above written.
/s/G.Michael Swor
G. MICHAEL SWOR
/s/David W. Swor
DAVID W. SWOR
/s/David A. Dee
DAVID A. DEE
/s/Tom DeCesare
TOM DECESARE
/s/Sam D. Norton
SAM D. NORTON
<PAGE>
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF SURGICAL SAFETY PRODUCTS, INC.
Pursuant to Florida Statute Section 607.1006, the Articles of
Incorporation of the above-named corporation (the "Corporation") are hereby
amended, pursuant to a written consent in lieu of meeting executed by a majority
of the stockholders and directors of the Corporation dated the 6th day of
October, 1994, as follows:
1. The name of the Corporation is:
SURGICAL SAFETY PRODUCTS, INC.
2. Article III of the Articles of Incorporation of the corporation, as
amended, entitled "Capital stock"is hereby deleted in its entirety and replaced
with the following in its place and stead:
Article II. CAPITAL STOCK
The shares of stock of this Corporation shall consist of only one
class. The Corporation shall not authorize the issuance of shares in
series. The maximum number of shares of stock that the corporation is
authorized to have outstanding at any one time is 20,000,000 shares of
common stock, having a par value of $.001 dollars per share.
3. The Article IV of the Articles of Incorporation of the corporation,
as amended, entitled "Directors" is hereby deleted in its entirety and replaced
with the following in its place and stead:
ARTICLE IV. DIRECTORS.
This Corporation shall have six (6) directors. The number of directors
may be modified from time to time by the Bylaws adopted by the
stockholders.
4. The foregoing amendments were adopted on the 6th day of
OCTOBER, 1994.
5. The foregoing amendments were approved by the majority consent of
all stockholders and unanimous consent of all directors entitled to vote
pursuant to Section 607.1006 of Florida Statutes.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment to the Articles of Incorporation of the Corporation this 6th of
OCTOBER, 1994.
/s/ G.Michael Swor
G. Michael Swor
President and Director
STATE OF FLORIDA
COUNTY OF SARASOTA
The foregoing instrument was acknowledged before me this 6th day of
OCTOBER, 1994, by G. Michael Swor, President and Director of SURGICAL SAFETY
PRODUCTS, INC., a Florida corporation on behalf of said corporation. He is
personally known to me or has produced __________________ as identification and
did (did not) take an oath.
/s/Sam D. Norton
Notary Public
My Commission Expires:
(SEAL/STAMP)
<PAGE>
BOARD OF DIRECTORS
G. Michael Swor, M.D.
434 S. Washington Blvd., Suite 2
Sarasota, FL 34236
David W. Swor
6385 Presidential Court
Ft. Myers, FL 33919
James D. Stuart
434 S. Washington Blvd., Suite 2
Sarasota, FL 34236
Tom DeCesare
15316 Gulf Blvd., #802
Madeira Beach, FL 33708
Sam D. Norton
1819 Main Street, Suite 610
Sarasota, FL 34236
Irwin Newman
2240 Woolbright Road, Suite 328
Boynton Beach, FL 33426
<PAGE>
(SEAL)
FLORIDA DEPARTMENT OF STATE
Jim Smith
Secretary of State
ARTICLES OF MERGER
Merger Sheet
- --------------------------------------
MERGING:
SURGICAL SAFETY PRODUCTS, INC., A FL Corp., V36535
INTO
SHEFFELD ACRES, INC., a New York corporation not qualified in Florida.
File date: December 6, 1994
Corporate Specialist: Susan Payne
Division of Corporations P.O. Box 6327 Tallahassee, Florida 32314
<PAGE>
AMENDED
ARTICLES OF MERGER OF
SURGICAL SAFETY PRODUCTS, INC.
The undersigned corporations, pursuant to Section 901 et. seq.
of the New York Business Corporation Law and Sections 607.1101 et.
seq. of the Florida statutes, hereby execute the following Articles
of Merger and set forth;
ONE
See Plan of Merger attached hereto as Exhibit A.
TWO
The Articles of Merger shall become effective at 12:00 am on
Dec. 5, 1994.
THREE
(a) The Plan of Merger was adopted by the shareholders of
Sheffeld Acres, Inc. on November 28, 1994.
(b) The Plan of Merger was adopted by the shareholders of
Surgical Safety Products, Inc. on November 26, 1994..
The undersigned Secretary of Surgical Safety Products, Inc.
declares that the facts herein stated are true.
/s/ Jim Stuart
Surgical Safety Products, Inc.
By: Jim Stuart, Secretary
The undersigned Secretary of Sheffeld Acres, Inc. declares
that the facts herein stated are true.
/s/ Jim Stuart
Surgical Safety Products, Inc.
By: Jim Stuart, Secretary
<PAGE>
CERTIFICATE OF MERGER
CERTIFICATE OF MERGER OF SHEFFELD ACRES, INC. AND SURGICAL SAFETY PRODUCTS,
INC., UNDER SECTION 907 OF THE NEW YORK BUSINESS CORPORATION LAW AND SECTIONS
607.1101 et. seq. OF THE FLORIDA STATUTES.
We, G. Michael Swor and Jim Stuart, being respectively President and
Secretary of Sheffeld Acres, Inc. a New York corporation, and we G. Michael Swor
and Jim Stuart, being respectively President and Secretary of Surgical Safety
Products, Inc. do hereby certify that pursuant to the Plan of Merger hereinafter
set forth, said corporations have mutually agreed to , and hereby do, unite and
merge into a single corporation under the same of Sheffeld Acres, Inc., pursuant
to Article Nine Section 907 of the New York Business Corporation Law and
Sections 607.1101 of the Florida Statutes.
The date when the certificate of incorporation of Sheffeld Acres, Inc.,
was filed by the department of the State of New York was May 7, 1993. The date
when the certificate of incorporation of Surgical Safety Products, Inc., was
filed by the department of State of Florida was May 15, 1992. Sheffeld Acres,
Inc., now has 8,936,440 shares of capital stock outstanding, all of which is
common stock and fully entitled to vote, and Surgical Safety Products, Inc., now
has 21,383 shares of capital stock outstanding, all of which is likewise common
stock with full voting rights.
PLAN OF MERGER
Plan of Merger, dated November 28, 1994, between Surgical Safety
Products, Inc., a Florida corporation, (herein sometimes referred to as "SSP" or
"the merged corporation"), and Sheffeld Acres Inc., a New York corporation,
(herein sometimes referred to as "Sheffeld" or the "surviving corporation").
WHEREAS, SSP is a corporation organized and existing under and by the
virtue of the laws of the State of Florida and;
WHEREAS, Sheffeld is a corporation organized and existing under and by
virtue of the laws of the State of new York and;
WHEREAS, the board of directors of SSP and Sheffeld, the parties
hereto, deem it desirable and in the best interests of the corporations and
their shareholders that SSP be merged into Sheffeld.
<PAGE>
NOW, THEREFORE, and in consideration of the foregoing and the mutual
promises and covenants, and subject to the conditions herein set forth, the
constituent corporations agrees as follows:
1. The names of the constituent corporations are Surgical
Safety Products, Inc., and Sheffeld Acres Inc.
2. The name of the surviving corporation is Sheffeld Acres
Inc.
3. As to each constituent corporation, the designation and
number of outstanding shares of each class and series
and the voting rights, are as follows:
SURGICAL SAFETY PRODUCTS, INC.
Classes and
series entitled
Designation Number to vote
Common stock 21,383 Common stock only
SHEFFELD ACRES INC.
Classes and
series entitled
Designation Number to vote
Common stock 8,936,440 Common stock only
4. Upon such merger, the separate corporate existence of SSP shall
cease and the surviving corporation shall become the owner, without other
transfer, of all the rights and property of the constituent corporations, and
the surviving corporation shall become subject to all the liabilities,
obligations and penalties of the constituent corporations.
5. The purposes, county where the principal office for the transaction
of business shall be located, number of directors, and capital stock of the
surviving corporation shall be as appears in the Articles of Incorporation of
the surviving corporation as amended and as herein set forth.
6. The Articles of Incorporation of Sheffeld Acres Inc., shall be the
Articles of the surviving until the same shall be altered, amended or repealed
or until new Articles are adopted as provided therein.
7. The bylaws of Sheffeld Acres Inc., as in effect on the
<PAGE>
effective date, shall be the bylaws of the surviving corporation until the same
shall be altered, amended, or repealed, or until new bylaws are adopted as
provided therein.
8. The names and addresses of the persons who shall constitute the
board of directors of the surviving corporation, and who shall hold office until
the first annual meeting of the shareholders of the surviving corporation are
attached hereto as Exhibit A.
9. The manner of converting the shares of constituent
corporations into shares of these surviving corporation shall be
as follows:
(a) Each share of common stock of the par value of $0.001 per
share of Sheffeld, issued and outstanding on the effective date of the merger
shall continue to be one share of common stock of $.0001 par value per share of
the surviving corporation, and
(b) Each share of common stock of no par value per share of
SSP, issued and outstanding on the effective date of the merger shall be changed
and converted into 308 shares of common stock, $.0001 par value per share of the
surviving corporation (currently held in the treasury of SSP), which shares of
common stock of the surviving corporation shall thereupon be issued and
outstanding, provided, however, that no fractional shares to which any holder of
the common stock of SSP would otherwise be entitled as a result of the
conversion, a payment in cash shall be made equal to the value of such fraction,
based on the market value of such common stock on the effective date.
(c) Any and all shares of common stock of SSP held by SSP in
its treasury on the effective date of the merger shall forthwith be surrendered
to the surviving corporation for cancellation, and no shares of the surviving
shall be issued or issuable in respect thereof.
(d) After the effective date of the merger, holders of
certificates for shares of common stock in Sheffeld shall surrender them to the
surviving corporation, or its duly appointed agent, in such manner as the
surviving shall legally require. On receipt of said share certificates, the
surviving corporation shall issue in exchange therefor a certificate of shares
of common stock in surviving corporation representing the number of shares of
such stock to which such holder shall be entitled as hereinabove set forth.
<PAGE>
(e) In addition such shareholder shall be entitled to receive
any dividends on such shares of common stock of the surviving corporation which
may have been declared and paid between the effective date of the merger and the
issuance to the shareholder of the certificate of such common stock. Holders and
certificates of common stock of SSP shall not be entitled to dividends payable
on shares of stock in the surviving corporation unless and until said
shareholders of such certificates have been issued certificates of common stock
in surviving corporation as herein above provided.
10. The surviving corporation shall not, prior to the effective date of
the merger, engage in any activity or transaction other than in the ordinary
course of business, except as contemplated by this plan.
11. This merger shall be submitted to the shareholders of the
constituent corporations for their approval in the manner provided or the
applicable laws of the States New York and Florida, at meeting to be held on or
before November 28, 1994, or at such other time as the boards of directors of
the constituent corporations shall agree
12. The directors of either constituent corporation may, in their
discretion, abandon this merger subject to the rights of third parties under
contracts relating thereto, without further action or approval by the
shareholders of the corporation, at any time the merger has been completed.
This plan of merger may be executed in any number of counterparts, and
all such counterparts and copies shall be and constitute an original instrument.
IN WITNESS WHEREOF, the parties hereto have caused this plan of merger
to be executed by their respective officers and directors and have caused their
respective corporate seals to impressed hereon on this 11th day of November,
1994.
It will be noted from the above that Sheffeld Acres Inc., a New York
corporation, will be the surviving corporation when this merger becomes
effective.
Such plan is to become effective immediately upon the filing of this
Certificate of Merger by the department of state, New York, land surviving
corporation shall have, thereupon and thereafter, such additional rights,
powers, and liabilities, as are conferred or imposed by the applicable state
laws and by the
<PAGE>
conditions of said merger plan.
SHEFFELD ACRES INC. SURGICAL SAFETY PRODUCTS, INC.
By: \s\G.Michael Swor By:\s\G.Michael Swor
President President
By: \s\J Stuart By:\s\J Stuart
<PAGE>
BOARD OF DIRECTORS
G. Michael Swor, M.D.
434 S. Washington Blvd., Suite 2
Sarasota, FL 34236
David W. Swor
6385 Presidential Court
Ft. Myers, FL 33919
James D. Stuart
434 S. Washington Blvd., Suite 2
Sarasota, FL 34236
Tom DeCesare
15316 Gulf Blvd., #802
Madeira Beach, FL 33708
Sam D. Norton
1819 Main Street, Suite 610
Sarasota, FL 34236
Irwin Newman
2240 Woolbright Road, Suite 328
Boynton Beach, FL 33426
<PAGE>
BY-LAWS OF
SHEFFELD ACRES INC.
ARTICLE I-Offices
The principal office of the corporation shall be located in the State of New
York in the County of Monroe. The corporation may have such other offices,
either within or outside the state, as the Board of Directors may designate or
as the business of the corporation may require from time to time. The registered
office of the corporation may be, but need not be, identical with the principal
office, and the address of the registered office may be changed from time to
time by the Board of Directors.
ARTICLE II-Shareholders
Section 1. Annual Meeting. The annual meeting of the shareholders shall be hold
at the 4 o'clock 4:00 p.m. on the Third Tuesday in the month of January in each
year, beginning with the year 1994. If the day fixed of the annual meeting shall
be a legal holiday, such meeting shall be held of the next succeeding business
day.
Section 2. Special Meetings. Special meetings of the shareholders, for any
purpose, unless otherwise prescribed by statues, may be called by the president
or by the Board of Directors, and shall be called by the president at the
request of the holders of not less than one-tenth on all the outstanding shares
of the corporation entitled to vote at the meeting.
Section 3. Place of meeting. The Board of Directors may designate any place as
the place for any annual meeting or for any special meeting called by the Board
of Directors. A waiver of notice signed by all shareholders entitled to vote at
a meeting may designate any place as the place for such meeting. If no
designation is made, or if a special meeting shall be called otherwise than by
the Board, the place of meeting shall be the registered office of the
corporation.
Section 4. Notice of Meeting. Written or printed notice stating the place, day
and hour of the meeting, and, in case of a special meeting, the purposes for
which the meeting is called, shall be delivered not less than ten nor more than
fifty days before the date of the meeting, either personally or by mail, by or
at the direction of the president, or the secretary, or the officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting, except that if the authorized
<PAGE>
capital stock is to be increased at least thirty days notice shall be given. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail, addressed to the shareholder at his address as it appears on the
stock transfer books of the corporation, with postage thereon prepaid. If
requested by the person or persons lawfully calling such meeting, the secretary
shall give notice thereof at corporation expense.
Section 5. Closing of Transfer Books or Fixing of Record Date. For the purpose
of determining shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or shareholders entitled to receive
payment of any dividend, or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors may provide that the stock
transfer books shall be closed for any stated period not exceeding fifty days.
If the stock transfer books shall be closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of shareholders, such
books shall be closed for at lest ten days, immediately preceding such meeting.
In lieu of closing the stock transfer books the Board of Directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than fifty days, and , in case of a meeting
of shareholders, not less than ten days prior to the date on which the
particular action, requiring such determination of shareholders, is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall the record date for such determination of shareholders. When
a determination of shareholders entitled to vote at any meeting of shareholders
has been made as provided in this section, such determination shall apply to any
adjournment thereof except where the determination has been made through the
closing of the stock transfer books and the stated period of the closing has
expired.
Section 6. Voting Lists. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make, at least ten days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares hold by each.
For a period of ten days prior to such meeting, this list shall
<PAGE>
be kept on file at the principal office of the corporation and shall be subject
to inspection by any shareholder at any time during usual business hours. Such
list shall also be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any shareholder during the whole time
of the meeting. The original stock transfer books shall be prima facie evidence
as to who are the shareholders entitled to examine such list or transfer books
or to vote at any meeting of shareholders.
Section 7. Quorum. Fifty One Percent (51%) of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum of the outstanding shares are represented at a meeting, a
majority of the shares so represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, a any
business may be transacted which might have been transacted at the meeting as
originally notified. The shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.
If a quorum is present, the affirmative vote of a majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders, unless the vote of a greater number or
voting by classes is required by law or the articles of incorporation.
Section 8. Proxies. At all meetings of shareholders, a shareholder may vote by
proxy executed in writing by the shareholder or his or her duly authorized
attorney-in-fact. Such proxy shall be filed with the secretary of the
corporation before aor at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy.
Section 9. Voting of Shares. Each outstanding share, regardless of class, shall
be entitled to one vote, and each fractional share shall be entitled to a
corresponding fractional vote on each matter submitted to a vote at a meeting of
shareholders.
Cumulative voting shall not be allowed.
Section 10. Voting of Shares by Certain Holders. Neither
treasury shares, nor shares of its own stock held by the
corporation in a fiduciary capacity, nor shares held by another
corporation if a majority of the shares entitled to vote for the
<PAGE>
election of Directors of such other corporation is held by this corporation,
shall be voted in any meeting or counted in determining the total number of
outstanding shares at any given time.
Shares standing in the name of another corporation may be voted by such
officer, agent or proxy as the bylaws of such corporation may prescribe or, in
the absence of such provision, as the Board of Directors of such corporation may
determine.
Shares held by an administrator, executor, guardian or conservator may
be voted by him or her, either in person or by proxy, without a transfer of
shares into his or her name. Shares standing in the name of a trustee may be
voted by him or her, either in person or by proxy, but no trustee shall be
entitled to vote shares held by him or her without a transfer of such shares
into his or her name.
Shares standing in the name of a receiver may be voted by such
receiver, an shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his or her name if authority to
do so be contained in an appropriate order of the court by which such receiver
was appointed.
A shareholder whose shared are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pleaded, and
thereafter the pledges shall be entitled to vote the shares so transferred.
Section 11. Informal Action by Shareholders. Any action required to be taken at
a meeting of the shareholders, or any other action which may be taken at a
meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof. Such
consent shall have the same force and effect as a unanimous vote of the
shareholders.
ARTICLE III-Board of Directors
Section 1. General Powers. The business and affairs of the
corporation shall be managed by its Board of directors, except as
otherwise provided by statute or the articles of incorporation.
Section 2. Number, Tenure and Qualifications. The number of
Directors of the corporation shall be not less than three nor
<PAGE>
more than five, unless a lesser number is allowed by statute. Directors shall be
elected at each annual meeting os shareholders. Each director shall hold office
until the next annual meeting of shareholders and thereafter until his or her
successor shall have been elected and qualified.
Directors need not be residents of this state or shareholders of the
corporation. Directors shall be removable in the manner provided by statute.
Section 3. Vacancies. Any director may resign at any time by giving written
notice to the president or to the Board of Directors may be filled by the
affirmative vote of a majority of the remaining Directors through not less than
a quorum. A director elected to fill a vacancy shall be elected for the
unexpired term of his or her predecessor in office. Any Directorship to be
filled by the affirmative vote of a majority of the Directors then in office or
by an election at an annual meeting or at a special meeting of shareholders
called for that purpose, and a director so chosen shall hold office for the term
specified in Section 2 above.
Section 4. Regular Meetings. A regular meeting of the Board of Directors shall
be held without other notice than this bylaw immediately and at the same place
as the annual meeting of shareholders. The board of Directors may provide by
resolution the time and place for the holding of additional regular meetings
without other notice than such resolution.
Section 5. Special Meetings. Special meetings of the Board of Directors may be
called by or at the request of the president or any two Directors. The person or
persons authorized to call special meetings of the Board of Directors may fix
any place as the place for holding any special meeting of the Board of Directors
called by them.
Section 6. Notice. Notice of any special meeting shall be given personally or
mailed to each director at his or her business address, or by notice given at
least two days previously by telegraph. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail so addressed, with
postage thereon prepaid. If notice be given by telegram, such notice shall be
deemed to be delivered when the telegram is delivered to the telegraph company.
Any director may waive notice of any meeting. The attendance of a director at a
meeting shall constitute a waiver of notice of such meeting, except where a
director attend a meeting for the express purpose of objection
<PAGE>
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice of waiver of notice of such meeting.
Section 7. Quorum. A majority of the number of Directors fixed by Section 2
shall constitute a quorum for the transaction of business at any meeting of the
Board of Directors, but if less than such majority is present at a meeting, a
majority of the Directors present may adjourn the meeting from time to time
without further notice.
Section 8. Manner of Acting. The act of the majority of the
Directors present at a meeting at which a quorum is present shall
be the act of the Board of Directors.
Section 9. Compensation. By resolution of the Board of Directors, any director
may be pain any one or more of the following: expenses, if any, of attendance at
meetings; a fixed sum for attendance at each meeting; or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefore.
Section 10. Informal Action by Directors. Any action required or permitted to be
taken at a meeting for the Directors may be taken without a meeting if a consent
in writing, setting forth the action so taken, shall be signed by all of the
Directors entitled to vote with respect to the subject matter thereof. Such
consent shall have the same force and effect as a unanimous vote of the
Directors.
ARTICLE IV-Officers and Agents
Section 1. General. The officers of the corporation shall be a
president, one or more vice presidents, a secretary and a
treasurer. The salaries of all the officers of the corporation
shall be fixed by eh Board of Directors.
One person may hold any tow offices, except that no person may
simultaneously hold the offices of president and secretary.
Section 2. Election and Term of Office. The officers of the corporation shall be
elected by the Board of Directors annually at the first meeting of the Board
held after each annual meeting of the shareholders.
<PAGE>
Section 3. Removal. Any officer or agent may be removed by the
Board of Directors whenever in its judgment the best interests of
the corporation will be served thereby.
Section 4. Vacancies. A vacancy in any office, however
occurring, may be filled by the Board of Directors for the
unexpired portion of the term.
Section 5. President. The president shall:
(a) subject to the direction and supervision of the Board of
Directors, be the chief executive officer of the corporation;
(b) shall have general and active control of its affairs and
business and general supervision of its officers, agents and
employees; and
(c) the president shall have custody of the treasurer's
bond, if any.
Section 6. Vice Presidents. The vice presidents shall:
(a) assist the president; and
(b) shall perform such duties as may be assigned to them by
the president or by the Board of Directors.
Section 7. Secretary. The secretary shall:
(a) keep the minutes of the proceedings of the shareholders
and the Board of Directors;
(b) see that all notices are duly given in accordance with
the provisions of these bylaws or as required by law;
(c) be custodian of the corporate records and of the seal of
the corporation and affix the seal to all documents when
authorized by the Board of Directors;
(d) keep at its registered office or principal place of business a
record containing the names and addresses of all shareholders and the number and
class of shareholder by each, unless such a record shall be kept at the office
of the corporation's transfer agent or registrar;
(e) sign with the president, or vice president, certificates for shares
of the corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors;
(f) have general charge of the stock transfer books of the
corporation, unless the corporation has a transfer agent; and
(g) in general, perform all duties incident to the office as secretary
and such other duties as from time to time may be assigned to him or her by the
president or by the Board of Directors.
<PAGE>
Section 8. Treasurer. The treasurer shall:
(a) be the principal financial officer of the corporation;
(b) perform all other duties incident to the office of the
treasurer and, upon request of the Board, shall make such reports
to it as may be required at any time;
(c) be the principal accounting officer of the corporation;
and
(d) have such other powers and perform such other duties a s may be
from time to time prescribed by the Board of Directors or the president;
ARTICLE V-Stock
Section 1. Certificates. The shares of stock shall be represented by
consecutively number certificates signed in the name of the corporation by its
president or a vice president and the secretary, and shall be sealed with the
seal of the corporation or with a facsimile thereof. No certificate shall be
issued until the shares represented thereby are fully paid.
Section 2. Consideration for Shares. Shares shall be issued for such
consideration, expressed in dollars (but not less than the par value thereof, if
any) as shall be fixed from time to time by te Board of Directors. Such
consideration may consist, in whole or in part of money, other property,
tangible or intangible or in labor or services actually performed for the
corporation, but neither promissory notes nor future services shall constitute
payment or part payment for shares.
Section 3. Transfer of Shares. Upon surrender to the corporation or to a
transfer agent of the corporation of a certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, and such documentary stamps as may be required by law, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate. Every such transfer of stock shall be
entered on the stock book of the corporation which shall be kept at its
principal office, or by its registrar duly appointed.
Section 4. Transfer Agents, Registrars and Paying Agents. The Board may at its
discretion appoint one or more transfer agents, registrar and agents for making
payment upon any class of stock, bond, debenture or other security of the
corporation.
ARTICLE IV-Indemnification of Officers and Directors
Each director and officer of this corporation shall be
<PAGE>
indemnified by the corporation against all costs and expense actually and
necessarily incurred by him or her in connection with the defense of any action,
suit or proceeding in which he or she may be involved or to which he or she may
be made a party by reason of his or her begin or having been such director or
officer, except in regulation to matters as to which he or she shall be finally
adjudged in such action, suit or proceeding to be liable for negligence or
misconduct in te performance of duty.
ARTICLE VII-Miscellaneous
Section 1. Waivers of Notice. Whenever notice is required by law, by the
articles of incorporation or by these bylaws, a waiver thereof in writing signed
by the director, shareholder or other person entitled to said notice, whether
before or after the time stated therein, or his or her appearance at such
meeting in person or (in the cause of a shareholders' meeting) by proxy, shall
be equivalent to such notice.
Section 2. Seal. The corporation seal of the corporation shall
be in the form impressed on the margin hereof.
Section 3. Fiscal Year. The fiscal year f the corporation shall
be as established by the Board of Directors.
Section 4. Amendments. The Board of Directors shall have power
to make, amend and repeal the bylaws of the corporation at any
regular meeting of the Board or at any special meeting call for
the purpose.
APPROVED: \s\Morris Diamond
Director: Morris Diamond
\s\Suzanne Lusenberg
Director: Suzanne Lusenberg
\s\Shirley Diamond
Director: Shirley Diamond
<PAGE>
ARTICLES OF INCORPORATION OF
SHEFFELD ACRES INC.
Under Section 402 of the Business Corporation Law.
KNOWN ALL PERSONS BY THESE PRESENTS, that the undersigned , for the purpose of
forming a corporation pursuant to Section 402 of the Business Corporation Law of
the State of New York, does hereby certify and set forth:
ARTICLE I-Name
The name of this corporation is SHEFFELD ACRES INC.
ARTICLE II-Purposes and Powers
Section 1. Purposes. The purpose(s) for which the corporation
is formed are:
To engage in any lawful act or activity for which corporation may be
organized under the business corporation law, provided that the corporation is
formed to engage in any act or activity which requires the act or approval of
any state official, department , board, agency or other body without such
approval or consent first being obtained.
To carry on a general mercantile, industrial, investigating and trading
business in all its branches; to devise, invent, manufacture, fabricate,
assemble, install, service, maintain, alter, buy, sell, import, export, license
as licenser or licensee, leases lessor or lessee, distribute, job, enter into,
negotiate, execute, acquire, and assign contracts in respect of acquire,
franchises, and other rights in respect of and generally deal in and with at
wholesale and retail, as principal, and as sales, business, special, or general
agent, representative, broker, fact, merchant, distributor, jobber, advisor, or
in any other lawful capacity, goods, wares, merchandise, commodities, and
unimproved, improved, finished, processed and other real, personal and mixed
property of any and all kinds, together with the components, resultants, and
by-products thereof.
To create manufacture, contract for, sell, import, export, distribute,
job and generally deal in and with, whether at wholesale or retail, and as
principal, agent, broker, factor, commission merchant, licenser, licensee or
otherwise, any and all kinds of goods, wares, and merchandise and in connection
<PAGE>
therewith or independent thereof, to establish and maintain, by and manner or
means, buying offices, distribution centers, speciality and other shops, stores,
mail-order establishments, concessions, leased departments, and any and all
other departments, sites and locations necessary, convenient or useful in the
furtherance of any business of the corporation.
To acquire by purchase, subscription, underwriting or otherwise, and to
won, hold or investment, or otherwise, and to use, sell, assign, transfer,
mortgage, pledge, exchange or otherwise dispose of real and personal property of
every sort and description ad wheresoever situated, including shares of stock,
bonds, debentures, notices, script, securities, evidences of indebtedness,
contracts or obligations of any corporation or association, whether domestic or
foreign, or of any firm or individual of the United State or any state,
territory or dependency of the United States or any foreign country, or any
municipality or local authority within or without the United States, and also to
issue in exchange therefore, stocks, binds, or other securities or evidences of
indebtedness of this corporation and, while the owner or holder of any such
property, to receive, collect and dispose of the interest, dividends and income
on or from such property and to possess and exercise in respect thereto all of
the rights, powers and privileges of ownership. including all voting powers
thereon.
To construct, build, purchase, lease or otherwise acquire, equip, hold,
own, improve, develop, manage, maintain, control, operate, lease, mortgage,
create liens upon, sell, convey or otherwise depose of and turn to account, any
and all plants, machinery, works, implements and thins or property, real and
personal, of every kind and description, incidental to, connected with,, or
suitable, necessary or convenient for any of the purposes enumerated herein,
including all or any part or parts of the properties, assets, business and good
will of any persons, firms, associations or corporations.
The powers, rights and privileges provided int his certificate are not
deemed to be in limitation of similar, other or additional powers, rights and
privileges granted or permitted to a corporation bay the Business Corporation
Law, it being intended that this corporation shall have all the rights, powers
and privileges granted or permitted to a corporation by such statute.
<PAGE>
ARTICLE III-Corporation Office
The office of the corporation is to be located in the County of Monroe,
State of New York.
ARTICLE IV-Number of Shares
The aggregate number of shares which the corporation shall have the
authority to issue is Twenty Million (20,000,000), all of which shall have a par
value of One ($.001) Mill.
ARTICLE V-Agent for the Corporation
The Secretary of State is designated as agent of the corporation upon
whom process against it may be served. The post office address to which the
Secretary of State shall mail a copy of any process against the corporation
served upon him is:
87 Armstrong Road
Rochester, New York 14616
ARTICLE VI-Directors Liability
The personal liability of directors to the corporation or its
shareholders for damages for any breach of duty in such capacity is hereby
eliminated except that such personal liability shall not be eliminated if a
judgment tor other final adjudication adverse to such director establishes that
his acts or omissions were in bad faith or involved intentional misconduct or
knowing violation of law or that he personally gained in fact a financial profit
or other advantage to which he was not legally entitled or that his acts
violated Section 719 of the Business Corporation Law.
No shareholder of this corporation shall have a preemptive right
because of his shareholders to have first offer to him any part of any of the
presently authorized shares of this corporation hereafter issued, optioned or
sold, or an y part of any debentures, bonds, notes or securities of this
corporation convertible into shares of hereafter issued, options or sold by the
corporation. The provision shall operate to defeat rights in all shares and
classes of shares now authorized and in all debentures, bonds, notes or
securities of he corporation which may in any and all shares and classes of
shares and securities convertible into shares which this corporation may be
hereafter authorized to issue by any amended certificate duly filed.
IN WITNESS WHEREOF, this certificate has been subscribed to this 4th
day of May, 1993 by the undersigned who affirms that the statements made herein
are true under the penalties of perjury.
\s\Morris Diamond
MORRIS DIAMOND
105 SOUTHERN PARKWAY
ROCHESTER, NEW YORK 14618
<PAGE>
EXHIBIT 2.7
CERTIFICATE OF MERGER
CERTIFICATE OF MERGER OF SURGICAL SAFETY PRODUCTS, INC., INTO SHEFFELD ACRES,
INC., UNDER ss.904 OF THE BUSINESS CORPORATION LAW.
We, G. Michael Swor and Jim Stuart, being respectively President and
Secretary of Sheffeld Acres, Inc. a New York corporation, and we G. Michael Swor
and Jim Stuart, being respectively President and Secretary of Surgical Safety
Products, Inc. a Florida corporation, do hereby certify that said corporations
have mutually agreed to, and hereby do, unite and merge into a single
corporation under the same of Sheffeld Acres, Inc., pursuant to ss.904 of the
New York Business Corporation Law.
The names of the constituent corporations are Surgical Safety Products,
Inc., a Florida corporation and Sheffeld Acres, Inc., a New York corporation.
The surviving corporation shall be Sheffeld Acres, Inc.
The date when the certificate of incorporation of Sheffield Acres Inc.,
was filed by the department of the State of New York was May 7, 1993. The date
when the certificate of incorporation of Surgical Safety Products, Inc., was
filed by the Department of State of Florida was May 15, 1992. Sheffield Acres
Inc., now has 8,936,440 shares of capital stock outstanding, all of which is
common stock and fully entitled to vote, and Surgical Safety Products, Inc., now
has 21,383 shares of capital stock outstanding, all of which is likewise common
stock with full voting rights.
A plan of merger was initially agreed upon between the officers and
directors of the above-named constituent corporations and was authorized and
approved by affirmative vote of more than two-thirds of all outstanding shares
of each of them at special meetings of shareholders duly called, noticed and
held on November 28, 1994, in accordance with Section 903 of the New York
Business Corporation Law, for the expressly stated purpose of considering and
obtaining shareholder approval of such plan.
This merger is permitted by the laws of the state of Florida.
<PAGE>
Surgical Safety Products, Inc., has never filed an application for
authority to do business in the state of New York and this merger is in
compliance with the laws of the state of Florida.
Pursuant to ss.902(a)(4) the certificate of incorporation of Sheffield Acres
Inc., is hereby amended to change the name of the corporation to Surgical Safety
Products, Inc.
This Certificate of Merger is effective on the date of filing.
IN WITNESS WHEREOF, the undersigned being the President and Secretary
of the surviving corporation, execute this Certificate of Merger and affirm,
subject to penalty of perjury that the statements contained herein are true this
27th day of January, 1995.
SHEFFIELD ACRES INC. SURGICAL SAFETY PRODUCTS
By: \s\G M Swor By: \s\G M Swor
G. Michael Swor, President G. Michael Swor,President
By: \s\J Stuart By: \s\J Stuart
Jim Stuart, Secretary Jim Stuart, Secretary
<PAGE>
F950208000161
CERTIFICATE OF MERGER OF SHEFFELD ACRES INC., AND SURGICAL SAFETY
PRODUCTS, INC. UNDER ss.904 OF THE NEW YORK BUSINESS CORPORATION
LAW.
Please mail certificate to:
Henderson & Becker
c/o Patrick G. King
55 W. Wacker
Suite 1000
Chicago, IL 60601
STATE OF NEW YORK
DEPARTMENT OF STATE
FILED: FEB 08 1995
TAX $ 0
BY: JJW
MONROE
950208000164
<PAGE>
EXHIBIT 2.8
AFFIDAVIT -OF PATRICK G. KING
Patrick G. King, on my oath state as follows:
1. I am above the age of 21 and fully competent to make this affidavit;
2. I am counsel to Surgical Safety Products, Inc., a New York Corporation;
3. On February 28, 1995, 1 forwarded an Application By Foreign Corporation For
Authorization To Transact Business In Florida on behalf of Surgical Safety
Products, Inc.;
4. Line 6 of the Application indicated that the date the corporation first
transacted business in Florida was 05/15/93;
5. The statement in No. 3 is inaccurate. Surgical Safety Products, Inc., the
Florida Corporation first transacted business in Florida on 05/15/93. However,
Surgical Safety Products, Inc. the New York Corporation subsequent to its merger
with the Florida Corporation first transacted business upon approval of the
merger on February 8, 1995;
FURTHER AFFIANT SAYETH NOT
BY:/S/Patrick G. King
PATRICK G. KING.
Signed and sworn to me this 6th day of April, 1995.
OFFICIAL SEAL
DENISE MARIE TUCHOLSKI
NOTARY PUBLIC STATE Of FLORIDA
MY COMMISSION EXP
/s/Denise Marie Tucholski
Notary Public
<PAGE>
APPLICATION BY FOREIGN CORPORATION FOR
AUTHORIZATION TO TRANSACT BUSINESS IN FLORIDA
IN COMPLIANCE WITH SECTION 607.1503, FLORIDA STATUTES, THE FOLLOWING IS
SUBMITTED TO REGISTER A FOREIGN CORPORATION TO TRANSACT BUSINESS IN THE STATE OF
FLORIDA
1. SURGICAL SAFETY PRODUCTS, INC.
(Name of corporation: must include the word "INCORPORATED", "COMPANY",
"CORPORATION" or words or abbreviations of like import in language as will
clearly indicate that it is a corporation instead of a natural person or
partnership if not so contained in the name at present.)
2. New York
(State or country under the law of which it is incorporated)
3._____________________
(FEI number, if applicable)
4. 05-07-93
(Data of Incorporation)
5. Perpetual
(Duration: Year corp. will cease to exist or "perpetual")
6. 05-15-93 (prior to merger with New York Corp.)
[Date first transacted business in Florida. (See Sections 607.1001,607.1502.
and 817.155 F.S.)]
7. 434 S. Washington Blvd., Suite 2
Sarasota, FL 34236
(Current Mailing address)
8. To engage in any lawful act or activity for which a
corporation may be organized
(Purpose(s) of corporation authorized in home state or country to
be carried out in the state of Florida)
9. Name and street address of Florida registered agent:
Name: Dr. G. Michael Swor
-------------------
Office Address: 434 S. Washington Blvd. Suite 2
-------------------------------
Sarasota, Florida, 34236
10. Registered agent's acceptance:
Having been named as registered agent and to accept service of process for the
above stated corporation at the place designated In this application, I hereby
accept the appointment as registered agent and agree to act In this capacity. I
further
<PAGE>
agree to comply with the provisions of all statutes relative to the proper and
complete performance of my duties, and I am familiar with and accept the
obligations of my position as registered agent.
/s/ G M Swor
(Registered agent's signature)
11. Attached is a certificate of existence duty authenticated, not more than 90
days prior to delivery of this application to the Department of State, by the
Secretary of State or other official having custody of corporate records In the
jurisdiction under the law of which it is incorporated.
12. Names and addresses of officers and/or directors:
1. DIRECTORS
Chairman: G. Michael Swor, M.D.
Address: See Exhibit A
Vice Chairman: James Stuart
Address: See Exhibit A
Director:
Address:
B. OFFICERS
President: G. Michael Swor M.D.
Address. See Exhibit A
Vice President: James Stuart
Address: See Exhibit A
Secretary: James Stuart
Address: See Exhibit A
Treasurer: James Stuart
Address: See Exhibit A
NOTE: If necessary, you may attach an addendum to the application
listing additional officers and/or direct.
13. /s/G M Swor
(Signature of Chairman. Vice Chairman, or any officer listed in number 12 of
the application)
14. G. Michael Swor, M.D., President
(Typed or printed name and capacity of person signing application)
<PAGE>
BOARD OF DIRECTORS
G. Michael Swor M. D.
434 S. Washington Blvd., Suite 2
Sarasota, FL 34236
David W. Swor
6385 Presidential Court
Ft. Myers, FL 33919
James D. Stuart
434 S. Washington Blvd., Suite 2
Sarasota, FL 34236
Tom DeCesare
15316 Gulf Blvd., #802
Madeira Beach, FL 33708
Sam D. Norton
18 19 Main Street, Suite 610
Sarasota, FL 34236
Irwin Newman
2240 Woolbright Road, Suite 322
Boynton Beach, FL 33462
<PAGE>
State of New York SS:
Department of State
I hereby certify, that the certificate of incorporation of SURGICAL SAFETY
PRODUCTS, INC. was filed on 03/01/1993, under the name of SHEFFELD ACRES INC.,
with perpetual duration, and chat I have made a diligent examination of the
index of corporation papers filed in this Department for a certificate, order,
or record of a dissolution, and upon such examination, I find no such
certificate, order or record, and that so far indicated by the records of this
Department, such corporation is a subsisting corporation.
A Certificate of Amendment SHEFFELD ACRES INC., changing name to SURGICAL SAFETY
PRODUCTS, INC., was filed 02/08/1995.
Witness my hand and the official
seal of the Department of State at
the City of Albany, this 20th day of
March one thousand nine hundred and
ninety-five.
/s/Alexander F. Treadwell
Secretary of State
(Seal)
199503210049
<PAGE>
EXHIBIT 2.9
N.Y.S. DEPARTMENT OF STATE 162 WASHINGTON AVE
DIVISION OF CORPORATIONS AND STATE RECORDS ALBANY, NY 12231
ENTITY NAME SURGICAL SAFETY PRODUCTS, INC.
DOCUMENT TYPE: MERGER (DOM. BUSINESS) COUNTY: MONR
NAME
SERVICE COMPANY ** NO SERVICE COMPANY** SERVICE
CODE: 00
CONSTITUENT NAME: SURGICAL SAFETY PRODUCTS, INC.
FILED: 02/08/1995 DURATION 950208000161 FILE: 950208000161
ADDRESS FOR PROCESS
REGISTERED AGENT
FILER FEES 85.00 PAYMENTS 85.00
HENDERSON & BECKER FILING 60.00 CASH 0.00
C/O PATRICIA G. KING. TAX 0.00 CHECK 85.00
55 W. WACKER, CERT 0.00 BILLED 0.00
SUITE 1000 COPIES 0.00
CHICAGO, IL 60601 HANDLING 25.00
REFUND 0.00
<PAGE>
Certificate of Amendment of the Certificate of Incorporation
of
Surgical Safety Products, Inc., f/k/a Sheffeld Acres Inc
Under Section 805 of the Business Corporation Law
IT IS HEREBY CERTIFIED THAT:
(1) The name of the corporation is
Surgical Safety Products, Inc., f/k/a Sheffeld Acres
Inc.
(2) The certificate of incorporation was filed by the department of
state on the 7th day of May 1993.
(3) The certificate of incorporation of this corporation is
hereby amended to effect the following change
The certificate of incorporation is amended to change the requisite
authority by the Board of Directors to issue other classes and series of shares.
Article IV of the Certificate of Incorporation is amended to read as follows:
Article IV-Number of Shares
The Board of Directors shall have authority to issue other classes of
shares, the aggregate number of which, the class, whether the class is
with or without par value and the relative rights, preferences and
limitations as it shall determine; and further, shall have the
authority to issue any and all series of any classes of preferred
shares and any and all of the designations, the aggregate number of
which, the class, whether the class is with or without par value,
relative rights, preferences and limitations of any and all such series
as it shall determine.
(4) The amendment to the certificate of incorporation was
authorized:
* first, by vote of the board of directors.
* and then at a meeting of shareholders by vote of a
majority of all the outstanding shares entitled to vote
thereon.
* Set forth the subject matter of each provision of the certificate of
incorporation which is to be amended or eliminated and the full text of the
provision(s), if any, which are to be substituted or added. If an amendment
provides for a change of issued shares, the number and kind of shares changed,
the number and kind of shares resulting from such change and the terms of
change. If an amendment makes two or more such changes, a like statement shall
be included in respect to each change.
<PAGE>
IN WITNESS WHEREOF, this certificate has been subscribed this day of April
1998 by the undersigned who affirm(s) that the statements made herein are true
under the penalties of perjury.
Type name Capacity in which signed Signature
G. Michael Swor, M.D. President/CEO /s/G M Swor
Jim Stuart Executive V.P./COO/Secretary /s/J Stuart
- ------------------------------------------------------------
Certificate of Amendment of the Certificate of Incorporation
of
Surgical Safety Products, Inc. f/k/a Sheffeld Acres Inc.
under Section 805 of the Business Corporate Law
- ------------------------------------------------------------
Filed by: Bradley F. Rothenberg
Address: Mintmire & Associates
265 Sunrise Avenue
Suite 204
Palm Beach, FL 33480
<PAGE>
EXHIBIT 2.10
BY-LAWS OF
SHEFFELD ACRES, INC.
ARTICLE I--Offices
The principal office of the corporation shall be located in the State of New
York in the County of Monroe. The corporation may have such other offices,
either within or outside the state, as the Board of Directors may designate or
as the business of the corporation may require from time to time. The registered
office of the corporation may be, but need not be, identical with the principal
office, and the address of the registered office may be changed from time to
time by the Board of Directors.
ARTICLE II--Shareholders
Section 1. Annual Meeting. The annual meeting of the shareholders shall be held
at 4 o'clock 4:00 PM. on the Third Tuesday in the month of January in each year,
beginning with the year 1994. If the day fixed for the annual meeting shall be a
legal holiday, such meeting shall be held on the next succeeding business day.
Section 2. Special Meetings. Special meetings of the shareholders, for any
purpose, unless otherwise prescribed by statute, may be called by the president
or by the Board of Directors, and shall be called by the president at the
request of the holders of not less than one-tenth of all the outstanding shares
of the corporation entitled to vote at the meeting.
Section 3. Place of Meeting. The Board of Directors may designate any place as
the place for any annual meeting or for any special meeting called by the Board
of Directors. A waiver of notice signed by all shareholders entitled to vote at
a meeting may designate any place as the place for such meeting. If no
designation is made, or if a special meeting shall be called otherwise than by
the Board, the place of meeting shall be the registered office of the
corporation.
Section 4. Notice of Meeting. Written or printed notice stating the place, day
and hour of the meeting, and, in case of a special meeting, the purposes for
which the meeting is called, shall be delivered not less than ten nor more than
fifty days before the date of the meeting, either personally or by mail, by or
at the direction of the president, or the secretary, or the officer or persons
calling the meeting, to each shareholder of record
<PAGE>
entitled to vote at such meeting, except that if the authorized capital stock is
to be increased at least thirty days notice shall be given. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the stock transfer
books of the corporation, with the postage thereon prepaid. If requested by the
person or persons lawfully calling such meeting, the secretary shall give notice
thereof at corporate expense.
Section 5. Closing of Transfer Books or Fixing of Record Date. For the purpose
of determining shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or shareholders entitled to receive
payment of any dividend, or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors may provide that the stock
transfer books shall be closed for any stated period not exceeding fifty days.
If the stock transfer books shall be closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of shareholders, such
books shall be closed for at least ten days immediately preceding such meeting.
In lieu of closing the stock transfer books the Board of directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than fifty days, and, in case of a meeting
of shareholders, not less than ten days prior to the date on which the
particular action, requiring such determination of shareholders, is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been to any adjournment thereof except where the determination
has been made through the closing of the stock transfer books and the stated
period of the closing has expired.
Section 6. Voting Lists. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make, at least ten days
before each meeting of shareholders, a complete list of the shareholders
entitled to ______ at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held-by each.
For a period of ten days prior to such meeting,this list shall be
<PAGE>
kept on file at the principal office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholder during the whole time of
the meeting. The original stock transfer books shall be prima facie evidence as
to who are the shareholders entitled to examine such list or transfer books or
to vote at any meeting of shareholders.
Section 7. Quorum. Fifty One Percent (51%) of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a quorum of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.
If a quorum is present, the affirmative vote of a majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders, unless the vote of a greater number or
voting by classes is required by law or the articles of incorporation.
Section 8. Proxies. At all meetings of shareholders, a shareholder may vote by
proxy executed in writing by the shareholder or his or her duly authorized
attorney-in-fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy.
Section 9. Voting of Shares. Each outstanding share, regardless of class, shall
be entitled to one vote, and each fractional share shall be entitled to a
corresponding fractional vote on each matter submitted to a vote at a meeting of
shareholders. Cumulative voting shall not be allowed.
Section 10. Voting of Shares by Certain Holders. Neither treasury shares, nor
shares of its own stock held by the corporation in a fiduciary capacity, nor
shares held by another corporation if a majority of the shares entitled to vote
for the
<PAGE>
election of Directors of such other corporation is held by this corporation,
shall be voted at any meeting or counted in determining the total number of
outstanding shares at any given time.
Shares standing in the name of another corporation may be voted by such
officer, agent or proxy as the bylaws of such corporation may prescribe or, int
eh absence of such provision, as the Board of Directors of such corporation may
determine.
Shares held by an administrator, executor, guardian or conservator may
be voted by his or her, either in person or by proxy, without a transfer of such
shares into his or her name. Shares standing in the name of a trustee may be
voted by him or her, either in person or by proxy, but not trustee shall be
entitled to vote shares held by him or her without a transfer of such shares
into his or her name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer there of into his or her name if authority to
do so be contained in an appropriate order of the court by which such receiver
was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Section 11. Informal Action by Shareholders. Any action required to be taken at
a meeting of the shareholders, or any other action which may be taken at a
meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof. Such
consent shall have the same force and effect as a unanimous vote of the
shareholders.
ARTICLE III--Board of Directors
Section 1. General Powers. The business and affairs of the corporation shall be
managed by its Board of Directors, except as otherwise provided by statute or
the articles of incorporation.
Section 2. Number, Tenure and Qualifications. The number of Directors of the
corporation shall be not less than three nor
<PAGE>
more than five, unless a lesser number is allowed by statute. Directors shall be
elected at each annual meeting of shareholders. Each director shall hold office
until the next annual meeting of shareholders and thereafter until his or her
successor shall have been elected and qualified.
Directors need not be residents of this state or shareholders of the
corporation. Directors shall be removable in the manner provided by statute.
Section 3. Vacancies. Any director may resign at any time by giving written
notice to the president or to the secretary of the corporation. Any vacancy
occurring in the Board of Directors may be filled by the affirmative vote of a
majority of the remaining Directors though not less than a quorum. A director
elected to fill a vacancy shall be elected for the unexpired term of his or her
predecessor in office. Any Directorship to be filled by the affirmative vote of
a majority of the Directors then in office or by an election at an annual
meeting or at a special meeting of shareholders called for that purpose, and a
director so chosen shall hold office for the term specified in Section 2 above.
Section 4. Regular Meetings. A regular meeting of the Board of Directors shall
be held without other notice than this bylaw immediately after and at the same
place as the annual meeting of shareholders. The Board of Directors may provide
by resolution the time and place for the holding of additional regular meetings
without other notice than such resolution.
Section 5. Special Meetings. Special meetings of the Board of Directors may be
called by or at the request of the president or any two Directors. The person or
persons authorized to call special meetings of the Board of Directors may fix
any place as the place for holding any special meeting of the Board of Directors
called by them.
Section 6. Notice. Notice of any special meeting shall be given at least seven
days previous thereto by written notice delivered personally or mailed to each
director at his or her business address, or by notice given at least two days
previously by telegraph. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail so addressed, with postage thereon
prepaid. If notice be given by telegram, such notice shall be deemed to be
delivered when the telegram is delivered to the telegraph company. Any director
may waive notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where
<PAGE>
a director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice of waiver of notice of such meeting.
Section 7. Quorum. A majority of the number of Directors fixed by Section 2
shall constitute a quorum for the transaction of business at any meeting of the
Board of Directors, but if less than such majority is present at a meeting, a
majority of the Directors present may adjourn the meeting from time to time
without further notice.
Section 8. Manner of Acting. The act of the majority of the Directors present at
a meeting at which a quorum is present shall be the act of the Board of
Directors.
Section 9. Compensation. By resolution of the Board of Directors, any director
may be paid any one or more of the following: expenses, if any, of attendance at
meetings; a fixed sum for attendance at each meeting; or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
Section 10. Informal Action by Directors. Any action required or permitted to be
taken at a meeting of the Directors may be taken without a meeting if a consent
in writing, setting forth the action so taken, shall be signed by all of the
Directors entitled to vote with respect to the subject matter thereof. Such
consent shall have the same force and effect as a unanimous vote of the
Directors.
ARTICLE IV--Officers and Agents
Section 1. General. The officers of the corporation shall be a president, one or
more vice presidents, a secretary and a treasurer. The salaries of all the
officers of the corporation shall be fixed by the Board of Directors.
One person may hold any two offices, except that no person may
simultaneously hold the offices of president and secretary.
Section 2. Election and Term of Office. The officers of the corporation shall be
elected by the Board of Directors annually at the first meeting of the Board
held after each annual meeting
<PAGE>
of the shareholders.
Section 3. Removal. Any officer or agent may be removed by the Board of
Directors whenever in its judgment the best interests of the corporation will be
served thereby.
Section 4. Vacancies. A vacancy in any office, however occurring, may be filled
by the Board of Directors for the unexpired portion of the term.
Section 5. President. The president shall:
(a) subject to the direction and supervision of the Board
of Directors, be the chief executive officer of the corporation;
(b) shall have general and active control of its affairs
and business and general supervision of its officers, agents and
employees; and
(c) the president shall have custody of the treasurer's
bond, if any.
Section 6. Vice President. The vice presidents shall:
(a) assist the president; and
(b) shall perform such duties as may be assigned to them by
the president or by the Board of Directors.
Section 7. Secretary. The secretary shall:
(a) keep the minutes of the proceedings of the shareholders
and the Board of Directors;
(b) see that all notices are duly given in accordance with
the provisions of these bylaws or as required by law;
(c) be custodian of the corporate records and of the seal
of the corporation and affix the seal to all documents when
authorized by the Board of Directors;
(d) keep at its registered office or principal place of business a
record containing the names and addresses of all shareholders and the number and
class of shares held by each, unless such a record shall be kept at the office
of the corporation's transfer agent or registrar;
(e) sign with the president, or a vice president, certificates for
shares of the corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors;
(f) have general charge of the stock transfer books of the
corporation, unless the corporation has a transfer agent; and
(g) in general, perform all duties incident to the office as secretary
and such other duties as from time to time may be assigned to him or her by the
president or by the Board of Directors.
<PAGE>
Section 8. Treasurer. The treasurer shall:
(a) be the principal financial officer of the corporation;
(b) perform all other duties incident to the office of the
treasurer and, upon request of the Board, shall make such reports
to it as may be required at any time;
(c) be the principal accounting officer of the corporation;
and
(d) have such other powers and perform such other duties as
may be from time to time prescribed by the Board of Directors or
the president;
ARTICLE V--Stock
Section 1. Certificates. The shares of stock shall be represented by
consecutively numbered certificates signed in the name of the corporation by its
president or a vice president ad the secretary, and shall be sealed with the
seal of the corporation, or with a facsimile thereof. No certificate shall be
issued until the shares represented thereby are fully paid.
Section 2. Consideration for Shares. Shares shall be issued for such
consideration, expressed in dollars (but not less than the par value thereof, if
any) as shall be fixed from time to time by the Board of Directors. Such
consideration may consist, in whole or in part of money, other property,
tangible or intangible, or in labor or services actually performed for the
corporation, but neither promissory notes nor future services shall constitute
payment or part payment for shares.
Section 3. Transfer of Shares. Upon surrender to the corporation or to a
transfer agent of the corporation of a certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, and such documentary stamps as may be required by law, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate. Every such transfer of stock shall be
entered on the stock book of the corporation which shall be kept at its
principal office, or by its registrar duly appointed.
Section 4. Transfer Agents, Registrars and Paying Agents. The Board may at its
discretion appoint one or more transfer agents, registrars and agents for making
payment upon any class of stock, bond, debenture or other security of the
corporation.
<PAGE>
ARTICLE VI--Indemnification of Officers and Directors
Each Director and officer of this corporation shall be indemnified by the
corporation against all costs and expenses actually and necessarily incurred by
him or her in connection with the defense of any action, suit or proceeding in
which he or she may be involved or to which he or she may be made a party by
reason of his or her being or having been such director or officer, except in
relation to matters as to which he or she shall be finally adjudged in such
action, suit or proceeding to be liable for negligence or misconduct in the
performance of duty.
ARTICLE VII--Miscellaneous
Section 1. Waivers of Notice. Whenever notice is required by law, by the
articles of incorporation or by these bylaws, a waiver thereof in writing signed
by the director, shareholder or other person entitled to said notice, whether
before or after the time stated therein, or his or her appearance at such
meeting in person on (in the case of a shareholders' meeting) by proxy, shall be
equivalent to such notice.
Section 2. Seal. The corporate seal of the corporation shall be in the form
impressed on the margin hereof.
Section 3. Fiscal Year. The fiscal year of the corporation shall be as
established by the Board of Directors.
Section 4. Amendments. The Board of Directors shall have power to make, amend
and repeal the bylaws of the corporation at any regular meeting of the Board or
at any special meeting called for the purpose.
APPROVED: /s/Morris Diamond
Director: Morris Diamond
/s/Suzanne Lurenberg
Director: Suzanne Lurenberg
/s/Shirley Diamond
Director: Shirley Diamond
<PAGE>
EXHIBIT 6.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated December 8, 1997, by and between
SURGICAL SAFETY PRODUCTS, INC., a New York corporation with its principal
offices located at 2018 Oak Terrace, Suite 400,. Sarasota, FL, 34231 ("Buyer")
and Endex Systems, Inc. d/b/a Interactive Pie, a Florida corporation with its
principal offices located at 716 Edgemere Lane, Sarasota, FL 34242 and Donald K.
Lawrence ("Seller")
RECITALS
WHEREAS, Buyer desires to acquire all of the assets of Seller, all as
more particularly set forth herein (the "acquisition"); and
WHEREAS, the board of directors of each of the parties to this
Agreement has determined that the proposed transaction is advisable and for the
general welfare and advantage of their respective corporations and shareholders
and have recommended to their respective shareholders that the proposed
transaction be consummated; and
WHEREAS, the Sale of Assets shall be consummated pursuant to and in
accordance with the terms and conditions set forth int this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth in this Agreement, the parties agree as follows:
SECTION 1. Purchase and Sale of the Assets and Assignment of
Agreements to Seller.
1.14 Transfer of Assets and Assignment of Contracts.
----------------------------------------------
Seller shall, subject to the terms and conditions of
this agreement, sell, transfer, convey, assign, and
deliver to right, title, and interest in and to the
assets described on Schedule 1.1 (the "Assets"). The
ownership and operation of the assets in the conduct
of an interactive media production business and all
activities necessary an incident thereto are
sometimes referred to as the "Business".
1.15 Purchase Price. The total purchase price payable
<PAGE>
to Buyer and Seller for the Assets("Purchased Price")
, subject to reduction as set forth below, if
applicable, shall be 250,000 shares of Rule 144
restricted Common Stock in Surgical Safety Products,
Inc., to be paid at the losing for this agreement as
set forth in Section 2.
1.16 Assignment of Agreements. There are no agreements,
contracts, or commitments, written or oral, which
Buyer will assume at the closing.
1.17 Instruments of Conveyance and Transfer. At the
--------------------------------------
closing, Seller shall deliver to Buyer such deeds,
bills of sale, endorsements, assignments, and other
good and sufficient instruments of transfer,
conveyance, and assignment satisfactory to Buyer and
its counsel as shall be effective to vest in and
warrant to Buyer good and marketable title to the
Assets, free and clear of all mortgages, security
agreements, pledges, charges, claims, liens.
Simultaneously with such delivery, Seller shall take
all steps as may be required to put Buyer in actual
possession an operating control of the Assets and the
Business.
1.18 Further Assurances. Seller shall from time to time
------------------
at the request of Buyer and without further
consideration, execute and deliver such instruments
of transfer, conveyance and assignment in addition to
the delivered under Section 1.4 and take such other
action as Buyer may reasonably request to more
effectively transfer, convey, and assign to and vest
in Buyer and to put Buyer in possession of all or any
portion of the Assets. In the event that any consent
required to transfer any of the Assumed Contract to
Buyer has not been received by the Closing, and Buyer
waives such nonreceipt and proceeds to Closing Seller
shall be obligated without further consideration to
use its best efforts to secure for the Buyer the
benefits of such contract.
SECTION 2. Closing.
Subject to the terms and conditions of this Agreement, the
closing (the "Closing") shall take place at 5:00 P.M. ON Tuesday,
<PAGE>
December 16, 1997 at the offices of Surgical Safety Products, Inc., or at such
other time, date, and/or place as the parties may mutually agree upon. The date
on which the closing occurs is referred to as the "Closing Date.".
SECTION 3 Representations and Warranties of Seller.
----------------------------------------
3.1 Seller's Representatives and Warranties. Seller
represents and warrants to Buyer as follows:
3.1.1 Capital Structure. The capitalization of Seller
-----------------
is set forth on Schedule 3.1.1, which states the
number of authorized, issued, and outstanding
shares of each class and series of capital stock
of Seller. All of the issued and outstanding
capital stock of Seller has been duly authorized
and validly issued, and is fully paid and
nonassessable, [free of preemptive rights,] and
not subject to any restriction on transfer under
the Articles of Incorporation or Bylaws of Seller
or any agreement to which Seller is a party or has
been given notice. There are no outstanding
subscriptions, options, warrants, convertible
securities, rights,, agreements, understandings,
or commitments of any kind relating to the
subscription, issuance, repurchase, or purchase of
capital stock or other securities of Seller, or
obligating Seller to transfer any additional
shares of its capital stock of any class or any
other securities, except as stated on Schedule
3.1.1.
3.1.2 Ownership of the Shares. The 25,000 shares of
-----------------------
Common Stock in Parview, Inc. being issued to
Surgical Safety Products, Inc. at the closing are
duly authorized and will be validly issued, fully
paid, and nonassessable upon their issuance. The
person receiving securities at the closing will
acquire good, valid, and indefeasible title, free
and clear of any interests, security interests,
claims, liens, pledges, options, penalties,
charges, other encumbrances, buy-sell agreements,
or rights of any party whatsoever.
3.1.3. Organization and Good Standing. Seller is a
corporation duly organized, validly existing, and
in good standing under the law of the state of
Florida, having all requisite corporation power
<PAGE>
and authority to own its assets and carry on its
business as presently conducted.
A true and complete copy of the Articles of
Incorporation and Bylaws of Seller, each as amended
to this date, has been delivered or made available to
Boyer. The minute books of Seller are current as
required by law, contain the minutes of all meetings
of the incorporators, Board of Directors, committees
of the Board of Directors, and shareholders from the
date of incorporation to this date, and adequately
reflect all material actions taken by the
incorporators, Board of Directors, committees of the
Board of Directors, and shareholders of Seller.
Seller has no subsidiaries.
3.1.4 Authorization; Validity. The execution, delivery,
-----------------------
and performance of this Agreement by Seller has
been duly and validly authorized by all requisite
corporate action. This Agreement has been duly
and validly executed and delivered by Seller, and
is the legal, valid, and binding obligation of
Seller, enforceable in accordance with its terms,
except as limited by bankruptcy, insolvency,
moratorium, reorganization, and other laws of
general application affecting the enforcement of
creditors' rights and by the availability of
equitable remedies.
3.1.5 Consents. No approval, consent, waiver, or
authorization of or filing or registration with any
governmental authority or third party is required for
the execution, delivery, or performance by Seller of
the transactions contemplated by this Agreement.
3.1.6 Violations. The executions, delivery, or
----------
performance of this Agreement does not and will
not (i) with or without the giving of notice or
the passage of time, or both, constitute a
default, result in breach of, result in the
termination of, result in the acceleration of
performance of, require any consent, approval, or
will result in the imposition of any lien or other
encumbrance upon any property or assets of Seller,
under any agreement, lease, or other instrument to
<PAGE>
which Seller is a party or by which any of the
property or assets of Seller is bound; (ii) violate
any permit, license, or approval required by Seller
to own its assets and operate its business; (iii)
violate any law, statute, or regulation or any
judgment, order, ruling, or other decision of any
governmental authority, court, or arbitrator; or (iv)
violate any provision of Seller's Articles of
Incorporation or Bylaws.
No representation, warranty, or covenant
contained in this Agreement or in any Schedule or
Exhibit furnished under it or in connection with the
transactions contemplated by it, contains any untrue
statement of a material fact or omits to state any
fact necessary to make the statements contained in it
not misleading, in light of the circumstances under
which they are made, and all representations,
warranties, certificates, Exhibits, and Schedules are
correct on and as of this date and will be correct on
the closing date.
3.2 Survival of Representations and Warranties. Each of the
representations and warranties in Section 3.1 shall be deemed
renewed and made again by Seller at the closing as if made at
the time, and shall survive the closing until the expiration
of all applicable statute of limitation periods.
SECTION 4. Representations and Warranties of Buyer.
4.1 Buyer's Representations and Warranties. Buyer
represents and warrants to Seller as follows:
4.1.2 Ownership of the Shares. The 250,000 shares of
-----------------------
Common Stock in Surgical Safety Products, Inc.,
being issued to Buyer's shareholders at the
closing are duly authorized and will be validly
issued, fully paid, and nonassessable upon their
issuance. The persons receiving securities at the
closing will acquire good, valid, and indefeasible
title, free and clear of any interests, security
interests, claims, liens, pledges, options,
penalties, charges, other encumbrances, buy-sell
agreements, or rights of any party whatsoever.
4.1.3 Organization and Good Standing. Seller is a
<PAGE>
corporation duly organized, validly existing, and in
good standing under the law of the state of New York,
having all requisite corporate power and authority to
own its assets and carry on its business as presently
conducted.
A true and complete copy of the Articles of
Incorporation and Bylaws of Buyer, each as amended to
this date, has been delivered or made available to
Seller. The minute books of the Buyer are current as
required by law, contain the minutes of all meetings
of the incorporators, Board of Directors, committees
of the Board of Directors, and shareholders from the
date of incorporation to this date, and adequately
reflect all material actions taken by the
incorporators, Board of Directors, committees of the
Board of Directors, and shareholder of Buyer. Buyer
has no subsidiaries.
4.1.4 Authorization; Validity. The execution, delivery,
-----------------------
and performance of this Agreement by Buyer has
been duly and validly authorized by all requisite
corporate action. This Agreement has been duly
and validly executed and delivered by Buyer, and
is the legal, valid, and binding obligation of
Seller, enforceable in accordance with its terms,
except as limited by bankruptcy, insolvency,
moratorium, reorganization, and other laws of
general application affecting the enforcement of
creditors' rights and by the availability of
equitable remedies.
4.1.5 Consents. No approval, consent, waiver, or
authorization of or filing or registration with any
governmental authority or third party is required for
the execution, delivery, or performance by Buyer of
the transactions contemplated by this Agreement.
4.1.6 Violations. The executions, delivery, or
----------
performance of this Agreement does not and will
not (i) with or without the giving of notice or
the passage of time, or both, constitute a
default, result in breach of, result in the
termination of, result in the acceleration of
performance of, require any consent, approval, or
will result in the imposition of any lien or other
encumbrance upon any property or assets of Buyer,
<PAGE>
under any agreement, lease, or other instrument to
which Seller is a party or by which any of the
property or assets of Seller is bound; (ii) violate
any permit, license, or approval required by Seller
to own its assets and operate its business; (iii)
violate any law, statute, or regulation or any
judgment, order, ruling, or other decision of any
governmental authority, court, or arbitrator; or (iv)
violate any provision of Buyer's Articles of
Incorporation or Bylaws.
No representation, warranty, or covenant
contained in this Agreement or in any Schedule or
Exhibit furnished under it or in connection with the
transactions contemplated by it, contains any untrue
statement of a material fact or omits to state any
fact necessary to make the statements contained in it
not misleading, in light of the circumstances under
which they are made, and all representations,
warranties, certificates, Exhibits, and Schedules are
correct on and as of this date and will be correct on
the closing date.
4.2 Survival of Representations and Warranties. Each of the
representations and warranties in Section 3.1 shall be deemed
renewed and made again by Seller at the closing as if made at
the time, and shall survive the closing until the expiration
of all applicable statute of limitation periods.
SECTION 5. Covenants of Seller.
5.1 Except as may otherwise be consented to or approved in writing
by Buyer, Seller agrees that from the date of this Agreement
and until Closing:
5.1.1 Conduct Pending Closing. (i) The business of
Seller shall be conducted only in the ordinary
course consistent with past practices.
5.1.2 Access to Records. Seller shall provide Buyer and its
representatives access to all records of Seller that
they reasonably may request and provide reasonable
access to the properties of Seller.
5.1.3 Solicitation. Seller agrees that it will not
<PAGE>
solicit, consider, or negotiate any offers to acquire
the shares or assets of Seller, or to provide any
information or to make available any management
personnel to third parties for such purposes.
5.1.4 Confidentiality. Seller agrees to keep the
---------------
provisions of this Agreement confidential and will
not disclose its provisions to any person,
excluding Seller's accountants, attorneys, and
other professionals with whom Seller conducts
business and to whom such disclosure is reasonably
necessary; provided, however, that such persons
shall be advised of the confidential nature of
this Agreement at the time of such disclosure.
5.1.5 Proration of Taxes and other Amounts. All applicable
taxes and rental payments under the Assumed
Contracts, and other expenses and revenues of the
Business relating to the Assets, shall be prorated as
of Closing. Utility deposits shall be retained by
Seller.
5.1.6 Risk of Loss. In the event that any of the assets
------------
are damaged by fire, vandalism, or other casualty
before closing, the cost of any repair or
restoration shall be an obligation of Seller and
the closing shall proceed under the terms of this
Agreement, with the cost of repair or restoration
escrowed at closing. If, however, the cost of
repair or restoration, exceeds one (1) percent of
the Purchase Price, Buyer shall have the option of
either (i) taking the Assets as is, together with
any insurance proceeds payable by virtue of such
loss or damage or (ii) canceling this Agreement.
SECTION 6. Covenants of Buyer.
SECTION 7. Conditions Precedent to Obligations of Buyer.
7.1 Conditions Precedent. Unless, at the closing, each of
the following conditions is either satisfied or waived
by Buyer in writing, Buyer shall not be obligated to
effect the transactions contemplated by this Agreement:
7.1.1 Representations and Warranties. The
representations and warranties of Seller are true
<PAGE>
and correct at the date of this Agreement and shall
be true and correct as of Closing as if each were
made again at that time.
7.1.2 Performance of Covenants. Seller shall have
performed and complied in all respects with the
covenants and agreements required by this
Agreement.
7.1.3 Items to be Delivered at Closing. Seller shall
have tendered for delivery to Buyer the following:
(i) Delivery of Shares for Cancellation. Stock
certificates representing all of the outstanding
securities of Seller duly endorsed in blank or
accompanied b duly executed stock powers with all
requisite transfer tax stamps attached, which shall
be subsequently cancelled.
(ii) Consents. Consents for each item listed on
Schedule 3.1.5.
(iii) Opinion of Seller's Counsel. An opinion of
Seller's counsel in form and content satisfactory
to the Buyer and its counsel.
(iv) Good Standing Certificate. A certificate of the
Florida Secretary of State, dated within 10 days
of the closing, showing that Seller is in good
standing.
(v) Corporate Action. A certified copy of the
corporate action of Seller authorizing and
approving this Agreement and the transactions
contemplated by it.
(vi) Certificate of Incumbency. A certificate of
incumbency duly executed by Seller's Secretary or
Assistant Secretary.
(vii) Transfer Documents. Deeds, bills of sale,
assignments, consents to assignments, and other
instruments of transfer and consent necessary to
transfer to Buyer good and marketable title in and to
all of the Assets and Assumed Contracts, free and
clear of all liens, except as set forth in this
Agreement.
<PAGE>
(viii) Investment Letter. An investment letter duly
executed by each of Seller's shareholders.
(ix) Agreement Not to Compete. An agreement not to
compete, in the form attached as Exhibit A, duly
executed by Seller or its principals.
7.1.4 Proceedings and Instruments Satisfactory. All
----------------------------------------
proceedings, corporate or other, to be taken in
connection with the transactions contemplated by
this Agreement, and all documents incident to this
Agreement, shall be satisfactory in form and
substance to Buyer and Buyer's counsel, whose
approval shall not be withheld unreasonably.
7.1.5 Certificate. There shall be delivered to Buyer an
-----------
officer's certificate, signed by Seller, to the
effect that all of the representations and
warranties of Seller set forth in this Agreement
are true and complete in all material respects as
of the closing date, and that Seller has complied
in all material respects with its covenants and
agreements required to be complied with by the
closing.
7.1.6 No Adverse Change. There shall not have been a
material adverse change in the financial condition of
Seller or the business, whether or not covered by
insurance; nor shall any lawsuit by pending that
seeks to set aside the Agreement or the transactions
contemplated by it.
SECTION 8. Conditions Precedent to Obligations of Seller.
8.1 Conditions Precedent. Unless, at the closing, each of
the following conditions is either satisfied or waived
by Seller in writing, Seller shall not be obligated to
effect the transactions contemplated by this Agreement:
8.1.1 Representations and Warranties. The representations
and warranties of Buyer are true and correct at the
date of this Agreement and shall be true and correct
as of Closing as if each were made again at that
time.
8.1.2 Items to be Delivered at Closing. Buyer shall
have tendered for delivery to Seller the following:
<PAGE>
(i) Delivery of Shares for Cancellation. Stock
certificates duly issued in the name of each of the
shareholders not dissenting to the proposed Sales of
Assets, or such other consideration as is required to
be delivered by this Agreement.
(ii) Consents. Consents for each item listed on
Schedule 3.1.5.
(iii) Opinion of Buyer's Counsel. An opinion of Buyer's
counsel in form and content satisfactory to the
Seller and its counsel.
(iv) Good Standing Certificate. A certificate of the
Florida Secretary of State, dated within 10 days
of the closing, showing that Seller is in good
standing.
(v) Corporate Action. A certified copy of the
corporate action of Buyer authorizing and
approving this Agreement and the transactions
contemplated by it.
(vi) Certificate of Incumbency. A certificate of
incumbency duly executed by Buyer's Secretary or
Assistant Secretary.
8.1.3 Performance of Covenants. Buyer shall have
performed and complied in all respects with the
covenants and agreements required by this
Agreement.
SECTION 9. Agreements to Indemnify.
9.1 Scope of Indemnity. Subject to the terms and
------------------
conditions of Section 9, Seller and Endex Systems, Inc.
d/b/a Interactive Pie and Donald K. Lawrence
(collectively "Indemnitors") agree, to the fullest
extent permitted by law, to indemnify, defend, and hold
harmless Buyer from and against all demands, claims,
actions or causes of action, assessments, losses,
damages, liabilities, cost, and expenses, including,
without limitation, interest, penalties, and reasonable
attorneys' fees and expenses, asserted against, related
to, resulting from, imposed upon, or incurred by Buyer,
<PAGE>
directly or indirectly, by reason of, relating to, or
resulting from (i) liabilities and obligations of, and claims
against, Seller (whether absolute, accrued, contingent, or
otherwise) existing as of the date of the closing or arising
out of facts or circumstances existing on or before the ate of
closing; (ii) a breach of any agreement, representation, or
warranty of Seller contained in or made pursuant to this
Agreement, or any facts or circumstances constituting such a
breach; or (iii) [any tax or related claim (including, without
limitation, claims for interest and penalties) asserted
against Seller or relating to the operations of Seller through
the date of the closing].
9.2 Indemnification Procedure. Promptly after receipt by
-------------------------
Buyer of notice of the making or commencement by any
third party of any claim, action, lawsuit, or
proceeding as to which indemnification may be sought (a
"Third Party Claim"), Buyer shall notify Indemnitors in
writing of the commencement. The failure to notify
Indemnitors shall not relieve Indemnitors from
liability that the may have under this section if
Indemnitors are not prejudiced by the lack of such
notice. However, if Indemnitors are prejudiced by the
lack of such notice, the Indemnitors shall not be
responsible for that portion of the liability caused by
the prejudice resulting from the lack of notice.
If any such Third Party Claim is brought against
Buyer, Indemnitors shall be entitled to participate and, to
the extent they may elect by written notice delivered promptly
to Buyer after receiving notice from Buyer, to assume the
defense with counsel reasonably satisfactory to Buyer. The
parties agree to cooperate fully with each other in connection
with the defense, negotiation, or settlement of any such legal
proceeding, claim, or demand. The Buyer shall have the right
to employ its own counsel in any such case, but the fees and
expenses of this counsel shall be at the expense of Buyer
unless (i) the employment of counsel has been authorized in
writing by Indemnitors in connections with the defense of the
action; (ii) Indemnitors have not employed counsel to have
charge of the defense of the action within a reasonable period
of time after commencement of the action; or (iii) Buyer has
reasonably concluded that there may be defenses available to
it that are different from or additional
<PAGE>
to those available to Indemnitors, in which case Indemnitors
shall not have the right to direct the defense of this action
on behalf of Buyer. In any of these events, the fees and
expenses of Buyer's counsel shall be borne by Indemnitors.
Neither Buyer nor Indemnitors may settle any Third
Party Claim without the consent of the other. After any final
judgment or award has been rendered by a court, arbitration
board, or administrative agency of competent jurisdiction and
the time in which to appeal from it has expired; a settlement
has been consummated; or Indemnitors and Buyer arrive at a
mutually binding agreement with respect to each separate
matter alleged to be indemnified by Indemnitors, Buyer shall
forward to Indemnitors notice of any sums due and owing by it
with respect to the matter, and Indemnitors immediately shall
pay all of the sums owing, by wire transfer or certified or
bank cashier's check, to Buyer.
9.3 Setoff. Buyer shall have the right to set off against the
balance of the Purchase Price due under Section 1 of this
Agreement any amounts due from Seller to Buyer under this
section.
9.4 Survival. The indemnity provided by this Section shall
survive the closing.
SECTION 10. Notices.
Any notice, request, demand, or communication required or permitted to
be given by ant provision of this Agreement shall be deemed to have been
delivered, given, and received for all purposes if written and (i) if delivered
personally, by facsimile, or by courier or delivery service, at the time of such
delivery; or (ii) if directed by registered or certified United States mail,
postage and charges prepaid, addressed to the intended recipient, at the address
specified below, two business days after such delivery to the United States
Postal Service.
If to Buyer: Surgical Safety Products, Inc.
2018 Oak Terrace, Suite 400
Sarasota, FL 34231
With a copy to: Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
<PAGE>
If to Seller: Donald K. Lawrence
2018 Oak Terrace, Suite 400
Sarasota, FL 34231
With a copy to: W. Lee McGinness
1800 2nd Street, Suite 750
Sarasota, FL 34236
Any party may change the address to which notices are to be mailed by giving
notice as provided herein to all other parties.
SECTION 11. Miscellaneous.
11.1 Entire Agreement. This Agreement, the Exhibits, and
----------------
the Schedules, contain all of the terms and conditions
agreed upon by the parties with reference to the
subject matter and supersede any and all previous
agreements, representations, and communications between
the parties, whether written or oral. This Agreement,
including its Exhibits and Schedules, may not be
modified or changed except by written instrument signed
by all of the parties, or their respective successors
or assigns.
11.2 Assignment. This Agreement shall not be assigned or assignable
by Seller or Buyer without the express written consent of the
other party. This Agreement shall inure to the benefit of and
be binding on the parties and their respective successors and
assigns.
11.3 Captions. All section, schedule, and exhibit headings are
inserted for the convenience of the parties and shall not be
used in any way to modify, limit, construe, or otherwise
affect this Agreement.
11.4 Counterparts. This Agreement may be executed n several
counterparts, each of which shall be deemed to be an original
and which together shall constitute one and the same
instrument.
11.5 Waiver. Each of the parties may, by written notice to
------
the other, (i) extend the time for the performance of
any of the obligations or other actions of the other
party; (ii) waive any inaccuracies in the
representations or warranties of the other party
contained in this Agreement or in any document
delivered pursuant to this Agreement; (iii) waive
<PAGE>
compliance with any of the covenants of the other party
contained in this Agreement; or (iv) waive, in whole or in
part, performance of any of the obligations of the other
party. No action taken pursuant to this Agreement, including,
but not limited to, the consummation of the closing or any
knowledge of or investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking
such action, possessing such knowledge, or performing such
investigations of compliance with the representations,
warranties, covenants, and agreements contained herein. The
waiver by any party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any
subsequent or similar breach.
11.6 Controlling Law. This Agreement has been entered into
in the state of Florida and shall be governed by,
construed, and enforced in accordance with the laws of
Florida.
11.7 Gender. Whenever in this Agreement the context so
------
requires, reference to the masculine shall be deemed to
include the feminine and the neuter, references to the
neuter shall be deemed to include the masculine and the
feminine, and references to the plural shall be deemed
to include the singular and the singular to include the
plural.
11.8 Further Assurances. Each of the parties shall use all
------------------
reasonable efforts to bring about the transactions
contemplated by this Agreement as soon as practicable,
including the execution and delivery of all
instruments, assignments, and assurances, and shall
take or cause to be taken such reasonable further or
other actions necessary or desirable to carry out the
intent and purposes of this Agreement.
11.9 Attorneys' Fees. In the event a lawsuit is brought to enforce
or interrupt any part of this Agreement of the rights or
obligations of any party to this Agreement, the prevailing
party shall be entitled to recover such party's costs of suit
and reasonable attorneys' fees, through all appeals.
11.10 References to Agreement. The words "hereof," "herein,"
"hereunder," and other similar compounds of the word
"here" shall mean and refer to the entire Agreement and
<PAGE>
not to any particular section, article, provision, annex,
exhibit, schedule, or paragraph unless so required by the
context.
11.11 Schedules and Exhibits. Schedules and Exhibits to this Agreement
(and any references to any part or parts of them) shall, in
each instance, include the Schedules or Exhibits (as the case
may be) attached to this Agreement as well as any amendments
to such Schedules or Exhibits (in each such case). All such
Schedules and Exhibits shall be deemed an integral part of
this Agreement, and are incorporated into this agreement by
reference.
11.12 Venue. Any litigation arising under this Agreement shall be
instituted only in Sarasota County, Florida, the place where
this Agreement was executed. All parties agree that venue
shall be proper in that county for all such legal or equitable
proceedings.
11.13Severability. Each section, subsection, and lesser section of this
Agreement constitutes a separate and distinct undertaking,
covenant, and/or provision. If any provision of this Agreement
shall be determined to be unlawful, such provision shall be
deemed severed from this Agreement, but every other provision
of this Agreement shall remain in full force and effect.
11.14 Rights in Third Parties. Except as otherwise specifically
provided, nothing expressed or implied in this Agreement is
intended, or shall be construed, to confer on or give any
person, firm, or corporation, other than the parties and their
respective shareholders, any rights or remedies under or by
reason of this Agreement.
11.15 Expenses. Each party shall pay its own expenses in
connection with the negotiation and consummation of the
transactions contemplated by this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
ATTEST: BUYER
a New York corporation
By:______________________ By:/s/G M Swor
(Corporate Seal) President
STATE OF FLORIDA
COUNTY OF PALM BEACH
SWORN TO and subscribed before me this 16th day of
December , 1997, by G. M. Swor , who is personally
known to me or produced as identification the following:
and who did/did not take an oath.
/s/ Kimberly A. Bourdeaux
Notary Public
(SEAL)
<PAGE>
STATE OF FLORIDA
COUNTY OF PALM BEACH
I hereby certify that on this day, before me an officer duly authorized
to administer oaths and take acknowlegements, personally appeared G.M. Swor
known to me the persons described in and who executed the foregoing instrument,
who acknowledged before that executed the dame, and an oath was not taken. Said
person is personally known to me or produced as identification the following: .
Witness my hand and official seal in the County and State last aforesaid
this 16th day of December , 1997.
/s/ Kimberly A. Bourdeaux
Notary Public
(SEAL)
ATTEST: SELLER
a Florida corporation
By:_________________ By:/s/Donald K Lawrence
President
STATE OF FLORIDA
COUNTY OF PALM BEACH
SWORN TO and subscribed before me this 16th day of December , 1997, by
Donald K. Lawrence , who is personally known to me or produced as identification
the following:
and who did/did not take an oath.
/s/ Kimberly A. Bourdeaux
Notary Public
(SEAL)
STATE OF FLORIDA
COUNTY OF PALM BEACH
I hereby certify that on this day, before me an officer duly authorized
to administer oaths and take acknowlegements, personally appeared Donald K.
Lawrence known to me the persons described in and who executed the foregoing
instrument, who acknowledged before that executed the dame, and an oath was not
taken. Said person is personally known to me or produced as identification the
following: .
Witness my hand and official seal in the County and State last aforesaid
this 16th day of December , 1997.
/s/ Kimberly A. Bourdeaux
Notary Public
(SEAL)
<PAGE>
Exhibit A
NON-COMPETITION AGREEMENT
1. For a period of five (5) years from and after the termination of
this Agreement, Endex Systems, Inc. d/b/a Interactive Pie and Donald K. Lawrence
agree that they will not, either directly or indirectly, on their own account or
through a partnership or corporation, engage in, invest in, or otherwise be
connected with any profession, business or enterprise which, at the time of such
proposed engagement, investment, or connection, is engaged in the practice of
developing and/or marketing an occupational injury and/or a blood-borne pathogen
exposure management information system or services of a like kind.
2. In the event of a breach or threatened breach by Endex Systems, Inc.
d/b/a Interactive Pie and Donald K. Lawrence or any of their obligations under
Number 1. hereof, each acknowledges that Surgical Safety Products, Inc., will
not have any adequate remedy at law and shall be entitled to such equitable and
injunctive relief as may be available to restrain Endex Systems, Inc. d/b/a
Interactive Pie and Donald K. Lawrence from the violation of the provisions
under Number 1. hereof. Nothing herein shall be construed as Surgical Safety
Products, Inc., from pursuing any other remedies available for such breach or
threatened breach, including the recovery of damages from Endex Systems, Inc.
d/b/a Interactive Pie and Donald K. Lawrence.
3. Endex Systems, Inc. d/b/a Interactive Pie and Donald K. Lawrence and
Surgical Safety Products, Inc. expressly agree that this Agreement is a
reasonably limited time and area within the meaning of ss.542.33(2)(a) of the
Florida Statutes.
4. The provisions of this Agreement shall not apply in the event the
Asset Purchase Agreement is terminated without cause by Surgical Safety
Products, Inc., as provided for herein.
5. Endex Systems, Inc. d/b/a Interactive Pie and Donald K. Lawrence and
Surgical Safety Products, Inc. hereby agree that if any portion of this
Agreement conflicts with the non-compete clause in the Asset Purchase Agreement,
the terms of the Asset Purchase Agreement shall control.
ATTEST: BUYER
a New York corporation
By: By: /s/ G.M. Swor
(Corporate Seal) President
ATTEST: SELLER
a Florida Corporation
By: By: /s/ Donald K. Lawrence
(Corporate Seal) President
Signed this 16th day of December, 1997 by Donald K. Lawrence and
G.M. Swor.
/s/ Kimberly A. Bourdeaux
(Notary Seal)
<PAGE>
Schedule 1.1
- -NEXT YEAR FEDERAL- ENDEX SYSTEMS, INC. DEPRECIATION REPORT
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSET DESCRIPTION OF PROPERTY DATE COST OR SALVAGE ACCU- METHOD/IRC LIFE OR AMOUNT
NUMBER ACQUIRED OTHER MULATED SEC. RATE DEPRE-
BASIS ADJMNT DEP- CIATION
SECTION RICIATION FOR 1997
1 IBM PC PSI 11/10/94 1,292. 852. 200DB 5.00 176.
AMT DEPRECIATION 683. 150DB 5.00 244.
2 MONITOR 11/10/94 200. 133. 200DB 5.00 27.
AMT DEPRECIATION 105. 150DB 5.00 38.
3 HP LASERJET PRINTER 11/10/94 648. 428. 200DB 5.00 88.
AMT DEPRECIATION 342. 150DB 5.00 122.
4 FAX MACHINE 11/10/94 377. 249. 200DB 5.00 51.
AMT DEPRECIATION 199. 150DB 5.00 71.
5 CELLULAR PHONE 11/10/94 213. 29. SL 5.00 43.
AMT DEPRECIATION SL 5.00 43.
6 OFC FURNITURE/FILE CABINT 11/10/94 991. 504. 200DB 7.00 139.
AMT DEPRECIATION 302. 200DB 10.00 103.
7 COMPUTER SOFTWARE 11/10/94 181. 129. SL 3.00 52.
AMT DEPRECIATION SL 3.00 52.
8 MODEM 06/01/95 192. 105. 200DB 5.00 35.
AMT DEPRECIATION 83. 150DB 5.00 33.
9 ZIP BACKUP DRIVE 06/01/95 200. 110. 200DB 5.00 36.
AMT DEPRECIATION 87. 150DB 5.00 34.
10 UPTECH COMPUTER 11/15/95 3,916. 1,684. 200DB 5.00 893.
AMT DEPRECIATION 1,278. 150DB 5.00 791.
11 UPTECH BACKUP 11/29/95 287. 123. 200DB 5.00 66.
AMT DEPRECIATION 94. 150DB 5.00 58.
</TABLE>
CURRENT YEAR SECTION 179 (0) - ASSET DISPOSED
<PAGE>
Schedule 1.1
- -NEXT YEAR FEDERAL - ENDEX SYSTEMS, INC. DEPRECIATION REPORT
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSET DESCRIPTION OF PROPERTY DATE COST OR SALVAGE ACCU- METHOD/IRC LIFE OR AMOUNT
NUMBER ACQUIRED OTHER MULATED SEC. RATE DEPRE-
BASIS ADJMNT DEP- CIATION
SECTION RICIATION FOR 1997
12 SOFTWARE 12/01/95 958. 412. 200DB 5.00 218.
AMT DEPRECIATION 150DB 3.00 639.
13 LAPTOP COMPUTER 02/09/96 4,489. 898. 200DB 5.00 4,436.
AMT DEPRECIATION 337. 150DB 10.00 623.
14 MISC SOFTWARE 06/30/96 1,364. 227. 200DB 3.00 758.
AMT DEPRECIATION 150DB 3.00 682.
15 MISC COMPUTER EQUIPMENT 06/30/96 2,277. 455. 200DB 5.00 729.
AMT DEPRECIATION 342. 150DB 5.00 581.
16 PINHOLE CAMERA 01/17/95 211. 98. 200DB 7.00 32.
AMT DEPRECIATION 150DB 5.00 47.
17 COMPUTER EQUIPMENT 03/12/97 564. 200DB 5.00 113.
AMT DEPRECIATION 200DB 5.00 85.
18 COMPUTER EQUIPMENT 04/07/97 428. 200DB 5.00 86.
AMT DEPRECIATION 150BD 5.00 64.
19 COMPUTER EQUIPMENT 07/18/97 354. 200DB 5.00 71.
AMT DEPRECIATION 150DB 5.00 53.
*TOTAL OTHER DEPRECIATION 19,142. 110. 5,049.
AMT DEPRECIATION 19,142. 87. 4,363.
20 25,000 shares Common Stock
in Parview, Inc.
</TABLE>
CURRENT YEAR SECTION 179 (D) - ASSET DISPOSED
<PAGE>
Schedule 1.1
(LOGO) ParView
SETTLEMENT AND MUTUAL RELEASE
This mutual release, executed on April 9th , 1997, between ParView,
Inc. of Sarasota, FL, and Don Lawrence of Interactive Pie of Sarasota, FL.
Disputes and differences have arisen between the parties with respect
to certain business arrangements regarding ParView, Inc., ParView, LLC, and
other entities controlled by David Chessler. The parties have agreed to execute
this mutual settlement release in settlement of such disputes and differences.
Don Lawrence agrees to accept 25,00 shares for full payment for
services to all ParView Inc., ParView LLC, or any Chessler entity, and to return
all information in any medium held by Don Lawrence regarding any and all
marketing material, contracts, and vendors.
In consideration of the mutual relinquishment of their respective legal
rights with reference t the above mentioned disputes and differences, in
consideration of the execution of this mutual release, each party for himself
and his heirs and legal representatives, expressly releases the other, and his
heirs and legal representatives from all liability for claims and demands
arising out of the above described contracts. The parties further agree to
mutually indemnify each other for any actual damages suffered by either party
for any action of the other party.
The parties agree that Don Lawrence is an independent contractor but as
such that all trade information, materials and or manuals developed pursuant to
this agreement or relating to the marketing material, contracts and vendor,
including all information conceived, originated or developed by Don Lawrence
shall be the property of ParView, Inc.
Don Lawrence further agrees to return to ParView, Inc., after
termination of his employment with ParView, Inc., or any time ParView, Inc., so
requests, all vendors, marketing materials, contracts, contracts and supporting
documentation belonging to ParView, Inc., which he may then possess or have
under his control, as well as to return any medium containing computer data,
hardware or programs belonging to ParView, Inc.
<PAGE>
The property including one Laptop PC, and one Digital Camera with memory board
was sold back to Don Lawrence as part of this settlement. Don Lawrence owns that
equipment free and clear of any liens from ParView, Inc.
Don Lawrence has read this release and understand all its terms and
execute it voluntarily and with full knowledge of its significance.
In witness whereof, Don Lawrence has executed this release at 5975
Cattlemen Lane, Sarasota, Florida on April 9th , 1997.
/s/Don Lawrence /s/David Chessler
Don Lawrence David Chessler
ParView, Inc.
5975 Cattleman Lane Sarasota, FL 34233
<PAGE>
NUMBER SHARES
43 25,000
PARVIEW, INC.
AUTHORIZED CAPITOL STOCK 500,000 COMMON SHARES WITHOUT PAR VALUE
This Certifies that Interactive Pie, Inc. Is
the owner of Twenty-Five Thousand fully paid and non-issuable
SHARES OF THE CAPITOL STOCK OF PARVIEW, INC., transferable on the books of the
Corporation in person or by duly authorized xxxx xxx upon surrender of this
Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and sealed with the Seal of the
Corporation.
This 9th day of April A.D. 1997
/s/Dennis M Hayes /s/David Chessler
Dennis M. Hayes Secretary David Chessler President
<PAGE>
Schedule 3.1.1
Capitol Structure of the Seller
The capital structure of the Seller (Endex Systems, Inc.
d/b/a Interactive Pie and Donald K. Lawrence) is as follows:
10,000 Shares of Common Stock authorized
1,000 Shares of Common Stock Issued and Outstanding
<PAGE>
EXHIBIT 6.2
PREPAID CAPITOL LEASE AGREEMENT
THIS AGREEMENT, made this 30th day of January, 1998 (the "Effective Date"), by
and between Surgical Safety Products, Inc., a New York corporation (herein
called "Lessor"), Community Health Corporation, a Florida not-for-profit
corporation (herein called "Lessee").
WITNESSETH:
WHEREAS, Lessor is the developer of a network of interactive, multimedia,
touchscreen kiosks designed to collect and assimilate health care worker
exposure to bloodborne pathogen incident data and provide immediate feedback to
health care workers regarding safety steps to be followed, known as the
"Surgical Safety Network" (herein called "SSN"), useful in ;managing bloodborne
pathogen exposures in large health care facilities, a part of which includes
certain computer software (herein called the "Software"); and
WHEREAS, Lessee acts in support of Sarasota Memorial Hospital ("SMH") and has
agreed to provide SSN to SMH; and
WHEREAS, the parties desire to enter into this Agreement to reflect various
understandings concerning the right of Lessee to SSN and the continuing
responsibilities of Lessor to develop and update SSN and to provide for training
and implementation services related thereto.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and obligations herein contained, the parties have agreed as follows:
1. Lease. Lessor hereby leases to Lessee and Lessee hereby leases and hires from
Lessor for the term hereof, four SSN kiosks and accompanying software and
technical support, subject to the conditions stated herin. Unless sooner
terminated as provided herein, the term of this Agreement (herin called the
"Term") shall be ten years beginning on the Development Date (as defined in
Section 5(e) herein).
2. Prepaid Lease Payment. In consideration of the rights conferred under this
Agreement, Lessee shall pay to Lessor the sum of TWO HUNDRED AND FIFTY THOUSAND
UNITED STATES DOLLARS (U.S. $250,000) pursuant to Schedule 2 attached hereto as
a prepayment of all rent anticipated to become due during the Term.
3. Installation and Maintenance.
<PAGE>
a. Lessor shall install at least four SSN kiosks, at a health care site in
Sarasota Memorial Hospital (the "Facility") within thirty (30) days after the
date hereof.
b. Lessor will provide Lessee with SSN and Software maintenance, including
improvements, updates and error notifications sent generally by Lessor to SSN
and Software users throughout the Term hereof, subject to Section 14 hereof.
Maintenance includes telephone service at mutually convenient times to answer
any user questions related to SSN and the Software.
c. In the event Lessee chooses to use additional SSN Kiosks, such SSN Kiosks
will be leased by Lessee at rates that reflect Lessee's most favored customer
status. A new three-year lease (separate from this agreement) will be entered
into by both parties for such SSN Kiosks.
4. Education and Training. Lessor shall provide to Lessee's personnel and
personnel of the Facility product training and education (herein called
"Training") on the use and implementation of SSN. Training shall include a
description of SSN concepts, methodology and Software models, and techniques for
converting health/medical data into form suitable for decision making and safety
analysis for managing health care facilities.
a. Lessor will provide the necessary personnel experienced and knowledgeable
with SSN to train Lessee's and the Facility's personnel to use SSN effectively.
b. Training operations will be carried on at the Facility. The Training Period
will commence at a time designated by Lessee, which shall be not later than
fifteen (15) days after the Development Date and will continue for a period of
thirty (30) days. During the Training Period, five (5) man-days of education and
training will be provided without charge separate from the prepaid rental fee.
Additional training shall be provided to Lessee upon request for a charge of
Four Hundred Dollars ($400) per man-day.
5. Lessee's Rights.
a. Except as provided in Section 13 hereof, the transaction represented by this
Agreement is a capital lease of SSN. Such lease does not include a right to
alter, disassemble or decompile SSN or make derivative works of SSN. However,
Lessee's creation of data files in accordance with customary use of SSN shall
not be deemed the making of a derivative work.
<PAGE>
b. Lessee shall acquire no rights with respect to SSN (including modifications)
under the terms of this Agreement other than the right to use SSN pursuant to
and subject to this Agreement, except as provided in Section 13 and Section 14
hereof.
c. All copyright and literary rights in SSN and the Software, except as
otherwise provided herein, shall remain the property of Lessor.
d. Lessee shall, in its sole discretion, establish performance standards based
in part on industry standards for the collection and assimilation of health care
worker bloodborne pathogen exposure incident data and the provision of feedback
related thereto and the needs of the Facility (the "Performance Standards"). If
at any time Lessee determines that SSN does not meet or exceed the Performance
Standards or does not meet or exceed the performance of other available
technology or personnel, Lessee will notify Lessor in writing the Performance
Standards are no longer being met. Lessor shall have thirty (30) days from
receipt of such written notice in which to modify or update SSN so that it meets
or exceed such standards. In the event Lessor fails to satisfy the Performance
Standard criteria, after its attempt to modify or update SSN, Lessee may
terminate this Agreement immediately upon written notice to Lessor and avail
itself of all remedies provided hereunder or otherwise available at law or
equity.
e. SSN shall meet the Performance Standards established by Lessee for the
operation of SSN. Lessor shall complete development of SSN and the Software in
accordance with the Performance Standards and to the satisfaction of Lessee and
will be ready, willing and shall install SSN at the Facility on or prior to a
date within five (5) days of the date hereof (the "Installation Date"). The
"Installation Date" shall be agreed upon by both parties as set forth on
Schedule 6(e) hereto. Lessee shall review the operation of SSN against the
Performance Standards for a period of thirty (30) days following the
Installation Date (the "Trial Period"). If during the Trial Period, Lessee
determines that SSN does not meet the Performance Standards, Lessee may require
Lessor to remove SSN from the Facility and return to Lessee all sums paid to
Lessor as prepaid rental hereunder. If Lessee chooses to accept SSN upon the
expiration of the Trial Period, the date Lessee accepts SSN shall be considered
the "Development Date."
6. Warranties.
a. Lessor warrants and represents that it has sufficient right,
<PAGE>
title and interest in SSN and the Software to enter into this Lease as provided
herein.
b. Lessor shall, at its expense, defend Lessee or the Facility against any claim
and shall indemnify and hold harmless Lessee from and against any final
judgment, that SSN or the Software infringes a U.S. patent or copyright,
provided that Lessee provides reasonable notice to Lessor in writing of the
claim.
7. Insurance and Indemnification.
a. Lessor shall maintain comprehensive general and products liability insurance
in the amount of no less than TWO MILLION UNITED STATES DOLLARS (U.S.
$2,000,000) covering the use of the SSN and its Software in the Facility, naming
the Facility and Lessee as co-insured parties.
b. Lessor shall indemnify, reimburse and hold harmless Lessee, the Facility,
their agents, employees and assigns from and against any liens, liabilities or
other damages incurred by Lessee, the Facility, their agents, employees and
assigns as a result of the installation or use of SSN or the Software at the
Facility, provided the use of SSN by the Lessee, its Facility, agents,
employees, and assigns is not grossly negligent or malicious.
8. Enhancements and Modifications.
a. The terms "SSN" and "Software" as used herein, include any modification,
improvements, addition or enhancement (other than the installation of additional
kiosks), whether authorized or not (herein called "Modification"), which may be
made to SSN or the Software by Lessor during the Term. This lease extends to all
Modifications, on the terms stated in this Section. Any Modification developed
by Lessor shall be made available to Lessee when and as provided generally by
Lessor to other Lessees, if any. No additional rental or license fees shall be
charged for the use of a Modification.
b. All rights to Modifications shall be the property of Lessor. In the event
that any Modification is proposed by Lessee, the Facility, or their employees,
agents, consultants, affiliates and assigns, and Lessor desires to incorporate
such Modification into SSN, Lessor shall pay to Lessee one-half of one percent
(.5%) of any net revenue of Lessor attributable to the Modification, as
reasonably determined by Lessor and Lessee.
9. Repair and Maintenance. During the Term hereof, Lessee shall maintain,
service and keep in good repair each component of SSN at its own expense.
<PAGE>
10. Taxes. Lessor agrees to promptly pay during the term of this Agreement all
sales taxes, use taxes, excise taxes, personal property taxes, assessments,
license fees, and all other governmental charges, fines, or penalties
whatsoever, by whomsoever payable, on or relating to SSN as installed in the
Facility or on the use, rental, shipment, transportation, delivery or operation
therefor, including all such taxes, fees, assessments and charges upon Lessee
(other than federal or state income and franchise taxes of Lessee) by reason of
Lessee's use thereof. Lessor shall likewise pay all stamp or documentary taxes,
state or federal, levied or assessed on this lease, if any.
11. Confidential Information or Data. If, pursuant to the performance of the
obligations hereunder, either party learns from or about the other party, or
clients of the other party, any confidential or proprietary information, not
limited to trade secrets, business plans, financial plans, marketing plans,
medical records and patient provider or payor data, the party receiving such
information shall protect the confidentiality thereof with the same care as it
uses for its own confidential technical and commercial information; unless such
party can demonstrate by written records that the information was previously
known to it, the information is now or becomes in the future public knowledge
other than through the acts or omissions of the party, the information is
lawfully obtained from independent sources, either party is required by law to
disclose such information or the information is subsequently developed by the
party independent of confidential information received hereunder. Either party
may add data gained through the use of SSN for statistical analysis, provided,
however, that no identifying data, including, but not limited to, patient names,
practitioner names, or the Facility, identity or location, may be disclosed in
such statistical analysis, without permission from the other party.
12. Termination. This Agreement may be terminated prior to the expiration of the
Term hereof upon the occurrence of any of the following:
a. By Lessee, in the event the Development Date does not occur prior to the
first day of April, 1998.
b. By Lessee upon notice of termination on account of Lessor's breach of any
provision of this Agreement, provided, however,
<PAGE>
that Lessor shall have the right to cure any such default within thirty (30)
days of notice thereof.
c. By Lessee upon thirty (30) days written notice to Lessor that it elects to
terminate this Agreement.
d. By Lessor upon notice of termination on account of Lessee's breach of any
provision of this Agreement, provided, however, that Lessee shall have the right
to cure any such default within ten (10) days of notice thereof.
e. By Lessee pursuant to Section 5(d) herein.
13. Termination by Lessee. In the event Lessee terminates this Agreement
pursuant to the provisions of Section 12(a) or 12(b) hereof:
a. This lease shall immediately be converted into a twenty-five year
irrevocable, nonexclusive, royalty free license for Lessee and SMH or any of
SMH's Affiliates to use SSN and the Software;
b. Lessor shall upon the request of Lessee, immediately deliver into Lessee's
possession copies of Software, documentation, computers, equipment, data bases
and other items related to the development and operation of SSN and the Software
for Lessee to use or sublicense SSN;
c. All sums paid by Lessee pursuant to Section 2 hereunder shall become
immediately due and payable to Lessee by Lessor. Lessor shall repay Lessee
immediately upon cessation of use of the SSN by Lessee the sum of TWO HUNDRED
FIFTY THOUSAND UNITED STATES DOLLARS (U.S. $250,000) less the sum of TWENTY-FIVE
THOUSAND UNITED STATES DOLLARS (U.S. $25,000) times the number of years, or part
thereof, SSN is used by Lessee in the Facility and any amounts paid by Lessor to
SMH pursuant to Article 6(b) of Clinical Products Testing Agreement dated
January 30, 1998.
14. Option to Purchase. By written notice given to Lessor during the last year
of the Term, Lessee shall have the option to purchase the SSN Kiosks from Lessor
at a price of one dollar. In the event Lessee elects such option, Lessor shall
continue to provide the services listed in Section 3(b) hereof for a term of ten
years from the date of such purchase at a cost to Lessee consistent with most
favored customer status of Lessee.
15. Notices. Any notices required or permitted to by given hereunder shall be
deemed to have been given personally, or
<PAGE>
deposited in the United States mails, certified mail, return receipt requested,
postage prepaid, addressed to the party to whom given at the following address:
If to Lessor: G. Michael Swor, M.D.
Surgical Safety Products, Inc.
2018 Oak Terrace
Sarasota, Florida 34231
If to Lessee: Community Health Corporation
1700 S. Tamiami Trail
Sarasota, Florida 334239
Attention: Michael H. Covert, President
Notification at the above addresses shall be binding upon both parties unless
written notice of change of address has been given by one party to the other.
16. Relationship. The relationship between the parties is that of independent
contractors; no partnership, joint venture, agency or employment is intended.
17. Waiver. The failure of any party to insist upon strict performance of any
obligation hereunder shall not be a waiver of such party's right to demand
strict compliance of that or any other obligation in the future. No custom or
practice of the parties at variance with the terms hereof shall constitute a
waiver, nor shall any delay or omission of a party to exercise any rights
arising from a default impair the party's right as to said default or to any
subsequent default.
18. Binding Effect and Benefits. All provisions of this Agreement shall be
binding upon, and shall inure to the benefit of, and shall be enforceable by and
against all the parties hereto, and their respective heirs, legal
representatives, successors and assigns. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any person other than the parties
hereto and their respective heirs, legal representatives, successors or assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
19. Assignment. This Agreement is personal to each of the parties hereto and
neither party may assign nor delegate any of his rights or obligations hereunder
without first having obtained the written consent of the other party, except
that Lessee may assign this Agreement to any party affiliated with Lessee or the
Facility without its sole discretion.
<PAGE>
20. Amendment. No change, modification or amendment of this Agreement shall be
valid or binding upon any party hereto unless expressed in writing signed by the
party against whom the same is sought to be enforced.
21. Integration. This Agreement, together with the Guaranty, contains the entire
agreement of the parties and supercedes all negotiations, tentative agreement,
representations, commitments, or arrangements made prior to the date hereof. All
prior agreements are merged into this Agreement and all representations and
warranties, whether oral or written, are hereby disclaimed and disavowed unless
expressly reiterated in this Agreement.
22. Construction. This Agreement shall be interpreted whether as to validity,
capacity, performance, or remedy, according to the internal substantive laws of
the State of Florida. Titles or captions of articles and paragraphs contained in
this Agreement are inserted only as a matter of convenience and for reference,
and in no way define, limit, extend, or describe the scope of this Agreement or
intent of any provisions hereunder. Whenever required by the context, the
singular number shall include the plural, the plural the singular, and the
masculine and neuter gender shall include all genders.
23. Venue. The parties to this Agreement agree that jurisdiction and venue shall
properly lie in the Twelfth Judicial Court of the State of Florida, in and for
Sarasota County, Florida or in the United States District Court for the Middle
District of Florida with respect to any and all legal proceedings arising from
this Agreement.
24. Affiliate. For purposes of this Agreement, "Affiliate" shall mean any entity
owned or controlled by the Sarasota County Public Hospital Board.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
WITNESSES: SURGICAL SAFETY PRODUCTS, INC.
a New York corporation
By:/S/G M Swor As its President
"LESSOR"
COMMUNITY HEALTH CORPORATION,
/S/Susan Whelan a Florida corporation
/S/Sharon Taddio By:/S/Michael Covert As its President
"LESSEE"
<PAGE>
Schedule 2
PREPAID LEASE PAYMENTS
Amount due on Development Date: $250,00
Schedule 6(e)
INSTALLATION DATE
Community Health Corporation and Surgical Safety Products, Inc., hereby
agree that the Installation Date of the Surgical Safety Network for purposes of
this Agreement shall be December 30, 1997.
COMMUNITY HEALTH CORPORATION,
By:/S/Michael H Covert
As its President
SURGICAL SAFETY PRODUCTS, INC.
By:/S/G M Swor
As its President
<PAGE>
EXHIBIT 6.3
Surgical Safety SSP Corporate Center
PRODUCTS, INC. 2018 Oak Terrace
(Logo) Sarasota, FL 34231
Telephone 941-927-7874
Fax 941-925-0515
Internet www.ssp-inc.com
Letter of Intent
WHEREAS, USSC has investigated SafetyNetwork(TM); and
WHEREAS, USSC intends to pursue a joint venture or equity buy-in relationship
with Surgical Safety Products, Inc., similar, but not necessarily limited to the
SafetyNetwork(TM) proposal option 2; and
WHEREAS, to pursue this relationship will require due diligence on behalf of
both USSC and Surgical Safety Products, Inc.; and
WHEREAS, part of this due diligence will be performed by observing healthcare
worker reactions and their responses to SafetyNetwork(TM) at the 1998 AORN
Congress.
NOW THEREFORE, in consideration of the above, Surgical Safety Products, Inc.
grants USSC favored status as a Charter Sponsor of SafetyNetwork(TM) and, as
such, grants a discount of 33% off the proposed retail value of services
provided for AORN.
UNITED STATES SURGICAL CORPORATION
By: /s/ Robert A. Knarr
As Its:
SURGICAL SAFETY PRODUCTS, INC.
By:/s/Donald K Lawrence 2/12/98
As Its: VP Sales
<PAGE>
EXHIBIT 6.4
ROCKFORD INDUSTRIES, INC. Rental Agreement
1851 East First Street, Sixth Floor - Santa Ana, CA 92705
Tel: (714) 547-7166 (800) 876-7788 Fax: (714) 547-3839
FULL LEGAL NAME SUPPLIER OF EQUIPMENT
AND ADDRESS OF LESSEE (COMPLETE ADDRESS)
DESCRIPTION OF RENTAL EQUIPMENT
- ----------------------------------------------------------------
EQUIPMENT LOCATION (IF OTHER THAN ABOVE):
- ----------------------------------------------------------------
RENTAL TERM MONTHLY PAYMENT Advance Rentals Payable
(plus Sales/Use Tax) at the Signing of Rental
(check must accompany rental)
Amount represents the__month
and__month's rent
Rent Commencement Date:
- ----------------------------------------------------------------
TERMS AND CONDITIONS - PLEASE READ BEFORE SIGNING
1. RENTAL SELECTION AND ACCEPTANCE. Lessor hereby rents to Lessee, and Lessee
hereby rents from Lessor, the equipment, "as- is", described above or on any
schedule attached here collectively, (the "Schedule(s)") (the equipment with all
replacement parts, repairs, additions and accessories is herein collectively
called the "Equipment") on the terms and conditions as set forth in this rental
or any Schedule(s) (hereinafter such rental and any Schedule(s) referred to as
the "Rental"). LESSEE REPRESENTS AND WARRANTS THAT THIS IS A COMMERCIAL AND
BUSINESS TRANSACTION ONLY. LESSEE REPRESENTS AND WARRANTS THAT IT HAS SELECTED
BOTH THE EQUIPMENT AND THE SUPPLIER BASED SOLELY ON LESSEE'S OWN JUDGMENT, and
having done so requests and authorizes Rockford Industries Inc. located at 1851
East First St. Santa Ana, CA 92705 ("Lessor") to purchase the Equipment from the
above Supplier. LESSOR IS NOT RESPONSIBLE FOR ANY REPAIRS, MAINTENANCE, OR
SERVICE OF ANY KIND to the Equipment (which is the personal property specified
above and in any Schedule referenced above) as that responsibility and the costs
thereof are solely Lessee's, as is delivery and installation. Lessor shall not
be liable for any loss or damage to Lessee if, for any reason, Supplier delays
or fails to deliver any or all of the Equipment. LESSEE'S OBLIGATIONS UNDER THIS
RENTAL SHALL NOT BE AFFECTED BY ANY DELAY IN THE DELIVERY. Upon delivery, Lessee
shall immediately inspect the Equipment. If acceptable, Lessee shall accept the
Equipment and sign a delivery and acceptance certificate (Lessor's form). Unless
Lessor receives written notice from Lessee within (5) days after the Equipment
has been delivered, such notice stating objection to or non-acceptance of the
Equipment, then, at sole election of Lessor, Lessee agrees that Lessor may
conclusively presume that Lessee has fully and irrevocably accepted the
Equipment, and that Lessee warrants that it is in good working condition fully
ready for use. If Lessee refuses or fails to sign such a delivery and acceptance
certificate within (5) days after the Equipment has been delivered, or if Lessee
requests cancellation of this Rental or is in default hereof, then, at sole
election of Lessor, in addition to any other liability hereunder, Lessee and any
guarantor(s) of this Rental ("Guarantor") shall assume all of Lessor's
obligations of whatsoever nature or kind under any purchase agreement, written
or otherwise, for the Equipment including Lessor's attorneys' fees and expenses.
2. NO WARRANTIES BY LESSOR. LESSOR, NEITHER BEING THE MANUFACTURER OF, NOR
SUPPLIER IN, THE EQUIPMENT, MAKES ABSOLUTELY NO WARRANTIES, EXPRESS OR IMPLIED
STATUTORY OR OTHERWISE REGARDING ANY MATTER WHATSOEVER, INCLUDING BUT NOT
LIMITED TO THE PERFORMANCE, RELIABILITY, QUALITY CONDITION, CAPACITY, TAX OR
ACCOUNTING TREATMENT OF THE EQUIPMENT, ITS MECHANICABILITY, OR ITS FITNESS FOR
ANY USE WHATSOEVER. LESSOR DISCLAIMS ANY LIABILITY FOR ANY LOSS, DAMAGE OR
INJURY TO LESSEE OR THIRD PARTIES AS A RESULT OF ANY DEFECTS, LATENT OR
OTHERWISE, IN THE EQUIPMENT. LESSOR SHALL HAVE NO OBLIGATION TO MAINTAIN,
SERVICE OR INSTALL THE EQUIPMENT, WHICH IS LEASED ONLY "AS-IS". LESSOR SHALL NOT
BE LIABLE FOR ANY INDIRECT OR CONSEQUENTIAL DAMAGES HOWSOEVER ARISING. IF THE
EQUIPMENT IS UNSATISFACTORY FOR ANY REASON, LESSEE SHALL MAKE CLAIM ON ACCOUNT
THEREOF SOLELY AGAINST THE MANUFACTURER AND/OR, THE SUPPLIER AND SHALL
NEVERTHELESS PAY LESSOR ALL RENT AND OTHER MONIES PAYABLE HEREUNDER.
To the extent assignable herewith, Lessee hereby assigns to Lessee, without
recourse and at Lessee's sole expense, all warranties given to Lessor by the
Supplier or manufacturer of the Equipment.
<PAGE>
Lessee agrees that NEITHER THE SUPPLIER NOR ANY OF ITS SALESPERSONS, EMPLOYEES
OR AGENTS IS AN AGENT OR LESSOR, NOR ARE THEY AUTHORIZED TO BIND LESSOR, TO
WAIVE OR ALTER ANY TERM OR CONDITION PRINTED HEREIN OR ADD ANY PROVISION HERETO
(which acts may be effected only by a writing signed by an authorized officer of
Lessor). 3. NON-CANCELABLE RENTAL. THE RENTAL CANNOT BE CANCELED BY LESSEE
DURING THE TERM HEREON. This is a net rental and all obligations of Lessee
hereunder, including its obligation to pay rent shall be absolute, unconditional
and irrevocable and shall not be subject to any counterclaim, offset, defense,
abatement, or reduction ("Counterclaim") for any reason whatsoever, including
without limitation by reason of any defect in, or damage to the Equipment or any
interference in Lessee's use thereof; or any act or omission of Lessor, Supplier
or any other entity, including a default by Lessor hereunder; or any bankruptcy
or insolvency of Lessor or Supplier. 4. TERM AND RENT. Lessee agrees to pay all
of the "Total Rent", which is equal to: the number of months of the rental term
multiplied by the monthly payment plus all other sums owed by Lessee to Lessor.
The monthly payments shall commence on the first date that any of the Equipment
is delivered to Lessee or Lessee's agent, or any later date selected by Lessor
(the "Rent Commencement Date"). Lessee further represents and certifies that (a)
Lessee has full power to enter into this Rental and fully authorized the person
executing it, (b) Lessee has duly authorized, executed and delivered this
rental, (c) the Rental is the legal, valid and binding obligation of Lessee
enforceable in accordance with its terms, (d) Lessee's entry into this Rental
and its performance hereof will not violate any laws or regulations or any
agreements or contracts by which Lessee is bound, and (e) that Lessee has read
and understands both sides of this Rental and acknowledges receipt of a copy of
this Rental. This Rental is not binding upon lessor, until accepted by Lessor,
by the signing at the Lessor's office, of a duly authorized signatory of Lessor
("Acceptance"). Upon Acceptance, Lessee agrees to Rental the Equipment from
Lessor under the terms and conditions of this Rental. Advance rentals shall not
be refunded if for any reason the Rent Commencement Date does not occur. 5.
TITLE; QUIET ENJOYMENT. The Equipment and title thereto, is to remain the
property of Lessor. Lessee shall neither have nor develop, by any payments,
invoices or otherwise, any equity, right, title or other interest in or to the
Equipment, other than that of lessee only. Lessee agrees to reflect the
Equipment as leased equipment on tax returns, and at the sole expense of Lessee,
to protect, defend, and affirm the title of Lessor. The Equipment is and shall
remain personal property regardless of its use or any attachment to real
property. lessee shall not by function of law or otherwise, sublet, sublease,
lend, permit use by anyone who is not an employee of Lessee, abandon, assign,
transfer, suffer liens or attachments, hypothecate, pledge or otherwise dispose
of or surrender the Equipment, or this Rental, or any part of or interest in all
equipment and any and all inventory, accounts, receivables, goods, machinery,
furniture, fixtures, property, intangible property, and assets of any and every
kind, regardless of location, and whether presently and/or hereafter acquired by
Lessee or in which Lessee has any interest, and all proceeds of the foregoing,
which shall secure the performance of all of Lessee's obligations of any kind
whatsoever, whenever originated, to Lessor. Said security interest and related
filings shall not be construed as meaning that this Rental is not a "True
Rental" under the UCC. Lessee hereby authorizes Lessor to file financing
statements under the UCC, and Lessee and Lessor agree that any reproduction of
this Rental shall be sufficient as a financing statement under the UCC. Lessee
authorizes Lessor to sign such financing statements as agent and
attorney-in-fact for Lessee. Lessee shall neither have nor develop, by payment
or otherwise, any equity, right, title or other interest in or to the Equipment,
other than that of a Lessee only.
LESSEE:________________________________
By X_______________________ Date X_______ Witness X_____________
(AUTHORIZED SIGNATURE)
By X_______________________ Date X_______ Witness X_____________
(AUTHORIZED SIGNATURE)
Accepted by: Rockford Industries Inc. Santa Ana, CA.("Lessor")
By:__________________________ Date: X________________________
<PAGE>
ROCKFORD INDUSTRIES,INC. EQUIPMENT SCHEDULE TO
1851 East First Street, Sixth Floor MASTER LEASE AGREEMENT
Santa Ana, CA 92705
Tel: (714) 547-7166 (800) 876-7788 MASTER LEASE #
Fax: (714) 547-3839 SCHEDULE #
LESSEE: SUPPLIER:
(BILLING ADDRESS) (DEALER OR SELLER OF EQUIPMENT)
EQUIPMENT LOCATION: (if different from billing address)
- --------------------------------------------------------------------------------
EQUIPMENT DESCRIPTION Together with all accessories, additions and attachments
thereto, replacements and substitutions therefore,now owned or hereafter
acquired (collectively, the "Equipment").
- --------------------------------------------------------------------------------
INITIAL LEASE TERM MONTHLY LEASE PAYMENT ADVANCE RENTAL
(CHECK MUST ACCOMPANY LEASE)
TERMS AND CONDITIONS - PLEASE READ BEFORE SIGNING
A. Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the
Equipment described above on the terms specified in this equipment schedule
(this "Schedule") and the Master Lease Agreement. By signing below, Lessee
hereby represents and warrants that it has read and understood all of the terms
and conditions contained in this Schedule and in the Master Lease Agreement. The
terms of the Master Lease Agreement are hereby ratified and incorporated in this
Schedule as if set forth herein in full and shall remain in full force and
effect and be fully enforceable throughout the term of this Schedule.
Capitalized terms used and not otherwise defined in this Schedule have the
respective meanings set forth in the Master Lease. B. All Rentals shall be
payable in advance and shall be due monthly (or such other period as specified
above) beginning on the Commencement Date and continuing on the same day of each
subsequent calendar month (or other specified period) during the term hereof. C.
Lessee agrees to lease the Equipment on an AS-IS, WHERE-IS BASIS, WITHOUT
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING (WITHOUT LIMITATION)
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. D. Lessee hereby
irrevocably appoints Lessor (and any of Lessor's officers, employees or agents
designated by Lessor) as Lessee's agent and attorney-in-fact, coupled with an
interest, to do all things necessary to carry out the intent of this Schedule
and/or the Master Lease Agreement, including (without limitation) the execution
and filing of all Uniform Commercial Code financing statements as Lessor may
deem necessary to perfect such interest. E. For purposes of perfection of a
security interest in chattel paper by possession under the Uniform Commercial
Code, it is understood and agreed that: (a) Counterpart No. 1 of this Schedule
shall be deemed the only original counterpart of this Schedule, and transfer and
possession thereof shall effect such perfection; (b) transfer or possession of
no other purported counterpart of this Schedule shall effect such perfection;
and (c) transfer or possession of an original counterpart of the Master Lease
Agreement shall not be necessary to effect such perfection.
LESSEE
BY SIGNING BELOW, LESSEE ACKNOWLEDGES READING AND AGREEING TO ALL THE TERMS AND
CONDITIONS SET FORTH ON THIS SCHEDULE AND THE MASTER LEASE AGREEMENT THE
EQUIPMENT IS FOR BUSINESS USE ONLY THIS SCHEDULE AND MASTER LEASE AGREEMENT ARE
NON-CANCELABLE
CERTIFICATE OF ACCEPTANCE OF LEASED EQUIPMENT The above named and undersigned
Lessee hereby acknowledges complete and satisfactory delivery, receipt and
installation of the Equipment described in this Schedule. Lessee understands and
agrees that the lack or failure of the Equipment or any misoperation thereof of
any kind shall no be a basis for non- fulfillment of any of the Lessee's
obligations under this Schedule or the Master Lease Agreement and that Lessee's
obligations to Lessor and Lessor's assigns as set forth in the Master Lease
Agreement are not subject to any claims, counterclaims, defenses or setoffs. WE
HERE BY AUTHORIZE YOU TO PAY FOR AND PURCHASE THE EQUIPMENT
<PAGE>
PERSONAL GUARANTY In order to induce Lessor to enter into this Schedule with
Lessee, the undersigned, jointly and severally, hereby irrevocably and
unconditionally, guaranty, without deduction or diminution by reason of
counterclaim, offset, or defense, the prompt and complete payment under,
whenever due, and performance of this Schedule to Lessor or its assigns,
including any and all modifications, additions, supplements and amendments
thereof, as well as all of Lessee's other Schedules with Lessor that have
commencement dates not later than ten (10) days after Lessor receives written
notice from the undersigned of their desire not to guaranty any additional
Schedules. The undersigned warrant and guaranty that this Schedule has been
properly executed by Lessee, and agree that this guaranty shall be of full force
and effect irrespective of any invalidity or unenforceability of the Schedule or
any provisions thereof, or the existence, validity or value of any security. The
undersigned hereby waive presentment notice of acceptance hereof, all notices of
any kind to which we may be entitled, and all defenses of a guarantor or surety.
The undersigned consent that from time to time, without notice to or further
consent from the undersigned and without releasing or affecting the
undersigned's liability hereunder, the time for payment or performance under
this Schedule may be extended or accelerated in whole or part, any security
therefor may be exchanged, rescheduled, enforced, sold, scheduled or otherwise
dealt with, the provisions of any documents may be cancelled, modified or
waived, any other guarantors may be rescheduled, and any indulgence may be
granted to Lessee, as Lessor may in its sole discretion determine. The
obligation and liability of each undersigned is direct, continuing and
unconditional, shall not be diminished or affected whether or not the Equipment
is repossessed, and Lessor shall not be required to proceed against Lessee or
resort to any other right or remedy before proceeding against the undersigned
under this guaranty. No payment by the undersigned, except payment in full of
all liabilities hereunder, shall entitle the undersigned to be subrogated to any
of the rights or remedies of Lessor under this Schedule. The undersigned warrant
they have read this Schedule and hereby waive any and all rights to a trial by
jury, and agree to the venue and jurisdiction contained therein, and agree that
only full payment and performance of the Schedule can discharge the
undersigned's liability. (Guarantor hereby grants to lessor a security interest
in all goods as set forth in the Master Lease Agreement. This guaranty shall be
binding upon the undersigned and the heirs, representatives, successors and
assigns of the undersigned, in favor of Lessor and Lessor's successors and
assigns. This guaranty cannot be terminated or changed orally and no provision
hereof may be modified or waived except in writing.)
ACCEPTED BY: ROCKFORD INDUSTRIES, INC., ("LESSOR")
<PAGE>
ROCKFORD INDUSTRIES, INC. Master Lease #
1851 East First Street, Sixth Floor
Santa Ana, CA 92705 LESSEE NAME
Tel: (714) 547-7166 (800) 876-7788 & ADDRESS:
Fax: (714) 547-3839
MASTER LEASE AGREEMENT
On the terms and conditions hereof, Lessee agrees to lease from Rockford
Industries, Inc. ("Lessor"), and Lessor agrees to lease to Lessee, certain
equipment (together with all additions thereto and substitutions and
replacements thereof, collectively, the "Equipment") in the quantities, models
and prices, and for the term as designated in each equipment schedule in the
form of Schedule "A" attached hereto (each, a "Schedule," and collectively, the
"Schedules") and to be acquired from the respective suppliers designated on each
Schedule (each, a "Supplier"). Lessee represents and warrants that it has
selected the Equipment and each Supplier based solely on its own judgment. Each
Schedule shall reference this Master Lease Agreement (this "Master Lease") and
shall be deemed to incorporate therein all of the terms and conditions hereof,
unless and to the extend any provisions hereof are expressly excluded or
modified therein, and shall contain such additional terms as Lessor and Lessee
shall, in their sole discretion, agree upon. All equipment leased subsequent to
the date hereof shall be subject to the terms and conditions of the related
Schedule and this Master Lease, as incorporated therein. All of the terms and
conditions of this Master Lease shall survive its termination and apply in full
force and effect to any and all Schedules. Each Schedule, together with (a) the
terms and conditions of this Master Lease so incorporated therein, and (b) any
schedules, attachments or exhibits thereto or hereto, shall constitute a
separate lease agreement (each, a "Lease" and collectively, the "Leases"). Each
such Lease may be assigned by Lessor and/or reassigned separate and apart from
any other Leases hereunder, and such rights shall be separately exercisable by
Lessor or such assignee, as the case may be, exclusively and independently of
the rights of Lessor or such assignee with respect to any other Leases. To the
extent that any schedule constituting a Lease hereunder would constitute
"chattel paper" as such term is defined under the Uniform Commercial Code (the
"UCC"), a security interest therein may be created only through the transfer or
possession of the original counterpart of such Schedule executed pursuant to
this Master Lease. The transfer or possession of an original counterpart of this
Master Lease shall not be necessary to perfect such security interest and no
security interest in any Schedule constituting a Lease hereunder may be created
by the transfer or possession of any other counterpart of such Schedule or by
the transfer or
<PAGE>
possession of any counterpart of this Master Lease. Lessee confirms that each
Lease is a commercial lease and that all Equipment leased pursuant to any Lease
will be used solely for commercial or business purposes (and not for consumer,
personal, family or household purposes) on the terms and conditions set forth in
the lease covering such Equipment. With respect to each Lease, Lessee
acknowledges that such lease is intended to be a "true" lease, and is a "finance
lease" as defined in UCC Section 2A-103(l(g). Lessee further acknowledges that
it is entitled under UCC Article 2A (as such Article, as amended from time to
time, may be in effect, "UCC2A") to the promises and warranties, including those
of any third party, provided to Lessor by any Supplier in connection with the
acquisition by Lessor of the Equipment or the right to possession and use
thereof. Lessor acknowledges that Lessee may communicate with any Supplier and
receive an accurate and complete statement of such promises and warranties,
including any related disclaimers, limitations or remedies. Lessee also
acknowledges that it received and read the notifications contained in this
paragraph before Lessee signed any Schedule constituting a Lease hereunder. A.
TERM. The term of this Master Lease shall commence on the date hereof and shall
continue until the latest of the respective termination dates of this Master
Lease and the Leases, unless otherwise terminated earlier pursuant to the
provisions of this Master Lease. In the event that this Master Lease shall be
terminated pursuant to the provisions hereof and prior to the latest of the
respective termination dates of the Leases, then, at the sole option of Lessor
and any assignees of Lessor, and provided that all obligations of Lessee under
each Lease shall have been satisfied, all outstanding Leases shall be terminated
concurrently herewith. The term of each Lease shall commence (the "Commencement
Date") on: (a) the first date on which any Equipment is delivered to Lessee or
Lessee's agents; or (b) at Lessor's election, such later date on which either
(i) physical delivery of all of the Equipment covered by a Schedule constituting
a Lease hereunder has been completed, or (ii) the first commercial use of any
Equipment covered by a Schedule constituting a Lease hereunder shall have
occurred prior to Lessor's receipt of the Certificate of Acceptance (as defined
in Section (i hereof), and shall terminate as indicated in such Schedule, unless
terminated earlier pursuant to the terms of this Master Lease. If Lessor should
decide to cancel this Master Lease or any Lease prior to the Commencement Date
of such Lease, in addition to any other liability hereunder and under any
Leases, each Obligor (as defined below) shall assume all of Lessor's obligations
with respect to all of the related Equipment, including (without limitation)
Lessor's attorneys'
<PAGE>
fees and expenses. As used in this Master Lease, the term "Obligor" shall mean
Lessee and each guarantor, surety and other person or entity liable for any of
Lessee's obligations under this Master Lease or any Lease. B. RENTALS AND FEES.
With respect to each Lease: (a) all advance rentals (collectively, the "Advance
Rentals") shall be due at the later of (i) the date of execution by Lessee of
this Master Lease; or (ii) the date of execution by Lessee of the related
Schedule; and (b) the subsequent rentals under such Lease (together with the
Advance Rentals, collectively, the "Rentals") shall be payable in advance
beginning on the Commencement Date in the amounts and at the times specified in
the related Schedule. In the event the term of any Lease does not commence for
any reason, the Advance Rentals thereunder shall not be refunded to Lessee and
shall be retained by Lessor not as a penalty but as liquidated damages to cover
Lessor's administrative expenses in processing the application for such Lease,
preparing any related documentation, undertaking any due diligence and taking
any other actions relating to the foregoing. Lessee shall, upon Lessor's demand,
promptly pay or reimburse Lessor for all documentation and administrative fees
and expenses relating to the Equipment and each Lease, including (without
limitation) Lessor's standard documentation fees, UCC and other search fees, UCC
filing fees, fees and expenses of Lessor's attorneys' and other related fees,
costs and expenses. C. NOTICES; NO WAIVER; TIME; ENTIRE AGREEMENT; SEVERABILITY;
GOVERNING LAW. Any notices to be given under this Master Lease or any Lease
shall be effective at the end of the fifth day following the mailing thereof,
via United States first class mail with postage prepaid, to the other party at
the address set forth herein or such other address as such other party may have
specified by written notice. No failure on the part of Lessor to exercise, and
no delay in exercising any right hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise by Lessor of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. Time is of the essence with respect to this Master Lease and each Lease.
With respect to each Lease, this Master Lease and the related Schedule, together
with all schedules, attachments and exhibit is hereto and thereto, contain the
entire agreement with respect to the transactions described herein and therein
and supersede any conflicting provision of any contract, purchase order or any
other verbal or written agreement. No term or provision of this Master Lease or
any Lease may be amended, altered, waived, discharged or terminated except by a
written instrument, signed by Lessor and Lessee, which is invalid under the law
of any state shall, as to such state, be ineffective to
<PAGE>
the extent of such prohibition in such state only, without invalidating the
remaining provisions of this Master Lease or such Lease in such state. Lessee
shall make the payments set forth in this Master Lease and each Lease shall be
performed in Orange County, California where Lessee's payments shall be sent.
THIS MASTER LEASE AND EACH LEASE IS ENTERED INTO IN AND SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW OR CHOICE OF LAW. Lessee hereby consents to
the exclusive venue and jurisdiction of any Federal or state court located in
Orange County, California with respect to any action commenced hereunder or
under any Lease. Lessee agrees that service of process in any action hereunder
or under any Lease shall be sufficient if made by first class certified mail to
Lessee at the address set forth herein or such other address as such other party
may have specified by written notice in accordance with the terms hereof. TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, LESSEE HEREBY WAIVES THE RIGHT TO
TRIAL BY JURY IN ANY ACTION COMMENCED HEREUNDER OR UNDER ANY LEASE. D. LATE
PAYMENTS. When Lessee fails to pay any part of any monthly lease payment or
other sum due hereunder and is not received by Lessor within five (5) days of
its due date, Lessee agrees, so as to compensate Lessor for costs and lessor's
inability to reinvest the sums due, to pay Lessor in regards to said delinquent
payment; a) a late charge equal to the greater of ten cents (10(cent)) per one
dollar ($1.00) of each delinquent payment or twenty five ($25) dollars; plus b)
a late charge of one fifteenth of one percent (1/15%) per day on the delinquent
amount commencing one month after the amount was due, until paid. E. LEASE
NON-CANCELABLE; PAYMENTS TO BE NET. Lessee agrees that all Rentals or other sums
payable by Lessee hereunder or under any Lease shall be the unconditional
obligation of Lessee and shall be made without abatement, reduction or setoff of
any nature, including (without limitation) any thereof arising out of any
security deposit amounts, certificates of deposit and similar credit supports
provided by Lessee or on its behalf, or any present or future claim Lessee may
have against Lessor, any of Lessor's assignees, any supplier or any
manufacturer, carrier or vendor of the Equipment or any part of the Equipment.
This Master Lease and each Lease shall not be cancelable or terminable by Lessee
prior to the end of the term hereof or thereof except as expressly provided
herein or therein. F. TAXES; INDEMNITY. With respect to each Lease, agrees that
taxes are not included in the Lease calculations. Lessee agrees: (a) to pay,
promptly when due, all license fees and assessments, and all sales, use,
property, excise and other taxes or charges (including any interest and
penalties), now or hereafter imposed
<PAGE>
by any governmental body or agency upon any Equipment or the purchase,
ownership, possession, leasing, operation, use or disposition thereof made
thereunder, or the Rentals or other payments thereunder (excluding taxes on or
measured by the net income of Lessor); (b) to prepare and file promptly with the
appropriate offices any and all tax and other similar returns required to be
filed with respect thereto (promptly sending copies thereof to Lessor) or, if
requested by Lessor, to notify Lessor of such requirement and furnish Lessor
with all information required by Lessor so that it may effect such filing; (c)
to assume all risks of liability arising from or pertaining to the purchase,
delivery, ownership, possession, leasing, operation, use, maintenance, storage,
repair, condition, transportation or other disposition of any Equipment or the
return of any Equipment to Lessor or any claims of patent, trademark or
copyright infringement and, at Lessee's sole expense and irrespective of whether
any of the following shall have resulted from or be attributable in any way to
any action or inaction of Lessee, to indemnify and save Lessor, and Lessor's
directors, officers, employees, affiliates, servants, agents, successors and
assigns, harmless from and against, and to defend them against, any and all
claims, actions, proceedings, settlements, judgments, losses,liens, obligations,
costs, expenses, attorneys' fees, fines, damages and liabilities arising
therefrom or pertaining thereto (including, without limitation, any thereof
arising out of injury to or death of persons or damage to property); and (d)
that Lessor will have the right each year to estimate the yearly property taxes
that will be due on the Equipment and that Lessee will pay the estimated
personal property taxes when requested or, at Lessor's election regarding
personal property taxes, Lessee will pay Lessor a monthly personal property tax
fee equal to three-tenths of one percent (0.33%) of the original Equipment cost
to reimburse Lessor for Lessor's payment of taxes and costs for preparing,
reviewing and filing returns. Any amounts required to be paid by Lessee under
this Section F which Lessee fails to pay may be paid by Lessor and shall, at
Lessor's option, become immediately due from Lessee to Lessor. Lessee's
obligations contained in this Section F shall survive the termination of this
Master Lease and the Leases. G. ACCEPTANCE. Promptly upon delivery to Lessee of
the Equipment to be leased under any Lease, Lessee shall inspect the Equipment
and execute and deliver to Lessor a Certificate of Acceptance (the "Certificate
of Acceptance") in form and content satisfactory to Lessor. Unless Lessee gives
Lessor and Supplier written notice of each defect or other proper objection to
any Equipment within five (5) days after delivery thereof, such
<PAGE>
Equipment shall be deemed to have been duly delivered to and unconditionally
accepted by Lessee. If Lessee wrongfully refuses delivery of any Equipment for
any reason, then Lessee agrees to promptly pay the price invoiced by Supplier to
Lessor, or if such payment is not made, Lessee indemnifies and holds Lessor
harmless from and against, and agrees to protect and (at Lessor's option) to
defend Lessor at Lessee's sole expense (with counsel acceptable to Lessor)
against, any claim of liability and damage by Supplier with reference to such
Equipment. Upon such payment, the related Schedule and Lease shall terminate as
to such Equipment only, and the Rentals thereunder shall be proportionately
adjusted. H. INSURANCE. With respect to each Lease, for the period from the date
on which the Equipment is delivered to Lessee or Lessee's agent until the date
of its redelivery to Lessor, Lessee, at its sole cost and expense, shall
procure,maintain, and pay for (a) casualty insurance, naming Lessor as "loss
payee," against the loss, theft or destruction of or damage to the Equipment,
including (without limitation) loss by fire and such other hazards as are
customary for personal property of the same or similar type as the Equipment,
subject to customary deductions, and (b) public liability insurance, naming
Lessor as an "additional insured," covering both personal injury and property
damage arising out of or in connection with the use or operation of the
Equipment. All such insurance shall be with companies and in form and amount
satisfactory to Lessor but shall in no event be in an amount less than the full
replacement value of the Equipment as determined by Lessor. Lessee shall deliver
the policies of insurance (or duplicates thereof) or certificates of insurance
to Lessor, but shall in no event be in an amount less than the full replacement
value of the Equipment as determined by Lessor. Lessee shall deliver the
policies of insurance (or duplicates thereof) or certificates of insurance to
Lessor. Each insurer shall agree by endorsement upon the policy or policies
issued by it, or by independent instrument furnished to Lessor, that it will
give Lessor at least thirty (30) days prior written notice before the policy in
question shall be altered or canceled and that, as to the interest or coverage
of Lessor or Lessor's assignee thereunder, such policy shall not be suspended,
forfeited or in any manner prejudiced by any default, misrepresentation or other
breach of warranty, condition or covenant by Lessor or Lessee under such policy
or any Lease. The proceeds of such insurance, at the option of Lessor, shall be
applied (i) toward the replacement, restoration or repair of the Equipment, or
(ii) toward payment of the obligations of Lessee hereunder and under the Leases.
Lessee hereby appoints Lessor as Lessee's attorney-in-fact to make claim for,
receive payment of,
<PAGE>
execute and endorse all documents, checks or drafts for loss or damage under any
such insurance policy. In the event the amount of insurance proceeds with
respect to any Total Loss (as defined below in Paragraph 1) is less than the
Reimbursement Amount required under Paragraph 1 of this Agreement, Lessee agrees
to promptly pay to Lessor the difference in such amounts. When not insured by
Lessee, Lessor will be exposed to increased credit risks; consequently, Lessee
agrees to pay Lessor each month a NON-COVERAGE CHARGE equal to one quarter of
one percent (0.25%) of Actual Total Equipment Cost, until Lessee complies with
the insurance requirements described above. Such changes do not take the place
of insurance requirements contained herein. I. FINANCIAL STATEMENTS. If
requested by Lessor, Lessee agrees to promptly deliver to Lessor annual and
interim financial statements. J. RISK OF LOSS. With respect to each Lease, for
the period from the date on which the Equipment is delivered to Lessee or
Lessee's agent until the date of its redelivery to Lessor: (a) the Equipment
shall be held at all times at the sole risk of Lessee for injury, damage
(including damage to third parties and their property), loss, destruction,
theft, expropriation or requisition (as to either title or use); and (b) in case
before return to Lessor any or all of the Equipment is destroyed, lost, stolen,
damaged beyond repair,documents, checks or drafts for loss or damage under any
such insurance policy. In the event the amount of insurance proceeds with
respect to any Total Loss (as defined below in Paragraph 1) is less than the
Reimbursement Amount required under Paragraph 1 of this Agreement, Lessee agrees
to promptly pay to Lessor the difference in such amounts. When not insured by
Lessee, Lessor will be exposed to increased credit risks; consequently, Lessee
agrees to pay Lessor each month a NON-COVERAGE CHARGE equal to one quarter of
one percent (0.25%) of Actual Total Equipment Cost, until Lessee complies with
the insurance requirements described above. Such changes do not take the place
of insurance requirements contained herein. I. FINANCIAL STATEMENTS. If
requested by Lessor, Lessee agrees to promptly deliver to Lessor annual and
interim financial statements. J. RISK OF LOSS. With respect to each Lease, for
the period from the date on which the Equipment is delivered to Lessee or
Lessee's agent until the date of its redelivery to Lessor: (a) the Equipment
shall be held at all times at the sole risk of Lessee for injury, damage
(including damage to third parties and their property), loss, destruction,
theft, expropriation or requisition (as to either title or use); and (b) in case
before return to Lessor any or all of the Equipment is destroyed, lost, stolen,
damaged beyond repair, permanently rendered unfit for
<PAGE>
normal use, expropriated or requisitioned for any reason whatsoever (each a
"Total Loss"). Lessee agrees promptly to notify Lessor and to pay, at Lessor's
option, on demand, as reimbursement to Lessor for such Total Loss, an amount
equal to the Reimbursement Amount (as defined below), payment of which shall
relieve Lessee from liability for any further rent with respect to such
Equipment. As used in this Master Lease: (i) the term "Reimbursement Amount"
shall mean, with respect to any total Loss, the greater of (A) the Fair Market
Value (as defined below) of the related Equipment, as determined immediately
prior to the occurrence of such Total Loss, or (B) the sum of (1) the entire
unpaid balance of Rentals for the entire original term allocable to such
Equipment, discounted at a rate of 5.50% per annum as of the date of such Total
Loss, plus (2) Lessor's residual value as may be allocated to such Equipment,
plus (3) any other amounts then due and owing under the related Lease; and (II)
the "Fair Market Value" of any Equipment shall mean the fair market sales value
of such Equipment, assuming such Equipment is in the condition required to be
maintained under Section O hereof, after deducting reasonable costs and expenses
of sale, as reasonably determined by Lessor or, at Lessor's option, by an
independent appraiser selected by Lessor, at Lessee's sole cost and expense,
whose determination shall be conclusive and binding upon the parties hereto. K.
TITLE; PERSONAL, PROPERTY; ENCUMBRANCES; LOCATION. With respect to each Lease,
Lessee covenants and agrees that: (a) title to the Equipment is and at all times
shall remain in Lessor, and Lessee shall not cause or suffer any substitution,
exchange or addition of the Equipment; (b) the Equipment is and shall remain
personal property of Lessee and shall not be attached to or become part of any
realty; (c) the Equipment shall be installed and used at the address of Lessee
or such other location as specified on the Schedule constituting a Lease
hereunder and Lessee will not relocate any Equipment without the prior written
consent of Lessor; (d) Lessee will not sell, secrete, mortgage, assign,
transfer, lease, sublet, loan, part with possession of or encumber the Equipment
or permit any liens or changes to become effective thereon or permit or attempt
to do any of the acts aforesaid; and (c) Lessee shall, at Lessee's own expense,
take such action as may be necessary (i) to remove any encumbrance, lien or
charge, and (ii) to prevent any third party from acquiring any other interest in
any Equipment (including, without limitation, by reason of such Equipment being
deemed to be a fixture or part of any realty). Upon request, lessee shall, at
Lessee's own expense, affix and maintain on the Equipment a plate, label or
other marking, satisfactory to Lessor, indicating Lessor's interest therein.
Prior to the relocation of any
<PAGE>
Equipment, Lessee shall promptly execute and deliver such agreements and
documents as may be reasonably requested by Lessor in connection with such
relocation, including (without limitation) any UCC financing statements. L.
MAINTENANCE; ACCESSIONS; INSPECTION; ALTERATIONS. Lessee agrees that, at its
sole expense, it will have sole responsibility for maintenance and preservation
of the Equipment and for all repairs and replacements necessary to keep the
Equipment in good repair, working order and condition, ordinary wear and tear
resulting from proper use thereof excluded. Lessee further agrees that it will
maintain the Equipment in such condition at its sole expense continuously
throughout the term of this Master Lease. All replacements or substitutions of
parts of or in any of the Equipment shall constitute accessions thereto and
shall become part of the Equipment owned by Lessor. Upon Lessor's request,
Lessee will permit Lessor to have access to the Equipment at all reasonable
times for the purpose of inspection and examination. Lessee shall neither make
nor cause to be made any alterations in the Equipment without the prior written
consent of Lessor. M. USE OF EQUIPMENT. With respect to each Lease, Lessee shall
be entitled to the right to possession and control of the Equipment and the use
thereof during the term of such Lease so long as no Event of Default (as defined
in Section P hereof) has occurred. Lessee will comply with all laws, regulations
and ordinances, and all applicable requirements of the manufacturer of the
Equipment, applicable to the physical possession, operation, condition, use and
maintenance of the Equipment. Lessee agrees to obtain all permits and licenses
necessary for the operation of the Equipment. LESSEE COVENANTS, WARRANTS AND
REPRESENTS TO LESSOR THAT THE EQUIPMENT WILL BE USED FOR BUSINESS OR COMMERCIAL
USE ONLY. N. DENIAL OF WARRANTIES. LESSOR HAS NOT MADE AND MAKES NO WARRANTY OR
REPRESENTATION OF ANY KIND, DIRECTLY OR INDIRECTLY, EXPRESS OR IMPLIED, WITH
RESPECT TO THE EQUIPMENT, INCLUDING (WITHOUT LIMITATION) AS TO ITS DESIGN OR
CONDITION, THE QUALITY OF THE MATERIAL AND EQUIPMENT IN OR WORKMANSHIP OF THE
EQUIPMENT, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, OR AS TO
LESSOR'S TITLE TO IT OR ANY COMPONENT THEREOF OR AS TO ANY OTHER MATTER, IT
BEING AGREED THAT ALL SUCH RISKS AS BETWEEN LESSOR AND LESSEE, ARE TO BE BORNE
BY LESSEE, AND THE BENEFITS OF ANY AND ALL IMPLIED WARRANTIES OF LESSOR ARE
HEREBY WAIVED BY LESSEE. With respect to each Lease, Lessee acknowledges that it
has selected the Supplier and the Equipment on the basis of its own judgment and
expressly disclaims any reliance upon any statements or representations made by
Lessor. Notwithstanding any fees which may be paid by Lessor to any Supplier, or
any salesperson,
<PAGE>
employer or agent of any Supplier, Lessee understands and agrees that neither
such Supplier nor such salesperson, employee or agent is an agent of Lessor or
is authorized to bind Lessor or to waive or alter any term or condition of this
Master Lease or any Schedule constituting a Lease by an authorized officer of
Lessor). NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE EQUIPMENT
OR ANY OTHER MATTER BY ANY SUPPLIER SHALL BE BINDING ON LESSOR, NOR SHALL THE
BREACH OF SUCH IN ANY WAY AFFECT LESSEE'S DUTY TO PERFORM ITS OBLIGATIONS AS SET
FORTH IN THIS MASTER LEASE OR ANY SCHEDULE CONSTITUTING A LEASE HEREUNDER. IN NO
EVENT SHALL LESSOR BE LIABLE FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES
RELATING TO ANY EQUIPMENT. WITH RESPECT TO EACH LEASE, LESSOR MAKES NO WARRANTY
AS TO THE TREATMENT OF SUCH LEASE FOR ACCOUNTING PURPOSES, OR AS TO THE
COMPLIANCE OF THE EQUIPMENT WITH APPLICABLE GOVERNMENT REGULATIONS OR
REQUIREMENTS, WHICH SHALL BE THE SOLE RESPONSIBILITY OF THE SUPPLIER AND/OR THE
MANUFACTURER OF THE EQUIPMENT. Lessee agrees to look solely to the Supplier,
manufacturer and/or the carrier of the Equipment (which are solely responsible
for supplying Lessee with all literature and manuals respecting the Equipment)
for any claim arising from any defect, breach of warranty, failure or delay in
delivery, misdelivery or inability to use any Equipment for any reason and
Lessee's obligations to Lessor under each Lease shall not in any manner be
affected thereby, including (without limitation) Lessee's obligations to pay
Lessor all rent and other amounts payable under such Lease. LESSOR EXPRESSLY
DISCLAIMS WARRANTY THAT NO PERSON HOLDS A CLAIM TO OR INTEREST IN THE EQUIPMENT
(NOT ARISING SOLELY FROM ANY ACT OR OMISSION OF LESSOR) THAT WILL INTERFERE WITH
LESSEE'S ENJOYMENT OF ITS LEASEHOLD INTEREST IN THE EQUIPMENT. O. ASSIGNMENT.
Lessee shall not assign this Master Lease, any Lease or any interest herein or
therein, or sublease any Equipment, or part with possession of any Equipment,
without the prior written consent of Lessor. Lessor's rights, title and interest
in and to this Master Lease, each Lease and the Equipment may be sold,
transferred and assigned by Lessor (and its assignees) without notice, and
Lessor's assignees (and their respective assignees) shall have all of the
rights, powers, privileges and remedies of Lessor hereunder. Except to the
extent any assignee otherwise agrees in writing, no assignee shall be obligated
to perform any of the obligations of Lessor hereunder or under any Lease and
Lessee (if notified of such assignment) shall not be entitled to terminate or
amend this Master Lease or any Lease without the prior written consent of such
assignee. P. RETURN OF EQUIPMENT. Lessee shall, at its own cost and expense, at
the end of the term of each Lease, crate and ship all
<PAGE>
of the Equipment in a proper manner to Lessor, freight and insurance prepaid, to
any location specified by Lessor within the continental United Sates, the
Equipment to be in good operating condition as required by Section K hereof.
With respect to each Lease, Lessee will continue to make Rental payments after
the term of such Lease expires until all the Equipment is returned. Lessee
agrees to pay Lessor the replacement cost and/or the repair and refurbishing
cost, including cleaning, for an amount designated by Lessor, if any Equipment
is returned damaged or incomplete, or shows signs of excessive wear and tear,
within ten (10) days of Lessor's request. Q. EVENTS OF DEFAULT; REMEDIES;
EXPENSES. Each of the following events shall constitute an "Event of Default":
(a) Lessee shall default in the payment when due of any Rentals under any Lease,
or any Obligor shall default in the payment when due of any other sums payable
hereunder or under any Lease; or(b) Lessee shall default in the observance or
performance of any other covenant or agreement in this Master Lease or any
Lease, and such default shall continue for a period of fifteen (15) days; or (c)
any representation or warranty made by or on behalf of any Obligor in this
Master Lease or any Lease shall at any time prove to have been incorrect or
untrue when made; or (d) any Obligor shall make any misrepresentation to Lessor
or fail to disclose to Lessor any material fact in connection with the Master
Lease or any Lease or otherwise, either contemporaneously with or at any time
prior or subsequent to the execution hereof or thereof; or (e) any Obligor shall
breach any warranty, covenant or agreement contained in this Master Lease or any
Lease, or (f) any Obligor shall undergo a change in control, management,
ownership or operations or suspend its usual business; or (g) any Obligor shall
dissolve (if such Obligor is a corporation, partnership, limited liability
company or other business entity) or become insolvent (however evidenced) or
bankrupt, commit any act of bankruptcy, make an assignment for the benefit of
creditors, suspend the transaction of its usual business or consent tot he
appointment of a trustee or receiver, or a trustee or a receiver shall be
appointed, for any Obligor or for a substantial part of its property, or
bankruptcy, reorganization, insolvency or similar proceedings shall be
instituted by or against any Obligor, or (h) an order, judgment or decree shall
be entered against any Obligor by a court of competent jurisdiction and such
order, judgment or decree shall continue unpaid or unsatisfied and in effect for
any period of sixty (60) consecutive days without a stay of execution, or any
execution or writ or process shall be issued in connection with any action or
proceeding against any Obligor or its property whereby the Equipment or any
substantial part of such Obligor's
<PAGE>
property may be taken or restrained; or (i) any Obligor shall default in the
performance of any obligation or in the payment when due of any sum to Lessor or
any assignee of Lessor's rights hereunder under any other contract, agreement,
arrangement or understanding; or (j) any indebtedness of any Obligor for
borrowed money shall become (or shall be permitted to become) due and payable by
acceleration of maturity thereof; or (k) any event or circumstance shall, in
Lessor's opinion, give Lessor reasonable cause to doubt any Obligor's
willingness or ability to fully and promptly perform its obligations to Lessor;
or (l) any change in the condition or affairs (financial or otherwise) of any
Obligor shall, in Lessor's opinion, increase Lessor's risk with respect to any
Lease or Equipment or any security therefor, or (m) Lessee is in default under
any other agreement, lease, master lease or schedule, whether presently or
hereafter held by Lessor. Upon the occurrence of any Event of Default, Lessor
may, by written notice to Lessee (to the extent legally permitted to do so): (i)
immediately declare this Master Lease and any or all of the Leases in default,
whereupon as liquidated damages for breach of such Lease(s) an amount equal to
the sum of (A) the entire unpaid balance of the Rentals under such Leases for
the entire original term thereof, discounted at a rate of 5.50% per annum as of
the date of default, plus (B) any other amounts then due and owing under such
Leases, plus (C) twenty percent (20%) of original cost of the related Equipment,
will become immediately due and payable; and/or (ii) proceed by appropriate
court action, either at law or in equity, to enforce performance by Lessee of
the applicable covenants of this Master Lease and the Leases or to recover
damages for the breach hereof and thereof; and/or (iii) without necessity of
process or other legal action (A) terminate this Master Lease and the Leases,
(B) require Lessee, at Lessee's sole expense and for Lessor's benefit, to
assemble the Equipment at a place reasonably designated by Lessor, and/or (C)
enter into the premises of Lessee or such other premises as the Equipment may
then be located and take possession of the Equipment, all without liability to
Lessor or any other premises as the Equipment may then be located and take
possession of the equipment, all without liability to Lessor or any other person
rising out of the taking of such action. In addition, Lessee shall continue to
be liable for all indemnities under this Master Lease and the Leases, and for
all legal fees and other costs and expenses resulting from the foregoing
defaults or the exercise of Lessor's remedies, including (without limitation)
placing any Equipment in the condition required by Section K hereof. No remedy
referred to in this Section P is intended to be exclusive, but each shall be
cumulative and in addition to any other remedy referred to above or otherwise
available to Lessor at law or in
<PAGE>
equity. Lessor shall be entitled to take or retain, by way of offset against any
or all amounts due and owing under this Master Lease and the Leases as
aforesaid, any assets, tangible or intangible, of Lessee which may then be in
the possession of Lessor, its correspondents, or agents. LESSEE AND EACH OTHER
OBLIGOR AGREES TO PAY AS DAMAGES LESSOR'S COLLECTION AND LEGAL EXPENSES AND
REASONABLE ATTORNEYS FEES. In all proceedings arising hereunder reasonable
attorneys fees are stipulated and liquidated to be equal to twenty percent (20%)
of the total collection amount, plus one half (1/2) of the amount (the "Excess")
by which Lessor's actual attorneys' fees exceed twenty percent (20%) of the
total collection amount. In consideration for Lessor's agreeing to absorb the
other half (1/2) of the Excess, Lessee agrees to pay and not dispute the
attorneys' fees agreed upon by the parties as a fair and reasonable liquidated
amount. Lessee agrees that each Lease is a "true lease" and hereby waives any
provision which may require Lessor to sell, lease, or otherwise use any
Equipment in the mitigation of damages. Lessee further agrees to compensate
Lessor for collection expenses of twenty dollars ($20) per collection phone call
and up to one hundred dollars ($100) per personal visit. Lessee also agrees to
reimburse Lessor for the costs associated with returned checks, for whatever
reason returned paying the greater of twenty-five dollars ($25) or Lessor's
actual bank charges for each such returned check. IN NO EVENT, HOWEVER, SHALL
ANY CHARGES IN THIS PARAGRAPH OR IN THIS MASTER LEASE OR ANY LEASE, OR THE SUM
THEREOF, EXCEED THE MAXIMUM PERMITTED BY APPLICABLE LAW. R. FURTHER ASSURANCES.
Lessee will cooperate fully with Lessor (or any assignee of Lessor pursuant to
Section N hereof) for the purpose of carrying out the intent and purposes hereof
and of the Leases and to protect the interests of Lessor. Lessor is hereby
authorized, to the extent permitted by applicable law, to file one or more UCC
financing statements, whether precautionary or otherwise, as appropriate,
disclosing Lessor's interest in the Equipment, this Master Lease, the Leases,
the sums due under and/or in connection with this Master Lease and the Leases,
and in any and all other collateral which secures Lessee's obligations to
Lessor, without the signature of Lessee or signed by Lessor as attorney-in-fact
for lessee. Lessee hereby irrevocably appoints Lessor (and any of Lessor's
officers, employees or agents designated by Lessor) as Lessee's agent and
attorney-in-fact, in Lessee's name, place and stead, to do all things necessary
to carry out the intent of this paragraph, including, without limitation, the
execution, endorsement, and filing of all UCC financing statements. As security
for the payment and performance of all of Lessee's present and future
<PAGE>
liabilities and obligations to Lessor, Lessee hereby grants to Lessor, a
security interest in the Equipment and in all other equipment and any and all
inventory, accounts, receivables, goods, machinery, furniture, fixtures,
property, intangible property, and assets of Lessee of any and every kind,
regardless of location, and whether presently and/or hereafter acquired by
Lessee or in which Lessee has any interest, and all proceeds of the foregoing,
which shall secure the performance of all of Lessee's obligations of any kind
whatsoever, whenever originated, to Lessor. Lessee will pay all costs of filing
any financing, continuation or termination statements with respect to this
Master Lease and the Leases, including, without limitation, any intangibles tax
and/or documentary stamp taxes relating thereto. Lessee shall also execute and
deliver to Lessor upon request such other instruments and assurances as Lessor
deems necessary or advisable for the implementation, effectuation, confirmation
or perfection of this Master Lease, the Leases and any rights of Lessor
hereunder and thereunder. Lessee hereby authorizes Lessor to add to this Master
Lease and/or the Leases or any document related hereto or thereto, serial
numbers, identification data and, when determined by Lessor to be necessary, any
dates or other omitted factual data. S. LESSEE'S WAIVERS. To the extent
permitted by applicable law, Lessee hereby waives any and all rights and
remedies otherwise available to Lessee (a) under Sections 2A-401 and 2A-402 of
UCC 2A to suspend performance of any of its obligations under this Master Lease
or any Lease, and (b) under Sections 2A-508 through 2A-522 of UCC 2A, including,
by way of example only but not limited to, Lessee's rights to: (i) cancel this
Master Lease or any Lease, (ii) repudiate this Master Lease or any Lease; (iii)
reject any Equipment; (iv) revoke acceptance of any Equipment; (v) recover
damages from Lessor for any breach of warranty or for any other reason; (vi)
claim a security interest in any Equipment in Lessee's possession or control for
any reason; (vii) deduct from payments to Lessor all or any part of any claimed
damages resulting from Lessor's default, if any, under this Master Lease or any
Lease; (viii) accept partial delivery of any Equipment,; (ix) "cover" by making
any purchase or lease, or contract to purchase or lease, equipment in
substitution for any Equipment to be leased from Lessor; (x) recover from Lessor
any general, special, incidental or consequential damages, for any reason
whatsoever, and (xi) bring a proceeding for specific performance, replevin,
detinue, sequestration, claim and delivery or the like for any Equipment
relating to this Master Lease or any Lease. To the extent permitted by
applicable law, Lessee also hereby waives any rights now or hereafter conferred
by statute or otherwise which may
<PAGE>
require Lessor to sell, lease or otherwise use any Equipment to reduce Lessor's
damages as set forth in this Master Lease or which may otherwise limit or modify
any of Lessor's rights or remedies under this Master Lease. T. BINDING EFFECT.
Lessee agrees that Lessee's obligations under this Master Lease and each Lease
are absolute and unconditional and shall continue without abatement, regardless
of (a) any claim of right, rescission, setoff, counterclaim, recoupment or
defense of any kind or for any reason, including (without limitation) any
defense of usury, or (b) any inability of Lessee to use any Equipment or any
part thereof for any reason, including (without limitation) war, act of God,
governmental regulations, strike, loss, damage, destruction, obsolescence,
failure of or delay in delivery, failure of any Equipment to operate properly,
termination by operation of law or any other cause. If more than one Lessee is
named herein or on any Schedule constitution a Lease hereunder, then the
obligations and liabilities of each hereunder is joint and several. This Master
Lease and the Leases shall be binding upon Lessee and any other Obligors and
their respective heirs, personal representatives, successors executors, and
permitted assigns, in favor of Lessor and/or Lessor's successors or assigns.
Lessee represents and warrants that it has read, understood and agreed to all of
the conditions contained herein. Lessee further represents and warrants that it
has sought the advice of legal counsel to explain any and all terms contained
herein. U. LEASE PAYMENT ADJUSTMENT. The amount of each Lease Payment is based
on the supplier's best estimate of the equipment cost including (if applicable),
any installation, other related costs and estimated sales or use tax. The Lease
Payments will be adjusted proportionately upward or downward if the actual total
cost of the equipment or taxes is more or less than the estimate. In that event,
you authorize us to adjust the Lease Payments by up to fifteen percent (15%).
<PAGE>
EXHIBIT 6.5
Addendums to Ad-vantagenet Proposal:
This document offers clarity to the proposal dated 6-10-98. It further defines
general objectives for the OASIS information service and should be considered
part of the original proposal. In the event discrepancies between the documents
are discovered, this addendum should be considered overruling. Upon review and
acceptance of this document SSP will complete the initial payment as requested
in the original proposal.
Project Summary:
The global picture is defined as follows: OASIS will be positioned as an
"information service" with touch-access. The base product will be a general
package geared to all customers. Additional "premium" models will be available
to OASIS customers as their need dictates. The onset of the OASIS project will
be developing the "base product" and one premium module. The product will also
include hospital specific information for "customization appearance." The
product should be developed on a platform in which content changes can be made
with relative ease. A plan for standalone units should be designed but not
developed at the onset of the project. The Spanish version of the program will
be included in this phase of the project.
Base Product Description:
Inservices and New Technology- From the customer's perspective this section will
be an information source with product description, videos, virtual touch reality
3D animation, etc. The development of the system should accommodate a virtually
unlimited number of products. These products will be set up in a categories menu
with search capability. This area may also allow for an administratively
controlled "Hospital stocks/doesn't stock function". From a content provider's
perspective, there will be multiple levels of complexity for inservice modules.
Details of these levels will be decided upon throughout the scope of the
project. It is agreed that the various levels of inservice modules will be
designed from a template standpoint to allow easy transition to SSP's in-house
multimedia department.
Safety News and Events-This section will include both a local section and global
section. The local section is to function as a news source that the customer can
use. The globak section will be functoned through Surgical Safety Products, Inc.
and primarily be based off an internet source with the capibility for non
internet geared towards the individual user's background. This
<PAGE>
background on the customer should be established and saved on the onset of use.
The user woll enter a digit code, password, set up preference screen and be
walked through the system. The design of this section should include "card
swipe" capability for future use.
Administrative Features (Surgical Safety Products, Inc.)-This administrative
module will serve as the main cotrol device for the system. Functionality will
include the ability to add/update/delete hospitals, add/update/delete/device
manufacturers and products, post news/press releases and modify content used on
the tech support and FAQ portions of the system.
Administrative Features (Hospital Administrative Module)-The hospital
administrative program will facilitate(but not be limited to)the following
functions: add/update/delete system users, check for incident expoosure
reporting, updating inservice devices on the system, upload news and messages to
users and view system technical documentation &FAQ.
Report Capability:
Both SSP and the hospital administrator will require a variety of reports. In
general, the system will have the capabilities of producing these reports based
on any combination of acquired data. These reports may include hits by terminal,
hits by module, tracking of individual user patterns, system maintenance logs
etc.
Module I:
Exposure Incident Reporting-This module will function similarly to the prototype
in concept. Surgical Safety Products will shorten and provide content for this
section. The format should change to be more interactive and include more than
one question per screen. Submitted reports will be recorded in a database that
will be accessed by key hospital personnel. This database will generate,at SSP's
or the hospital's request, reports based on selected criteria.
Additional:
OASIS Icon-An icon will be built on the main srceen where any user (without ID)
can obtain a one-screen discrpition of OASIS. Promotional Icon-To promote usage
of OASIS an icon should be built to accomodate a customer promotional program
developed by Surgical Safety Products, Inc.
Corporate Identity:
The OASIS project will incorporate the SSP company identity.
<PAGE>
This consistant look and feel will be utilized throughout OASIS and the other
SSP product initiatives. Ad-vantagenet will work with SSP to determine the
appropriate design.
Progress Reports:
As the detailed scope of work is developed by Ad-vantagenet, a timeline with
milestones will be determined for the purpose of providing SSP with a progress
report.
Confidentiality:
Neither party shall disclose to any third werson, firm organization or
corporation, the confidential and proprietary information disclosed to it by the
other party. Both parties agree to take the same steps and procedures that they
use to safegaurd their own proprietary information received from the other in
writing or any visual or oral information received from the other party.
The aforesaid obligations shall have no applicability when and used to the
extent:
a. Such information was known to either party prior to the
recipt of such Disclosure;
b. Such information becomes available in the public domain
through no fault of the party receiving the confidential or
proprietary information or
c. Such information is disclosed by a third party not acting on
behalf of or for the benefit of the party disclosing the
confidential or proprietary information.
Both parties agree that the foregoing provides reasonalbe protection to the
confidential and proprietary information to be disclosed between the parties.
Copyrights:
All work performed or obtained on behalf of SSP is copyrighted to SSP.
Ad-vantagenet further agrees to obtain copyright releases from individual
artists and producers of software and other media assets on behakf of SSP.
Should such arrangement be unobtainable for any reason, Ad-vantage will notify
SSP so that a determination of appropriate course of action may be made.
Decision Makers:
While a team approach will be utilized for the development of this project,
respective decision makers for SSP and Ad- vantagenet will be Don Lawrence and
Ray Villares. These individuals have full authority to approve significant
variances from the agreed upon scope of work.
<PAGE>
Documentation:
Ad-vantagenet will include, as part of this project, full written documentation
of the architecture and functions of the project. Ad-vantagenet will provide all
information necessary for SSP to develope user's manuals, training manuals, and
development guidelines for future authors on the OASIS system.
Training:
Ad-vantagenet will provide in house training for updating and maintaining
content and graphics on system.
Coded Protection:
This agreemetn is inclusive of a strict prohibition against any sort of "time
bomb" mechanism or undisclosed lock mechanism in Oasis. This includes any type
of mechanism for disabling the functionality of the system for any reason .
Cost and Terms:
The approximate cost for this production is $36,270.00 exclusive of photography
and animation, language translations, inservice content, data entry, hosting and
maintenance. Ad-vantagenet will prepare a formal document and present it to SSP
ASAP for concept and budget purposes.
Time Frame:
The base product and Module 1 will be completed for testing of outside
individuals by July 31, 1998. Delivery of an integrated software and hardware
product to hospital facilities is officially scheduled for August 15, 1998.
/s/ Ray Villares
For Ad-vantagenet
/s/ Donald K Lawrence
For Surgical Safety Products, Inc.
<PAGE>
ad-vantagenet
CONFIDENTIAL
Oasis Project (Phase 1)
A proposal to design and develope an Internet site for Surgical Saftey Products,
Inc.
Prepared for
Mike Swor
Don Lawrence
Prepared by
Ray Villares
Ad-vantagenet
Date June 10, 1998
(C) 1998 ad-vantagenet
This proposal has been specifically prepared for limited distribution at
Surgical Safety Products, Inc.. This document contains materials and information
which Ad-vantagenet considers confidential, proprietary, and significant for the
protection of its business. The distribution of this document is limited solely
Surgical Safety Products employees, either actively involved in the evaluation
and selection of Ad-vantagenet as a firm to conduct this aagreement, or those
that will be involved with the program described herein.
Project Summary and Objective
Ad-vantagenet proposes to design, produce and maintain an application for
Surgical Safety Product, Inc. (Referred herein as Surgical Safety). Our goal is
to create a professional Internet based application that will be both impressive
in appearance as well preformance.
The primary objective of this phase of developement is to establish the product
"look and feel", code the foundationand design/implement two modules that will
be used for the initial product launch. The application will be designed in a
way that will facilitate for RAD (rapid application development) and
implementation of modules to come.
Specifications Project
The following outlines the main components serviced under this proposal.
Detailed scope specifications will be outlined in addendum.
About Surgical Safety
Content for this portion will include, but not be limited to, a bio/profile on
the company and its principles, information on company standings,news/press
releases, advertising information and contact form.
Introductory Tour
This section will be a walk through tutorial that will be used by a first time
user.
<PAGE>
Exposure Incident Reporting
This module will function similarly to the protype. Several content changes will
be made. Submitted reports will be recorded in a data base that will be accessed
by key hospital personnel.
Inservices and New Technology
This module will be similar to the prototype in concept. Three or more new
device templates will be developed. The program will also allow for the
customization of content presentation per hospital and per hospital
facility(example: the OR).
Surgical Saftey Administative Module
This administrative module will serve as the main conrtol device for the system.
Functionally it will include the ability to add/update/delete
hospitals,add/update/delete device manufacturers and products, post news/press
releases and modify the content used on the tech support and FAQ portions of the
site.
Hospital Administrative Module
This hospital administrative program will facilitate the following funcions,
add/update/delete system users, check for incident reporting, updating inservice
devices on system, upload news and messages to users and view system technical
documentation and FAQ.
Other
Registered user login system. Spanish version of program (translations provided
by Surgical Safety). Traffic/hit reporting for device inservice module.
Development Cost and Terms Our rates for services are as follows:
Mechanical(scanning, typing, and html)-$50.00 Creative(consulting, site design,
and graphical work)-$65.00 Programming(database design, site architecture and
cold fusion programming)-$120.00
As requseted by Surgical Safety, a fixed quote has been estimated for the
project. This quote is based on the total hourly approximation for production.
The cost for developing this project is $36, 270.00. (This fee includes the
completion of all project specs listed above).
This proposal does not include
Photography. Ad-vantagenet will create a concept, contact photographers, send
out RFP's, coordinate and cast
<PAGE>
models/costuming, schedual shoot and produce shoot. Any costs associatred with
the production of this photography(including the above as well as the cost for
ownership rights and any materials needed) will be billed to Surgical Safety in
another contract. Ad-vantagenet will p[repare a formal document and present it
to Surgical Safety for concept and budget approval before moving forward.
Production of any multimedia pieces that will be used in the site (including
sound, video and animation). These elements will be priced out individually.
Production of any graphic elements used in the "device inservices" module.
Surgical safety will be responsible for populating appropriate content and
graphics for this module. Advantagenet will provide any training needed to
upload/maintain content.
Hosting and maintenance fees. These will be negotiated in a separate monthly
service agreement. No hosting costs will apply during project
development/testing.
Payment
An initial payment of $18,135 is required to queue project for production. This
payment must be paid in full before June 17. A second payment of $10,000 will be
due on July 15. A final payment of $8,135 due upon completion. A materials list
will be created upon the execution of this contract. Surgical Safety must
fulfill this list before any production work can begin. Once all materials have
been collected, production dates will be assigned (within 5 business days).
Surgical Safety will be informed of exact deliverable dates.We estimate that
this project can be completed from start to finish within the range of 30 to 45
days (assuming client approval).Changes/additions to the above specifications
portion of this contract will be billed separatly at appropriate billing rates.
Ad-vantagenet will inform Surgical of any changes that may alter the terms of
this agreement or date of completion in advance. Upon execution,this document
will serve as the proposal, contract and scope/design document for the project.
Please contact me as soon as possible to discuss our course of action.
Ray Villares Date
Surgical Safety Date
<PAGE>
EXHIBIT 6.6
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 30th of September, 1996, between Morrison
International Inc., a Pennsylvania corporation with its principal place of
business located at 2201 Cantu court, Suite 115, Sarasota, Florida 34232, U.S.A.
("Morrison"), and Surgical Safety Products, Inc., a New York corporation with
its principal place of business located at 2018 Oak Terrace, Suite 400,
Sarasota, Florida 34231, U.S.A. ("Distributor").
WHEREAS, Morrison is engaged in the business of manufacturing
and selling eyeglasses; and
WHEREAS, Distributor is engaged in the business of distributing
various safety products to health care providers; and
WHEREAS, Morrison and Distributor desire to have Distributor distribute
certain of Morrison's eyeglasses to health care providers, in accordance with
the terms and conditions hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and premises herein
contained, the parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
1.1. "Health Care Providers" means hospitals, clinics, laboratories, physicians,
surgeons, surgical technicians, dentists, veterinarians, nurse practitioners,
nurses and other organizations and professionals that provide care to human and
animals, and their respective employees.
1.2. "Procedures" means medical, surgical, dental, and other health care
procedures that require that the person performing the procedure wear eyeglasses
with protective side shields while performing the procedure.
1.3. "Products" means the Morrison products listed and described
on Exhibit A.
1.4. "Territory" means the United States of America.
1.5. "Trademark" means the Instant Eyeglasses trademark.
<PAGE>
2. DISTRIBUTOR'S RIGHTS
2.1. Distribution Rights. Morrison hereby grants to Distributor the right to
purchase, promote, resell and distribute the Products, directly and through
dealers, under the Trademark or a private label trademark owned by distributor,
to Health Care Providers in the Territory for use during the performance of
Procedures. Provided Distributor is in full compliance with all of the terms and
conditions of this Agreement, Morrison agrees that it will not appoint any other
distributor of the Products to Health Care Providers in the Territory for use
during Procedures or sell the Products directly to Health Care Providers in the
Territory for use during the performance of Procedures.
2.2. Exclusions. Notwithstanding the above, it is agreed that to the extent that
Morrison or any licensee of Morrison fills orders for Health Care Providers in
the Territory, which orders are placed on the Internet, such orders shall not be
a violation of Paragraph 2.1. Except as provided in this Agreement, no other
rights are granted to Distributor. the rights granted to Distributor do not
extend to the distribution of the Products outside the Territory or to Health
Care Providers in the Territory (other than for use during the performance of
Procedures), and Distributor agrees that it will not distribute the Products
outside the Territory or to Health Care Providers in the Territory (other than
for use during the performance of Procedures) or sell or distribute the Products
to any other party which sells, markets or distributes or intends to sell,
market or distribute the Products outside the Territory or to Health Care
Providers in the Territory (other than for use during the performance of
Procedures). Distributor further agrees that it will take such actions as are
legal and reasonable to prevent any dealer to whom it sells the Products from
selling, marketing or distributing the same to Health Care Providers for use
during the performance of Procedures), and that it will indemnify Morrison and
its licensees against any and all loss of profit occasioned by the sale of the
Products to parties outside the Territory or to Health Care Providers in the
Territory (other than for use during the performance of Procedures) by
Distributor or any such party.
3. SALE AND PURCHASE
3.1. Terms and Conditions. All sales by Morrison to Distributor will be made in
accordance with Morrison's terms and conditions of sale attached to this
Agreement as Exhibit B at the prices attached to this Agreement as Exhibit C.
This Agreement is
<PAGE>
expressly conditioned upon the terms and conditions of sale contained in Exhibit
B and Morrison will not accept and object to any terms and conditions on
Distributor's purchase order or other forms different from or additional to
those contained in Exhibit B. In the event any terms and conditions of Exhibit B
conflict with the terms and conditions of this Agreement, this Agreement will be
controlling. The terms and conditions are sale contained in Exhibit B may be
modified by Morrison in its sole discretion, upon thirty (30) days prior written
notice. Further, in the event that Distributor fails to achieve the annual
requirements for Minimum Purchases listed in Exhibit D, Morrison may increase
the prices on Exhibit C by providing Distributor with written notice of such
increase at least thirty (30) days prior to the effective date. Such increases
in price will be applied to the next contract year's orders.
3.2. Purchase Orders. All purchase orders are to be submitted in writing to
Morrison in a form to be designated by Morrison. Purchase orders must specify
the size, color and interpupillary distance measurement for each pair of the
Products ordered. All purchase orders must be clearly referenced by Distributor
with a purchase order number and an identification number must be included for
each individual Health Care Provider. All purchase orders for prescription
Products must include a signed, valid prescription for each pair of the Products
written no earlier than two (2) years prior to the date the purchase order was
submitted. All purchase orders must specify Distributor's preferred method of
delivery.
3.3. Estimated Quantities. On or before January 1, April 1, July 1 and October 1
of each year during the term of this Agreement, distributor will submit to
Morrison an estimate of the quantity of the Products Distributor expects to
purchase from Morrison during the subsequent three (3) month period. Such
foreseeable demands of Distributor for the Products and shall not become binding
obligations on Distributor to order such quantities nor on Morrison to provide
such quantities.
3.4. Prices, Delivery and Title. All prices of the Products will be F.O.B.
Morrison's order fulfillment facility or other point of delivery designated by
Morrison. Risk of loss shall pass to Distributor upon delivery to the carrier,
and Morrison reserves, and Distributor grants to Morrison, a purchase money
security interest in each shipment of the Products and the proceeds thereof
until receipt of payment in full. If any of the Products delivered to
distributor are damaged or do not otherwise comply in all material respects with
the specifications thereof,
<PAGE>
Distributor may return such damaged or non-conforming Products to Morrison for
credit in accordance with Morrison's then current return policy. No credit will
be given for orders which are correctly filled by Morrison but are not required
by Distributor because of an error in the prescription or ordering of the
Product.
3.5. Payment. Payment shall be in advance by a check written on
distributor's bank in the United States of America.
4. DISTRIBUTOR'S OBLIGATIONS
4.1. Best Efforts. Distributor, at its sole expense, shall use its best efforts
to promote and distribute the Products to Health Care Providers in the Territory
for use during the performance of Procedures so that the Products are as widely
used as possible throughout all parts of the Territory. Distributor agrees that
such efforts shall include, without limitation, promotion of the Products in
trade shows and exhibitions. Notwithstanding the above, Distributor agrees that
it will purchase from Morrison and sell to Health Care Providers, or dealers for
resale to Health Care Providers, in the Territory in each calendar year of the
Agreement at least the Minimum Purchases set forth on Exhibit D.
4.2. Adequate Facilities. Distributor will maintain, at its own expense,
adequate premises and facilities within the Territory from which to receive
orders for the Products. It is agreed that all personnel engaged by Distributor
to assist in the distribution of Products are employees and agents of
Distributor and not of Morrison, and all costs of such employees or agents are
the sole responsibility of Distributor.
4.3. Compliance with Laws. Distributor will comply with all
applicable laws and regulations and conduct its efforts hereunder
in accordance with the highest commercial and ethical standards.
4.4. Proprietary Notices. All sales of the Products by
distributor will be in Distributor's own name and for
Distributor's own account. However, Distributor agrees not to
remove from the Products or any materials provided with the
Products, any patent, trademark, copyright or other proprietary
notices of Morrison.
4.5. Reports. Distributor will furnish Morrison, upon Morrison's
request, with written reports containing information concerning
Distributor's distribution activities, competition in the
marketplace and such other information as Morrison may reasonably request.
<PAGE>
4.6. Insurance. Distributor will maintain comprehensive liability insurance for
the benefit of Distributor insuring against bodily injury or property damage
resulting from the acts or omissions of Distributor or its employees or agents
in such amounts and with such companies as are reasonably acceptable to
Morrison. all such policies shall name Morrison as an additional insured, with
rights of subrogation waived.
4.7. Competition. Distributor agrees that during the term of this Agreement it
will not directly or indirectly handle or sell any products which compete with
the Products. Distributor will purchase all of its requirements for eyeglasses
with side shields from Morrison. Distributor may purchase cases, chains and
other accessories for the Products from Morrison or any other manufacturers or
suppliers of its choice.
5. MORRISON'S OBLIGATIONS
5.1. Promotional Materials. Morrison will furnish Distributor, in reasonable
quantities and without charge, Product photographs in electronic form from
Morrison's existing electronic library as well as such assistance with layouts
and other marketing advice as Morrison, in its sole discretion, determines to be
appropriate. Distributor is solely responsible for preparing and printing all
necessary promotional materials.
5.2 Supply. Morrison will use reasonable commercial efforts to fill purchase
orders placed by distributor in a proper and timely manner. In the event of
Products shortages, Morrison shall have the right to make reasonable allocations
without liability to Distributor.
6. TRADEMARK
6.1. Ownership. Distributor acknowledges that the Trademark is the property of
Morrison and that Distributor acquires no right, title or interest in or to the
Trademark under this Agreement. Distributor agrees not to use or to authorize
any third party to use the Trademark with any other products, in a corporate
title, in a business name or in any other manner than affixed to the Products or
in connection with the promotion of the Products as expressly allowed in this
Agreement. All goodwill associated with the Trademark will inure exclusively to
the benefit of Morrison.
<PAGE>
6.2. No Disputes. Distributor will not dispute or contest for any reason
whatsoever, directly or indirectly, during the term of this Agreement or
thereafter, the validity or ownership of the Trademark, nor directly or
indirectly register or attempt to acquire or damage the value of the Trademark
or goodwill associated with the Trademark.
6.3. Quality Control. Distributor will use or display the
Trademark in all promotional materials and packaging only in the
manner and form specified by Morrison and Distributor will place
all notices on the Products, packaging for the Products and
promotional materials specified by Morrison.
6.4. Termination. Upon termination or expiration of this Agreement, any and all
rights of Distributor to use the Trademark will cease and Distributor will
permanently discontinue using the Trademark or any word, words or trademarks
similar thereto in association with any goods or services and will, at
Morrison's instruction, return or destroy any materials in its possession
bearing in any manner the Trademark, provided, however, that Distributor may (a)
continue to use the Trademark on or in relation to the Products in order to fill
purchase orders which have been placed and accepted by Morrison prior to such
termination or expiration, or (b) sell for a period of three (3) months the
Products in Distributor's inventory at the date of termination or expiration.
7. CONFIDENTIALITY
During the term of this Agreement, Distributor may be provided or have access to
confidential or proprietary information of Morrison, including, but not limited
to, designs, devices, inventions, processes, records, costs and prices
(collectively, the "Confidential Information"). Distributor agrees that during
the term of this Agreement and thereafter, Distributor shall not disclose the
Confidential Information to any third party, either directly or indirectly, or
use the Confidential Information in any way, except as expressly contemplated by
this Agreement, and then only for the benefit of Morrison. Confidential
Information shall not include: (a) any information which is or becomes generally
known to the public without fault of Distributor; (b) any information previously
known by Distributor; or (c) any information obtained in good faith from third
parties not under an obligation of secrecy to Morrison. Morrison will not be
provided or have access to any confidential or proprietary information of
Distributor during the term of this Agreement.
<PAGE>
8. WARRANTY AND LIMITATION OF LIABILITY
8.1. Warranty. The sole and exclusive warranty made by Morrison
with respect to the Products is set forth on the attached Exhibit
E, which may be prospectively amended by Morrison from time to
time.
8.2. Limitations of Liability. Except as set forth above, Morrison makes no
warranties whatsoever, whether express or implied, with regard to the Products,
and Morrison disclaims all WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, including warranties arising from course of dealing or usage
of trade. Except as otherwise provided herein, Morrison will not be liable for
any damages whatsoever, whether in contract, breach of warranty or tort arising
out of the acts or omissions of Distributor, its employees, agents or customers
with respect to the promotion, distribution or sale of the Products. In no event
will Morrison be liable to Distributor or its customers for lost profits, loss
of use or interruption of business, nor for special, indirect incidental or
consequential damages of any kind whatsoever, even if Morrison has been advised
of the possibility of such damages.
9. INDEMNIFICATION
Distributor agrees to indemnify, hold harmless and defend Morrison from and
against any and all suits, judgments costs damages, losses, claims, expenses or
liabilities of any nature which are threatened or brought against or inured by
Morrison arising out of the acts or omissions of distributor or from any breach
or threatened breach of this Agreement by Distributor.
10. INDEPENDENT CONTRACTOR
Both parties are independent contractors with respect to all matters arising out
of this Agreement. Neither party shall have nor shall represent that it has any
right to bind the other or to assume or create any obligation or responsibility,
contractual or otherwise on behalf or in the name of the other party. Neither
party shall be considered the employee, agent, partner or joint venturer of the
other.
11. JUSTIFIABLE DELAYS
Except with respect to payment of any amounts due hereunder, neither party will
be liable for failure to perform or for delay in its performance under this
Agreement due to causes beyond its
<PAGE>
control, including, without limitation, acts of God and governmental regulations
and restrictions, and the time for performance will be extended by a reasonable
period of time necessary to overcome the effect of such delay.
12. TERM AND TERMINATION
12.1. Term. This Agreement will take effect as of the date first above written,
and shall expire on September 30, 2001, unless earlier terminated in accordance
herewith. This Agreement may be renewed if the parties so agree for successive
five (5) year periods, but only by a writing signed by both parties.
12.2. Termination by Morrison. Morrison may terminate this Agreement upon
written notice to Distributor upon the occurrence of any one of the following
events, each of which is declared to be "just cause" for termination: (a)
Distributor fails to make any payment to Morrison when due and such failure
continues for ten (10) days after Distributor's receipt of notice of such; (b)
Distributor admits insolvency, becomes insolvent or institutes or has instituted
against it proceedings in bankruptcy, insolvency, reorganization or dissolution;
(c) Distributor makes an assignment for the benefit of creditors; (d)
Distributor distributes the Products outside of the Territory or to Health Care
Providers in the Territory (other than for use during the performance of
Procedures); (e) Distributor distributes competing products; (f) Distributor
commits any other material breach of this Agreement, and such breach is not
cured within thirty (30) days of Distributor's receipt of notice of such breach;
or (g) Distributor commits more than two (2) breaches in any twelve (12) month
period, even if such breaches are subsequently cured.
12.3. Termination by Distributor. Distributor may terminate this Agreement upon
written notice to Morrison: (a) in the event Morrison admits insolvency, becomes
insolvent or institutes or has instituted against it proceedings in bankruptcy,
insolvency, reorganization or dissolution; (b) if Morrison makes an assignment
for the benefit of creditors; (c) if Morrison commits any other material breach
of this Agreement and such breach is not cured within thirty (30) days of
Morrison's receipt of notice of such breach; or (d) Morrison commits more than
two (2) breaches in any twelve (12) month period, even if such breaches are
subsequently cured.
12.4. Effect of Termination. Upon termination or expiration
of this Agreement for any reason, each party shall promptly pay
to the other any sums due and owing. Morrison shall have the
<PAGE>
option to purchase any Products in Distributor's inventory. Provided that such
Products are unused and in the same condition as originally shipped by Morrison,
the price to be paid by Morrison shall be the original price paid by
Distributor. If not in such condition, the price shall be reduced appropriately.
12.5. Disclaimer. Each party expressly waives the payment of any compensation or
damages for termination of or failure to renew this Agreement and agrees to hold
harmless and indemnify the other against any claims of third parties therefore.
It is expressly understood and agreed that the rights of termination set forth
in this Agreement are absolute and that each party has considered the
possibility of the making of expenditures in preparing for performance under
this Agreement and the possibility of loss and damage resulting from termination
or expiration of this Agreement in accordance with its terms.
13. ARBITRATION
All Disputes, misunderstandings, or any other problems that may arise between
the parties by reason of or related to this Agreement, to the extent not
resolved through good faith negotiation of the parties, shall be decided by
arbitration. The arbitrator shall be chosen by agreement of the parties and, in
the event the parties cannot so agree, either party may file a written
application to have an arbitrator designated by the American Arbitration
Association. The arbitrator shall be chosen and the arbitration proceeding shall
take place in Sarasota Florida in accordance with the rules and procedures of
the American Arbitration Association. The arbitrator shall have all powers
necessary to determine the issues presented, including damages. The arbitrator
shall not have authority to award punitive damages. The decision of the
arbitrator shall be final and conclusive, both as to costs and the merits, and
the parties agree that they shall be bound by his decision. Such decision may be
enforced in any court of competent jurisdiction.
14. MISCELLANEOUS
14.1. No Waiver. No failure to exercise and no delay in
exercising any right, power or privilege hereunder by either
party will operate as a waiver thereof, nor will any partial
exercise of any right preclude further exercise of the same right
or any other right hereunder.
14.2. Choice of Law and Jurisdiction. This Agreement will be
governed by and construed in accordance with the laws of the
<PAGE>
Commonwealth of Pennsylvania without regard to its conflicts of laws provisions.
14.3. Assignment. This Agreement is personal to distributor
and may only be assigned by Distributor to a third party which
has the economic and professional ability to assume the
obligations of this Agreement.
14.4. Integration. This Agreement, together with the
attached Exhibits, sets forth the entire understanding of the
parties with respect to the subject matter and supersedes all
prior and contemporaneous agreements and understandings.
14.5. Invalid Provisions. If any reason any provision of this Agreement,
including, but not limited to, any provision relating to termination of this
Agreement, shall be deemed to be legally invalid or unenforceable in any
jurisdiction to which it applies, the validity of the remainder of the Agreement
shall not be affected and such provision shall be deemed modified to the minimum
extent necessary to make such provision consistent with applicable laws, and in
its modified form, such provision shall then be enforceable and enforced.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives effective as of the date first above
written.
MORRISON INTERNATIONAL, INC. SURGICAL SAFETY PRODUCTS, INC.
By:/s/John L. Edwards By:/s/J Stuart
Title: C.E.O. Title: Exec. V.P.
Date: 9/30/96 Date: 9/30/96
5445-022-0355901.03
<PAGE>
EXHIBIT A
PRODUCTS
Morrison's Instant Eyeglasses(R), Style D-02, with Clear Side
Shields
- - Fully assembled by Morrison's order fulfillment facility
- - Available in frame sizes to be advised by Morrison at the
time of order
- - Standard range of lenses +6.00 to -6.00 sphere on cylinders
to -2.00 in .25 diopter steps
5445-022-0355901.03
<PAGE>
EXHIBIT B
TERMS AND CONDITIONS OF SALE
1. LATE PAYMENT - Late payments shall bear interest at 1-1/2% per month or the
highest rate permitted by law, whichever is less.
2. FREIGHT AND TAXES - All applicable freight charges, taxes and duties which
Morrison may be require to pay or collect relating to the sale, purchase,
transportation, delivery or storage of the Products, except net income and
equity franchise taxes, shall be for account of Distributor.
3. CHECKING AND INSPECTION - Distributor agrees to check and inspect all
Products against shipment papers and for damage upon unloading at destination.
claims for shortage or damage must be made in writing within thirty (30) days
for delivery and Morrison must be given a reasonable opportunity to investigate.
Products alleged to be damaged or defective must be returned prepaid to
Morrison. Every claim shall be deemed waived by Distributor unless made in
writing within thirty (30) days of receipt of the Products by Distributor.
4. DELIVERY - Deliveries specified are only our best estimate.
5. CANCELLATION OR ALTERATION - Distributor may not alter or cancel any purchase
order without Morrison's written consent, which will not be unreasonably
withheld. Any purchase order delayed or deferred by Distributor will be subject
to price escalation for increased costs of production, and any other expense
caused by the delay thereby. Morrison reserves the right to invoice Distributor
and require payment before shipment on any such delayed or deferred order.
5445-022-0355901.03
<PAGE>
EXHIBIT C
PRICES
For the initial term of the Agreement, Morrison agrees to make fully assembled
Instant Eyeglasses(R), Style D-02, with Clear Side Shields, available at $6.98
per pair, exclusive of shipping, handling and packaging, for single vision
prescription powers which fall within Morrison's standard lens power range.
This price is F.O.B. Morrison's order fulfillment facility. If requested by
Distributor, Morrison will package and ship directly to the Distributor's
customers for a $3.00 per pair shipping and handling charge for orders of fewer
than ten pairs shipped to a single address. For orders of ten or more pairs
shipped to a single address, Morrison will quote the shipping and handling
charge at the time of the order.
Distributor may submit requests for pricing for purchase orders
for Products which fall outside of Morrison's standard lens power
range.
445-022-0355901.03
<PAGE>
EXHIBIT D
DISTRIBUTOR MINIMUM PURCHASES FOR RESALE
Contract Year Minimum Purchases
Year 1 (10/01/96 to 09/30/97) 2,750 Units
Year 2 (10/01/97 to 09/30/98) 12,500 Units
Year 3 (10/01/98 to 09/30/99) 33,500 Units
Year 4 (10/01/99 to 09/30/00) 45,500 Units
Year 5 (10/01/00 to 09/30/01) 56,000 Units
5445-022-0355901.03
<PAGE>
EXHIBIT E
WARRANTY
Morrison warrants to Distributor that the Products purchased by Distributor
shall conform to all specifications established by Morrison for the Products and
shall be free from defects in material and workmanship. If any Product fails to
conform to such specifications or is defective in materials or workmanship,
Morrison, at is option, will either replace such Product or issue a credit
memorandum to Distributor for the purchase price, freight and insurance
allocable to such Product. These warranties shall be applicable only if such
Product is handled, stored and used by distributor (and, if applicable, its
customer and the ultimate user) in accordance with the specifications
established by Morrison (90) days after the date of delivery to Distributor.
THESE WARRANTIES AND REMEDIES ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES
(EXCEPT WARRANTY OF TITLE) AND REMEDIES, WHETHER STATUTORY, EXPRESS, OR IMPLIED
(INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE).
5445-022-0355901.03
<PAGE>
EXHIBIT 6.7
DISTRIBUTION AGREEMENT
THIS AGREEMENT made as of the 1st day of August, 1997, between Surgical Safety
Products, Inc. (SSP) a New York corporation with its principal place of business
located 2018 Oak Terrace, Suite 400, Sarasota, Florida 34231, U.S.A., and
Hospital News (HN) a Florida corporation with its principal place of business
located at 4107 Gunn Highway, Tampa, FL 33642.
WHEREAS, SSP is engaged in the business of marketing and selling
eyeglasses; and
WHEREAS, Distributor is engaged in the business of distributing
various medical products to health care providers; and
WHEREAS, SSP AND Distributor desire to have Distributor distribute certain of
SSP's eyeglasses to health care providers in accordance with the terms and
conditions hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and premises herein
contained, the parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
1.1. "Health Care Providers" means hospitals, clinics, laboratories, physicians,
surgeons, surgical technicians, dentists, veterinarians, nurse practitioners,
nurses and other organizations and professions that provide health care to
humans and animals, and their respective employees.
1.2. "Procedures" means medical, surgical, dental and other health care
procedures that require that the person performing the procedure wear eyeglasses
with protective side shields while performing the procedure.
1.3. "Products" means the SSP products listed and described in
Exhibit A.
1.4. "Territory" means the state of Florida.
1.5. "Trademark" means the Medi-Specs Rx(TM) trademark.
2. DISTRIBUTOR'S RIGHTS.
2.1. Distribution Rights. SSP hereby grants to Distributor the
<PAGE>
right to purchase, promote, resell and distribute the Products, directly and
through dealers, under the Trademark, to Health Care Providers in the Territory,
for use during the performance of Procedures. Provided Distributor is in full
compliance with all of the terms and conditions of this Agreement, SSP agrees
that it will not appoint any other distributor of the Products to Health Care
Providers in the Territory for use during Procedures or sell the Products
directly to Health Care Providers in the Territory for use during the
performance of Procedures.
2.2. Market Exclusions. Notwithstanding the above, it is agreed that to the
extent that SSP or any licensee of SSP fills orders for Health Care Providers in
the Territory, which orders are placed on the Internet, such orders shall not be
a violation of Paragraph 2.1. Except as provided in this Agreement, no other
rights are granted to Distributor. The rights granted to Distributor do not
extend to the distribution of the Products outside the Territory or to Health
Care Providers in the Territory (other than for use during the performance of
Procedures), and Distributor agrees that it will no distribute the Products
outside the Territory or to Health Care Providers in the Territory (other than
for use during the performance of Procedures)or sell or distribute the Products
to any other party which sells, markets or distributes or intends to sell,
market or distribute the Products outside the Territory or to Health Care
Providers in the Territory (other than for use during the performance of
Procedures). Distributor further agrees that it will take such actions as are
legal and reasonable to prevent any dealer to whom it sells the Products from
selling, marketing or distributing the same to parties outside the Territory or
in the Territory (other than Health Care Providers for use during the
performance of Procedures), and that it will indemnify SSP and its licensees
against any and all loss of profit occasioned by the sale of the Products to
parties outside the Territory or to Health Care Providers in the Territory
(other than for use during the performance of Procedures) by Distributor or any
such party.
2.3. Territory Exclusions: The company at its sole discretion may
continue to develop certain established sales initiatives at
Sarasota Memorial Hospital and Doctors Hospital of Sarasota.
3. SALE AND PURCHASE
3.1 Terms and Conditions. All sales by SSP to Distributor will be made in
accordance with SSP's terms and conditions of sale attached to this Agreement as
Exhibit B at the prices attached to this Agreement as Exhibit C and the order
entry process attached
<PAGE>
to this Agreement as Exhibit F. This Agreement is expressly conditioned upon the
terms and conditions of sale contained in Exhibit B and SSP will not accept and
objects to any terms and conditions on Distributor's purchase order or other
forms different from or additional to those contained in Exhibit B. In the event
any terms and conditions of Exhibit B conflict with the terms and conditions of
this Agreement, this Agreement will be controlling. The terms and conditions of
sale contained in Exhibit B may be modified by SSP in its sole discretion, upon
thirty (30) days prior written notice. Further, in the event that Distributor
fails to achieve the annual requirements for Minimum Purchases listed in Exhibit
D, SSP may decrease the payment to Distributor on Exhibit C by providing
Distributor with written notice of such decrease at least thirty (30) days prior
to the effective date. Such decrease in price will be applied to the next
contract year's orders.
3.2 Purchase Orders. All purchase orders are to be submitted in writing to SSP
in a form to be designated by SSP and in accordance with Exhibit F. Purchase
orders must specify the size, color and inter-pupillary distance measure for
each pair of Products ordered. All purchase orders must be clearly referenced by
Distributor with a purchase order number and an identification number must be
included for each individual Health Care Provider. All purchase orders for
prescription Products must include a signed, valid prescription for each pair of
Products written no earlier than two (2) years prior to the date the purchase
order was submitted. All purchase orders must specify Distributor's preferred
method of delivery.
3.3 Estimated Quantities. On or before January 1, April 1, July 1, and October 1
of each year during the term of this Agreement, Distributor will submit to SSP
an estimate of the quantity of the Products Distributor will submit to SSP
during the subsequent three (3) month period. Such estimates are to be provided
to assist SSP in meeting the foreseeable demands of Distributor for the Products
and shall not become binding obligations on Distributor to order such quantities
nor on SSP to provide such quantities.
3.4. Prices, Delivery and Title. All prices of the Products will be F.O.B. SSP's
order fulfillment facility or other point of delivery designated by SSP. Risk of
loss shall pass to Distributor upon delivery to the carrier, and SSP reserves,
and Distributor grants to SSP, a purchase money security interest in each
shipment of the Products and the proceeds thereof until receipt of payment in
full. If any of the Products delivered to
<PAGE>
Distributor are damaged or do not otherwise comply in all material respects with
the specifications thereof, Distributor may return such damaged or
non-conforming Products to SSP for credit in accordance with SSP's then current
return policy. No credit will be given for orders which are correctly filled by
SSP but are not required by Distributor because of an error in the prescription
or ordering of the product.
3.5. Payment. Direct payments to SSP shall be in advance by a
check written on Distributor's bank in the United States of
America. Payment by Health Care Provider to SSP shall be by
personal check, money order, MasterCard or VISA.
4. DISTRIBUTOR'S OBLIGATIONS
4.1. Best Efforts. Distributor, at its sole expense, shall use its best efforts
to promote and distribute the Products to Health Care Providers in the Territory
for use during the performance of Procedures so that the Products are widely
used as possible throughout all parts of the Territory. Distributor agrees that
such efforts shall include, without limitation, promotion of the Products in
trade shows and exhibitions, direct sales and marketing, telemarketing or any
means Distributor sees fit. Notwithstanding the above, Distributor agrees that
it will purchase from SSP and sell to Health Care Providers, or dealers for
resale to Health Care Providers, in the Territory in each calendar year of the
Agreement, at least the Minimum Purchases set forth in Exhibit D.
4.2. Adequate Facilities. Distributor will maintain, at its own expense,
adequate premises and facilities within the Territory from which to receive
orders for the Products. It is agreed that all personnel engaged by Distributor
to assist in the distribution of the Products are employees and agents of
Distributor and are not of SSP, and all costs of such employees or agents are
the sole responsibility of Distributor.
4.3. Compliance with Laws. Distributor will comply with all
applicable laws and regulations and conduct its efforts hereunder
in accordance with the highest commercial and ethical standards.
4.4. Propriety Notices. All sales of the Products by Distributor
will be in Distributor's own name and for Distributor's own
account. However, Distributor agrees not to remove from the
Products or any materials provided with the Products, any patent,
trademark, copyright or other proprietary notices of SSP.
<PAGE>
4.5. Reports. Distributor will furnish SSP, upon SSP's request,
with written reports containing information concerning
Distributor's distribution activities,competition in the
marketplace and such other information as SSP may reasonably
request.
4.6. Insurance. Distributor will maintain comprehensive liability insurance for
the benefit of Distributor insuring against bodily injury or property damage
resulting from the acts or omissions of Distributor or its employees or agents
in such amounts and with such companies as are reasonably acceptable to SSP. All
such policies shall name SSP as an additional insured, with rights of
subrogation waived.
4.7. Competition. Distributor agrees that during the term of this
Agreement it will not directly or indirectly handle or sell any
products which compete with the Products. Distributor will
purchase all of its requirements for prescription eyeglasses with
side shields from SSP.
5. SSP's OBLIGATIONS
5.1. Promotional Materials. SSP will furnish Distributor with Product
photographs in electronic form from SSP's existing electronic library as well as
such assistance with layouts and other marketing advice as SSP, in its sole
discretion, determines to be appropriate. Distributor is solely responsible for
preparing and printing all necessary promotional materials.
5.2. Supply. SSP will use reasonable commercial efforts to fill
purchase orders placed by Distributor in a proper and timely
manner. In the event of Product shortages, SSP shall have the
right to make reasonable allocations without liability to
Distributor.
6. TRADEMARK
6.1. Ownership. Distributor acknowledges that the Trademark is the property of
SSP and that Distributor acquires no right, title or interest in or to the
Trademark under this Agreement. Distributor agrees not to use or to authorize
any third party to use the Trademark with any other products, in a corporate
title, in a business name or in any other manner than affixed to the Products or
in connection with the promotion of the Products as expressly allowed in this
Agreement. All goodwill associated with the Trademark will inure exclusively to
the benefit of SSP.
<PAGE>
6.2. No Disputes. Distributor will not dispute or contest for any reason
whatsoever, directly or indirectly, during the term of this Agreement or
thereafter, the validity or ownership of the Trademark, nor directly or
indirectly register or attempt to acquire or damage the value of the Trademark
or goodwill associated with the Trademark.
6.3. Quality Control. Distributor will use or display the
Trademark in all promotional materials and packaging only in the
manner and form specified by SSP and Distributor will place all
notices on the Products, packaging for the Products and
promotional materials specified by SSP.
6.4. Termination. Upon termination or expiration of this Agreement, any and all
rights of Distributor to use the Trademark will cease and Distributor will
permanently discontinue using the Trademark or any word, words or trademarks
similar thereto in association with any goods or services and will, at SSP's
instruction, return or destroy any materials in its possession bearing in any
manner the Trademark, provided, however, that Distributor may: a) continue to
use the Trademark on or in relation to the Products in order to fill purchase
orders which have been placed and accepted by SSP prior to such termination or
expiration, or b) sell for a period of three (3) months the Products in
Distributor's inventory at the date of termination or expiration.
7. CONFIDENTIALITY
During the term of this Agreement, Distributor may be provided or have access to
confidential or proprietary information of SSP, including, but not limited to,
designs, devices, processes, records, costs and prices (collectively, the
"Confidential Information"). Distributor agrees that during the term of this
Agreement and thereafter, Distributor shall not disclose the Confidential
Information to any third party, either directly or indirectly, or use the
Confidential Information in any way, except as expressly contemplated by this
Agreement, and then only for the benefit of SSP. Confidential Information shall
not include: a) any information which is or becomes generally known to the
public without fault of Distributor; b) any information previously known by
Distributor; or c) any information obtained in good faith from third parties not
under an obligation of secrecy to SSP. SSP will not be provided or have access
to any confidential or proprietary information of Distributor during the term of
this Agreement.
<PAGE>
8. WARRANTY AND LIMITATION OF LIABILITY
8.1. Warranty. The sole and exclusive warranty made by SSP with
respect to the Products is set forth in the attached Exhibit E,
which may be prospectively amended by SSP from time to time.
8.2. Limitations of Liability. Except as set forth above, SSP makes no
warranties whatsoever, whether express or implied, with regard to the Products,
and SSP disclaims all WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, including warranties arising from course of dealing or usage of trade.
Except as otherwise provided herein, SSP will not be liable for any damages
whatsoever, whether in contract, breach of warranty or tort arising out of the
acts or omissions of Distributor, its employees, agents or customers with
respect to the promotion, distribution or sale of the Products. In no event will
SSP be liable to Distributor or its customers for lost profits, loss of use or
interruption of business, nor for special, indirect incidental or consequential
damages of any kind whatsoever, even if SSP has been advised of the possibility
of such damages.
9. INDEMNIFICATION
Distributor agrees to indemnify, hold harmless and defend SSP from and against
any and all suits, judgments, costs, damages, losses, claims, expenses or
liabilities of any nature which are threatened or brought against or inured by
SSP arising out of the act or omissions of Distributor or from any breach or
threatened breach of this Agreement by Distributor.
10. INDEPENDENT CONTRACTOR
Both parties are independent contractors with respect to all matters arising out
of this Agreement. Neither party shall have nor shall represent that it has any
right to bind the other or to assume or create any obligation or responsibility,
contractual or otherwise on behalf or in the name of the other party. Neither
party shall be considered the employee, agent, partner, or joint venturer of the
other.
11. JUSTIFIABLE DELAYS
Except with respect to payment of any amounts due hereunder, neither party will
be liable for failure to perform or for delay in its performance under this
Agreement due to causes beyond its control, including, without limitation, acts
of God and governmental regulations and restrictions, and the time for
<PAGE>
performance will be extended by a reasonable period of time necessary to
overcome the effect of such delay.
12. TERM AND TERMINATION
12.1. Term. This Agreement will take effect as of the date first above written,
and shall expire on December 31, 1997, unless earlier terminated in accordance
herewith. This Agreement may be renewed if the parties so agree for successive
one (1) year periods, but only in writing signed by both parties.
12.2. Termination by SSP. SSP may terminate this Agreement upon written notice
to Distributor upon the occurrence of any one of the following events, each of
which is declared to be "just cause" for termination: a) Distributor fails to
make any payment to SSP when due and such failure continues for ten (10) days
after Distributor's receipt of notice of such; b) Distributor admits insolvency,
becomes insolvent or institutes or has instituted against it proceedings in
bankruptcy, insolvency, reorganization or dissolution; c) Distributor makes an
assignment for the benefit of creditors; d) Distributor distributes competing
products; f) Distributor commits any other material breach of this Agreement,
and such breach is not cured withing fifteen (15) days of Distributor's receipt
of notice of such breach; or g) Distributor commits more than two (2) breaches
in any six (6) month period, even if such breaches are subsequently cured.
12.3. Termination by Distributor. Distributor my terminate this
Agreement upon written notice to SSP: a) in the event SSP admits
insolvency, becomes insolvent of institutes or has instituted
against it proceeding in bankruptcy, insolvency, reorganization
or dissolution; b) SSP makes an assignment for the benefit of
creditors; c) if SSP commits any other material breach of this
Agreement and such breach is not cured within thirty (30) days of
SSP's receipt of notice of such breach; or d) if SSP is unable to
meet the production requirements of Distributor for a three (3)
month period.
12.4. Effect of Termination. Upon termination or expiration of this Agreement
for any reason, each party shall promptly pay to the other any sums due and
owing. SSP shall have the option to purchase any Products in Distributors's
inventory. Provided that such Products are unused and in the same condition as
originally shipped by SSP, the price to be paid by SSP shall be the original
price paid by Distributor. If not in such condition, the price shall be reduced
appropriately.
<PAGE>
12.5. Disclaimer. Each party expressly waives the payment of any compensation or
damages for termination of or failure to renew this Agreement and agrees to hold
harmless and indemnify the other against any claims of third parties therefore.
It is expressly understood and agreed that the rights of termination set forth
in this Agreement are absolute and that each party has considered the
possibility of the making of expenditures in preparing for performance under
this Agreement and the possibility of loss and damage resulting from termination
or expiration of this Agreement in accordance with its terms.
13. ARBITRATION
All disputes, misunderstandings, or any other problems that may arise between
the parties by reason of or related to this Agreement, to the extent not
resolved through good faith negotiation of the parties shall be decided by
arbitration. The arbitrator shall be chosen by agreement of the parties and, in
the event the parties cannot so agree, either party may file a written
application to have an arbitrator designated by the American Arbitration
Association. The arbitrator shall be chosen and the arbitration proceeding shall
take place in Sarasota, Florida in accordance with the rules and procedures of
the American Arbitration Association. The arbitrator shall have all powers
necessary to determine the issues presented, including damages. The arbitrator
shall not have authority to award punitive damages. The decision of the
arbitrator shall be final and conclusive, both as to costs and merits, and the
parties agree that they shall be bound by his decision. Such decision may be
enforced in any court of competent jurisdiction.
14. MISCELLANEOUS
14.1. No Waiver. No failure to exercise and no dely in exercising any right,
power or privilege hereunder by either party will operate as a waiver thereof,
no will any partial exercise of any right preclude further exercise of the same
right or any other right hereunder.
14.2. Choice of Law and Jurisdiction. This Agreement will be
governed by and construed in accordance with the laws of the
State of Florida without regard to its conflicts of laws
provisions.
14.3. Assignment. This Agreement may only be assigned by
Distributor to a third party, which has the economic and
professional ability to assume the obligations of this Agreement,
<PAGE>
with the written consent of SSP.
14.4. Integration. This Agreement, together with the attached
Exhibits, sets forth the entire understanding of the parties with
respect to the subject matter and supersedes all prior and
contemporaneous agreements and understandings.
14.5 Invalid Provisions. If for any reason any provision of this Agreement,
including, but not limited to, any provision relating to termination of this
Agreement, shall be deemed to be legally invalid or unenforceable in any
jurisdiction to which it applies, the validity of the remainder of the Agreement
shall not be affected and such provision shall be deemed modified to the minimum
extent necessary to make such provision consistent with applicable laws, and in
its modified form, such provision shall then be enforceable and enforced.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives effective as of the date first above
written.
SURGICAL SAFETY PRODUCTS, INC. HOSPITAL NEWS
By: /s/Donald K Lawrence By: /s/Ed Cohen
Title: V. P. SALES AND MARKETING Title: PRESIDENT
Date: 8-1-97 Date: 8-1-97
<PAGE>
EXHIBIT A
PRODUCTS
SSP's Medi-Specs Rx(TM) Medical Eyeglasses, Style D-02, with Clear
Side Shields
*Fully assembled by SSP's order fulfillment facility
*Available in frame sizes to be advised by SSP at the time of
orde
*Available in frame colors to be advised by SSP at the time of
order
*Standard range of lenses +6.00 to -6.00 sphere on cylinders to
- -2.00 in .25 diopter steps
<PAGE>
EXHIBIT B
TERMS AND CONDITIONS OF SALE
1. LATE PAYMENT - Late payments shall bear interest
at one and 1-1/2% per month or the highest rate permitted by law,
whichever is less.
2. FREIGHT AND TAXES - All applicable freight charges, taxes and duties which
SSP may be required to pay or collect relating to the sale, purchase,
transportation, delivery or storage of products, except net income and equity
franchise taxes, shall be for account of Distributor.
3. CHECKING AND INSPECTION - Distributor agrees to check and inspect all
Products against shipment papers and for damage upon unloading at destination.
Claims for shortage or damage must be made in writing within thirty (30) days of
delivery and SSP must be given a reasonable opportunity to investigate. Products
alleged to be damaged or defective must be returned prepaid to SSP. Every claim
shall be deemed waived by Distributor unless made in writing within thirty (30)
days of receipt of the Products by Distributor.
4. DELIVERY - Deliveries specified are only our best
estimate.
5. CANCELLATION OR ALTERATION - Distributor may not alter or cancel any purchase
order without SSP's written consent, which will not be unreasonably withheld.
Any purchase order delayed or deferred by Distributor will be subject to price
escalation for increased costs or production, and any other expense caused by
the delay thereby. SSP reserves the right to invoice Distributor and require
payment before shipment on any such delayed or deferred order.
<PAGE>
EXHIBIT C
PRICES
For the initial terms of this Agreement, SSP agrees to ship, sully assembled,
Medi-Specs Rx(TM) Eyeglasses, Style D-02, with clear side shields, to
distributor's customers for $19.95 per pair plus $4.95 shipping and handling.
For each new pair of glasses shipped and invoiced, SSP will pay Seven Dollars
($7.00) to the account of Distributor. This payment will be made no later than
seven (7) days after the receipt of Distributor's customer's payments to the
account of SSP. Any subsequent customer orders (re-orders) will be handled and
paid to the account of SSP.
<PAGE>
EXHIBIT D
PERFORMANCE: FLORIDA
It is agreed by both parties that Distributor will generate 800 orders for
Medi-Specs Rx(TM) Medical Eyeglasses, Style D-02, with side shields, within and
accordance with the terms of this Agreement.
Month (1997) Units Cumulative
July 0 0
August 50 50
September 150 200
October 200 400
November 200 600
December 200 800 Total Performance Standard
--------------------------
SURGICAL SAFETY PRODUCTS, INC. HOSPITAL NEWS
By: /s/ By:/s/Ed Cohen
Title: V. Pres. Sales and Marketing Title: President
Date: 7-16-97 Date: 8-1-97
<PAGE>
EXHIBIT E
WARRANTY
SSP warrants to Distributor that the Products purchased by Distributor shall
conform to all specifications established by SSP for the Products and shall be
free from defects in material and workmanship. If any Products fails to conform
to such specifications or is defective in materials or workmanship, SP, at its
option, will either replace such product or issue a credit memorandum to
Distributor for the purchase price, freight and insurance allocable to such
Product. These warranties shall be applicable only if such Product is handled,
stored and used by Distributor (and, if applicable, its customer and the
ultimate user) in accordance with the specifications established by SSP and a
written claim is made by Distributor not later than ninety (90) days after the
date of delivery to Distributor. THESE WARRANTIES AND REMEDIES ARE EXCLUSIVE AND
IN LIEU OF ALL OTHER WARRANTIES (EXCEPT WARRANTY OF TITLE) AND REMEDIES, WHETHER
STATUTORY, EXPRESS, OR IMPLIED (INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE).
<PAGE>
EXHIBIT F
SALES AND OTHER PROCESS
Hospital News will solicit, collect and deliver complete sales orders to
Surgical Safety Products, Inc. A complete sales order consists of the following:
1. Complete, dated, and signed prescriptions including frame
measurements. The prescriptions must fall within the accepted
range as indicated on current marketing material.
2. Complete Order Information: This includes the number of
pairs, color and shipping address.
3. Payment: Distributor costs for each pair of glasses is $13+ $4.95 Shipping
and Handling and 7% FL sales tax. Distributor costs for group orders received by
SSP in excess of twenty-five (25) sets from a single healthcare facility is
$12.00 + $3.95 Shipping and Handling. Payment in the form of company check must
be submitted with each batch of orders. The frequency of batch order submission
will be determined by order volume, but should be at least on a weekly basis to
ensure prompt fulfillment of the customer's order.
Surgical Safety Products, Inc. will verify and deliver orders to
the manufacturer within twenty-four (24) hours of receipt.
Shipment to the customer should follow within seven business
days.
<PAGE>
EXHIBIT 6.8
CLINICAL PRODUCTS TESTING AGREEMENT
THIS CLINICAL PRODUCTS TESTING AGREEMENT (the "Agreement") is entered into this
30th day of January 1998, by and between SURGICAL SAFETY PRODUCTS, INC.,
("SSP"), a New York corporation, with its principal office at 2018 Oak Terrace,
Sarasota, Florida 34231, and Sarasota Memorial Hospital ("SMH"), with an office
located at 1700 South Tamiami Trail, Sarasota, Florida 34239.
WITNESSETH:
WHEREAS, SSP has begun the development of certain products used in surgery and
other medical procedures or treatments; and
WHEREAS, SHM is an acute care hospital and related facilities owned and operated
by the Sarasota County Public Hospital Board ("the Board"), willing to perform
clinical testing of the products at its facilities.
NOW, THEREFORE, in consideration of the mutual covenants, promises and
undertakings provided herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Product Testing.
a. SSP shall submit ten (10) surgical or medical products (the
"Products") for clinical testing by SMH during the first five (5) years of the
term of this Agreement. The Products are identified on Schedule 1 hereto, which
may be altered from time to time by substitution of products by SSP.
b. SMH shall provide clinical testing services with respect to each of
the Products in accordance with protocols prepared by SSP and agreed upon by SMH
prior to the commencement of clinical testing ( the "Protocols"). Each Protocol
shall contain a clinical testing budget which shall identify the estimated cost
to be incurred by SMH in performing its testing services hereunder. The results
derived from the performance of testing services by SMH in accordance with
Protocols shall be hereinafter referred to as a "Study" or "Studies".
<PAGE>
2. Compliance with Laws. SMH shall comply with the provisions of any Protocol
and any applicable federal, state, and local laws, rules and regulations, and
operate in accordance with all applicable standards and recommendations of the
United States Food and Drug Administration and other applicable federal and
state agencies in performing clinical testing of the Products under the
Protocols.
3. Term. The Term of this Agreement shall be five (5) years
from the date hereof and such additional time as required by SMH
to complete clinical testing of all of the Products.
4. Clinical Data. Upon request by SSP, all clinical data generated as a result
of a Study will be promptly and completely disclosed by SMH and delivered to
SSP, who will conduct onside and/or telephone monitoring of a Study. At the
request of SSP, SMH will provide a study summary or overview in addition to such
clinical data. SMH also agrees to permit SSP and persons authorized by SSP to
have on-site access to the information relating to a Study during normal
business hours or as otherwise required by law.
All study-related information will become the property of SSP and may
be freely utilized by SSP in any manner deemed appropriate by SSP and will by
subject to the provisions of Section 5 below.
5. Confidential Information. SMH will keep strictly
confidential all information, materials, and data transmitted by
SSP to SMH for use with any Protocol and all information,
materials and data generated by SMH in connection with any Study.
6. Compensation.
a. SSP shall reimburse SMH for its actual costs of providing all
clinical testing services rendered hereunder as agreed upon in a budget
contained in each Protocol and shall pay SMH a fixed profit amount of
TWENTY-FIVE THOUSAND UNITED STATES DOLLARS (U.S. $25,000) (the "Profit Amount")
for each Study. SSP shall reimburse SMH for its costs and shall pay a pro rata
portion of the Profit Amount based on the estimated duration of each Study on a
monthly basis within five(5) days of submission by SMH of an appropriate
invoice.
b. In consideration of SMH making its staff and facilities available to
perform the Studies, SSP acknowledges and agrees that the full Profit Amount of
TWO HUNDRED FIFTY THOUSAND UNITED STATES DOLLARS (U.S. $250,000) shall be
payable in all events, regardless of the final cost incurred by SMH and in the
event SSP determines no to have SMH perform clinical testing on one or more of
the Products.
<PAGE>
c. The Profit Amount payable by SSP hereunder shall be reduced by any
payments actually made to Community Health Corporation under Article 13(c) of
that certain Prepaid Capital Lease Agreement dated January 30, 1998, covering
the SSN Network, currently in use by SMH.
d. SSP shall pay SMH one-half of one percent (.5%) of the proceeds
realized by SSP from the sale, use or licensing of the Products, payable no
later than five (5) days of the end of each three-month period commencing upon
the receipt of any proceeds by SSP.
7. Verification. SMH and SSP shall each have the right to retain at its own
expense an independent certified public accountant to verify the other party's
accounting records to determine the accuracy of the costs reported under Section
6(a) herein or amounts determined under Section 6(a) herein.
8. Publication and Announcements. SMH agrees not to publish or
present the results of the Study or any paper utilizing data
generated from the Study, or otherwise disclose any aspect of the
Study, without the prior written consent of SSP.
9. Termination. This Agreement my be terminated upon thirty
(30) days written notice to SSP if SMH for any reason becomes
unable to perform and complete any of the Studies, or by either
party upon a material breach of any of the terms and conditions
of this Agreement by the other party, provided;
a. The non-breaching party provides the other party with a written
notice specifying the alleged breach and such other party shall have ten (10)
day to cure such breach; and,
b. In no event shall SMH be paid less than the total Profit Amount,
regardless of any breach of the Agreement by SMH, subject to Section 6(c)
herein.
10. Document Retention. SMH shall retain a copy of all
documentation relating to the Studies in accordance with
applicable law until all obligations required of all persons
associated with the Studies have been completed.
11. Authorization. SMH shall obtain all approvals as required
to conduct the Studies.
12. Indemnification.
a. SSP agrees to indemnify and hold harmless SMH, its agents and
employees, and the Board, its agents and employees (hereinafter collectively
referred to as the "Indemnified Parties"), from and against any and all damages,
claims, liabilities, losses, costs and expenses whatsoever, including
<PAGE>
claims of injury or illness, resulting from the conduct or
administration of the Studies.
b. SSP's duty to indemnify the Indemnified Parties pursuant hereto is
conditional upon the Indemnified Parties having observed the terms of the
Protocols in all material respects and not having violated any local, state or
federal laws pertaining to the conduct or the administration of the Studies.
c. If any legal, administrative, arbitration, or other proceeding or
action or governmental investigation is instituted or threatened in writing
against the Indemnified Parties by any party upon which Indemnified Parties
claim or intend to claim the SSP would be liable to it under this Agreement,
Indemnified Parties shall provide SSP with written notice of such claim within
ten (10) days of the assertion hereof. In the event that SSP shall agree that
the success of such claim, action, or suit would make SSP liable to Indemnified
Parties under this Agreement, and SSP secures its potential obligation to the
Indemnified Party in an amount and in a manner satisfactory to the Indemnified
Parties, in its sole discretion, the Indemnified Parties shall permit SSP to
defend the same at SSP's sole expense, and the Indemnified Parties shall
cooperate with SSP by making available to SSP at reasonable times for the
purpose of consultation and giving deposition and courtroom testimony, as such
places as SSP shall reasonably require, without expense to SSP. In such event,
SSP shall keep SMH and its counsel reasonably informed as to the status of its
defense of such proceeding, action, or governmental investigation. In the event
SSP does not elect or neglect to defend such a claim, abandons a defense, or if
a judgment entered against Indemnified Parties is not appealed and becomes
final, Indemnified Parties may cause the same to be paid, with court costs, if
any, and proceed against SSP herein. In the event that, upon receiving notice of
such claim, action, or suit, SSP shall notify Indemnified Parties that such
claim, action, or suit is not clearly within the scope of the indemnification of
this Agreement, or SSP does not secure its potential obligation hereunder in an
amount of manner satisfactory to the Indemnified Party, the Indemnified Parties
may undertake the defense for itself and proceed against SSP under this
Agreement.
13. Notices. Any notices required or permitted to be given hereunder shall be
deemed to have been given when given personally, or deposited in the United
States mails, certified mail, return receipt requested, postage prepaid,
addressed to the party to whom given at the following address:
If to Surgical Safety Products, Inc.:
G. Michael Swor, M.D.
<PAGE>
2018 Oak Terrace
Sarasota, Florida 34231
If to Sarasota Memorial Hospital or the Board:
Michael H. Covert, President
1700 S. Tamiami Trail
Sarasota, Florida 34239
Notification at the above addresses shall be binding upon both parties unless
written notice of change of address has been given by one party to the other.
14. Relationship. The relationship between the parties is that
of independent contractors; no partnership, joint venture, agency
or employment is intended.
15. No Waiver. The failure of any party to insist upon strict performance of any
obligation hereunder shall not be a waiver of such party's right to demand
strict compliance of that or any other obligation in the future. No custom or
practice of the parties at variance with the terms hereof shall constitute a
waive, nor shall any delay or omission of a party to exercise any rights arising
from a default impair the party's right as to said default or to any subsequent
default.
16. Binding Effect and Benefits. All provisions of this Agreement shall be
binding upon and shall inure to the benefit of, and shall be enforceable by and
against all parties hereto and their respective heirs, legal representative,
successors and assigns. Nothing in this Agreement express or implied, is
intended to or shall confer upon any person other than the parties hereto and
their respective heirs, legal representative, successors or assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement.
17. Assignment. This Agreement is personal to each of the parties hereto, and
neither party may assign nor delegate any of its rights or obligations hereunder
without first having obtained the written consent of the other party, except
that SMH may assign this Agreement to any party affiliated with SMH without its
sole discretion.
18. Amendment. No charge, modification or amendment of this
Agreement shall be valid or binding upon any party hereto unless
expressed in writing signed by the party against whom the same is
sought to be enforced.
19. Integration. This Agreement contains the entire agreement
<PAGE>
of the parties and supersedes all negotiations, tentative agreements,
representations, commitments, or arrangements made prior to the date hereof. All
prior agreements are merged into this Agreement and all representations and
warranties, whether oral or written, are hereby disclaimed and disavowed unless
expressly reiterated in this Agreement.
20. Construction. This Agreement shall be interpreted whether as to validity,
capacity, performance, or remedy, according to the internal substantive laws of
the State of Florida. Titles of captions of articles and paragraphs contained in
this Agreement are inserted only as a matter of convenience and for reference,
and in no way define, limit, extend or describe the scope of this Agreement or
the intent of any provisions hereunder. Whenever required by the context, the
singular number shall include the plural, the plural the singular, the masculine
and neuter gender shall include all genders.
21. Venue. The parties to this Agreement agree that jurisdiction and venue shall
properly lie in the Twelfth Judicial Court of the United States of Florida, in
and for Sarasota County, Florida or in the United States District Court for the
Middle District of Florida with respect to any and all legal proceedings arising
from this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
WITNESS: SURGICAL SAFETY PRODUCTS, INC.
________________ By: /s/ G M Swor
________________ As Its: President
SARASOTA MEMORIAL HOSPITAL
________________ By: /s/Michael H Covert
/s/Surannea Fruheb As Its: President
Schedule 1
PRODUCTS
SharpsMate Prostasert/Gyn
SutureMate VagPak
Transfer Tray Cirperfect
FingerSafe MediSpecs
MayoMate
PrepWiz - 2 Studies
<PAGE>
EXHIBIT 6.9
REAL ESTATE LEASE
This Lease Agreement (this "Lease") is made effective as of June 01, 1998, by
and between Savannah Leasing ("Landlord"), and Surgical Safety Products, Inc.
("Tenant"). The parties agree as follows:
PREMISES. Landlord, in consideration of these lease payments
provided in this Lease, leases to Tenant 3,500 sq. feet building
(the "Premises") located at 2018 Oak Terrace, Sarasota, Florida
34231.
TERM. The lease term will begin on June 01, 1998 and will
terminate on May 31, 2000.
LEASE PAYMENTS. Tenant shall pay to Landlord monthly payments of $3,500.00 per
month, payable in advance on the fifth day of each month, for a total annual
lease payment of $42,000.00. Lease payments shall be made to the Landlord at
2018 Oak Terrace, Sarasota, Florida 34231, which may be changed from time to
time by the Landlord.
POSSESSION. Tenant shall be entitled to possession on the first day of the term
of this Lease, and shall yield possession to Landlord on the last day of the
term of this Lease, unless otherwise agreed by both parties in writing.
USE OF PREMISES. Tenant may use the Premises only. The Premises may be used for
any other purpose only with prior written consent of Landlord, which shall not
be unreasonably withheld. Tenant shall notify Landlord of any anticipated
extended absence.
PROPERTY INSURANCE. Landlord and Tenant shall each be
responsible to maintain appropriate insurance for their
respective interests in the Premises and property located on the
Premises.
DEFAULTS. Tenant shall be in default of this Lease if Tenant fails to fulfill
any lease obligation or term by which Tenant is bound. Subject to any governing
provisions of law to the contrary, if Tenant fails to cure any financial
obligation within 30 days (or any other obligation within 30 days) after written
notice of such default is provided by Landlord to Tenant, Landlord may take
possession of the Premises without further notice (to the extent permitted by
law), and without prejudicing Landlord's rights to damages. In the alternative,
Landlord may
<PAGE>
elect to cure any default and the cost of such action shall be added to Tenants
financial obligations under this Lease. Tenant shall pay all costs, damages and
expenses (including reasonable attorney fees and expenses) suffered by Landlord
by reason of Tenant's defaults. All sums of money or charges to be paid by
Tenant under this Lease shall be additional rent, whether or not such sums or
charges are designated as "additional rent".
NOTICE. Notices under this Lease shall not be deemed valid unless given or
served in writing and forwarded by mail, postage prepaid, addressed as follows:
LANDLORD:
Name: Savannah Leasing
Address: 2018 Oak Terrace
Sarasota, Florida 34231
TENANT:
Name: Surgical Safety Products, Inc.
Address: 2018 Oak Terrace
Sarasota, Florida 34231
Such addresses may be changed from time to time by either party providing notice
as set forth above.
ENTIRE AGREEMENT/AMENDMENT. This Lease Agreement contains the entire agreement
of the parties and there are no other promises or conditions in any other
agreement whether oral or written. This Lease may be modified or amended in
writing, if the writing is signed by the party obligated under the amendment.
SEVERABILITY. If any portion of this Lease shall be held to be invalid or
unenforceable for any reason, the remaining provisions shall continue to be
valid and enforceable. If a court finds that any provision of this Lease is
invalid or unenforceable, but that by limiting such provision, it would become
valid and enforceable, then such provision shall be deemed to be written,
construed, and enforced as so limited.
WAIVER. The failure of either party to enforce any provisions of this Lease
shall not be construed as a waiver or limitation of that party's right to
subsequently enforce and compel strict compliance with every provision of this
Lease.
CUMULATIVE RIGHTS. The rights of the parties under this Lease
are cumulative, and shall not be construed as exclusive unless
otherwise required by law.
<PAGE>
GOVERNING LAW. This Lease shall be construed in accordance with
the laws of the State of Florida.
PARKING. Tenant shall be entitled to use all parking space(s)
for the parking of the Tenant's customers'/guests' motor
vehicle(s).
STORAGE. Tenant shall be entitled to store items of personal
property in on site during the term of this Lease. Landlord
shall not be liable for loss of, or damage to, such stored items.
HOLDOVER. If Tenant maintains possession of the Premises for any period after
the termination of this Lease ("Holdover Period"), Tenant shall pay to Landlord
a Lease payment for the Holdover period equal to the amount set forth in the
following Lease Payments paragraph. Such holdover shall constitute a month to
month extension of this Lease.
RENEWAL TERMS. This Lease shall automatically renew for an additional period of
1 year per renewal term, unless either party gives written notice of the
termination no later than 30 days prior to the end of the term or renewal term.
The Lease terms during any such renewal term shall be the same as those
contained in this Lease except that the lease payment shall be $3,750.00 per
month.
NON-SUFFICIENT FUNDS. Tenant shall be charged $25.00 for each check that is
returned to Landlord for lack of sufficient funds.
MAINTENANCE.
Landlord's obligations for maintenance shall include: -The roof, outside walls,
and other structural parts of the building -The sewer, water pipes and other
matters relating to plumbing -The electrical wiring -The air conditioning system
- -The heating system
Tenant's obligations for maintenance shall include: -The parking lot, driveways,
and sidewalks, including snow and ice removal -All other items of maintenance
not specifically delegated to Landlord under this lease.
UTILITIES AND SERVICES.
Landlord shall be responsible for all utilities and services in connection with
the Premises.
<PAGE>
TAXES. Taxes attributable to the Premises or the use of the
Premises shall be allocated as follows:
REAL ESTATE TAXES. Landlord shall pay all real estate taxes and
assessments for the Premises.
PERSONAL TAXES. Landlord shall pay all personal taxes and any other charges
which may be levied against the Premises and which are attributable to Tenant's
use of the Premises, along with all sales and/or use taxes (if any) that may be
due in connection with lease payments.
DESTRUCTION OR CONDEMNATION OF PREMISES. If the Premises are partially destroyed
in a manner that prevents the conducting of Tenant's use of the Premises in a
normal manner, and if the damage is reasonably repairable within sixty days
after the occurrence of the destruction, and if the cost of repair is less than
$0.00, Landlord shall repair the Premises and lease payments shall abate during
the period of the repair. However, if the damage is not repairable within sixty
days, or if the cost of repair is $0.00 or more, or if Landlord is prevented
from repairing the damage by forces beyond Landlord's control, or if the
property is condemned, this Lease shall terminate upon twenty days' written
notice of such event or condition by either party.
TERMINATION UPON SALE OF PREMISES. Notwithstanding any other provision of this
Lease, Landlord may terminate this lease upon 30 days' written notice to Tenant
that the Premises have been sold.
REMODELING OR STRUCTURAL IMPROVEMENTS. Tenant shall have the obligation to
conduct any construction or remodeling (at Tenant's expense) that may be
required to use the Premises as specified above. Tenant may also construct such
fixtures on the Premises (at Tenant's expense) that appropriately facilitate its
use for such purposes. Such construction shall be undertaken and such fixtures
may be erected only with prior written consent of the Landlord which shall not
be unreasonably withheld. At the end of the lease term, Tenant shall be entitled
to remove (or at the request of Landlord shall remove) such fixtures, and shall
restore the Premises to substantially the same condition of the Premises at the
commencement of this Lease.
FIRST RIGHT ON ADJACENT PROPERTY LEASE. Tenant shall have the
first right to lease or purchase landlord owned adjacent
properties at the end of existing leases or agreements. This
includes 2024 Oak Terrace and 2017/2019 Oak Terrace. Landlord
will notify tenant 30 days prior to availability of these properties.
<PAGE>
ASSIGNABILITY/SUBLETTING. Tenant may not assign or sublease any interest in the
Premises, nor effect a change in the majority ownership of the Tenant (from the
ownership existing at the inception of this lease), without the prior written
consent of Landlord, which shall not be reasonably withheld.
LANDLORD:
Savannah Leasing
/s/G M Swor
Savannah Leasing
TENANT:
Surgical Safety Products, Inc.
/s/Frank M Clark
Surgical Safety Products, Inc.
<PAGE>
EXHIBIT 6.10
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into this 1st day of April, 1997, by and
between Surgical Safety Products, Inc., a corporation organized and existing
under the laws of the State of New York, (hereinafter referred to as
"Corporation"), and Don Lawrence (hereinafter referred to as "Employee").
WITNESSETH:
WHEREAS, Employee desires employment as an employee of
Corporation, and
WHEREAS, Corporation desires to employ Employee under the terms and conditions
hereinafter stated.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
herein contained, it is agreed by and between Corporation and Employee as
follows:
ARTICLE ONE: TERM
Corporation agrees to employ Employee, and Employee agrees to be so employed,
for a term of one (1) year, commencing on May 1, 1997, and terminating on March
31, 1998, for the purpose of rendering, on behalf of Corporation, services as a
Marketing Director. The aforesaid term of employment shall be automatically be
extended from year to year subsequent to its expiration and thereafter, unless
either party gives the other written notice to the contrary no later than
fourteen (14) days prior to the end of such initial term or any extended term.
The said term of employment and any extension thereof shall be hereinafter
referred to as the "period of active employment".
ARTICLE TWO: COMPENSATION
For all services rendered by Employee under this Agreement during the period of
active employment, and immediately subsequent to Corporate funding as defined
above, Corporation shall pay to Employee a rate/salary of $50,000 per year in
equal bi-monthly installments. Such salary may be adjusted by the Board of
Directors of Corporation as required.
In addition to the salary stated above, Employee may receive, at the election of
Corporation, a special productivity bonus. The Special productivity bonus shall
be in an amount and paid at such time or times as the Board of Directors of
Corporation, in its sole and absolute discretion, shall determine. In making its
determination of the amount of bonus, if any, to be paid, the Board of Directors
of Corporation shall take into account the amount, if any, provided to Employee
in the form of other compensation.
ARTICLE THREE: TIME
Employee hereby accepts employment with Corporation on the terms and conditions
herein set forth and agrees that during the period of active employment, as
defined above, Employee will devote Employee's full time and attention to the
rendition of the enumerated services on behalf of Corporation and to the
furtherance of Corporation's best interests. Employee agrees that, in the
rendition of such services and in all aspects of the employment, Employee will
comply with the policies, standards and regulations of the Corporation from time
to time established, provided same are reasonable and do not violate the law or
ethics.
ARTICLE FOUR: DUTIES
Employee is employed to Commercialize & Market Products & Services on behalf of
Corporation. Employee will not engage in such activity except as an employee of
Corporation unless otherwise authorized by the Board of Directors of
Corporation. Corporation shall have the power to determine the specific duties
which shall be performed by Employee, and shall, within reason, determine the
means and manner in which these duties shall be performed. Duties of Employee
shall include, by not be limited to, management of the assigned business.
Corporation shall at
<PAGE>
all times have the power to tell Employee what duties, as well as how many hours
during the day Employee shall perform his or her duties; provided, however, that
Employee shall not be compelled to work longer than a normal work week unless
agreed to otherwise by Employee.
The power to direct, control and supervise the duties to be performed, the
manner of performing said duties, the employee performing said duties and the
time for performing said duties shall be exercised by the Board of Directors of
Corporation; provided, however, that the Board shall not impose employment
duties or restraints of any kind which would require Employee to infringe on
professional ethics or violate any local ordinance or other law.
Employee agrees to abide by and follow the ethics of the Corporation's
profession and all federal, state and local laws and ordinances relating to or
regulating the Corporation.
Employee, subject to the approval of Corporation, may seek and/or accept any
elective or appointive office or position within any recognized professional
association and may attend professional meetings, seminars and conventions,
provided that such activities do not require an unreasonable amount of
Employees's time and do not otherwise adversely affect Corporation's interests.
ARTICLE FIVE: ACCOUNTING AND RECORD KEEPING
Employee shall maintain for Corporation all active records in his or her
possession. The records shall be kept at the place of business of Corporation
and shall be the sole permanent property of Corporation. Unless required by
service of legal process, no records shall be displayed or delivered to, no any
information therefrom disclosed to any person not connected with Corporation,
without first obtaining consent from the Executive Vice President of
Corporation.
All income generated by Employee for services as Employee, and all activities
relating thereto, such as writing thesis or articles, and consultative work for
any governmental or other agency, shall belong to the Corporation, whether paid
directly to Corporation or to Employee. Employee may be required (and agrees
upon the request of Corporation) too render a true account of all transactions
relating to Employees's professional practice during the course of Employee's
employment. Employee shall have no authority to enter into any contracts binding
upon Corporation, except as shall be specifically authorized by the Board of
Directors of Corporation or by an executive officer of Corporation acting
pursuant to authority granted by the Board of Directors of Corporation.
ARTICLE SIX: WORKING FACILITIES
Corporation shall furnish Employee with such office, technical and/or
secretarial assistance, and other facilities and services which Corporation, in
its sole discretion, shall deem suitable to Employee's position and adequate for
the performance of Employee's duties.
ARTICLE SEVEN: EXPENSES
It is understood and agreed that Employee shall from time to time incur expenses
for and on behalf of Corporation and will also incur reasonable and necessary
expenses for the promotion of the business of Corporation, including expenses
for entertainment, travel, dues, supplies and similar expenses. Corporation
shall reimburse Employee for such expenses incurred, including travel and other
expenses reasonably and necessarily incurred by Employee in the performance of
duties pursuant to this Agreement. These expenses should be pre-approved by the
Executive Vice President of Corporation.
ARTICLE EIGHT: VACATION
Employee shall, for each year of active service, as defined above, be entitled
to a vacation as provided for in the Corporation Policy Manual in existence from
time to time, at which time Employee's salary shall be paid in full. Such
vacation shall be taken at times to be determined in the manner most convenient
to Corporation and to Employee. Unless otherwise consented to by Corporation,
unused vacation time may not be accumulated and carried to another year.
<PAGE>
In addition to the vacation period above, an additional leave of absence shall
be granted with full pay to Employee for attendance at professional conventions,
continued educational institutions or other professional or business activities
approved by Corporation.
ARTICLE NINE: DISABILITY
In the event Employee is unable to fully perform his/her services by reason of
illness or incapacity of any kind, then in that event, Employee's salary shall
continue for a period of Sixty (60) days. All periods of absence form work for
illness or incapacity shall, for purposes of such compensation, be aggregated.
In the event Employee is unable to return to work on a full-time basis at or
before the expiration of such Sixty (60) day period, then in that event,
Employee salary payment may be reduced or terminated by Corporation in its
absolute discretion. Employee's full salary may be reinstated upon the return to
full-time employment and the full discharge of duties hereunder. Corporation
reserves the right to provide Employee with disability coverage by paying the
premiums on disability insurance policies insuring Employee, and Corporation
shall thereupon only be required to pay the difference, if any, between
disability payment to Employee by the insurer under such policies and the salary
required to be pain hereunder.
ARTICLE TEN: TERMINATION
This Agreement may be terminated by the Board of Directors of Corporation upon
the occurrence of one or more of the following events:
1. If Employee shall fail or refuse to comply with the policies,
standards and regulations of Corporation from time to time
established; or,
2. In the event Employee shall fail and refuse to diligently
perform the conditions of this Agreement and the usual and
customary duties of Employee's employment; or
3. In the event of a bona fide determination by the Board of Directors of
Corporation to sell or reduce to cash substantially all of the assets of
Corporation and to distribute the corporate assets to its stockholders in
liquidation.
4. Death of Employee.
Notwithstanding anything herein contained to the contrary, this Agreement my be
terminated by any party hereto upon fourteen (14) days written notice.
ARTICLE ELEVEN: TRADE SECRETS
It is acknowledged by and between the parties hereto that, during the course of
its employment, Employee will have access to, and will obtain knowledge of,
information utilized by Corporation that will be considered "trade secrets" by
Corporation as defined in F.S.A. ss.ss.688.001-688.009, as amended. Employee
shall not disclose any such information to third parties during the course of
his/her employment with Corporation, or at any time subsequent thereto, unless
expressly authorized by the Executive Vice President of the Corporation in
writing. In the event of any improper disclosure of a trade secret of
Corporation by Employee during the course of his/her employment, Corporation
shall have the right to immediately terminate the employment of Employee and to
institute appropriate action against Employee pursuant to this Agreement and the
Florida Uniform Trade Secrets Act.
ARTICLE TWELVE: RELATIONSHIP BETWEEN THE PARTIES The parties recognize that the
Board of Directors of Corporation, in accordance with controlling state
statutes, shall manage the business affairs of Corporation. The relationship
between Corporation and Employee is that of employer and employee.
Employee shall be entitled to participate in any plans, arrangements or
distributions by Corporation pertaining to or in connection with any major
medical insurance program, group term life insurance program, or nay pension,
bonus, profit sharing or similar benefits provided to the other employees of
Corporation as may be available. Nothing herein contained shall be construed to
give Employee any interest in the tangible or intangible assets of Corporation.
<PAGE>
ARTICLE THIRTEEN: COVENANT NOT TO COMPETE
Employee hereby agrees that he/she will not, for a period of one year from the
effective date of termination of his/her employment relationship with
Corporation, for whatever reason, engage, directly or indirectly, in a business
similar to that of the Corporation and that Employee will not during such period
of time be connected, directly or indirectly, with any person, firm or
corporation engaged in such a business and that during said period Employee will
have no financial interest in any such business. Employee further agrees that
during said period, Employee will not, directly or indirectly, be employed by or
become a partner of or a stockholder of any partnership or corporation engaged
in a business similar to that of Corporation. This covenant will be applicable
to Employee with the geographical area consisting of the State of Florida. This
covenant on the part of Employee shall be construed as an agreement; and the
existence of any claim or cause of action of Employee or otherwise, shall not
constitute a defense to the enforcement by Corporation of this covenant. It is
agreed by the parties hereto that if any portion of this covenant not to compete
is held to be unreasonable, arbitrary or against public policy, the covenant
herein shall be considered diminishable both as to time and geographical area;
and each month for the specified period shall be deemed a separate period of
time, and each quarter mile shall be deemed a separate geographical area, and
shall remain effective so long as the same is not unreasonable, arbitrary, or
against public policy. The parties hereto agree that in the event any court
determines the specified time period or the specified geographical area to be
unreasonable, arbitrary, or against public policy, a lesser time period or
geographical area which is determined to be reasonable, nonarbitrary and not
against public policy may be enforced against Employee. Employee further
consents to the entering of any injunction to enforce this covenant.
In the event that Corporation or its successors in interest shall make
application to a court of competent jurisdiction for injunctive relief, then and
in that event the five (5) year period of time specified herein shall be tolled
for a period of time from the commencement of the acts by Employee which create
the claim for injunctive relief and terminating with the date of final
adjudication of the claim for injunctive relief, if granted.
ARTICLE FOURTEEN: MISCELLANEOUS
(a) The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
by any party. (b) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, heirs, and legal
representatives, and neither this Agreement nor any of the rights herein shall
be assignable by the Employee or by any beneficiary or beneficiaries designated
by the Corporation. (c) Any notices required or permitted to be given under this
Agreement shall be sufficient if in written and sent by registered or certified
mail to the party entitled thereto. (d) This Agreement shall be governed by the
State of Florida.
ARTICLE FIFTEEN: ATTORNEYS FEES AND COSTS
In the event there is a breach of this Agreement, then in that event, the
prevailing party shall be paid by the non-prevailing party all reasonable
attorneys and paralegal fees and costs incurred by the prevailing party, whether
for arbitration, negotiation, trial or appeal as a result of such breach.
ARTICLE SIXTEEN: ENTIRE AGREEMENT
This instrument contains the entire agreement between the parties, and may not
be modified or amended except by an agreement in writing signed by the parties
hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement this 1st day of
May , 1997.
WITNESSES: Surgical Safety Products, Inc.
_______________________ By: /S/J Stuart
_______________________ As its: Exec. V.P.
As to Corporation "CORPORATION"
___________________ /S/Donald K. Lawrence
___________________ "EMPLOYEE"
As to Employee
<PAGE>
EXHIBIT 6.11
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into this 15TH day of June, 1998, by and
between Surgical Safety Products, Inc., a corporation organized and existing
under the laws of the State of New York, (hereinafter referred to as
"Corporation"), and G. Michael Swor, M.D., MBA (hereinafter referred to as
"Employee").
WITNESSETH:
WHEREAS, Employee desires employment as an employee of
Corporation, and
WHEREAS, Corporation desires to employ Employee under the terms and conditions
hereinafter stated.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
herein contained, it is agreed by and between Corporation and Employee as
follows:
ARTICLE ONE: TERM
Corporation agrees to employ Employee, and Employee agrees to be so employed,
for a term of one (1) year, commencing on June 15, 1998, and terminating on June
15, 1999, for the purpose of rendering, on behalf of Corporation, services as
Treasurer and Medical Director. The aforesaid term of employment shall be
automatically be extended from year to year subsequent to its expiration and
thereafter, unless either party gives the other written notice to the contrary
no later than fourteen (14) days prior to the end of such initial term or any
extended term. The said term of employment and any extension thereof shall be
hereinafter referred to as the "period of active employment".
ARTICLE TWO: COMPENSATION
For all services rendered by Employee under this Agreement during the period of
active employment, and immediately subsequent to Corporate funding as defined
above, Corporation shall pay to Employee a rate/salary of $50,000 per year in
equal bi-monthly installments. Such salary may be adjusted by the Board of
Directors of Corporation as required. In addition to the salary stated above,
Employee may receive, at the election of Corporation, a special productivity
bonus. The Special productivity bonus shall be in an amount and paid at such
time or times as the Board of Directors of Corporation, in its sole and absolute
discretion, shall determine. In making its determination of the amount of bonus,
if any, to be paid, the Board of Directors of Corporation shall take into
account the amount, if any, provided to Employee in the form of other
compensation.
ARTICLE THREE: TIME
Employee hereby accepts employment with Corporation on the terms and conditions
herein set forth and agrees that during the period of active employment, as
defined above, Employee will devote Employee's full time and attention to the
rendition of the enumerated services on behalf of Corporation and to the
furtherance of Corporation's best interests. Employee agrees that, in the
rendition of such services and in all aspects of the employment, Employee will
comply with the policies, standards and regulations of the Corporation from time
to time established, provided same are reasonable and do not violate the law or
ethics.
ARTICLE FOUR: DUTIES
Employee is employed to provide overall stratigic direction on behalf of
Corporation. Employee will not engage in such activity except as an employee of
Corporation unless otherwise authorized by the Board of Directors of
Corporation. Corporation shall have the power to determine the specific duties
which shall be performed by Employee, and shall, within reason, determine the
means and manner in which these duties shall be performed. Duties of Employee
shall include, by not be limited to, management of the assigned business.
Corporation shall at all times have the power to tell Employee what duties, as
well as how many hours during the day Employee shall perform his or her duties;
provided, however, that Employee shall not be compelled to work longer than a
normal work week unless agreed to otherwise by Employee.
The power to direct, control and supervise the duties to be performed, the
manner of performing said duties, the employee performing said duties and the
time for performing said duties shall be exercised by the Board of Directors of
Corporation; provided, however, that the Board shall not impose employment
duties or restraints of any kind which would require Employee to infringe on
professional ethics or violate any local ordinance or other law.
<PAGE>
Employee agrees to abide by and follow the ethics of the Corporation's
profession and all federal, state and local laws and ordinances relating to or
regulating the Corporation.
Employee, subject to the approval of Corporation, may seek and/or accept any
elective or appointive office or position within any recognized professional
association and may attend professional meetings, seminars and conventions,
provided that such activities do not require an unreasonable amount of
Employees's time and do not otherwise adversely affect Corporation's interests.
ARTICLE FIVE: ACCOUNTING AND RECORD KEEPING
Employee shall maintain for Corporation all active records in his or her
possession. The records shall be kept at the place of business of Corporation
and shall be the sole permanent property of Corporation. Unless required by
service of legal process, no records shall be displayed or delivered to, no any
information therefrom disclosed to any person not connected with Corporation,
without first obtaining consent from the Executive Vice President of
Corporation.
All income generated by Employee for services as Employee, and all activities
relating thereto, such as writing thesis or articles, and consultative work for
any governmental or other agency, shall belong to the Corporation, whether paid
directly to Corporation or to Employee. Employee may be required (and agrees
upon the request of Corporation) too render a true account of all transactions
relating to Employees's professional practice during the course of Employee's
employment. Employee shall have no authority to enter into any contracts binding
upon Corporation, except as shall be specifically authorized by the Board of
Directors of Corporation or by an executive officer of Corporation acting
pursuant to authority granted by the Board of Directors of Corporation.
ARTICLE SIX: WORKING FACILITIES
Corporation shall furnish Employee with such office, technical and/or
secretarial assistance, and other facilities and services which Corporation, in
its sole discretion, shall deem suitable to Employee's position and adequate for
the performance of Employee's duties.
ARTICLE SEVEN: EXPENSES
It is understood and agreed that Employee shall from time to time incur expenses
for and on behalf of Corporation and will also incur reasonable and necessary
expenses for the promotion of the business of Corporation, including expenses
for entertainment, travel, dues, supplies and similar expenses. Corporation
shall reimburse Employee for such expenses incurred, including travel and other
expenses reasonably and necessarily incurred by Employee in the performance of
duties pursuant to this Agreement. These expenses should be pre-approved by the
Executive Vice President of Corporation.
ARTICLE EIGHT: VACATION
Employee shall, for each year of active service, as defined above, be entitled
to a vacation as provided for in the Corporation Policy Manual in existence from
time to time, at which time Employee's salary shall be paid in full. Such
vacation shall be taken at times to be determined in the manner most convenient
to Corporation and to Employee. Unless otherwise consented to by Corporation,
unused vacation time may not be accumulated and carried to another year.
In addition to the vacation period above, an additional leave of absence shall
be granted with full pay to Employee for attendance at professional conventions,
continued educational institutions or other professional or business activities
approved by Corporation.
ARTICLE NINE: DISABILITY
In the event Employee is unable to fully perform his/her services by reason of
illness or incapacity of any kind, then in that event, Employee's salary shall
continue for a period of Sixty (60) days. All periods of absence form work for
illness or incapacity shall, for purposes of such compensation, be aggregated.
In the event Employee is unable to return to work on a full-time basis at or
before the expiration of such Sixty (60) day period, then in that event,
Employee salary payment may be reduced or terminated by Corporation in its
absolute discretion. Employee's full salary may be reinstated upon the return to
full-time employment and the full discharge of duties hereunder. Corporation
reserves the right to provide Employee with disability coverage by paying the
premiums on disability insurance policies insuring Employee, and Corporation
shall thereupon only be required to pay the difference, if any, between
disability payment to Employee by the insurer under such policies and the salary
required to be pain hereunder.
<PAGE>
ARTICLE TEN: TERMINATION
This Agreement may be terminated by the Board of Directors of Corporation upon
the occurrence of one or more of the following events:
A. If Employee shall fail or refuse to comply with the policies,
standards and regulations of Corporation from time to time
established; or,
B. In the event Employee shall fail and refuse to diligently
perform the conditions of this Agreement and the usual and
customary duties of Employee's employment; or
C. In the event of a bona fide determination by the Board of
Directors of Corporation to sell or reduce to cash substantially all of the
assets of Corporation and to distribute the corporate assets to its stockholders
in liquidation.
D. Death of Employee.
Notwithstanding anything herein contained to the contrary, this Agreement my be
terminated by any party hereto upon fourteen (14) days written notice.
ARTICLE ELEVEN: TRADE SECRETS
It is acknowledged by and between the parties hereto that, during the course of
its employment, Employee will have access to, and will obtain knowledge of,
information utilized by Corporation that will be considered "trade secrets" by
Corporation as defined in F.S.A. ss.ss.688.001-688.009, as amended. Employee
shall not disclose any such information to third parties during the course of
his/her employment with Corporation, or at any time subsequent thereto, unless
expressly authorized by the Executive Vice President of the Corporation in
writing. In the event of any improper disclosure of a trade secret of
Corporation by Employee during the course of his/her employment, Corporation
shall have the right to immediately terminate the employment of Employee and to
institute appropriate action against Employee pursuant to this Agreement and the
Florida Uniform Trade Secrets Act.
ARTICLE TWELVE: RELATIONSHIP BETWEEN THE PARTIES The parties recognize that the
Board of Directors of Corporation, in accordance with controlling state
statutes, shall manage the business affairs of Corporation. The relationship
between Corporation and Employee is that of employer and employee.
Employee shall be entitled to participate in any plans, arrangements or
distributions by Corporation pertaining to or in connection with any major
medical insurance program, group term life insurance program, or nay pension,
bonus, profit sharing or similar benefits provided to the other employees of
Corporation as may be available. Nothing herein contained shall be construed to
give Employee any interest in the tangible or intangible assets of Corporation.
ARTICLE THIRTEEN: COVENANT NOT TO COMPETE
Employee hereby agrees that he/she will not, for a period of one year from the
effective date of termination of his/her employment relationship with
Corporation, for whatever reason, engage, directly or indirectly, in a business
similar to that of the Corporation and that Employee will not during such period
of time be connected, directly or indirectly, with any person, firm or
corporation engaged in such a business and that during said period Employee will
have no financial interest in any such business. Employee further agrees that
during said period, Employee will not, directly or indirectly, be employed by or
become a partner of or a stockholder of any partnership or corporation engaged
in a business similar to that of Corporation. This covenant will be applicable
to Employee with the geographical area consisting of the State of Florida. This
covenant on the part of Employee shall be construed as an agreement; and the
existence of any claim or cause of action of Employee or otherwise, shall not
constitute a defense to the enforcement by Corporation of this covenant. It is
agreed by the parties hereto that if any portion of this covenant not to compete
is held to be unreasonable, arbitrary or against public policy, the covenant
herein shall be considered diminishable both as to time and geographical area;
and each month for the specified period shall be deemed a separate period of
time, and each quarter mile shall be deemed a separate geographical area, and
shall remain effective so long as the same is not unreasonable, arbitrary, or
against public policy. The parties hereto agree that in the event any court
determines the specified time period or the specified geographical area to be
unreasonable, arbitrary, or against public policy, a lesser time period or
geographical area which is determined to be reasonable, nonarbitrary and not
against public policy may be enforced against Employee. Employee further
consents to the entering of any injunction to enforce this covenant.
<PAGE>
In the event that Corporation or its successors in interest shall make
application to a court of competent jurisdiction for injunctive relief, then and
in that event the five (5) year period of time specified herein shall be tolled
for a period of time from the commencement of the acts by Employee which create
the claim for injunctive relief and terminating with the date of final
adjudication of the claim for injunctive relief, if granted.
ARTICLE FOURTEEN: MISCELLANEOUS
A. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of
any subsequent breach by any party.
B. This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors, heirs, and legal
representatives, and neither this Agreement nor any of the rights herein shall
be assignable by the Employee or by any beneficiary or beneficiaries designated
by the Corporation.
C. Any notices required or permitted to be given under this Agreement shall be
sufficient if in written and sent by registered or certified mail to the party
entitled thereto.
D. This Agreement shall be governed by the State of Florida.
ARTICLE FIFTEEN: ATTORNEYS FEES AND COSTS
In the event there is a breach of this Agreement, then in that event, the
prevailing party shall be paid by the non-prevailing party all reasonable
attorneys and paralegal fees and costs incurred by the prevailing party, whether
for arbitration, negotiation, trial or appeal as a result of such breach.
ARTICLE SIXTEEN: ENTIRE AGREEMENT
This instrument contains the entire agreement between the parties, and may not
be modified or amended except by an agreement in writing signed by the parties
hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement this day of , 19
.
WITNESSES:
_________________________ By:/s/Frank M Clark
_________________________ As its: President
As to Corporation "CORPORATION"
_________________________ /S/ G M Swor
"EMPLOYEE"
As to Employee
<PAGE>
EXHIBIT 12
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into this 15TH day of June, 1998, by and
between Surgical Safety Products, Inc., a corporation organized and existing
under the laws of the State of New York, (hereinafter referred to as
"Corporation"), and Frank M. Clark (hereinafter referred to as "Employee").
WITNESSETH:
WHEREAS, Employee desires employment as an employee of Corporation, and
WHEREAS, Corporation desires to employ Employee under the terms and conditions
hereinafter stated.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
herein contained, it is agreed by and between Corporation and Employee as
follows:
ARTICLE ONE: TERM
Corporation agrees to employ Employee, and Employee agrees to be so employed,
for a term of one (1) year, commencing on June 15, 1998, and terminating on June
15, 1999, for the purpose of rendering, on behalf of Corporation, services as
Treasurer and Medical Director. The aforesaid term of employment shall be
automatically be extended from year to year subsequent to its expiration and
thereafter, unless either party gives the other written notice to the contrary
no later than fourteen (14) days prior to the end of such initial term or any
extended term. The said term of employment and any extension thereof shall be
hereinafter referred to as the "period of active employment".
ARTICLE TWO: COMPENSATION
For all services rendered by Employee under this Agreement during the period of
active employment, and immediately subsequent to Corporate funding as defined
above, Corporation shall pay to Employee a rate/salary of $60,000 per year in
equal bi-monthly installments. Such salary may be adjusted by the Board of
Directors of Corporation as required. In addition, Employee will be gifted
50,000 shares of common stock as a signing bonus and 200,000 stock options at an
exercise price of $1.75 vested in one year.
In addition to the salary stated above, Employee may receive, at the election of
Corporation, a special productivity bonus. The special productivity bonus shall
be in an amount and paid at such time or times as the Board of Directors of
Corporation, in its sole and absolute discretion, shall determine. In making its
determination of the amount of bonus, if any, to be paid, the Board of Directors
of Corporation shall take into account the amount, if any, provided to Employee
in the form of other compensation.
ARTICLE THREE: TIME
Employee hereby accepts employment with Corporation on the terms and conditions
herein set forth and agrees that during the period of active employment, as
defined above, Employee will devote Employee's full time and attention to the
rendition of the enumerated services on behalf of Corporation and to the
furtherance of Corporation's best interests. Employee agrees that, in the
rendition of such services and in all aspects of the employment, Employee will
comply with the policies, standards and regulations of the Corporation from time
to time established, provided same are reasonable and do not violate the law or
ethics.
ARTICLE FOUR: DUTIES
Employee is employed to keep the Company on course and to enhance the overall
direction of the Company with respect to expanding sales and profits through
existing products, the addition of new products, technologies, new strategic
alliances, and appropriate acquisition opportunities. Employee will not engage
in such activity except as an employee of Corporation unless otherwise
authorized by the Board of Directors of Corporation. Corporation shall have the
power to determine the specific duties which shall be performed by Employee, and
shall, within reason, determine the means and manner in which these duties shall
be performed. Duties of Employee shall include, by not be limited to, management
of the assigned business. Corporation shall at all times have the power to tell
Employee what duties, as well as how many hours during the day Employee shall
perform his or her duties; provided, however, that Employee shall not be
compelled to work longer than a normal work week unless agreed to otherwise by
Employee.
<PAGE>
The power to direct, control and supervise the duties to be performed, the
manner of performing said duties, the employee performing said duties and the
time for performing said duties shall be exercised by the Board of Directors of
Corporation; provided, however, that the Board shall not impose employment
duties or restraints of any kind which would require Employee to infringe on
professional ethics or violate any local ordinance or other law.
Employee agrees to abide by and follow the ethics of the Corporation's
profession and all federal, state and local laws and ordinances relating to or
regulating the Corporation.
Employee, subject to the approval of Corporation, may seek and/or accept any
elective or appointive office or position within any recognized professional
association and may attend professional meetings, seminars and conventions,
provided that such activities do not require an unreasonable amount of
Employees's time and do not otherwise adversely affect Corporation's interests.
ARTICLE FIVE: ACCOUNTING AND RECORD KEEPING
Employee shall maintain for Corporation all active records in his or her
possession. The records shall be kept at the place of business of Corporation
and shall be the sole permanent property of Corporation. Unless required by
service of legal process, no records shall be displayed or delivered to, no any
information therefrom disclosed to any person not connected with Corporation,
without first obtaining consent from the Executive Vice President of
Corporation.
All income generated by Employee for services as Employee, and all activities
relating thereto, such as writing thesis or articles, and consultative work for
any governmental or other agency, shall belong to the Corporation, whether paid
directly to Corporation or to Employee. Employee may be required (and agrees
upon the request of Corporation) too render a true account of all transactions
relating to Employees's professional practice during the course of Employee's
employment. Employee shall have no authority to enter into any contracts binding
upon Corporation, except as shall be specifically authorized by the Board of
Directors of Corporation or by an executive officer of Corporation acting
pursuant to authority granted by the Board of Directors of Corporation.
ARTICLE SIX: WORKING FACILITIES
Corporation shall furnish Employee with such office, technical and/or
secretarial assistance, and other facilities and services which Corporation, in
its sole discretion, shall deem suitable to Employee's position and adequate for
the performance of Employee's duties.
ARTICLE SEVEN: EXPENSES
It is understood and agreed that Employee shall from time to time incur expenses
for and on behalf of Corporation and will also incur reasonable and necessary
expenses for the promotion of the business of Corporation, including expenses
for entertainment, travel, dues, supplies and similar expenses.
Corporation shall reimburse Employee for such expenses incurred, including
travel and other expenses reasonably and necessarily incurred by Employee in the
performance of duties pursuant to this Agreement. These expenses should be
pre-approved by an Officer of Corporation.
ARTICLE EIGHT: VACATION
Employee shall, for each year of active service, as defined above, be entitled
to a vacation as provided for in the Corporation Policy Manual in existence from
time to time, at which time Employee's salary shall be paid in full.
Such vacation shall be taken at times to be determined in the manner most
convenient to Corporation and to Employee. Unless otherwise consented to by
Corporation, unused vacation time may not be accumulated and carried to another
year.
In addition to the vacation period above, an additional leave of absence shall
be granted with full pay to Employee for attendance at professional conventions,
continued educational institutions or other professional or business activities
approved by Corporation.
<PAGE>
ARTICLE NINE: DISABILITY
In the event Employee is unable to fully perform his/her services by reason of
illness or incapacity of any kind, then in that event, Employee's salary shall
continue for a period of Sixty (60) days. All periods of absence form work for
illness or incapacity shall, for purposes of such compensation, be aggregated.
In the event Employee is unable to return to work on a full-time basis at or
before the expiration of such Sixty (60) day period, then in that event,
Employee salary payment may be reduced or terminated by Corporation in its
absolute discretion. Employee's full salary may be reinstated upon the return to
full-time employment and the full discharge of duties hereunder. Corporation
reserves the right to provide Employee with disability coverage by paying the
premiums on disability insurance policies insuring Employee, and Corporation
shall thereupon only be required to pay the difference, if any, between
disability payment to Employee by the insurer under such policies and the salary
required to be pain hereunder.
ARTICLE TEN: TERMINATION
This Agreement may be terminated by the Board of Directors of Corporation upon
the occurrence of one or more of the following events:
A. If Employee shall fail or refuse to comply with the policies,
standards and regulations of Corporation from time to time
established; or,
B. In the event Employee shall fail and refuse to diligently
perform the conditions of this Agreement and the usual and
customary duties of Employee's employment; or
C. In the event of a bona fide determination by the Board of Directors of
Corporation to sell or reduce to cash substantially all of the assets of
Corporation and to distribute the corporate assets to its stockholders in
liquidation.
D. Death of Employee.
Notwithstanding anything herein contained to the contrary, this Agreement my be
terminated by any party hereto upon fourteen (14) days written notice.
ARTICLE ELEVEN: TRADE SECRETS
It is acknowledged by and between the parties hereto that, during the course of
its employment, Employee will have access to, and will obtain knowledge of,
information utilized by Corporation that will be considered "trade secrets" by
Corporation as defined in F.S.A. ss.ss.688.001-688.009, as amended.
Employee shall not disclose any such information to third parties during the
course of his/her employment with Corporation, or at any time subsequent
thereto, unless expressly authorized by the Executive Vice President of the
Corporation in writing. In the event of any improper disclosure of a trade
secret of Corporation by Employee during the course of his/her employment,
Corporation shall have the right to immediately terminate the employment of
Employee and to institute appropriate action against Employee pursuant to this
Agreement and the Florida Uniform Trade Secrets Act.
ARTICLE TWELVE: RELATIONSHIP BETWEEN THE PARTIES The parties recognize that the
Board of Directors of Corporation, in accordance with controlling state
statutes, shall manage the business affairs of Corporation. The relationship
between Corporation and Employee is that of employer and employee.
Employee shall be entitled to participate in any plans, arrangements or
distributions by Corporation pertaining to or in connection with any major
medical insurance program, group term life insurance program, or nay pension,
bonus, profit sharing or similar benefits provided to the other employees of
Corporation as may be available. Nothing herein contained shall be construed to
give Employee any interest in the tangible or intangible assets of Corporation.
ARTICLE THIRTEEN: COVENANT NOT TO COMPETE
Employee hereby agrees that he/she will not, for a period of one year from the
effective date of termination of his/her employment relationship with
Corporation, for whatever reason, engage, directly or indirectly, in a business
similar to that of the Corporation and that Employee will not during such period
of time be connected, directly or indirectly, with any person, firm or
corporation engaged in such a business and that during said period Employee will
have no financial interest in any such
<PAGE>
business. Employee further agrees that during said period, Employee will not,
directly or indirectly, be employed by or become a partner of or a stockholder
of any partnership or corporation engaged in a business similar to that of
Corporation. This covenant will be applicable to Employee with the geographical
area consisting of the State of Florida. This covenant on the part of Employee
shall be construed as an agreement; and the existence of any claim or cause of
action of Employee or otherwise, shall not constitute a defense to the
enforcement by Corporation of this covenant. It is agreed by the parties hereto
that if any portion of this covenant not to compete is held to be unreasonable,
arbitrary or against public policy, the covenant herein shall be considered
diminishable both as to time and geographical area; and each month for the
specified period shall be deemed a separate period of time, and each quarter
mile shall be deemed a separate geographical area, and shall remain effective so
long as the same is not unreasonable, arbitrary, or against public policy. The
parties hereto agree that in the event any court determines the specified time
period or the specified geographical area to be unreasonable, arbitrary, or
against public policy, a lesser time period or geographical area which is
determined to be reasonable, nonarbitrary and not against public policy may be
enforced against Employee. Employee further consents to the entering of any
injunction to enforce this covenant.
In the event that Corporation or its successors in interest shall make
application to a court of competent jurisdiction for injunctive relief, then and
in that event the five (5) year period of time specified herein shall be tolled
for a period of time from the commencement of the acts by Employee which create
the claim for injunctive relief and terminating with the date of final
adjudication of the claim for injunctive relief, if granted.
ARTICLE FOURTEEN: MISCELLANEOUS
A. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of
any subsequent breach by any party.
B. This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors, heirs, and legal
representatives, and neither this Agreement nor any of the rights herein shall
be assignable by the Employee or by any beneficiary or beneficiaries designated
by the Corporation.
C. Any notices required or permitted to be given under this Agreement shall be
sufficient if in written and sent by registered or certified mail to the party
entitled thereto.
D. This Agreement shall be governed by the State of Florida.
ARTICLE FIFTEEN: ATTORNEYS FEES AND COSTS
In the event there is a breach of this Agreement, then in that event, the
prevailing party shall be paid by the non-prevailing party all reasonable
attorneys and paralegal fees and costs incurred by the prevailing party, whether
for arbitration, negotiation, trial or appeal as a result of such breach.
ARTICLE SIXTEEN: ENTIRE AGREEMENT
This instrument contains the entire agreement between the parties, and may not
be modified or amended except by an agreement in writing signed by the parties
hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement this 15 day of
June , 1998.
WITNESSES:
/s/Stacy Quaid By:/s/G M Swor
_________________________ As its: Chairman
As to Corporation "CORPORATION"
_________________________ /S/Frank M Clark
"EMPLOYEE"
As to Employee
<PAGE>
EXHIBIT 6.13
AGREEMENT FOR CONSULTING SERVICES IN THE AREAS OF MEDIA CONSULTING AND VARIOUS
PUBLIC RELATIONS BETWEEN SURGICAL SAFETY PRODUCTS, INC., AND STOCKSTOWATCH.COM.,
FOR SERVICES TO BE RENDERED TO THE COMPANY PURSUANT TO THE FOLLOWING AGREEMENT.
WHEREAS, Surgical Safety Products, Inc., a publicly traded company (the
"Company") whose offices are located at 2018 Oak Terrace, Sarasota, Florida
34231, wishes to retain Stockstowatch.com, Inc.; and
WHEREAS, Stockstowatch.com, Inc.("CONSULTANT")whose business address is, 250
Bearded Oak Drive, Sarasota, Florida 34232, offers professional consulting
services as a Media and Public Relations consultant, the parties agree as
follows:
NOW, THEREFORE, The parties agree as follows:
During the course of the services that shall be adopted by corporate resolution
by the Company, Consultant will be retained as an independent and nonexclusive
advisor. The terms of the agreement and the definitions of each section are
outlined in the following agreement, (the "AGREEMENT").
1. SERVICES
Consultant will agree to profile the Company via a privileged E- mail program
for the purpose of performing Investor Relations as a Media Consultant.
In the course of consulting to the Company, Consultant will explore various
strategic options for consideration by the Company. Such options may include:
introductions to potential investors, introductions to market makers,
introductions to broker/dealer firms, and introductions to other entities that
may have common goals and objectives.
2. EXCLUSIVITY
This agreement will be nonexclusive in nature. In the course of Consultant's
business may, at their discretion, elect to retain various individuals or firm
to assist with the media relations and investors' relations capacities. Any
election to do such and any compensation agreed to, at the sole discretion of
the Consultant, shall be assumed by the Consultant. The company may utilize any
and all existing relations and will not be barred from entering new
relationships whatsoever.
3. TERM
This agreement will be valid for a term of six (6) months from the date of
acceptance by the parties. Consultant agrees to preform the services as outlined
in this Agreement for a period of six months and will utilize all efforts to
create awareness programs that will inform investors of the Company and its
operations during this time. The Company has an option for an additional six (6)
months of service for 1000,000 shares.
4. INDEMNIFICATION
The Company agrees to indemnify and hold harmless Consultant and all associates
as retained by the Consultant and any other affiliated parties from any claims,
damages, costs, actions, or otherwise which mat cause harm to the above
referenced parties as result of actions by the Company, its principles, agents,
employees, officers, directors, consultants, or any other affiliated parties and
hold harmless and agree to forever indemnify them and to defend them from any
past, present, or future liabilities as a result of their actions.
5. COMPENSATION
The Company agrees to compensate the Consultant in common stock, in lieu of cash
for services rendered pursuant to this agreement. Consultant shall, upon
acceptance of this Agreement be issued 200,000 shares of common stock in the
Company. Delivery of the initial shares will indicate the start of the
Agreement. These shares are not to be registered without legend, should the
shares be legend then they shall carry an opinion letter from the Company's
securities counsel that the shares will be issued in compliance with the
Securities and Exchange Commission pursuant to the appropriate securities act,
and that the shares may be sold at any time at the discretion of the Consultant.
Said shares shall be titled in the name of Stockstowatch.com, Inc. Services
under this agreement will not commence until the shares have been returned to
consultant=s brokerage account as "good transfer" transfer@.
<PAGE>
Additionally, the Company will agree to provide a performance bonus to the
Consultant. This bonus will be a total of 100,000 additional shares to be issued
at the signing of this agreement. Shares under the performance bonus will be
held by the Client until the Company is profiled on its service and made
available to the subscribers of STW on the web site and 1,000,000 shares have
been traded, and ten (10) days of activity observed. Said shares shall be issued
under the same terms as identified in the previous paragraph entitled
"Compensation". At such time as may be the case, the Company will immediately
release the performance bonus of shares. In the event that SAW elects not to
profile or post to the web site, STW will promptly return all shares issued
under this agreement.
The Company will agree to act within all of the rules and regulations of the
Securities and Exchange Codes regarding the issuance of any and all share and
shall agree to defend Consultant should any action relating to the stock
issuance be brought against the Consultant.
6. BEST EFFORTS
The Consultant will agree to utilize all best efforts during the term of this
Agreement. Consultant makes no promises other than as contained within this
Agreement and makes no representations or promises relating to the performance
of the equities of the Company whatsoever. Moreover, the Company shall not seek
return of the shares or compensation of any kind for services performed under
this agreement. Consultant will agree to represent the Company with integrity at
all times.
7. EXPENSES
The Company shall bear no liability for expenses during the due diligence
process, following the acceptance of the Agreement. Should the Company request
travel of the Consultant, the Company agrees to pay all travel related expenses
and to compensate on a per diem basis an amount equal to $200.00 per day for
hotel expenses. All per diem amounts are to be paid to the commencement of
travel.
Following the initial due diligence, The Consultant will be responsible for any
and all expenses associated with the performance of the duties as a media and
investor relations Consultant to the Company. With exception, the Company will
reimburse Consultant for any expense approved, in writing, by an officer of the
Company at any time following the due diligence process for expenses incurred at
the request of the Company.
8. GOVERNING LAW
Any disputes under this Agreement shall be settled by binding arbitration in
Sarasota, Florida in accordance with the rules of American Arbitration
Association. The parties agree to wave all rights of jurisdiction to Sarasota,
Florida.
9. AGREEMENT
This document contains the entire Agreement between the parties. Amendments may
only be made in writing with the mutual approval to make any amendments
whatsoever. Upon execution of the Agreement,and the deliverance of stock(with
"good transfer") to the Consultant, the Agreement will become binding to the
parties.
The parties whose signatures appears below states through their signature that
they have the authority on behalf of the Company to execute a binding and
enforceable agreement between the parties as set forth in this agreement.
If the foregoing meets with your approval, please indicate your desire to retain
Consultant under the previously outlined terms and conditions.
AGREED THIS 30TH DAY OF MARCH IN THE YEAR 1988.
STEVEN A. KING G. MICHAEL SWOR
CONSULTANT PRESIDENT AND CEO
/s/Steven A. King 3/30/88 /s/G M Swor
Print/Date Print/Date
STOCKSTOWATCH.COM, INC. SURGICAL SAFETY PRODUCTS, INC.
<PAGE>
STOCKSTOWATCH.COM Legal Disclaimer, taken directly from the web site:
Legal Disclaimers
Stockstowatch.com is an independent Internet-based publication dedicated to
providing timely, factual analysis on fundamentally based emerging market
investment opportunities. The selected Companies, in the sole opinion of
Stockstowatch.com, have certain qualities which could allow them tp perform
favorably for investors. All of the opinions and statements made in this
publication are the sole opinion of Stockstowatch.com and are not in any fashion
or form to be a solicitation or recommendation to buy, sell or hold securities.
While Stockstowatch.com strives to identify, investigate, and fully research
equity investments in many small, micro capitalization companies that have the
potential for long-term appreciation, these companies are, in many cases,
speculative and are considered high risk. The information provided shall not be
construed as fact, but as a generalized overview of the opportunity. Each
specific profile will have its own disclaimer attached to the individual profile
and preferred subscribers and other viewers should read these disclaimers as
well. It is the sole responsibility of the subscriber to fully perform their own
due diligence to determine if the opportunity fits with their individual
investment objectives. All investments are made solely at the investors decision
and the investor acknowledges and releases Stockstowatch from any and all claims
whatsoever. Acceptance of this email message constitutes acceptance of these
terms. The information utilized by Stockstowatch.com is provided by the public
companies featured and by various public resources. While we believe the
information to be accurate, we in no way guarantee the accuracy thereof.
Investors should not rely solely on the information provided by
Stockstowatch.com. Rather, Investors should use this information as a due
diligence tool in their own investigation of the opportunity profiled. Factual
statements in this publication are made as of the date stated and are subject to
change without notice. Stockstowatch.com may act as a consultant to the
companies profiled in this publication and may receive compensation for
promotional or public relations services. Stockstowatch.com also may provide for
a fee, web site design services, and other support services for either cash or
stock. The editor or affiliates may have positions in stock of the companies
reviewed and may increase or decrease them at any time. Any compensation paid
may be construed as a potential conflict of interest. It is possible that an
investment in a profiled company may be lost in whole or in part. Investing in
securities is risky and speculative. This document may be quoted, in context,
provided that proper credit is given including the publishers internet address.
<PAGE>
EXHIBIT 6.14
OPTION AGREEMENT made this Day of July, 1994, between Surgical Safety
Products, Inc., a Florida corporation (the "Corporation"), and , an employee
and/or Director of the Corporation (the "Employee").
The Corporation desires, by affording the Employee an opportunity to purchase
its common shares, of no par value per share, hereinafter called the Common
Shares, as hereinafter provided, to carry out the purpose of the Stock Option
Plan of Surgical Safety Products, Inc., which has been approved by its
shareholders.
Now, therefore, in consideration of the mutual covenants hereinafter set forth
and for other good and valuable consideration, the parties hereto agree as
follows:
1. Grant of option. The Corporation hereby irrevocably grants to the Employee
the right and option, hereinafter called to the option, to purchase all or any
of aggregate of Common Shares (such number being subject to adjustment as
provided in paragraph 8 hereof) on the terms and conditions herein set forth.
2. Purchase Price. The purchase price of the Common Shares
covered by the Option shall be $ Per share flat or ex-
dividend.
3. Term of option. The term of option shall be for a period of seven years from
the date hereof, subject to earlier termination as provided in paragraphs 5, 6,
and 7 hereof. The option may be exercised within the above limitations, at any
time or from time to time, as to any part of or all the shares covered thereby;
provided, however, that: (a) the Option may not be exercised as to less than 100
shares at any one time (or the remaining shares then purchasable under the
Option, if less than 100 shares); and (b) the Option shall not be exercisable
prior to the expiration of two years from the date hereof. The purchase price of
the shares as to which the Option shall be exercised shall be paid in full in
cash at the time of exercise. Except as provided in paragraphs 6 and 7 hereof,
the Option may not be exercised at any time unless the Employee shall have been
in the continuos employ of the Corporation and/or of one or more of its
subsidiaries, from the date hereof to the date of the exercise of the Option.
The holder of the Option shall not have any of the rights of a shareholder with
respect to the shares covered by the Option except to the extent that one or
more certificates for such shares shall be delivered to him upon the due
exercise of the Option. The Option may not be exercised unless at the date of
exercise a registration statement on Form S-8 under the Securities Act of 1933,
as amended, relating to the shares covered by the Option shall be in effect. The
Corporation will endeavor to obtain prior to the time when the Option would
otherwise be exercisable the registration of the shares covered by the Option
under the Act as amended.
4. Nontransferability. The Option shall not be transferable otherwise than by
will or the laws of descent and distribution, and the Option may be exercised,
during the lifetime of the Employee, only by him. More particularly (but without
limiting the generality of the foregoing), the Option may not be assigned,
transferred (except as provided above), pledged, or hypothecated in any way,
shall not be assignable by operation of law, and shall not be subject to
execution , attachment, or similar process. Any attempted assignment, transfer,
pledge, hypothecation, or other disposition of the Option contrary to the
provisions hereof, and the levy of any execution, attachment, or similar process
upon the Option, shall be null and void and without effect.
5. Employment. (excepting directors who are not also employees). In
consideration of the granting of the Option and regardless of whether or not the
Option shall be exercised, the Employee agrees to remain in the employ of
Corporation of a period of at least two years from the date of hereof; and he
will, during such employment, devote his full business time, energy, and skill
to the service of Corporation subject to vacations, sick leaves, and other
approved absences. Such employment, subject to the provisions of paragraph 6
hereof and subject also to the provisions of any contact between the Corporation
and the Employee, shall be at the pleasure of the Board of Directors of the
Corporation and at such compensation as the corporation shall reasonably
determine. In the event of any termination of the Employee's employment during
the period during which he has agreed by the foregoing provisions of this
paragraph 5 to remain in employment that is either (a) for cause or (b)
voluntary on the part of the employee and without the consent of the
corporation, the Option (and any other option or options held by him under the
above mentioned Stock Option Plan), to the extent not pr4viously exercised,
shall immediately terminate.
<PAGE>
6. Termination of employment. In the event that the employment of the employee
shall be terminated (otherwise than by reason of death), the Option may, subject
to the provisions of paragraph 5 hereof, be exercised by the Employee (to the
extent that he shall have been entitled to do so at the termination of his
employment) at any time within two months after such termination. So long as the
employee shall continue to be employee of the corporation the Options shall not
be affected by any changes in his duties or position. Nothing in this Option
agreement shall confer upon the employee any right to continue in the employee
of the corporation or interfere in any way with the right of the corporation to
terminate his employment at any time; provide, however, that the employment of
the employee shall not be terminated without his consent during the first year
of term of the Option, except for cause.
7. Death of an employee. If the employee shall die while he shall be employed by
the Corporation or within 3 months after the termination of his employment, the
option may be exercised (to the extent that the employee shall have been
entitled to do so at the date of his death) by a legatee or legatees of the
employee under his last will, or by his personal representatives or
distributees, at any time within three years of his death, but not more than
five years after the date hereof.
8. Changes in capital structure. If all or any portion of the Option shall be
exercised subsequent to any share dividend, split-up, recapitalizations,
mergers, consolidations, combination or exchange of shares, separation,
reorganization, or liquidation occurring after the date hereof, as a result of
which shares of any class shall be issued in respect of outstanding Common
Shares or Common Shares shall be changed into the same or another class or
classes, the person or persons so exercising the Option shall receive for the
aggregate price paid upon such exercise, the aggregate number and class of
shares which, If Common Shares (as authorized at the date hereof) had been
purchased at the date hereof for the same aggregate price (on the basis of the
price per share set forth in paragraph 2 hereof) and had not been disposed of,
such person or persons would be holding, at the time of such exercise, as a
result of such purchase and all such share dividends, splitups,
recapitalizations, or liquidations; provided, however, that no fractional share
shall be issued upon any such exercise, and the aggregate price paid shall be
appropriately reduced on account of any fractional share not issued. No
adjustment shall be made in the minimum number if shares, which may be purchased
at any one time, as fixed by, paragraph 3 hereof.
9. Limitation. The employee shall not exercise any one or more Options hereunder
if and to the extent hat the Employee would thereby be entitled to purchase
Common Shares in any one calendar year the value of which, determined at the
time of the grant of the Option or Options, would exceed $100,00; provided,
however, that such exercise shall nonetheless be permitted if and to the extent
that the right to first exercise said options shall have accumulated over a
number of years rather than having first occurred in the year of exercise.
10. Method of exercising option. Subject to the terms and conditions of this
Option Agreement, the Option may be exercised by written notice to the
Corporation, at its Stock Transfer Department, which is now located at the
office of the Corporation, 434 S. Washington Blvd., Sarasota, Florida 34236.
Such notice shall state the election to exercise the Option and the number of
shrews in respect of which is being exercised, and shall be signed by the person
or persons so exercising the Option. Such notice shall either; (a) be
accompanied by payment of the full purchase price of such shares, in which event
the Corporation shall deliver a certificate or certificates representing such
share as soon as practicable after the notice shall be received; or (b) fix a
date (not less than five or more than ten business days from the date such
notice shall be received by the Corporation) for the payment of the full
purchase price of such shares at the Stock Transfer Department, against delivery
of a certificate or certificates representing such shares. Payment of such
purchase price shall, in either case, be made by check payable to the order of
the Corporation. The certificate or certificates for the shares as to which the
Option shall have been so exercised shall be registered in the name of the
person or persons so exercising the Option (or, if the Option shall be exercised
by the Employee and if the Employee shall so request in the notice exercising
the Option shall be registered in the name of the Employee and another person
jointly, with right of survivorship) and shall be delivered as provided above to
the written order of the person or persons exercising the Option. In the event
the Option shall be exercised, pursuant to paragraph 7 hereof, by ant person or
persons other than the Employee, such notice shall be accompanied by appropriate
proof of the right of such person or persons to exercise the Option. All shares
that shall be purchased upon the exercise of the Option as provided herein shall
be fully paid and nonassessable.
<PAGE>
11. General The corporation shall at all times during the term of the Option
reserve and keep available such number of Common Shares as will be sufficient to
satisfy the requirements of this Option Agreement, shall pay all original issue
and transfer taxes with respect to the issue and transfer of shares pursuant
hereto and all other fees and expenses necessarily incurred by the Corporation
in connection therewith, and will from time to time use its best efforts to
comply with all laws and regulations which, in the opinion of counsel for the
Corporation, shall be applicable thereto.
In witness whereof the Corporation has caused this Option Agreement to be duly
executed by its officers thereunto duly authorized, and the employee has
hereunto set his hand and seal, all on the day and year first above written.
Corporate Seal Surgical Safety Products, Inc.
Attest: By:
- -------------------------- ------------------------
Secretary Employee
<PAGE>
EXHIBIT 6.15
OPTION AGREEMENT made this xxst day of xxx,19xx, between Surgical Safety
Products, Inc., a New York Corporation (the "Corporation"),, and xxxxxxxx, an
employee and/or Director of the Corporation (the "Employee").
The Corporation desires, by affording the Employee an opportunity to purchase
its common shares, of no par value per share, hereinafter called the Common
Shares, as hereinafter provided, to carry out the purpose of the Stock Option
Plan of Surgical Safety Products, Inc., which has been approved by its
shareholders.
Now, therefore, in consideration of the mutual covenants herein after set
forth and for other good and valuable consideration, the parties hereto agree as
follows:
1. Grant of option. The Corporation hereby irrevocably grants to the Employee
the right and option, hereinafter called the Option, to purchase all or any part
of an aggregate of xxxxx Common Shares (such number being subject to adjustment
as provided in paragraph 8 hereof) on the terms and conditions herein set forth.
2. Purchase price. The purchase price of the Common Shares
covered by the Option shall be $0.xx per share flat or ex-dividend.
3. Term of option. The term of the Option shall be for a period of seven years
from the date hereof, subject to earlier termination as provided in paragraphs
5,6, and 7 hereof. The Option may be exercised within the above limitations, at
any time or from time to time, as to any part of or all the shares covered
thereby; provided, however, that: (a) the Option may not be exercised as to less
that 100 shares at any one time (or the remaining shares then purchasable under
the Option, if less than 100 shares); and (b) the Option shall not be
exercisable prior to the expiration of xxx years from the date hereof. The
purchase price of the shares as to which the Option shall be exercised shall be
paid in full in cash at the time of exercise. Except as provided in paragraphs 6
and 7 hereof, the Option may not be exercised at any time unless the Employee
shall have been in the continuous employ of the Corporation and/or of one or
more of its subsidiaries, from the date hereof to the date of the exercise of
the Option. The holder of the Option shall not have any of the rights of a
shareholder with respect to the shares covered by the Option except to the
extent that one or more certificates for such shares shall be delivered to him
upon the due exercise of the Option. The Option may not be exercised unless at
the date of exercise a registration statement on Form S-8 under the Securities
Act of 1933, as amended, relating to the shares covered by the Option shall be
in effect. The Corporation will endeavor to obtain prior to the time when the
Option would otherwise be exercisable the registration of the shares covered by
the Option under the Act, as amended.
4. Nontransferability. The Option shall not be transferable otherwise than by
will or the laws of descent and distribution, and the Option may be exercised,
during the lifetime of the Employee, only by him. More particularly (but without
limiting the generality of the foregoing) the Option may not be assigned,
transferred (except as provided above), pledged, or hypothecated in any way,
shall not be assignable by operation of law, and shall not be subject to
execution, attachment, or similar process. Any attempted assignment, transfer,
pledge, hypothecation, or other disposition of the Option contrary to the
provisions hereof, and the levy of any execution, attachment, or similar process
upon the Option, shall be null and void and without effect.
5. Employment (excepting directors who are not also employees). In consideration
of the granting of the Option and regardless of whether or not the Option shall
be exercised, the Employee agrees to remain in the employ of the Corporation for
a period of at least two years from the date hereof; and he will, during such
employment, devote his full business time, energy, and skill to the service of
the Corporation subject to vacations, sick leaves, and other approved absences.
Such employment, subject to the provisions of paragraph 6 hereof and subject
also to the provisions of any contract between the Corporation and the Employee,
shall be at the pleasure of the Board of Directors of the corporation and at
such compensation as the corporation shall reasonably determine. In the event of
any termination of the Employee's employment during the period during which he
has agreed by the foregoing provisions of the paragraph 5 to remain in
employment that is either (a) for cause or (b) voluntary on the part of the
Employee and without the consent of the corporation, the Option (and any other
option or options held by him under the above mentioned Stock Option Plan), to
the extent not previously exercised, shall immediately terminate.
<PAGE>
6. Termination of employment. In the event that the employment of the Employee
shall be terminated (otherwise than by reason of death), the Option may, subject
to the provisions of paragraph 5 hereof, be exercised by the Employee (to the
extent that he shall have been entitled to do so at the termination of his
employment) at any time within two months after such termination. So long as the
Employee shall continue to be an employee of the Corporation the Option shall
not be affected by any change in his duties or position. Nothing in this Option
Agreement shall confer upon the Employee any right to continue in the employ of
the Corporation or interfere in any way with the right of the Corporation to
terminate his employment at any time; provided, however, that the employment of
the Employee shall not be terminated without his consent during the first year
of the term of the Option, except for cause.
7. Death of employee. If the Employee shall die while he shall be employed by
the Corporation or within three months after the termination of his employment,
the Option may be exercised (to the extent that the Employee shall be been
entitled to do so at the date of his death) by a legatee or legatees of the
Employee under his last will, or by his personal representatives or
distributees, at any time within three years after his death, but not more than
five years after the date hereof.
8. Changes in capital structure. If all or any portion of the Option shall be
exercised subsequent to any share dividend, split-up, recapitalization, merger,
consolidation, combination or exchange of shares, separation, reorganization, or
liquidation occurring after the date hereof, as a result of which shares of any
class shall be issued in respect of outstanding Common Shares or Common Shares
shall be changed into the same or a different number of shares of the same or
another class or classes, the person or persons so exercising the Option shall
receive, for the aggregate price paid upon such exercise, the aggregate number
and class of shares which, if Common Shares (as authorized at the date hereof)
had been purchased at the date herefor for the same aggregate price (on the
basis of the price per share set forth in paragraph 2 hereof) and had not been
disposed of, such person or persons would be holding, at the time of such
exercise, as a result of such purchase and all such share dividends, splitups,
recapitalizations, mergers, consolidations, combinations or exchanges of shares,
separations, reorganizations, or liquidations; provided, however, that no
fractional share shall be issued upon any such exercise, and the aggregate price
paid shall be appropriately reduced on account of any fractional share not
issued. No adjustment shall be made in the minimum number of shares which may be
purchased at any one time, as fixed by paragraph 3 hereof.
9. Limitation. The Employee shall not exercise any one or more Options hereunder
if any to the extent that the Employee would thereby be entitled to purchase
Common Shares in any one calendar year the value of which, determined at the
time of the grant of the Option or Options, would exceed $100,000; provided,
however, that such exercise shall nonetheless be permitted if and to the extent
that the right to first exercise said options shall be accumulated over a number
of years rather than having first occurred in the year of exercise.
10. Method of exercising option. Subject to the terms and conditions of this
Option Agreement, the Option may be exercised by written notice to the
Corporation, at its Stock Transfer Department, which is now located at the
office of the Corporation, 2018 Oak Terrace, Suite 400, Sarasota, FL 34231. Such
notice shall state the election to exercise the Option and the number of shares
in respect of which it is being exercised, and shall be signed by the person or
persons so exercising the Option. Such notice shall either: (a) be accompanied
by payment of the full purchase price of such shares, in which event the
Corporation shall deliver a certificate or certificates representing such shares
as soon as practicable after the notice shall be received; or (b) fix a date
(not less than five nor more than ten business days from the date such notice
shall be received by the Corporation) for the payment of the full purchase price
of such shares at the Stock Transfer Department, against delivery of a
certificate or certificates representing such shares. Payment of such purchase
price shall, in either case, be made by check payable to the order of the
Corporation. The certificate or certificates for the shares as to which the
Option shall have been so exercised shall be registered in the name of the
person or persons so exercising the Option (or, if the Option shall be exercised
by the Employee and if the Employee shall so request in the notice exercising
the Option, shall be registered in the name of the Employee and another person
jointly, with the right of survivorship) and shall be delivered as provided
above to or upon the written order of the person or persons exercising the
Option. In the event the Option shall be exercised, pursuant to paragraph 7
hereof, by any person or persons other than the Employee, such notice shall be
accompanied by appropriate proof of the right of such person or person to
exercise the Option. All shares that shall be purchased upon the exercise of the
Option as provided herein shall be fully paid and nonassessable.
<PAGE>
11. General. The Corporation shall at all times during the term of the Option
reserve and keep available such numbers of Common Shares as will be sufficient
to satisfy the requirements of this Option Agreement, shall pay all original
issue and transfer taxes with respect to the issue and transfer of shares
pursuant hereto and all other fees and expenses necessarily incurred by the
Corporation in connection therewith, and will from time to time use its best
efforts to comply with all laws and regulations which, in the opinion of counsel
for the Corporation, shall be applicable thereto.
In witness whereof the Corporation has caused this Option Agreement to be duly
executed by its officers hereunto duly authorized, and the Employee has hereunto
set his hand and seal, all on the date and year first above written.
Corporate Seal Surgical Safety Products, Inc.
Attest: By:
- ------------------------ ----------------------
President
- ------------------------- -----------------------
Secretary Employee
<PAGE>
EXHIBIT 6.16
CONSULTANTS OPTION AGREEMENT
OPTION AGREEMENT made this ___ day of July, 1994, between Surgical Safety
Products, Inc., a Florida corporation (the "Corporation"), and ________________,
an outside business consultant (the "Consultant").
The Corporation desires, by affording the Consultants an opportunity to
purchase its common shares, of no par value per share, hereinafter called the
Common Shares, as hereinafter provided, to carry out the purpose of the Stock
Option Plan of Surgical Safety Products, Inc., which as been approved by its
shareholders.
Now, therefore, in consideration of the mutual covenants hereinafter set forth
and for other good and valuable consideration, the parties hereto agree as
follows:
1. Grant of option. The Corporation hereby irrevocable grants to the Consultant
the right and option, hereinafter called the Option, to purchase all or any part
of an aggregate of ____ Common Shares (such number being subject to adjustment
as provided in paragraph 8 hereof) on the terms and conditions herein set forth.
2. Purchase price. The purchase price of the Common Shares
covered by the Option shall be $_________ per share flat or ex-dividend.
3. Term of option. The term of the Option shall be for a period of seven years
from the date hereof, subject to earlier termination as provided in paragraphs
5,6, and 7 hereof. The Option may be exercised within the above limitations, at
any time or from time to time, as to any part of or all the shares covered
thereby; provided, however, that: (a) the Option may not be exercised as to less
than 100 shares at any one time (or the remaining shares then purchasable under
the Option, if less than 100 shares); and (b) the Option shall not be
exercisable prior to the expiration of two years from the date hereof. The
purchase price of the shares as to which the Option shall be exercised shall be
paid in full in cash at the time of exercise. The holder of the Option shall not
have any of the rights of a shareholder with respect to the shares covered by
the Option except to the extent that one or more certificates for such shares
shall be delivered to him upon the due exercise of the Option. The Option may
not be exercised unless at the date of exercise a registration statement on Form
S-8 under the Securities Act of 1933, as amended, relating to the shares covered
by the Option shall be in effect. The Corporation will endeavor to obtain prior
to the time when the Option would otherwise be exercisable the registration of
the shares covered by the Option under the Act, as amended.
4. Nontransferability. The Option shall not be transferable otherwise than by
will or the laws of descent and distribution, and the Option may be exercised,
during the lifetime of the Consultant, only by him. More particularly (but
without limiting the generality of the foregoing), the Option may not be
assigned, transferred (except as provided above), pledged, or hypothecated in
any way, shall not be assignable by operation of law, and shall not be subject
to execution, attachment, or similar process. Any attempted assignment,
transfer, pledge, hypothecation, or other disposition of the Option contrary to
the provisions hereof, and the levy of any execution, attachment, or similar
process upon the Option, shall be null and void and without effect.
5. Termination of services. In the event that the services of the Consultant
shall be terminated (otherwise than by reason of death), the Option may be
exercised by the Consultant (to the extent that he shall have been entitled to
do so at the termination of his services) at any time within two months after
such termination. So long as the Consultant shall continue to be a Consultant of
the Corporation the Option shall not be affected by any change in his duties or
position. Nothing in this Option Agreement shall confer upon the Consultant any
right to continue in the service of the Corporation or interfere in any way with
the right of the Corporation to terminate his services at any time.
6. Death of consultant. If the Consultant shall die while he shall be providing
services to the Corporation or within three months after the termination of his
services, the Option may be exercised (to the extent that the Consultant shall
have been entitled to do so at the date of his death) by a legatee or legatees
of the Consultant under his last will, or by his personal representatives or
distributees, at any time within three years after his death, but not more than
five years after the date hereof.
<PAGE>
7. Changes in capital structure. If all or any portion of the Option shall be
exercised subsequent to any share dividend, split-up, recapitalization, merger,
consolidation, combination or exchange of shares, separation, reorganization, or
liquidation occurring after the date hereof, as a result of which shares of any
class shall be issued in respect of outstanding Common Shares or Common Shares
shall be changed into the same or a different number of shares of the same or
another class or classes, the person or persons so exercising the Option shall
receive, for the aggregate price paid upon such exercise, the aggregate number
and class of shares which, if Common Shares (as authorized at the date hereof)
had been purchased at the date hereof for the same aggregate price (on the basis
of the price per share set forth in paragraph 2 hereof) and had not been
disposed of, such person or persons would be holding, at the time of such
exercise, as a result of such purchase and all such share dividends, splitups,
recapitalizations, mergers, consolidations, combinations or exchanges of shares,
separations, reorganizations, or liquidations; provided, however, that no
fractional share shall be issued upon any exercise, and the aggregate price paid
shall be appropriately reduced on account of any fractional share not issued. No
adjustment shall be made in the minimum number of shares which may be purchased
at any one time, as fixed by paragraph 3 hereof.
8.
9. Method of exercising option. Subject to the terms and conditions of this
Option Agreement, the Option may be exercised by written notice to the
Corporation, at its Stock Transfer Department, which is now located at the
office of the Corporation, 434 S. Washington Blvd., Sarasota, Florida 34236.
Such notice shall state the election to exercise the Option and the number of
shares in respect of which it is being exercised, and shall be signed by the
person or persons so exercising the Option. Such notice shall either: (a) be
accompanied by payment of the full purchase price of such shares, in which event
the Corporation shall deliver a certificate or certificates representing such
shares as soon as practicable after the notice shall bee received; or (b) fix a
date (not less than five nor more than ten business days from the date such
notice shall be received by the Corporation) for the payment of the full
purchase price of such shares at the Stock Transfer Department, against delivery
of a certificate or certificates representing such shares. Payment of such
purchase price shall, in either case, be made by check payable to the order of
the Corporation. The certificate or certificates for the shares as to which the
Option shall have been so exercised shall be registered in the name of the
person or persons so exercising the Option (or, if the Option shall be exercised
by the Consultant and if the Consultant shall so request in the notice
exercising the Option, shall be registered in the name of the Consultant and
another person jointly, with right of survivorship) and shall be delivered as
provided above to or upon the written order of the person or persons exercising
the Option. In the event the Option shall be exercised, pursuant to paragraph 5
hereof, by any person or persons other than the Consultant, such notice shall be
accompanied by appropriate proof of the right of such person or persons to
exercise the Option. All shares that shall be purchased upon the exercise of the
Option as provided herein shall be fully paid and nonassessable.
10. General. The Corporation shall at all times during the term of the Option
reserve and keep available such number of Common Shares as will be sufficient to
satisfy the requirements of this Option Agreement, shall pay all original issue
and transfer taxes with respect to the issue and transfer of shares pursuant
hereto and all other fees and expenses necessarily incurred by the Corporation
in connection therewith, and will from time to time use its best efforts to
comply with all laws and regulations which, in the opinion of counsel for the
Corporation, shall be applicable thereto.
IN WITNESS WHEREOF, The Corporation has caused this Option Agreement to be
duly executed by its officers thereunto duly authorized, and the Consultant has
hereunto set his hand and seal, all on the day and year first above written.
Corporate Seal Surgical Safety Products, Inc.
Attest: By:
- ------------------------- -----------------------
President
_________________________ ________________________(L.S.)
Secretary Consultant
<PAGE>
EXHIBIT 6.17
CONSULTANTS OPTION AGREEMENT
OPTION AGREEMENT made this ___ day of ________, 19xx, between Surgical Safety
Products, Inc., a Florida corporation (the "Corporation"), and ________________,
an outside business consultant (the "Consultant").
The Corporation desires, by affording the Consultants an opportunity to
purchase its common shares, of no par value per share, hereinafter called the
Common Shares, as hereinafter provided, to carry out the purpose of the Stock
Option Plan of Surgical Safety Products, Inc., which has been approved by its
shareholders.
Now, therefore, in consideration of the mutual covenants hereinafter set forth
and for other good and valuable consideration, the parties hereto agree as
follows:
1. Grant of option. The Corporation hereby irrevocably grants to the Consultant
the right and option, hereinafter called the Option, to purchase all or any part
of an aggregate of ____ Common Shares (such number being subject to adjustment
as provided in paragraph 8 hereof) on the terms and conditions herein set forth.
2. Purchase price. The purchase price of the Common Shares
covered by the Option shall be $_________ per share flat or ex-
dividend.
3. Term of option. The term of the Option shall be for a period of seven years
from the date hereof, subject to earlier termination as provided in paragraphs
5,6, and 7 hereof. The Option may be exercised within the above limitations, at
any time or from time to time, as to any part of or all the shares covered
thereby; provided, however, that: (a) the Option may not be exercised as to less
than 100 shares at any one time (or the remaining shares then purchasable under
the Option, if less than 100 shares); and (b) the Option shall not be
exercisable prior to the expiration of two years from the date hereof. The
purchase price of the shares as to which the Option shall be exercised shall be
paid in full in cash at the time of exercise. The holder of the Option shall not
have any of the rights of a shareholder with respect to the shares covered by
the Option except to the extent that one or more certificates for such shares
shall be delivered to him upon the due exercise of the Option. The Option may
not be exercised unless at the date of exercise a registration statement on Form
S-8 under the Securities Act of 1933, as amended, relating to the shares covered
by the Option shall be in effect. The Corporation will endeavor to obtain prior
to the time when the Option would otherwise be exercisable the registration of
the shares covered by the Option under the Act, as amended.
4. Nontransferability. The Option shall not be transferable otherwise than by
will or the laws of descent and distribution, and the Option may be exercised,
during the lifetime of the Consultant, only by him. More particularly (but
without limiting the generality of the foregoing), the Option may not be
assigned, transferred (except as provided above), pledged, or hypothecated in
any way, shall not be assignable by operation of law, and shall not be subject
to execution, attachment, or similar process. Any attempted assignment,
transfer, pledge, hypothecation, or other disposition of the Option contrary to
the provisions hereof, and the levy of any execution, attachment, or similar
process upon the Option, shall be null and void and without effect.
5. Termination of services. In the event that the services of the Consultant
shall be terminated (otherwise than by reason of death), the Option may be
exercised by the Consultant (to the extent that he shall have been entitled to
do so at the termination of his services) at any time within two months after
such termination. So long as the Consultant shall continue to be a Consultant of
the Corporation the Option shall not be affected by any change in his duties or
position. Nothing in this Option Agreement shall confer upon the Consultant any
right to continue in the service of the Corporation or interfere in any way with
the right of the Corporation to terminate his services at any time.
6. Death of consultant. If the Consultant shall die while he shall be providing
services to the Corporation or within three months after the termination of his
services, the Option may be exercised (to the extent that the Consultant shall
have been entitled to do so at the date of his death) by a legatee or legatees
of the Consultant under his last will, or by his personal representatives or
distributees, at any time within three years after his death, but not more than
five years after the date hereof.
7. Changes in capital structure. If all or any portion of the
Option shall be exercised subsequent to any share dividend,
split-up, recapitalization, merger, consolidation, combination or
exchange of shares, separation, reorganization, or liquidation
<PAGE>
occurring after the date hereof, as a result of which shares of any class shall
be issued in respect of outstanding Common Shares or Common Shares shall be
changed into the same or a different number of shares of the same or another
class or classes, the person or persons so exercising the Option shall receive,
for the aggregate price paid upon such exercise, the aggregate number and class
of shares which, if Common Shares (as authorized at the date hereof) had been
purchased at the date hereof for the same aggregate price (on the basis of the
price per share set forth in paragraph 2 hereof) and had not been disposed of,
such person or persons would be holding, at the time of such exercise, as a
result of such purchase and all such share dividends, splitups,
recapitalizations, mergers, consolidations, combinations or exchanges of shares,
separations, reorganizations, or liquidations; provided, however, that no
fractional share shall be issued upon any exercise, and the aggregate price paid
shall be appropriately reduced on account of any fractional share not issued. No
adjustment shall be made in the minimum number of shares which may be purchased
at any one time, as fixed by paragraph 3 hereof.
8. Method of exercising option. Subject to the terms and conditions of this
Option Agreement, the Option may be exercised by written notice in the
Corporation, 434 S. Washington Blvd., Sarasota, Florida 34236. Such notice shall
state the election to exercise the Option and the number of shares in respect of
which it is being exercised, and shall be signed by the person or persons so
exercising the Option. Such notice shall either: (a) be accompanied by payment
of the full purchase price of such shares, in which event the Corporation shall
deliver a certificate or certificates representing such shares in which event
the Corporation shall deliver a certificate or certificates representing such
shares as soon as practicable after the notice shall be received; or (b) fix a
date (not less than five nor more than ten business days from the date such
notice shall be received by the Corporation) for the payment of the full
purchase price of such shares at the Stock Transfer Department, against delivery
of a certificate or certificates representing such shares. Payment of such
purchase price shall, in either case, be made by check payable to the order of
the Corporation. The certificate or certificates for the shares as to which the
Option shall have been so exercised shall be registered in the name of the
person or persons so exercising the Option (or, if the Option shall be exercised
by the Consultant and if the Consultant shall so request in the notice
exercising the Option, shall be registered in the name of the Consultant and
another person jointly, with right of survivorship) and shall be delivered as
provided above to or upon the written order of the person or persons exercising
the Option. In the event the Option shall be exercised, pursuant to paragraph 5
hereof, by any person or persons other than the Consultant, such notice shall be
accompanied by appropriate proof of the right of such person or persons to
exercise the Option. All shares that shall be purchased upon the exercise of the
Option as provided herein shall be fully paid and nonassessable.
9. General. The Corporation shall at all times during the term of the Option
reserve and keep available such number of Common Shares as will be sufficient to
satisfy the requirements of this Option Agreement, shall pay all original issue
and transfer taxes with respect to the issue and transfer of shares pursuant
hereto and all other fees and expenses necessarily incurred by the Corporation
in connection therewith, and will from time to time use its best efforts to
comply with all laws and regulations which, in the opinion of counsel for the
Corporation, shall be applicable thereto.
IN WITNESS WHEREOF, The Corporation has caused this Option Agreement to be
duly executed by its officers thereunto duly authorized, and the Consultant has
hereunto set his hand and seal, all on the day and year first above written.
Corporate Seal Surgical Safety Products, Inc.
Attest: By:
- ------------------------- ------------------------
President
_________________________ ________________________(L.S.)
Secretary Consultant
<PAGE>
EXHIBIT 6.18
SURGICAL SAFETY PRODUCTS, INC.
CONFIDENTIAL
PRIVATE OFFERING
MEMORANDUM
MAY 30,1995
NAME OF OFFEREE:______________________COPY NUMBER:______________
<PAGE>
Copy Number: _______________
Name of Offeree:_________________
CONFIDENTIAL PRIVATE OFFERING MEMORANDUM
SURGICAL SAFETY PRODUCTS, INC.
Minimum Offering $ 500,000
Maximum Offering $ 4,000,000
Offered in Units at aPurchase Price of $5,000 per Unit.Each Unit consists of (a)
5,000 shares of Common Stock and (b) three year warrants to purchase 2,500
shares of Common Stock at an exercise price of $1.50 per share 10O Unit Minimum
800 Unit Maximum
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND SHOULD NOT BE
PURCHASED BY ANYONE WHO CANNOT AFFORD THE LOSS OF HIS ENTIRE INVESTMENT. SEE
"RISK FACTORS."
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH OR APPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Memorandum is May 30, 1995
<PAGE>
CONFIDENTIAL PRIVATE OFFERING MEMORANDUM
SURGICAL SAFETY PRODUCTS, INC.
Minimum Offering - $ 500,000
Maximum Offering - $ 4,000,000
The company is offering for sale hereunder, on a "best-efforts" basis, a minium
of 100 Units (the "Minimum Offering - $500,000") and a maximum of 800 Units (the
"Maximum Offering - $4,000,000), each unit ("Unit") consisting of (a) 5,000
shares of common stock, $.001 par value (the "common Stock"), and (b) 2,500
warrants ("Warrants") entitling the holder to purchase one (1) share of common
Stock for each Warrant at an exercise price of $1.50 per share for a three year
period commencing on the Initial Closing Date (as defined below) or such
subsequent Closing (as defined below) of the offering being conducted pursuant
hereto and expiring on the third anniversary of the Initial Closing Date or a
subsequent Closing, as the case may be. Each Unit wil be offered at a purchase
price of $5,000 per Unit. A minimum purchase of twenty (20) Units ($1,000,000)
is required.
All proceeds received by the Company from subscribers for the Units offered
hereby will be deposited by the Company in a special, segregated,
interest-bearing custodial account at Barnett Bank, 240 South Pineapple Avenue,
Sarasota, Florida 34236. Upon receipt of subscriptions for the Minimum Offering,
a closing will be held as soon as practicable thereafter (the "Initial Closing
Date") and all funds held in the custodial account, including interest thereon,
will be released to the Company on such Initial Closing Date. If subscriptions
for the Minimum Offering have not been received by October 31, 1995, unless
extended by the Company, in its discretion, to December 31, 1995, no Units will
be ' sold and all funds paid by subscribers will be refunded promptly, with
interest (if held for at least 30 days), less the fees and expenses of Barnett
Bank, on a pro-rata basis. The Company shall have the right, upon receipt of
subscription proceeds aggregating the Minimum Offering, to continue to offer
Units for sale and to receive and accept subscription proceeds in an amount up
to the Maximum Offering at one or more closings (a "Closing") held at any time
and from time to time as determined by the Company, through and including
December 31, 1995, unless extended by the Company in its discretion to December
31, 1996.
AN INVESTMENT IN THE COMPANY IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF
RISK. PURCHASE OF THE UNITS OFFERED HEREBY IS SUITABLE ONLY FOR PERSONS OF
SUBSTANTIAL FINANCIAL MEANS WHO CAN AFFORD A TOTAL LOSS OF THEIR INVESTMENT. FOR
A DISCUSSION OF THE MATERIAL RISKS IN CONNECTION WITH THE PURCHASE OF THE UNITS,
SEE "RISK FACTORS.
Offering Sales Proceeds to
Price Commissions (1) the Company (2)
Per Unit $ 5,000 $ 350 $ 4,650
Minimum Offering $ 500,000 $ 35,000 $ 465,000
Maximum Offering $ 4,000,000 $ 280,000 $ 3,720,000
(1) Officers and directors of the Company are offering the Units on a
"best-efforts" minimum-maximum basis. Such persons will not receive any sales
commissions or other special compensation in connection therewith. Sales
commissions of up to 7% of the offering price ($350 per Unit) may be paid to
participating broker-dealers and other qualified persons who introduce the
Company to a purchaser of the Units.
(2) Exclusive of legal, accounting, printing, blue sky and related offering
expenses estimated at approximately $54,000. To the extent Units are sold by
officers and directors of the Company, the commissions otherwise payable by the
Company will be retained by it for working capital and the net proceeds of the
offering will increase as a result thereof. See "USE OF PROCEEDS."
<PAGE>
CAVEATS
THE INVESTMENT DESCRIBED IN THIS MEMORANDUM IS SPECULATIVE, INVOLVES A HIGH
DEGREE OF RISK AND THE PURCHASE OF UNITS SHOULD BE CONSIDERED ONLY BY PERSONS
WHO CAN AFFORD THE TOTAL LOSS OF THEIR INVESTMENT. (SEE "RISK FACTORS.")
OFFEREES ARE CAUTIONED NOT TO CONSTRUE THE CONTENTS OF THIS MEMORANDUM OR OF ANY
PRIOR OR SUBSEQUENT COMMUNICATIONS AS LEGAL OR TAX ADVICE. OFFEREES ARE URGED TO
CONSULT THEIR OWN LEGAL, TAX AND FINANCIAL ADVISORS AS TO ALL MATTERS CONCERNING
THIS INVESTMENT.
THERE IS NO ESTABLISHED MARKET FOR THESE SECURITIES AND THERE WILL NOT BE ANY
ESTABLISHED MARKET FOR THESE SECURITIES IN THE NEAR FUTURE. THE SUBSCRIPTION
PRICE OF THESE SECURITIES HAS BEEN ARBITRARILY DETERMINED BY THE COMPANY, HAS NO
RELATION TO THE ASSETS, EARNINGS, NET WORTH OR OTHER CUSTOMARY INDICIA OF VALUE
AND IS NOT AN INDICATION OF THE ACTUAL VALUE OF THESE SECURITIES.
THE PURCHASER OF THESE SECURITIES MUST MEET CERTAIN SUITABILITY STANDARDS AND
MUST BE ABLE TO BEAR THE ENTIRE LOSS OF HIS INVESTMENT. THIS INVESTMENT IS
AVAILABLE ONLY TO (A) "ACCREDITED INVESTORS" AS THAT TERM IS DEFINED IN THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR (B) INVESTORS WHOSE NET WORTH
(EXCLUSIVE OF HOME, FURNISHINGS AND AUTOMOBILES) IS AT LEAST TEN TIMES THEIR
INVESTMENT ($50,000 FOR EACH FULL UNIT PURCHASED HEREUNDER) (HIGHER FOR
RESIDENTS OF CALIFORNIA) OR SUCH HIGHER AMOUNT REQUIRED BY APPLICABLE STATE LAW.
(SEE "TERMS OF THE OFFERING--Qualifications of Investors" AND THE SUBSCRIPTION
AGREEMENT WITH RESPECT TO CERTAIN REPRESENTATIONS AND WARRANTIES WHICH EACH
INVESTOR WILL BE REQUIRED TO MAKE).
THIS OFFERING IS BEING MADE PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
PROVISIONS OF THE ACT IN RELIANCE ON INTENDED COMPLIANCE WITH THE PROVISIONS OF
THE RULES AND REGULATIONS PROMULGATED THEREUNDER. ACCORDINGLY, THIS MEMORANDUM
SHALL NOT BE DISTRIBUTED TO, NOR SHALL AN OFFER, SOLICITATION OR SALE BE MADE
TO, ANY PERSON UNLESS THERE IS COMPLIANCE WITH THE REQUIREMENTS SET FORTH IN
SUCH RULES AND REGULATIONS. (SEE "TERMS OF THE OFFERING.")
IF THE COMPANY AND ITS AGENTS ARE INCORRECT IN THEIR ASSUMPTIONS AS TO THE
FINANCIAL CIRCUMSTANCES AND BUSINESS AND INVESTMENT EXPERIENCE OF ANY OFFEREE,
THEN THE DELIVERY OF THIS MEMORANDUM TO SUCH OFFEREE DOES NOT CONSTITUTE AN
OFFER AND THIS MEMORANDUM MUST BE RETURNED TO THE COMPANY IMMEDIATELY.
THE UNITS OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH, APPROVED OR DISAPPROVED
BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR BY THE SECURITIES
REGULATORY AUTHORITY OF ANY STATE. NEITHER THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION NOR ANY STATE AUTHORITY HAS PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM, NOR IS
IT INTENDED THAT ANY OF THE ABOVE WILL DO SO. ANY REPRESENTATION CONTRARY TO THE
FOREGOING MAY BE A CRIMINAL OFFENSE.
FOR FLORIDA RESIDENTS ONLY:
EACH FLORIDA RESIDENT WHO SUBSCRIBES FOR THE PURCHASE OF UNITS HEREIN HAS THE
RIGHT, PURSUANT TO SECTION 517.061(12)(a)(5) OF THE FLORIDA SECURITIES ACT, TO
WITHDRAW HIS SUBSCRIPTION FOR THE PURCHASE, AND RECEIVE A FULL REFUND OF ALL
MONIES PAID, WITHIN THREE (3) BUSINESS DAYS AFTER THE EXECUTION OF THE
SUBSCRIPTION AGREEMENT OR PAYMENT FOR THE PURCHASE HAS BEEN MADE, WHICHEVER IS
LATER. WITHDRAWAL WILL BE WITHOUT ANY FURTHER LIABILITY TO ANY PERSON. TO
ACCOMPLISH THIS WITHDRAWAL, A SUBSCRIBER NEED ONLY SEND A LETTER OR TELEGRAM TO
THE COMPANY AT THE ADDRESS SET FORTH IN THIS MEMORANDUM, INDICATING HIS
INTENTION TO WITHDRAW.
SUCH LETTER OR TELEGRAM SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF THE
AFOREMENTIONED THIRD BUSINESS DAY. IT IS ADVISABLE TO SEND SUCH LETTER BY
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED AND ALSO
TO EVIDENCE THE TIME IT WAS MAILED. IF THE REQUEST IS MADE ORALLY, IN PERSON OR
BY TELEPHONE TO THE COMPANY, A WRITTEN CONFIRMATION THAT THE REQUEST HAS BEEN
RECEIVED SHOULD BE REQUESTED.
FOR NEW YORK AND NEW JERSEY RESIDENTS ONLY:
THIS PRIVATE PLACEMENT MEMORANDUM HAS NOT BEEN FILED WITH OR REVIEWED BY THE
ATTORNEYS GENERAL OF THE STATES OF NEW YORK OR NEW JERSEY PRIOR TO ITS ISSUANCE
AND USE. THE ATTORNEYS GENERAL OF THE STATES OF NEW YORK AND NEW JERSEY AND THE
BUREAU OF SECURITIES OF THE STATE OF NEW JERSEY HAVE NOT PASSED ON OR ENDORSED
THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
<PAGE>
FOR PENNSYLVANIA RESIDENTS ONLY:
(1) EACH PENNSYLVANIA RESIDENT WHO SUBSCRIBES FOR UNITS MUST EXECUTE, HAVE
NOTARIZED AND DELIVER TO THE COMPANY THE SUBSCRIPTION AGREEMENT WHEREBY THE
SUBSCRIBER AGREES NOT TO SELL HIS INTEREST IN THE COMPANY FOR A PERIOD OF TWELVE
(12) MONTHS FROM THE DATE OF EXECUTION OF THE SUBSCRIPTION AGREEMENT ADMITTING
SUCH SUBSCRIBER AS A SHAREHOLDER; AND
(2) EACH PENNSYLVANIA RESIDENT WHO SUBSCRIBES FOR UNITS HAS THE RIGHT, PURSUANT
TO SECTION 207 OF THE PENNSYLVANIA SECURITIES ACT OF 1972, TO WITHDRAW HIS
SUBSCRIPTION FOR UNITS, AND RECEIVE A FULL REFUND OF ALL MONIES PAID, WITHIN TWO
(2) BUSINESS DAYS AFTER THE EXECUTION OF THE SUBSCRIPTION AGREEMENT OR PAYMENT
FOR UNITS HAS BEEN MADE, WHICHEVER IS LATER. WITHDRAWAL WILL BE WITHOUT ANY
FURTHER LIABILITY TO SUCH PERSON. TO ACCOMPLISH- THIS WITHDRAWAL, A SUBSCRIBER
NEED ONLY SEND A LETTER OR TELEGRAM TO THE COMPANY AT THE ADDRESS SET FORTH IN
THIS MEMORANDUM, INDICATING HIS INTENTION TO WITHDRAW.
SUCH LETTER OR TELEGRAM SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF THE
AFOREMENTIONED SECOND BUSINESS DAY. IT IS ADVISABLE TO SEND SUCH LETTER BY
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED AND TO
EVIDENCE THE TIME WHEN IT WAS MAILED. IF THE REQUEST IS MADE ORALLY, IN PERSON
OR BY TELEPHONE, TO THE COMPANY, A WRITTEN CONFIRMATION THAT THE REQUEST TO
WITHDRAW HAS BEEN RECEIVED SHOULD BE REQUESTED.
THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER OR SOLICITATION TO ANY PERSON IN
ANY STATE OR IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT
AUTHORIZED. IN ADDITION, THIS MEMORANDUM CONSTITUTES AN OFFER ONLY IF A NAME AND
COPY NUMBER APPEAR IN THE APPROPRIATE SPACES PROVIDED ON THE COVER PAGE HEREOF
AND ONLY TO THE PERSON SO NAMED.
TRANSFER OF THE UNITS IS SPECIFICALLY RESTRICTED UNDER THE ACT AND THE
SUBSCRIPTION AGREEMENT AND THERE IS NO ESTABLISHED MARKET FOR THESE SECURITIES.
INVESTORS MAY BE REQUIRED TO RETAIN OWNERSHIP OF THE UNITS AND BEAR THE ECONOMIC
RISK OF AN INVESTMENT IN THE COMPANY FOR AN INDEFINITE PERIOD. (SEE RISK
FACTORS.")
THE COMPANY RESERVES THE RIGHT TO WITHDRAW OR MODIFY THIS OFFERING AND TO REJECT
ANY SUBSCRIPTION FOR UNITS IN WHOLE OR IN PART, FOR ANY REASON, INCLUDING,
WITHOUT LIMITATION, THE DETERMINATION THAT THE PROSPECTIVE INVESTOR DOES NOT
MEET THE APPLICABLE SUITABILITY REQUIREMENTS. SUBSCRIPTIONS WHICH ARE NOT
ACCOMPANIED BY A DULY COMPLETED AND EXECUTED PURCHASER QUESTIONNAIRE WILL BE
REJECTED.
THIS MEMORANDUM CONTAINS A FAIR SUMMARY OF CERTAIN PROVISIONS OF THE DOCUMENTS
RELATING TO THIS OFFERING, AS WELL AS SUMMARIES OF VARIOUS PROVISIONS OF
RELEVANT STATUTES AND THE APPLICABLE REGULATIONS THEREUNDER. SUCH DOCUMENTS
INCLUDE, BUT ARE NOT LIMITED TO, THE SUBSCRIPTION AGREEMENT AND THE AGREEMENTS
RELATING TO THE PLASTICS COMPANY ACQUISITION. WHILE THE COMPANY BELIEVES THESE
SUMMARIES TO BE ACCURATE, THESE SUMMARIES DO NOT PURPORT TO BE COMPLETE AND ARE
QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE TEXTS OF SUCH DOCUMENTS,
STATUTES AND REGULATIONS.
NO OFFERING LITERATURE OR ADVERTISING IN ANY FORM SHALL BE EMPLOYED IN THE
OFFERING OF THE UNITS EXCEPT THE INFORMATION CONTAINED HEREIN, AND NO OFFEREE
MAY RELY ON ANY REPRESENTATION OR INFORMATION THAT MAY BE MADE OR GIVEN WHICH IS
NOT CONTAINED HEREIN. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY REPRESENTATION
OR GIVE ANY INFORMATION WITH RESPECT TO THIS OFFERING EXCEPT FOR INFORMATION
CONTAINED IN THIS MEMORANDUM, AND NO OFFEREE MAY RELY UPON ANY REPRESENTATION OR
INFORMATION THAT MAY BE MADE OR GIVEN IN VIOLATION OF THE ABOVE.
ANY DISTRIBUTION OR REPRODUCTION OF THIS MEMORANDUM IN WHOLE OR IN PART, OR THE
DIVULGENCE OF ANY OF ITS CONTENTS, OTHER THAN AS SPECIFICALLY SET FORTH HEREIN,
IS UNAUTHORIZED AND FORBIDDEN.
IN THE EVENT ANY OFFEREE ELECTS NOT TO MAKE A PURCHASE OFFER, OR SAID OFFEREE'S
PURCHASE OFFER IS TOTALLY REJECTED BY THE COMPANY, SAID OFFEREE, BY ACCEPTING
DELIVERY OF THIS MEMORANDUM, AGREES TO RETURN THIS MEMORANDUM AND ALL RELATED
DOCUMENTS TO THE COMPANY, AT THE ADDRESS SET FORTH HEREIN.
THIS MEMORANDUM DOES NOT CONTAIN AN UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT
TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS MADE, IN LIGHT OF THE
CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING. IT CONTAINS A FAIR
SUMMARY OF THE MATERIAL TERMS OF DOCUMENTS PURPORTED TO BE SUMMARIZED HEREIN.
PERSONS TO WHOM OFFERS ARE MADE WILL BE FURNISHED WITH ANY ADDITIONAL
INFORMATION CONCERNING THE COMPANY AND OTHER MATTERS DISCUSSED HEREIN AS THEY OR
THEIR BUSINESS, TAX OR LEGAL ADVISORS MAY REASONABLY REQUEST. THEY ARE URGED TO
MAKE SUCH PERSONAL INVESTIGATIONS, INSPECTIONS OR INQUIRIES AS THEY DEEM
APPROPRIATE, INCLUDING A VISIT TO THE COMPANY IN SARASOTA, FLORIDA.
ACCOMPANIED BY A DULY COMPLETED AND EXECUTED PURCHASER QUESTIONNAIRE WILL BE
REJECTED.
<PAGE>
THIS MEMORANDUM CONTAINS A FAIR SUMMARY OF CERTAIN PROVISIONS OF THE DOCUMENTS
RELATING TO THIS OFFERING, AS WELL AS SUMMARIES OF VARIOUS PROVISIONS OF
RELEVANT STATUTES AND THE APPLICABLE REGULATIONS THEREUNDER. SUCH DOCUMENTS
INCLUDE, BUT ARE NOT LIMITED TO, THE SUBSCRIPTION AGREEMENT AND THE AGREEMENTS
RELATING TO THE PLASTICS COMPANY ACQUISITION. WHILE THE COMPANY BELIEVES THESE
SUMMARIES TO BE ACCURATE, THESE SUMMARIES DO NOT PURPORT TO BE COMPLETE AND ARE
QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE TEXTS OF SUCH DOCUMENTS,
STATUTES AND REGULATIONS.
NO OFFERING LITERATURE OR ADVERTISING IN ANY FORM SHALL BE EMPLOYED IN THE
OFFERING OF THE UNITS EXCEPT THE INFORMATION CONTAINED HEREIN, AND NO OFFEREE
MAY RELY ON ANY REPRESENTATION OR INFORMATION THAT MAY BE MADE OR GIVEN WHICH IS
NOT CONTAINED HEREIN. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY REPRESENTATION
OR GIVE ANY INFORMATION WITH RESPECT TO THIS OFFERING EXCEPT FOR INFORMATION
CONTAINED IN THIS MEMORANDUM,.AND NO OFFEREE MAY RELY UPON ANY REPRESENTATION OR
INFORMATION THAT MAY BE MADE OR GIVEN IN VIOLATION OF THE ABOVE.
ANY DISTRIBUTION OR REPRODUCTION OF THIS MEMORANDUM IN WHOLE OR IN PART, OR THE
DIVULGENCE OF ANY OF ITS CONTENTS, OTHER THAN AS SPECIFICALLY SET FORTH HEREIN,
IS UNAUTHORIZED AND FORBIDDEN.
IN THE EVENT ANY OFFEREE ELECTS NOT TO MAKE A PURCHASE OFFER, OR SAID OFFEREE'S
PURCHASE OFFER IS TOTALLY REJECTED BY THE COMPANY, SAID OFFEREE, BY ACCEPTING
DELIVERY OF THIS MEMORANDUM, AGREES TO RETURN THIS MEMORANDUM AND ALL RELATED
DOCUMENTS TO THE COMPANY, AT THE ADDRESS SET FORTH HEREIN.
THIS MEMORANDUM DOES NOT CONTAIN AN UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT
TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS MADE, IN LIGHT OF THE
CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING. IT CONTAINS A FAIR
SUMMARY OF THE MATERIAL TERMS OF DOCUMENTS PURPORTED TO BE SUMMARIZED HEREIN.
PERSONS TO WHOM OFFERS ARE MADE WILL BE FURNISHED WITH ANY ADDITIONAL
INFORMATION CONCERNING THE COMPANY AND OTHER MATTERS DISCUSSED HEREIN AS THEY OR
THEIR BUSINESS, TAX OR LEGAL ADVISORS MAY REASONABLY REQUEST. THEY ARE URGED TO
MAKE SUCH PERSONAL INVESTIGATIONS, INSPECTIONS OR INQUIRIES AS THEY DEEM
APPROPRIATE, INCLUDING A VISIT TO THE COMPANY IN SARASOTA, FLORIDA.
<PAGE>
TABLE OF CONTENTS
SUMMARY 1
TERMS OF THE OFFERING 9
RISK FACTORS 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 27
CAPITALIZATION 32
USE OF PROCEEDS 33
DILUTION 34
BUSINESS 36
MANAGEMENT 65
SUMMARY COMPENSATION 68
PRINCIPAL STOCKHOLDERS 70
CERTAIN TRANSACTIONS 73
DESCRIPTION OF SECURITIES 75
MISCELLANEOUS 76
LEGAL MATTERS 77
EXPERTS 77
Exhibit A Form of Subscription Agreement
Exhibit B Form of Purchaser Questionnaire
Exhibit C Form of Warrant
Exhibit D Company Financial Statements
<PAGE>
SUMMARY
The following is a summary of certain material contained in this Private
offering Memorandum and certain of the exhibits attached hereto. This summary is
qualified in its entirety by the detailed information appearing elsewhere herein
and should be read in conjunction with such material.
The Company
The Company was formed in 1992, and until recently, was primarily engaged in
medical research and product development with a focus on safety-related products
geared to the reduction of occupational risk in health care workers. To date,
the Company has received four (4) patents on two (2) products, is seeking patent
protection on a third product, and is in the process of developing or acquiring
the rights to approximately 25 additional medical products intended to be
marketed to the health care community. The concepts and designs are at various
stages of development or negotiation. The Company's premiere product line,
marketed under the trademark, SutureMate, is a disposable, FDA approved,
multi-function, suturing safety device for surgery. The original instrument and
its developmental variations facilitate advanced surgical techniques, which
increase surgical efficiency, and more importantly, reduce the occupational risk
of exposure of bloodborne pathogens, such as HIV and hepatitis. The recently
developed FDA listed, disposable obstetric and gynecologic device, known by the
trade name, Prostasert, was developed to improve the preparation of pregnant
patients for labor by providing a mechanism for applying and maintaining a
pharmaceutical gel to the cervix and vagina. Additional medical applications are
proposed and being investigated while clinical trials are under way. The Company
is seeking patent protection for a third product line, known by the trade name,
ICE PACK, an abbreviation for Infection Control Equipment Pack. This product and
its many accessories provide a variety of health care workers improved access to
personal protective supplies (such as gloves and antiseptic wipes), in a
durable, reusable format with customized components.
Additional products in the final stages of development include:
11. A prescription protective eyeglass line, codeveloped with an
optical product developer and manufacturer, which offers
distinctive features such as lightweight construction, and
low cost;
2. A computer software program group known as Safety Track, which will be
marketed to health care institutions to facilitate the reporting, data
collection, and tracking of employee exposure to occupational hazards,
such as TB and bloodborne illnesses like HIV and hepatitis.
The Company has other products and concepts in development, which generally fall
into the categories of occupational safety, infection control, obstetrics and
gynecology, and new "minimally invasive" surgery devices and techniques. Most of
these development projects originated from within the Company, although several
are being codeveloped with outside third party inventors comprised mainly of
physicians and medical technicians, for which the Company provides consulting
services in new product idea development.
The Company is also involved in medical product utility research with two (2)
completed projects and two (2) evaluations under way. Currently, negotiations
have begun with a national, 16-center, research company, and also with a
surgical facility, planning for health care product evaluation services. Health
care education projects focusing on occupational safety, advanced surgical
techniques, and women's health care, are ongoing, and include a recent
presentation to a national organization of surgical technicians and plans for a
Company sponsored medical conference on advanced surgical techniques scheduled
for 1996.
The Company's newly-formed Health Care Facility Management and Development
Division oversees the continuing development and operations of the Company's
wholly-owned subsidiary, Women's Diagnostic Center of Sarasota, Inc. (WDC),
which was acquired in October, 1994, and provides specialized diagnostic testing
exclusively to women including mammography, bone density testing, ultrasound,
and laboratory evaluation through a contracted, national laboratory. WDC has a
patient base of approximately 28,000 patients, a physician referral base of
approximately 200, and provides specialty services for patients with
menopause-related problems, breast implant concerns, and osteoporosis. The
divisional developmental plan includes continuing development and expansion of
the current facility, as well as the marketing of proprietary operational plans
to other existing facilities, including the formation of a franchise network of
similar centers in the southeast region. Expansion of services are expected to
include fertility diagnostics and diet/nutritional programs. The Company is
currently negotiating with potential joint venture partners in this expansion
project. Two (2) highly trained individuals are being recruited to join the
organization in facilitating growth and expansion of facility
<PAGE>
management and development and are expected to join the Company once the private
placement capitalization is completed.
The Company is primarily marketing its products directly and is concurrently
developing a network of various distribution and licensing agreements.
SutureMate is distributed by Johnson & Johnson Medical Pty., Ltd. in
certain foreign counties including Australia, and other distributors are
contracted in Saudi Arabia, Italy, and the Netherlands. Negotiations are also
under way for distribution in the United States and other markets. Licensing and
distribution agreements are currently being negotiated for Prostasert and the
prescription protective eyeglasses.
As the Company makes the transition into manufacturing, marketing, and
distribution, negotiations have begun on the acquisition of a plastic injection
molding and engineering company, and a related product development company that
has several patents, projects and concepts that fit the Company's product line.
The Company envisions growth in various revenue streams; through product
development, managerial fees, distribution arrangements, and sales of products
and contemplates bringing an increasing number of products to market to satisfy
growing customer demand.
Through research and product development, the Company plans to maintain a
leadership role in new technology related to occupational safety and health care
and through the combination of successful management teams, high-level physician
medical input, and state-of-the-art operational models, the Company plans to
become a leader in providing quality health care through its Facility Management
and Development Division.
The Company intends to utilize the net proceeds of the Maximum Offering together
with newly issued unregistered shares of its Common Stock to acquire one or more
of several businesses in the health care field that it is currently analyzing.
Another prime acquisition candidate is a manufacturer and engineering firm
("Plastics Manufacturer") specializing in injection molded products for medical
and industrial applications ("Plastics Company Acquisition") that currently acts
as a contract manufacturer for the Company's SutureMate product and which has
extensive relationships with other inventors and developers of medical products.
Although the Company is interested in pursuing acquisition discussions with the
Plastics Manufacturer, it has not reached any definitive agreements nor has it
concluded its due diligence with respect to any such acquisition, which is
subject to approval of its Board of Directors and the approval of the Board of
Directors and stockholders of the Plastics Manufacturer. The information
contained herein concerning the Plastics Manufacturer has been supplied by it,
has not been independently verified by the Company, its auditors or its counsel
and is supplied for the purpose of providing investors with general information
only. Notwithstanding the foregoing it is possible that the Plastics Company
Acquisition will be consummated after the successful conclusion of this
offering, and in such event investors should be aware that (i) a significant
portion of the proceeds from the Maximum Offering could be utilized in
connection therewith, (ii) stockholders will not be requested to approve any
such acquisition, and (iii) the information obtained upon completion of due
diligence (including audited financial statements) may be substantially
different from the information currently known and additional risks regarding
such acquisition may not become known until after the consummation thereof.
However, there is no assurance that the Plastics Company Acquisition will occur,
in which event the Maximum Offering proceeds will be allocated among the other
purposes hereinafter described. If the Plastics Company Acquisition is
consummated, or an agreement to do so is executed, prior to the successful
conclusion of the Maximum Offering, this Private Offering Memorandum will be
supplemented accordingly and all investors who have previously subscribed will
be offered a right of rescission. Subscriptions from the Minimum Offering will
be utilized to produce and market existing products; to develop a secondary
group of new medical products currently under development; to further develop
the Company's new healthcare facility management group; and to repay debt to an
affiliate of the Company. SEE "USE OF PROCEEDS" and "RISK FACTORS".
As of April 20, 1995 the Company had authorized 20,000,000 shares of Common
Stock, par value $.001 per share, of which 8,980,818 shares were issued and
outstanding. No-shares were held in treasury. According to the Company's
registrar and transfer agent, there are approximately 1,100 holders of shares of
Common Stock. Although there is no established trading market, there are four
market makers for such shares. An application was recently submitted and
approved, pursuant to Securities and Exchange Commission Rule 15c 2-11, for the
initiation of quotations for the Common Stock on the OTC Bulletin Board by a
member firm of the National Association of Securities Dealers, Inc. ("NASD"). No
price was quoted in such application and Investors should not assume that an
active trading market will develop simply because the NASD has permitted
quotations on the OTC Bulletin Board.
<PAGE>
The Company's principal offices are located at 434 S. Washington
Boulevard, Suite 2, Sarasota, Florida 34236, telephone number (813) 953-7889.
The Offering
Securities Offered - Units, with each Unit consisting of (i)5,000 shares of
Common Stock and (ii) 2,500 Warrants to purchase one (1) share of Common Stock
for each Warrant, exercisable at a price of $1.50 per share at any time during
the three year period commencing on the Closing Date.
Purchase Price $ 5,000 per Unit.
Shares of Common Stock
outstanding Prior to
Offering (1) 8,980,818 shares.
Shares of Common Stock
Outstanding After
Offering (1)(2)
Minimum 9,480,818 shares.
Maximum 12,980,818 shares.
Warrants Outstanding
After Offering
Minimum 250,000 Warrants.
Maximum 2,000,000 Warrants.
(1) Excludes 5,423,524 shares of Common Stock subject to issuance upon exercise
of currently outstanding stock options, which options are exercisable at prices
ranging from $.31 to $.90 per share. These numbers are as of December 31, 1994
and exclude 5,000 shares of common stock issued subsequent thereto.
(2) Excludes 250,000 (Minimum Offering) or 2,000,000 (Maximum Offering) shares
of Common Stock, as the case may be, issuable upon exercise of the Warrants
included within the Units.
Registration Rights. Persons holding shares of Common Stock included within the
Units (the "Offered Shares"), Warrants and/or shares issuable upon exercise of
the Warrants (the "Warrant Shares") representing, in the aggregate, a majority
of the Offered Shares, Warrants and/or Warrant Shares then outstanding will have
"piggyback" registration rights with respect to any registration statement
(other than a registration statement filed on Forms S-4, S-8 or 1-A, or any
similar or successor form used for the same purpose or a registration statement
filed in connection with an exchange offer or an offering of securities solely
to the Company's existing stockholders or employees) filed by the Company
subsequent to the Company's initial public offering (IPO") of its Common Stock
which becomes effective and results in the development of an active trading
market therefor, e.g. on the NASDAQ National Market System or NASDAQ Small-Cap
Market, during the five year period immediately following the Closing Date.See
"RISK FACTORS".
Current Market Price. There is no established trading market for shares of the
Company's Common Stock. Although there are four market makers for such shares,
trading volume is insignificant. As a result, quotations for such shares are
difficult to obtain, if obtained they should not be relied upon and the price
thereof is subject to material fluctuation. The purchase price for the Units has
been arbitrarily determined by the Company and has no relation to its net worth,
income, assets, or other conventional criteria of value. See "Risk Factors" for
further information.
Use of Proceeds. Net proceeds (assuming a 7% commission) with respect to the
Minimum offering, and with respect to the Maximum Offering, are estimated to be
$465,000 and $3,720,000, respectively, exclusive of legal, accounting, printing,
blue sky and related offering expenses estimated at approximately $54,000), may
be utilized to consummate the Plastics Company Acquisition (assuming the Company
raises a minimum of $1,250,000 and enters into a definitive arrangement with the
Plastics Manufacturer) and, in addition, to produce and market existing
products, to research and further develop additional medical products, to
develop additional women's health care facilities, to hire additional highly
trained management and staff, to repay debt to an affiliate and for working
capital purposes.
Risk Factors. Purchase of the securities offered hereby is speculative and
involves a high degree of risk. See "Risk Factors."
Selected Financial Information. The following information has been summarized
from the Company's financial statements included herein and should be read in
conjunction with such financial statements and the related notes thereto
attached as Exhibit D.
<PAGE>
Statement of Operations Data:
Quarter Ended March 31, Year Ended Dec. 31,
1995 1994 1993
(unaudited) (Audited)
Revenue 124,728 120,689 24,344
Costs 65,337 65,037 17,436
Gross profit 59,391 55,652 6,908
Operating expenses 147,450 286,954 155,026
Loss from operations 88,059 231,302 148,118
Interest and other
income(expense) net (7,167) (14,788) --
Net loss (95,226) (246,090) (148,118)
Net loss per
common share (.011) (.028) (.017)
Weighted average
common shares and
equivalent 8,968,785 8,938,3638 8,936,440
Balance Sheet Data:
As of As Adjusted for As Adjusted for
March 31, 1995 the Minimum the Maximum
Offering 1 Offering 2
(Unaudited)
Current Assets $ 70,183 $ 481,183 $3,736,183
Total Assets $557,218 $ 968,218 $4,223,218
Total $514,578 $ 514,578 $ 514,578
Liabilities
Shareholders $ 42,640 $ 453,640 $3,708,640
Equity
(1)Exclusive of sales commissions of $35,000 and other costs of
the offering of an estimated $54,000.
(2)Exclusive of sales commissions of $280,000 and other costs of
the offering of an estimated $54,000.
TERMS OF THE OFFERING
The Offering
The Company is offering hereunder for sale on a "best efforts" basis a minimum
of 100 Units (the "Minimum Offering $500,000") and a maximum of 800 units (the
"Maximum Offering $4,000,000"), each Unit consisting of (i) 5,000 Shares of
Common Stock and (ii) 2,500 Warrants to purchase one (1) share of Common Stock
for each Warrant at an exercise price of $1.50 per share for a period of three
years commencing upon the Initial Closing Date or a subsequent Closing, as the
case may be. Each Unit will be offered at a price of $5,000. A minimum purchase
of twenty (20) Units ($100,000) is required.
All proceeds received by the Company from subscribers for the Units offered
hereby will be deposited by the Company in a special, segregated, interest
bearing custodial account at Barnett Bank, 240 South Pineapple Avenue, Sarasota,
Florida 34236. If subscriptions for the Minimum Offering have been received by
October 31, 1995 (or by December 31, 1995 if the Minimum Offering shall have
been extended, in its discretion, by the Company), a closing will be held as
soon as practicable thereafter (the "initial" Closing Date") and the funds held
in the custodial account, together with accumulated interest thereon, will be
released to the Company on such Closing Date. if subscriptions for the Minimum
Offering have not been received by October 31, 1995 (or December 31, 1995 if the
offering has been extended), no Units will be sold and all funds paid by
subscribers will be refunded promptly with interest, less the fees and expenses
of Barnett Bank, on a pro-rata basis. The Company shall have the right, upon
receipt of subscription proceeds aggregating the Minimum Offering, to continue
to offer Units for sale and to receive and accept subscription proceeds in an
amount up to the Maximum Offering at one or more closings (a "Closing") held at
any time and from time to time as determined by the Company, through and
including December 31, 1995, unless extended by the Company in its discretion to
December 31, 1996.
Officers and directors of the Company and affiliates of such persons may
purchase Units pursuant to this offering. Although it is not the Company's
present intention, subscriptions for less than the minimum number of Units (20)
Unit may be accepted by the Company, at its sole discretion.
<PAGE>
Subscription Procedure
Persons desiring to acquire the Units offered hereunder should deliver to the
Company two completed and executed copies of a Subscription Agreement, in the
form appended hereto as Exhibit A, and the appropriate form of Purchaser
Questionnaire appended hereto as part of Exhibit 5, accompanied by a check drawn
to the order of "Surgical Safety Products, Inc. Custodial Account", in an amount
equal to $5,000 times the number of Units subscribed for. Subscribers may also
arrange for wire transfer of such funds or make other arrangements for payment
acceptable to the Company.
The Company, in its sole discretion, may determine whether to accept or reject
subscriptions received from qualified offerees, and no subscriptions will be
effective unless and until accepted in writing by the Company. If a subscriber's
subscription is not accepted, the funds received from such subscriber will be
returned promptly upon such determination, with interest if held for at least 30
days.
An offeree, by virtue of the execution and delivery of a Subscription Agreement,
in addition to becoming obligated to purchase the Units subscribed for (subject
to the terms and conditions of the offering), will have made certain
representations and warranties to the Company including, but not limited to,
representations and warranties that such offeree is purchasing the Units for
such offeree's own account, for investment only and not with a view toward the
sale or distribution thereof, that such offeree meets the suitability standards
set forth below, is able to bear the substantial economic risk of the
investment, can afford a complete loss of such investment and has no need for
liquidity of such offeree's investment. In addition, the offeree, by executing
and delivering the Subscription Agreement, undertakes certain legal obligations,
including but not limited to an undertaking to indemnify the Company for any
damages which may be sustained by it as a result of the breach of any
representation, warranty or obligation made by such offeree. Each offeree is
urged to consult with such offeree's counsel, to the extent that such offeree
deems necessary, with respect to the legal implications of the execution and
delivery of the Subscription Agreement and the matters referred to therein.
Suitability Requirements
Since a purchase of the Units is speculative and involves a high degree of risk,
the Company has adopted as a general investor suitability standard the following
requirements for each subscriber: (a) the subscriber is acquiring the Units for
investment and not with a view to resale or distribution; (b) the subscriber can
bear the economic risk of losing the entire investment in the Company; (c) the
subscriber's overall commitment to investments which are not readily marketable
is not disproportionate to the subscriber's net worth and the subscriber's
investment in the Company will not cause such overall commitment to become
excessive; (d) the subscriber has adequate means of providing for his current
needs and personal contingencies and has no need for liquidity in his investment
in the Units; and (e) the subscriber (or subscriber's investment adviser or
representative, if one is utilized by the subscriber) has such knowledge and
experience in financial and business matters that the subscriber is (or the
subscriber and his adviser or representative) are capable of calculating the
merits and risks of a purchase of the Units, and is capable of protecting the
subscriber's own interests in connection with this investment.
The securities comprising the Units offered hereby will not be registered under
the Securities Act and are being sold in reliance upon the exemption from such
registration provided in Section 4(2) of the Securities Act with respect to
"transactions by an issuer not involving a public offering." In order to
establish the availability of such exemption, the Company may elect to rely on
such provisions of Regulation D under the Securities Act, which provides that an
offering made in accordance with all its conditions is deemed exempt from
registration. The number of investors in an offering conducted under such
provisions of Regulation D is limited to 35, although any relative, spouse or
corporation or other organization of which subscriber or such a related person
owns collectively more than 50% of the equity securities or beneficial interests
(excluding contingent interests) are, in general, not counted as an investor. In
addition, there are excluded from the calculation of the total number of
investors any investors who are "accredited investors" as defined in Regulation
D. The term "accredited investor" refers to any person or entity who comes
within any of the following categories or who the Company reasonably-believes
comes within any of the following categories, at the time of the sale of the
Units to such investor:
1. Any bank as defined in Section 3(a)(2) of the Securities Act or any savings
and loan association or other institution as defined in Section 3(a)(5)(A) of
the Securities Act whether acting in its individual or fiduciary capacity; any
broker or dealer registered pursuant to Section 15 of the Securities Exchange
Act of 1934; any insurance company as defined in Section 2(13) of the Securities
Act; any investment company registered
<PAGE>
under the Investment Company Act of 1940 or a business development company as
defined in Section 2(a)(48) of the Investment Company Act of 1940; any Small
Business Investment Company licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small Business Investment Act of 1958; any
plan established and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political subdivisions, for the
benefit of its employees, if such plan has total assets in excess of $5,000,000;
any employee benefit plan within the meaning of Title I of the Employment
Retirement Income Security Act of 1974 ("ERISA"), if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either
a bank, a saving and loan association, insurance company or registered
investment advisor, or if the employee benefit plan has total assets in excess
of $5,000,000, or, if a self-directed plan, with investment decisions made
solely by persons that are accredited investors;
2. Any private business development company as defined in Section
202(a)(22) of the Investment Advisors Act of 1940;
3. Any organization described in Section 501(c)(3) of the Internal Revenue Code,
corporation, Massachusetts or similar business trust, or partnership, not formed
for the specific purpose of acquiring the securities offered, with total assets
in excess of $5,000,000;
4. Any director or executive officer of the Company;
5. Any natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his purchase,exceeds $1,000,000;
6. Any natural person who had an individual income in excess of $200,000 in each
of the two most recent years or joint income with that person's spouse in excess
of $300,000 in each of those years and has a reasonable expectation of reaching
the same income level in the current year; and
7. Any trust, with total assets in excess of $5,000,000 not formed for the
specific purpose of acquiring the securities offered, whose purchase is directed
by a sophisticated person as described in Rule 506 of Regulation D;
8. Any entity in which all of the equity owners are accredited investors.
Up to 35 subscribers who meet the suitability standards specified in clauses (a)
through (e) above but who do not qualify as accredited investors may be accepted
by the Company as suitable investors for purchase of the Units offered hereby,
provided that each such investor has a net worth sufficient to bear the risk of
losing his entire investment. The Company will generally require that a
subscriber who does not qualify as an accredited investor have a net worth
(exclusive of home, furnishings and automobiles) of not less than twenty (20)
times their investment in order to qualify to purchase Units.
The suitability standards referred to above represent minimum suitability
requirements for prospective investors and the satisfaction of such standards by
a prospective investor does not necessarily mean that the Units are a suitable
investment for such investor. The Company may, in circumstances it deems
appropriate, modify such requirements.
Restrictions or Transfers: Registration Rights
The Company has not registered, either under the Securities Act or any state
securities laws, the sale of the Shares of Common Stock and Warrants included
within the Units, or the Shares of Common Stock issuable upon exercise of the
Warrants ("Warrant Shares"). As a result, those securities may not be resold or
otherwise transferred by any purchasers of the Units unless such securities are
registered for resale or an exemption from registration is available under the
Securities Act and applicable state securities laws. All certificates
representing the Shares of Common Stock and warrants included within the Units,
and the Warrant Shares issued upon.exercise of the warrants, will bear a legend
reflecting these restrictions. Although Purchasers of the shares of Common Stock
included within the Units in this offering have been granted "piggy-back"
registration rights for such shares of Common Stock with respect to a
registration statement filed after the effectiveness of the Company's IPO and
the development of an active trading market for the shares so registered, there
is no assurance as to when, if ever, the Company will effectuate an IPO or a
secondary offering of its Common Stock or whether and under what circumstances
the managing underwriter of an offering that legally permits the inclusion
therein of the shares subject to such piggy-back registration rights will not
reduce or eliminate all or a portion of such shares, as such underwriter is
permitted to do under the terms of such piggy-back registration rights. As a
result, such securities may be deemed to be illiquid and, subject to the
Subscription Agreement and the Securities Act, transfer thereof is severely
restricted. See "RISK FACTORS".
<PAGE>
Plan of Distribution
Although no underwriter or placement agent is initially being retained by the
Company in connection with the offer and sale of the Units, the Company
anticipates that compensation may be paid to certain broker-dealers and other
persons, excluding officers and/or directors of the Company, who assist in the
sale of Units to certain investors. Such compensation, if paid, shall not exceed
7% of the purchase price of the Units sold with such persons, assistance. In the
event any compensation is to be paid in connection with any purchase, such
compensation will be disclosed to such purchaser in the relevant Subscription
Agreement or otherwise in writing prior to the acceptance of the Subscription
Agreement relating to the purchase involved. Information with respect to the
total amount of additional compensation paid, if any, and the current status of
any material arrangements in respect thereof shall be furnished to prospective
investors upon request.
RISK FACTORS
The securities being offered hereby involve a high degree of risk and are,
therefor, speculative in nature and should not be purchased by anyone who cannot
afford a loss of his or her entire investment. Prospective investors, prior to
making an investment in the Company, should carefully consider the risks and
speculative factors inherent in and affecting the business of the Company,
including the following:
1. Recently organized Company, Limited Operating History; History of Losses. The
Company was organized on May 15, 1992 and was in the development stage until
July 7, 1993 when it began commercial shipments of its first product. As of
December 31, 1993, the Company had total assets of $95,097, a net loss of
$148,118 on revenues of $24,344 and stockholders equity of $15,703. As of
December 31, 1994, the Company had total assets of $515,761, a net loss of
$246,090 on revenues of $120,689 and stockholders equity of $118,488. Due to the
Company's very limited operating history and limited resources, among other
factors, there can be no assurance that profitability or significant revenues
will occur in the future. Moreover, the Company expects to continue to incur
operating losses through at least 1995, and there can be no assurance that
losses will not continue thereafter. The Company is subject to all of the risks
inherent in the operation of a new business enterprise and there can be no
assurance that the Company will be able to successfully address these risks.(See
Exhibit I'D").
2. Significant Customer Concentration. To date, approximately 40 customers and
one distributor have accounted for substantially all of the Company's revenues
with respect to product sales, and approximately 3,600 patients have accounted
for all of the revenues from WDC. The Company anticipates that the main focus of
its selling efforts will be to continue to sell its products to a relatively
small group of medical products distributors with the objective of having its
products distributed on a large national and international scale. Although the
Company recently entered into an exclusive distributorship agreement with
Johnson & Johnson Medical Pty Ltd. to sell its SutureMate product (in the
territories of Australia, New Zealand, Papua, New Guinea and Fiji), with two
other distributors to sell such product in Saudi Arabia and the Netherlands, and
is currently engaged in a marketing test agreement with a large U.S.
manufacturer of operating room disposable safety products, there is no assurance
that the Company will be able to obtain adequate distribution of its products to
the intended end user. Most medical product distributors carry an extensive line
of products (some of which they manufacture themselves) which they make
available to end users (hospitals, surgeons, healthcare workers) and various of
these products may compete with each other as to function, price or other
factors. In addition, numerous medical product distributors are not themselves
well capitalized and their financial condition may impact their ability to
properly distribute the Company's products. The Company's ability to achieve
revenues in the future will depend in significant part upon its ability to
obtain orders from, maintain relationships with and provide support to, existing
and new distributors, as well as the condition of its distributors. As a result,
any cancellation, reduction or delay in orders by or shipments to any customer
or the inability of any customer to finance its purchases of the Company's
products may materially adversely affect the Company's business, financial
condition and results of operations. There can be no assurance that the
Company's revenues will increase in the future or that the Company will be able
to support or attract customers. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business - Customers."
3. Fluctuations in Results of Operations. The Company has initially experienced
and may in the future experience significant fluctuations in revenues, gross
margins and operating results. on the medical products development side of its
<PAGE>
business, the introduction of new products and the manufacture and marketing of
most of the Company's products is a lengthy (ranging from a minimum of six weeks
to an estimated maximum of 18 months from order to delivery) process and the
timing and amount of product sales is difficult to predict reliably. In
addition, a single customer's order scheduled for shipment in a fiscal quarter
can represent a significant portion of the Company's potential sales for such
quarter. As with many new businesses, the Company expects to fail to receive
expected orders, and delivery schedules may have to be deferred as a result of
changes in customer requirements, among other factors. As a result, the
Company's operating results for a particular period have, to date, been and may
in the future be materially adversely affected by a delay, rescheduling or
cancellation of even one purchase order. Moreover, purchase orders are often
received and accepted substantially in advance of shipment, and the failure to
reduce actual costs to the extent anticipated or an increase in anticipated
costs before shipment could materially, adversely affect the gross margins for
such order, and as a result, the Company's results of operations. Moreover, a
majority of the Company's anticipated orders could be cancelled since orders are
expected to be made substantially in advance of shipment, and even though the
Company's contracts do not typically provide that orders may be cancelled, if an
important distributor wishes to cancel an order, the Company may be compelled,
due to competitive conditions, to accede to such request. As a result, backlog,
if any, will not necessarily be indicative of future sales for any particular
period. Furthermore, a substantial portion of net sales may be realized near the
end of each quarter. A delay in a shipment near the end of particular quarter,
due, for example, to an unanticipated shipment rescheduling, to cancellations or
deferrals by customers or to unexpected manufacturing difficulties experienced
by the Company, may cause net revenues in a particular quarter to fall
significantly below the Company's expectations and may materially adversely
affect the Company's operating results for such quarter. The Company does not
believe that the fluctuations anticipated in the medical product side of its
business are applicable to its women's diagnostic clinic which has had a
relatively small but consistent patient load and is steadily growing.
A large portion of the Company's expenses are fixed and difficult to reduce
should revenues not meet the Company's expectations, thus magnifying the
material adverse effect of any revenue shortfall. Furthermore, announcements by
the Company or its competitors of new products and technologies could cause
customers to defer purchases of the Company's products or a reevaluation of
products under development, which would materially adversely affect the
Company's business, financial condition and results of operations. Additional
factors that may cause the Company's revenues, gross margins and results of
operations to vary significantly from period to period include: product
development, patent processing, FDA processing, clinical trials, mix of products
sold; manufacturing efficiencies, costs and capacity; price discounts; market
acceptance and the timing of availability of new products by the Company or its
customers, usage of different distribution and sales channels; warranty and
customer support expenses; customization of systems; and general economic and
political conditions. In addition, the Company's results of operations are
influenced by competitive factors, including the pricing and availability of and
demand for, competitive products. All of the above factors are difficult for the
Company to forecast, and these or other factors could materially adversely
affect the Company's business, financial condition and results of operations. As
a result, the Company believes that period-to-period comparisons are not
necessarily meaningful and should not be relied upon as indications of future
performance. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
4. Dependence on Contract Manufacturers: Reliance on Sole or Limited-Sources of
Supply. As of the date hereof, the Company has no internal manufacturing
capacity. The Company has been utilizing contract manufacturers such as the
Plastics Manufacturer to produce its products. If the Plastics Company
Acquisition is not consummated, the Company expects to rely increasingly on such
manufacturers in the future. The Company may also rely on outside vendors to
manufacture certain components. Certain necessary components and services
anticipated to be necessary for the manufacture of the Company's products could
be required to be obtained from a sole supplier or a limited group of suppliers.
There can be no assurance that the Company's internal manufacturing capacity,
even after the Plastics Company Acquisition, and that of its contract
manufacturers, will be sufficient to fulfill the Company's orders.
Should the Company be required to rely solely on contract manufacturers and a
limited group of suppliers, such increasing reliance involves several risks,
including a potential inability to obtain an adequate supply of finished
products and required components, and reduced control over the price, timely
delivery, reliability and quality of finished products and components. The
Company does not believe that it is currently necessary to have any long-term
supply agreements with its manufacturers or suppliers but this may change in the
future. The Company has from
<PAGE>
time to time experienced and may in the future experience delays in the delivery
of and quality problems with its products and certain components from vendors.
Certain of the Company's suppliers have relatively limited financial and other
resources. Any inability to obtain timely deliveries of acceptable quality or
any other circumstance that would require the Company to seek alternative
sources of supply, or to manufacture its finished products internally, could
delay the Company's ability to ship its products which could damage
relationships with current or prospective customers and have a material adverse
effect on the Company's business, financial condition and operating results.
See "Business."
5. No Assurance of Successful Expansion of Operations. Upon the receipt of
proceeds from the Maximum Offering, the Company expects to significantly
increase the scale of its operations. This increase will include the hiring of
additional personnel (the Company currently employs a total of eleven (11) full
time personnel, six (6) of whom are employed by WDC) and will probably result in
significantly higher operating expenses. If the Company's revenues do not
correspondingly increase, its operating results will be materially adversely
affected. Expansion of the Company's operations may also cause a significant
strain on the Company's management, financial and other resources. The Company's
ability to manage the recent and any possible future growth, should it occur,
will depend upon a significant expansion of its accounting and other internal
management systems and the implementation and subsequent improvement of a
variety of systems, procedures and controls. There can be no assurance that
significant problems in these areas will not occur. Any failure to expand these
areas and implement and improve such systems, procedures and controls in an
efficient manner at a pace consistent with the Company's business could have a
material adverse effect on the Company's business, financial condition and
results of operations.
In this regard, any significant sales growth will be dependent in part upon the
Company's expansion of its marketing, sales, manufacturing and customer support
capabilities. This expansion will require significant expenditures to build the
necessary infrastructure which does not currently exist. There can be no
assurance that the Company's attempts to expand its marketing, sales,
manufacturing and customer and patient support efforts will be successful or
will result in additional revenues or profitability in any future period. As a
result of the anticipated expansion of its operations and the anticipated
increase in its operating expenses, as well as the difficulty in forecasting
revenue levels, the Company expects to continue to experience significant
fluctuations in its revenues, costs, and gross margins, and therefore its
results of operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business - Sales and marketing."
6. Declining Average Selling Prices. The Company believes that average selling
prices and gross margins for its products may decline in the long term as such
products are in use in the market, as volume price discounts in existing and
future contracts take effect and as competition intensifies, among other
factors. To offset declining average selling prices, the Company believes that
it must successfully introduce and sell new products and services or adaptations
of products and services on a timely basis, develop new products and services
with features that can be sold at higher average selling prices and reduce the
costs thereof through design improvements, component cost reduction and in-house
manufacturing, among other actions. To the extent that new products and services
are not developed in a timely manner, do not achieve customer acceptance or do
not generate higher average selling prices, and the Company is unable to offset
declining average selling prices, the Company's gross margins will decline, and
such decline will have a material adverse effect on the Company's business,
financial condition and results of operations. The Company believes that if it
consummates the Plastics Company Acquisition, notwithstanding any decline in
average selling prices, its gross margins will increase. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business -Research and Development."
7. Uncertainty of Market Acceptance. The future operating results of the Company
depend to a significant extent upon the continued development of products and
services deemed necessary, useful, convenient, affordable and competitive by
medical professionals and their patients. There can be no assurance that the
Company has the ability to continuously introduce propriety products and
services into the market place which will achieve the market penetration and
acceptance necessary for the Company to grow and become profitable on a
sustained basis, especially given the fierce competition that exists from
companies more established and well financed than the Company. See "Business -
Competition."
To date, substantially all of the Company's product sales have been to customers
located within the United States although several distribution agreements have
been entered into which are expected over time to generate more revenue from
outside the United States than from within. The Company's future results of
operations will be dependent in significant part on its ability
<PAGE>
to penetrate markets in the United States and foreign countries in which the
Company has not yet established a meaningful presence. There can be no assurance
that the Company will be successful in penetrating these additional markets.
8. Highly Competitive Industry. Although the Company intends to develop
innovative proprietary products not currently in the marketplace, there is no
assurance it will be able to do so, whether on a timely or cost effective basis
or at all. The market for medical safety products and the services that WDC
provides is intensely competitive. The Company's products and services
experience intense competition worldwide from numerous manufacturers,
distributors and developers and providers that offer a wide variety of
competitive products and services, and most of these companies have
substantially greater financial resources and production, marketing,
manufacturing, engineering and other capabilities than the Company. The Company
also faces competition from startup companies. The Company may also face
competition in the future from new market entrants offering competing products
and services. In addition, the Company's current and prospective customers have
developed, are currently developing or could develop the capability to
manufacture products competitive with those that have been or may be developed
or manufactured by the Company. The Company's future results of operations may
depend in part upon the extent to which these customers elect to purchase from
outside sources rather than develop and manufacture their own products and
services. The Company expects its competitors to continue to improve the
performance of their current products and to introduce new products or new
technologies that either provide added functionality or are available at very
competitive prices. These factors could cause a significant decline in sales or
loss of market acceptance of the Company's products and services, or make the
Company's products and services obsolete or noncompetitive. The Company expects
to experience significant price competition that may materially adversely affect
its gross margins and its results of operations. There can be no assurance that
the Company will be able to compete successfully in the future. See "Business
- -Competition."
9. Requirement for Response to Rapid Technological Change and Requirement for
Frequent New Product Introductions. The market for surgical safety products and
services is subject to rapid technological change, frequent new product
introductions and enhancements, product obsolescence and, changes in end-user
requirements. The Company's ability to be competitive in this market will depend
in significant part upon its ability to successfully develop, introduce and sell
new innovative proprietary products, services and enhancements thereof on a
timely and cost-effective basis that respond to changing customer requirements.
Any success of the Company in developing new and enhanced products and services
will depend upon a variety of factors, including new product selection, timely
and efficient compliance with and completion of the regulatory process (FDA and
the U.S. Patent and Trademark Office), timely and efficient completion of
design, timely and efficient implementation of manufacturing and assembly
process, its cost reduction program and the development, completion,
performance, quality and reliability and development of competitive products and
services by competitors. The Company may experience delays from time to time in
completing development and introduction of new products and services. Moreover,
there can be no assurance that the Company will be successful in selecting,
developing, manufacturing and marketing new products and services. There can be
no assurance that defects will not be found in the Company's products and
services after commencement of commercial shipments, which could result in the
loss of or delay in market acceptance. The inability of the Company to introduce
in a timely manner new products and services that contribute to revenues could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business."
10. International Operations: Risks of Doing Business in Developing Countries.
Substantially all of the Company's revenues from product sales to date have been
made to customers located inside of the United States. The Company anticipates
that international sales will, as a result of various distribution agreements
entered into, account for most of its revenues from product sales for the
foreseeable future. The Company's international sales may be denominated in
foreign or United States currencies. The Company does not currently engage in
foreign currency hedging transactions. As a result, a decrease in the value of
foreign currencies relative to the United States dollar could result in losses
from transactions denominated in foreign currencies. With respect to the
Company's international sales that are United States dollar-denominated, such a
decrease could make the Company's products less price competitive. Additional
risks inherent in the Company's international business activities include
changes in regulatory requirements, costs and risks of local customers in
foreign countries, availability of suitable export financing, timing and
availability of export licenses, tariffs and other trade barriers, political and
economic instability, difficulties in staffing and managing foreign operations,
difficulties in managing distributors, potentially adverse tax consequences,
foreign currency exchange fluctuations, the burden of complying with a wide
variety of
<PAGE>
complex foreign laws and treaties and the possibility of difficulty in accounts
receivable collections. Some of the Company's customer purchase agreements may
be governed by foreign laws, which may differ significantly from U.S. laws.
Therefore, the Company may be limited in its ability to enforce its rights under
such agreements and to collect damages, if awarded. There can be no assurance
that any of these factors will not have a material adverse effect on the
Company's business, financial condition and results of operations.
Some of the Company's potential markets consists of countries that have not yet
developed the technological and medical know-how to properly utilize the
Company's products, in which event the development of demand for the Company's
products in those countries will be limited or delayed. In doing business in
some of these markets, the Company may also face economic, political and foreign
currency fluctuations that are more volatile than those commonly experienced in
the United States and other areas.
11. Extensive Government Regulation. Medical products are subject to extensive
regulation by the United States (U.S. Food and Drug Administration ("FDA") and
U.S. Patent Office), state, local and foreign laws and international treaties.
The Company's products must conform to a variety of domestic and international
requirements. In order for the Company to sell its products in a jurisdiction,
it must obtain regulatory approval and comply with different regulations in each
jurisdiction. The delays inherent in this governmental approval process may
cause the cancellation, postponement or rescheduling of the purchase by the
Company's customers, which in turn may have a material adverse effect on the
sale of such products by the Company to such customers. The failure to comply
with current or future regulations or changes in the interpretation of existing
regulations could result in the suspension or cessation of product sales. Such
regulations or such changes in interpretation could require the Company to
modify its products and incur substantial costs to comply with such
time-consuming regulations and changes.
The regulatory environment in which the Company operates is subject to change.
Regulatory changes, which are affected by political, economic and technical
factors, could significantly impact the Company's operations by restricting
development efforts by the Company and its customers, making current products
obsolete or increasing the opportunity for additional competition. Any such
regulatory changes could have a material adverse effect on the Company's
business, financial condition and results of operations. The Company might deem
it necessary or advisable to alter or modify its products to operate in
compliance with such regulations. Such modifications could be extremely
expensive and, especially if subject to regulatory review and approval,
time-consuming. See "Business -Government Regulation."
12. No Assurance of Product Ouality. Performance and Reliability. The Company
has limited experience in producing and manufacturing its products and
contracting for such manufacture. The Company expects that its distributors and
their customers will continue to establish demanding specifications for quality,
performance and reliability. Although the Company attempts to only deal with
manufacturers who adhere to good manufacturing practice standards, there can be
no assurance that problems will not occur in the future with respect to quality,
performance, reliability and price. If such problems occur, the Company could
experience increased costs, delays in or cancellations or reschedulings of
orders or shipments and product returns and discounts, any of which would have a
material adverse effect on the Company's business, financial condition or
results of operations. See "Business -Manufacturing."
13. Future Capital Reauirements. The Company's future capital requirements will
depend upon many factors, including the development of new medical products,
requirements to maintain adequate manufacturing facilities, the progress of the
Company's research and development efforts, expansion of the Company's marketing
and sales efforts, the status of competitive products and services and the
acquisition of new facilities for WDC. The Company believes that receipt of
proceeds from the Maximum Offering will be adequate to fund its operations for
at least twelve months. There can be no assurance, however, that the Company
will not require additional financing prior to such date. In addition, the
Company may require additional financing after such date. If the Company only
receives proceeds from the Minimum Offering or amounts significantly less than
the Maximum Offering, then it will not have sufficient capital to fund its
operations for more than several months absent an infusion of capital from
existing shareholders or other third parties, of which there is no assurance.
There can be no assurance that any additional financing will be available to the
Company on acceptable terms, or at all. If additional funds are raised by
issuing equity securities, further dilution to the existing stockholders will
result. If adequate funds are not available, the Company may be required to
delay, scale back or eliminate its research and development or manufacturing
programs or obtain funds through arrangements with partners or others that may
require the Company to relinquish rights to certain of its existing or potential
<PAGE>
products or other assets. Accordingly, the inability to obtain such financing
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
14. Uncertainty Regarding Protection of Proprietary Rights. The Company attempts
to protect its intellectual property rights through patents, trademarks, secrecy
agreements, trade secrets and a variety of other measures. However, there can be
no assurance that such measures will provide adequate protection for the
Company's trade secrets or other proprietary information, that disputes with
respect to the ownership of its intellectual property rights will not arise,
that the Company's trade secrets of proprietary technology will not otherwise
become known or be independently developed by competitors or that the Company
can otherwise meaningfully protect its intellectual property rights. There can
be no assurance that any patent owned by the Company will not be invalidated,
circumvented or challenged, that the rights granted thereunder will provide
competitive advantages to the Company or that any of the Company's pending or
future patent applications will be issued with the scope of the claims sought by
the Company, if at all. Furthermore, there can be no assurance that others will
not develop similar products, duplicate the Company's products or design around
the patents owned by the Company or that third parties will not assert
intellectual property infringement claims against the Company. In addition,
there can be no assurance that foreign intellectual property laws will
adequately protect the Company's intellectual property rights abroad. The
failure of the Company to protect its proprietary rights could have a material
adverse effect on its business, financial condition and results or operations.
Litigation may be necessary to protect the Company's intellectual property
rights and trade secrets, to determine the validity of and scope of the
proprietary rights of others or to defend against claims of infringement or
invalidity. Such litigation could result in substantial costs and diversion of
resources and could have a material adverse effect on the Company's business,
financial condition and results of operations. There can be no assurance that
infringement, invalidity, right to use or ownership claims by third parties or
claims for indemnification resulting from infringement claims will not be
asserted in the future. If any claims or actions are asserted against the
Company, the Company may seek to obtain a license under a third party's
intellectual property rights. There can be no assurance, however, that a license
will be available under reasonable terms or at all. In addition, should the
Company decide to litigate such claims, such litigation could be extremely
expensive and time consuming and could materially adversely affect the Company's
business, financial condition and results of operations, regardless of the
outcome of the litigation. See "Business-Intellectual Property Rights".
15. Dependence on Key Personnel. The Company's future operating results depend
in significant part upon the continued contributions of its founder, Chief
Executive Officer and largest shareholder, G. Michael Swor, M.D., who is the
inventor of and is responsible for the creation and development of the Company's
SutureMate product and various other products currently under development, and
its key technical and senior management personnel, all of whom would be
difficult to replace. None of such persons has an employment or non-competition
agreement and although Dr. Swor, a practicing physician, spends a significant
amount of time on strategic planning for the Company, he only devoted a small
amount of time to the operational affairs of the Company. The Company's future
operating results also depend in significant part upon its ability to attract
and retain qualified personnel. There can be no assurance that the Company will
be successful in attracting or retaining such personnel. The loss of any key
employee, the failure of any key employee to perform in his or her current
position or the Company's inability to attract and retain skilled employees a
needed, could materially adversely affect the Company's business, financial
condition and results of operations. The Company has obtained and is the
beneficiary of $1,500,000 insurance policy on the life of Dr. Swor. See
"Business-Employees" and "Management".
16. Absence of Public Market; Illiquidity of Investment in the Securities
Comprising the Units. There has been no prior public market for the Company's
Common Stock, and it is not intended that a public market for the Common Stock
be developed or be sustained after this offering. In connection with the
purchase of the Units, each investor will be required to represent that such
investor has no intention to dispose of the securities comprising the Units in
the foreseeable future and has no reason to believe that such a disposition
might be required by reason of such investor's financial circumstances. In
reliance upon these representations, the Company has not registered the sale of
the Offered Shares and Warrants included within the Units under the Securities
Act, or the Warrant Shares, and these securities may not be resold or otherwise
transferred unless such securities are registered for resale or an exemption
from registration is available under the Securities Act. Although the investors
will be granted certain "piggy-back" registration rights with respect to the
Offered Shares and the Warrant Shares, such rights are
<PAGE>
limited and subject to certain restrictions. See "Terms of Offering-Restrictions
on Transfer; Registration Rights" and Exhibit A. In addition, any resale
pursuant to Rule 144 under the Securities Act of Offered Shares or Warrant
Shares will not be permitted until at least two years after the purchase of such
shares. Consequently, even if an unexpected change occurs in the financial
circumstances of an investor which requires such investor to attempt to dispose
of the investment, it may be difficult or impossible to do so.
17. Lack of Dividends. The Company has not paid any dividends
since its inception and does not intend to pay any dividends in
the foreseeable future but intends to retain all earnings, if and
when they occur, for use in its business operations.
18. Dilution. Assuming completion of the Maximum Offering, purchasers of the
Units will incur an immediate dilution of $.73 per share in net tangible book
value from the price per Offered Share included within the Units (attributing no
value to the Warrants included within the Units). See "Dilution".
19. Control by Existing Shareholders. Following the completion of the Maximum
Offering, members of the Board of Directors and the executive officers of the
Company, together members of their families and entities that may be deemed
affiliates of or related to such persons or entities, will beneficially own
approximately 32% of the outstanding shares of Common Stock of the Company
which, together with options owned by such persons to acquire an additional
5,034,9 shares of Common Stock, on a fully diluted basis, would be enable these
stockholders to elect all members of the Company's Board of Directors and
substantially influence, if not determine, under some circumstances, the outcome
of corporate actions requiring stockholder approval, such as mergers and
acquisitions. This level of ownership, together with certain provisions of the
Company's Certificate of Incorporation, Bylaws and New York law, may have a
significant effect in delaying, deferring or preventing a change in control of
the Company and may adversely affect the voting and other rights of other
holders of Common Stock. See "Management-Directors, Executive Officers and Key
Employees," 'Certain Transaction," "Principal Stockholders" and "Description of
Capital Stock".
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
The Company was founded in 1992 to combat the potential spread of blood borne
pathogenic infections such as HIV and hepatitis. It has broadened its mission to
research, development manufacture, market and sell medical products and services
to the healthcare community. The Company was in the development stage until 1993
when it began commercial shipments of Suture Mate, its first product. From
inception in June, 1992 through December 31, 1994, the Company generated
revenues of approximately $145,000 from approximately 3,600 customers. Since
inception through December 31, 1994, the Company has generated cumulative losses
of approximately $411,000. Although the Company has experienced a significant
percentage growth in revenues and gross profit from fiscal 1992 to fiscal 1994,
the Company is still in its infancy and does not believe prior growth rates are
indicative of future operating results. Due to the Company's very limited
operating history and limited resources, among other factors, there can be no
assurance that profitability or significant revenues on a quarterly or annual
basis will occur in the future. Moreover, the Company expects to continue to
incur operating losses through at least 1995, and there can be no assurance that
losses will not continue after such date.
The Company is currently marketing one (1) product, expects to introduce two
other by the end of 1995, and expects to continue to invest significant
resources in at least ten (10) new products and enhancements prior to 1996. The
Company has also serviced approximately 3,600 patients to date through its WDC
subsidiary and continues to carry a patient load of approximately 600 patients
per month, which number is expected to steadily increase as marketing programs
take effect.
Upon implementation of its various distribution agreements, the Company expects
to experience a period of growth, which requires it to significantly increase
the scale of its operations. This increase will include the hiring of additional
personnel in all functional areas and will result in significantly higher
operating expenses. The increase in operating expenses is not expected to be
matched by a concurrent increase in revenues. Therefore, the Company's net loss
may continue to increase even as revenues increase. The Company anticipates that
its operating expenses will continue to increase. Expansion of the Company's
operations may cause a significant strain on the Company's management, financial
and other resources. The Company's ability
<PAGE>
to manage recent and any possible future growth, should it occur, will depend
upon a significant expansion of its accounting and other internal management
systems and the implementation and subsequent improvement of a variety of
systems, procedures and controls. There can be no assurance that significant
problems in these areas will not occur. Any failure to expand these areas and
implement and improve such systems, procedures and controls in an efficient
manner at a pace consistent with the Company's business could have a material
adverse effect on the Company's business, financial condition and results of
operations. As a result of such expected expansion and the anticipated increase
in its operating expenses, as well as the difficulty in forecasting revenue
levels, the Company expects to continue to experience significant fluctuations
in its revenues, costs and gross margins, and therefore its results of
operations. See "Risk Factors- Fluctuations in Results of Operations" and
"Expansion of Operations".
Results of Operations
Revenues. To date, approximately 40 customers and one distributor have accounted
for substantially all of the Company's revenues with respect to product sales,
and approximately 3,600 patients have accounted for all of the revenues from
WDC. The Company anticipates that the main focus of its selling efforts will be
to continue to sell its products to a relatively small group of medical products
distributors with the objective of having its products distributed on a large
national and international scale. Although the Company recently entered into an
exclusive distributorship agreement with Johnson & Johnson Medical Pty. Ltd. to
sell its SutureMate product (in the territories of Australia, New Zealand, Papua
New Guinea and Fiji), with two other distributors to sell such product in Saudi
Arabia and the Netherlands, and is currently engaged in a marketing test
agreement with a large U.S. manufacturer of operating room disposable safety
products, there is no assurance that the Company will be able to obtain adequate
distribution of its products to the intended end user. Most medical product
distributors carry an extensive line of products (some of which they manufacture
themselves) which they made available to end users (hospitals, surgeons,
healthcare workers) and various of these products may compete with each other as
to function, price or other factors. In addition, numerous medical product
distributors are not themselves well capitalized and their financial condition
may impact their ability to properly distribute the Company's products. The
Company's ability to achieve revenues in the future will depend in significant
part upon its ability to obtain orders from, maintain relationships with and
provide support to; existing and new customers, as well as the condition of its
customers. As a result, any cancellation, reduction or delay in orders by or
shipments to any customer or the inability of any customer to finance its
purchases of the Company's products may materially adversely affect the
Company's business, financial condition and results of operations. There can be
no assurance that the Company's revenues will increase in the future or that the
Company's revenues will increase in the future or that the Company will be able
to support or attract customers. The Company provides significant volume price
discounts to its major foreign distributor which are expected to lower the
average selling price of a particular product line as more units are sold. In
addition, the Company expects that the average selling price of a particular
product line will also decline as such product matures, and as competition
increases in the future. Accordingly, the Company's ability to maintain or
increase revenues will depend in part upon its ability to increase unit sales
volume of it products and to introduce and sell products at prices sufficient to
compensate for reduced revenues resulting from declines in the average selling
price of the Company's more mature products. See "Risk Factors- Significant
Customer and Product Concentration", "Declining Average Selling Prices" and
"International Operations; Risks of Doing Business in Developing Countries".
Gross Profit. On the product side of its business, the Company's cost of
revenues consists primarily of costs related to contracted manufacturing. For
the year ended December 31, 1994, gross profit was $3,461 or approximately 70%
of product sales. For the year ended December 31, 1993, gross profit was $6,908
or approximately 30%. The improvement from 1993 to 1994 was primarily due to
product design improvements and economies of scale, but there can be no
assurance that such improvements will continue.
The Company has an ongoing program to reduce the costs of manufacturing its
products. As part of this program, the Company has been attempting to achieve
cost reductions principally through engineering and manufacturing improvements,
product economies and utilization of third party subcontractors for the
manufacture of the Company's products. The Company also intends to impalement
other cost reduction programs in order to favorable affect gross profit in the
future, including the acquisition of manufacturing facilities. There can be no
assurance that the Company's ongoing or future programs can be accomplished or
that they will increase gross profits.
<PAGE>
To the extent the Company is unable to reduce its production costs or introduce
new products with higher margins, the Company's gross profit may also be
affected by a variety of other factors, including mix of products and services
sold; production, reliability or quality problems; price competition; and
warranty expenses and discounts.
On the service side of its WDC business for the three months ended December 31,
1994 gross profit was $52,191 or 45% of revenues generated from services
provided. See "Risk Factors- Declining Average Selling Prices".
Research and Development. These expenses consist primarily of costs associated
with personnel and equipment costs and filed/clinical trials. The Company's
research and development activities include the development of more than
twenty-five (25) operating room. OB/GYN, advanced surgical and protective
related products.
Since inception, the Company has spent approximately $24,000 on research and
development. For the years ended December 31, 1993 and December 31, 1994,
research and development expenses were approximately $1,800 and $22,200,
respectively. During 1994, research and development expenses increased as the
Company concentrated on new product development. The Company intends to continue
to invest significant resources to continue the development of new products and
expects that research and development expenses in 1995 will increase in absolute
dollars as compared to 1994.
Sales and Marketing. These expenses consist of salaries of certain personnel,
investments in international operations, sales commissions, product exhibitions,
travel expenses, customer service and support expenses and costs related to
advertising and trade shows. Since inception, the Company has spent
approximately $135,000 on sales and marketing expenses. For the years ended
December 31, 1993 and December 31, 1994, sales and marketing expenses were
$56,000 and $79,000, respectively. The Company intends to invest significant
resources to expand its sales and marketing effort, including the hiring of
additional personnel, e.g. a full time marketing director, and to establish the
infrastructure necessary to support future operations. The Company expects that
such expenses in 1995 will increase in absolute dollars as compared to 1994.
General and Administrative. These expenses consist primarily of salaries and
other expenses for management and finance and accounting, legal and other
professional services. Since inception, the Company has spent approximately
$283,000 on general and administrative expenses. For the years ended December
31, 1993 and December 31, 1994, general and administrative expenses were $98,000
and $185,000, respectively. The Company expects general and administrative
expenses to increase in absolute dollars in 1995 as compared to 1994, as the
Company continues to expand its operations. The Company also expects to incur
additional ongoing expenses as a publicly owned company related to legal,
accounting and other administrative services and expenses.
Interest and Other Income (Expense), Net. Interest and other income (expense),
net consists primarily of interest expenses accrued on the direct loan to the
Company from its founder, Dr. G. Michael Swor. To date, contracts negotiated in
foreign currencies have been insignificant. As a result of its contract with
Johnson & Johnson Medical Pty. Ltd. and the Company's distribution arrangements
in the Netherlands and in Saudi Arabia, the Company may in the future be exposed
to the risk of foreign currency gains or losses depending upon the magnitude of
a change in the value of a local currency in an international market. The
Company does not currently engage in foreign currency hedging transactions,
although it may implement such transactions in the future.
Liquidity and Capital Resources
Since its inception in June of 1992, the Company has financed its operations and
met its capital requirements through common stock financings aggregating
approximately $529,000 and through borrowings from current shareholders.
Operating activities used net cash of $179,123 and $156,277 in 1993 and 1994,
respectively.
At December 31, 1994, the Company had a working capital deficiency of
approximately $278,000 (primarily resulting from the acquisition of WDC).
including $3,961 of accounts receivable and $37,364 of inventory. The Company's
other principal sources of liquidity at December 31, 1994 consisted of
approximately $40,000 of cash and cash equivalents.
At December 31, 1994, substantially all of the Company's outstanding
indebtedness consisted of acquisition indebtedness regarding WDC (approximately
$257,000), amounts due to its principal stockholder (approximately $67,000)
accounts payable (approximately $52,000) and accrued expenses (approximately
$20,000).
<PAGE>
The Company intends to utilize approximately $350,000 of the net proceeds
received by the Company from the Maximum Offering to repay its outstanding
indebtedness owed to Dr. Swor as of May 12, 1995. In addition, during the next
twelve months, the Company currently intends to use approximately $1,500,000 for
acquisitions and capital expenditures.
The Company's future capital requirements will depend upon many factors,
including the development of new products and services, the extent and timing of
acceptance of the Company's products and services in the market, requirements to
maintain adequate manufacturing facilities, the progress of the Company's
research and development efforts, expansion of the Company's marketing and sales
efforts, the Company's results of operations and the status of competitive
products and services. The Company' believes that cash on hand, cash flow from
operations, if any, and funds available from the net proceeds of the Maximum
Offering, will be adequate to fund its operations for at least the next twelve
months. There can be no assurance, however, that the Company will not require
additional financing prior to such date to fund its operations. In addition, the
Company may require additional financing after such date to fund its operations.
There can be no assurance that any additional financing will be available to the
Company on acceptable term or at all, when required by the Company. If
additional funds are raised by issuing equity securities, further dilution to
the existing stockholders will result. If adequate funds are not available, the
Company may be required to delay, scale back or eliminate one or more of its
research and development or manufacturing programs or obtain funds through
arrangements with partners or others that may require the Company to relinquish
rights to certain of its products or potential products or other assets that the
Company would not otherwise relinquish. Accordingly, the inability to obtain
such financing could have a material adverse effect on the Company's business,
financial condition and results of operations.
CAPITALIZATION
The following table sets forth the capitalization (audited) of the Company as of
December 31, 1994, and as adjusted to give effect to the net proceeds estimated
to be received from the sale of the minimum and maximum number of Units offered
hereby:
As Adjusted As Adjusted
As of For the For the March 31,
Minimum 1995 Maximum
Offering Offering
Total Liabilities $ 514,578 $514,578 $514,578
Shareholders, Equity
Common Stock, $.001 par
value; 20,000,000 shs
authorized, 8,980,818
issued; 9,480,818 shs
issued, as adjusted for
Minimum Offering;
12,980,818 shares issued
as adjusted for Maximum
Offering 8,980 9,480 12,980
Additional paid-in
capital 539,689 950,189 4,201,689
Accumulated Deficit (506,029) (506,029) (506,029)
Total Shareholders,
Equity 42,640 153,640 3,708,640
Total Capitalization $557,218 $968,218 $4,223,218
<PAGE>
USE OF PROCEEDS
The gross proceeds of the Minimum Offering is the sum of $500,000 and the gross
proceeds from the Maximum Offering is the sum of $4,000,000. Such amounts are
anticipated to be expended as follows:
Minimum Offering Maximum Offering
Amount Approx.% Amount Approx.%
Plastics Company $950,000 24
(or other)
Acquisition
Patent Research $100,000 20 600,000 15
Development
(approx. 30 products
for maximum offering)
Production & 125,000 25 55,000 9
Marketing (existing
products)
Additional Personnel -- -- 200,000 5
Expansion of Womens' 100,000 20 500,000 13
Diagnostic Services
Working Capital 11,500 2 641,500 16
Repayment of Debt 75,000 15 350,000 9
an affiliate)
Expenses of Offering:
Legal 25,000 25,000
Accounting 15,000 15,000
Printing 10,000 10,000
Blue Sky 3,500 3,500
Sales Comm. 35,000 88,500 18 280,000 333,500 9
TOTAL $500,000 100% $4,000,000 100%
If the Company receives gross proceeds in an amount in excess of the Minimum
Offering (but not less than $1,250,000) but less than the Maximum Offering,
then, and in that event, the Company will attempt to consummate the Plastics
Company Acquisition and allocate all additional proceeds among the items set
forth above as it, in its sole discretion, shall determine.
DILUTION
The pro forma net tangible book value of the Company's Common Stock at December
31, 1994 was a negative $188,640, or $(.021) per share. Pro forma net tangible
book value per share represents the amount of total tangible assets less total
liabilities, divided by the pro forma number of shares of Common Stock
outstanding. After giving effect to the sale by the Company of the Minimum
Offering hereby (after deduction of underwriting discounts and commissions and
estimated offering expenses), the Company's pro forma net tangible book value at
December 31, 1994 would have been $222,360 or $.024 per share of Common Stock.
This represents an immediate dilution in net tangible book value of $.976 per
share to new investors purchasing shares in this offering. After giving effect
to the sale by the Company of the Maximum Offering hereby (after deduction of
underwriting discounts and commissions and estimated offering expenses), the
Company's pro forma net tangible book value at December 31, 1994 would have been
$3,477,360 or $.268 per share of Common Stock. This represents an immediate
dilution in net tangible book value of $.732 per share to new investors
purchasing shares in this offering. Dilution is determined by subtracting pro
forma net tangible book value per share after the offering from the amount of
cash paid by a new investor for a share of Common Stock. The following table
illustrates the per share dilution:
<PAGE>
MAXIMUM MINIMUM
Offering price per share $1.00 $1.00
Pro forma negative net tangible book
value per share before Offering (.021) (.021)
Increase in pro forma net tangible book
value per share attributable to new
investors .289 .045
Pro forma net tangible book value
per share after Offering .268 .024
Dilution per share to new investors $.732 $.976
The following table sets forth on a pro forma basis as of December 31, 1994 the
number of shares of Common Stock purchased from the Company, the total
consideration paid and the average price per share paid by the existing
stockholders and by new investors, assuming the Minimum Offering and the Maximum
Offering, respectively:
<TABLE>
<S> <C> <C> <C> <C> <C>
Common Shares Total Average
Minimum Offering Consideration Price Per
Share
Number Percent Amount Percent
Existing
Stockholders 8,980,818 94.7 548,669 52.3 $ .06
New
Investors 500,000 5.3 500,000 47.7 1.00
Total 9,480,818 100 1,048,669 100 .11
Common Shares Total Average
Maximum Offering Consideration Price Per
Share
Number Percent Amount Percent
Existing
Stockholders 8,980,818 69.2 548,669 12.1 $ .06
New
Investors 4,000,000 30.8 4,000,000 87.9 1.00
Total 12,980,818 100 1,048,669 100 .35
</TABLE>
To the extent outstanding options are exercised, there wil be further dilution
to new invetors. See "Management - and Note to Notes to Financial Statements."
BUSINESS
Surgical Safety Products, Inc. (the "Company,") was incorporated under the laws
of the State Florida in May of 1992 for the initial purpose of combatting the
potential spread of bloodborne pathogen infections, such as HIV and hepatitis.
The founding philosophy arose from a concern regarding the occupational risk of
health care workers in the operating room. Since inception, it has broadened its
mission to include the research, development and production of innovative
products and services which create and maintain a safe surgical environment for
medical and hospital staff, healthcare workers and patients, as well as enhance
the level of surgical care available to patients.
The Company is currently engaged in two general lines of business: (1) specialty
medical product research and development, one subdivision of which involves (a)
developing various medical-related services to be marketed to health care
facilities, including an entire family of computer software applications
designed to evaluate, track, organize and manage infection control data for
healthcare facilities ("Data Systems Division"), another subdivision of which
involves (b) providing confidential consultation services to third party
developers of medical products, usually physicians and healthcare technicians
("Medical Products Consultation Division"); and a third subdivision of which is
active in (c) researching and developing medical products for sale in the
marketplace ("Medical Products Division") and (2) health care facility
development and management, with emphasis on advanced surgical techniques. The
common thread interwoven into each area requires medical research, education and
a commitment to safety issues. It is the Company's intention to gradually make
the transition from a research and development-oriented medical device company
into a multi-product device manufacturer and distributor.
<PAGE>
On September 28, 1994 the Company's wholly-owned subsidiary, Women's Diagnostic
Center, Inc. ("WDC") was incorporated under the laws of the State of Florida and
immediately acquired certain personnel and assets, consisting of a diagnostic
clinic specializing in womens health, of Women's Ambulatory Services, Inc., a
Florida corporation. WDC caters exclusively to women and their specific health
care needs are attended to by an all female staff which attempts to provide a
uniquely personal and caring atmosphere while emphasizing women's health care
education and awareness. WDC specializes in mammography, ultrasounds,
osteoporosis testing, chest x-rays and comprehensive laboratory testing. Future
expansion may include fertility diagnostic testing, and diet and nutritional
programs.
On November 28, 1994 the Company merged into Sheffeld Acres Inc., a New York
shell corporation which had approximately 1,100 shareholders, which had never
commenced operations. Although Sheffeld Acres, Inc. was technically the
surviving entity, the Company changed its name after the merger to Surgical
Safety Products, Inc.
The Company has been engaged in a series of discussions with a Florida
corporation (the "Plastics Company") leading towards acquisition of the
personnel and assets ("Plastics Company Acquisition") of such business. The
Plastics Company is in the business of manufacturing injection molded products
for medical and industrial applications and has relationships with numerous
inventors and developers of medical products. The Company believes that if
consummated, this acquisition will create favorable synergies and not only
enable it to directly manufacture and warehouse its own products, but will
provide access so as create broader and more in-depth relationships with
inventors, doctors, technicians and other developers of medical products, either
on a joint venture basis or otherwise. The Company has not entered into any
agreements with the Plastics Company, and has, to date, conducted limited due
diligence regarding its operations, business, financial condition and future
prospects. There is no assurance that any such agreement will occur on a timely
basis, or at all, or that the Company will have sufficient funds to consummate
such acquisition should it be available and should the Company choose to do so.
In addition any such acquisition will require the approval of the Board of
Directors and Stockholders of the Plastics Company. Stockholders of the Company
will not be requested to approve such transaction, if any. If the Plastics
Company Acquisition is consummated, or an agreement to do so is executed, prior
to the successful conclusion of the Maximum Offering, this Private Memorandum
will be supplemented accordingly and all investors who have previously
subscribed will be offered a right of rescission. See "RISK FACTORS."
Background
According to the World Health Organization, forty million people will be
infected with HIV by the year 2000. There are nearly ten million people
worldwide currently infected, including close to one million children. Auto
Immune Deficiency Syndrome ("AIDS") is now the top killer of men age 17 to 54 in
the U.S. The Centers for Disease Control and the National Institutes of Health
have focused a great deal of effort and research into improving occupational
safety and decreasing the risk of bloodborne pathogens in the healthcare
setting. The American Hospital Association reports that needlestick injuries are
the most common injury to healthcare workers and represent the greatest risk of
occupational exposure to AIDS, Hepatitis, and other viral diseases. Since
operating room personnel and surgeons are in particular high risk categories,
the Company has committed itself to developing products and techniques to
decrease the potential for deadly viral transmission to and from healthcare
workers and patients.
The Company's initial product, SutureMate was designed primarily to
reduce the risk of needlestick and glove perforation during suturing. Infection
can also be transmitted by skin to skin (mucocutaneous) contact, and the
Company's Infection Control Equipment Pack (ICE PACK) product was developed from
the need to reduce this hazard.
Customer demand is expected to be further stimulated by recent scientific data
suggesting that the risks related to these hazards were originally
underestimated. In addition, new serious viral diseases are discovered
regularly. The market for these products and services is significant, with,
according to current medical journals, over $6,000,000,000 spent on medical and
surgical supplies in the U.S. alone, and over 25,000 surgical procedures and
4,000,000 births annually in approximately 7,000 surgical facilities in the U.S.
alone.
<PAGE>
Market Overview and Size
Occupational Safety
A large body of research and statistical evidence has been accumulated over the
last ten years regarding the significant risk of bloodborne disease to
healthcare workers. Similar kinds of risks exist regarding the transmission of
disease from health workers to patients. Since the AIDS virus was discovered and
blood testing became available in 1985, even greater awareness has been focused
on these problems. The Company has focused its efforts on identifying
occupational risks in the healthcare industry and providing solutions to various
problems regarding these risks.
As noted, the bloodborne pathogens which have received the most attention are
AIDS and Hepatitis. There are an estimated ten million people infected with the
AIDS virus worldwide, and because of the nature of the disease, it is impossible
to determine infected individuals with certainty, even with blood tests.
Hepatitis is even more widespread and, according to medical experts, much more
contagious. These diseases and others are transmitted via blood or bodily fluids
and reports of infection through needlesticks, Sharps injuries, and skin to skin
contact are accumulating. The American Hospital Association, in 1992, reported
over 800,000 occupational needlestick injuries in the U.S. each year, and
estimated that approximately 16,000 were contaminated by HIV. They also
estimated that as many as 60 healthcare workers may become infected annually
with HIV. as a result of occupational exposure. There have been estimates as
high as 12,000 Hepatitis B infections annually to healthcare workers. A newer
form of Hepatitis, Hepatitis C, is rapidly becoming even more important and more
serious.
The Occupational Safety and Health Administration ("OSHA") now has strict
guidelines for personal protective equipment, such as gloves, gowns, and eye
wear. However, with a reported rate of glove perforation in surgery of up to
50%, sharps injuries (sharps injuries are injuries to health care worker or
patient caused by suture needles, syringes, intravenous catheters, scalpels,
screws, wires and other sharp instruments in the operating room) of up to 25%
and concerns regarding the prevention of bloodborne pathogen transmission,
healthcare professionals, workers and patients are requesting more protection.
Most professionals agree that many sharps injuries in surgery are preventable
with changes in techniques and the use of new devices and protective equipment.
The cost of these types of exposures is also a significant factor in the
Company's business. The direct financial burden that facilities bear for medical
evaluation and follow-up after a single needlestick injury is estimated from
$200 to $1,200. This figure does not include indirect costs such as time lost
from work, medical expense and potential liability loss. With annual
expenditures in the U.S. on medical and surgical supplies estimated by current
medical journals at more than 6 billion dollars annually, there would appear to
be a large budget for safety-related products. Surprisingly, there have been few
significant advances in new technology regarding bloodborne pathogens. The
Company is focusing its research and development efforts directly on
improvements in this area with operating room, infection control, and personal
safety equipment product lines.
With an estimated 25 million surgical procedures and 4 million births annually
in the U.S. alone, and a fertile international market as well, the Company is
dedicated to the development of innovative protective equipment, efficiency
related instruments, and cost efficient supplies for furthering the concept for
cost conscious safety in healthcare. Marketing efforts will focus directly on
approximately 100,000 obstetricians, gynecologists, and surgeons in the U.S.,
and over 8,000 hospitals and outpatient surgery facilities in the domestic
market. Hospitals are under increasing pressure to evaluate and adopt the use of
safety-related technology, especially with regards to sharps injuries. New
regulations, hospital policies, and federal guidelines will encourage any
efficient means of improving safety, especially with regard to HIV transmission.
Advanced Surgical Techniques
The Company has several products in development that are designed to contribute
to the rapidly growing market of "minimally invasive surgery with increasing
emphasis on small incisions, laparoscopy, laser treatment, and more efficient
postsurgery convalescence. The Company believes that there is a significant
demand for improved technology to facilitate these newly developed procedures.
The Company has several concepts and projects in development related to this
type of surgery, and many of the new product ideas presented to the Consulting
Division by third parties are included in this group.
<PAGE>
Womens' Health Care
The population of women over the age 50 is the fastest growing segment in world
population trends. Over the next 15 years, the average female life span is
expected to increase to 81.1 years. In 1993, according to current medical
literature, there were an estimated 182,000 new cases of breast cancer in the
U.S. Mammography is an integral part of early diagnosis of this disease and is
accepted and recommended by the American Cancer Society, as well as numerous
other medical organizations, as an essential part of women's regular health
care. Breast cancer affects one in ten women. The current recommendations
include baseline mammography between the ages of 35 and 40, with repeat
procedures every one (1) to two (2) years between 40 and 50, and every year
after the age of 50. Additional diagnostic procedures, such as ultrasound of the
breast, needle aspiration, and breast biopsy are required frequently. In 1992,
the National Health Interview Survey estimated that only 30% of women, 50 and
older, had had a mammogram within the previous year. The American Cancer Society
has set goals of increasing this percentage to 50% in the next five (5) years.
Women's Diagnostic Center of Sarasota, Inc., plays a role in promoting breast
cancer screening and awareness among its clientele, as well as its referring
physician base, and provides availability of a quality examination and
appropriate access to follow-up and treatment. Through aggressive, early
detection measures and prompt initiation of effective treatment, medical experts
believe mortality due to breast cancer could be reduced by as much as a third.
Current medical literature indicates that osteoporosis affects more than 20
million American Women. Medical statistics show that a woman's risk of
developing a hip fracture related to osteoporosis is equal to the combined risk
of breast, uterus, and ovarian cancer together. The data indicates that one (1)
out of every five (5) persons with hip fracture will not survive for more than a
year due to long-term disability and related problems. According to these
sources, over $10 billion is spent each year on the cost of acute care
associated with osteoporosis. Recently, the U.S. Goverment lent its support to
the diagnosis and treatment of osteoporosis by allowing Medicare coverage for
bone density testing.
Of all gynecologic related malignancies, medical authorities advise that ovarian
cancer is the leading cause of death in the United States. According to such
persons, the risk of a woman developing ovarian cancer in her lifetime is one
(1) in seventy (70), but certain patients with a family history may have as high
as a 50% chance of developing this dreaded disease. Because of the diagnosis of
ovarian cancer usually occurring at a late stage in the disease, there has been
new technology directed towards early diagnosis. Vaginal ultrasound is a
relatively new technique and according to the Company, has become one of the
principal ways to screen certain high-risk groups for this type of cancer.
As described in numerous newspaper reports, there has been a significant
controversy in recent years over the safety of silicone gel breast implants, and
although the scientific data is still not conclusive, there appears to be a
group of women with the implants who suffer from a number of health problems. As
research continues and recommendations are being developed, Women's Diagnostic
Center of Sarasota, Inc., has taken a leading role in offering evaluation and
testing of patients with breast implants. Under the direction of nationally
recognized breast surgeon experts, special mammography, breast ultrasound, and
blood testing are being arranged to be available to patients and referring
physicians through the Center, as well as appropriate follow-up treatment.
Medical Products Division
SutureMate(R)
SutureMate(R) is a first of its kind, patented, suturing safety device. It is
multi-purpose, disposable, and has a variety of potential applications in
numerous medical settings. It has three convenient features, including a foam
needle cushion, a suture cutting slot, and a cautery tip cleaning pad. These
features allow for an efficient one-handed suturing technique, which is
advocated by occupational safety experts and avoids some of the high risk
activity associated with suturing. One of the significant benefits of
SutureMate(R) relates to the increased efficiency of the suturing process. With
current technique, extra steps are required by the surgeon or the assistant in
cutting the needle free of the suture thread and extra time and hand movements
are required of the surgeon in manually adjusting needles while using a needle
holder in most suturing processes.
<PAGE>
SutureMate(R) was developed by the Company's founder, controlling shareholder
and Chief Executive Officer, Dr. Michael Swor, a practicing surgeon. The product
has been the subject of at least three independent medical research studies
suggesting its efficacy and, according to the Company, has been well received by
medical authorities. The Company is not aware of any comparable product on the
market. New applications for its use are being devised regularly and several
variations of the original product are in development, including a laparoscopic
version, for use in the fast growing field of minimally invasive surgery.
Additionally, dental, podiatry, microsurgical, and other variations, including
commercial applications, are also in development. SutureMate(R) is currently
manufactured by Manateck Plastics, Inc., doing business as Continental Plastics,
as a third party manufacturer.
Prostasert
Prostasert is a patented, disposable, obstetrical/gynecological specialty device
with many potential uses, including use for patients undergoing induction of
labor, specifically providing vaginal application of a precise dosage of
pharmaceutical gel to shorten and improve the labor and delivery process.
Although simple in design, Prostasert is unique. It differs from its competitors
by allowing for a more site-specific application and improved maintenance of the
pharmaceutical gel used. This FDA-listed device is a specially designed
medication delivery and maintenance system which allows a physician to deliver
the proper dosage and maintain that dosage precisely. With over 4 million births
annually in the U.S. alone, the Company estimates the potential market to be
approximately 200,000 - 400,000 cases annually for this single indication.
Alternate uses and other applications for this product are under development.
This product is currently undergoing clinical trials. once completed the Company
intends to make final engineering adjustments and then commence manufacturing
for initial market entry in the United States by the end of 1995.
ICE-PAX (infection Control Equipment Pack)
The Company is researching patent protection for this unique specialty product
and its accessory components. This belt is designed to carry various infection
control-related products providing healthcare workers with easy access to
personal protective supplies. The belt itself is a durable, reusable product
with consumable supplies attached. The Company intends to market and sell this
product primarily through catalogs, with a focus on distribution to nurses. The
Company is in the process of developing arrangements with suppliers of the
consumable supplies to be used in the belt. A prototype has been manufactured
and the product is expected to enter the market before the end of calendar 1995
when agreements with potential manufacturers/suppliers are expected to be
complete.
Prescription Protective Eyewear
The Company is currently negotiating the terms of an exclusive manufacturing and
supply agreement with Morrison International, a Florida based manufacturer of
optical products, for a new line of protective prescription eyeglasses
co-developed by the Company that provide optically accurate vision correction
and protection against blood or body fluid splashes. An average pair of
prescription eyeglasses costs over $150. These eyeglasses are specially designed
for healthcare workers with additional safety features such as their ultra light
weight construction and side shields for splash protection. They sell for
approximately $25, and can be ordered by mail. This product will be manufactured
by Morrison International which will fulfill orders on behalf of the Company
with expected sales by the Company through exhibit booths at medical conferences
throughout the United States, through third party distributors and direct
sales/mail order.
Infection Control and Health Care Data Systems
Several concepts for information systems and computer software have been
developed by the Company and its infection control consultants and data systems
personnel. These include Safety Track, a software program which is in secondary
development, and is designed for occupational risk data monitoring, employee
health data collection and management, OSHA reporting, and data centralization.
Once completed, the system will be marketed to health care facilities with
benefit to the Company through data organization and reporting to both health
care facilities and health industry entities. Available systems, in the opinion
of the Company, are incomplete and rudimentary. Future markets for this and
similar products could include medical and dental offices and ancillary health
care facilities.
<PAGE>
Ongoing Research and Development
In addition, the Company's research and development group (currently consisting
of two (2) persons) is actively working on in excess of twenty-five (25)
additional products for the medical and health care community, all of which are
in various stages of development, from prototype to patent. As previously noted,
the SutureMate(R) product is currently commercially available in the marketplace
today and the Prostasert and ICE-PAK products are poised for introduction prior
to the end of 1995. The Company is also devoting a substantial amount of time to
the research and development of products within distinct product lines.
Substantially all of the products listed below have been designed, drawn, had
preliminary market research conducted and have been submitted for review to the
Company's patent counsel.
A. Operating Room Products/Advanced Surgical Techniques
1. Variations of SutureMate(R) for more efficient use,
including a laparoscopic version.
2. Retracting scalpel handle.
3. Scrub Safe, which is an instrument counting device.
4. Surgical Drain Container, which protects drainage
containers used in surgery.
5. Cone Mate, a pathology-ready biopsy specimen case.
6. Liquid Sterilization Container, a spill-proof vapor
reduction model.
7. Disposable Sponge Sticks, used for fluid sponging during
surgical procedures.
8. PathMate, Sharps transfer tray, designed to prevent
sharps injuries.
9. SharpsMate, a depository device for procedural trays.
10. Protective Suture Thimble, protects the finger while
suturing and aids in suture transfer.
11. LoopMate, pre-ties suture knots for specific procedures.
12. Spring Reapproximator, for laparoscopic reapproximation
of tissue edges.
B. Obstetric/Gynecologic Products
1. LeetzMate, a cone biopsy device.
2. Circperfect, a custom kit for circumcision.
3. Vagpack, a premixed pharmaceutical gauze/vaginal packing.
4. Speculum reservoir, designed to control and measure
excessive bloods or fluids.
5. LAVH clamp, a specially designed instrument, for use in
laparoscopic, vaginal hysterectomy.
C. Personal Protective-Related Products
1. Prescription, protective eyewear accessories.
2. HIV Kill, wipes designed for surface decontamination.
3. Antiseptic wipes designed for hand and skin
decontamination.
4. Wipe dispensers, designed to hold the HIV Kill and hand
wipes on walls for ICE-PAK.
D. Miscellaneous Products
1. Smith Needleholder, a specially designed needleholder
protects the user from the sharp end of the suture
needle.
2. The Troha(R) sponge numbering system - allows for easy
counting of surgical sponges.
3. The Cats(R) IV Catheter system - positions and holds the
intravenous needle in place.
4. The Troha(R) portable suction device - eliminates
potentially hazardous vapors from the operating room
field.
5. The laparoscopic Knot system - allows for easy
laparoscopic knot tying.
<PAGE>
Distribution of Products
Although SutureMate(R) is currently the Company's only product in the
marketplace, the Company expects to introduce prescription protective eyewear,
Prostasert and ICE-PAK before the end of 1995. The Company has recently received
an indication of interest from Devon Industries, Inc., a large national
distributor of medical products, expressing a desire, subject to evaluation from
its territory managers, to purchase exclusive rights to the SutureMate(R)
product line in the continental United States. The Company is currently
negotiating a strategic alliance with Devon Industries, Inc., which, if
consummated, will include the distribution of the SutureMate(R) line of products
within the United States. The Company is also negotiating a similar strategic
alliance with Milex, Inc., a leading manufacturer and distributor of
contraceptive diaphragms. The proposed strategic alliance will include the
distribution of the Prostasert line of products within the United States.
Effective as of April 1, 1995 the Company entered into a Distributorship
Agreement with Johnson & Johnson medical Pty Ltd. ("J&J") to exclusively sell
this product in Australia, New Zealand, Papua, New Guinea and Fiji and an
initial order has been placed by J&J. Under the terms of this agreement J&J has
no sales quota for the first ninety (90) days and the parties are to agree, on
or before July 1, 1995, as to a sales quota for the remaining term of the
agreement. J&J has the right to terminate the agreement on sixty (60) days
notice.
Effective December 1, 1994, for a period of one year, the Company entered into a
Distributorship Agreement with ISC Group, a corporation organized under the laws
of the country of Saudi Arabia, for the exclusive right to purchase, inventory,
promote and resell SutureMate(R) in Saudi Arabia and the so-called "GCC Nations"
(comprising the countries of Oman, Yemen, United Arab Emirates, Qatar, Bahrain
and Kuwait). An initial order for this product was placed and shipped. Effective
in March of 1995, the Company entered into a distribution arrangement with
Medicor Corp., for the exclusive right to purchase and sell SutureMate(R) in the
Netherlands. An initial order was shipped pursuant to this agreement in April of
1995. The agreement has no term and the parties are awaiting evaluation of the
product in the marketplace.
The Company has recently received a proposed license agreement from Morrison
International, Inc. with respect to the proposed sale, by the Company, on an
exclusive basis, of protective prescription eyeglasses in the United States to
hospitals, research institutions, doctors, nurses, surgical assistants and
technicians. The Company has not yet determined whether the proposed terms of
this agreement are in its best interests nor whether and to what extent such
terms are negotiable.
Medical Products Consultation Division
Product Consultants -- "Concept to Carton"
The Company provides confidential consultation services to developers of medical
products, primarily physicians, nurses and medical technicians who are generally
inexperienced in design, prototyping and obtaining proprietary protection
(patents) for, gaining regulatory acceptance (FDA) of and bringing new products
to market which are beneficial to the healthcare community. These services
include guidance in areas such as: new product development, engineering, market
research, prototyping, patents, trademarks, copyrighting, FDA compliance,
international issues, manufacturing, clinical trials, marketing, and
distribution. The Company is currently providing such services to approximately
ten (10) doctors, clinicians and other medical product developers. These
services are paid for on a consulting basis. However, this program is designed
to infuse innovative products into the Company's own product line and
negotiations are currently in progress to obtain trade rights and patents for
the most promising of these product ideas. It is expected that these
arrangements will encompass the issuance of previously authorized but unissued
Company shares of common stock, or options therefor, in exchange for patent
rights, royalty arrangements and purchase of patents. Under this approach, the
Company expects to expand its proprietary product line and develop an extended
family of relationships with doctors, clinicians and other medical product
developers. None of such arrangements are currently in place and no revenue has
been generated from this division to date.
<PAGE>
Data Systems Division
Infection Control and Healthcare Data Systems
Due to the emerging need for the development of safe practice strategies and
healthcare worker monitoring, the Data Systems Division has evolved. This
Division is active in developing various medical-related services, including an
entire family of computer software applications, for the health care industry.
These services are designed to educate healthcare professionals about
occupational safety. The primary purpose of these computer software products and
services is to simplify the tracking procedures of over 800,000 occupational
needlestick injuries in the U.S., and to reduce the thousands of occupationally
acquired HIV, Hepatitis, Tuberculosis and other infections that occur annually.
The data system provides recommendations and recordkeeping regarding the Public
Health Services occupational exposure strategy. This advisory is regularly
updated and recommends when to test, what to look for, how to counsel, and
appropriate treatment following a needlestick or infection exposure to a
healthcare worker. The Company's infection control consultants and data systems
personnel (three (3) in number) are involved in safety device evaluation, data
management, exposure specificity, and employee health monitoring. They are
updating and revising available systems designed to evaluate, track, organize,
and manage infection control data for healthcare facilities. This data
monitoring is required by new OSHA regulations. The systems also provide data
collection and centralization of information. By centralizing data collection,
the Company expects to facilitate consultation fees inasmuch as feedback to the
member facilities will be provided on a consultative basis. The collective data
will then be marketed to major health industry entities. The Company believes
that this is a relatively new market and that available systems are incomplete
and rudimentary. Because there are over 1,500 outpatient centers and close to
7,000 hospitals in the U.S., all of which are under regulatory pressure to
improve occupational safety management, the Company believes that this is an
area of potential significant growth if it can establish a market niche.
Educational Services
The services of this division are expected to include providing visiting
lecturers, educational videos and related publications and seminars to
healthcare professionals; the development of a surgical training center which
will teach advanced safe surgical techniques and strategies;an annual
International Surgical Safety Conference to be attended by healthcare
professionals from around the world who will attend and participate in lectures,
presentations and seminars conducted by leading experts in the area of surgical
safety; and, providing independent safety audits and consultations to healthcare
providers. The Company has also recently developed "State-Of-The-Art-Surgical
Safety", a strategy for occupational safety in surgery and it is developing
similar awareness programs and prevention strategies for other areas of the
hospital. The Company has the support of several well-known infection control
and surgery experts and will be enhancing this educational program by providing
visiting lecturers, educational videos, related publications, and an
occupational healthcare journal. The Company is also in the process of
developing a training center for visiting healthcare workers to learn the latest
in safety techniques and strategies and is in the process of hiring a medical
educator to facilitate the expectations of growth in this division. It is in
discussions with a leading national educator of health care workers and surgeons
on safe surgical techniques to fill this position but no arrangements have been
concluded to date. To date, all of the Company's work in this division has been
developmental and no services have been marketed.
Product Utility Research
The Company has been retained to conduct several research evaluations of various
proprietary medical products and has completed two of such projects and two (2)
additional projects are ongoing. Based upon the initial evaluation of these
products, the Company believes that one or more could be very successful and
lead to additional business for the Company.
Women's Diagnostic Center, Inc.
On September 28, 1994 the Company's wholly-owned subsidiary, Women's Diagnostic
Center, Inc. ("WDC") was incorporated and immediately acquired certain assets of
Women's Ambulatory Services, Inc. ("WAS") for cash and a promissory note. The
taxable income for WAS for the year prior to acquisition was in excess of
$74,000 on revenues of approximately $590,000. Substantially all of the
Company's revenues for 1994 were generated by WDC. See Exhibit D, footnote 2.
The business of WAS (hereinafter referred to as "Women's Diagnostic Center" or
"WDC") had been in operation since 1986 and was acquired by the Company in
October, 1994 possibly as a result of the impact of the so-called "Stark
Amendment", legislation which required referring physicians to divest themselves
of the conflict created when referring patients to a medical facility in which
they had a certain ownership interest.
<PAGE>
WDC is operated by the Company's Health Care Facility Development and Management
Division. It provides state-of-the-art medical diagnostic testing services and
educational programs exclusively to women. These include mammography,
ultrasound, bone density testing, and laboratory analysis, as well as a
community education lecture series provided for the female patient. WDC attempts
to provide these services in a secure, relaxed, and personalized manner in a
comfortable facility by an all-female staff of professionals.
A specialized radiologist and consulting perinatology group provides test
interpretation, and a nationally recognized laboratory provides laboratory
testing with phlebotomy services on site. The facility is accredited by the
American College of Radiology and is FDA approved. The Medical Director is Board
certified and a Clinical Professor at the University of South Florida.
The acquisition of the business of WAS was premised upon several factors: (i)
addressing women's health needs has traditionally lagged behind other
specialties in the medical profession; (ii) the aging population in the U.S. and
the greater longevity of women versus that of men has created a large segment of
medically underserved patients; (iii) the Company believes that women seek out
diagnostic testing when it is available, especially after recent endorsements
from high profile spokespersons, such as Hillary Clinton, etc.; (iv) doctors,
health care facilities, insurance companies and others have recently, on a
regular basis, been publicizing the need for annual mammograms and diagnostic
tests for bone density are now reimbursed under most health insurance policies
including Medicare; (v) medical literature indicates that approximately one out
of every nine women will develop breast cancer in their lifetime and a similar
number will develop osteoporosis i.e. brittle bones, leaving long term health
problems for many women, including hip fractures, immobility, need for assisted
living, pneumonia, etc.; and (vi) according to medical literature there are ten
million surgical procedures performed annually in the U.S., creating a need for
simplified pretesting; (vii) obstetric statistics and the use of ultrasound
testing. As a result of all of the foregoing, the Company consummated the WDS
acquisition and believes that WDC has created a proprietary formula for
successful operations in a rapidly expanding but underserved medical market
niche. As described below, the Company plans to enter into joint ventures with
other existing facilities in other markets with the WDC model as a franchise
concept. The expansion concept is in the development phase as of the date hereof
and discussions and negotiations are ongoing.
This division is based on the idea that, in today's health care market place,
there is a significant opportunity and a real customer need for quality health
care provided to certain niche markets by top management teams in facilities
that have a quality and character that makes them state-of-the-art. The plan for
numerous nationwide women's diagnostic centers have, as their cornerstone, the
Company's Sarasota, Florida facility, which provides diagnostic care exclusively
to women, in cooperation with private physician care. Women's health care, as a
niche market, has now become a top priority in the medical community, due to the
increased emphasis placed on health care for the mature woman, menopausal
management, breast cancer, gynecologic care, and osteoporosis. With managed
health care controlling or increasing as a percentage of the market, the Company
believes that a "one-stop" packaged women's health care service is viewed
favorably by health maintenance organizations, insurance companies, hospitals
and health care providers.
WDC patients are encouraged to follow-up WDC's diagnostic services with their
own personal physician and an emphasis is put on communication and cooperation
with the physician referral base. The goal is to have all pre-operative testing
performed at a single facility rather than having blood tests, x-rays etc.
performed at various sites by numerous different laboratories, doctors and
technicians. The referring physician will receive one report from a single
diagnostic center regarding all preoperative testing.
The Company believes that women prefer to have their medical care and diagnostic
testing done in a facility that provides a sense of comfort, privacy, and
cleanliness, which the Company believes is characteristic of Women's Diagnostic
Centers. WDC's patients receive their physician care privately, outside of WDC.
The Company then markets its diagnostic services directly to patients and
physicians for the purpose of providing diagnostic care basic to women. This
would include all of the testing described above.
<PAGE>
The Company believes that this market is currently fragmented. WDC services an
approximate 28,000 patient base, with a 200 physician referral base. This
patient and referral base is expected to increase based upon implementation of
advertising and marketing programs nd to provide a steady stream of stable
revenue such that the Company will be able to sustain itself while continuing to
develop its medical products and expand the operations of WDC as hereinafter
described.
WDC's proprietary features include a data system program for tracking procedures
and referral data, an organized, direct marketing program which solicits
physician's input on suggested testing protocols, an in-house radiologist with
special interest in women's diagnostics, a laboratory affiliation with a
national laboratory, and on-site phlebotomy station. The Company believes that
it has management expertise with a successful track record, and expertise in
equipment selection, maintenance, and updating.
The current plan is to continue increasing patient volume and physician referral
growth. Additional services are expected to be added, including fertility
testing and diet and nutritional programs. Thereafter an expansion program into
other markets is contemplated by joint venturing with existing facilities
utilizing WDC's working model as a franchise concept of the enhancement of the
joint venture facility. Compensation to the Company under this plan is
anticipated to consist of an initial payment and a percentage of operations.
WDC's facility is supported by an affiliation with the University of South
Florida and major diagnostic testing manufacturing firms. The Company is also
seeking support from Sarasota Memorial Hospital, and has affiliations with
national women's health advocacy groups, such as the Jacobs Women's Health
Institute.
With the help of a national network of breast surgery specialists, a similar
plan for comprehensive breast care centers is in the concept and preliminary
development stage. This type of center would be a potential addition to a
women's diagnostic center and could provide, at the minimum, breast examination
and mammography with breast ultrasound, and potential added services, such as
fine needle aspiration, stereotactic needle biopsy, open breast biopsy and
advanced surgical treatment, breast cancer therapy, and the full range of
reconstructive surgery, adjunctive medical treatment and ancillary services. Dr.
Gail Lebovic, author of "Developing a Breast Cancer Center" from the textbook,
"Breast Cancer", has provided significant input to Company management and has
offered continuing support for the development of a primary breast cancer center
in the Sarasota County area. The Company believes that it will also have support
from local surgery specialists and intends to offer a special niche service in
this area for the evaluation and treatment of women with health-related problems
associated with silicone gel breast implants, another area which Dr. LeBovic
specializes in. However, these are long term plans which are not expected to be
implemented in the near future.
The Company currently employs six full time persons to operate WDC and if the
Maximum Offering proceeds are raised, approximately $500,000 will be utilized to
expand the operations of WDC, a portion of which (amounts not yet determined)
will assist in its developmental activities during the next twelve months.
Market Segments
On the product side of its business, the Company intends to concentrate on
innovative ideas and products to improve occupational safety and advanced
surgical techniques in the medical field primarily. The Company believes that
its medical safety niche will be especially attractive because of its relatively
recent development and rapid growth potential. Because of recent OSHA
regulations and mandates from governmental agencies, such as the Centers for
Disease Control ("CDC") and the National Institutes of Health, there is a
rapidly growing awareness of occupational safety-related problems and a
significant amount of resources are being concentrated by healthcare facilities
and healthcare workers into devising new methods for protecting employees and
patients. There already exists two major professional organizations which have
devoted a large share of education towards these problems: The Society of
Hospital Epidemiologists of America and the Association of Practitioners and
Infection Control, and more recently combined efforts of the American College of
Surgeons and the CDC are concentrated on new developments in healthcare worker
safety related to Hepatitis, HIV, and Tuberculosis. A growing body of research
is accumulating related to previously recognized, as well as more recently
discovered risks in this area and the Company believes that it has a ground
floor position to provide education, consulting, and research and development
into this active collaboration of expertise. The Company believes that the
public is barged daily with reports of cases of infectious disease transmission
in the healthcare field, and according to research, has proven ready to support
efforts to reduce these risks.
<PAGE>
Customer Profile
On the product side of its business, the Company's customers are the healthcare
workers worldwide who are at risk due to the requirements of their job, more
specifically, those healthcare workers who are exposed to potentially terminal
diseases in their daily workplace.
The Company's products in development are divided into specific lines and each
customer profile varies somewhat from line to line. The Operating Room and
Advanced Surgical Techniques product line is comprised of disposable safety
devices for use in the operating room. The customers or decision markers in this
particular line consist mostly of surgeons and nursing staff. These customers
are impacted the most by the use of these products. Other influential people in
the operating room are directors of surgery and surgical services, scrub
technicians, and surgical product procurement agents.
The customer profile of the next line, OB/GYN products, consists mostly of
physicians specializing in obstetrics and gynecology, and their hospital and
office staff. These customers are the decision makers with regard to OB/GYN
products and are also very involved in evaluating operating room related items
which they are exposed to in the surgical setting.
The Infection Control Line is designed to be marketed to Infection Control
Supervisors nationwide. This customer group is most active in investigating what
safety products and techniques are available commercially in their particular
facility. This group also serves as educators of the hospital staff in safety
products and techniques designed to reduce the overall exposure to bloodborne
pathogen infection.
The Personal Safety Line is designed to be beneficial to many types of
healthcare workers. These items will be marketed to specific department
supervisors. These supervisors are expected to educate the personnel in their
department as to the product's availability and utility. There are also
commercial and industrial markets that variations of these products would be
marketed to.
The Educational and Consulting Division is comprised of a variety of healthcare
related services which will be marketed to physicians and hospital personnel,
especially training oriented customers.
The Company is concentrating its promotional and educational efforts on the
knowledgeable "inner circle" of researchers involved in the transmission of
bloodborne pathogen infection in the operating room and related areas. These
individuals are recognized as the leading authorities on this fast growing "hot
topic" and are looked upon as leading authorities in educating the healthcare
community on the latest advances in this area. The Company believes that once
the experts are familiarized, then the other educators and leading edge
practitioners of state-of- the-art surgical safety will understand its products
and their utility. Ultimately, the major customer base influenced by this
process will be the students and physicians in training. This group is expected
to annually migrate to the marketplace and request the use of SutureMate(R)and
other Company devices for all appropriate applications. These customers are
expected to be particularly driven to seek out sensible economic alternatives to
common day medical practice since they have been brought up in an environment in
which bloodborne pathogens are prevalent. All groups (customers) described
herein are influenced by recent mandates from OSHA and the CDC that encourage
hospitals to seek out and evaluate safety devices for potential risk reduction
and usefulness.
Overall, the medical safety industry is fledgling, and with new regulations
health-related workers and administrators are expected to be actively looking
for cost effective answers to managing occupational risks. Given the increasing
prevalence of Hepatitis, HIV, the discovery of new bloodborne illnesses, and the
increasing concerns of healthcare staff, the Company believes that it is in the
process of establishing a niche in an industry that is expected to grow
substantially.
Competition
The Company believes that it is in the process of developing products that have
no current competition in the marketplace because of their unique features and
because they are intended to fill an existing recently identified need. All of
such products will be conceived and based upon new safety and efficiency
considerations for the healthcare worker. They are uniquely designed to be
innovative, leading edge products. If the Company can accomplish this goal, it
will allow it to satisfy customer needs for a safer work place with little
competitive considerations upon initial introduction in the market. However, it
is a virtual certainty that competitors with more experience and resources will
enter this field and attempt to design around the Company's patented products.
<PAGE>
The Company estimates that Devon Industries Inc. sells approximately 50% of all
safety devices to the medical industry. Devon's product line is comprised of
approximately three hundred products. Many other device companies market these
same products with only slight variations. Other competitors include major
suture manufacturers, e.g. Ethicon, Inc., and chemical companies that market
solvents that claim to be useful as barrier protection to bloodborne pathogen
infection. The Company believes that its competition in the data services line,
when launched, will initially be limited. The only known entrant in this field
has developed a single system designed to track and report bloodborne pathogen
exposures in the healthcare setting.
Although the Company is in a very early stage of its development, it believes
that it can create a sales force (other than the distribution arrangements
previously described, none currently exists), both direct and contract, with
substantial knowledge of healthcare worker safety issues and that this knowledge
base will give it a competitive advantage once it develops its products and has
sufficient funds to manufacture and market them. Notwithstanding the foregoing,
there is no assurance that the Company will be able to supply products and
services needed in the marketplace. Many other companies are knowledgeable in
this area and they have much more experience and resources than does the
Company. Investors are specifically referred to RISK FACTOR #8 regarding
competitive conditions in this industry.
Geographic Market Factors
The initial market areas for the product side of the business will be the major
metropolitan centers in the U.S. and abroad that presently have large teaching
programs, higher disease prevalence, and acute problem awareness. Entry into
these target areas is expected to significantly ease general market penetration.
The Company has a preference toward licensing deals with broad coverage and
intends to utilize international specialty distributors to assist in quicker
market in-roads until it can create and expand its own sales network. The
Company plans to export its products worldwide to markets including Europe,
South America, Asia, the Mid-East, and the Pacific rim. As noted, it has
recently entered into an exclusive distributorship agreement with Johnson &
Johnson Medial Pty Ltd. with respect to the territories of Australia, New
Zealand, Papua, New Guinea and Fiji; with Medicor Corp. with respect to the
Netherlands and with the ISC Group with respect to Saudi Arabia and the
so-called GCC Nations.
Barriers to Market Entry
The typical barriers to a newcomer to the medical product business are both
internal and external. Internal barriers include financing, training, the cost
of research and development, tooling, manufacturing, and marketing. External
barriers include patent or trade secret protection, regulatory approvals (i.e.,
FDA), and competitive reaction. Product acceptance, in the case of new
proprietary products, can be a large barrier due to the educational process
involved in teaching surgeons and nurses a new technique. Due to this factor,
product acceptance may be a longer process in some cases. All of the foregoing
apply to the Company and entities not currently established in this business.
Market Strategies
The Company's safety-related products and services are intended to be sold to
hospitals nationwide and abroad. The Company believes that its research will
enable it to identify customer's specific safety concerns and needs. Much of
this useful customer feedback is obtained in the healthcare setting in
hospitals. Another important source of information for product development is
the interaction with surgeons and nurses at the various conferences the Company
has attended and expects to continue attending. These are unique opportunities
to converse with hundreds of surgeons or nurses over a short period of time
(intense marketing research). In this setting, the healthcare workers are
typically looking for new products and alternatives that offer a safer and more
productive work environment. The Company's research to date is based upon
interaction with over 2,000 physicians and 1,000 nurses. It has also developed a
network of professional opinions, including input from industry, infection
control, risk management, and administration. The Company's initial product,
Suturemate(R), was originally licensed to a U.S. based medical marketing company
for distribution in continental United States. The Company was dissatisfied with
the marketing performance of this licensee, terminated this arrangement in 1994
and pending an anticipated arrangement with Devon Industries Inc., the Company
is marketing the product in the U.S. directly. The remainder of the Company's
products and services will be sold through national distributors that employ
their own sales force, manufacturer representatives, catalog sales, and direct
from the Company. Additionally, the Company plans to hire a full time in-house
sales person to facilitate customer service, quality assurance, and re-orders.
The Company's direct customers will be periodically telephoned to accommodate
this follow-up program.
<PAGE>
Other methods of marketing include: educational alerts, price versus cost
evaluation, comprehensive product and service support, promotional exhibits,
industry and specialty publications, and speaker sponsorship.
Customer Interaction - Product Business
Sales Order Process
For in-house sales and for direct and distributor sales, the Company's sales
department (consisting of 2 persons) will work exclusively by telephone for
follow-up on direct mailings, customer re-orders, customer service issues,
quality, or warranty issues. These calls are expected to be initiated by the
customer as a result of a direct mailing to be made from the Company's office.
Mailing lists consist of surgeons and nurses who have seen the products at
conferences (trade shows) or at hospitals, and have requested that their
hospital purchase a trial supply. Orders are expected to be closed by Company
personnel at its administrative and sales office. A customer sales order or
purchase order will confirm the order. Once the order is received by the sales
department, the order will then be given to order entry. The order entry process
is expected to be facilitated by a point of sale accounting system. A shipping
ticket and invoice will then be computer-printed. A shipping ticket will then be
faxed in batches to the manufacturer warehouse, where the shipment will be made
and confirmed by the order entry department. Once the shipping confirmation is
received by order entry the invoice will be mailed to the customer.
Order Fulfillment
After an order is received and shipped to the customer, quality satisfaction is
expected to occur several ways. All products carry a money back guarantee for
any unused portion of product returned to the main office. In addition,
instructional materials in the form of written literature, including pictures or
photographs, and or video tape on certain products are included with each
initial order at no charge. Third, a Company representative will contact the
customer by telephone to answer any technical questions, handle any quality or
warranty problems, and facilitate a re-order. Furthermore, automated mailing
systems immediately follow-up each new sale with a thank you letter which
includes a toll free number for customer convenience of re-order and to answer
any questions or provide any technical support. This same system will send out
periodic letters to the customer providing the same type of support as described
above.
Advertising and Promotions
The Company will promote its Operating Room, OB/GYN, and infection control lines
at several conferences held nationwide. The Company currently exhibits and
demonstrates safety-related product lines and services, enabling it to make
contact with surgeons, nurses, administrators, infection control, and risk
management supervisors, who attend from the U.S. and abroad. Its planned
computerized automated mail system is intended to allow it to contact the
healthcare worker or facility for order or informational follow-up in a timely
manner. These contacts are also included in the database for periodic follow-up
and new product informational mailings.
Promotional efforts will be enhanced by an advertising plan which will commence
with a nationwide press release. This program will commence with release in the
State of Florida. Some of the periodicals will include Florida Trend, Miami
Herald, Orlando Sentinel, Tampa Tribune, Palm Beach Post. Next, the national
press, including Wall Street Journal, New York Times, Los Angeles Times, San
Francisco Chronicle, Chicago Tribune, Washington Post, Houston Post,
Philadelphia Enquirer, Atlanta Journal & Constitution, Boston Globe, Dallas
Morning News, San Diego Union Tribune, Baltimore Sun, Oakland Tribune, and
Detroit Free Press. Finally, the wire services such as AP, UPI and Reuters.
The Company also expects to sponsor, through WDC, a "Women's Health Care Issue
Speaker Series" as an educational effort for both physicians and patients and a
Physicians Seminar Series to Educate physicians about WDC and the services it
provides.
Upon receipt of the Maximum Offering, the Company will allocate approximately
$250,000 for its advertising budget for 1995-1997. The products and services
will get exposure in professional journals specializing in targeting surgeons,
nurses, clinicians, infection control and risk management personnel, purchasing,
and administrators. Some of the journals include Journal of the AORN, various
surgery and OB/GYN medical journals, and the American Journal of Infection
Control. Direct mail sales and advertising will also be used to target specific
groups to promote Company products. The computer automated mailing system will
enable the Company to penetrate specific targets, follow-up with potential
customers and clients, and update the pertinent customer information for a
continuing data base management.
<PAGE>
Selling Methods
Outside Sales Force
Unless and until the Devon Industries Agreement is in place, the Company will
continue to sell its products direct to hospitals in the U.S. It is possible
that the Company will utilize the network of manufacturers representatives that
exist in the medical product marketplace. These salespeople typically have
geographical territories that they are responsible for. They have an established
relationship with surgeons, nurses, etc., depending on their work experience and
the lines they currently represent. This allows for an immediate introduction to
the key audience who are ultimately the decision makers. Manufacturers
representatives are best suited to the Company for products enhanced by it, not
designed from inception. This is so because, in the opinion of the Company, with
their limited time availability, they are best ad distributing a product which
has been generally accepted in the medical market place. A manufacturers
representatives will typically earn between six and ten percent sales
commission, depending on the product and market mix. Manufacturers
representatives typically do not inventory product, thus any orders gained, will
be phoned, faxed, or mailed to the Company or appropriate dealer and distributor
for order entry. Upon receipt of order, a shipping order will be forwarded to
the producing facility for immediate shipment to customer sales representatives
to follow-up with customers, provide technical support, and administer
subsequent reorders.
The sales representatives will be trained on the technical aspects of the
particular product sa it relates to sales by Company personnel. A formalized
training module must be successfully completed prior to engaging in the sales of
Company products. Representatives will be continually updated with recent sales
results, sales achievements, technical enhancements or modifications, research
statistics, journal articles, etc. as part of the on-going training and
educational process.
The distribution network will also include a group of regional specialty
distributors, who normally concentrate on a limited number of specialties. This
allows for a concentrated sales effort targeted by specialty and geographic
region. Typically, distributors inventory product and deliver direct customer or
work with the preferred vendors for Just-In-Time (JIT) delivery.
The Company will also solicit orders through direct mail sales and advertising
by targeting specific market groups. This will be achieved using the Company's
computer automated mailing system. This is expected to enable it to penetrate
specific targets, follow-up with potential customers and clients, and update the
pertinent customer information for a continuing data base management. The
customer follow-up will be handled by in-house sales staff. Orders obtained can
be shipped from in-house inventory or warehousing arrangements. The Company will
also obtain sales of products through catalogs. These orders will be handled
similar to direct mail sales.
In summary, the Company's U.S. based distribution network for product sales, in
order of importance, will be national distributors, regional distributors,
manufacturers representatives and direct sales. As to sales by WDC, the Company
is currently training one person to go out in the community to promote the
services of this subsidiary.
International Sales
The Company's international sales will be handled through a network of dealers
and distributors of medical devices, who typically service an entire foreign
country or substantial portion thereof. This international network allows for
operating room, OB/GYN, and infection control market coverage in specifically
targeted countries abroad. As previously noted, effective as of April 1, 1995,
the Company entered into one such agreement with Johnson & Johnson Medical Pty
Ltd. for the exclusive sale of the SutureMate(R) product in the territories of
Australia, New Zealand, Papua, new Guinea and Fiji and, as noted with ISC Group
to exclusively distribute the SutureMate(R) product in the territories of the
Netherlands and Saudi Arabia and the so-called GCC Nations, respectively. To
date the initial order for this product under the J&J agreement aggregates
approximately $70,000. Only minimal orders have been received and product
shipped under the other two agreements.
Sales Management
Sales from licensing agreements, direct sales and arrangements with dealers and
distributors (both foreign and domestic), manufacturers representatives, and
catalogs will be managed by Company personnel, including all sales for WDC.
<PAGE>
Service and Delivery
Direct Company accounts will be serviced by telephone and mail. These accounts
will be stored in the Company's computer data base and turned over to
distributors who receive exclusives on particular territories. The system will
forecast the next delivery of product and automatically initiate a mailing to
the customer. The customer will be posted to a daily list for telephone
follow-up. This mailing will request written answers on the quality of the
product, service, support, etc. Customers sold through the network of
distributors and manufacturers representatives will be serviced by their
respective sales people. Company personnel are available for technical and sales
support.
Company products will typically be delivered by UPS or common carrier. The
Company is working initially with contract manufacturers who warehouse and
provide inventory control for "just in time" delivery to hospitals. The customer
is billed direct for the shipping charges and is asked for a shipping preference
while placing the orders. Orders can be delivered to a centralized warehouse or
marked for inside delivery for medical office safety products, if required. If
the Plastics Company acquisition is consummated this procedure will change. See
Exhibit D.
Government Regulation
Regulation by governmental authorities in the United States and foreign
countries is a significant factor in the development, manufacture and marketing
of the Company's proposed products and services and in its ongoing research and
product development activities. It is anticipated that virtually all of the
Company's products will require regulatory approval by governmental agencies
prior to commercialization. These products will be subject to rigorous
manufacturing controls and clinical testing approval procedures by the FDA and
similar regulatory authorities in foreign countries. Various Federal statutes
and regulations also govern or influence the testing, manufacturing, safety,
labeling, storage and record keeping related to, and the marketing of, such
products. The process of obtaining these approvals and the subsequent compliance
with appropriate Federal statutes and regulations require the expenditure of
substantial time and financial resources. Any failure by the Company or its
collaborators, licensors or licensees to obtain, or any delay in obtaining,
regulatory approval could adversely affect the marketing of products developed
by the Company, its ability to receive product or royalty revenues, and its
liquidity and capital resources.
It is anticipated that many of the Company's products, as presently
contemplated, will be regulated as medical devices. Prior to entering commercial
distribution, all medical devices must undergo FDA review under one or two basic
review procedures: a Section 510(K) premarket notification ("510(k)") or a
premarket approval application ("PMA'). A 510(k) notification is generally a
relatively straightforward filing submitted to demonstrate that the device in
question is "substantially equivalent" to another legally marketed device.
Approval under this procedure is typically granted within 90 days if the product
qualifies, but can take longer. When the product does not qualify for approval
under the 510(k) procedure, the manufacturer must file a PMA which shows that
the product is safe and effective based on extensive clinical testing among
several diverse testing sites and population groups, and shows acceptable
sensitivity and specificity. This requires much more extensive prefiling testing
than does the 510(k) procedures and involves a significantly longer FDA review
after the date of filing.
Under the current regulatory scheme, any therapeutic products developed by the
Company will be subject to regulation by the FDA and will require FDA approval
before they may be commercially marketed for human therapeutic use in the United
States. The precise regulatory requirements with which the Company will have to
comply are uncertain at this time due to the variety of products currently under
development in the industry. The Company believes that any therapeutic products
to be developed by it will be regulated either as biological products or as new
drugs. New drugs are subject to regulation under the Federal Food, Drug, and
Cosmetic Act, and biological products, in addition to being subject to certain
provisions of this Act, are regulated under the Public Health Service Act. Both
statutes and the regulations promulgated thereunder govern, among other things,
the testing, manufacturing, safety, efficacy, labeling, storage, recordkeeping,
advertising and other promotional practices involving biologics or new drugs as
the case may be. FDA approval or other clearances must be obtained before
clinical testing, and before manufacturing and marketing, of biologics or other
products. At the FDA, the Center for Biological Evaluation and Research ("CBER")
is responsible for the regulation of new biologics and the Center for Drug
Evaluation and Research ("CDER") is responsible for the regulation of new drugs.
<PAGE>
Obtaining FDA approval for therapeutic products has historically been a costly
and time consuming process. Generally, in order to gain approval from the FDA, a
developer first must conduct preclinical studies in the laboratory and in animal
model systems to gain preliminary information on a product's efficacy and to
identify any major safety problem. The results of these studies are submitted as
a part of an Investigational New Drug ("IND") application, which the FDA must
review before human clinical trials of an investigational drug can start. The
IND application includes a detailed description of the clinical investigations
to be undertaken.
In order to commercialize any therapeutic products, the Company must first
prepare and file an IND application. It must act as the sponsor of product
testing and will be responsible for planning, initiating and monitoring human
clinical studies which must be adequate to demonstrate safety and efficacy. The
Company will be responsible for selecting well-trained physicians as clinical
investigators to supervise the administration and evaluation of the new
products. The Company, however, will bear the responsibility for monitoring the
studies to ensure that they are conducted in accordance with the general
investigational plan and protocols contained in the IND. Human clinical trials
are normally done in three phases. Phase I trials are concerned primarily with
the safety and preliminary effectiveness of the drug, involve fewer than 100
subjects, and may take from six months to over a year. Phase II trials normally
involve a few hundred patients and are designed primarily to demonstrate
effectiveness in treating or diagnosing the disease or condition for which the
drug is intended, although short-term side effects and risks in people whose
health is impaired may also be examined. Phase III trials are expanded clinical
trials with larger numbers of patients which are intended to gather the
additional information on safety and effectiveness needed to clarify the drug's
benefit-risk relationship, discover less common side effects and adverse
reactions, and generate information for proper dosage and labeling of the drug.
Human clinical trials generally take four to six years, but may take longer, to
complete.
The FDA receives reports on the progress of each phase of human clinical
testing, and it may require the modification, suspension, or termination of
clinical trials if an unwarranted risk is presented to patients. There can be no
assurance as to the length of the clinical trial period or the number of
patients the FDA will require to be enrolled in the clinical trials in order to
establish the safety, efficacy, and potency of the Company's products. In
addition, it is uncertain that the clinical data generated in these studies will
be acceptable to the FDA to support marketing approval.
After completion of clinical trials of a new therapeutic product, FDA marketing
approval must be obtained. If the product is regulated as a new biologic, CBER
will require the submission and approval of both a Product License Application
("PLA") and an Establishment License Application ("ELA") before allowing
commercial marketing of the biologic. If the product is classified as a new
drug, the Company must file a New Drug Application ("NDA") with CDER and receive
approval before commercial marketing of the drug. The NDA or PLA must include
results of product development, preclinical studies and clinical trials. The
testing and approval processes require substantial time and effort and there can
be no assurance that any approval will be granted on a timely basis, if at all.
NDAs and PLAs submitted to the FDA can take, on average, two years to receive
approval. If questions arise during the FDA review process, approval can take
longer. Notwithstanding the submission of relevant data, the FDA may ultimately
decide that the NDA or PLA does not satisfy its regulatory criteria for approval
and require additional clinical studies. Even if FDA regulatory clearances are
obtained, a marketed product is subject to continual review, and later discovery
of previously unknown problems or failure to comply with the applicable
regulatory requirements may result in restrictions on the marketing of a product
or withdrawal of the product from the market as well as possible civil or
criminal sanctions.
The Company's business is also subject to regulation under state and Federal
laws regarding environmental protection and hazardous substances control,
including the Occupational Safety and health Act, the Environmental Protection
Act, and Toxic Substance Control Act. In 1992, the U.S. Congress expressed
increasing interest in the issues of sharps injuries. The House Subcommittee on
Regulation held hearings regarding needlestick injuries and the implementation
of mandated guidelines on safer medical devices. However, the Company is unaware
of any bills currently pending in Congress on this issue. The Company believes
that it is in material compliance with these and other applicable laws and that
its continual compliance therewith will not have a material adverse effect on
its business.
<PAGE>
Patents
The Company's first medical device patent is U.S. Patent No. 496893, issued on
November 3, 1990 for SutureMate(R) a unique surgical suturing device, for its
suture cutting and needle rest utility. Additional patents (Patent No's. Des.
353, 672 and 5,385,569) were issued on December 20, 1994 and January 31, 1995
for surgical accessories to SutureMate(R) for both design and utility.
Prostasert is the Company's second medical device on which a patent was issued.
This patent, U.S. Patent No. 5,364,375 was issued on November 15, 1994 for a
unique device designed to introduce and maintain a precise amount of
pharmaceutical material to the uterine cervix, and upper vagina.
FDA Approval
On May 26, 1993, the Company received notifications from the Department of
Health and Human Services, Food & Drug Administration that the 510(K)
notification of intent to market device related to SutureMate(R) had been
received and reviewed, and the FDA had determined that the device is
substantially equivalent to the devices marketed in interstate commerce prior to
May 28, 1976. The receipt of this letter allowed the Company to immediately
begin marketing and selling SutureMate(R). The Prostasert device was listed with
the FDA on June 2, 1994.
Trademark
The trademark registration for SutureMate(R) and design of thread line before
and after work with needleholder holding suture needle and thread was filed on
July 1, 1993 and became registered on April 5, 1994.
Employees
As of the date of this Private Offering Memorandum, the Company employs 11
persons on a full time basis, six of whom are employed at the Company's WDC
subsidiary. Such personnel are engaged in research, management, operations and
sales and the Company considers its relationship with such persons to be
excellent. The Company also has a Scientific Advisory Board which assists in
providing awareness as to marketplace needs and product and service research.
The members of the Scientific Advisory Board and their area of specialization
are listed below as follows:
Scientific Advisory Board
1. Dr. Marguerite Barnett, M.D., Plastic Surgery, Venice
Hospital, Venice, Florida.
2. Dr. Mark Davis, M.D., OB/Gyn, DeKalb Hospital, Atlanta,
Georgia.
3. Ms. Donna Haiduven, R.N./CIC Infection Control, Santa
Clara Valley Medical Center, San Jose, California.
4. Dr. Randi Kauffman, M.D., Womens' Diagnostic Center of
Sarasota, Inc., Sarasota, Florida.
5. Dr. Gail Lebovic, M.D., Breast Surgery, Founder, Bay
Area Breast Center, Palo Alto, California.
6. Dr. Neil Pollack, M.D., Ob/Gyn, Womens Care
Specialists, Sarasota, Florida.
7. Dr. Michael Shroder, M.D., Ob/Gyn, Women's Care
Specialists, Sarasota, Florida.
8. Dr. Galen Swartzendruber, M.D., Ob/Gyn, Women's Care
Specialists, Sarasota, Florida.
9. Dr. G. Michael Swor, M.D., Ob/Gyn, Women's Care
Specialists, Sarasota, Florida
10. Ms. Sharon Tolhurst, R.N., Sarasota Memorial Hospital,
Sarasota, Florida.
11. Dr. John Reeder, M.D., General Surgery, 1921 Waldemere
St., Sarasota, Florida.
12. Dr. George Maroulis, M.D., Professor, University of
South Florida, Department of OB/GYN, Chief, Division of
Endocrinology.
Additional employees are due to commence employment upon successful completion
of the Maximum Offering. Most of the Company's employees will be engaged
directly in research and development and related sales activities. By the end of
December, 1995, the Company expects to have hired approximately three (3)
full-time employees,most of whom will be involved in research, development and
related sales activity. However, if only the minimum amount of proceeds of this
offering is raised, the Company will not hire any additional personnel.
Additionally, the Company expects to continually engage others as consultants.
<PAGE>
Facilities
The Company has leased approximately 750 square feet of office space at 434
South Washington Boulevard, Sarasota, Florida. The Company began occupancy of
such space on December 17, 1992. Its current lease is on a month to month basis.
Upon receipt of proceeds from the Maximum Offering, the Company expects to
commence leasing additional square feet in another location. The Company
believes that these facilities will be sufficient for the next several years.
Should the Company consummate the Plastics Company Acquisition, the assets to be
acquired will encompass warehousing space anticipated to be sufficient to
satisfy the Company's needs for the next several years. The Company's WDC
subsidiary has leased approximately 1,750 square feet at 1801 Arlington Street,
Sarasota, Florida. Its current lease is for a period of one year expiring in
January of 1996 and is deemed adequate for its needs until expansion in
accordance with the plans described herein.
Legal Proceedings
The Company is not a party to any legal proceedings.
MANAGEMENT
Directors, Executive Officers and Key Employees
The following table sets forth certain information concerning the
directors, executive officers and key employees of the Company as of March 31,
1995:
Name Age Position
Directors and Executive Officers:
G. Michael Swor, M.D 37 Chairman of the
Board, President,
Chief Executive
Officer & Primary
Medical/Technical
Advisor
James D. Stuart 37 Executive Vice
President, Chief
Operating Officer
and Director
Chris J. Norcia 37 Vice President,
Operations
Thomas DeCesare 62 Director
David W. Swor 62 Director
Samuel D. Norton 35 Director
Irwin J. Newman 47 Director
Key Employees and Area of
Consultants Responsibility
Donna Haiduven 40 Infection Control
Robert Norcia 36 Computer Systems
Robert Hazzard 57 Engineering/
Manufacturing
Dotty Broome 53 Manager, Womens'
Diagnostic Center
All directors hold offices until the next annual meeting of stockholders or
until their successors have been elected and qualified. Officers are appointed
to serve, at the discretion of the Board of Directors, until their successors
are appointed. There are no family relationships among executive officers or
directors of the Company except as indicated below.
<PAGE>
Dr. Swor is the founder of the Company and has served as President, Chief
Executive Officer and Chairman of the Board of Directors since June 1, 1992. Dr.
Swor has been in private medical practice for the past fourteen years,
functioning as an obstetrics and gynecology surgeon in the State of Florida. He
is also a Board Certified senior partner since 1985 of Women's Care Specialists
of Sarasota, a private clinic specializing in women's health. He is also an
assistant clinical professor at the University of South Florida College of
Medicine, and is an active member of numerous professional organizations
including the American College of Obstetricians and Gynecologists, the American
College of Surgeons, the Florida Medical Association, the Sarasota County
Medical Society and several surgical and infection control related
organizations. He has been involved in numerous research projects and has
contributed to numerous professional publications with a special interest in new
surgical advances and the development of new surgical techniques and improved
safety strategies for health care professionals and their patients. He has been
instrumental in initiating numerous innovative programs and technical advances
in the Sarasota Medical Community. Dr. Swor oversees research and development,
including product design and acts as product-user liaison for the Company. He is
Medical Director at WDC and was an original investor and developer of the WDC
concept. Dr. Swor also serves as Chief Medical/Technical Advisor and plays a
major role in long range planning.
Mr. Stuart has been Vice-President and Chief Operating Officer of the Company
since June 1993, and is responsible for new product development and the
marketing thereof. He graduated from the University of South Florida with a B.A.
in Marketing in 1981. Prior to his employment by the Company he was employed in
South Florida by Liquid Air Corp., the world's largest medical and industrial
gas company where he functioned as Program Manager for the period March 1986 to
June 1993.
Mr. Norcia has been Vice President of Operations since March 1994. He manages
corporate operations on a day-to-day basis and is the Director of Management
Information Systems. He graduated from the Air Force Institute of Technology
where he received an M.S. in Information Resources Management in 1988. He is
also a graduate of the University of South Florida, where he received a B.A. in
english in 1981. Prior to his employment with the Company he was employed by the
U.S. Air Force which was engaged, among other things, in management information
systems where he functioned as Program Manager for the period March 1985 to
September 1992. Mr. Norcia's professional affiliations include numerous
managerial, computer, and governmental associations. He has developed numerous
office automation programs for the U.S. Air Force and has extensive experience
in Project Management, Process Improvement, Systems Implementation and Total
Quality Management.
Mr. DeCesare has been Mayor of Maderia Beach, Florida since April, 1991. He
recently retired as a Vice-President with Metropolitan Life Insurance Company
having been employed at such firm since 1959 where he functioned as a management
executive.
Mr. David W. Swor has been a real estate broker and developer in Ft. Myers,
Florida since August 1974. Mr. Swor is the father of G. Michael Swor, M.D.
Mr. Norton, an attorney specializing in business and real estate law, has been
the senior partner in the firm of Norton, Gurley and Hammersley, P.A. in
Sarasota, Florida since 1987.
Mr. Newman, an attorney, has been a principal of Jenex Financial Services, Inc.,
a diversified financial business which raises money for small and medium sized
companies, since October 1993. Prior thereto and from March 1988 to September
1993, he was Vice President and General Counsel of Boca Raton Capital
Corporation, a diversified investment company.
Ms. Haiduven, has been the Infection Control Supervisor at Santa Clara Medical
Center in San Jose, California since 1986. Ms. Haiduven has published numerous
articles and presented numerous papers at national and international medical
conferences on the subject of Infection Control. She is currently conducting a
study on the effect of a one handed surgical suturing device on decreasing
needlestick injuries and glove perforations and increasing efficiency of the
suturing procedure. Her services on behalf of the Company consist of infection
control consulting for which she is paid a consulting fee in the form of options
to purchase Company stock.
Mr. Robert Norcia is a data processing professional with over fifteen years
experience developing large scale software applications. For the past eight
years, Mr. Norcia has been employed as a Senior Systems Engineer for GTE Data
Services, a Fortune 100 telecommunications company. Mr. Norcia is the brother of
Chris J. Norcia. His services on behalf of the Company consist of software
engineering for which he is paid a consulting fee in the form of options to
purchase Company stock.
<PAGE>
Mr. Hazzard is a mechanical engineer with twenty-five years experience in the
plastics industry. He has been President of Continental Plastics, the
SutureMate(R) contract manufacturer and provides, on a fee basis, on-going
technical consulting leading towards new product development.
Ms. Broome has managed the day to day operations of WDC since its purchase by
the Company in 1994. Prior thereto, she managed a plastic surgery practice for
14 years and an orthopedic practice for 4 1/2 years.
Executive Compensation
Summary of Cash and Other Compensation
The following table provides certain summary information concerning the
compensation earned for services rendered in all capacities to the Company for
the fiscal year ended December 31, 1994, by the Company's Chief Executive
Officer and each of the other three executive officers whose salary and bonus
for such fiscal year was in excess of $40,000 (collectively, the "Named
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<S> <C> <C> <C> <C>
Long Term
Compensation
Awards
Number of
Name Principal Annual Compensation Securities All Other
Position and Salary(1) Bonus Underlying Compensation
Year Joined ($) ($) Options (2) ($)
- -------------- ---------- ------ ----------- --------
G. Michael Swor,
M.D. - . . . . . . $ 0 $ 0 4,008,501(a) 7,200/yr.
Founder, President
Chief Executive
Officer and
Chairman of the
Board
James D. Stuart -
1993 . . . . . . . $ 45,800 $ 0 694,386(b) 4,800/yr.
Executive Vice
President, Chief
Operating Officer
Chris J. Norcia -
1994 . . . . . . . $ 41,600 $ 0 78,907(c) 3,300/yr.
Vice President,
Operations and
Information Systems
</TABLE>
The management of Surgical Safety Products, Inc., in its commitment to
creating a profitable organization in a timely fashion, has mutually agreed to a
lower, short-term compensation plan, in favor of a heavier-weighted stock option
plan. Stock option awards by Board approval are based on usual factors, such as
tenure and accomplishments, and gives special consideration to new business
concepts and product ideas.
1. Although none of the Officers of the Company currently have an employment
agreement, under the terms of stock options granted on July 21, 1994, they have
agreed to remain as employees of the Company for a period of two years from such
date. The Company intends to facilitate agreements upon consummation of the
offering. At that time, annual compensation will be as follows: G. Michael Swor,
M.D., $60,000 per annum, James D. Stuart, $80,000 per annum, Chris J. Norcia,
$50,000 per annum. These and future additional Corporate Officers will also be
entitled to such cash or stock bonuses as the Board of Directors may determine.
2a. Comprised of 3,787,560 options awarded to second generation product
concepts/designs and new business development in 1994 and 63,126 options awarded
as director (1994). This does not include 157,815 options exchanged in a
transaction with a former Board member.
2b. Comprised of 631,260 options awarded for second generation product concepts
(designs and new business development) in 1994, plus 63,126 options awarded as
director (1994).
2c. Awarded for information systems concepts and software design.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Company's Common Stock as of March
31, 1995, and as adjusted to reflect the sale of a minimum of 500,000 and a
maximum of 4,000,000 shares of Common Stock, respectively, being offered hereby,
by (i) each person (or group of affiliated persons) who is known by the Company
to beneficially own more than five percent of the Company's Common Stock, (ii)
each of the Company's directors, (iii) the Company's Chief Executive Officer and
each of the Company's other executive officers and (iv) the Company's Directors
and executive officers as a group.
Percentage of
Shares
Beneficially Owned
Shares % %
5% Stockholders and all Bene- Before After
Directors and Executive ficially Minimum Minimum
Officers as a Group Owned Offering Offering
Name and Address of
Beneficial Owner
G. Michael Swor, M.D.(1) 3,566,619 39.71 37.62
Stephen J. Guarino 744,538 8.29 7.85
Andrea Swor (wife of
G. Michael Swor)(2) 631,260 7.03 6.66
David W. Swor(3) 473,445 5.28 4.99
James D. Stuart(4) 63,126 0.70 0.67
Samuel D. Norton(5) 62,986 0.70 0.66
Thomas DeCesare(6) 9,469 0.11 0.10
Chris J. Norcia(7) 0 0.00 0.00
Irwin Newman(8) 0 0.00 0.00
All Directors and executive
officers as a group (7)
persons)(9) 4,175,645 46.50 44.04
- -----------------------------
See footnotes next page.
Shares % %
5% Stockholders and all Bene- Before After
Directors and Executive ficially Minimum Minimum
Officers as a Group Owned Offering Offering
Name and Address of Beneficial Owner
G. Michael Swor, M.D.(1) 3,566,619 39.71 27.47
Stephen J. Guarino 744,538 8.29 5.74
Andrea Swor (wife of
G. Michael Swor)(2) 631,260 7.03 4.86
David W. Swor(3) 473,445 5.28 3.65
James D. Stuart(4) 63,126 0.70 0.49
Samuel D. Norton(5) 62,986 0.70 0.49
Thomas DeCesare(6) 9,469 0.11 0.07
Chris J. Norcia(7) 0 0.00 0.00
Irwin Newman(8) 0 0.00 0.00
All Directors and executive
officers as a group
(7 persons)(9) 4,175,645 46.50 32.17
- ----------------------
<PAGE>
(1) Exclusive of (a) options to purchase an additional 3,851,796 shares of
Common Stock granted to Dr.Swor directly and (b) 441,882 shares of Common Stock
owned by various members of Dr.Swor's family (exclusive of his wife Andrea Swor
and his parents, David W. Swor and Doris Swor) beneficial ownership of which is
disclaimed by him, and options held by another family member to purchase 6,313.6
shares of Common Stock.
(2) Exclusive of all shares of Common Stock owned by Dr. G. Michael Swor and all
shares of Common Stock referred to in footnote (1) above, beneficial ownership
of which is disclaimed by Andrea Swor.
(3) These shares are held jointly by Mr. David Swor and Doris Swor, his wife, as
joint tenants. Such persons are the parents of Dr.g. Michael Swor, and such
shares are exclusive of options to purchase 63,136 shares of Common Stock held
by David W. Swor.
(4) Includes 31,563 shares of Common Stock owned jointly by Mr. Stuart with his
brother David Stuart, but excludes options held by Mr. Stuart to purchase
694,386 shares of Common Stock.
(5) Exclusive of options held by Mr. Norton to purchase 63,136 shares of Common
Stock and options granted to Mr. Norton and his law partners to purchase an
additional 14,378 shares in exchange for legal services rendered to the Company.
(6) Exclusive of options held by Mr. DeCesare to purchase 63,136 shares of
Common Stock.
(7) Exclusive of options held by Mr. Norcia to purchase 78,920 shares of Common
Stock and options held by his brother, Robert Norcia, a consultant to the
Company, to purchase 47,352 shares of Common Stock.
(8) Exclusive of options held by Mr. Newman to purchase 63,136 shares of Common
Stock and options held by Jenex Financial Services, a company in which Mr.
Newman is a principal, to purchase 315,680 shares of Common Stock.
(9) Exclusive of all of the options referred to in footnotes (1)
through (8) above. See "Certain Transactions".
CERTAIN TRANSACTIONS
Commencing in April of 1993 and continuing up until April of 1995, Dr. Swor has
periodically, from time to time, loaned the Company sums currently aggregating
in excess of $320,000 in order to facilitate payment of various corporate
obligations. In exchange therefore, the Company has issued a series of
non-negotiable prime rate plus 2% promissory notes. The current balance due
thereunder is approximately $350,000, $75,000 of which will be repaid upon
consummation of the Minimum Offering and all of which will be repaid upon
consummation of the Maximum Offering. If amounts in excess of the Minimum but
less than the Maximum Offering are raised, the amounts repaid will be in
proportion to the foregoing numbers. In addition, Dr. Swor, at the request of
the Company, personally leased certain medical equipment utilizing his personal
credit, and re-leased same to the Company, which resulted in a deminimus profit
to him. See Note 3 to the Company's financial statements for the fiscal quarter
ended March 31, 1995.
The Company has entered into a financial consulting arrangement with a company
in which Mr. Irwin Newman, a director of the Company, is a principal. Pursuant
thereto the Company paid Mr. Newman's firm the sum of $7,100 during 1994 and on
July 21, 1994, Mr. Newman's firm received options to purchase 315,680 shares of
Common Stock at a purchase price per share substantially below the offering
price per share as being made available to investors pursuant to the terms of
this offering. See "Dilution" and "Risk Factors".
The Company has agreed to issue to Mr. Samuel D. Norton, a director of the
Company, and his law partners, 14,378 shares of its common stock in exchange for
legal services previously rendered the invoice for which aggregated $14,378.
Each of the officers and directors of the Company listed under the section of
this Memorandum entitled "Principal Stockholders", as indicated therein, either
own shares of Common Stock, directly or indirectly. Such options are generally
exercisable at prices of approximately $.31 per share, are exercisable for a
period of seven years from the date of grant, generally on July 21, 1994, have a
two year restriction before any exercise may take effect, and the option may not
be exercised unless at the date of exercise a registration statement on Form S-8
under the Securities Act of 1933, as amended, relating to the shares covered by
such option shall be in effect. Optionees that are employees of the Company have
agreed to remain in the employ of the Company, whether or not they exercise the
options, for a period of two years from the date of the option grant.
<PAGE>
All of the officers and directors of the Company have purchased their shares of
Common Stock either for services rendered, assignment of ideas or proprietary
information or at prices substantially below the offering price per share as
being made available to investors pursuant to the terms of this offering. Any
investor that wishes to receive the specific details thereof will be entitled to
receive same upon inquiry to management of the Company. See "Dilution" and "Risk
Factors".
DESCRIPTION OF SECURITIES
A minimum of 100 Units and a maximum of 80 Units are being offered hereunder.
Each Unit consists of (a) 5,000 shares of Common Stock and (b) 2,500 Warrants
entitling the holder to purchase one (1) share of Common Stock for each Warrant
at an exercise price of $2.00 per share at any time during the three year period
commencing on the Closing Date.
A description of the Common Stock and the Warrants is set forth below.
Common Stock
The Company is authorized to issue up to 20,000,000 shares of Common Stock. A
total of 8,980,818 shares (exclusive of 5,423,524 shares subject to issuance
upon exercise of currently outstanding stock options) are currently issued and
outstanding. If the Minimum Offering of 100 Units offered hereby are sold, a
total of 9,480,818 shares of Common Stock will be issued and outstanding; if the
Maximum Offering is sold, a total of 12,980,818 shares of Common Stock will be
issued and outstanding.
The holders of Common Stock, in person or by proxy, are entitled to one vote for
each outstanding share in each matter submitted to a vote t a meeting of
shareholders. Shares of Common Stock have no preemptive or conversion rights and
they are not liable for further call or assessment. In the event of the
liquidation of the Company, each share of common Stock is entitled to share
ratably in any assets available for distribution to holders of the equity
securities of the Company.
The holders of shares of Common Stock are not permitted to vote their shares
cumulatively. Accordingly, the holders of more than 50% of the issued and
outstanding shares of Common Stock can elect all of the directors of the Company
which the holders of Common Stock are entitled to elect if they choose to do so,
and, in such event, the holders of the remaining shares of Common Stock will not
be able to elect any directors. Officers and directors of the Company currently
own 4,175,645 shares of Common Stock, or approximately 46.5% of all issued and
outstanding shares of Common Stock (exclusive of an additional 7% thereof owned
by the wife of the Company's Chief Executive Officer, beneficial ownership of
which is disclaimed by him). In addition, such officers and directors and
members of their families own options to acquire an additional 5,034,298 shares
of Common Stock (out of total options granted to purchase 5,423,524 shares of
Common Stock) which, on a fully diluted basis would aggregate, together with
their current stock ownership, approximately 66% of the Company's issued and
outstanding Common Stock. Assuming that a maximum of 800 Units are sold and that
none of such officers and directors purchase any of the Units offered hereby
(which they are permitted to do), such persons will own or control approximately
32% (exclusive of an additional 5% thereof owned by the wife of the Company's
Chief Executive Officer beneficial ownership of which is disclaimed by him) of
the Company's issued and outstanding Common Stock and assuming exercise in full
of the foregoing options, they would own, on a fully diluted basis, 50% of the
Company's issued and outstanding Common Stock and be in a position to designate
all of the members of the Company's Board of Directors. Assuming exercise in
full of all outstanding options and the Warrants offered as part of the Units
and no purchase of any of the Units by the officers and directors of the
Company, such persons would own or control approximately 45% of the issued and
outstanding shares of Common Stock and would be in a position to designate all
of the members of the Company's Board of Directors.
Holders of shares of Common Stock are entitled to receive dividends when, as and
if declared by the Company's Board of Directors out of funds legally available
therefor. The Company has not previously declared or paid any dividends and does
not have any current intention of doing so in the foreseeable future. The
Company intends to utilize its available capital to further develop its product
lines and to make appropriate acquisitions.
Warrants
<PAGE>
Each Warrant entitles the registered holder thereof to purchase one share of
Common Stock, at a price of $2.00 per share, subject to adjustment in certain
circumstances, until 5:00 p.m., Eastern Daylight Time, on the third anniversary
of the Closing Date. The Warrants may be exercised upon delivery of the Warrant
certificate, on or prior to the expiration date, to the Company, with the
exercise form at the end thereof completed and executed as indicated,
accompanied by full payment of the exercise price. The exercise price and number
of shares of Common Stock or the securities issuable upon exercise of the
Warrants will be adjusted for stock splits, stock dividends and similar
transactions. Until exercised and paid for, holders of the Warrants doe not have
the rights or privileges of holders of Common Stock. The Warrants are not
redeemable by the Company.
Transfer Agent
The transfer agent and registrar for the Common Stock is IDATA Inc., 14675
Midway Road, Dallas, Texas 75244.
MISCELLANEOUS
Each offeree and his authorized representative will have the opportunity to ask
questions of, and receive answers from, officers and representatives of the
Company concerning the terms and conditions of this offering and to obtain such
additional information, to the extent that they possess such information or can
obtain it without unreasonable effort or expense, as the offeree or his
representative may deem necessary to verity the accuracy of the information set
forth in this Private Offering Memorandum.
LEGAL MATTERS
The validity of the shares of Common Stock and the Warrants included within the
Units will be passed upon for the Company by Zimet, Haines, Friedman & Kaplan,
460 Park Avenue, New York, New
York 10022.
EXPERTS
The financial statements of the Company as of December 31, 1993 and 1994 and for
each of the two years in the period ended December 31, 1994 included in this
Private Offering Memorandum have been so included in reliance on the report of
Kerkering Barberio & Co., P.A., 1858 Ringling Boulevard, Sarasota, Florida
34236, independent accountants, given on the authority of such firm as experts
in auditing and accounting.
<PAGE>
EXHIBIT A
SURGICAL SAFETY PRODUCTS, INC.
-----------------------
SUBSCRIPTION AGREEMENT
THIS INVESTMENT IS HIGHLY SPECULATIVE INVOLVING A HIGH DEGREE OF RISK. THIS
INVESTMENT IS SUITABLE ONLY FOR INVESTORS WHO CAN AFFORD THE POSSIBLE LOSS OF
THEIR ENTIRE INVESTMENT. MATERIAL FURNISHED IN AND WITH THIS SUBSCRIPTION
AGREEMENT IS NOT SUFFICIENT FOR AN INVESTMENT DECISION AND THE OFFEREES ARE
URGED TO AVAIL THEMSELVES OF THE OFFERED ACCESS TO FURTHER INFORMATION BEFORE
DECIDING TO INVEST. OFFEREES ARE ALSO URGED TO GIVE SPECIAL ATTENTION TO THE
RISK FACTORS CONTAINED IN THE COMPANY'S CONFIDENTIAL PRIVATE OFFERING
MEMORANDUM.
Surgical Safety Products, Inc.
434 South Washington Boulevard
Sarasota, Florida 34236
Gentlemen:
1. Subscription.
(a) The undersigned (the "Subscriber") whose name appears on the
signature page of this agreement (the "Subscription Agreement"), intending to be
legally bound, irrevocably applies to purchase from Surgical Safety Products,
Inc., a corporation organized under the laws of the State of New York (the
"Company"), the number of units (the "Units") set forth on the signature page of
this Subscription Agreement at the purchase price (the "Purchase Price") of
$5,000 per Unit, in accordance with the terms and subject to the conditions of
this Subscription Agreement and the Disclosure Documents (as defined below).
Each Unit shall consist of 5,000 shares ("Offered Shares") of the Common Stock,
par value $.001 per share ("Common Stock"), of the Company and three year
warrants (the "Warrants") to purchase 2,500 shares of the Common Stock at an
exercise price of $1.50 per share (The "Warrant Shares"). The Warrants shall be
evidence by a Warrant Certificate substantially in the form appended as an
exhibit to the Memorandum referred to below. The Offered Shares, Warrants and
Warrant Shares are sometimes collectively referred to herein as the
"Securities".
(b) The Units are being offered to the Subscriber as part of an
offering by the Company of a minimum of 100 Units and a maximum of 800 Units
(the "Offering") to certain qualified offerees without registration under the
Securities Act of 1933, as amended (the "Securities Act"), or qualification
under applicable state securities laws (the "Blue Sky Laws"). The Offering and
the effectiveness of this Subscription Agreement is conditioned upon the sale of
not less than 100 Units. A minimum purchase of 20 Units is required for each
investor. The Company also reserves the right to sell Units, shares of Common
Stock, other debt or equity securities of the Company, or securities convertible
into or exchangeable for shares of Common Stock or other debt or equity
securities of the Company, to other persons at a price or prices to be
determined by the Company, at its discretion.
(c) The terms of this Offering are more particularly described in the
Confidential Private Offering Memorandum of the Company dated May 30, 1995
hereof and heretofore delivered to the Subscriber, including any and all written
supplements and amendments thereto (the "Memorandum"). The Memorandum and the
documents referred to as exhibits thereto and all subsequent supplements thereto
are collectively referred to herein as the "Disclosure Documents"
2. Payment. Simultaneously with the execution and delivery of this
Subscription Agreement, the Subscriber is delivering to the Company, in the form
of a certified or bank cashier's check drawn payable to the order of "Surgical
Safety Products, Inc. custodial Account", an amount equal to the number of Units
subscribed for multiplied by $5,000.
<PAGE>
3. Acceptance. The Subscriber understands and agrees that the Company,
in its sole discretion, reserves the right to accept or reject this
subscription, in whole or in part, and to withdraw its offer to sell the Units
at any time before the issuance thereof. This subscription shall be deemed
accepted by the Company only when the Company either deposits a notice of
acceptance in the United States mail, delivers such notice by hand or transmits
such notice by facsimile to the Subscriber or issues the Units to the
Subscriber. No subscription shall be accepted unless and until the Company
receives subscriptions for not less than 100 Units. The Company agrees that upon
its acceptance of this subscription and the Company's receipt of the Purchase
Price, the Company shall as promptly as practicable deliver to the Subscriber
the securities constituting the Units purchased, registered in the name of the
Subscriber or such nominee as the Subscriber shall have requested in writing. In
the event that this subscription is not accepted by the Company, the Company
shall return to the Subscriber, with interest if held for at least 30 days, all
funds received from the Subscriber in respect of the Purchase Price less a
proportionate amount of fees and expenses of Barnett Bank, Sarasota, Florida.
4. Representations, Warranties and Covenants of the
Subscriber. In order to induce the Company to sell the Units to
the Subscriber, the Subscriber hereby represents, warrants and
covenants to the Company as follows:
(a) This Subscription Agreement has been duly and validly executed and
delivered by the Subscriber and is the valid and binding legal obligation of the
Subscriber, enforceable against the Subscriber in accordance with its terms,
except to the extent that enforcement may be limited by applicable bankruptcy
laws, insolvency, reorganization or other similar laws affecting creditors'
rights generally and by general equitable principles (regardless of whether
enforcement is sought in equity or at law).
(b) The execution, delivery and performance of this Subscription
Agreement and the purchase of the Units do not and will not conflict with,
violate or constitute a default under any applicable law or regulation or any
agreement or arrangement to which the Subscriber is a party or by which the
Subscriber may be bound.
(c) In order to make an informed decision in connection
with the purchase of the Units:
(i) the Subscriber has reviewed the merits and risks of an
investment in the Units with such tax and legal counsel and with an investment
advisor (to the extent deemed advisable by the Subscriber) and is not relying on
the Company or any director, shareholder, employee, advisor or affiliate of the
Company with respect to the economic, tax and other considerations relevant to
the Subscriber relating to this investment;
(ii) the Subscriber (together with, if any, his Purchaser
Representative, as defined under Rule 501 of Regulation D promulgated under the
Securities Act), (A) is familiar with the business and operations of the
Company, has been provided with sufficient information with respect to the
business of the Company, including without limitation the Disclosure Documents,
and has carefully reviewed the same, (B) has been provided with such additional
information with respect to the Company as the Subscriber has requested, (C) has
had the opportunity to discuss such information with members of the management
of the Company and any questions that the Subscriber has had with respect
thereto have been answered to the full satisfaction of the Subscriber;
(iii) the Subscriber recognizes that an investment in the
Units involves a high degree of risk, including, without limitation, those set
forth in the Disclosure Documents, and the Subscriber has carefully studied the
section entitled "RISK FACTORS" set forth in the Memorandum; and
(iv) the Subscriber (together with his Purchaser
Representative, if any) is a highly sophisticated investor who has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Units.
(d) The Subscriber understands that the sale of the Units to the
Subscriber is intended to be exempt from registration under the Securities Act,
by virtue of Section 4(2) of the Securities Act, and any applicable state
securities law ("Blue
<PAGE>
Sky Laws") and that, as a result, the securities included within the Units must
be held indefinitely, unless the subsequent disposition thereof is registered
under the Securities Act and the Blue Sky Laws or an exemption from such
registration is available. The Subscriber further understands that the Warrant
Shares, if issued, shall also be subject to similar restrictions. The Subscriber
will not sell, hypothecate or otherwise transfer any or all of the Securities
other than pursuant to a registration statement under the Securities Act which
has become effective or pursuant to a specific exemption from registration under
the Securities Act and the Blue Sky Laws; provided, however, if any such
transfer is pursuant to an exemption, such transfer shall be made only upon the
Subscriber first having delivered to the Company a favorable written opinion of
counsel to the Company, reasonably satisfactory in form and substance to the
Company, to the effect that such proposed transfer is exempt from registration
under the Securities Act and the Blue Sky Laws.
(e) The Subscriber acknowledges that, except as provided in Section 6
hereof, the Company has not undertaken to register any of the Securities
pursuant to the Securities Act and, except as provided therein, will have no
obligation to effect on behalf of the Subscriber any registration under the
Securities Act or to assist the Subscriber in complying with any exemption from
registration under the Securities Act or any Blue Sky Laws. The Subscriber
understands that the exemption from registration afforded by certain rules and
regulations under the Securities Act depends upon the satisfaction of various
conditions and that, if applicable, such rules and regulations may afford the
basis for sales of the Securities only in limited amounts.
(f) The Subscriber is acquiring the Units solely for such subscriber's
own account, for investment purposes only and not with a view to, or for,
subdivision, resale, distribution, or fractionalization thereof, or for the
account, in whole or in part, of another. No other person has or will have a
direct or indirect beneficial interest in the Units. The Subscriber recognizes
the restrictions on the transferability of the securities comprising the Units
and is able to bear the substantial economic risk of an investment in the Units,
including a complete loss thereof, for an indefinite period of time. The
Subscriber has no need for liquidity of this investment and has no reason to
anticipate any change in circumstances, financial or otherwise, or other
particular occasion or event which might cause or require the Subscriber to
attempt to sell or transfer any of the Securities.
(g) The Subscriber acknowledges that certificates
evidencing the Offered Shares and Warrants and the certificates evidencing
Warrant Shares issued upon exercise of the Warrants, and any substitutions or
replacements thereof, shall bear a legend in substantially the following form:
"The securities represented by this certificate may not be sold,
transferred, pledged, or hypothecated unless a registration statement under the
Securities act of 1933, as amended, is in effect with respect thereto or the
Company has received an opinion of counsel, satisfactory to the Company, to the
effect that such registration is not required or that there exists a valid
exemption from such registration."
(h) The Subscriber represents and warrants that no oral or written
representations have been made or oral or written information furnished to the
Subscriber (or such Subscriber's Purchaser Representative, if any) in connection
with the Offering which were in any way inconsistent with any information
provided to the Subscriber in the Disclosure Documents.
(i) The Subscriber is not subscribing to purchase the Units as a result
of, or subsequent to, any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, or presented at any seminar or meeting, or any solicitation
of a subscription by a person not previously known to the Subscriber in
connection with investments in securities generally.
(j) If this Subscription Agreement is signed on behalf of the
Subscriber, the person signing this Subscription Agreement on behalf of the
Subscriber has full authority on behalf of the Subscriber to execute this
Subscription Agreement and to bind each person and entity included within the
definition of "Subscriber" and has verified that the representations and
warranties of the Subscriber contained in this Subscription Agreement are true
and correct with respect to such included person and entity as if separately and
individually made by each such person and entity.
(k) If the Subscriber is acting in a fiduciary capacity in purchasing
the Units, the fiduciary represents and warrants that he or she has authority to
execute this Subscription Agreement on behalf of the person or persons for whom
the Units are being purchased, that such persons have been given this
Subscription Agreement and the Disclosure Documents and such persons have
confirmed to the fiduciary that they have reviewed the same, and that the
representations and warranties contained in this Subscription Agreement (and in
any other written statement or
<PAGE>
document delivered to the Company) shall be deemed to have been made on behalf
of such person or persons.
(l) All information which the Subscriber has furnished and is
furnishing to the Company, including, without limitation, the information
provided to the Company in completing the appropriate form of Purchaser
Questionnaire included as an exhibit to the Memorandum and all other
representations contained in this Subscription Agreement, are true, correct and
complete as of the date of this Subscription Agreement, and if there should be
any material change in such information prior to the Subscriber's receipt of the
Units, the Subscriber will immediately furnish such revised or corrected
information to the Company.
(m) The Subscriber is executing and delivering this Subscription
Agreement with full awareness of its implications and in recognition of the fact
that the Company is relying on the Subscriber's representations and warranties
contained herein in selling the Units to the Subscriber, and that the Company
and other investors may be damaged if such representations or warranties are
false, incorrect or incomplete. The Subscriber, by executing and delivering this
Subscription Agreement, agrees to indemnify and hold harmless the Company and
each of its officers and directors from and against any and all loss, damage or
liability due to or arising out of a breach of any representation, warranty or
covenant of the Subscriber set forth herein.
5. Representations, Warranties and Covenants of the
Company. The Company hereby represents, warrants and covenants
to the Subscriber as follows:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York and has full power and
authority (corporate and otherwise) to conduct its business as presently
conducted and proposed to be conducted by it and to effect the transactions
contemplated hereby.
(b) The authorized capital stock of the Company as of December 31, 1994
consists of 20,000,000 shares of Common Stock, par value $.001 per share. As of
such date, there are a total of 8,980,818 shares of Common Stock issued and
outstanding, and options to purchase a total of 5,423,524 shares of Common Stock
issued and outstanding.
(c) No consent, authorization or other approval from, nor
any registration, qualification or filing with, any person or
governmental authority is required in connection with the Offering or the
transactions contemplated hereby, which consent, authorization or approval has
not heretofore been obtained or which registration, qualification or filing has
not heretofore been made.
(d) The Company has taken all corporate action required on the part of
the Company to authorize and approve the Offering and the transactions
contemplated hereby. The Units, when paid for and delivered pursuant to the
terms hereof, will be validly issued, fully paid and non-assessable.
6. Registration Rights
(a) Definitions. As used in this Subscription Agreement,
the following terms shall have the definitions set forth below:
(i) "Commission" means the United States Securities
and Exchange Commission.
(ii) "Registrable Shares" means (A) all of the Offered Shares
included within the Units, (B) all of the Warrant Shares issued or is usable
upon the exercise of Warrants included within the Units, and (C) any shares of
Common Stock issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to or in exchange for or in replacement of any
Registrable Shares, provide, however, that shares of Common Stock shall cease to
be Registrable Shares at such time as they become eligible for sale pursuant to
Rule 1444(k) under the Securities Act.
(iii) "Securityholders" shall mean the purchasers of all Units
sold pursuant to the Offering and any person who acquires any of the Securities
in a private transaction exempt from registration under the Securities Act.
(b) Piggy-Back Registration
(i) Request for Registration. If the Company proposes to file
a registration statement under the Securities At (a "Piggyback Registration")
with respect to an offering by the Company of its Common Stock for its own
account (other than a registration statement on Form S-4, S-8 or 1-A, or any
similar or successor form used for the same purpose or a registration statement
filed in connection with an exchange offer or an offering of securities solely
to the Company's existing stockholders or employees) subsequent to the
registration
<PAGE>
statement filed by the Company in connection with its initial public offering
("IPO") of its Common Stock which become effective and results in the
development of an active trading market therefor, e.g., on the NASDAQ National
Market System or NASDAQ Small-Cap Market during the period commencing on the
Closing Date and ending on the fifth anniversary of the Closing Date, the
Company shall in each case give written notice of such proposed filing to each
of the Securityholders at least twenty (20) days before the anticipated filing
date. Subject to the provisions of this Section 6(b), the Company will include
in such Piggyback Registration all Registrable Shares with respect to which the
Company has received, within (10) days after the receipt of the applicable
holder of the Company's notice, written requests for inclusion therein. The
holders of the Registrable Shares shall be permitted to withdraw all or any part
of the Registrable Shares from a Piggyback Registration at any time prior to the
effective date of such Piggyback Registration. If the Piggyback Registration is
an underwritten offering, all Securityholders whose securities are included in
the Piggyback Registration shall be obligated to sell their securities on the
same terms and conditions as apply to the securities being issued and sold by
the Company.
(ii) Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company,
and the managing underwriters advise the Company in writing that in their
opinion the total number or dollar amount of securities requested to be included
in such registration would materially and adversely affect the success of such
offering, the Company will include in such registration: (1) first, all
securities the Company proposes to sell, (2) second, upon to the full number of
Registrable Shares requested to be included in such registration in excess of
the number of securities the Company proposes to sell which, in the opinion of
such underwriters, can be sold (allocated pro rata among the holders of such
Registrable Shares on the basis of the number of Registrable Shares requested to
be included therein by each such holder), and(3) third, such other securities
(provided such securities are of the same class as the securities being sold by
the Company) as are requested to be included in such registration (allocated
among the holders of such securities in such proportions as the Company and such
holders may agree).
(iii) Priority on Secondary Registrations. If a
Piggyback Registration is an underwritten secondary registration
on behalf of other holders of the Company's securities (other
than the Securityholders), and the managing underwriters advise
the Company in writing that in their opinion the dollar amount or
number of securities requested to be included in such registration would
materially and adversely affect the success of such offering, the Company will
include in such registration (a) to the extent of 50% of the number or dollar
amount of securities which in the opinion of such underwriters can be sold, the
securities requested to be included therein by the other holders, allocated
among the other holders in such proportions as the Company and such other
holders may agree, and (b) to the extent of the 50% balance, the Registrable
Shares requested to be included in such registration, allocated pro rate among
the holders of such Registrable Shares requested to be included therein by each
such holder.
(iv) Expenses. In connection with a Piggyback
Registration, the Company will bear all Registration Expenses.
(v) Conflict with Previously Granted Rights. Notwithstanding
any other provision of this Section 6(b), if the provisions of any registration
rights heretofore granted by the Company to holders of securities of the Company
preclude or limit incidental registration on those registrations which may be
indicated by those securityholders, the provisions of this Section 6(b) shall be
inapplicable to such registrations or shall be subject to such limitations as
the case may be.
(c) Holdback Agreements
(i) Restrictions on Public Sales by Holder of Registrable
Shares. Each Shareholder agrees not to effect any public sale or distribution of
the class of securities being registered or any securities convertible into or
exchangeable or exercisable for such securities, including a sale pursuant to
rule 144 under the Securities Act, during the 14 days prior to, and during the
120-day period beginning on the effective date of the registration statement
referred to in Section 6(c) hereof (except a part of the registration).
<PAGE>
(ii) Restrictions on Public Sale by the Company and Others.
The Company agrees not to effect, on its own behalf or for the benefit of any
other holder, any public sale or distribution of the class of securities being
registered, or any securities convertible into or exchangeable or exercisable
for such securities (other than any such sale or distribution of such securities
pursuant to an employee benefit plan in connection with any merger or
consolidation by the Company or any subsidiary thereof or the acquisition by the
Company or a subsidiary thereof of the capital stock or substantially all of the
assets of any other person), during the 14 days prior to, and during the 120-
day period beginning on the effective date of the registration statement
referred to in Section 6(c) (other than securities which may be included in such
registration or behalf of the Company or any other holder).
(d) Registration Procedures
(i) Company Undertakings. Whenever a Securityholder (each a
"Selling Securityholder" for purposes of this Section 6(d) has requested that
any Registrable Securities be registered pursuant to Section 6(c) hereof, the
Company will use its best efforts to effect the registration and the sale of all
such Registrable Shares in accordance with the intended method of disposition
thereof as promptly as reasonably practicable, and in connection with any such
request, the Company will as expeditiously as possible:
(A) prepare and file with the Commission, as
promptly as practicable after receipt of a request to file a registration
statement with respect to such Registrable Shares, a registration statement with
respect to such Registrable Shares, and use its best efforts to cause such
registration statement to become effective;
(B) notify each Selling Securityholder of any
stop order threatened or issued by the Commission and take all actions required
to prevent the entry of such stop order or to remove it if entered;
(C) prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for a period of not more than 270 days, or such shorter
period as may be required if all Registrable Securities covered by such
registration statement are sold prior to the expiration of said 270-day period;
except that if the registration statement is not filed pursuant to Rule 415
promulgated under the Act, the registration statement need not be effective for
more than 90 days;
(D) furnish to each Securityholder such number of
copies of such registration statement, each amendment and supplement thereto (in
each case including all exhibits thereto), the prospectus included in such
registration statements (including each preliminary prospectus) and such other
documents as such seller may reasonably request in order to facilitate the
disposition of the Registrable Shares owned by the Selling Securityholder;
(E) use its best efforts to register or qualify
such Registrable Shares under the state securities or blue sky laws of such
jurisdictions, not to exceed ten in number, as the Selling Securityholders
reasonably request, or, in the event of a firm commitment underwritten offering,
such larger number of jurisdictions as the managing underwriter or underwriters
shall reasonably request, and do any and all other acts and things which may be
reasonably necessary or advisable to enable the Selling Securityholders to
consummate the disposition in such jurisdictions of such Registrable Shares
owned by such Selling Securityholders; provided that the Company will not be
required to (x) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph (E), (y)
subject itself to taxation in any such jurisdiction, or (z) consent to general
service of process in any such jurisdiction;
(F) use reasonable efforts to cause the
Registrable Shares covered by such registration statement to be registered with
or approved by such other governmental agencies or authorities as may be
necessary by virtue of the business and operations of the Company to enable the
Selling Securityholders to consummate the disposition of such Registrable
Shares;
(G) notify the Selling Securityholders, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, and the Company will
prepare a supplement or amendment to such prospectus as soon as reasonably
practicable thereafter (except that may avoid supplementing or amending such
prospectus for up to 45 days when such nondisclosure is in the interests of the
Company) so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus will not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading;
<PAGE>
(H) enter into and perform customary agreements
(including, without limitation, an underwriting agreement containing customary
representations, underwriters compensation and indemnity and other customary
terms and conditions) and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of such Registrable Shares;
(I) use reasonable efforts to cause all such
Registrable Shares to be listed on each securities exchange, if any, on which
similar securities issued by the Company are then listed, provided that the
applicable listing requirements are satisfied.
(ii) Information from Selling Securityholder. The Company may
require each Selling Securityholder to furnish to the Company such information
and affidavits with respect to such Selling Securityholder regarding the
distribution of the Registrable Shares and such other information as the Company
may from time to time reasonably request for use in connection with any
registration statement or prospectus.
(iii) Discontinue Use of Prospectus. Each Selling
-----------------------------
Securityholder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in
Section 6(d)(i)(G) hereof, the Selling Securityholder will
forthwith discontinue disposition of Registrable Shares pursuant
to the registration statement covering such Registrable Shares
until such Selling Securityholder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section
6(d)(i)(G) hereof, and, if so directed by the Company (at the
Company's expense) all copies, other than permanent file copies
then in such Selling Securityholder's possession, of the
prospectus covering such Registrable Shares current at the time
of receipt of such notice. In the event the Company shall give
any such notice, the Company shall extend the period during which
such registration statement shall be maintained effective
pursuant to this Agreement by the number of days during the
period from and including the date of the giving of such notice
pursuant to Section 6(d)(i)(G) hereof to and including the date
when the Selling Securityholder shall have received the copies of
the supplemented or amended prospectus contemplated by Section
6(d)(i)(G) hereof.
(iv) Registration Expenses. All expenses incident to the
Company's performance of or compliance with its obligations under this Section
6, including without limitation all registration and filing fees, fees and
expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky qualifications of
the Registrable Securities), printing expenses, internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the fees and expenses incurred in
connection with the listing of the securities to be registered on each
securities exchange on which such securities are required to be listed, and fees
and disbursements of counsel for the Company and its independent certified
public accountants (including the expenses of any special audit conducted at the
Company's option or "cold comfort" letters required by or incident to such
performance), the reasonable fees and expenses of any special experts retained
by the Company in connection with such registration, and fees and expenses of
other persons retained by the Company (all such expenses being herein called
"Registration Expenses"), will be borne by the Company; provided, however, that,
in connection with the registration or qualification of the Registrable Shares
under state securities laws, nothing herein shall be deemed to require the
Company to make any payments to third parties in order to obtain "lock-up,"
escrow or other extraordinary agreements. Each Selling Securityholder shall pay
the fees and expenses of its own counsel, underwriting discounts and commissions
attributable to the sale of the Registrable Shares by such Selling
Securityholder, and its other out-of-pocket expenses.
(v) Obligations of the Selling Securityholders.
Following the filing of the registration statement and during any
period that the registration statement is effective, the Selling
Securityholder shall:
(A) not effect any stabilization transactions or
engage in any stabilization activity in connection with the Common Stock in
contravention of Rule 10-7 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act");
(B) furnish each broker through whom the Selling
Securityholder offers Registrable Shares such number of copies of the prospectus
relating to the Registrable Shares as the broker may require and otherwise
comply with prospectus delivery requirements under the Securities Act;
<PAGE>
(C) report to the Company each month all sales,
pledges and other dispositions of Registrable Shares made by the
Selling Securityholder during said month;
(D) not, and shall not permit any Affiliated
Purchaser (as that term is defined in Rule 10-6 under the Exchange Act) to bid
for or purchase for any account in which the Selling Securityholder has a
beneficial interest, or attempt to induce any other person to purchase any
shares of stock of the Company in contravention of Rule 10-6 under the Exchange
Act; and
(E) not offer or agree to pay, directly or
indirectly, to anyone any compensation for soliciting another to purchase or for
purchasing (other than for the Selling Securityholder's own account), any
securities of the Company on a national securities exchange in contravention of
Rule 10b-2 under the Exchange Act.
(vi) Indemnification; Contribution
(A) Indemnification by the Company. The Company
shall indemnify, to the full extent permitted by law, each Selling
Securityholders, its officers, directors and agents and each person who controls
such Selling Securityholder (within the meaning of the Securities Act), against
all losses, claims, damages, liabilities and expenses (including but not limited
to reasonable attorneys' fees) caused by any untrue or alleged untrue statement
of a material fact contained in any registration statement, prospectus or
preliminary prospectus or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
made therein in the light of the circumstances under which they were made, not
misleading, except insofar as the same are caused by or contained in any
information with respect to such Selling Securityholder furnished to the Company
by such Securityholder for use therein or by such Selling Securityholder's
failure to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto in accordance with the requirement of the
Securities Act after the Company has furnished such Selling Securityholder with
a copy of the same. The Company will also indemnify any underwriters of the
Registrable shares, their officers and directors and each person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the Selling
Securityholder.
(B) Indemnification by the Selling
Securityholder. In connection with any registration statement in which the
subscriber is Selling Securityholder, the Subscriber shall indemnify, to the
full extent permitted by law, the Company, its directors, officers, employees
and agents and each person who controls the Company (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities and expenses
(including reasonable attorneys' fees) caused by any untrue or alleged untrue
statement of a material fact in any registration statement of prospectus or any
omission or alleged omission to state therein a material fact required to be
stated therein, or supplement thereto, or necessary to make the statements
therein, in the light of the circumstances under which
they were made,not misleading, to the extent, but only to the extent that such
untrue statement or omission is caused by or contained in (i) any information or
affidavit with respect to such Selling Securityholder or the Registerable Shares
or its investment therein furnished by such Selling Securityholder pursuant to
Section 6(d)(ii) or otherwise, or (ii) by such Selling Securityholder's failure
to deliver a copy of the prospectus or any amendments or supplements thereto in
accordance with the requirements of the Securities Act after the Company has
furnished such Selling Securityholder with a copy of the same.
(C) Conduct of Indemnification Proceedings. Any
person entitled to indemnification hereunder shall give prompt written notice to
the indemnifying party after the receipt by such person of any written notice of
the commencement of any action, suit, proceeding or investigation or threat
thereof made in writing for which such person may claim indemnification or
contribution pursuant to this Agreement and unless, in the reasonable judgment
of such indemnified party, a conflict of interest may exist between such
indemnified party and the indemnifying party with respect to such claim, permit
the indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to such indemnified party. If the indemnifying party is
not entitled to, or elects not to, assume the defense of a claim, it will not be
obligated to pay the fees and expenses of more than one counsel with respect to
such claim, unless in the reasonable judgment of counsel for such indemnified
party a conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the reasonable fees and expenses of
such additional counsel or counsels. The indemnifying party will not be subject
to any liability for any settlement made without its consent.
<PAGE>
(D) Contribution. If the indemnification
provided for in this Section 6(d)(vi) from the indemnifying party is unavailable
to an indemnified party hereunder in respect of any losses, claims, damages,
liabilities or expenses, then the indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damage, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of material fact or mission or
alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 6(d)(vi)(C) hereof, any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding. The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6(d)(vi)(D) were determined by pro rate allocation or
by any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. If
indemnification is available under this Section 6, the indemnifying parties
shall indemnify each indemnified party to the full extent provided in Sections
6(d)(vi)(A) and (B) hereof without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable consideration
provided for in this Section 6(d)(vi)(D).
(f) Reporting Requirements. The Company covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange
Act; and it will use reasonable efforts to take such further action as any
Securityholder may reasonably request to the extent required to enable such
Securityholder to sell Registrable Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144 and
Rule 144A under the Securities Act, as such Rules may be amended or any similar
rules or regulations hereafter adopted. Upon the request of any Security holder,
the company will deliver to such Securityholder a written statement as to
whether it has complied with such requirements.
7. Governing Law. THIS SUBSCRIPTION AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ALL RESPECTS IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE FULLY PERFORMED ENTIRELY WITHIN SUCH
STATE.
8. Severability. Each provision of this Subscription
Agreement is intended to be severable from every other provision,
and the invalidity or illegality of any provision shall not
affect the validity or legality of the remaining provisions of
this Subscription Agreement.
9. Assignability. This Subscription Agreement, and the
rights and obligations hereunder, are not transferable or
assignable by the Subscriber without the prior written consent of
the Company.
10. Modification. Neither this Subscription Agreement nor
any of its provisions shall be waived, modified, discharged or
terminated except by an instrument in writing signed by the party
against whom any such waiver, modification, discharge or
termination is sought.
11. Notices. Any notice, demand or other communication which any party
to this Subscription Agreement may be required, or may elect, to give to anyone
interested hereunder shall be validly given if personally delivered or sent by
registered or certified mail, return receipt requested, addressed to the
recipient as follows: if to the Company, to the address set forth at the head of
this Subscription Agreement, and if to the subscriber, to the address shown
under the name of the Subscriber at the head of this Agreement, or to such other
address as such party may designate by written notice to the other in accordance
with the provisions of this Section.
12. Entire Agreement. This Subscription Agreement contains
the entire understanding and agreement of the parties with
respect to the subject matter hereof and supersedes all
negotiations, representations and other agreements made by and
between such parties with respect hereto.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement on the date set forth below.
SIGNATURE PAGE
Date:_________________________, 1995
Organization Signature: Individual Signature:
- ------------------------------- -------------------------------
Print Name of Subscriber Signature
By:____________________________ _______________________________
Signature (if investment is to
be made jointly)* (see below)
- -------------------------------
Print Name and Title of
Person Signing _______________________________
Print Name
-------------------------------
Print Name (if investment is
to be made jointly)*(see below)
Number of Units Subscribed for: _______________________________
(Please print information below exactly as you wish
it to appear in the records of the Company)
-------------------------------
Social Security Number of
Individual or other Taxpayer
I.D. Number
Address: Address for notices if different
- ------------------------------- -------------------------------
Number and Street Number and Street
- ------------------------------- -------------------------------
Number and Street Number and Street
- ------------------------------- -------------------------------
City State Zip Code City State Zip Code
- -------------------------------------------------
*Please indicate by check mark form of ownership (if applicable):
__ TENANTS-IN-COMMON __ JOINT TENANTS WITH RIGHT OF SURVIVORSHIP
ACCEPTANCE OF SUBSCRIPTION
The foregoing subscription is hereby accepted by Surgical
Safety Products, Inc. this ____ of _____________, 1995.
SURGICAL SAFETY PRODUCTS, INC.
By:_______________________________
Name:
Title:
<PAGE>
EXHIBIT B
SURGICAL SAFETY PRODUCTS, INC.
CONFIDENTIAL PURCHASER QUESTIONNAIRE FOR INDIVIDUALS
Purpose of this Questionnaire
An aggregate of a minimum of 100 Units and a maximum of 800 Units, each
Unit consisting of (i) 5,000 shares of Common Stock of Surgical Safety Products,
Inc., a New York corporation (the "Company"), and (ii) warrants to purchase
2,500 shares of Common Stock at a price of $1.50 per share, are being offered
pursuant to a Confidential Private Offering Memorandum of the Company dated May
30, 1995, without registration under the Securities Act of 1933, as amended (the
"Act"), or the securities laws of some states, in reliance on the private
offering exemptions contained in certain provisions of the Act and/or in
Regulation D of the General Rules and Regulations under the Act, and in reliance
on similar exemptions under applicable state laws. The Company must determine
that an individual meets certain suitability requirements before selling (or, in
some states, offering) Units to such individual. This Questionnaire does not
constitute an offer to sell or a solicitation of an offer to buy Units or any
other security.
THE COMPANY WILL NOT OFFER OR SELL UNITS TO ANY INVESTOR WHO HAS NOT
DULY COMPLETED A CONFIDENTIAL PURCHASER QUESTIONNAIRE, AND ON THE BASIS OF THE
INFORMATION SET FORTH THEREIN THE COMPANY HAS CONCLUDED THAT THE INDIVIDUAL IS
QUALIFIED TO PURCHASE UNITS IN THE OFFERING.
Instructions
One (1) copy of this Questionnaire should be completed,
signed, dated and delivered to Surgical Safety Products, Inc.,
434 S. Washington Boulevard, Suite 2, Sarasota, Florida 34236
Attention: Mr. Chris J. Norcia. Please contact Mr. Norcia
(telephone no. (813) 953-7889) if you have any questions with
respect to the Questionnaire.
PLEASE ANSWER ALL QUESTIONS. If the appropriate answer is
"None" or "Not Applicable," so state. Please print or type your
answers to all questions. Attach additional sheets if necessary
to complete your answers to any item.
Your answers will be kept strictly confidential at all times; however,
the Company may present this Questionnaire to such parties as it deems
appropriate in order to assure itself that the offer and sale of the Units will
not result in a violation of the registration provisions of the Act or a
violation of the securities laws of any state.
1. Name and Address. Please provide the following personal
information:
Name _____________________________________________________
Age ____________
Residence Address
(including Zip
Code)______________________________________________________
- ------------------------------------------------------
Business Address
(including Zip
Code)______________________________________________________
------------------------------------------------------
Telephone: Res.:________________ Bus.:_____________________
Preferred Mailing Address: _____ Residence _____ Business
2. Net Worth and Income Information.
2.1 Indicate (by check mark) your individual or joint (together with
your spouse) net worth (excluding homes, home furnishings, and personal
automobiles):
______ less than $50,000
______ $ 50,001 - $ 100,000
______ $100,001 - $ 250,000
______ $250,001 - $ 500,000
______ $500,001 - $ 1,000,000
______ over $1,000,000
<PAGE>
2.2 The percentage of net worth as shown above which is in liquid
assets (cash, marketable securities or assets readily convertible to cash) is in
excess of (check highest number applicable):
______ 10% ______ 50%
______ 20% ______ 60%
______ 30% ______ 70%
______ 40% ______ 80%
2.3 Please provide the following information with respect
to your income:
Income From Income From
Year All Sources Salary
1993 (actual) $___________ $____________
1994 (actual) $____________ $____________
1995 (estimated) $____________ $____________
3. Sophistication.
3.1 Please list all the educational institutions you have attended
(including colleges, and specialized training schools) and indicate the dates
attended and the degrees(s) (if any) obtained from each.
From To Institution Degree
-
-
-
-
3.2 Please provide the following information concerning
your business experience:
3.2.1. Indicate your principal business experience or other
occupations during the last ten years. (Please list your present, or most
recent, position first and the others in reverse chronological order.)
Name and Address
From To of Employer Position
- ---- - ---- ----------------------------------------------
- ---- - ---- ----------------------------------------------
- ---- - ---- ----------------------------------------------
3.2.2. Describe, in greater detail, your present or most
recent business or occupation, as listed in your answer to Question 3.2.1.
Please indicate such information as the nature of your employment, the principal
business of your employer, the principal activities under your management or
supervision and the scope (e.g., dollar volume, industry rank, etc.) of such
activities.
===============================================================
- ---------------------------------------------------------------
3.2.3. Describe any significant business you engage in
or intend to engage in other than as specified above.
===============================================================
===============================================================
3.3 Please provide the following information concerning
your financial experience:
<PAGE>
3.3.1. Indicate (by check mark) which of the following
categories best describes the extent of your prior experience in the areas of
investment listed below:
Substantial Limited No
Experience Experience Experience
Marketable securities ___________ ____________
- ------------
Government Securities ___________ ____________
- ------------
Municipal (tax-exempt)
securities ___________ ____________
- -----------
Stock options ___________ ____________
- ------------
Commodities ___________ ____________
- ------------
Real estate programs ___________ ____________
- ------------
Securities for which
no market exists ___________ ____________
- ------------
Limited partnerships ___________ ____________
- ------------
Tax deferred
investments generally ___________ ____________
- ------------
3.3.2. For those investments for which you indicated
"substantial experience" above, please answer the following additional questions
by checking the appropriate box:
A. Do you make your own investment decisions with
respect to such investments?
____ Always ____ Frequently
____ Usually ____ Rarely
B. What are your principal sources of investment
knowledge or advice (You may check more than one)
____ First hand experience with industry
____ Financial publication(s)
____ Trade or industry publication(s)
____ Banker(s)
____ Broker(s)
____ Investment Adviser(s) Attorney(s)
____ Accountant(s)
3.3.3. Indicate (by check mark) whether you maintain any of
the following types of accounts over which you, rather than a third party,
exercise investment discretion, and the length of time you have maintained each
type of account.
--- ---
Securities (cash) Yes No Number of years______
--- ---
Securities Yes No Number of years______
(margin) --- ---
Commodities Yes No Number of years______
3.4. Please provide in the space below any additional information which
would indicate that you have sufficient knowledge and experience in financial
and business matters so that you are capable of evaluating the merits and risks
of investing in restricted securities of an enterprise such as the Company.
===============================================================
4. Citizenship. If you are not a citizen of the United States
of America, please indicated your
citizenship:____________________________________________
5. Bank References (please include name and address of Bank and
name of an officer):
===============================================================
- ---------------------------------------------------------------
<PAGE>
6. Attorney (Name, Firm and Address):
===============================================================
- ---------------------------------------------------------------
7. Accountant (Name, Firm and Address):
===============================================================
- --------------------------------------------------------------
8. By signing this Questionnaire I hereby confirm the following
statements:
(a) I am aware that the offering of securities comprising the Units
will involve "restricted securities", as said term is defined in Rule 144 of the
Rules and Regulations promulgated under the Act, and that they, or any interest
therein may not be sold or otherwise transferred unless they have first been
registered under the Act and all applicable state securities laws, or unless an
exemption from such registration provisions is available with respect to any
such resale or transfer.
(b) I acknowledge that any delivery to me of offering materials
relating to the Units prior to the determination by the Company of my
suitability as an investor shall not constitute an offer of the Units until such
determination of suitability shall be made, and I agree that I shall promptly
return the offering materials to the Company upon request.
(c) My answers to the foregoing questions are true and
complete to the best of my information and belief, and I will
promptly notify the Company of any changes in the information I
have provided.
--------------------------------
Print Name
-------------------------------
Signature
Date and Place Executed:
Date:_____________________
Place:____________________
<PAGE>
EXHIBIT C
SURGICAL SAFETY PRODUCTS, INC.
CONFIDENTIAL PURCHASER QUESTIONNAIRE FOR ORGANIZATIONS
Purpose of this Questionnaire
An aggregate of a minimum of 100 Units and a maximum of 800 Units, each
Unit consisting of (i) 5,000 shares of Common Stock of Surgical Safety Products,
Inc., a New York corporation (the "Company") and(ii) warrants to purchase 2,500
shares of Common Stock at a price of $1.50 per share, are being offered pursuant
to a Confidential Private Offering Memorandum of the Company dated May 30, 1995,
without registration under the Securities Act of 1933, as amended (the "Act"),
or the securities laws of some states, in reliance on certain private offering
exemptions contained in the Act and in Regulation D of the General Rules and
Regulations under the Act, and in reliance on similar exemptions under
applicable state laws. The Company must determine that an organization meets
certain suitability requirements before selling (or, in some states, offering)
Units to such entity. This Questionnaire does not constitute an offer to sell or
a solicitation of an offer to buy Units or any other security.
THE COMPANY WILL NOT OFFER OR SELL UNITS TO ANY CORPORATION, TRUST,
PARTNERSHIP OR SIMILAR ENTITY UNLESS A QUESTIONNAIRE HAS BEEN DULY COMPLETED ON
BEHALF OF SUCH ENTITY, AND ON THE BASIS OF THE INFORMATION SET FORTH THEREIN THE
COMPANY HAS CONCLUDED THAT THE ENTITY IS QUALIFIED TO PURCHASE UNITS IN THE
OFFERING.
Instructions
One (1) copy of this Questionnaire should be completed,
signed, dated and delivered to Surgical Safety Products, Inc.,
434 S. Washington Boulevard, Suite 2, Sarasota, Florida 34236,
Attention: Mr. Chris J. Norcia. Please contact Mr. Norcia
(telephone no. (813) 953-7889) if you have any questions with
respect to the Questionnaire.
PLEASE ANSWER ALL QUESTIONS. If the appropriate answer is
"None" or "Not Applicable," so state. Please print or type your
answers to all questions. Attach additional sheets if necessary
to complete your answers to any item.
Your answers will be kept strictly confidential at all times; however,
the Company may present this Questionnaire to such parties as it deems
appropriate in order to assure itself that the offer and sale of the Units will
not result in a violation of the registration provisions of the Act or a
violation of the securities laws of any state.
As used in this Questionnaire, the term "Organization," unless
otherwise indicated, refers to any corporation, trust, partnership or other
association or similar entity which may purchase Units.
1. Name and Address. Please print or type the following
information about the Organization:
Name of Organization
=========================================================
Address of Principal Office
- --------------------------------------------------
(including Zip Code)
- --------------------------------------------------
Telephone No. ( )____________
Type of Organization (e.g., corporation, trust, limited
partnership, general partnership)
- ----------------------------------------------------------------
Date of Formation or Incorporation
- -------------------------------------------
State of Formation or Incorporation
- ------------------------------------------
2. Information regarding principals. Please provide the names, addresses,
positions or titles, ages and citizenship of all executive officers, trustees or
general partners authorized to act with respect to investments by the
Organization generally.
Position Citizen-
Name Address or Title Age ship
- ------------- ------------- --------- ------- --------------
-------------
- ------------- ------------- --------- ------- --------------
-------------
- ------------ ------------- --------- ------- --------------
-------------
<PAGE>
3. Business description. Please describe the business of the
Organization.
================================================================
4. Authority. Please provide the following information
concerning the Organization's authority to subscribe for the
purchase of Units:
4.1. The name(s) of the officer(s), trustee(s) or partner(s)
of the Organization who is (are) authorized to subscribe for the
purchase of Units and who will be effecting the purchase.
=================================================================
- ----------------------------------------------------------------
- -----------------------------------------------------------------
4.2. Indicate by check mark whether permission or
authorization from any person other than those listed in the
answer to Question 4.1 is necessary in order for the organization
to effect the purchase of the Units.
---- ----
Yes No
4.3. If the answer to Question 4.2 is "yes," please provide
the following additional information:
4.3.1. Identify all such persons from whom such
permission or authorization is necessary.
- --------------------------------------------------------------
- -----------------------------------------------------------------
4.3.2. Indicate by check mark whether such permission
or authorization has been obtained.
---- ----
Yes No
4.3.3. Indicate when such permission or authorization was
obtained. (A copy of such authorization must be submitted not later than the
date of execution of a Subscription Agreement relating to the purchase of Units.
In addition, the Company may, in its sole discretion, require that an opinion of
counsel, satisfactory to the Company, be submitted with respect to the
authorizations referred to in this Question 4.)
- ---------------------------------------------------------------
- ----------------------------------------------------------------
4.3.4. If the answer to Question 4.3.2 is "no," indicate what
steps are being taken to obtain such authorization.
===============================================================
5. Investor Suitability Status. Please answer Question 5.1 by marking the
appropriate box in the margin. As indicated below, Questions 5.2, 5.3, 5.4 and
5.5, if applicable, need only be answered if the answer to 5.1 is "No". IF THE
RESPONSES TO QUESTIONS 5.2, 5.3, 5.4 AND 5.5 REQUIRE RESPONSES FOR MORE THAN ONE
PERSON, RESPONSES FOR EACH SUCH PERSON SHALL BE FURNISHED SEPARATELY AND SUCH
RESPONSES SHOULD BE ATTACHED TO THIS QUESTIONNAIRE.
5.1. Does the organization qualify as (a) any of the types of entities
as defined in Rule 501 (A) (1) of Regulation D pursuant to the rules and
regulations of the Securities and Exchange Commission, (b) a private business
development company as defined in Section 202(a)(22) of the Investment Advisers
Act of 1940, or (c) an organization described in Section 501 (c) (3) of the
Internal Revenue Code, corporation, Massachusetts or similar business trust or
partnership, not formed for the specific purpose of acquiring the securities
offered hereby, with total assets in excess of $5,000,000?
---- ----
Yes No
IF YOU ANSWER "YES" TO QUESTION 5.1, PLEASE PROCEED TO QUESTION 7.
5.2. If the Questionnaire is answered on behalf of a corporation or
partnership, indicate by check mark for each shareholder or partner, as the case
may be, such person's individual or joint (together with spouse) net worth:
________ less than $ 50,000
________ $ 50,001 - $100,000
________ $100,001 - $250,000
________ $250,001 - $500,000
________ $500,001 - $ 1,000,000
________ over $ 1,000,000
<PAGE>
5.3. For each person for whom a response is furnished pursuant to
Question 5.2 above, indicate the percentage of such person's net worth which is
in liquid assets (cash, marketable securities or assets readily convertible to
cash) which is in excess of (check highest number applicable):
________ 10% ________ 50%
________ 20% ________ 60%
________ 30% ________ 70%
________ 40% ________ 80%
5.4. If the Questionnaire is answered on behalf of a corporation,
partnership or trust, please provide the following information with respect to
each shareholder or partner, as the case may be:
Income From Income From
Year All Sources Salary
1993 (actual) $__________ $__________
1994 (actual) $__________ $__________
1995 (estimated) $__________ $__________
5.5. If the Questionnaire is answered on behalf of a trust, does the
trust have total assets in excess of $5,000,000 and was the trust not formed for
the specific purpose of acquiring the securities offered hereby, whose purchase
is directed by a "sophisticated person" as described in Question 6?
---- ----
Yes No
IF THE ANSWER TO ANY OF QUESTIONS 5.2 OR 5.4 IS "OVER $1,000,000" AS TO NET
WORTH AND OVER $200,000, AS TO INCOME, PLEASE PROCEED TO QUESTION 7; HOWEVER, IF
YOU ANSWER YES TO QUESTION 5.5 YOU MUST ANSWER ALL OF QUESTIONS 6.
6. Sophistication of decision-maker. Each person whose name
appears in the answer to Question 4.1 above must answer Questions
6.1, 6.2, 6.3 and 6.4. IF MORE THAN ONE INDIVIDUAL IS NAMED IN THE ANSWER TO
QUESTION 4.1, EACH INDIVIDUAL SHOULD ANSWER SEPARATELY AND SUCH ANSWERS SHOULD
BE ATTACHED TO THIS QUESTIONNAIRE.
Name of Person Answering
Questions____________________________________________
6.1 Please list all the educational institutions you have
attended (including colleges, and specialized training schools)
and indicate the dates attended and the degree(s) (if any)
obtained from each.
From To Institution Degree
-
-
-
-
6.2 Please provide the following information concerning
your business experience:
6.2.1. Indicate your principal business experience or other occupations
during the last ten years. (Please list your present, or most recent, position
first and the others in reverse chronological order.)
Name and Address
From To of Employer Position
-
-
-
6.2.2. Describe, in greater detail, your present or most
recent business or occupation, as listed in your answer to
Question 6.2.1. Please indicate such information as the nature
of your employment, the principal business of your employer, the
principal activities under your management or supervision and the
scope (e.g., dollar volume, industry rank, etc.) of such
activities.
==============================================================
==============================================================
<PAGE>
6.2.3. Describe any significant business you engage in
or intend to engage in other than as specified above.
================================================================
- -----------------------------------------------------------------
6.3. Please provide the following information
concerning your financial experience:
6.3.1. Indicate (by check mark) which of the following
categories best describes the extent of your prior experience in the areas of
investment listed below:
Substantial Limited No
Experience Experience Experience
Marketable securities _________ _________ ________
Government Securities _________ _________ _________
Municipal (tax-exempt)
securities _________ _________ _________
Stock options _________ _________ _________
Commodities _________ _________ _________
Real estate programs _________ _________ _________
Securities for which
no market exists _________ _________ _________
Limited partnerships _________ _________ _________
Tax deferred
investments generally _________ _________ _________
6.3.2. For those investments for which you indicated
"substantial experience" above, please answer the following additional questions
by checking the appropriate box:
A. Do you make your own investment decisions with
respect to such investments?
____ Always ____ Frequently
____ Usually ____ Rarely
B. What are your principal sources of investment knowledge
or advice (You may check more than one)
____ First hand experience with industry
____ Financial publication(s)
____ Trade or industry publication(s)
____ Banker(s)
____ Broker(s)
____ Investment Adviser(s) Attorney(s)
____ Accountant(s)
6.3.3. Indicate (by check mark) whether you maintain any of the
following types of accounts over which you, rather than a third party, exercise
investment discretion, and the length of time you have maintained each type of
account.
Securities ___ ___
(cash) Yes No Number of years______
Securities ___ ___
(margin) Yes No Number of years______
Commodities ___ ___
Yes No Number of years______
6.4. Please provide in the space below any additional
information which would indicate that you have sufficient
knowledge and experience in financial and business matters so
that you are capable of evaluating the merits and risks of
investing in restricted securities of an enterprise such as the
Company.
==============================================================
7. Bank References (please include name and address of Bank and
name of an officer):
================================================================
8. Attorney (Name, Firm and Address):
- ----------------------------------------------------------------
- ---------------------------------------------------------------
- ----------------------------------------------------------------
<PAGE>
9. Accountant (Name, Firm and Address):
================================================================
10. By signing this Questionnaire the undersigned hereby
confirms the following statements:
(a) I (we) am (are) aware that the proposed offering of the Units will
involve "restricted securities", as said term is defined in Rule 144 of the
Rules and Regulations promulgated under the Act, and that they, or any interest
therein may not be sold or otherwise transferred unless they have first been
registered under the Act and all applicable state securities laws, or unless an
exemption from such registration provisions is available with respect to any
such resale or transfer.
(b) I (We) acknowledge on behalf of the Organization named below that
any delivery to such Organization of offering materials relating to the Units
prior to the determination by the Company of the suitability of the Organization
as an investor shall not constitute an offer of the Units until such
determination of suitability shall be made, and that the offering materials
shall be returned promptly to the Company upon request.
(c) The foregoing statements are true and accurate to the best of my
(our) information and belief and the Company will be notified promptly of any
changes in the foregoing answers.
- -----------------------------------
Print Name of Organization
By:________________________
Signature of Officer,
Trustee or Partner
By:_________________________________
Signature of Officer, Trustee
or Partner (if second signature is
required)
- ------------------------------------
Print Name of Officer,
Trustee or Partner
- ------------------------------------
Print Name of Officer,
Trustee or Partner (if second
signature is required)
Date:______________________, 1995
Name of Holder ______________________________
Address of Holder ______________________________
------------------------------
Number of Warrant
Shares ______________________________
<PAGE>
The securities represented by this certificate may not be sold, transferred,
pledged, or hypothecated unless aa registration statement under the Securities
Act of 1933, as amended, is in effect with respect thereto or the Company has
received an opinion of counsel, satisfactory to the Company, to the effect that
such registration is not required or that there exists a valid exemption
from such registration.
Warrant Certificate for Purchase of Common Stock
of
Surgical Safety Products, Inc.
(a New York corporation)
This certifies that the person whose name appears above (the "Holder"),
for value received and subject to the provisions hereinafter set forth, shall be
entitled to purchase from Surgical Safety Products, Inc. (the "Company") the
number of shares (the "Warrant Shares") of common stock, $.001 par value, of the
Company ("Common Stock") set forth above at an exercise price ("Exercise Price")
of $1.50 per share (subject to adjustment as hereinafter provided in Section 4
hereof). This Warrant is one of a series of warrants ("Series Warrants")
entitling the holders to purchase in the aggregate, a minimum of 250,000 shares
of Common Stock and a maximum of 2,000,000 shares of Common Stock, which Series
Warrants are being sold pursuant to an offering of a minimum of 100 units and a
maximum of 800 units, each unit ("Unit") consisting of 5,000 shares of Common
Stock and Warrants to purchase 2,500 shares of Common Stock. The offering is
being made pursuant to a Confidential Private Offering Memorandum dated May 30,
1995 of the Company relating to the Units (the "Memorandum"). The Holder has
agreed to purchase ______ or more of the Units pursuant to a subscription
agreement (the "Subscription Agreement") dated May 30, 1995, the terms and
conditions of which, including those relating to disclosures made by the Company
in connection with the sale of the Units, shall apply to this Warrant.
1. Exercise. This Warrant may be exercised during the period commencing
on the Initial Closing Date (as defined in the Memorandum) and expiring as set
forth in Section 8(c) (the "Exercise Period") at any time and from time to time
by the Holder as to the whole or any lesser number of whole Warrant Shares
covered hereby, upon surrender of this Warrant together with the exercise form
attached hereto, duly executed, and accompanied by a letter, signed by the
Holder, containing the representations referred to in Section 3, at the office
of the Company accompanied by payment, in cash or by certified or official bank
check payable to the order of the Company, in the amount of the Exercise Price
hereinabove set forth for the Warrant Shares so purchased.
2. Delivery of Securities. As soon as practicable after
the exercise of this Warrant, in whole or in part, and in any
event within 30 days thereafter, the Company, at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued in the name
of and delivered to the Holder or to such person as the Holder (upon payment by
the Holder of any applicable taxes) may direct, a certificate or certificates
for the number of full Warrant Shares covered hereby, the Holder shall be
entitled to receive a new Warrant of like tenor covering the number of Warrant
Shares with respect to which this Warrant shall not have been exercised.
3. Covenants and Investment Representations of the Holder. The Holder
acknowledges to the Company that (i) the Warrant and the Warrant Shares will not
be registered under the Securities Act of 1933, as amended (the "Securities
Act") or any applicable state securities laws ("Blue Sky Laws") and will be
issued in reliance upon the exemption afforded by Section 4(2) of the Securities
Act for transactions by an issuer not involving any public offering, (ii) any
Warrant Shares issued upon exercise of the Warrant must be held indefinitely
unless a subsequent disposition thereof is registered under the Securities Act
and the Blue Sky Laws or is exempt from such registration and (iii) the
certificates representing the Warrant Shares will bear a legend substantially in
the form set forth below. Whenever the restrictions described in (1) and (ii)
above shall terminate as to any Warrant Shares, the holder thereof shall be
entitled to receive from the Company, without expense, new securities of like
tenor not bearing a restrictive legend. Neither the Warrant nor the Warrant
Shares may be made subject to a security interest, pledged, hypothecated, or
otherwise transferred without an effective registration statement for such
Warrant or Warrant Shares under the Securities Act and the Blue Sky Laws or the
Company having received an opinion of counsel in form and content reasonably
acceptable to it that registration is not required under the Securities Act and
the Blue Sky Laws, or the Company having otherwise notified the Holder in
writing that it has determined that no such registration is required. Any
Warrant Shares issued upon the exercise of this Warrant shall bear the following
legend:
"The securities represented by this certificate may not be sold,
transferred, pledged, or hypothecated unless a registration statement under the
Securities Act of 1933, as amended, is in effect with respect thereto or the
Company has received an opinion of counsel, satisfactory to the Company, to the
effect that such registration is not required or that there exists a valid
exemption from such registration."
<PAGE>
It shall be a condition of exercise that the Holder give such representations
and warranties as the Company shall deem
necessary to assure that the exercise of this Warrant does not involve any
violation of the Securities Act and the Blue Sky Laws.
4. Adjustments. In the event that the Company shall, at any time prior
to the expiration date of this Warrant and prior to the exercise thereof: (i)
declare or pay to the holders of the Common Stock a dividend payable in any kind
of shares of stock of the Company; (ii) change or divide or otherwise reclassify
its Common Stock into the same or a different number of shares with or without
par value, or into shares of any class or classes; (iii) consolidate or merge
with, or transfer its property as an entirety or substantially as an entirety
to, any other corporation; or (iv) make any distribution of its assets to
holders of its Common Stock as a liquidation or partial liquidation dividend;
then, upon the subsequent exercise of this Warrant, the Holder shall receive for
the Exercise Price, in addition to or in substitution for the shares of Common
Stock to which the Holder would otherwise be entitled upon such exercise, such
additional shares of stock or script of the Company, or such reclassified shares
of stock of the Company, or such shares or the securities or property resulting
from such consolidation or merger or transfer, or such distributed assets of the
Company, which the Holder would have been entitled to receive had the Holder
exercised this Warrant prior to the happening of any of the foregoing events or,
at the discretion of the Board of Directors of the Company, the Board shall make
such alternate provisions as in the judgment of the Board shall be fair and
reasonable including, without limitation, an adjustment in the exercise price of
this Warrant which, in the judgment of the Board would, as nearly as may be
practicable, preserve the economic position of the Holder. The Company will mail
to the Holder a notice at least 10 days prior to the date or expected date of
any dividend or distribution or the date or expected date on which any such
reclassification, consolidation, merger, transfer of property, partial
liquidation or liquidation is to take place describing the material terms and
conditions of any such transaction.
5. Registration Rights. Any Warrant Shares issued on the
exercise of this Warrant shall be subject to, and have the
benefit of, the registration rights set forth in the Subscription Agreement.
6. Notices. All notices and other communications from the
Company to the Holder shall be mailed by first class registered or certified
mail, postage prepaid, to such address as may be furnished to the Company in
writing by the Holder, or, until an address is furnished, to and at the address
of the last holder of this Warrant who has so furnished an address to the
Company.
7. Reservation of Common Stock. The Company will at all times reserve
and keep available, solely for issuance and delivery upon exercise of this
Warrant, all Warrant Shares from time to time issuable upon the exercise of this
Warrant at the time outstanding. All Warrant Shares issuable upon exercise of
the Warrant shall be duly authorized and, when issued and paid for in full,
validly issued, fully paid and non-assessable with no liability on the part of
the Holder thereof.
8. Miscellaneous. (a) This Warrant does not confer upon
the Holder any right whatsoever as a stockholder of the Company.
(b) Upon the exercise of this Warrant, the exercise
form attached hereto must be duly executed.
(c) This Warrant shall be void unless exercised prior to 5:00
p.m., Eastern Daylight Time, on the third anniversary of the Initial Closing
Date.
(d) This document may not be altered or amended except in
writing. The Series Warrants, including this Warrant, may be amended and the
provisions of the Series Warrants waived with the consent of the Company and the
holders of more than 50% of the Series Warrants then outstanding (computed on
the basis of the number of Warrant Shares, regardless of exercise price, covered
by such Warrants), provided that without the consent of the Holder of this
Warrant, this Warrant may not be amended so as to shorten the Exercise Period or
increase the Exercise Price. Any amendment or waiver executed pursuant to the
preceding sentence shall be binding upon all holders of the series Warrants at
the time of such amendment or waiver, and any succeeding holder or holders of
each of the Series Warrants, whether or not consenting thereto. In addition,
this Warrant may be amended by agreement of the Company and the Holder.
(e) The provisions of this Warrant shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors and assigns.
<PAGE>
(f) This Warrant shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York applicable to
contracts made and to be performed entirely therein.
Witness the seal of the Company and the signature of its duly
authorized officer.
Dated:________________, 1995 SURGICAL SAFETY PRODUCT, INC.
Accepted and Agreed to: By:__________________________
________________________________ Name:
Signature of Holder Title:
Exercise Form
(To Be Executed if Owner Desires to Exercise the Warrant)
TO: Surgical Safety Products, Inc.
The undersigned hereby exercises, according to the terms and conditions
thereof, the number of Warrant Shares set forth below, pursuant and subject to
the Warrant evidenced by the within Warrant Certificate, and herewith makes
payment of the purchase price in full. Kindly issue all shares to the
undersigned and deliver them to the undersigned at the address stated below. If
such number of shares shall not be all of the shares purchasable under the
within Warrant Certificate, please issue a new Warrant Certificate of like tenor
for the balance of the remaining shares purchasable hereunder to be delivered to
the undersigned at the address stated below.
Name ______________________________
Address ______________________________
------------------------------
Dated: Signature ______________________________
Signature Guarantee
Number of Warrant Shares
for which exercise is made _____________________________________
Total Exercise Price for
all Warrant Shares being purchased _____________________________
<PAGE>
EXHIBIT D
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
SARASOTA, FLORIDA
INDEPENDENT AUDITORS' REPORT,
CONSOLIDATED FINANCIAL STATEMENTS
AND
SUPPLEMENTARY INFORMATION
DECEMBER 31, 1994
<PAGE>
CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT 1
CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheet 2
Statements of Operations 3
Statements of Changes
in Stockholders' Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 7
CONSOLIDATED SCHEDULES OF OPERATING EXPENSES 11
<PAGE>
KERKERING
BARBERIO & CO., P.A.
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT
The Stockholders
Surgical Safety Products, Inc.
Sarasota, Florida
We have audited the accompanying consolidated balance sheet of Surgical Safety
Products, Inc. and subsidiary as of December 31, 1994, and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for each of the years in the two-year period then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards required that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Surgical Safety Products, Inc. and subsidiary as of December 31, 1994, and the
consolidated results of operations and cash flows for each of the years in the
two-year period then ended in conformity with generally accepted accounting
principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplementary information included in the
consolidated schedules of operating expenses is presented for purposes of
additional analysis and is not a required part of the basic financial
statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/Kerkering Baberio & Co.
Certified Public Accountants
Sarasota, Florida May 2, 1995
1858 Ringling Blvd./Sarasota, Florida 34236/813-365-4617
1001 9th Avenue West/Brandenton, Florida 34205/813-746-4040
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1994
ASSETS
CURRENT ASSETS
Cash $ 39,695
Receivables:
Trade $ 2,907
Other 1,054
---------
Total receivables 3,961
Prepaid expense 318
Inventory 37,364
--------
Total current assets 81,338
FURNITURE AND EQUIPMENT 146,589
LESS: Accumulated depreciation 19,794
---------
Furniture and equipment, net 126,795
OTHER ASSETS:
Excess of cost over net assets acquired, net 275,430
Organization cost, net 15,523
Trade names, net 6,987
Patent costs, net 9,188
Deposits 500
--------
Total other assets 307,627
--------
TOTAL ASSETS $515,761
========
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994 AND 1993
COMMON STOCK
Balances - December 31, 1992 $ 39,980
Issuance of Surgical Safety Products, Inc.
no par common stock - 1,830 shares 131,500
Initial issuance of Sheffeld Acres, Inc.
$.001 par value common stock - 8,936,440 shares 8,936
Net loss ________
Balances - December 31, 1993 180,416
Issuance of Surgical Safety Products, Inc. no par
common stock - 2,600 shares 358,875
Acquisition of Sheffeld Acres, Inc. $.001 par value,
common stock for treasury - 6,749,152 shares
Reverse merger between Surgical Safety Products, Inc.
and Sheffeld Acres, Inc. (530,355)
Issuance of common stock - 25,000 shares 25
Net loss ________
Balances - December 31, 1994 $ 8,961
========
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Long-term debt - current position $220,068
Note payable to stockholder 66,990
Accounts payable 52,283
Accrued expenses 20,206
--------
Total current liabilities 359,547
LONG-TERM DEBT, net of current portion 37,726
--------
Total liabilities 397,273
STOCKHOLDERS' EQUITY
Common stock - $.001 par value; 20,000,000
shares authorized; 8,961,440 shares
issued and outstanding 8,961
Additional paid-in capital in excess of par 520,330
Deficit (410,803)
--------
118,488
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $515,761
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994 AND 1993
1994 1993
---- ----
REVENUE
Medical services fees $ 115,7791
Medical products sales 4,8988 $ 24,344
------ ---------
120,689 24,344
---------- ---------
COSTS
Direct cost of medical services 63,600
Cost of medical products 1,437 17,436
--------- ---------
65,037 17,436
--------- ---------
GROSS PROFIT 55,652 6,908
OPERATING EXPENSES 286,954 155,026
--------- ---------
LOSS FROM OPERATIONS (231,302) (148,118)
OTHER INCOME (EXPENSE)
Interest income 892
Interest expense (15,680) _________
Loss before income taxes (246,090) (148,118)
Income taxes _________ _________
NET LOSS $(246,090 $(148,118)
========= ---------
NET LOSS PER SHARE $ (.028) $ (.017)
--------- ---------
The accompanying notes are an integral
part of these financial statements.
<PAGE>
ADDITIONAL TOTAL
PAID-IN TREASURY STOCKHOLDERS'
CAPITAL DEFICIT STOCK EQUITY
$ - $ (16,595) $ - $ 23,38
131,500
8,936
________ (148,118) _________ (148,118)
------------------ ---------
(164,713) - 15,703
358,875
(35,000) (35,000)
495,355 35,000 -
24,975 25,000
________ (246,090) _________ (246,090)
--------- ---------
$520,330 $(410,803) $ - $ 118,488
======== --------- ----------------- ---------
The accompanying notes are an integral
part of these financial statements.
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994 AND 1993
CASH FLOWS FROM OPERATING ACTIVITIES: 1994 1993
---- ----
Net loss $(246,090) $(148,118)
Adjustments to reconcile net loss to cash used in operating activities:
Deprecation and amortization 20,814 6,852
Decrease (increase) in operating assets:
Receivable 10,442 (14,403)
Inventory (5,285) (32,078)
Deposits 295
Prepaid expense (318)
Increase in operating liabilities:
Accounts payable 44,361 8,329
Accrued expenses 19,799
-------
Total adjustments 89,813 (31,005)
------- --------
Net cash used in operating expenses (156,277) (179,123)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Assets acquired and liabilities assumed by
wholly-owned subsidiary:
Furniture and equipment (115,150)
Trade name (5,000)
Note and accounts payable 37,989
Excess of cost over net assets
acquired (248,369)
---------
Cost of net assets acquired (330,530)
Less: Promissory note issued 229,725
--------
Cash disbursed at closing (100,805)
Purchase of treasury stock (35,000)
Furniture and equipment purchased (300) (22,367)
Intangible assets capitalized (44,834) (17,013)
--------- --------
Net cash used in investing activities (180,939) (39,380)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stockholder loan 85,164 80,000
Repayment of stockholder loans (95,174)
Proceeds from issuance of common stock 383,875 140,436
Repayment of long-term debt (9,920)
--------
Net cash provided by financing
activities 360,945 220,436
------- -------
INCREASE IN CASH 23,729 1,933
CASH AT BEGINNING OF YEAR 15,966 14,033
-------- ------
CASH AT END OF YEAR $ 39,695 $15,966
======== =======
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
YEAR ENDED DECEMBER 31,1994
Supplemental Schedule of Non-Cash Activities
Effective November 28, 1994 Surgical Safety Products, Inc. (SSP) was merged into
Sheffeld Acres, Inc. (Sheffeld) and the assets and liabilities of the companies
were combined. The merger was completed through an exchange of 315.632 shares of
Sheffeld stock, previously purchased by SSP for 35,000 for each outstanding
share of SSP stock.
The accompanying notes are an integral part of these financial statements.
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,1994
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activities
Surgical Safety Products, Inc. is engaged in medical products development and
medical products sales primarily to the medical community. Its wholly-owned
subsidiary, Women's Diagnostic Center of Sarasota, Inc., which was incorporated
on September 28, 1994, operates a diagnostic clinic specializing in women's
health.
Merger
On November 28, 1994 Surgical Safety Products, Inc. (SSP), a Florida
corporation, merged into Sheffeld Acres, Inc. (Sheffeld), a New York corporation
which had never commenced operations. The merger was approved by the
stockholders of both corporations on that date. Subsequent to the merger the
name of the Company was changed to Surgical Safety Products, Inc.
Prior to the merger, SSP acquired 6,749,152 shares of Sheffeld stock from
Sheffeld stockholders for $35,000. At the time of the merger each of the 21,383
outstanding shares of SSP stock were exchanged for approximately 315.632 shares
of the previously acquired Sheffeld stock. As a result, the prior SSP
stockholders held approximately 75% of the outstanding shares of Sheffeld stock.
This transaction represents a reverse acquisition and has been recorded at
historical cost. Therefore, the accompanying financial statements include the
activity of Surgical Safety Products, Inc. and Sheffeld Acres, Inc. prior to the
merger of the two entities.
Inventory
Inventory is stated at the lower cost (first-in, first-out) or market (net
realizable value).
Intangible Assets
Intangible assets subject to amortization include the excess of cost over net
assets acquired, organization costs, trade names and patent costs. Organization
costs are being amortized on a straight-line basis over five years. Patent costs
are being amortized on a straight-line basis over seventeen years from the
granting of the patent. The other assets are being amortized on a straight-line
basis over fifteen years.
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31,1994
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
The Company follows Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Incom Taxes". Under the asset and liability method of SFAS 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under SFAS 109, the effect
on the deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
Net Loss Per Share
Net loss per share has been computed by dividing net loss by the weighted
average number of shares outstanding during each year. Common stock equivalents
have not ben included in the computation of weighted average number of shares
outstanding in both 1994 and 1993 since the effect would have been antidilutive.
NOTE 2 - ACQUISITION
On September 28, 1994, the Company's wholly-owned subsidiary, Women's Diagnostic
Services, Inc., was incorporated and immeadiately acquired certain assets of
Women's Ambulatory Service, Inc. In exchange for cas and a promissory note. The
purchase price was allocated as follows:
Assets acquired:
Furniture and equipment $ 115,150
Trade name 5,000
---------
120,150
Liabilities assumed:
Note payable (14,394)
Accounts payable (23,595)
(37,989)
Net assets acquired 82,161
Execess of cost over net assets acquired 248,369
--------
Purchase price and filing fees $ 330,530
=========
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31,1994
NOTE 2 - ACQUISITION (CONTINUED)
The acquisition was completed through the payment of $100,805 in cash and the
issuance of a promissory note for $229,725 which is described in Note 3.
Women's Ambulatory Services, Inc. had been in business in the
same general location for five years prior to the acquition. The
company's taxable income for the year prior to acquisition was in
excess of $74,000.
NOTE 3 - LONG-TERM DEBT
Long-term debt consist of the following:
Promissory note payable to Women's
Ambulatory Services, Inc.; maturing on January 15, 1996, payable in
installments of $100,000 on January 15, 1995 and April 15, 1995, and $40,000 on
January 15, 1996, each such installment includes interest at 8% per annum. The
two $100, 000 payments were made with funds advance to the Company
by its principal stockholder in 1995. $229,725
Note payable to an individual in monthly
payments of $1,005 including interest at 7% per
annum, maturing in December 1995 11,615
Note payable for equipment in monthly
payments of $1,573 including interest at 10%
per annum, maturing in November 1995 16,454
--------
257,794
LESS: Current portion 220,068
Non-current portion $ 37,726
========
Maturities of long term debt are as follows:
Year Ending
December 31
1995 $220,068
1996 37,726
--------
$257,794
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31,1994
NOTE 4 - RELATED PARTY TRANSACTION
At December 31, 1994, the Company was indebted to a stockholder in the amount of
$66,990. The indebtedness is payable on demand and bears interest at prime plus
2% (aggregating 10%) at December 31, 1994. Interest on the loan for 1994
amounted to $6,513.
NOTE 5 - STOCK OPTION PLANS
On July 21, 1994 the Company adopted two stock option plans. Under one plan
7,890,800 shares of common stock are reserved for the paticipating employees and
directors of the plan (Employee's Plan). Under the other plan 1,578, 160 shares
of common stock are reserved for outside business consultants and business
advisors of the plan (consultant's Plan). Both plans provide that options may be
exercised only after two years from the date of grant but not later than seven
years from date of grant. Prior to the exercise of any optiosn, the Company is
required to file a Form S-8 with the Securities Exchange Commission to register
the shares.
The following summarizes option transactions outstanding at December 31, 1994:
Date Options Exercise Price
Granted Granted Per Share
Employees' Plan July 21, 1994 4,876,483.5 $.31563
September 21, 1994 157,815.0 .31563
Consultants' Plan July 21, 1994 388,724.9 $.31563
NOTE 6 - INCOME TAXES
The Company has net operating loss carryforwards of approximately $411,000 for
book purposes and $304,000 for income tax purposes which expire during the years
2007 through 2009. The 1994 and 1993 tax benefits relating to the losses
incurred in each year amounted to $77,000 and $40,000, respectively. Based on
the Company's financial history, there is no basis to conclude the tax benefits
will be realized. Accordingly, valuation allowances have been provided for the
entire tax benefit in each year.
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
CONSOLIDATED SCHEDULES OF OPERATING EXPENSES
YEAR ENDED DECEMBER 31,1994 AND 1993
1994 1993
---- ----
Accounting and legal $ 20,429 $ 5,979
Advertising 21,460 11,961
Contract labor 26,042 6,030
Meetings/conventions 9,368 10,398
Donations 120
Depreciation and amortization 20,814 6,852
Salaries/payroll taxes 70,629 61,627
Entertainment 5,069 157
Freight 931
Insurance 10,085 1,566
Leased equipment 3,745 420
General and administrative 34,059 21,015
Rent 14,189 5,280
Repairs and maintenance 1,097
Research and development 22,258 1,861
Supplies 7,329
Taxes 1,643 5,884
Telephone 9,467 5,813
Travel 8,220 10,183
----- ------
$ 286,954 $ 155,026
======= =======
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
SARASOTA, FLORIDA
ACCOUNTANTS' COMILATION REPORT,
CONSOLIDATED FINANCIAL STATEMENTS
AND
SUPPLEMENTARY INFORMATION
MARCH 31, 1995
(UNAUDITED)
<PAGE>
CONTENTS PAGE
ACCOUNTANTS' COMILATION REPORT 1
CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheet 2
Statement of Operations 3
Statement of Changes in Stockholders' Equity 4
Statement of Cash Flows 5
Notes to Financial Statements 6
CONSOLIDATED SCHEDULE OF OPERATING EXPENSES 10
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
MARCH 31, 1995
(UNAUDITED - SEE ACCOUNTANTS' COMILATION REPORT)
ASSETS
CURRENT ASSETS
Cash $ 13,742
Receivables:
Trade $19,692
Other 651
Total Receivables 20,343
Inventory 35,883
Prepaid Expense 215
-------
Total current assets 70,183
FURNITURE AND EQUIPMENT 209,409
LESS: Accumulated depreciation 29,197
Furniture and equipment, net 180,212
OTHER ASSETS
Excess of cost over net assets acquired,
net 270,744
Organization cost, net 14,673
Trade names, net 6,864
Patent costs, net 9,042
Deferred financing costs 5,000
Deposits 500
--------
Total other assets 306,823
TOTAL ASSETS $557,218
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Long-term debt - current portion $163,558
Note payable to stockholder 221,990
Accounts payable 69,799
Accrued expenses 6,824
--------
Total current liabilities 462,171
LONG-TERM DEBT, net of current portion 52,407
-------
Total liabilities 514,578
STOCKHOLDERS' EQUITY
Common stock - $.001 par value; 20,000,000
shares authroized; 8,989,818 shares
issued and outstanding 8,980
Additional paid-in capital in excess of par 539,689
Deficit (506,029)
---------
42,640
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $557,218
The accompanying notes are an integral part of these financial statements.
<PAGE>
KERKERING BARBERIO & CO., P.A.
CERTIFIED PUBLIC ACCOUNTANTS
ACCOUNTANTS' COMILATION REPORT
The Stockholders
Surgical Safety Products, Inc.
Sarasota, Florida
We have comiled the accompanying consolidated balance sheet of Surgical Safety
Products, Inc. and subsidiary as of March 31, 1995, the related consolidated
statements of operations and cash flows for the three months then ended and the
accompanying supplementary consolidated schedule of operating expenses, which is
presented only for supplementary analysis purposes.
A comilation is limited to presenting in the form of consolidated financial
statements information that is the representation of management and does not
include evaluation of the support for the assumptions underlying the
transactions. We have not audited or reviewed the accompanying consolidated
financial statements and, accordingly, do not express an opinion or any other
form of assurance on them.
/s/ Kerkering Barberio
Certified Public Accountants
Sarasota, Florida
May 23, 1995
1858 Ringling Blvd./Sarasota Florida 34236/813-365-4617
1001 9th Avenue West/Bradenton, Florida 34205/813/746-4040
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1995
(UNAUDITED - SEE ACCOUNTANTS' COMILATION REPORT)
REVENUE
Medical services fees $ 122,589
Medical products sales 2,139
-------
Total revenue 124,728
COSTS
Direct cost of medical services 64,726
Cost of medical products sold 611
Total costs 65,337
GROSS PROFIT 59,391
OPERATING EXPENSES 147,450
LOSS FROM OPERATIONS 88,059
OTHER INCOME (EXPENSES)
Interest income 47
Interest expense (1,785)
Miscellaneous income 571
Other income (expense), net (7,167)
Loss before income taxes (95,226)
Income taxes -
NET LOSS $ (95,226)
==========
NET LOSS PER SHARE $ (.011)
==========
The accompanying notes are an integeral part of these financial statements.
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
CONSOLIDATED STOCKHOLDERS' EQUITY
MARCH 31, 1995
(UNAUDITED - SEE ACCOUNTANTS' COMILATION REPORT)
COMMON STOCK
Balances - December 31, 1994 $ 8,961
Issuance of common stock - 19,378 shares 19
Net loss -
Balances - March 31, 1995 $ 8,980
=======
ADDITIONAL TOTAL
PAID-IN DEFICIT STOCKHOLDERS'
CAPITAL EQUITY
$ 520,330 $ (410,803) $ 118,488
19,359 - 19,378
- (95,226) (95,226)
------- --------- ---------
$ 539,689 $ (506,029) $ 42,640
========= =========== =========
The accompanying notes are an integrl part of theses financial statements.
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994 AND 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(95,226)
Adjustments to reconcile net loss
cash used in operating activities:
Deprecation and amortization 15,208
Decrease (increase) in operating assets:
Receivables (14,403)
Inventory 1,481
Prepaid expense 318
Increase in operating liabilities:
Accounts payable 44,361
Accrued expenses (13,382
-------
Total adjustments 18,922
-------
Net cash used in operating activities (76,304)
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Furniture and equipment purchansed (2,820)
Deferred financing costs (5,000)
Net cash used in investing activities (7,820)
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stockholder loan 155,000
Proceeds from issuance of common stock 5,000
Repayment of long-term debt (101,829)
Net cash provided by financing
activities 58,171
DECREASE IN CASH (23,953)
CASH AT BEGINNING OF PERIOD 39,695
CASH AT END OF PERIOD $ 13,742
========
Supplemental Schedule of Non-Cash Activities:
During the period, the Company issued 14,378 shares of
common stock to a creditor in payment of amounts due. Also, the company entered
into a capital lease agreement for a medical diagnostic instrument with a value
of $60,000.
The accompanying notes are an integral part of these financial statements.
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activities
Surgical Safety Products, Inc. (Company) is engaged in medical products
development and medical products sales primarily to the medical community. Its
wholly-owned subsidiary, Women's Diagnostic Center of Sarasota, Inc., which was
incorporated on September 28, 1994, operates a diagnostic clinic specializing in
women's health.
Inventory
Inventory is stated at the lower cost (first-in, first-out) or market (net
realizable value).
Intangible Assets
Intangible assets subject to amortization include the excess of cost over net
assets acquired, organization costs, trade names and patent costs. Organization
costs are being amortized on a straight-line basis over five years. Patent costs
are being amortized on a straight-line basis over seventeen years from the
granting of the patent. The other assets are being amortized on a straight-line
basis over fifteen years.
Income Taxes
The Company follows Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Incom Taxes". Under the asset and liability method of SFAS 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under SFAS 109, the effect
on the deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
Net Loss Per Share
Net loss per share has been computed by dividing net loss by the weighted
average number of shares outstanding during each year. Common stock equivalents
have not ben included in the computation of weighted average number of shares
outstanding in both 1994 and 1993 since the effect would have been antidilutive.
<PAGE>
NOTE 2 - LONG-TERM DEBT
Long-term debt consist of the following:
Promissory note payable to Women's
Ambulatory Services, Inc.; maturing on January 15, 1996, payable in
installments of $100,000 on January 15, 1995 and April 15, 1995, and $40,000 on
January 15, 1996, each such installment includes interest at 8% per annum. The
two $100, 000 payments were made with funds advance to the Company
by its principal stockholder in 1995. $135,062
Capital lease obligation to stockholder, payable monthly at $1,511
through February 2000, with an additional $6,000 due with the
final payment (see Note 3) 60,000
Note payable to an individual in monthly
payments of $1,005 including interest at 7% per
annum, maturing in December 1995 8,787
Note payable for equipment in monthly
payments of $1,573 including interest at 10%
per annum, maturing in November 1995 12,116
--------
215,965
LESS: Current portion 163,558
Non-current portion $ 52,407
========
Maturities of long term debt are as follows:
Twelve months ending
March 31
1996 $163,558
1997 8,584
1998 10,430
1999 12,674
2000 20,719
$215,965
NOTE 3 - RELATED PARTY TRANSACTION
At December 31, 1994, the Company was indebted to a stockholder in the amount of
$221,990 related to advances made to the Company by him. The indebtedness is
payable on demand and bears interest at prime plus 2% (aggregating 10%) at March
31, 1995. Interest on the loan for the three months ended March 31, 1995
amounted to $4,254.
During 1995, the Company's primary stockholder personally leased a medical
diagnostic instrument at the request of the Company's subsidiary. The
stockholder in turn leased the instrument to the Company's subsidairy at an
amount of twelve percent in excess of his monthly payment. The lease arrangement
between the stockholder and the Company's subsidiary has been recorded as a
capital lease with the related liability included in long-term debt (see Note
2).
NOTE 4 - STOCK OPTION PLANS
On July 21, 1994 the Company adopted two stock option plans. Under one plan
7,890,800 shares of common stock are reserved for the paticipating employees and
directors of the plan (Employee's Plan). Under the other plan 1,578,160 shares
of common stock are reserved for outside business consultants and business
advisors of the plan (Consultant's Plan). Both plans provide that options may be
exercised only after two years from the date of grant but not later than seven
years from date of grant. Prior to the exercise of any optiosn, the Company is
required to file a Form S-8 with the Securities Exchange Commission to register
the shares.
The following summarizes option transactions outstanding at March 31, 1995:
Date Options Exercise Price
Granted Granted Per Share
Employees' Plan July 21, 1994 4,876,483.5 $.31563
September 21, 1994 157,815.0 .31563
Consultants' Plan July 21, 1994 388,724.9 $.31563
January 24, 1995 500.0 .90
<PAGE>
NOTE 5 - INCOME TAXES
The Company has net operating loss carryforwards of approximately $506,000 for
book purposes and $400,000 for income tax purposes
which expire during the years 2007 through 2010. The tax benefit
relating to the losses incurred during the three month period
ended March 31, 1995 amounted to $20,600. Based on the Company's
financial history, there is no basis to conclude the tax benefits
will be realized. Accordingly, valuation allowance has been
provided for all tax benefit to date.
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
CONSOLIDATED SCHEDULES OF OPERATING EXPENSES
THREE MONTHS ENDED DECEMBER 31, 1995
Accounting and legal $ 19,201
Advertising 7,452
Contract labor 951
Meetings/conventions 7,459
Donations 299
Depreciation and amortization 15,208
Salaries/payroll taxes 37,473
Entertainment 1,574
Freight 108
Insurance 1,975
Leased equipment 791
General and administrative 12,691
Rent 10,821
Repairs and maintenance 9,814
Supplies 9,941
Taxes 4,224
Telephone 7,128
Travel 340
$ 147,450
=======
<PAGE>
EXHIBIT 6.19
SURGICAL SAFETY PRODUCTS, INC.
SUPPLEMENT
TO
PRIVATE OFFERING MEMORANDUM
DATED MAY 30, 1995
Dated: October 30, 1995
Sarasota, Florida
<PAGE>
GENERAL
The purpose of supplementing the Confidential Private Offering
Memorandum of Surgical Safety Products, Inc. (the "Company") dated May 30, 1995
(the "POM") is to reflect new developments concerning the Company's intentions
with respect to potential acquisitions, the proposed sale of a majority interest
in SSP's wholly owned subsidiary, Women's Diagnostic Center, Inc. ("WDC"), the
redirection in SSP's marketing focus, and as a result of the foregoing, the
restructuring of the terms of this offering, the persons eligible to invest
therein and the use of proceeds thereof. In addition, updated financial and
other information is included herewith. Unless otherwise specified all
capitalized terms utilized herein shall have the meanings ascribed to them in
the POM. As to supplemented, the term POM shall include this supplement. Except
as otherwise set forth in this supplement, all investors are referred to the
POM, the terms and conditions of which are incorporated herein and form a part
hereof. TERMS OF THE OFFERING
The Company is offering hereunder for sale on a "best-efforts" basis a
minimum of ten (10) Units (the Minimum Offering" - $250,000) and a maximum of
forty (40) Units (the "Maximum Offering" - $1,000,000), each Unit consisting of
(a) 50,000 shares of Common Stock, and (b) three (3) year warrants to purchase
25,000 shares of Common Stock at an exercise price of $1.50 per share. The
offering price pre Unit is $25,000 although the Company reserves the right, in
its sole and exclusive discretion, to accept subscriptions in lesser amounts as
it shall determine. The Company also reserves the right, in its sole and
exclusive discretion, to increase the Maximum Offering to 100 Units -
$2,500,000, in which event the additional net proceeds thereof will be allocated
amongst the uses described herein as the Company shall determine. If
subscriptions for the Minimum Offering have not been received by March 31, 1996
(or June 30, 1996 if the offering has been extended), no Units will be sold and
all funds will be refunded promptly, with interest, less the fees and expenses
of Barnett Bank where all subscription funds will be kept in a special,
segregated, interest-bearing custodial account in the name of the Company, or a
pro-rata basis. As a result of the restructuring of this offering and the
disclosures contained herein, all investors who have tendered subscription funds
pursuant to the POM will be given a right of recission and the opportunity to
reinvest if they so qualify.
Units will only knowingly be offered and sold to "accredited investors"
as defined in Regulation D under the Securities Act of 1993, as amended (the
"Act") (see pages 11-12 of the POM for the definition of an "accredited
investor").
The Company believes the receipt of proceeds from the
Maximum Offering will be adequate to fund its operations for at least eight (8)
months. If the Company only receives proceeds from the Minimum Offering, or
amounts significantly less than the Maximum Offering, then it will not have
sufficient capital to fund its operations for more than several months absent an
infusion of capital from existing shareholders or other third parties, of which
there is no assurance. BUSINESS
The Company has determined that its best interests in the near term
will be served by concentrating its time, attention and resources to the
development and distribution of its proprietary product line. At this stage in
its development, the acquisition and integration of additional businesses, the
management teams associated therewith and the management time related to
operating non-core businesses has been determined to be a distraction from the
founding philosophy of the Company. Although attractive acquisition
opportunities may exist and the future of non-core businesses, such as WDC, may
prove to be profitable, senior management of the Company believe that their
efforts in the immediate future should be concentrated on the Company's core
business of researching, developing, producing and marketing proprietary
products designed to create and maintain a safe surgical environment for medical
and hospital staff, healthcare workers and patients.
As a result of the foregoing, the Company has (a) abandoned its efforts
to acquire the Plastics Company or any other entity, (b) entered into a
preliminary non-binding letter of intent with All Women's Center for Radiology
("AWCR") for the purchase of a 51% interest in WDC, and (c) intends to market
its core products, under the trade name "Compliance Plus(TM)", directly,
utilizing regional sales managers employed by, and under the direction and
control of, the Company, instead of licensing the rights thereto in exchange for
royalties.
With respect to WDC, the offer from AWCR is to pay the Company an
amount which represents a majority of the Company's original investment. The
amount would be paid over a 12-month period, and reflects a 51% interest in a
new entity which will own the WDC assets and will be managed by AWCR. Pursuant
to such proposal, each sise will control 50% of the seats on the Board of
Directors. If effectuated, the Company will maintain a 49% equity interest in
the new entity, thus having cashed out its investment, while enabling management
to concentrate its efforts on its core business as described above. Should this
transaction be consummated, the Company will not consolidate the financial
statements of WDC which accounted for 87.2% of the revenues and 69.5% of the
total assets of the Company for the year ended December 31, 1994. There is no
assurance that this transaction will be consummated or if consummated, on terms
advantageous to
<PAGE>
the Company.
With respect to the marketing of its "Compliance Plus(TM)" package of
seven (7) disposable and two (2) reusable products, the Company intends, with
appropriate financing, to hire five regional sales managers and at least two
occupational safety experts as full time employees to assist in penetrating the
market for such products. Such personnel will be assisted by a newly developed
video-education marketing campaign, by advertising and direct mail and continued
medical conferences. Those products which are not compatible with the
"Compliance Plus" package will be licensed to third parties or sold outright.
The Company will not have sufficient funds from the Minimum Offering to hire any
new personnel and will be required, in such event, to rely exclusively on
advertising, direct mail and the efforts of existing personnel. Even if proceeds
from the Maximum Offering are received, it is anticipated that only two (2) full
time sales managers will be able to be employed. The Company believes that
qualified personnel are available for hire upon receipt of funding therefor.
Effective as of August 30, 1995, the Company entered into an Advisory
Services Agreement with Stenton Leigh Capital Corp., Boca Raton, Florida ("SL")
pursuant to which SL was retained to assist the Company in its capitalization
efforts, financing restructuring and business expansion program. A copy of this
agreement is available for inspection by any investor requesting same. CHANGES
IN EXECUTIVE PERSONNEL
Effective as of October 2, 1995, Bonnie S. Gilmore, age 34, was elected
Chief Financial Officer and Director of Investor Relations of the Company. In
such capacity, she will have responsibility for managing the Company's finances,
acting as liaison to independent outside accountants, attorneys, directors and
shareholders. Prior to joining the Company, Ms. Gilmore was, from December 1992
to September 1995, Chief Financial Officer/Vice President of Executive
Securities, Inc., a securities broker dealer. Prior thereto and from December
1991 to November 1992, she was Vice President and Assistant Operations Director
of Integrity Securities Group, Sarasota, Florida, a securities broker-dealer.
Prior thereto and for the period December 1989 through September 1991, Ms.
Gilmore was District Manager of Crossland Savings, F.S.B., Sarasota, Florida, a
Federal Savings Bank.
Effective as of September 30, 1995, Chris J. Norcia resigned from the
Company to pursue other ventures.
USE OF PRODUCTS
The gross proceeds of the Minimum Offering is the sum of $250,000 and
the gross proceeds from the Maximum Offering is the sum of $1,000,000. Such
amounts are anticipated to be expended, as follows:
Minimum Offering Maximum Offering
Amount Approx.% Amount Approx.%
Patent Research &
Development (8 Pro-
ducts-Maximum
Offering: 4 Products-
Minimum Offering $ 60,000 24 $120,000 12
Production &
Marketing
(Existing
Products) $ 40,000 16 $200,000 20
Additional
Personnel - - $200,000 -
Expansion of
Women's Dia-
gnostic
Services 0 0 $119,000 12
Working
Capital $ 79,000 32 $150,000 15
Repayment of
Debt (to an
Affiliate) 0 0 $ 87,500 9
Expenses of Offering
Legal $ 32,500 32,500
Accounting 15,000 15,000
Printing 2,500 7,500
Blue Sky 3,500 3,500
Sales Com-
missions 17,500 71,000 28 65,000 123,500 12
------ -- ------ ------- --
TOTAL $250,000 100% $1,000,000 100%
-------- --------- ---------- ----
<PAGE>
MISCELLANEOUS
As a result of the restructuring of the terms of this offering, each
Unit will increase from 5,000 shares of Common Stock to 50,000 shares of Common
Stock and from warrants to purchase 2,500 shares of Common Stock to warrants to
purchase 25,000 shares of Common Stock. Therefore, the number of shares of
Common Stock as set forth throughout the POM will change,
depending upon whether the Minimum or the Maximum Offering is
effected. Investors are referred to the heading in the POM
entitled:
Cover Page (P.ii)
Summary (P.4 & 5)
Balance Sheet Data (P.8)
Risk Factors (P.26)
Capitalization (P.32)
Dilution (P.34 & 35)
Principal Stockholders (P.70 & 71)
Description of
Securities (P.75 & 76)
for the places within the POM that will change accordingly. If any investor
requires assistance in analyzing these numbers, the Company and its accountants
are pleased to provide assistance.
FINANCIAL STATEMENTS
Interim financial statements for the fiscal quarter ended September 30,
1995 are attached hereto together with a consolidated income statement for the
nine months ended September 30, 1995.
<PAGE>
SURGICAL SAFETY PRODUCTS, INC., AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1995
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 13,582
Receivables:
Trade $56,696
Other 32,831
Total Receivables 89,527
Inventory 38,650
Total Current Assets $141,759
FURNITURE AND EQUIPMENT $215,288
LESS: Accumulated depreciation 39,921
Furniture and equipment, net 175,367
OTHER ASSETS
Excess of cost over net
assets acquire, net 262,755
Organization costs, net 17,945
Trade names, net 2,530
Patent costs, net 8,964
Deferred financing costs 45,215
Deposits 500
---
Total other assets 337,909
TOTAL ASSETS $655,035
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES $
Long-term debts-current portion 99,983
Note payable to stockholder 391,990
Accounts payable 142,291
Accrued expenses 23,333
--------
Total current liabilities $657,597
STOCKHOLDERS' EQUITY
Common stock-$.001 par value;
20,000,000 shares authorized;
8,980,818 shares issued and
outstanding 9,017
Additional paid-in capital in
excess of par 577,152
Deficit (588,731)
( 2,562)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $655,035
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
CONSOLIDATED INCOME STATEMENT AND
SUBSIDIARY STATEMENT OF OPERATIONS
Three and Nine Months Ended September 30
(unaudited)
Three Months Ended Nine Months Ended
1995 1995
REVENUE
Sales 962 41,545
Consulting Fee-Research 14,750 14,750
Medical Services Fees 118,804 387,181
Other Income - 657
------- -------
TOTAL REVENUE 134,516 444,133
COSTS
Direct Cost of
Medical Services 22,725 76,537
Cost of Medical
Products Sold 250 13,387
------ ------
Total Costs 22,975 89,924
GROSS PROFIT 111,541 354,209
EXPENSES
Advertising 724 11,613
Amortization and
depreciation 10,890 32,670
Consulting fees 3,173 12,755
Convention expenses 1,100 13,354
Due and subscriptions 25 1,064
Employment benefits 25 953
GENERAL EXPENSES
Insurance 1,895 5,008
Interest expense 11,550 34,649
Laundry and uniforms 960 4,117
Legal and accounting - 27,048
Leased Equipment 458 3,384
Licenses and fees 578 640
Miscellaneous 3,894 9,572
Patient refunds 1,013 4,773
Postage and shipping 1,062 7,388
PRODUCT DEVELOPMENT
Office Expense 5,204 18,313
Rent 11,412 33,503
Repairs and maintenance 143 5,290
Salaries and wages 80,083 242,595
Seminars - 2,043
Supplies 7,697 27,386
Taxes 900 5,783
Travel and lodging 3,015 8,447
Telephone 6,932 19,005
Utilities 313 784
----- ------
TOTAL EXPENSES 153,046 532,137
---------------------------------------------------
NET PROFIT (LOSS) (-41,505) (-177,928)
NET LOSS PER SHARE (005) (02)
------------------------------------ ----------
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
ADDITIONAL TOTAL
COMMON PAID-IN STOCKHOLDERS'
STOCK CAPITAL DEFICIT EQUITY
Balances
December
31,1994 $ 8,961 $520,330 $(140,803) $118,488
Issuance
of common
stock-
56,878
shares 65 56,822 - 56,878
Net loss - - (177,928) (177,928)
------------------------------------------------------
Balances -
September
30, 1995 $ 9,017 $577,152 $(588,731) $( 2,562)
------------------------------------------------------
The accompanying notes are in integral part of these
financial statement.
<PAGE>
SURGICAL SAFETY PRODUCTS, INC., AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED - SEE ACCOUNTS COMPILATION REPORT)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(117,928)
----------
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation and amortization 32,670
Decrease (increase) in operating assets:
Receivables (85,566)
Inventory ( 1,286)
Prepaid expense 318
Increase (decrease) in operating liabilities:
Accounts payable 77,410
Accrued expenses 15,722
Equipment lease/Capital lease 59,217
Total adjustments 98,485
------
Net cash used in operating activities (79,443)
--------
CASH FLOWS FROM INVESTING ACTIVITIES:
Furniture and equipment purchased (68,699)
Deferred financing costs (45,215)
Net cash used in investing activities (113,914)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stockholder loan 325,000
Proceeds from issuance of common stock 56,878
Repayment of long-term debt (214,634)
---------
Net cash provided by financing activities 167,244
DECREASE IN CASH (26,113)
CASH AT BEGINNING OF PERIOD 39,695
CASH AT END OF PERIOD $ 13,582
---------
Supplemental Schedule of Non-Cash Activities:
During the period, the Company issued 14,378 shares of
common stock to a creditory in payment of amounts due. Also, the Company entered
into a capital lease agreement for a medical diagnostic instrument with a value
of $60,000.
The accompanying notes are an integral part of these
financial statements.
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activities
Surgical Safety Products, Inc. (Company) is engaged in medical products
development and medical products sales primarily to the medical community. Its
wholly-owned subsidiary, Women's Diagnostic Center of Sarasota, Inc., which was
incorporated on September 28, 1994, operates a diagnostic clinic specializing in
women's health.
Inventory
Inventory is stated at the lower of cost(first-in, first-out) or market (net
realizable value).
Intangible Assets
Intangible assets subject to amortization include the excess of cost over net
assets acquired, organizational costs, trade names and patent costs.
Organization costs are being amortized on a straight-line basis over five years.
Patent costs are being amortized on a straight-line basis over seventeen years
from the granting of the patent. The other assets are being amortized on a
straight-line basis over fifteen years.
Income Taxes
The Company follows Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes". Under the asset and liability method of SFAS 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under SFAS 109, the effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
Net Loss Per Share
Net loss per share has been computed by dividing net loss by the weighted
average number of shares outstanding during the period. Common stock equivalents
have not been included in the computation of weighted average number of shares
outstanding since the effect would have been antidilutive.
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1995
(UNAUDITED - SEE ACCOUNTANTS' COMPILATION REPORT)
NOTE 2 - LONG TERM DEBT Long-term debt consists of the following:
Promissory note payable to Women's Ambulatory Services Inc: maturing on
January 15, 1996, balance payable on January 15, 1996, each such
installment includes interest at 8% per annum. The $200,000 payment was
made with funds advanced to the Company by its principal stockholder in
1995.
$37,786
Capital lease obligation to stockholder, payable monthly at $1,511
through February, 2000, with an additional $6,000 due with the final
payment (see Note 3).
$56,111
Note payable to an individual in monthly payments of $1,005 including
interest at 7% per annum, maturing in December 1995.
$ 2,980
Note payable to an individual in monthly payments of $1,573 including
interest at 10% per annum, maturing in November 1995.
$ 3,106
$99,983
LESS: Current portion $55,872
Non-current portion $41,111
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENT (CONTINUED)
SEPTEMBER 30, 1995
(UNAUDITED)
NOTE 3 - RELATED PARTY TRANSACTION
At September 30, 1995, the Company was indebted to a stockholder in the amount
of $391,990 related to advances made to the Company by him. The indebtedness is
payable on demand and bears interest at prime plus 2% (aggregating 10%) at
September 30, 1995. Interest on the loan for the nine months ended September 30,
1995, amounted to $21,609.
During 1995, the Company's primary stockholder personally leased a medical
diagnostic instrument at the request of the Company's subsidiary. The
stockholder in turn leased the instrument to the Company's subsidiary at an
amount twelve percent in excess of his monthly payment. The lease arrangement
between the stockholder and the Company's subsidiary has been recorded as a
capital lease with the related liability included in long-term debt (see Note
2).
NOTE 4- STOCK OPTION PLANS
On July 21, 1994, the Company adopted two stock option plans. Under one plan,
7,890,800 shares of common stock are reserved for the participating employees
and directors of the plan. (Employees' Plan). Under the other plan, 1,578,160
shares of common stock reserved for outside business consultants and business
advisors to the Company who are participants of the plan (Consultants' Plan).
Both plans provide that options may be exercised only after two years from the
date of grant but not later than seven years from the date of grant. Prior to
the exercise of any options, the Company is required to file a Form S-8 with the
Securities Exchange Commission to register the shares.
The following summarizes options outstanding at September 30, 1995:
Date Options Exercise Price
Granted Granted Per Share
Employees' Plan July 21, 1994 4,876,483.5 $.31563
September 21, 1994 157,815.0 $.31563
----------------
Consultants' Plan July 21, 1994 388,724.9 $.31563
January 24, 1995 500.9 .90
-----------------
<PAGE>
SURGICAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1995
(UNAUDITED - SEE ACCOUNTANTS' COMPILATION REPORT)
NOTE 5 - INCOME TAXES
The Company has net operating loss carry forwards of approximately $506,000 for
book purposes and $400,000 for income tax purposes which expire during the years
2007 through 2010. The tax benefit relating to the loss incurred during the nine
month period ended September 30, 1995 amounted to approximately $35,000. Based
on the Company's financial history, there is no basis to conclude the tax
benefit will be realized. Accordingly, a valuation allowance has been provided
for all tax benefits to date.
<PAGE>
EXHIBIT 6.20
Surgical Safety Products, Inc.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is made as of April 9, 1998, between
Surgical Safety Products, Inc., a New York Corporation (the "Company), and Bay
Breeze Enterprises, LLC (the "Optionee").
THE PARTIES AGREE AS FOLLOWS:
1. Option Grant. The Company hereby grants to the Optionee an option
(the "Option") to purchase the number of shares of the Company's common stock
(to be issued pursuant to Regulation D, Section 504), (the "Shares"), for an
exercise price per share (the "Option Price") all as set forth below:
Shares under option: 400,000 shares exercisable @ $1.75 per share
The Option will be subject to all of the terms and conditions set forth herein.
2. Stockholder Rights. No rights or privileges of a
stockholder in the Company are conferred by reason of the granting
of the Option. Optionee will not become a stockholder int eh
Company with respect tot eh Shares unless and until the Option has
been properly exercised and the Option Price fully paid as to the
portion of the Option exercised.
3. Termination. This option will expire, unless previously exercised in
ful, on or before sixty (60) days from the date hereof or when Surgical Safety
Products, Inc. obtains reporting status or where the aggregate funding for the
corporation for the preceding 12 months exceeds $1,00,000 (after 5 days written
noticed), whichever comes first.
4. Miscellaneous. This Agreement sets forth the complete
agreement of the parties concerning the subject matter hereof,
superseding all prior agreements, negotiations and understandings.
This Agreement will be governed by the substantive law of the State
of Florida, and may be executed in counterparts.
The parties hereby have entered into this Agreement as of the date set forth
above.
Surgical Safety Products, Inc.
By: /s/Frank M Clark
Title:__________________
"Optionee"
/s/ C. Szafiroff, N. Salerno
Address: 104 Sarasota Quay
Sarasota, FL 34236
FOR VALUE RECEIVED, the undersigned, jointly, individually and severally,
promise under seal to pay to the order of Surgical Safety Products, Inc., and/or
their assignee at 2018 Oak Terrace, Sarasota, Florida or such other place as the
holder hereof may designate in writing, the principal sum of Seven Hundred
Thousand and no/100ths ($700,000.00) Dollars, together with interest at the rate
of 12 percent per annum on the unpaid principal balance remaining from time to
time along with a transaction fee of $2,500. Said sum shall be payable within
five (5) working days from the date of exercise of the last option in the sum of
$702,500.00. It is agreed that there will be no interest due and payable unless
the note becomes in default. This note is part of an agreed to stock option plan
between the parties and is evidenced by Exhibit A as attached and that is part
of this agreement
Failure to exercise said option shall not constitute a waiver of the subsequent
right to exercise same. The principal sum may be prepaid in whole or in part at
any time without penalty. The exchange, release, surrender or sale of all or any
property or collateral as defined by Exhibit A which is pledged to secure the
repayment of this note shall release or discharge any party obligated hereunder
when and if surrendered: While in default and without release of the collateral
(exhibit A), this note and accrued interest shall bear interest at a rate of
five percentage points above the rate stated herein. Notwithstanding anything
contained in this note to the contrary, no holder of this note shall ever be
entitled to receive or apply as interest any amount in excess of the maximum
rate of interest permitted by law and, in the event the holder hereof ever
receives or applies as interest any such excess, such excess shall be applied
tot eh reduction of the principal sum; and, if the principal sum is paid in
full, any remaining excess shall forthwith be paid to maker.
BORROWER:
/s/ C. Szafiroff, N. Salerno
Bay Breeze Enterprises
LENDER:
/s/Frank M Clark
Surgical Safety Products, Inc.
<PAGE>
Exhibit "A"
400,000 Four Hundred Thousand Shares of SURG at $1.75 per share
I hereby confirm, under oath, that this collateral will not be
encumbered whatsoever until such time as the promissory note be satisfied.
Further, I attest that should the obligation as spelled out on the promissory
note not be met, then I will make immediate access of the collateral or any part
thereof, available immediately to the Payee of the note, and agree to hold
harmless for any reason whatsoever, the makers of the promissory note, and their
rights to damages to satisfy the obligation made to you.
By signature, I agree to these terms as a condition to the promissory
note to which this exhibit is a party to.
Agreed this 28th day of April in the year 1998.
/s/ C. Szafiroff, N. Salerno
Bay Breeze Enterprises
Seal
<PAGE>
EXHIBIT 6.21
REVOLVING NOTE
$100,000.00 SARASOTA FL 05/02/97
- ----------- -------- -- --------
(City)(State) (Date)
For value received, the undersigned (whether one or more, hereinafter called the
"Obligors") promise(s) to pay to the order of SOUTHTRUST BANK of Florida,
National Association (hereinafter called the "Bank" or, together with any other
holder of this note, the "Holder"), at any office of the Bank in Sarasota,
FL, or at such other place as the Holder may designate, the sum of ONE HUNDRED
THOUSAND AND NO/100 Dollars, together with Interest thereon at the rate and one
the date(s) provided below from the date of this note until maturity, and with
interest on the aggregate unpaid principal and accrued interest after maturity
at the rate which is 2 percent per annum in excess of the rate stated below or
the maximum rate allowed by law, whichever is less, from maturity until said
aggregate indebtedness is paid in full.
X VARIABLE RATE
nterest will accrue on the above-stated principal sum at the rate per annum
which is 1.500 percentage points in excess of the Base Rate. As used in this
note, the term 'Base Rate' means the rate of interest designated by the Bank
periodically as its Base Rate. The Base Rate is not necessarily the lowest rate
charged by the Bank. The Base Rate on the date of this note is 8.500 percent.
The rate of interest payable under this note will change to reflect any change
in the Base Rate:
X on any day the Base Rate changes. ___On the day of each
month thereafter.
X on the day each payment of interest is due as provided below.
Obligors may prepay this
note in full at any time without penalty.
X FIXED RATE Interest will accrue on the above-stated principal sum at the rate
of _____ percent per annum from the date of this note until maturity. The
above-stated principal sum shall be paid In full:
On _____________________. X on demand. on demand, but
if no demand is made, then on .
Accrued Interest on the unpaid balance of the principal sum shall
be paid: X monthly on the 2ND day of each month beginning JUNE
2, 1997, and at maturity.
quarterly beginning on ______________________, on the day of
each month thereafter, and at maturity.
Until the earlier of maturity of this note, or the occurrence of any event
giving Bank the right to accelerate maturity of this note as provided below. or
written or oral notice to any Obligor of Bank's election to terminate the line
of credit (which notice Bank may give at its discretion), the undersigned may
borrow hereunder. prepay the principal sum in whole or in part without penalty,
and reborrow hereunder, so long as the aggregate unpaid principal balance of
such borrowings does not exceed the
principal amount of this note at any time. Bank may require that borrowings be
made only upon at 'east one banking day's written notice to Bank. For the
privilege of having such credit available, the undersigned agrees to pay Bank a
commitment fee of
n/a percent per annum on the unused portion of the principal sum of this
note, such fee to be calculated and payable as follows:
INTEREST the principal sum will be calculated at the rate set forth above on the
basis of a 360 day year and the actual number of days elapsed by multiplying the
principal sum by the per annum rate set forth above, multiplying the product
thereof by We actual number of days elapsed, and dividing the product so
obtained by 360.
LOAN FEE (this provision applicable only if completed): A loan fee in the amount
of $ 100.00 has been _____ advanced to Obligors as a loan under this note and
paid to the Bank x paid to the Bank by cash or check at closing. The loan fee is
earned by the Bank when paid and is not subject to refund except to the extent
required by law.
LATE CHARGE: If a payment of the principal sum is late 10 days or more, in
addition to interest after maturity as provided above. Obligors promise to pay a
late charge equal to one-half of one percent (1/2%) of the amount of the payment
which is late, subject to a minimum late charge of $.50 and a maximum late
charge of $250.00
<PAGE>
This note is secured by every security agreement, pledge, assignment,
stock power and/or mortgage covering personal or real properly (all of which are
hereinafter included in the term "Separate Agreements*) which secures an
obligation so defined as to Include this note, including without limitation all
such Separate Agreements which are of even date herewith and delivered to the
Bank and/or described in the space below. In addition, as security for the
payment of any and all liabilities and obligations of the Obligors to the Holder
(including the Indebtedness evidenced by this note and all extensions, renewals,
and substitutions thereof) and all claims of every nature of the Holder against
the Obligors, whether present or future, and whether joint, several, absolute,
contingent, matured, unmatured, liquidated, unliquidated, direct or Indirect
(all of the foregoing are hereinafter included In the term 'Obligations") the
Obligors hereby grant to the Holder a security Interest in and security title to
the properly described below: (Describe Separate Agreements and Collateral)
AS FURTHER DESCRIBED IN SECURITY AGREEMENT DATED 05/02/97
If this note is payable on demand, or on demand but not later than a
stated date, all of the Obligations shall be due and payable in full upon demand
by Holder, whether or not any default described below has occurred and whether
or not the Holder reasonably deems itself to be insure. If this note has no
provision for payment on demand, the following terms apply: If default occurs in
the payment of any of the Obligations when due or with respect to any condition
or agreement contained in this note; or if for any reason whatever the
Collateral shall cease to be satisfactory to the Holder; or in the event of
death (if an individual) or dissolution (if a partnership or corporation) of,
insolvency of, general assignment by, filing of petition under any chapter of
the Federal Bankruptcy code by or against, filing of application in any court
for receiver, for judgment against, issuance of a writ of execution, attachment
or garnishment against, or against any of the property of, any Obligor or any
Indorser or guarantor of this note; or if there occurs any default or event
authorizing acceleration as contained in any Separate Agreement; or if at any
time in the sole opinion of the Holder the financial responsibility of any
Obilgor or any Indorser or guarantor of this note shall become impaired; then,
if any of the foregoing occur, all unpaid amounts of any and all of the
Obligations shall, at the option of the Holder and without notice or demand,
become immediately due and payable, notwithstanding any time or credit allowed
under any of the obligations or under any instrument evidencing the same.
With respect to any and all Obligations, the obligors and any indorsers
of this note severally waive the following: (1) all rights of exemption of
property from levy or sale under execution or other process for the collection
of debts under the constitution and laws of the United States or of any state
thereof; (2) demand, presentment, protect, notice of dishonor, suit against any
party and all other requirements necessary to charge or hold any Obligor liable
on any Obligation; (3) any further receipt for or acknowledgment of the
Collateral now or hereafter deposited or statement of indebtedness; (4) all
statutory provisions and requirements for the benefit of any Obligor, now or
hereafter in force (to the extent that same may be waived); (5) the right to
interpose any set-off or counterclaim of any nature or description in any
litigation in which the Holder and any Obligor shall be adverse parties. The
Obligors severally agree that any Obligations of any Obligor may from time to
time, in whole or in part, be renewed, extended, modified, accelerated,
compromised, discharged or released by the Holder, and any Collateral, lien
and/or right of set-off securing any Obligation may from time to time, in whole
or in part, be exchanged, sold, or released, all without notice to or further
reservations of rights against any Obligor and all without in any way affecting
or releasing the liability of any Obligor. The Obligors jointly and severally
agree to pay all filing fees and taxes in connection with this note or the
Collateral and all costs of collecting or securing or attempting to collect or
secure any obligations, including a reasonable attorney's fee if an attorney,
not a salaried employee of the Holder, is consulted with reference to suit or
otherwise.
The Obligors shall be jointly and severally liable for all indebtedness
represented by this note and have subscribed their names hereto without
condition that anyone else should sign or become bound hereon and without any
other condition whatever being made. The provision printed on the back of this
page are a part of this note. The provisions of this note are binding on the
heirs, executors, administrators, assigns and successors of each and every
Obligor and shall inure to the benefit of the Holder, its successors and
assigns. This note is executed under the seal of each of the Obligors and of the
Indorsers, If any.
SURGICAL SAFETY PRODUCTS, INC.
(SEAL)
No. 7301868-00001 By /s/ G Michael Swor PRESIDENT
G. MICHAEL SWOR
Title
Officer: THOMAS A. MARTIN, JR. Signature
(SEAL)
Branch: Plaza Signature
(SEAL)
<PAGE>
Additional Terms and Conditions of Revolving Note
(Terms Continued from Reverse Side)
As additional Collateral for the payment of all Obligations, the
Obligors jointly and severally transfer, assign, pledge, and set over to the
Holder and grant the Holder a continuing lien upon and security interest in, any
and all properly of each Obligor that for any purpose. whether In trust for any
Obligor or for custody, pledge, collection or otherwise. is now or hereafter in
the actual or constructive possession of, or In transit to, the Holder In any
capacity, Its correspondents or agents, and also a continuing lien upon and or
right of set-off against all deposits and credits of each Obligor with, and all
claims of each Obligor against, the Holder now or at any time hereafter
existing. The Holder is hereby authorized, at any time or times and without
prior notice, to apply such property, deposits, credits, and claims, In whole or
In part and in such order as the Holder may elect, to the payment of, or as a
reserve against, one or more of the Obligations, whether other Collateral
therefor Is deemed adequate or not. Ali such properly, deposits. credits and
claims of the Obligors are Included In the term Collateral. and the Holder shall
have (unless prohibited by law) the same rights with respect to such Collateral
as It shall have with respect to other Collateral.
Without the necessity for notice to or consent of any Obligor, the
Holder may exercise any rights of any of the Obligors with respect to any
Collateral, including without limitation thereto the following rights: (1) to
record or register In, or otherwise transfer Into, the name of the Holder or Its
nominee any part of the Collateral, without disclosing that the Holder's
Interest Is that of a secured party; (2) to pledge or otherwise transfer any or
all of the Obligations and/or Collateral, whereupon any pledgee or transferee
shall have all the rights of the Holder hereunder, and the Holder shall
thereafter be fully discharged and relieved from all responsibility and
liability for the Collateral so transferred but shall retain all rights and
powers hereunder as to all Collateral not so transferred; (3) to take possession
of any Collateral and to receive any proceeds of and dividends and Income on any
Collateral, Including money, and to hold the same as Collateral or apply the
same to any of the Obligations, the manner, order and extent of such application
to be In the sole discretion of the Holder; (4) to exercise any and all rights
of voting, conversion, exchange, subscription or other rights or options
pertaining to any Collateral; and (5) to liquidate, demand, sue for, collect,
compromise, receive and receipt for the cash or surrender value of any
Collateral. It for any reason whatsoever the Collateral shall cease to be
satisfactory to the Holder. the Obligors shall upon demand deposit with the
Holder additional Collateral satisfactory to the Holder. Surrender of this note.
upon payment or otherwise, shall not affect the right of the Holder to retain
the Collateral as security for other Obligations, Upon default. the Obligors
agree to assemble the Collateral and make it available to Holder at such place
or places as the Holder shall designate.
The Holder shall be deemed to have exercised reasonable care In the
custody and preservation of any of the Collateral which Is in Its possession If
It takes such reasonable actions for that purpose as the pledgor of such
Collateral shall request In writing, but the Holder shall have sole power to
determine whether such actions are reasonable. Any omission to do any act not
requested by said pledgor shall not be deemed a failure to exercise reasonable
care. The Obligors shall be responsible for the preservation of the Collateral
and shall lake all steps to preserve rights against prior parties. The Holder
shall have the right to, but shall not be obligated to, preserve rights against
prior parties; nor shall the Holder be liable for any failure to realize upon,
or to exercise any right or power with respect to. any of the Obligations or
Collateral, or for any delay in so doing.
The Holder, without making any demands whatsoever, shall have the right
to sell all or part of the Collateral, although the Obligations may be
contingent or unmatured, whenever the Holder considers such sale necessary for
its protection. Sale of the Collateral may be made, at any time and from time to
time, at any public or private sale, at the option of the Holder. without
advertisement or notice to any Obligor, except such notice as Is required by law
and cannot be waived. The Holder may purchase the Collateral at any such sale
(unless prohibited by law) free from any equity or redemption and from all other
claims. After deducting all expenses. including legal expenses and attorney's
fees, for maintaining or selling the Collateral and collecting the proceeds of
sale, the Holder shall have the right to apply the remainder of said proceeds in
payment of, or as a reserve against, any of the Obligations, the manner, order
and extent of such application to be In the sole discretion of the Holder. To
the extent notice of any sale or other disposition of the Collateral Is required
by law to be given to any Obligor. the requirement of reasonable notice shall be
met by sending such notice, as provided below, at least five (5) calendar days
before the time of sale or disposition. The Obligors shall remain liable to the
Holder for the payment of any deficiency, with interest at the rate provided
herein above. However, the Holder shall not be Obligated to resort to any
Collateral but, at Its election. may proceed to enforce any of the Obligations
In default against any or all of the Obligors.
<PAGE>
The Obligors understand that the Bank may enter Into participation
agreements with participating banks whereby the Bank will sell undivided
Interests In this note to such other banks. The Obligors consent that the Bank
may furnish Information regarding the Obligors, Including financial Information,
to such banks from time to time, and also to prospective participating banks in
order that such banks may make an Informed decision whether to purchase a
participation In this note. The Obligors hereby grant to each such participating
bank. to the extent of Its participation In this note, the right to set off
deposit accounts maintained by the Obligors, or any of them. with such bank,
against unpaid sums owed under this note. Upon written request from the Holder,
the Obligors agree to make each payment under this note directly to each such
participating bank in proportion to the participant's Interest In this note as
set forth In such request from the Holder.
If, at any time, the rate of interest payable under this note shall
exceed the maximum rate of Interest permitted by applicable law, then, for such
lime as the Interest rate would be excessive, Its application shall be suspended
and there shall be charged Instead the maximum rate of Interest permitted under
such law, and any excess interest paid by the Obligors or collected by the
Holder shall be refunded to the Obligors or credited against the principal sum
of this note, at the election of the Holder or as required by applicable law.
The Holder shall not by any act, delay, omission or otherwise be deemed
to have waived any of Its rights or remedies, and no waiver of any kind shall be
valid, unless In writing and signed by the Holder. All rights and remedies of
the Holder under the terms of this note and under any statutes or rules of law
shall be cumulative and may be exercised successively or concurrently. The
Obligors jointly and severally agree that the Holder shall be entitled to all
the rights of a holder In due course of a negotiable instrument. This note shall
be governed by and construed In accordance with the substantive laws of the
United States and the state where the office of the Bank set forth above in the
first paragraph of this note is located, other than the rules of such state
governing conflicts of law. Any provision of this note which may be
unenforceable or invalid under any law shall be Ineffective to the extent of
such unenforceability or Invalidity without affecting the enforceability or
validity of any other provision hereof. Any notice required to be given to any
person shall be deemed sufficient It delivered to such person or It mailed.
postage prepaid, to such person's address as It appears on this note or. If none
appears, to any address of such person In the Holder's files. The Holder shall
have the right to correct patent errors in this note. A photocopy of this note
may be filed as a financing statement In any public office.
EACH INDORSER OF THIS NOTE AGREES TO BE BOUND BY THE PROVISIONS PRINTED OR
OTHERWISE APPEARING ABOVE AND ON THE FACE OF THIS NOTE. INCLUDING THE PROVISION
FOR PAYMENT OF ATTORNEYS' FEES FOR COLLECTION.
Signature See Separate Guaranty Dated
05/02/98 (SEAL) Address
Signature
Address____________________________
Signature__________________________
Address____________________________
Signature__________________________
Address____________________________
<PAGE>
SECURITY AGREEMENT
DEBTOR: SECURED PARTY:
[Last name(s) first, if individual(s)]
__________________________________________ SOUTHTRUST BANK of Florida,
SURGICAL SAFETY PRODUCTS, INC. National Association
2018 OAK TERRACE, SUITE 400 1800 SECOND STREET
Mailing address SARASOTA, FL 34236
SARASOTA SARASOTA FL 33431
- ----------------------------------------------
City County State Zip
Date: 05/02/97
1. For valuable consideration, receipt of which is hereby acknowledged, and in
further consideration of the Secured Obligations (as hereinafter defined), the
undersigned (whether one or more than one, hereinafter referred to as "Debtor")
hereby grants, bargains, sells conveys, assigns, and sets over to the Secured
Party named above (hereinafter referred to as "Secured Party"), and grants to
Secured Party a security interest in, the following property and rights of
Debtor (check applicable box(es)):
X A. (Inventory and Documents)
all inventory of Debtor, whether now owned or hereafter
acquired by Debtor and whenever located, including, without
limitation, all goods, merchandise, raw material, work in
process, finished goods, and other tangible personal property
held for sale or lease or furnished under contracts of service
or used or consumed in Debtors business and returned and
repossessed goods; all Documents now or hereafter evidencing
any such inventory; and all proceeds and products of the
foregoing; and
X B. (Accounts, Intangibles, Instruments, Chattel Paper)
all Accounts, General intangibles, instruments, and
Chattel Paper, whether now existing or hereafter
arising, and all proceeds of the foregoing, whether
cash or non-cash, including returned and repossessed
goods; and
X C. (Equipment)
all Equipment, including without limitation, all machinery,
computer equipment and peripherals, furniture, furnishings,
and motor vehicles, and all replacements thereof and
substitutes therefor, and all accessories, additions, attach-
ments and other goods now or hereafter installed in or affixed
thereto or used in connection therewith, whether any of the
foregoing now owned or hereafter acquired by Debtor and wher-
ever located, and all proceeds thereof (but inclusion of
proceeds shall not be deemed to imply that Secured Party auth-
orizes the sale or other transfer or disposition of any such
Equipment); _ If this box is checked, the term "Equipment" as
used in this agreement also includes Fixtures including lease-
hold improvements and machinery and appliances which are
attached to the real property in such a manner as to become
Fixtures; and
_ D. (Farm Products)
all crops (whether annual or perennial) and all livestock (including
fowl) and all natural increase thereof, all feed, seed, fertilizer and
other supplies used or produced in farming operations, and all products
of crops and livestock in their unmanufactured states, whether any of
the foregoing is now owned or hereafter acquired by Debtor and wherever
located, all contracts for the sale by Debtor of any of the foregoing,
and all crop or acreage allotments, price supports or supplements and
rights under governmental programs, and all proceeds of all of the
foregoing, provided that no security interest attaches hereunder to
crops which become such more than one year after this Security
Agreement is executed unless the security interest in crops is given in
conjunction with a lease or a land purchase or improvement transaction
evidenced by a separate contract, mortgage, deed of trust or deed to
secure debt. The security interest herein granted covers, without
limitation, all crops growing or to be grown on the real property
described on any Exhibit attached hereto.
(All of the property and rights described in A, B, C, and D above (as
applicable) are sometimes hereinafter referred to collectively as "the
Collateral.")
<PAGE>
2. This agreement, and the security interest herein granted,
secures the payment and performance of
every loan and other extension of credit heretofore, now, or hereafter made to
Debtor by Secured Party, and extensions or renewals thereof, all interest due or
to become due to Secured Party on each such loan or other extension of credit,
every note or other writing now or hereafter evidencing the obligation of
Debtor to repay any such loan or other extension of credit and/or the interest
thereon, every guaranty of payment or collection of the debt of another
heretofore, now, or hereafter entered into by Debtor with Secured Party, every
letter of credit reimbursement agreement heretofore, now, or hereafter entered
into by Debtor with Secured Party, every lease of personal property heretofore,
now, or hereafter entered into by Debtor with Secured Party, the payment and
performance of all of Debtor's obligations under this agreement, and all other
indebtedness and other obligations of Debtor to Secured Party, including all
sums paid to Secured party for Debtor's account by Debtor or any other person
which are later recovered back from Secured Party by Debtor or any creditor of
Debtor or any representative of Debtor or of Debtor's creditors, such as a
trustee in bankruptcy, whether any of the foregoing debts and other obligations
are joint or several, primary or secondary, direct or indirect, otherwise
secured or unsecured, whether originally payable or owed to Secured Party or
acquired by Secured Party from another (the terms "with Secured Party" and "by
Secured Party" in this sentence being expressly intended to include Secured
Party's assignors and predecessors in interest), and whether now existing or
hereafter incurred prior to termination of this agreement as hereinafter
provided. (All the debts and other obligations described in the preceding
sentence are hereinafter referred to collectively as the "Secured Obligations.")
3. Debtor represents and warrants to Secured Party that:
(a) Debtor's inventory, Equipment and/or Farm Products are kept or
stored only at the address shown below Debtor's name at the beginning of this
agreement and at the following address(s)(use separate schedule if necessary):
Street Address City County State Zip
(Failure to list any address where Inventory, Equipment and/or Farm Products are
kept shall not limit Secured Party" security interest, which covers all
Inventory, Equipment and/or Farm Products of Debtor, wherever located.)
Debtor agrees not to keep or store any Inventory, Equipment and /or Farm
Products at any address other than those set forth above except upon not less
than 10 days advance notice in writing to Secured Party and upon compliance with
the remaining terms of this agreement.
(b)The address where the records concerning Debtor's
Accounts are kept and the address of Debtor's chief executive office is the
address shown below Debtor's name at the beginning of this agreement. Debtor
agrees not to change the address where the records concerning Debtor's Accounts
are kept or the address of Debtor's chief executive office except upon not less
than 10 days advance notice in writing to Secured Party and compliance with the
remaining terms of this agreement.
(c)If Debtor is a corporation, Debtor is duly organized and existing in
good standing under the laws of the state of its incorporation and is duly
qualified and in good standing in every other state in which the nature of its
business or the ownership of its properties makes qualification necessary.
(d)If Debtor is a corporation, the execution, delivery, and performance
of this agreement are within Debtor's corporate powers, have been duly
authorized, are not in contravention of law or the terms of Debtor's certificate
of incorporation, by-laws, or other incorporation papers, or of an indenture,
agreement, or undertaking to which Debtor is a party or by which Debtor is
bound.
(e)Except for the security Interest granted herein, and except as
otherwise noted in writing hereon or on a schedule attached hereto, Debtor is,
and as to Collateral acquired after the date hereof, will be, the owner of the
Collateral free from any adverse lien, security interest or encumbrance.
4. If paragraph 1.A., 1.C., or 1.D. above is marked, Debtor
agrees with Secured Party as follows:
Debtor will maintain insurance at all times with respect to all
Inventory, Equipment and Farm Products against risk of fire (including so-called
extended coverage), theft, water damage and such other risks as Secured Party
may require from time to time and, in the case of motor vehicles, against risk
of collision and vandalism, in such form, for such perils, and written by such
companies as may be satisfactory to Secured Party. Secured Party shall be named
as loss payee under such policies of insurance. Debtor my furnish such insurance
through an existing policy or policy independently obtained and paid for by
Debtor. All policies of insurance shall provide for a minimum of 10 days written
notice to Secured Party before cancellation. At request of Secured Party, Debtor
will deliver such policies, or at Secured Party's option, certificates thereof,
to Secured Party to be held by it. Debtor hereby appoints Secured Party the
attorney -in-fact for Debtor for purposes of obtaining, adjusting, settling, and
canceling such insurance and of endorsing in Debtor's name and giving receipt
for checks and drafts issued in payment of losses and as return premium. In the
event Debtor
<PAGE>
fails to provide any insurance as required herein, Secured Party may, at its
option, purchase such insurance or, at Secured Party's option after 10 days
notice to Debtor, insurance covering only Secured Party's interest in Inventory,
Equipment and Farm Products and all return or unearned premiums thereon to
Secured Party as additional collateral for the Secured Obligations.
5. If paragraph 1.A. above is marked, Debtor agrees with
Secured Party as follows:
(a)Debtor will allow Secured Party and any of its officers, agents,
attorney, or accountants to examine or inspect the inventory wherever located at
all reasonable times and to examine, inspect, and make extracts from Debtor's
books and records.
(b)Debtor will keep the Inventory, all Documents with respect thereto,
and proceeds of both free from any adverse lien, security interest or
encumbrance, except that Debtor may, with Secured Party's written consent
obtained in advance, grant a security interest in its Accounts. General
intangibles, instruments, and/or Chattel Paper to another creditor. Debtor will
keep the Inventory in good condition, and will not waste or destroy any of the
same. Debtor will not use the Inventory in violation of any statute or
ordinance.
(c)Until the occurrence of a default hereunder, Debtor may use the
Inventory in any lawful manner which is consistent with Debtor's usual business
and is not inconsistent with this agreement or with the terms or conditions of
any policy of insurance thereon, and may sell the Inventory in the ordinary
course of business. A sale in the ordinary course of business does not include a
transfer in partial or total satisfaction of a debt. Until the occurrence of a
default, Debtor may also use and consume any raw materials or supplies, the use
and consumption of which is necessary in order to carry on Debtor's usual
business.
IN WITNESS WHEREOF, Debtor has executed this agreement under seal, or the
officers or agents of Debtor thereunto duly authorized have executed this
agreement on behalf of Debtor, on or as the date set forth above.
The provisions on the reverse side and on any attachments are part of this
agreement.
ATTEST OR WITNESS:
SURGICAL SAFETY PRODUCTS, INC.(SEAL)
______________________ By /s/ G M Swor PRESIDENT
G. MICHAEL SWOR Title
Signature (SEAL)
(d)Upon request of Secured Party at any time, Debtor will deliver to Secured
Party lists or copies of all Accounts which are proceed of Inventory or Farm
Products promptly after they arise. Unless Secured Party shall have otherwise
agreed with Debtor in writing, Debtor will deliver to Secured Party, promptly
upon receipt, all proceeds (except goods) of the Inventory of Farm Products
received by Debtor, including proceeds of such Accounts, in precisely the form
received by Debtor, except for the endorsement of Debtor where necessary to
permit the collection of such proceeds (which endorsement Debtor hereby agreed
to make) Debtor agrees not to mingle any proceeds of the Inventory or Farm
Products with any of Debtor's own funds, goods or property, and at all times to
hold such proceeds upon express trust for the Secured Party until delivery
thereof is made to Secured Party. To evidence Secured Party's rights hereunder,
Debtor will assign or endorse proceeds to Secured Party in such form as Secured
Party may request and Secured Party shall have the full power and authority to
collect, compromise, endorse, sell, or otherwise deal with proceeds in its own
name or that of Debtor. Secured Party in its discretion may apply cash proceed
to the payment of any of the Secured Obligations or may release such cash
proceeds to Debtor for use in the operation of Debtor's business.
(e)With respect to proceeds of the Collateral in the form of Accounts,
Secured Party may at any time before or after default notify account debtors
that the Accounts have been assigned to Secured Party and shall be paid to
Secured Party. Upon request of Secured Party at any time Debtor will so notify
such account debtors and will indicate on all invoices to such account debtors
that the Accounts are payable to Secured Party.
6. If paragraph 1.B. is marked above, Debtor hereby agrees with
Secured Party as follows:
(a)For the consideration recited in paragraph 1 above, Debtor hereby leases
to Secured Party, during the term of this agreement, all file cabinets, books,
ledgers, microfilm, microfiche, magnetic tapes, magnetic discs, and other
information retrieval or storage systems, on which, any of Debtor's records
concerning its Accounts, General Intangibles, Instruments, and Chattel Paper,
are kept or stored. Debtor agrees to deliver all of the foregoing property, or
any part thereof specified by Secured Party, to Secured Party upon request.
Debtor agrees that Secured Party may come on any premises where any of such
property is located at any reasonable time to take possession of such property,
and that the entry of such premises by Secured Party will not constitute a
trespass and the taking of such
<PAGE>
property by Secured Party will not constitute a trespass to, or
conversion of, any such property.
(b)Secured Party shall have the right at any time, whether before or
after the occurrence of a default hereunder by Debtor, to notify any or all
account debtors on the Accounts or General Intangibles, and any or all obligors
on the Instruments or Chattel Paper, to make payment directly to Secured Party,
or to make payment to an address (a "lock box") under the exclusive control of
Secured Party. Upon request of Secured Party, Debtor agrees immediately to
notify such account debtors and obligors to make payment directly to Secured
Party or to such lock box and to place Secured Party's address or such lock
box's address on Debtor's invoices and statements as the address to which
payment should be made. To the extent Secured Party does not so elect to notify,
or does not request Debtor to notify, the account debtor or obligors, Debtors
shall continue to collect the Collateral. Debtor agrees not to mingle any
proceeds of any of the Collateral with any of Debtor's own funds, goods or
property, and at all times to hold such proceeds upon express trust for the
Secured Party until delivery thereof is made to Secured Party. Debtor agrees to
deliver all proceeds of the Collateral, in precisely the form received by
Debtor, except for the endorsement of Debtor where necessary to permit the
collection of such proceeds (which endorsement Debtor hereby agrees to make).
Secured Party may apply such proceeds to any of the Secured Obligations, whether
or not such Secured Obligations shall have matured by their terms, or Secured
Party may at its option, release such proceed to Debtor for use in Debtor's
business. Secured Party need not apply nor give credit for any item included in
such proceeds until Secured Party has received final payment therefor at its
offices in cash or solvent credits acceptable to Secured Party.
(c)Weekly, monthly, or at such other intervals as Secured Party shall
designate, Debtor will deliver to Secured Party lists and agings of all of
Debtor's Accounts in such form, and in such detail, as Secured Party shall
require, together with copies of invoices, delivery receipts, bills of lading,
and such other documents in support of Debtor's Accounts as Secured Party shall
require.
(d)If any of the Accounts arise out of contracts with the United States
or any agency thereof, Debtor agrees to notify Secured Party thereof and to
execute such documents as shall be necessary to permit Secured Party to perfect
its right to receive payment under the federal Assignment of Claims Act.
(e)Upon request of Secured Party, Debtor will purchase insurance
covering the loss of, and cost of reconstruction of, Debtor's records of its
Accounts, General Intangibles, Chattel Paper and Instruments, such insurance to
be issued by an insurer acceptable to Secured Party and to contain such coverage
provisions as Secured Party shall request.
7. Debtor hereby covenants, represents, and warrants as
follows:
(a)Debtor agrees to keep all records concerning the Collateral in a
fireproof and safe place and, upon request of Secured Party, to make such
records available to Secured Party, its agents, attorneys, and accountants, at
any reasonable time and without hindrance or delay to allow Secured Party to
inspect, audit, check or make extracts from such records.
(b)Debtor hereby represents, warrants and agrees with Secured Party
that: (i) (except as otherwise noted in writing hereon or in a schedule attached
to this agreement) Debtor is the owner of the Collateral, free and clear of all
liens and encumbrances, and has the full right and power to transfer the
Collateral to Secured Party and to grant to Secured Party the security interest
provided in this agreement; (ii) Debtor will not make any other assignments of
the Collateral, nor create any other security interest therein, nor permit any
other financing statement to filed in any public office with respect thereto
(except as otherwise expressly agreed in writing by Secured Party), nor permit
either Debtor's or Secured Party's rights therein to be reached by attachment,
levy, garnishment, or other judicial process; (iii) each debt owing to Debtor
which is a part of the Collateral, and all names of all account debtors, amounts
owing, due dates, and other facts appearing on Debtor's records relating
thereto, are true, correct and genuine and are what they purport to be, and each
such debt arises out of a bona fide sale of goods or other property sold and
delivered to, or out of services heretofore rendered by Debtor to, the account
debtors so indicated, and the amount of each such debt is unconditionally owed
to Debtor by each such account debtor, except for normal cash discounts, and is
not subject to any offset, credit, deduction, or counterclaim, and Debtor is
sole owner thereof; (iv) Debtor will promptly notify Secured Party in writing in
the event any such account debtor refuses to accept or returns any goods which
are subject to any debt owed to Debtor for credit allowance, adjustment, offset
or counterclaim by any such account debtor; (v) Debtor agrees not to sell or
otherwise dispose of any Equipment except worn out or obsolete Equipment which
are immediately replaced with the certificate of title therefore; (vi) Debtor
agrees not to sell, collect, assign, negotiate, or otherwise transfer any of
Debtor's Inventory, Accounts, General Intangibles, Instruments, or Chattel Paper
outside the ordinary course of Debtor's business as conducted on the date of
this
<PAGE>
agreement; and (vii) all of Debtor's Inventory is and will be produced in
compliance with the federal Fair Labor Standards Act.
(c)Debtor hereby irrevocably makes, constitutes, and appoints Secured
Party and any of its officers or designees as Debtor's true and lawful
attorney-in-fact with full power and authority to do any and all acts necessary
or proper to carry out the Intent of this agreement, including, without
limitation, the right, power and authority (i) to receive and give receipt for
any amount or amounts due or to become due to Debtor on account of the
Collateral and to endorse and negotiate in the name of Debtor any check or other
item issued in payment or on account thereof, and in the name of Secured Party
or of Debtor to enforce by suit or otherwise, compromise, settle, discharge,
extend the time of payment, file claims or otherwise participate in bankruptcy
proceedings, and otherwise deal in and with the collateral and any proceeds
thereof; (ii) to open mail addressed to Debtor, remove any Collateral or
proceeds of the Collateral therefrom, and deliver the remainder of such mail to
Debtor; and (iii) to do all acts and things deemed by Secured Party to be
appropriate to protect, preserve and realize upon Secured Party's security
interest hereunder; but Secured Party shall not be under any duty to exercise
such authority or power or in any way responsible for collecting or realizing
upon the Collateral. Debtor hereby ratifies and confirms all that Secured Party,
its officers or designees, shall do as such attorney-in-fact by virtue of the
foregoing powers, which power is coupled with an interest and are irrevocable
until this agreement has been terminated as hereinafter provided.
8. (a)Debtor shall do, make, execute, and deliver to Secured Party all such
additional and further acts, assignments, assurances, and instruments as Secured
Party may require to more completely vest in and assure to Secured Party its
rights hereunder and in or to the Collateral and the proceeds thereof. Debtor
will deliver all Instruments, Documents, and Chattel Paper which constitute a
part of the Collateral to Secured Party upon request, duly endorsed by Debtor to
the order of Secured Party or in blank in form satisfactory to Secured Party.
(b)Debtor will pay promptly when due all taxes and assessments upon the
Collateral or any part thereof, upon its use or operation, upon the proceeds
thereof, upon this Security Agreement, or upon any note or notes evidencing the
Secured Obligations. At its option, Secured Party may discharge any taxes,
liens, security interests or other encumbrances at any item levied or placed on
the Collateral or any part thereof and my pay for the maintenance and
preservation of the Collateral, but Secured Party shall not be under any duty to
exercise any such authority. Debtor agrees to reimburse Secured Party, upon
demand, for any payment made or any expense incurred by the Secured Party
pursuant to the foregoing authorization.
(c)All sums expended by Secured Party which Debtor is obligated to
reimburse Secured Party under this agreement shall bear interest from the date
reimbursement is due until the date paid at the rate provided in the note
evidencing the Secured Obligation with respect to which the sum was expended by
Secured Party, or if no single such note exists or is identifiable, then at the
rate which is two percentage points in excess of the average of the prime rates
of the three largest banks in New York City three business days before
expenditure was made, but in any event not more than the maximum rate allowed by
law. All such sums and the interest thereon shall be secured by the security
interest granted in this agreement.
(d)At the request of Secured Party, Debtor will execute financing
statements pursuant to the Uniform Commercial Code in form and number
satisfactory to Secured Party and will pay the cost of filing the same in all
public offices where filing is deemed by Secured Party to be necessary or
desirable. Debtor agrees that a carbon or photostatic copy of this agreement may
be filed as a financing statement in any public office. If certificates of title
are issued or outstanding with respect to any of the Collateral, Debtor will
cause the interest of Secured Party to be properly noted thereon at Debtor's
expense. Without the written consent of Secured Party, Debtor will not allow an
adverse financing statement covering any of the Collateral to be on file in any
public office. Secured Party may elect not to perfect its security interest in
all or any part of the Collateral without discharging or otherwise impairing its
rights against Debtor or any other party.
9. Any or all of the Secured Obligations shall, at the option of Secured Party
and notwithstanding the stated maturity date of any instrument evidencing any
such Secured Obligation, become immediately due and payable without notice or
demand upon the occurrence of any of the following events, each of which shall
constitute a default hereunder;
(a)Debtor's failure to pay or perform as and when due any of
the Secured Obligations or any note evidencing the same;
(b)Debtor's failure to pay or perform as and when due any covenant
contained in this agreement or if any warranty or representation made or any
writing furnished to Secured Party by or on behalf of Debtor in or in connection
with this agreement is breached or is false or inaccurate in any material
respect when made or furnished;
<PAGE>
(c)Any event occurs which results in the acceleration of maturity of
any indebtedness or Debtor to others under any indenture, agreement, or
undertaking;
(d)Loss, theft, damage, or destruction of any material part
of the Collateral, or any levy seizure, garnishment or attachment
thereof or thereon;
(e)Death, dissolution termination of existence, insolvency, cessation
of business, or appointment of a receiver for any part of the property of,
general assignment for the benefit of creditors by, or the commencement of any
proceeding under any chapter of the Federal Bankruptcy Code or any insolvency
laws by or against, Debtor or any guarantor or surety for Debtor on any of the
Secured Obligations.
10. Upon the occurrence of any event of default set forth in the preceding
paragraph, and at any time thereafter, Secured Party shall have the right to
take possession of all or any part of the Collateral and, with or without taking
possession thereof, to sell the Collateral at one or more public or private
sales, at Secured Party's option and collect the Accounts, Instruments, Chattel
Paper, and General Intangibles which are a part of the Collateral. At Secured
Party's request, Debtor agrees to assemble the Collateral and to make it
available to Secured Party at a place to be designated by Secured Party which is
reasonably convenient to both parties. Debtor waves any notice of sale or other
disposition of the Collateral and agrees that notice of sale or other
disposition of the Collateral hereunder, or any part thereof, which cannot be
waived shall be sufficient if such notice is delivered to Secured Party in
writing for such purpose, at least ten (10) calendar days before the time of the
sale or disposition. Debtor agrees to pay Secured Party on demand any and all
expenses, including attorneys' fees in the amount of 15% of the unpaid balance
of the Secured Obligations at the time of default(or the maximum fee allowed by
law, if less than 15%, or a reasonable attorneys' fee if applicable law does not
permit the parties to agree to the amount of the attorney's fee prior to
default) incurred or paid by Secured Party in protecting or enforcing the
Secured Obligations and the rights of Secured Party hereunder, including Secured
Party's right to take possession of and sell or dispose of the Collateral, and
in repossessing and storing the Collateral, collecting the Collateral, preparing
the Collateral for sale, advertising and conducting such sale, and collecting
the proceeds of such sale. Payment of all such expenses and the interest thereon
shall be secured by the security interest granted in this agreement. The
proceeds of any sale or other disposition or collection of the Collateral shall
be applied, first, to the payment of all costs and expenses incurred by Secured
Party in connection with such sale or other realization including, without
limitation, attorneys' fees as specified above and all costs of litigation, and
to the repayment of all advances made by Secured Party hereunder for the account
of Debtor and the payment of all costs and expenses paid or incurred by Secured
Part in connection with this agreement or in the exercise of any right or remedy
hereunder or under applicable law, to the extent that such advances, costs and
expenses have not previously been paid to Secured Party upon demand to Debtor
therefor; second, to the payment of the Secured Obligation in such order as
Secured Party may elect; and third, to Debtor, or the person then entitled
thereto, or as a court of competent jurisdiction may direct. No sale or other
disposition are applied thereto. Debtor will remain obligated to pay any
deficiency.
11. Secured Party shall have the right to set off the Secured Obligations
against any indebtedness or liability of Secured Party to Debtor at any time
existing. As additional security for the Secured Obligations, Debtor hereby
transfers and assigns to Secured Party, and grants to Secured Party a security
interest in, all account balances, credits, deposits, and rights of withdrawal
of Debtor with Secured Party, whether now owned or hereafter acquired, and
whether jointly or severally held, and Debtor agrees that Secured Party shall
have a lien upon and security interest in all property of Debtor of every kind
now or hereafter in the possession or control of Secured Party for any reason.
12. (a)Secured Party's rights and remedies hereunder, under other agreements or
instruments, and under applicable law (including the Uniform Commercial Code)
are cumulative and may be exercised successively or concurrently. Secured Party
shall not be deemed to have waived any of its rights hereunder, under any other
agreement or instrument, or under law except in a writing signed by Secured
Party. No delay or omission on the part of Secured Party in exercising any right
or remedy shall operate as a waiver thereof, and a written waiver on any one
occasion shall not be construed as a bar or waiver of any right or remedy on any
future occasion.
(b)Whenever there is no outstanding Secured Obligation and no commitment on
the part of Secured Party under any agreement which might give rise to a Secured
Obligation, Secured Party will deliver to Debtor a written termination of this
agreement upon written request therefor from Debtor. Prior to such termination
this shall be a continuing agreement in every respect.
(c)This agreement and all rights and obligations hereunder,
<PAGE>
including matters of construction, validity, and performance, shall be governed
by the laws of the state where the address of Secured Party set forth above is
located. This agreement is effective when signed by Debtor and delivered to
Secured Party, and binds Debtor and inures to the benefit of Secured Party and
their respective heirs, successors, and assigns. The provisions of this
agreement are severable, and the invalidity or unenforceability of any provision
hereof shall not affect the remaining provisions of this agreement.
(d)All terms used in this agreement which are not expressly defined herein
shall have the meaning, if any, assigned to them in Article 9 of the Uniform
Commercial Code.
(e)Time is of the essence of every provision of this
Agreement.
REVOLVING LOAN AGREEMENT
This Agreement dated May 2, 1997, made by and between SURGICAL SAFETY
PRODUCTS, INC., ("Borrower") and SOUTHTRUST BANK of Florida, National
Association ("Bank").
WITNESSETH:
That for valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and in consideration of the mutual promises herein made,
Bank and Borrower, intending to be legally bound, agree as follows:
ARTICLE I - THE REVOLVING LOAN
Section 1.1 Bank hereby agrees to lend to Borrower, and Borrower hereby
agrees to borrow from Bank, upon the terms and conditions set forth in this
Agreement, the principal sum of up to ONE HUNDRED THOUSAND AND NO/100
($100,000.00) (the "Revolving Loan"). Borrower's obligation is repay the
Revolving Loan and the interest thereon shall be evidenced by a promissory note
(the "Note") in form and substance satisfactory to Bank. Until the earlier of
MAY 2, 2017, or the occurrence of any Event of Default (as defined under Article
VI of this Agreement), or written notice to Borrower of Bank's election to
terminate the availability of new loans under this Agreement (which notice Bank
may give at its discretion, whether or not an Event of Default has occurred or
is threatened), Borrower may borrow hereunder, prepay the principal sum of such
loans in whole or in part without penalty, and reborrow hereunder, so long as
the aggregate unpaid principal balance of such loans does not exceed the maximum
principal amount set forth in the preceding sentence of this Section 1.1. Bank
may require at any time the loans be made
upon at least one banking day's notice to Bank. Bank may also require at any
time that loans be requested in writing on Bank's loan request form. Bank may
disburse each loan by credit to Borrower's transaction account with Bank, by
check, or in such other manner as Borrower and Bank may agree.
Section 1.2. Borrower agrees to pay interest on the Revolving Loan at
the rate(s), on the date(s) and calculated by the method, set forth in the Note.
Section 1.3. Unless payment is required to be made earlier under the
terms of the Note or pursuant to Section 6.2 of this Agreement following an
Event of Default, Borrower shall pay the unpaid principal balance of the
Revolving Loan in full on the maturity date of the Note.
Section 1.4. For the privilege of having the Revolving Loan
available, until the earlier of the termination of this Agreement
or the effective date of Bank's election to terminate the
availability of new loans, Borrower agrees to pay to Bank a
commitment fee of 0.00% per annum on the unused portion of the
maximum principal amount of the Revolving Loan, such fee to be
calculated and paid as follows:
- -------------------------------------------------------------
- -------------------------------------------------------.
ARTICLE II - COLLATERAL
Section 2.1. The repayment of Borrower of its indebtedness under the
Revolving Loan and the Note, and the performance by Borrower of all obligations
under this Agreement, shall be secured by every mortgage and every security
agreement (every "Separate Agreement") which secures obligations so defined as
to include the Revolving Loan or the Note, and by all property of Borrower in,
or coming into, the possession, control or custody of Bank, or it which Bank has
or hereafter acquires a lien, security interest, or other right, including
without limitation, the following (describe Collateral and Separate Agreements):
AS FURTHER DESCRIBED IN SECURITY AGREEMENT DATED 05/02/97.
(individually and collectively the "Collateral").
Section 2.2. Borrower shall execute and deliver, or shall
cause to be executed and delivered, such documents relating to the Collateral as
Bank may from time to time request.
ARTICLE III - REPRESENTATIONS AND WARRANTIES; CONDITIONS
PRECEDENT
Section 3.1. Borrower is a Corporation duly organized and existing
under the laws of the State of Florida, and is qualified to do business in all
jurisdictions in which it conducts its business.
<PAGE>
Section 3.2. The execution and delivery by Borrower of, and the
performance by Borrower of its obligations under, this Agreement, the Note and
the Separate Agreements have been duly authorized by all requisite action on the
part of Borrower and do not and will not (i) violate any provision of Borrower's
articles of incorporation by-laws, or other organizational documents, any law or
any judgment, order or ruling of any court or governmental agency, or (ii) be in
conflict with, result in a breach of, or constitute, following notice or lapse
of time or both, a default under any indenture, agreement or other instrument to
which Borrower is a party or by which Borrower or any of its property is bound.
Section 3.3. Each of this Agreement and the Note is the legal, valid
and binding agreement of Borrower enforceable against Borrower in accordance
with its terms.
Section 3.4. There are no pending or threatened actions or proceedings
before any court or administrative or governmental agency that may, individually
or collectively, adversely affect the financial condition or business operation
of Borrower.
Section 3.5. The financial statement dated ____________, previously
delivered by Borrower to Bank, fairly and accurately presents the financial
condition of Borrower as of such date and has been prepared in accordance with
generally accepted accounting principles consistently applied. Since the date of
that financial statement, there has been no mention adverse change in the
financial condition of Borrower, and, after due inquiry, there exists no
material contingent liability or obligation assertable against Borrower.
Section 3.6. All federal, state and other tax returns of Borrower
required by law to be filed have been completed in full and have been duly
filed, and all taxes, assessments and withholds shown on such returns or billed
to Borrower have been paid, and Borrower maintains adequate reserves and
accruals in respect of all such federal, state and other taxes, assessments and
withholdings. There are no unpaid assessments pending against Borrower for any
taxes or withholdings, and Borrower knows of no basis therefor.
Section 3.7. The obligations of Borrower under this Agreement and the
Note are not subordinated in right of payment to any other obligation of
Borrower.
Section 3.8. Borrower possesses all permits, memberships, franchises,
contracts, licenses, trademark rights, trade names, patents, and other
authorizations necessary to enable it to conduct its business operations as now
conducted, and no filing with, and no consent, permission, authorization, order
or license of, any individual, entity, or governmental authority is
necessary in connection with execution, delivery, performance or enforcement of
this Agreement or the Note.
Section 3.9. No event has occurred and is continuing which is, or which
with the giving of notice or lapse to time or both would be, an Event of Default
(as defined in Article VI) of this Agreement.
Section 3.10. Borrower has good and marketable title to all of its
properties and assets including, without limitation, the Collateral and the
properties and assets reflected in the above-described financial statement.
Section 3.11. The minimum funding standards of Section 302 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") have been
met at all times with respect to all "plans" of Borrower to whish such standards
apply; Borrower has not made a "partial withdrawal" or a "completed withdrawal"
from any "multi-employer plan"; and no "reportable event" or "prohibited
transaction" has occurred with respect to any such "plan" (as all of the quoted
terms are defined in ERISA).
Section 3.12. Except as otherwise expressly disclosed by Borrower to
Bank in writing on the date of this Agreement: No "hazardous substance" (as that
term is defined in Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ["CERCLA"]) has been
released, discharged, disposed of, or stored on any of Borrower's owned or
leased real or personal property by Borrower, by any third party, or by any
predecessor in interest or title to Borrower; Borrower and all of Borrower's
properties are in compliance with all applicable local, state and federal
environmental laws and regulations; no notice has been served on Borrower by any
governmental authority or any individual or entity claiming violation of any
environmental protection law or regulation, or demanding compliance with any
environmental protection law or regulation, or demanding payment, indemnity, or
contribution for any environmental damage or injury to natural resources; no
"hazardous substance" (as defined in CERCLA) is produced or used in Borrower's
business; and no improvement on any real property owned or leased by Borrower
contains any asbestos, including, without limitation, asbestos insulation on
ceilings, piping or structural members or supports.
Section 3.13. Bank shall not be obligated to make any loan under the
Revolving Loan until Borrower shall have furnished Bank, at Borrower's expense,
such evidence as Bank shall require regarding the truth or continue truth of the
foregoing representations and warranties, including, without limitation,
opinions of Borrower's outside legal counsel, opinions and certificates of
Borrower's independent certified public accountants, surveys, appraisals,
environmental audits by
<PAGE>
qualified environmental engineers selected by Bank, reports of other independent
consultants selected by Bank, and certificates of Borrower's officers. All such
evidence must be in form and content satisfactory to Bank.
ARTICLE IV - AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as it may borrow under this
Agreement or so long as any indebtedness remains outstanding under the Revolving
Loan or under the Note, Borrower shall:
Section 4.1. Deliver to Bank (i) within 30 days after fiscal quarter an
unaudited income and expense statement and balance sheet, (ii) within 120 days
after the end of each fiscal year statements of income and retained earnings of
Borrower for the just-ended fiscal year, and a balance sheet of Borrower as of
the end of such year, certified or compiled (at Bank's election) by the present
independent certified public accountants of Borrower or by such other firm of
independent public accountants as may be designated by Borrower and bee
satisfactory to Bank, and (iii) with reasonable promptness, such other
information as Bank may reasonably request.
Section 4.2. Maintain its books, accounts and records in accordance
with generally accepted accounting principles and shall permit any person or
entity designated in writing by Bank to visit and inspect any of its properties,
books and financial records, and to make copies thereof and take extracts
therefrom, and to discuss Borrower's financial affairs with Borrower's financial
officers and accountants.
Section 4.3. Pay and discharge all taxes, assessments, fees,
withholdings and other governmental charges or levies imposed upon it, or upon
its income and profits, or upon any property belonging to it, prior to the date
on which penalties attach thereto, unless the legality thereof shall be promptly
and actively contested in good faith by appropriate proceedings, and unless
adequate reserves for such liability are maintained by Borrower pending
determination of such contest.
Section 4.4. Maintain its existence in good standing in the state of
its organization or incorporation of its qualification and good standing in all
jurisdictions where such qualification is required under applicable law, and
conduct its business in the manner in which it is now conducted subject only to
changes made in the ordinary course of business.
Section 4.5. Promptly notify Bank in writing of the occurrence on any
Event of Default or of any pending or threatened litigation claiming damages in
excess of $25,000 or seeking relief that, if granted, would adversely affect the
financial condition or business operations of Borrower.
Section 4.6. Maintain and keep in force insurance of the types and in
the amounts customarily carried in lines of business similar to Borrower's and
such other insurance as Bank may require, including, without limitation, fire,
public liability, casualty, property damage, flood damage, and worker's
compensation insurance, which insurance shall be carried with companies and in
amounts satisfactory to Bank. All casualty and property damage insurance shall
name Bank as mortgagee or loss payee, as appropriate. Borrower shall deliver to
Bank from time to time at Bank's request copies of all such insurance policies
and certificates of insurance and schedules setting forth all insurance then in
effect.
Section 4.7. Keep all of its properties in good repair and condition,
and from time to time make necessary repairs, renewals and replacements thereto
so that Borrower's property shall be fully and efficiently preserved and
maintained.
Section 4.8. Perform or take, on request of Bank, such action as may be
necessary or advisable to perfect any lien or security interest in the
Collateral or otherwise to carry out the intent of this Agreement.
Section 4.9. Pay or reimburse Bank for any out-of-pocket expenses,
including attorney's fees, incurred by Bank in preparing or enforcing this
Agreement, the Note, and the Separate Agreements, or in collecting the Revolving
Loan and any other sum due under the Note or this Agreement after default by
Borrower in the payment thereof.
Section 4.10. Fund all of its "plans" to which the minimum funding
standards of Section 302 of ERISA apply in accordance with such standards;
furnish Bank, promptly upon Bank's request, copies of all reports or other
statements filed with, or received from, the United States Department of Labor,
the Internal Revenue Service, or the Pension Benefit Guaranty Corporation with
respect to all of Borrower's "plans"; and promptly advise Bank of the occurrence
of any "reportable event" or "prohibited transaction" with respect to any such
"plan" (as all of the quoted terms are defined in ERISA).
Section 4.11. Comply with all applicable present and future local,
state and federal laws, including, without limitation, environmental laws and
regulations; notify Bank immediately if any "hazardous substance" (as defined in
CERCLA) is released, discharged, disposed of, stored, or discovered on any real
or personal property owned or leased by Borrower; notify Bank in writing within
three days after Borrower receives notice from any governmental authority or any
individual or entity claiming violation of any environmental protection law or
regulation, or demanding compliance with any environmental protection law or
regulation, or demanding payment, indemnity, or contribution for
<PAGE>
any environmental damage or injury to natural resources; and permit Bank from
time to Time to observe Borrower's operations and to perform tests (including
soil tests and ground water tests) for "hazardous substances" on any real or
personal property owned or leased by Borrower.
Section 4.12. Maintain its principal transaction account with Bank.
Section 4.13. Use the proceeds of the Revolving Loan only for SHORT
TERM WORKING CAPITAL.
Section 4.14. THIS LINE OF CREDIT MUST BE PAID DOWN TO A
ZERO BALANCE FOR THIRTY CONSECUTIVE DAYS ANNUALLY DURING THE TERM
OF THE LOAN.
ARTICLE V - NEGATIVE COVENANTS
Borrower covenants and agrees that, without the prior written consent
of Bank, so long as it may borrow under this Agreement or so long as any
indebtedness remains outstanding under the Revolving Loan or under the Note,
Borrower shall not:
Section 5.1. Use any proceeds of the Revolving Loan except for the
purposes stated in Section 4.13.
Section 5.2. Make any additional investment in fixed assets
in any one fiscal year in excess of a yearly aggregate of
$---------------.
Section 5.3. Create, incur, assume, or suffer to exist any indebtedness
of any description whatsoever not existing as of the date of this Agreement,
except (I) indebtedness incurred under this Agreement, (ii) any trade
indebtedness incurred in the ordinary course of business payable within 60 days
of its incurrence, and (iii)________________________________________.
Section 5.4. Merge, consolidate or enter into a partnership or joint
venture with any other person or entity; or sell, lease, transfer or otherwise
dispose of all or any substantial portion of its assets, except sales of
inventory in the ordinary course of business, or change its name, or change the
location of its chief executive office.
Section 5.5. Guarantee or become contingently liable for any obligation
or indebtedness of any other person or entity, except that Borrower may endorse
negotiable instruments for collection in the ordinary course of business.
Section 5.6. Make any loans, advances or extensions of
credit to any person or entity ________________________________
- -------------------------------------.
Section 5.7. Pay or declare any dividend on any of its capital stock
after the date hereof, provided, however, that if Borrower is an S Corporation,
it may pay dividends not to exceed the amount of income taxes payable by its
shareholders attributable to Borrower's income.
- ----------------------------------------------------------------
- --------------------------------------------------------------.
Section 5.8. Grant any lien on or security interest in, or otherwise
encumber, any of its properties or assets including, without limitation, the
collateral, and, except for liens for taxes not yet due and payable or which are
being actively contested in good faith by appropriate proceedings and for which
adequate reserves are being maintained by Borrower and those liens disclosed to
Bank by Borrower in writing prior to the execution of this Agreement, Borrower
shall not permit to exist any lien, security interest or other encumbrance on
any of its properties or assets.
Section 5.9. Take, or fail to take, any act if such act or failure to
act results in the imposition of withdrawal liability under Title IV of ERISA.
Section 5.10. Release, discharge, dispose of, store, accept or receive
for storage or disposal, or allow to be stored or disposed of, any "hazardous
substance" (as defined in CERCLA) on or in any real or personal property owned
or leased by Borrower, except as otherwise expressly consented to by Bank in
writing; or release, discharge, use, transport, or dispose of any "hazardous
substance" in an unlawful manner.
Section 5.11.
(a) Permit its working capital to be at any time less
than $ n/a;
(b) Permit the ratio of its current assets to its
current liabilities to be at any time less than n/a to 1.0;
(c) Permit its tangible net worth to be at any time
less than $ n/a;
(d) Permit the ratio of its total liabilities to its
tangible net worth to be at any time greater than n/a to 1.0;
(e) Permit is Fixed Charge Coverage to be less than
n/a;
(f) Change the dates of its fiscal year now employed
for financial and accounting purposes;
(g)______________________________________________;
(h)______________________________________________.
ARTICLE VI - EVENTS OF DEFAULT AND REMEDIES
Section 6.1. Any one or more of the following shall
constitute an Event of Default hereunder by Borrower;
(a)Failure to pay when due any payment of principal or
interest due on the Note or any other sum due hereunder;
or
(b)Failure to pay when due any payment of principal or interest due on
any other obligation for money borrowed or the deferred purchase price of goods
or services; or
<PAGE>
(c)Default under any Separate Agreement or any other document, note,
agreement, mortgage, security agreement, instrument, or understanding with, held
by, or executed in favor of Bank; or
(d)Should any representation or warranty contained herein or made by or
furnished on behalf of Borrower in connection herewith be false or misleading in
any material respect as of the date made; or
(e)Failure to perform or observe any covenant or agreement
contained in Articles IV or V of this Agreement; or
(f)Failure to pays its debts generally as they become due;
or
(g) Borrower's or any Guarantor's making or taking any action to make
an assignment for the benefit of creditors, or petitioning or taking any action
to petition any tribunal for the appointment of a custodian, receiver or any
trustee for it or a substantial part of its assets, or commencing or taking any
action to commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or debtor relief law
or statute of any jurisdiction, whether now or hereafter in effect, including
without limitation, any chapter of the federal Bankruptcy Code; or, if there
shall have been filed or commenced against Borrower or any Guarantor any such
petition, application or proceeding which is not dismissed within 30 days or in
which an order for relief is entered; or should Borrower or any such Guarantor
by any act or omission indicate its approval of or acquiescence in any such
petition, application or proceeding or order for relief or the appointment of a
custodian, receiver or any trustee for it or any substantial part of any of its
properties; or should Borrower or any such Guarantor suffer to exist any such
custodianship, receivership or trusteeship; or
(h) Borrower's or any Guarantor's concealing, removing, or permitting
to be concealed or removed, any part of its property, with intent to hinder,
delay or defraud its creditors or any of the, making or suffering a transfer of
any of its property which may be fraudulent under any bankruptcy, fraudulent
conveyance or similar law; or making any transfer of its property to or for the
benefit of a creditor at a time when other creditors similarly situated have not
been paid, or suffering or permitting, while insolvent, any creditor to obtain a
lien upon any of its property through legal proceedings or distraint which is
not vacated within 30 days after the date thereof; or
(i) Occurrence of any of the following with respect to
Borrower or any Guarantor: death (if individual), death of a
general partner (if a partnership), dissolution or cessation of
business (if a partnership, corporation, or other organization),
or insolvency. Section 6.2. Upon the occurrence and continuation of an Event of
Default, Bank may (i) terminate all obligations of Bank to Borrower, including,
without limitation, all obligations to lend money under this Agreement, (ii)
declare immediately due and payable, without presentment, demand, protest or any
other notice of any kind, all of which are expressly waived, the Note and any
other note of Borrower held by Bank, including, without limitation, principal,
accrued interest and costs of collection (including, without limitation, a
reasonable attorney's fee if collected by or through an attorney who is not a
salaried employee of Bank, in bankruptcy or in other judicial proceedings) and
(iii) pursue any remedy available to it under this Agreement, under the Note,
under any note of Borrower held by Bank, or available at law or in equity.
ARTICLE VII - DEFINITIONS
Section 7.1.
As used in this Agreement, the following terms shall have the meanings
set forth below:
(a) Accounting terms used in this Agreement such as "net income",
"working capital", "current assets", "current liabilities", "tangible net
worth", and "total liabilities" shall have the meanings normally given them by,
and shall be calculated, both as to amounts and classification of items, in
accordance with, generally accepted accounting principles.
(b) "Agreement" means this Revolving Loan Agreement, as amended or
supplemented in writing from time to time.
(c) "Bank" means the banking corporation or association name in the
first sentence of this Agreement and which executes this Agreement below as
"Bank".
(d) "Borrower" means the person or entity named in the first sentence
of this Agreement and who executes this Agreement below as "Borrower". For the
purposes of Section 3.11, 4.10, and 5.9, such term also includes any member of a
"controlled group" (as defined in ERISA) of which the named Borrower is a
member.
(e) "CERCLA" is defined in Section 3.12.
(f) "Collateral" is defined in Section 2.1.
(g) "ERISA" is defined in Section 3.11.
(h) "Event of Default" is defined in Section 6.1.
(i) "Fixed Charge Coverage" means a fraction in which the
numerator is the sum of the net income of Borrower (after provision for federal
and state taxes) for the 12-month period proceeding the applicable date plus the
interest, lease and rental expense of Borrower for the period plus the sum of
non-cash expenses or allowances for such period (including, without limitation,
amortization or write-down of intangible assets, depreciation, depletion, and
deferred taxes and expenses) and the
<PAGE>
denominator is the sum of the current portion of the long-term debt of Borrower
as of the applicable date plus the interest, lease and rental expenses for the
12-month period proceeding the applicable date. If Borrower has elected
treatment as an S Corp9oration under the Internal Revenue Code, however, "Fixed
Charge Coverage" means a fraction in which the numerator is the sum of the net
income of Borrower (after deduction of an amount equal to the federal and state
income taxes, calculated at the marginal rates which would otherwise have been
applicable to Borrower at such time, which Borrower would have been required to
pay if it had not elected treatment as an S Corporation for federal and state
income tax purposes) for the 12-month period preceding the applicable date plus
the interest, lease and rental expenses of Borrower for the period plus the sum
of noncash expenses or allowances for such period (including, without
limitation, amortization or write-down of intangible assets, depreciation,
depletion, and expenses), and the denominator is the sum of the current portion
of the long-term debt of Borrower as of the applicable date plus the interest,
lease and rental expenses for the 12-month period preceding the applicable date.
(j) "Guarantor" means any person or entity who endorses the Note or who
now or hereafter guarantees payment or collection of the Revolving Loan in whole
or in part.
(k) "Note" is defined in Section 1.1 and includes any promissory note
or notes given in extension or renewal of, or in substitution for, the original
Note.
(l) "Revolving Loan" is defined in Section 1.1.
(m) "Separate Agreement" is defined in Section 2.1.
ARTICLE VIII - MISCELLANEOUS
Section 8.1. No delay or failure on the part of the Bank in the
exercise of any right, power or privilege granted under this Agreement or the
Note, or available at law or in equity, shall impair any such right, power or
privilege or be construed as a waiver of any Event of Default or any
acquiescence therein. No single or partial exercise of any such right, power or
privilege shall preclude the further exercise of such right, power or privilege.
No waiver shall be valid against Bank unless made in writing or signed by Bank,
and then only to the extent expressly specified therein.
Section 8.2. All notices and communications provided for hereunder
shall be in writing, delivered by hand or sent by first-class or certified mail,
postage prepaid to the following addresses:
(a) If to Bank SOUTHTRUST BANK of Florida
National Association
1800 SECOND STREET
SARASOTA, FL 34236
Attention: THOMAS A. MARTIN, JR.
FIRST VICE PRESIDENT
(b) If to Borrower:
SURGICAL SAFETY PRODUCTS, INC.
2018 OAK TERRACE, SUITE 400
SARASOTA, FL 34231
Attention: G. MICHAEL SWOR President
Either Borrower or Bank, or both, may change its addresses for notice of
purposes by notice to the other party in the mater provided herein.
Section 8.3. This Agreement and the Note shall be governed by and
construed and enforced in accordance with the substantive laws of the United
States and the state in which the principal office of Bank is located, without
regard to that state's rules governing conflicts of law.
Section 8.4. All representations and warranties contained in this
Agreement or made or furnished on behalf of Borrower in connection herewith
shall survive the execution and delivery of this Agreement and the Note, shall
be deemed to be made anew each time Borrower requests a loan under this
Agreement, and shall survive until the Revolving Loan and all interest thereon
are paid in full.
Section 8.5. This Agreement shall bind and inure to the benefit of
Borrower and Bank, and their respective successors and assigns; provided,
however, Borrower shall have no right to assign its rights or obligations
hereunder to any person or entity.
Section 8.6. Time is of the essence in the payment and performance of
every term and covenant of this Agreement and the Note.
Section 8.7. This Agreement may be amended or modified, and Borrower
may take any action herein prohibited, or omit to perform any action required to
be performed by it, only if Borrower shall obtain the prior written consent of
Bank to such amendment, modification, action or omission to act, and no course
of dealing between Borrower and Bank shall operate as a waiver of any right,
power or privilege granted under this Agreement, under the Note or the Separate
Agreements, or available at law or in equity. This Agreement, the Note, and the
Separate Agreement contain the entire agreement between Borrower and Bank
regarding the Revolving Loan and the Collateral. No oral representations or
statements shall be binding on Bank, and no agent of Bank has the authority to
vary the terms of this Agreement except in
<PAGE>
writing on the face hereof or on a separate page attached hereto.
Section 8.8. All rights, powers and privileges granted
hereunder shall be cumulative, and shall not be exclusive of any other rights,
powers and privileges granted by the Note or any other document or agreement, or
available at law or in equity.
Section 8.9. Upon the occurrence and during the continuation of an
Event of Default, Borrower recognizes Bank's right, without notice or demand, to
apply any indebtedness due or to become due to Borrower from Bank in
satisfaction of any of the indebtedness, liabilities or obligations of Borrower
under this Agreement, under the Note, or under any other note, instrument,
agreement, document or writing of Borrower held by or executed in favor of Bank,
including, without limitation, the right to set off against any deposits or cash
collateral of Borrower held by Bank. In addition to the right to setoff, as
additional collateral for the Revolving Loan, Borrower hereby grants to Bank a
continuing lien on and security interest in all deposit accounts of Borrower now
or hereafter held by Bank, including all certificates of deposit now or
hereafter issued to Borrower by Bank.
Section 8.10. Borrower hereby agrees to indemnify Bank and its
officers, directors, agents and attorneys against, and to hold Bank and all such
other persons harmless from, any claims, demands, liabilities, costs, damages,
and judgments (including without limitation, liability under CERCLA, the Federal
Resource Conservation and Recovery Act, or other environmental law or
regulation, and costs of defense and attorneys' fees) resulting from any
Representation or Warranty made by Borrower or on Borrower's behalf pursuant to
Article III of this Agreement having been false when made, or resulting from
Borrower's breach of any of the covenants set forth in Articles IV or V of this
Agreement. This Agreement of indemnity shall be a continuing agreement and shall
survive payment of the Revolving Loan and the Note and termination of this
Agreement.
WITNESS the hand and seal of the parties hereto or as of the date first
above written.
BANK: SOUTHTRUST BANK of Florida BORROWER: SURGICAL SAFETY
National Association PRODUCTS, INC.
By: /S/Thomas A Martin By:/s/ G Michael Swor
THOMAS A. MARTIN, JR. G. MICHAEL SWOR
Title: First Vice President Title: President
Attest: ____________________
Title: _____________________
(Corporate Seal)
<PAGE>
GUARANTY OF PAYMENT
THIS GUARANTY OF PAYMENT (this "Guaranty") is made by the undersigned
(whether one or more, herein collectively called the "Guarantor") with
SOUTHTRUST BANK of Florida, National Association (herein called the "Bank"),
a/an National Association bank having its principle office located at 1800
SECOND STREET, SARASOTA, FL;
WITNESSETH:
To induce Bank to make a loan or to extend credit or make other
financial products available to SURGICAL SAFETY PRODUCTS, INC., (as hereinafter
further defined, called the "Borrower"), and for the consideration set forth
below, Guarantor hereby agrees with the Bank as follows:
1. This Guaranty is made for the purpose of securing to Borrower, at
Guarantor's request, one or more loans or other extensions of credit from, or a
line of credit with, or the issuance of one or more letters of credit by, or the
issuance of one or more bankers' acceptances by, or the lease of personal
property from, or the furnishing of other financial products or services by
Bank, but the amount of the loan or other financial products or services now or
hereafter provided by Bank to Borrower, and all extensions or renewals of debts
or other obligations now or at any time hereafter owning by Borrower to Bank,
are made by Bank in reliance on this Guaranty, and are the consideration for the
execution and delivery of this Guaranty by Guaranty by Guarantor. Each term and
provision of every promissory note or other evidence of debt, and every loan
agreement, security agreement, mortgage, deed to secure debt, deed of trust,
letter of credit, reimbursement agreement, bankers' acceptance agreement, lease
agreement, and every other contract executed by Borrower and delivered to Bank,
shall bind Guarantor as if executed by Guarantor as the primary and individual
obligation of Guarantor.
2. Guarantor, joint and severally if more than one, hereby
unconditionally guarantees the Bank the payment and performance by Borrower of
all of the Guaranteed Obligations (as hereafter defined). This Guaranty is a
guaranty of payment and performance and not of collection. In the event Borrower
at any time defaults in the payment or performance of any of the Guaranteed
Obligations as and when the same becomes due, whether by acceleration of
maturity of the debt or obligation or otherwise, Guarantor agrees to pay such
debt or perform such obligation immediately. Upon failure of Guarantor to do so,
Bank may, in its discretion, enforce the collection of such debt or the
performance of such obligation out of Guarantor by action in any court of
competent jurisdiction, or in any manner provided by law, the same as if such
debt or obligation were the primary and individual debt or obligation of
Guarantor, and without first seeking to enforce such debt or obligation by
action or otherwise against Borrower; or, Bank may in its discretion, proceed in
any manner provided by law or by contract for collection of debts against either
or both Guarantor and Borrower the same as if such debts and obligations were
primarily and individually the debt of both Guarantor and Borrower, jointly and
severally. (The remainder of this paragraph applies only if this box is marked
|_| Guarantor's liability under this Guaranty is limited to the sum of
$___________, plus interest accrued on the sum prior to default at the rate
provided for interest on the guaranteed obligations and the interest on the sum
after default at the rate provided for interest following default by Borrower,
plus all costs (including attorneys' fees) incurred by Bank in collecting any
sum owed by Guarantor hereunder following default by Borrower and payments made
by any other person (including any other Guarantor) will not reduce each
Guarantor's maximum liability under this Guaranty. Guarantor agrees that
Borrower's obligation to Bank may exceed any limitation of liability of
Guarantor (individually and in the aggregate, if more than one) under this
Guaranty.
3. This is a continuing Guaranty. This Guaranty extends to all debts
and other obligations now contracted or owing by Borrower to Bank and also to
all debts and other obligations contracted or owing by Borrower to Bank in the
future at any time up to the time this Guaranty is terminated pursuant to the
provisions of this paragraph, even though from time to time and for extended
periods of time there may be no debt or obligation owed to Bank by Borrower.
Subject to the provisions which follow, Guarantor shall have the right to
terminate this Guaranty at any time effective ten (10) days after receipt by the
then president of Bank of written notice of Guarantor's intention to terminate
this Guaranty. Such termination will have prospective effect only and will not
affect Guarantor's obligations with respect to, and this Guaranty will remain in
full force and effect with respect to, all of the Guaranteed Obligations then
due and owing or then contracted for or existing, whether or not yet due, at the
time such notice becomes effective, and all interest then accrued or thereafter
accruing on any of the foregoing, and all expenses, including costs of
collection and attorneys's fees, with respect to such Guaranteed Obligation and
with respect to this Guaranty, and all obligations described in
<PAGE>
paragraph 4e. Of this Guaranty, whether then existing or arising in the future,
and also with respect to any subsequent loans, extensions of credit, and other
financial accommodations which, prior to receipt of such notice, Bank may have
committed to make to Borrower (regardless of whether Bank waives any default or
condition precedent to the making of such loans, extensions of credit, or other
financial accommodations), together with all interest thereon and all expenses,
including costs of collection and attorney's fees related thereto.
4. Guarantor's obligations under this Guaranty are secured by the
following property and/or separate agreements provided by Guarantor
___________________________________________________ ____________________(The
foregoing is for ease of reference only; failure to describe any property or any
separate agreement which by its terms secures this Guaranty does not constitute
a waiver of such property or separate agreement as collateral for Guarantor's
obligations hereunder.) Guarantor hereby assigns to Bank and grants to Bank, as
additional collateral and in addition to any applicable right of set off, a
security interest in all deposit accounts now or hereafter owned to Guarantor by
Bank and all personal property of Guarantor now or hereafter in the actual or
constructive possession or control of Bank.
5. Guarantor hereby irrevocably:
a. Assents to all terms and agreement heretofore or hereafter made by
Borrower with Bank, including, but without limitation, agreements regarding the
manner of disposing of any collateral in a commercially reasonable manner and
agreements regarding the manner of giving notice and the time of giving notice
of any sale or other intended disposition of any of such collateral;
b. Consents that Bank may, without discharging Guarantor or in any way
affecting the obligations of Guarantor under this Guaranty: (i) exchange,
release, or surrender to Borrower or to any guarantor or any other person, or
waive, release, subordinate, fail to perfect any lien or security interest in,
or otherwise impair, any collateral now or hereafter held as security for any of
the Guaranteed Obligations or any right of setoff against any deposit account of
Borrower; (ii) waive or delay the exercise of any of its rights or remedies
against Borrower or any other person or entity, including, without limitation
Guarantor; (iii) with or without consideration, release Borrower or any other
person or entity, including, without limitation, any other guarantor of the
Guaranteed Obligations; (iv) renew, extend, or modify the terms of any of the
Guaranteed Obligations or of any promissory note or other instruments or
agreement evidencing the same; (v) apply payments by Borrower, Guarantor, or any
other person or entity to any of the Guaranteed Obligations in such manner and
in such order as Bank may elect; (vi) apply payments received for Borrower's
account first to pay any indebtedness of Borrower that is not guaranteed by
Guarantor, if any, before reducing the Guaranteed Obligations; and (vii) in the
event of the filing of a petition (whether voluntary or involuntary) under any
chapter of the federal Bankruptcy Code with respect to Borrower, participate in
the bankruptcy proceeding and exercise any and all rights set forth in clauses
(i) through (vi) above, including, but without limitation, voting for or against
any plan of reorganization, consenting to the use of any cash collateral,
consenting to the sale, use or lease of any collateral securing any of the
Guaranteed Obligations, and entering into any compromise or settlement regarding
the Guaranteed Obligations or any collateral therefor.
c. Waives all notices whatsoever with respect to this Guaranty or with
respect to the Guaranteed Obligations or any collateral therefor, including, but
without limitation, notice of (i) Banker's acceptance of this Guaranty or its
intention to act, or its action, in reliance hereon; (ii) the present existence
or future incurring of any of the Guaranteed Obligations or the terms or amounts
thereof or any change therein; (iii) any default by Borrower or any surety,
pledger, grantor of any lien or security interest, or guarantor, including,
without limitation, Guarantor, (iv) the obtaining or release of any guaranty or
surety agreement (in addition to this Guaranty), or any pledge assignment,
security agreement, mortgage, deed to secure debt, deed of trust, or other
security for any of the Guaranteed Obligations.
d. Waives demand, dishonor, protest, notice of presentation and notice
of nonpayment or dishonor with respect to any promissory note or other
instrument or agreement now or hereafter evidencing any of the Guaranteed
Obligations, and any other demands and notices, except such notices as are
required by law and cannot be waived, and waives any requirement that suit under
this Guaranty be brought within any period of time shorter than the general
statute of limitations applicable to contracts under seal.
e. Agrees that, if at any time al or any part of any
payment previously applied by Bank to any of the Guaranteed
<PAGE>
Obligations must be returned by Bank for any reason, whether upon the claim of
preference, fraudulent transfer, prior lien, or other claim of a creditor,
debtor-in-possession, trustee in bankruptcy or other representative of creditors
of Borrower, or otherwise, and whether by court order, administrative order, or
non-judicial settlement, this Guaranty shall continue in effect or shall be
reinstated, as the case may be, and Guarantor shall remain liable for the full
amount returned as if such amount had never been received by Bank,
notwithstanding any termination of this Guaranty (whether under paragraph 3
above or otherwise) or cancellation of any promissory note or other instrument
or agreement evidencing any of the Guaranteed Obligations.
f. Waives acceptance of this Guaranty by Bank and agrees that this
Guaranty will be valid and binding upon Guarantor when delivered to Bank by
anyone having possession hereof after execution of this Guaranty by Guarantor;
g. Agrees that Guarantor's liability under this Guaranty is
absolute and is not conditioned on the execution of this or any
similar guaranty by any other person or upon the occurrence or
nonoccurrence of any other event;
h. Waives any right to require Bank to marshal the assets of Borrower
or any other person and agrees that Bank may proceed against any collateral
securing the Guaranteed Obligations (whether or not Guarantor or any other
person holds a lien on only a part of such collateral) and against parties
liable on any of the Guaranteed Obligations in such order as Bank my elect, the
benefit of any rule of law or equity to the contrary being hereby expressly
waived by Guarantor;
i. Agrees that the liability of Guarantor under this Guaranty shall not
be affected or impaired by, and this Guaranty shall remain fully enforceable
against Guarantor for the full amount of the Guaranteed Obligations less only
payments thereon actually received and retained by Bank irrespective of and
without reduction on account of (i) any defense, offset, or counterclaim which
Borrower must have or assert with respect to any of the Guaranteed Obligations,
including, but without limitation, filing of a petition in bankruptcy, discharge
in bankruptcy, confirmation of a plan of reorganization (whether Bank voted for
or against such plan), composition with creditors (whether or not including
Bank), failure of consideration, breach of warranty, statute of frauds, statute
of limitations, accord and satisfaction, waiver, estoppel, release, usury, or
fraud or misrepresentation,(ii) termination of any present or future
relationship between Guarantor and Borrower or between Guarantor and Borrower or
between Guarantor and any other guarantor of any obligations of Borrower, or
(iii) death, incompetency, or dissolution of Guarantor or Borrower;
j. Agrees that Bank may, at is election, release or satisfy
of record any collateral for this Guaranty only after any
applicable preference periods have elapsed; and
k. Subordinates any right of subrogation against Borrower to Bank's
rights under the Guaranteed Obligations and agrees that Guarantor shall have no
right to any payment or reimbursement from Borrower on account of any sums paid
under this Guaranty until the Guaranteed Obligations have been paid and
discharged in full.
6. Guarantor hereby wholly subordinates all claims which Guarantor may
now or hereafter have against Borrower to all debts and other obligations which
Borrower may now or hereafter owe to Bank, and assigns all such claims to Bank
as additional collateral for the Guaranteed Obligations. This agreement of
subordination and assignment shall survive the termination of this Guaranty, and
shall remain in effect until all Guaranteed Obligations existing on the date of
such termination, whether or not then due, and all interest then accrued and
thereafter accruing thereon, together with all expenses, including collection of
costs and attorneys' fees, are paid and performed in full. Until full payment
and performance are made, Guarantor agrees not to accept any payment or
satisfaction of any kind on, or any security for, any of the claims hereby
subordinated. If Guarantor should receive any such payment or security Guarantor
agrees to deliver the same immediately to Bank in the form received, endorsed or
assigned to Bank or in bland as Bank may require, for application on account of,
or as security for, the Guaranteed Obligations. Until such payment or security
is delivered to Bank, Guarantor agrees to hold the same in trust for Bank. If at
any time any of the claims hereby subordinated is evidenced by any promissory
note, chattel paper, or other instrument or writing, Guarantor agrees to affix
to every such writing, in form and manner satisfactory to Bank, a statement that
the writing is subject to the terms of this Guaranty and, upon request of the
Bank, agrees to endorse and deliver any such writing to Bank as additional
collateral for the Guaranteed Obligations. Bank will not be under any duty to
take any action in connection with any such writing and will not be responsible
in any respect in connection therewith, whether for any action it may take or
refrain from taking against prior parties thereto or
<PAGE>
otherwise, except to use reasonable care in the custody of the writing, and
except for willful misconduct of its employees. At the request of Bank,
Guarantor agrees to cause Borrower to mark Borrower's records to indicate that
the claims of Guarantor against Borrower are subordinate to the claims of Bank
against Borrower and have been assigned to Bank as collateral. In the event
Borrower at any time defaults in the payment of any debt owing to Bank when due,
whether by acceleration of maturity or otherwise, Bank may, in its own name or
that of Guarantor, compromise, collect, sue on, and give receipt for all claims
hereby assigned by Guarantor. If Borrower files or has filed against it a
petition under any chapter of the Bankruptcy Code, Bank may file proofs of
claims in its own name with respect to the claims hereby assigned and may vote
such claims in the bankruptcy proceedings.
7. Guarantor acknowledges that the statute of limitations applicable to
this Guaranty shall begin to run only upon Guarantor's failure or refusal to pay
any of the Guaranteed Obligations following default in the payment or
performance thereof by Borrower; provided, that if subsequent of such default,
Bank reaches an agreement with Borrower on any terms causing Bank to forebear in
the enforcement of its claims against Guarantor, the statute of limitations
shall be reinstated for its full duration until Borrower again defaults.
8. Guarantor hereby consents to the jurisdiction of any state or
federal court holding in the county or district in which Bank's principal office
is located and, to the extent permitted by applicable law, waives any objection
based on venue or forum non conveniens with respect to any action instituted in
any such court and agrees that such court shall be the exclusive venue for any
action under this Guaranty or concerning or relating to the relationship between
Guarantor and Bank or the obligations of Guarantor with respect to any of the
Guaranteed Obligations, and agrees that process in any such action will be
sufficient if served on Guarantor by certified mail, return receipt requested,
or in any manner provided by law. Notwithstanding the foregoing, Bank shall have
the right to bring any action or proceeding against Guarantor or Guarantor's
property in the courts of any other jurisdiction Bank deems necessary or
appropriate in order to enforce the obligations of Guarantor under this
Guaranty.
9. Guarantor hereby agrees to pay all costs of collecting under this
Guaranty after default by Guarantor, including, but without limitation, court
costs, litigation expenses and attorneys' fees in the amount which is 15 percent
of the unpaid balance of the Guaranteed Obligations at the time of default by
Borrower, including attorney's fees incurred by Bank in connection with any
bankruptcy or other court or receivership proceedings involving Guarantor, and
in connection with any workout of obligations of Guarantor to Bank hereunder,
whether involving court proceedings or not. If attorney's fees in such amount
would be prohibited by applicable law, then Guarantor agrees to pay reasonable
attorneys' fees exceeding the maximum amount allowed by law. Each provision of
this Guaranty for the payment of attorneys' fees by Guarantor shall be construed
by reference to the provisions of this paragraph 8.
10. As used in this Guaranty, the following terms have the
following meanings:
"Borrower" means the debtor identified above in this Guaranty, together
with his, her, its or their heirs, administrators, executors, successors, and
assigns, including any resulting or surviving corporation following any merger
or any other reorganization, and also includes any debtor-in-possession or
similar entity following the filing of a petition for relief by or against
Borrower under any chapter of the federal Bankruptcy Code or in any similar
proceeding under state or federal law, and also includes any proprietorship,
partnership, corporation, trust, or other entity resulting from or arising out
of the dissolution liquidation or change in form of business organization by
Borrower or following any change of name or domicile by Borrower.
"Guaranteed Obligations" means all debts and other obligations now owed
to Bank by Borrower, all debts and other obligations in the future owed to Bank
by Borrower, all extensions and renewals of any of such debts or obligations,
and all interest and other lawful charges on any or all of such debts and
obligations, including, but without limitation, late charges, penalty interest,
and costs of collection (including reasonable attorney's fees) which Borrower
has agreed to pay to Bank, or for which Borrower has agreed to reimburse Bank,
or for which Borrower is obligated to Bank under applicable law, together with
each and every promissory note or other instrument or writing now or hereafter
evidencing the obligation of Borrower to pay any such debt, the interest
thereon, or such other charges: whether such debts or other obligations are now
foreseen or unforeseen; whether now due or to become due in the future; whether
incurred with or without notice to Guarantor; whether arising from contract,
tort, or otherwise; whether arising from an original obligation of Borrower to
Bank or from an obligation of Borrower
<PAGE>
which was purchased by Bank from another; whether from time to time increased,
or reduced, or entirely extinguished and then reincurred; whether direct or
indirect, absolute or contingent or secured or unsecured; whether otherwise
guaranteed or not; and whether arising gout of a loan of money or other
extension of credit, an overdraft on a deposit account or line of credit account
with Bank, use of a credit card or cards, a sale or lease of goods, the issuance
of a letter of credit or bankers' acceptance, the purchase, discount, acceptance
or certification of a note, check or draft, any combination of the foregoing, or
otherwise. The Guaranteed Obligations include, without limitation, interest and
other charges on any debt or obligation of Borrower to Bank accruing after the
filing of a petition under any chapter of the federal Bankruptcy Code by or
against Borrower and any loans or other credit or financial products or services
extended to Borrower after the filing of any such petition. The Guaranteed
Obligations specifically are not limited to debts and other obligations
contracted for or arising concurrently with or prior to the execution of this
Guaranty and are not limited in amount unless otherwise specifically set forth
in writing in this Guaranty.
11. No delay by Bank in enforcing its rights hereunder shall prejudice
Bank's rights to enforce this Guaranty. All of Bank's rights and remedies under
this Guaranty, under any other agreement, and under applicable law shall be
cumulative, and any failure of Bank to exercise any such right or remedy shall
not be construed as a waiver of the right to exercise the same or any other
right or remedy at any time, and from time to time, thereafter. No waiver by
Bank shall be effective unless made in writing by a duly authorized officer or
agent of the Bank, and no waiver by Bank of any right or remedy shall constitute
a waiver of any other or future right or remedy. This Guaranty shall inure to
the benefit of the Bank, its successors and assigns, and to any person to whom
Bank may grant an interest in any of the Guaranteed Obligations, and shall be
binding upon Guarantor, and his, her, its, or their respective heirs, executors,
administrators, successors, and assigns. This Guaranty shall be governed,
construed, and enforced in accordance with the substantive laws of the United
States and the state in which Bank's principal office is located, without regard
to principles of conflict of laws. This Guaranty is intended to take effect as a
document under seal.
12. This Guaranty sets forth the entire agreement and understanding of
Guarantor with respect to the subject matter hereof. Guarantor acknowledges that
no agent of Bank has made any representation which is inconsistent with any of
the terms of this Guaranty and that no officer or agent of Bank has the
authority to vary the terms of this Guaranty except in a writing signed by a
duly authorized officer of Bank. The making of loans and providing of the other
financial services referred to in this Guaranty shall be solely in the
discretion of the Bank, and reference thereto in the Guaranty, whether in
paragraph 1 hereof or elsewhere, shall not be deemed to be a commitment by Bank
to make any loan or provide any financial service. In the event any one or more
of the provisions of this Guaranty shall be invalid, illegal or unenforceable in
any respect, the validity, legality and enforce ability of the remaining
provisions of this Guaranty shall not in any way be affected or impaired
thereby. If more than one person or entity signs this Guaranty below, the
liability of such persons or entities on this Guaranty is joint and several, and
all references to the singular in this Guaranty also include the plural. In the
event of termination of this Guaranty as to any one or more of such Guarantors,
this Guaranty shall continue in full force and effect with respect to the
remaining Guarantors. Bank may file a photocopy of this Guaranty as a financing
statement in any public office.
IN WITNESS WHEREFOR, each of the Guarantors has hereunto set his or her
hand and seal or has caused this Guaranty to be executed by its officer(s) or
partner(s) thereunto duly authorized and its corporate seal to be affixed
hereto, on the date first above written.
WITNESS(ES) GUARANTOR(S)
(Individual Guarantors sign below)
____________________ /s/ G Michael Swor [seal]
G. MICHAEL SWOR
____________________ /s/ Andrea Swor [seal]
ANDREA SWOR
____________________ __________________________[seal]
____________________ __________________________[seal]
(Corporate and Partnership
Guarantors sign below)
ATTEST:
- -------------------- -----------------------------
Title
[corporate seal] By: _________________________
Title
<PAGE>
SOUTHTRUST
BANK [LOGO]
AGREEMENT TO PROVIDE ACCIDENTAL PHYSICAL DAMAGE INSURANCE
Date: 05/02/97
To provide protection against serious loss should an accident or damage occur, I
understand that my installment contract required that the vehicle be
continuously covered with insurance against the risks of fire, theft, and
collision, and that failure to provide such insurance gives SouthTrust Bank the
right to declare the entire unpaid balance immediately due and payable.
Accordingly, I have arranged for the required insurance through the insurance
company shown below and have requested that the policy contain a loss payable
endorsement in favor of SouthTrust Bank.
1800 SECOND STREET
SARASOTA, FL 34236
City, State, Zip
PURCHASER
Name (First, Middle, Last) Phone:
SURGICAL SAFETY PRODUCTS, INC.
Street Address
2018 OAK TERRACE, SUITE 400
City, State, Zip
VEHICLE INSURED
Year Make Body Model Serial No.
INSURANCE AGENT INSURANCE COMPANY
Name (First Middle, Last) Name:
Street Address Policy No:
City, State, Zip Effective Date
From To
Phone Coverage Deductible
|_|XFire/Theft |_|Collision
|_| Comprehensive $____________
Purchaser Signature: Date: 05/02/97
DEALER CONFIRMATION
Dealer Phone
|_| Agency |_|Insurance Company Name of Person Date Loss Payee
|_| Yes |_| No
Confirmed by Name Confirmed by Signature Date:
<PAGE>
WAIVER OF LANDLORD'S LIEN
STATE OF FLORIDA )
)
Sarasota COUNTY )
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned Savannah Leasing, Inc., G. Michael Swor and Andrea
Swor (whether one or more, hereinafter called "Landlord") is the owner of the
real property located in the State of Florida, Sarasota County, described as
follows:
2018 OAK TERRACE, SARASOTA, FLORIDA
Landlord has leased said real property to SURGICAL SAFETY PRODUCTS, INC.
("Tenant"). Landlord recognizes that all equipment and/or inventory owned by
Tenant and now or hereafter installed in or located on said real property is to
be collateral for loans made by SOUTHTRUST BANK OF FLORIDA, NATIONAL ASSOCIATION
("Bank") to Tenant. To induce Bank to make such loans to Tenant, and in
consideration of such loans, Landlord hereby (a) agrees with Bank that all
machinery, furniture and equipment now or hereafter owned by Tenant and now or
at any time hereafter located on said real property shall remain personal
property and may be removed by Bank at any time; and (b) waives and subordinates
in favor of Bank (but not in favor of any other person or entity) any right,
title, lien or claim which Landlord (or any of them, if more than one) might
otherwise have, whether by statute, agreement or otherwise in, to or on any of
said machinery, furniture, or equipment and in, to or on any inventory (as
defined in the Uniform Commercial Code) now or hereafter owned by Tenant and now
or at any time hereafter located on said real property.
IN WITNESS WHEREOF, Landlord has executed these presents, or has caused
these presents to be executed by its officer or partner thereunto duly
authorized, this 2ND day of MAY, 1997.
Savannah Leasing, Inc.
(Name of Corporation, Partnership
Or firm)
_____________________ By:/s/J Stuart Title: President
Witness James D. Stuart
And
_____________________ G. Michael Swor Andrea Swor
Witness (Name of Individual)
<PAGE>
INDIVIDUAL ACKNOWLEDGMENT
STATE OF FLORIDA
COUNTY OF ___________
The foregoing instrument was acknowledged before me this ____ day of
___________, 19____ by ________________________ |_| who is personally known to
me |_| who has produced ___________________ ______________ as identification,
and who did not take an oath.
- ------------------------------
Notary Signature
- --------------------------------------
Notary Name (typed, Printed or Stamped)
- --------------------------------------
Serial Number
CORPORATE ACKNOWLEDGMENT
STATE OF FLORIDA
COUNTY OF ___________
The foregoing instrument was acknowledged before me this ____ day of _______,
19____ by _________________, A ___________________ corporation, on behalf of the
corporation. He/She |_| who is personally known to me |_| who has produced
_____________________ ___________ as identification, and who did not take an
oath.
- -------------------------------------
Notary Signature
- --------------------------------------
Notary Name (typed, Printed or Stamped)
- --------------------------------------
Serial Number
PARTNERSHIP ACKNOWLEDGMENT
STATE OF FLORIDA
COUNTY OF ___________
The foregoing instrument was acknowledged before me this ____ day of _______,
19__ by _______________ a partnership, He/She |_| who is personally known to me
|_| who has produced ___________________ as identification, and who did not take
an oath.
- -------------------------------------
Notary Signature
- --------------------------------------
Notary Name (typed, Printed or Stamped)
- --------------------------------------
Serial Number
<PAGE>
CERTIFIED CORPORATE RESOLUTIONS
I HEREBY CERTIFY that I am Secretary of SURGICAL SAFETY PRODUCTS, INC. A
corporation organized and existing under the laws of the State of FLORIDA. I
FURTHER CERTIFY that a meeting of the Board of Directors of said corporation was
duly called and held at its offices in the City of SARASOTA and State of FLORIDA
on the 2ND day of MAY 1997, that at said meeting a quorum was present and voting
throughout, and that the following resolutions were duly adopted: "Resolved,
that SURGICAL SAFETY PRODUCTS, INC., (hereinafter called the "corporation")
borrow from SOUTHTRUST BANK (hereinafter called the "Bank"), from time to time,
such sums of money as, in the judgment of the officer or officers hereinafter
authorized, this corporation may require: "Resolved Further, that any 1 (specify
number, any one is authorized if no greater number is specified) of the
following named officers of this corporation, G. MICHAEL SWOR the PRESIDENT,
JAMES D. STUART the EXECUTIVE VICE PRESIDENT, and their respective successors in
office, (the officer or officers authorized to act pursuant hereto being
hereinafter designated as "authorized officers") be and they are hereby
authorized, directed and empowered, for and on behalf and in the name of this
corporation (1) to execute and deliver to the Bank agreements for the borrowing
of money and to execute and deliver to the Bank such notes or other evidences of
indebtedness of this corporation for the monies so borrowed, with interest
thereon, as the Bank may require, and to execute and deliver, from time to time,
renewals or extensions of such notes or other evidences of indebtedness; (2) to
convey, grant, assign, transfer, pledge, mortgage or otherwise hypothecate and
deliver by such instruments in writing or otherwise as may be demanded by Bank,
any of the property of this corporation, including real and personal property
and chooses in action, as may be required by the Bank to secure the payment of
any notes or other indebtedness of this corporation or any other person or
entity to the Bank, whether arising under authority of this resolution or
otherwise; (3) to endorse and guarantee notes and other indebtedness of any
other person or entity to the Bank; and (4) to perform all acts and execute and
delivery all agreements and instruments which the authorized officers may deem
necessary or appropriate to carry out the purposes of this resolution; "Resolved
Further, that said authorized officers be and they are hereby authorized,
directed and empowered, and that any one of said authorized officers be and he
is hereby authorized, directed and empowered (1) to discount with, assign or
sell to the Bank conditional sales contracts, notes, acceptances, drafts,
receivables and evidences of indebtedness payable to this corporation, upon such
terms as may be agreed upon by them and the Bank, and to endorse in the name of
this corporation said conditional sales contracts, notes, acceptances, drafts,
receivables and evidences of indebtedness so discounted, assigned or sold, and
to guarantee the payment of the same to the Bank; (2) to apply for an obtain
from the Bank letters of credit and in connection therewith to execute such
agreements, applications, trust receipts, pledge agreements, guarantees,
indemnities, agreements for cover and other financial undertakings as Bank may
require; and (3) to enter into leases of personal property from the Bank
containing such terms as said officers shall deem to be appropriate, whether
such leases are true leases or leases intended as security, and whether such
leases contain options on the part of this corporation to purchase the lease
property or not; "Resolved Further, that this resolution will continue in full
force and effect until the Bank shall receive official notice in writing from
this corporation of the revocation thereof by a resolution duly adopted by the
Board of Directors of this corporation, which revocation shall have prospective
effect only, and that the certification of the Secretary of this corporation as
to the signature of the above-named persons shall be binding on this
corporation." I FURTHER CERTIFY, that the foregoing resolutions are withing the
power of the Board of Directors to adopt as provided in the Articles of
Incorporation and By-Laws of this corporation, and that said resolutions are
still in full force and effect and have not been amended or revoked, and that
the specimen signatures appearing below are the genuine signatures of the
officers authorized to sign for this corporation by virtue of said resolutions.
Authorized Signatures:
/s/ G Michael Swor
(Signature) G. MICHAEL SWOR, PRESIDENT
/s/J Stuart
(Signature) JAMES D. STUART, Executive Vice President
Federal ID# 65-0565144
IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary and affixed
the corporate seal to said corporation this ____ day of ____________.
Corporate Seal
(if none, so state)
/s/ J Stuart
(Signature) JAMES D. STUART
<PAGE>
FURTHER ASSURANCE AND COMPLIANCE AGREEMENT
For and in consideration of Ten Dollars ($10.00) and other good and
valuable consideration, and the funding of that certain Loan of even date in the
amount of $ 100,000.0 from SOUTHTRUST BANK OF Florida, National Association
(herein, "Bank") to the borrower agrees to cooperate, adjust, initial,
re-execute and redeliver any and all closing documents, including but not
limited to any notes, mortgages, deeds, affidavits and closing statements if
deemed necessary or desirable at the sole discretion of the bank in order to
consummate or complete the Loan from the Bank to Borrower or to perfect the
Bank's lien or mortgage. It is the intention of the Borrower that all
documentation for the Loan shall be an accurate reflection of the Bank's
requirements.
The Borrower agrees and covenants to assure that the Loan and its
documentation will conform to the Bank's requirements. The Bank is relying upon
this Agreement and the covenants contained herein in closing this transaction
and funding the Loan to Borrower.
Bank shall have the right to bring suit to enforce the obligations
incurred in connection with this Agreement, and in the event any suit is brought
to enforce this Agreement, the Bank shall be entitled to recover all costs and
expenses incurred, including a reasonable attorney fee.
DATED this 2ND day of MAY, 1997.
WITNESSES: "BORROWER(S)"
Surgical Safety Products, Inc.
- ------------------------
________________________ /s/G Michael Swor
G. MICHAEL SWOR
- ------------------------
- ------------------------ --------------------------
Loan # 7301868-00001
<PAGE>
STATE OF FLORIDA
UNIFORM COMMERCIAL CODE FINANCING STATEMENT FORM UCC1
(Rev.1993)
This Financing Statement is presented
to a filing officer pursuant to the Uniform Commercial Code
----------------------------------------------------------
1. Debtor (Last Name First if an Individual
SURGICAL SAFETY PRODUCTS, INC.
- -----------------------------------------------------------
1a. Date of Birth or FEI#
- -----------------------------------------------------------
1b. Mailing Address
2018 OAK TERRACE, SUITE 400
- ----------------------------------------------------------
1.c. City, State 1d. Zip Code
SARASOTA, FLORIDA 34231
- ----------------------------------------------------------
2. Additional Debtor or Trade Name (Last Name First if an
Individual)
- ----------------------------------------------------------
2a. Date of Birth of FEI#
- ----------------------------------------------------------
2b. Mailing Address 2c. City, State 2d. Zip Code
- -----------------------------------------------------------
3. Secured Party (Last Name First if an Individual)
SOUTHTRUST BANK of Florida, National Association
- -----------------------------------------------------------
3a. Mailing Address 3b. City, State 3c. Zip Code
1800 SECOND STREET SARASOTA, FLORIDA 34236
- -----------------------------------------------------------
4. Assignee of Secured Party (Last Name First if an Individual)
- -----------------------------------------------------------
4a. Mailing Address 4b. City, State 4c. Zip Code
- -----------------------------------------------------------
5. This Financing Statement covers the following types of items or property
[Include description of real property on which located and owner of record when
required. If more space is required, attach additional sheet(s).
ALL ACCOUNTS RECEIVABLE, EQUIPMENT, INVENTORY, FURNITURE, FIXTURES & LEASEHOLD
IMPROVEMENTS OF DEBTORS INCLUDING BUT NOT LIMITED TO NOW OWNED OR HEREAFTER
ACQUIRED, WHEREVER LOCATED AND ALL ADDITIONS, SUBSTITUTIONS AND REPLACEMENTS
THERETO AND ALL PROCEEDS OR ACCOUNTS ARISING FROM THE SALE OF ANY SUCH PROPERTY.
- ----------------------------------------------------------
6. Check only if Applicable:
|_| Products of collateral are also covered.
|_| Products of collateral are also covered.
|_| Debtor is transmitting utility.
- --------------------------------------------------------
7. Check appropriate box (One box must be marked) |X| All documentary stamp
taxes due and payable or to become due and payable pursuant to ss.201.22 F.S.,
have been paid. |_| Florida Documentary Stamp Tax is not required.
- -----------------------------------------------------------
8. In accordance with ss.679.402(2) F.S., this statement is filed
without the Debtor's signature to perfect a security interest in
collateral:
|_| already subject to a security interest in another jurisdiction
when it was brought to this state or debtor's location changed to
this state.
|_| which is proceeds of the original collateral described above
in which a security interest was perfected.
|_| as to which the filing has lapsed. Dated filed ________ and
previous UCC-1 file number.
|_| acquired after a change of name, identity, or corporate
structure of the debtor.
- -----------------------------------------------------------
9. Number of additional sheets presented: 0
- -----------------------------------------------------------
10. Signature(s) of Debtor(s)
SURGICAL SAFETY PRODUCTS, INC.
G. MICHAEL SWOR
- -----------------------------------------------------------
11. Signature(s) of Secured Party or if Assigned, by Assignee(s)
SOUTHTRUST BANK of Florida, National Association
THOMAS A. MARTIN, JR., FIRST VICE PRESIDENT
- -----------------------------------------------------------
12. Return Copy to:
Name: SOUTHTRUST BANK of Florida, National Association
Address: 1800 SECOND STREET
City: SARASOTA
State: FL
Zip: 34236
- -----------------------------------------------------------
This space for use of Filing Officer
----------------------------------------------------------
Approved by Secretary of State, State of Florida
----------------------------------------------------------
FILING OFFICER COPY STANDARD FORM-FORM UCC-1
<PAGE>
SouthTrust
Bank [Logo]
SOUTHTRUST BANK OF Florida, National Association
CLOSING STATEMENT FOR LOAN DATED 05/02/97
Florida State Documentary Stamps $ 350.00
Loan Fee to SouthTrust Bank 100.00
UCC-1 FILING FEE 25.00
________________________________ n/a
________________________________ n/a
________________________________ n/a
________________________________ n/a
________________________________ n/a
TOTAL $ 475.00
SURGICAL SAFETY PRODUCTS, INC.
------------------------------------
G. MICHAEL SWOR, PRESIDENT
-------------------------------------
<PAGE>
TELEPHONE TRANSFER AGREEMENT
I, G. Michael Swor, from time to time may make transfers from
Line of Credit #7301868-00001 in the name of Surgical Safety
Products, Inc. into account #63875498 in the name of Surgical
Safety Products, Inc. by telephoning the Commercial Lending
Department at SouthTrust Bank of Florida, N.A. I understand and
accept this policy.
Surgical Safety Products, Inc.
/s/G Michael Swor __________________
G. Michael Swor Date
I, G. Michael Swor, also authorize James D. Stuart to make any
telephone transfers involving the above referenced account:
/s/Thomas A Martin, Jr. __________________
Thomas A. Martin, Jr. Date
First Vice President
<PAGE>
EXHIBIT 10.1
1858 Ringling Boulevard KERKERING
Sarasota, FL 34236 BARBERIO & Co., P.A.
INDEPENDENT AUDITOR'S CONSENT
We consent to the inclusion in the Registration Statement of Surgical
Safety Products, Inc., on Form 10-SB to be filed with the Securities and
Exchange Commission our report dated March 27, 1998 on the financial statements
of Surgical Safety Products, Inc., which expresses an unqualified opinion for
the year ended December 31, 1997.
/s/Kerkering Barberio & Co.
Sarasota, Florida
September 22, 1998
<PAGE>
EXHIBIT 10.2
(Logo) Mosby Mosby, Inc.
Dedicated to Publishing Excellence 11830 Westline Industrial Drive
St. Louis, MO 63146
314 872-8370
800 325-4177
Fax: 314 432-1380
Consent
We consent to the inclusion in the Registration Statement of Surgical Safety
Products, Inc., on Form 10-SB to be filed with the Securities Exchange
Commission a reprint of the article entitled "The use of a surgical assist
device to reduce glove perforation in postdelivery vaginal repair: A randomized
controlled trial" by Drs. Michael w. Bebbington and Mark J Treissman, which
appeared in our publication American Journal of Obstetrics and Gynecology, in
Volume 175, No. 4, Part 1, dated October 1996.
/s/Susan L Patterson
Susan L. Patterson
Associate Publisher
Periodical Division
St. Louis, Missouri
August 21, 1998
The use of a surgical assist device to reduce glove
perforations in postdelivery vaginal repair: A
randomized trial
Michael w. Bebbington, MD, MHSc, and Mark J. Treissman, MD
Vancouver, British Columbia, Canada
OBJECTIVE: Our purpose was to compare the effectiveness of a surgical assist
device. SureMate, to decrease glove perforations during postdelivery vaginal
repair.
STUDY DESIGN: This was a prospective randomized trial. After delivery surgeons
who needed to perform vaginal repair were randomized to use the surgical assist
device or to perform the repair in the usual fashion. After the repair, gloves
were collected and the operator was asked to complete a standardized data form
that was submitted with the gloves. The gloves were tested for perforations
within 24 hours by the Food and Drug Administration-approved hydrosufflation
technique. Comparisons were made with x2 statistics with p taken as being
statistically significant with use of a Bonferoni adjustment for multiple
comparisons. RESULTS: a total of 476 glove sets were evaluated. The use of the
surgical assist device significantly reduced the overall glove perforation rate
from 28.3% in the control arm to 8.4% in the study arm(p=0.0001). Rates of
perforation varied with level of training and expertise but fell in all groups
that used the device. A total of 76% of perforations were recognized in only 16%
of the glove sets. The level of satisfaction with the device was mixed, but
overall 50% of operators indicated that they were either satisfied or very
satisfied with the device. CONCLUSION: The rate of glove perforation in
postdelivery vaginal repair is high. The surgical assist device significantly
reduced the rate of glove perforations. (Am J Obstet Gynecol 1996;175:862-6)
Key words: Glove perforations, surgical devices, surgical safety.
Originally introduced in 1889 by Halstead to protect the surgeon's hands from
the toxic chemicals used in the operative procedures of the day, surgical gloves
have become an important part of the barrier to the passage of microorganisms
between the surgeon and the patient.1,2 An intact barrier prevents the
possibilities of transmission, no matter how infrequently it might occur in the
absence of an intact barrier. Recently there has been an increase in the level
of concern for the occupational safety of health care workers.3 There are a
multitude of potentially harmful organisms that can come into contact with the
hand of a surgeon if there is a breakdown in the barrier. Concerns regarding the
transmission of hepatitis viruses and the human immunodeficiency virus have led
to a number of studies designed to test the effectiveness of various
interventions to prevent the exposure of health care workers to blood and other
potentially harmful body fluids.
The objective of this study was to assess the effectiveness of a new
suturing accessory (SutureMate, Surgical Safety Products, Sarasota Fla.)
designed to assist the surgeon during situations where suturing was occurring.
The specific application chosen was in the situation where vaginal repair was
undertaken after a vaginal delivery. The hypothesis tested was that the
SutureMate would decrease the number of glove punctures observed during a common
obstetric procedure.
<PAGE>
Material and methods
This prospective, randomized, controlled trial was conducted between
Jan. 1 and June 20, 1995, at the British Columbia Women's Hospital in Vancouver,
British Columbia, Canada. This hospital is the largest maternity care hospital
in Canada, with an annual delivery volume >7200 patients. It is the only
tertiary level maternity care facility for the province of British Columbia and
it also provides maternity services to the city of Vancouver.
The surgical assist device assessed is known as SutureMate. This is a
small plastic device containing a sponge for embedding the needle when the
driver is being reloaded and when the needle is not in use. It come with an
adhesive backing to allow it to be attached to the surgical drapes near the
operative area. There is an abrasive surface to allow the needle to be cleaned
of clotted blood and a cutting slot to facilitate knot tying while leaving the
needle embedded in the sponge surface. (Fig.1)
Fig. 1 Picture of SutureMate
device attached to drapes
adjacent to surgical field.
An a priori power analysis was performed to determine that 250 subjects
would need to be recruited for each arm of the study on the basis of a 50%
reduction in the baseline perforation rate of 25% being accepted as significant.
The baseline perforation rate was taken from a previous study at this
institution examining glove perforation rates at cesarean section (Bebbington
MW, Cooper JK, Unpublished observations). There is evidence in the literature to
suggest that the rates of glove perforations for surgeons in the operating room
and in the delivery room are similar.1
For a 3-week period before the start of the trial the surgical assist
device was made available for use to the physicians delivering at British
Columbia Women's Hospital. The purpose of this was to allow them to become
familiar with the device and its use before the study so that results would not
be influenced by inexperience with the device. During this time devices were
made available in the physician's and nurse's lounge, in the delivery suite, and
in the operating rooms. Additionally, a video-tape, posters, and pamphlets
describing the proper use of the device were made available and placed in
strategic locations. An in-service program was held with the nursing staff to
familiarize them with the device and the purpose of the study. Study personnel
were also available to answer questions about the study and to demonstrate the
device. Randomization began after this "educational run-in" period.
Eligible deliveries were those where vaginal surgery was required after
a vaginal delivery. The delivery could be spontaneous or assisted. Vaginal
surgery consisted of repair of an episiotomy or perineal tear, repair of vaginal
laceration, or repair of cervical laceration. Randomization was carried out with
sealed envelopes with allocation done before the start of the study by use of a
random number table. These envelopes were placed in a secure but accessible
location in the delivery suite. Once the delivery was complete and the need for
a repair determined, the attending physician was asked to participate in the
study. Randomization occurred once consent to participate had been received.
Those physicians randomized to use the surgical assist device then had one
envelope opened for them by the nurse in attendance. Those randomized to the
usual repair technique then proceeded with the usual repair. Choice of
instruments, sutures, the availability of assistance, repair technique, and the
positioning of patients was not influenced by participation in the study and was
at the attending physician's discretion.
At the end of the repair the physician performing the repair completed
a short data collection sheet indicating level of training, extent and type of
procedure, handedness, and whether he or she had been aware of perforating the
glove during the repair procedure. Operators using the device were asked to
indicate the level of satisfaction on a 4-point Lichert scale. All data
collection was anonymous with no patient or operator identifying information
included on the data sheet. The data sheet and gloves were wrapped separately,
placed in a plastic bag, and then placed in a central location for testing.
Gloves were tested for perforations by the Food and Drug
Administration-approved hydrosufflation technique. Within 24 hours of collection
gloves were tested by filling each of the pair with 1 L of warm water. The glove
cuff was twisted 360 degrees and each finger and then the palm was inspected and
squeezed. A perforation was easily seen by the production of a fine jet of
water. The location and number of perforations was recorded on a separate data
sheet. The individual testing the gloves was blinded to the allocation of the
operator with respect to the use of the surgical assist device.
Statistical analysis was carried out with x2 for categoric variables. A
value of p0.01 was used to determine statistical significance because of a
Bonferoni adjustment to allow for multiple comparisons. Analysis was carried out
according to the group to which a delivery was randomized.
Results
During the 6 months of the study, health records information showed an
average of 490 vaginal deliveries per month with an average of 75% requiring
vaginal repair of the types listed previously. From this information a
recruitment rate of 23% of eligible deliveries can be estimated. No data are
available for those eligible deliveries not recruited.
<PAGE>
Table I. Study participants by level of training and expertise.
Study Group (n = 250) Control Group (n = 250)
Obstetrician 49 56
Family Physician 66 63
Resident 80 87
Medical Student 31 20
Not indicated 24 24
Table II. Glove perforation rates (overall)
Study Group (n = 250) Control Group (n = 250)
Perforated * 20 67
Intact 219 170
Lost 11 13
*p0.0001.
None of the deliveries allocated to the control arm of the trial
inadvertently used the surgical assist device. No accounting was made of whether
those allocated to the study arm actually used the device, but 90% of the
operators in the study arm of the trial did complete the section of the data
sheet indicating their level of satisfaction with the device. It would be
reasonable to assume that all at least tried to use the device when they were
allocated to the study arm.
There was equal participation in both study and control groups from
obstetricians, family physicians, residents in obstetrics, and medical students.
Twenty-four individuals in each group did not indicate their level of training
or expertise (Table 1).
A total of 476 sets of gloves were collected and tested, with 237 sets
from the study arm and 239 sets from the control arm of the trial. Twenty-four
pairs of gloves were lost because
of janitorial error. The data sheets from these gloves were, however, salvaged.
Of these gloves, 13 pairs belonged to the control group and 11 to the study
group. The loss of these gloves occurred in the middle of the trial; there was
no reason to believe that the puncture rates in these gloves would have been any
different from that of the rest of the study population. These have been
excluded from the analysis involving glove punctures.
In the entire study sample there were 96 glove perforations in 87
gloves, for an overall glove perforation rate of 18.3%. The majority of the
gloves contained a single perforation, but 12 gloves had multiple perforations.
Table II shows the distribution of perforations by study group. There were
markedly fewer glove perforations in the study versus control group (8.4% vs
28.3%, x2 31.55, P=0.0012).
Nineteen of the gloves sets submitted were from the double gloved users
(4%). These were equally distributed between the study group (7 sets) and the
control group (12 sets). The distribution through the various levels of training
and expertise was equal. Although the numbers are small and it was not an
objective of the study to assess double gloving with the device, it is
interesting to note that only one of the inner gloves, from a delivery in the
study arm, was perforated, for an overall perforation rate in this subgroup of
5%.
The surgical assist device appeared to be useful in decreasing glove
perforation regardless of the degree of training or expertise of the operator.
These data are shown in Table III. In all groups except the medical students
there was a statistically significant reduction in the rate of glove
perforations with the use of the surgical assist device. The numbers of medical
students involved in the study is probably too small to draw any conclusions
about the usefulness of the device. It is interesting to note that the glove
puncture rate of the group of medical students in the control arm was similar to
those of the obstetricians and obstetric residents, whereas the rate of glove
puncture rate in the family physician group was the highest. This group also
showed the greatest difference in perforations between the study and control
arms of the trial.
Table III. Glove perforation rates by level of training and expertise.
Study Group Control Group Significance
Obstetrician 2/49 16/56 P=0.0009
Family Physician 6/66 24/63 P=0.0001
Resident 7/80 21/87 P=0.0078
Medical Student 3/31 4/20 P=0.2960
The majority of glove perforations occurred in the thumb, index, and
second finger of the nondominant hand. Of the 418 operators who indicated that
they were right-handed, there were 86 perforations. Seventy-four of these were
located in the left-hand glove. Nineteen (26%) were located in the thumb, 27
(36%) in the index finger, and 21 (28%) in the second finger. The remaining 7
perforations were located on the other fingers or the palmar area of the glove.
Of the 12 perforations in right-hand gloves, 9 were similarly located in the
thumb, index, and second fingers, with 3 in the palmar area. Of the 26 operators
who indicated they were left-handed, there were 10 perforations, 7 in the
right-hand glove and 3 in the left-hand glove. Six of the 7 right-glove
perforations occurred in the thumb, index, or second finger. All the left-hand
glove perforations occurred in one of these three areas.
<PAGE>
The operator was asked to indicate whether he or she was aware of
having perforated the glove during the course of the repair. This assessment was
made after the repair was finished and presumably after the gloves had been
removed for collection. Of the 87 gloves that were found to have been
perforated, only 14 operators (16%) correctly indicated that they were aware of
having perforated the gloves during the procedure. A total of 43 of the 476
operators in the study (9%) indicated that they thought they had perforated the
glove, but 29 of them (68%) were in error.
The level of operator satisfaction with the surgical assist device was
mixed, but overall 50% indicated that they were either satisfied or very
satisfied. In general,, higher levels of satisfaction were indicated by
residents and students in the study than was the case with the obstetricians and
family physicians (Table IV).
A B C D
Obstetrician 1 24 24 2
Family Physician 1 32 27 4
Resident 7 43 24 3
Medical Student 3 12 14 1
Overall 12 112 89 10
Satisfaction not indicated: 27, A, Very satisfied; B, Satisfied; C, not very
satisfied; D, dissatisfied.
Comment
Surgical glove perforation is a common event during operative
procedures. Surgical disciplines such as general surgery, plastic surgery, and
orthopedics have been studied.5-14 Obstetric and gynecologic procedures have
also been studied, most frequently cesarean section. Various authors have
estimated glove perforation rates to be as low as 12.3%9 and as high as 30.6%.10
Previous experience at this institution showed an overall glove perforation rate
a cesarean section to be 28.7%. The observed rate of perforation of 28.3% in the
control arm of the study is certainly within the range of the values previously
observed. The duration of the operation and an increased urgency of the surgery
appear to be factors resulting in higher perforation rates. This could explain
the reporting of increased perforation rates in major gynecologic surgery.
Various strategies have been studied and suggested to try to decrease
the frequency of glove puncture. The best studied of these is the use of double
gloving.10-14 These studies have shown double gloving to result in decrease in
the frequency of puncturing the inner glove. The surgeon may feel that dexterity
is compromised by the use of double gloves but Doyle et al.10 noted that the
perforation rate of the outer glove was similar in both the single and
double-gloved groups. This would suggest that, at least from a needle-handling
perspective, the double gloving does not adversely affect dexterity.10
Educational strategies such as reinforcing operative principles and "no-touch
technique" with delivery room nurses in the operating room has been shown to be
effective in decreasing the frequency of glove punctures (Bebbington, MW, Cooper
JK, Unpublished observations). To date, we are unaware of the publication of any
other tests of surgical assist devices.
The use of this device significantly reduced the number of glove
perforations that occurred during vaginal repair after delivery. Therefore it
can be of benefit to the safety of operators during an all-too-frequent
procedure in obstetrics. This is especially true when universal precautions are
being advocated for all patients. A decrease in glove perforations decreases the
exposure to potential pathogens.
Five percent of the study gloves were lost to testing. These were
equally distributed between the two groups in the trial. The number of
perforations in these gloves is the unknown and there is no reason to suspect
that there should have been an increased number of perforations in these gloves.
If it is assumed that the perforation rate is the same, it would have resulted
in an additional one glove perforation in the study
group and an addition four gloves in the control group. Including these gloves
would still result in a statistically significant difference between the groups.
In fact, if a worst- case scenario is assumed and it assumed that all the lost
gloves in the control arm were perforated, there would still be a statistically
significant difference with x2 16.448 and p=0.001. Thus the impact of the lost
gloves on the conclusions of this study are negligible.
<PAGE>
Family physicians in the control group were found to have the highest
rate of glove perforation. The greatest impact of the device was observed
compared with the family physicians in the study group. The exact reason for
this difference is not known, but it may be related to the frequency with which
the individuals in this group perform vaginal repairs. The device may function,
at least in part, to focus the operator's attention on needle handling during
the repair, resulting in fewer glove punctures. With the family physicians
having a greater tendency to glove perforations, the impact of the device is
more marked in this subgroup. The lack of a difference in the medical student
subgroup maybe due to the small numbers of observations. It may also be that the
skill level is such that the device does not provide increase awareness of
needle handling because that is already at a high level and cannot be increased
within their technical ability.
The thumb, index finger, and second finger of the nondominant hand is
the focus for most glove punctures. This is in keeping with the findings of
other glove perforation studies.4,14 It is likely that some of these perforation
occur from direct handling of the needle after placement of a stitch through
tissue. Grasping the needle with tissue forceps while repositioning the needle
driver would likely prevent the majority of these perforations. In general, the
device would not be expected to assist in preventing these perforations. The
second time that the needle is typically grasped is while the needle is
repositioned on the driver in preparation to place another stitch. It is these
types of perforations that the device can be expected to reduce. Perforations in
the glove of the dominant hand are more difficult to explain but are also likely
due to direct needle handling at some point and could potentially be prevented
by the device.
It is possible that the reduction in glove perforations may, in part,
be due to a change in repair technique by the operators in the study arm, not
related to the use of the device. For example, more operators in the study arm
may have used instruments to grasp needles while performing repairs, thinking
that it was surgical technique that was being evaluated rather than the surgical
assist device. As mentioned previously, no
attempt was made to influence repair technique of those involved in either arm
of the study, but this aspect was not specifically studied.
Relying on operator recognition would not appear to be an effective
strategy for reducing exposure to potential pathogens because surgeons are
notably poor at being able to accurately know when they have punctured their
gloves. In this study only 16% of the perforations were identified by the glove
wearers. Previous studies have shown detection rates between 14% and 30%. Many
more operator thought they had perforated their gloves than actually did. This
overreporting may be because the operators knew that the glovers were being
tested for leaks. Although recognitions of a perforation and changing gloves
prevents further exposure, it does not lessen the rate of initial exposure.
Assessment of satisfaction with any new device of this type is
important. No matter how effective an intervention may be, if it is not used, it
is not useful.
Overall, the satisfaction, although crudely measured, was good.
Residents and medical students tended to rate their satisfaction higher. This
may be due to a "novelty effect" whereby they enjoyed trying new techniques and
would tend to rate their satisfaction higher. It may also indicate a higher
willingness to incorporate new techniques or ideas into their own patterns of
practice.
Compliance with the use of the device in the study arm was not measured
during the trial. If the operator reporting on his or her own satisfaction is
accepted as a proxy for measuring use, the >=90% of those who were randomized to
use the device did so. In estimating the effect of noncompliance, it would be
expected that not using the device when randomized to use it would have the
effect of increasing the number of perforations in the study group and
decreasing the difference between the two groups. Thus if it is hypothesized
that compliance may have been low, the true difference between the groups would
have been even greater than that observed.
This study demonstrates that the use of the SutureMate surgical assist
device does decrease the incidence of glove perforation in the setting of
vaginal repair after delivery. Why it works may be a result of the fact that it
is a technically useful device. Part of its effectiveness may reside in its
serving as a visual reminder to the operator to use greater care in the
technique of suturing and needle handling. Regardless of why it works, it does
appear to be an effective aid in decreasing exposure to potential pathogens in
blood and other bodily fluids by maintaining an intact glove barrier.
It is not possible to draw any conclusions about the
additional impact of double gloving on the effectiveness of the device because
the numbers are small. Studies to date have focused on the benefits of a single
intervention rather than examining the benefits of multiple strategies to reduce
glove perforations. This would be a potential are for future study.
<PAGE>
REFERENCES
2. Geelhoed GW. The pre-Halsteadian and post-Halsteadian
history of the surgical rubber glove. Surg Gynecol Obstet
1988;167:350-6.
3. Van Den Broek PJ. Epidemic of prosthetic valve endocarditis
caused by Staphylococcus epidermidis. BMJ 1985;291:949-50.
4. Bell DM. Human immunodeficiency virus transmission in health
care settings: risk and risk reduction. Am J Med
1993;91(Suppl 3B):294S-9S.
5. Chapman S, Duff P. Frequency of glove perforations and
subsequent blood contact in association with selected
obstetric surgical procedures. Am J Obstet Gynecol
1993;168:1354-7.
6. Dodds RD, Guy PJ, Peacock AM, Duffy SR, Barker SGE, Thomas
MH. Surgical glove perforation. Br J Surg 1988;75:966-8
7. Brough SJ, Hunt TM, Barrie WW. Surgical glove perforations.
Br J Surg 1988;75:317.
8. Dodds RD, Barker SGE, Morgan NH, Donaldson DR, Thomas MH.
Self protection in surgery: the use of double gloves. Br J
Surg 1990;77:219-20
9. Gerberding JL, Littell C, Tarkington A, Brown A, Schecter W.
Risk of exposure of surgical personnel to patients' blood
during surgery at San Francisco General Hospital. N Engl J
Med 1990;322:1788-93
10. Serrano CW, Wright JW, Newton ER. Surgical glove
perforations in obstetrics. Obstet Gyncol 1991;77:525-8
11. Doyle PM, Alvi S, Johanson R. The effectiveness of double
gloving in obstetrics and gynecology. Br J Obstet Gynaecol
1992;99:83-4
12. Bennett B, Duff P. The effect of double-gloving on frequency
of glove perforations. Obstet Gynecol 1991;78:1019-22
13. Cohn GM, Deifer DB. Blood exposure in single versus double
gloving during pelvic surgery. Am J Obstet Gynecol
1990;162:715-7
14. Malta H, Thompson AM, Raine JB. Does wearing two pairs of
gloves protect operating theatre staff from skin
contamination? BMJ 1988;297:597-8
15. Chiu KY, Fung B, Lau SK, Ng KH, Chow SP. The use fo double
latex gloves during hip fracture operations. J Orthop Trauma
1993;7:354-6
<PAGE>
EXHIBIT 10.3
CONSENT
I consent to the inclusion in the Registration Statement of Surgical Safety
Products, Inc., on Form 10-SB to be file with the Securities and Exchange
Commission a reprint of the abstract entitled "Evaluation of a One-Handed
Surgical Suturing Device to Decrease Interaoperative Needlestick Injuries and
Glove Perforataions: Phases I and II" by Donna J. Haiduven BSN, MSN, CIC which
was presented at Conference on Prevention of Transmission of Bloodborne
Pathogens in Surgery and Obstetrics, February 1994.
/s/Donna J. Haiduven
Donna J. Haiduven
San Jose, California
September 9, 1998
CONFERENCE ON PREVENTION
OF TRANSMISSION
OF BLOODBORNE PATHOGENS
IN SURGERY AND OBSTETRICS
SPONSORED BY
[LOGO] CDC
The American College and The Centers for Disease
of Surgeons Control and Prevention
February 13-15, 1994
Atlanta Hilton Hotel
Atlanta, GA
FINAL PROGRAM AND ABSTRACTS
EVALUATION OF ONE-NANDED SURGICAL SUTURING DEVICE TO DECREASE INTRAOPERATIVE
NEEDLESTICK INJURIES AND GLOVE PERFORATIONS: PHASES I & II. DONNA J. HAIDUVEN
BSN, MSN, CIC, * AND MARIA D. ALLO, MD, SANTA CLARA VALLEY MEDICAL CENTER, SAN
JOSE, CALIFORNIA.
Intra operative suturing poses a high-risk for needle sticks in the
operating room. "Suture Mate" (SM) is a new safety device which enables the user
to suture one-handed, reducing or eliminating needle stick injuries. A
prospective multicenter randomized study has been designed to evaluate the
effect of this product on decreasing per cutaneous injuries, glove perforations
and improving efficiency of the suturing procedure. Cases where randomized to
use or not to use this device. Phase I - Study Design focused on the data
collection form. Parameters include demographic patient data, length of surgery
and suturing times, presence of visible blood on hands of surgical personnel
after glove removal, number and type of per cutaneous injuries, number and
location of glove perforations and length of incision. Phase 2 - Data Collection
has been initiated in 3 of 4 hospitals and completed in 62 cases. Data obtained
thus far indicate that 56% of cases not utilizing SM experienced glove
perforations as opposed to 28% of those utilizing SM. Per cutaneous injuries
were present in 7% of cases not using SM; no per cutaneous injuries have
occurred in SM cases.
These data suggest that one-handed suturing significantly decreases
Intra operative needlestick injury. The "Suture Mate" device obviates the need
for two-handed suturing and provides a safe place to "bank" needles on the
surgical field.
EVALUATION OF A ONE-HANDED SURGICAL SUTURING DEVICE TO DECREASE
INTRAOPERATIVE NEEDLESTICK INJURIES AND GLOVE PERFORATIONS: PHASES I & II
DONNA J. HAIDUVEN BSN, MSN, CIC * AND MARIA D. ALLO, MD, SANTA CLARA
VALLEY MEDICAL CENTER, SAN JOSE, CALIFORNIA
SUMMARY
INTRODUCTION
The operating room environment has a high potential for per cutaneous and
mucocutaneious exposures. Suturing poses a significant risk of needle stick
injury making any devices or practices that eliminate these risks desirable. We
designed a prospective randomized multicenter trial to determine whether use of
a one-handed suture device decreases glove perforations and per cutaneous
injuries without a significant loss of efficiency.
DEVICE DESCRIPTION
"Suture-Mate" was utilized in this study and was designed by a practicing
surgeon. It is the first device of its kind designed to allow a safe repository
for the suture needle and permits use of the needle in a one-handed method, thus
decreasing the chance of per cutaneous injury. "Suture Mate" is a product of
Surgical Safety Products, Inc. in Sarasota, Florida. The device received
substantiation of their 510K approval from the Food and Drug Administration as
of June 2, 1993.
<PAGE>
PHASE I - STUDY DESIGN
The initial study design phase determined the data collection parameters:
o Demographic patient data
o Type and length of operation
o Length of incision and suturing times
o Number and location of per cutaneous injuries and glove
perforations
o presence of visible blood on hands of surgical personnel
after glove removal
PHASE 2 - DATA COLLECTION
At time of abstract submission, data collection had been initiated in 3 of 4
hospitals and completed in 62 cases.
PARTICIPATING CENTERS
Doctor's Hospital Sarasota, Florida
Sarasota Memorial Hospital Sarasota, Florida
Santa Clara Valley Medical Center San Jose, California
RESULTS
Of 62 cases completed, 18 used Suture Mate and 44 did not use Suture Mate (SM)
GLOVE PERFORATIONS BY CASE AND NUMBER
Five cases using "Suture Mate" (28%) had glove perforations and 24 cases not
using "Suture Mate" (56%) had glove perforations. Only 1/5 SM cases had multiple
glove perforations (defined as more than one perforation per glove) as opposed
to 11/24 (46%) cases not using SM.
GLOVE PERFORATIONS BY NUMBER OF GLOVES WORN
Three of 6 perforations in cases using SM and 20/44 perforations in cases not
using SM occurred in persons wearing one pair of gloves.
VISIBLE BLOOD ON HANDS OF SURGICAL PERSONNEL AFTER GLOVE REMOVAL
In one case (5.6%) using SM and 8 cases (18%) not using SM there was visible
blood on hands of surgical personnel (including surgeons, surgeon assistants,
scrub technicians or nurses, students, residents or interns) after glove
removal.
PER CUTANEOUS INJURIES
In the first 62 cases, there was no per cutaneous injuries in cases using
"Suture Mate". In cases not using SM, there have been 4 (9%) per cutaneous
injuries. In those cases, the exposed person was wearing one pair of gloves.
CONCLUSION
Use of "Suture Mate" facilitates one-handed suturing technique, resulting in
less likelihood of glove perforations and intra- operative needle stick
injuries. This study reinforces previous study finds on the importance of double
gloving.
- ----------------------------------------------------------------
PLEASE DIRECT CORRESPONDENCE REGARDING THIS INFORMATION TO:
Donna J. Haiduven, BSN, MSN, CID
Infection Control Supervisor
Sant Clara Valley Medical Center
751 S. Bascom Avenue
San Jose, California 95128
<PAGE>
PERCEIVED RISK OF ACQUIRING BLOODBORNE INFECTIONS DURING SURGERY: A
PATIENT SURVEY
G. MICHAEL SWOR, MD AND DONNA J. HAIDUVEN, BSN, MSN CIC*
WOMEN'S CARE SPECIALISTS OF SARASOTA, FLORIDA AND
SANTA CLARA VALLEY MEDICAL CENTER, CALIFORNIA
SUMMARY
INTRODUCTION & METHODS
The viewpoint of the patient regarding risk of acquiring bloodborne infection in
surgery was the focus of this survey. The survey containing 9 questions was
distributed to 260 obstetric and gynecology patients at a women's care
speciality practice in Sarasota, Florida. The questions on the survey followed
by the results and conclusions are presented.
QUESTIONS AND ANSWERS
1. If you should require surgery, would you have any concern regarding the
risk of infection to you related to torn gloves or needle stick
injuries?
Yes - 87% (225) No - 12% (32) NR+ - 1% (3)
2. Prior to this survey, would you have had any concern?
Yes - 76% (197) No - 23% (59) Other - 1.4%
(NR - 3, some - 1)
3. Would you have any concern regarding your risks if you knew that your
surgeon had been vaccinated for hepatitis B and regularly tested
negative for HIV virus?
Yes - 31% (81) No - 65% (170) Other - 3.5% (9)
(NR - 4, some -2
Undec - 2
Hep B concern -1)
4. If a device was available to your surgeon which could possibly reduce
the risk of needle stick injury or glove perforation during your
planned procedure, would you want this used without regard to cost?
Yes - 82% (212) No - 15% (40) NR - 2.3% (6)
? - 0.8% (2)
5. If a device such as this were available and added $100 to
the cost of your surgery, would you want it used?
Yes - 63% (165) No - 10% (25) Other 5.8% (15)
NR - 13
Maybe - 2
6. Would you want it used if it cost $50?
Yes - 64% (167) No - 7% (19) NR 4.6% (12)
? 0.4% (1)
7. Would you want it used if it cost $15?
Yes - 68% (177) NR - 6% (15) No - 3% (7)
? 0.4% (1)
8. If by using certain techniques and/or devices, your risk of infection
in surgery could be reduced by 50%, but added additional cost and 10%
additional time to your procedure, would you want them used?
Yes - 90% (233) NR - 3.8%(10) No - 3.8% (10)
? - 2.7% (7)
9. Do you believe that hospitals and surgical facilities should actively
incorporate techniques and devices into used which by design would
decrease risk of glove perforation and needle stick injuries?
Yes - 95% (246) NR - 3.5% (9) No - 1.5% (4)
? - 0.4% (1)
<PAGE>
CONCLUSION
Results of this survey indicate patients' concerns for both themselves and the
health care worker regarding risk of acquiring infections from bloodborne
pathogens in surgery. In addition, there appears to be a willingness on behalf
of these patients to incur some costs for devices that may decrease these risks.
It is recommended that more patient groups be surveyed and results utilized in
designing future strategies for use of safety devices.
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
SutureMate(TM) Price Schedule
Effective October 1, 1993
SutureMate(TM) packaged:
144 units per master carton
6 packages (dispenser box) per master carton
24 Units per package (dispenser box)
No. of Master Cartons Price per Unit Price Per Master Carton
- --------------------- -------------- -----------------------
1-5 $8.75 $1260.00
6-10 8.05 1159.20
11-20 7.55 1087.20
21-50 7.15 1029.60
51-99 6.80 979.20
101 + Negotiable Negotiable
No. of Dispenser Box Price Per Unit Price Per Dispenser Box
1-2 $9.40 $225.60
3-5 9.05 217.20
Introducing SutureMate(TM) (Scissors)
The Multi-Purpose Surgical Suturing Accessory
[drawing of instrument]
10. Surgeon Developed
11. Engineering Designed for
12. Surgical Safety
13. Patient Protection
14. Procedure Efficiency
U.S. Patent No. 4,969,893 (other patents pending)
SUTUREMATE(TM)
FUNCTIONS
15. needle rest/holder
16. suture cutter
17. scratch pad
BENEFITS
18. protects against needle stick injury
19. reduces infection risks
20. allow one-handed suturing
21. cost effective
22. disposable
23. Patented
24. American-Made
FOR MOST TYPES OF SUTURING IN:
25. emergency room
26. obstetrics
27. gynecology
28. general surgery
29. plastic surgery
30. vascular surgery
31. skin/wound closure
32. office suturing
SutureMate is a temporary needle rest that allows one-handed needle
repositioning prior to stitch placement
SutureMate is a cutting edge used to cut the needle free prior to knot tying.
SutureMate holds the cut suture end in place for easy retrieval prior to knot
tying.
SutureMate Protects the Surgeon and staff by eliminating manual needle
adjustment and decreasing exposure to needle stick injury.
SutureMate allows one-handed suturing providing optimal "second hand usage".
SutureMate is mounted on a cautery cleaner adhesive pad. It is applied to the
surgical field, near the incision site.
<PAGE>
Using the SutureMate(TM) (Scissors)
{pamphlet in fold out form]
drawing
illustration
Step 1
STEP 1
Place initial suture
using one-handed
suturing technique
drawing
illustration
Step 2
STEP 2
Grasp needle tip and
draw through tissue
drawing
illustration
Step 3
STEP 3
Place needle tip in
needle cushion with
backhand motion
drawing
illustration
Step 4
STEP 4
Regrasp needle
appropriately using
forehanded motion
drawing
illustration
Step 5
STEP 5
Repeat suture
placement as indicated
in preparation for
knot tying
<PAGE>
drawing
illustration
Step 6
STEP 6 Guide suture through cutting slot to remove needle and any excess suture.
drawing
illustration
Step 7
STEP 7
Free end of suture is
held in SutureMate for
easy removal
drawing
illustration
Step 8
STEP 8
Tie suture knot
drawing
illustration
Cautery tip cleaner pad
is available for use
drawing
illustration
SutureMate used as
needle depository for
safe disposal in sharps
container
For more information on
SutureMate or other products
contact:
{SSP Medical Shield drawing}
Surgical Safety Products, Inc.
434 South Washington Boulevard
Suite #2
Sarasota, Florida 34236
(813) 953-7889
FAX (813) 955-0287
<PAGE>
EXHIBIT 10.4
Midway Publishing Corp.
Infection Control & Sterilization Technology
CONSENT
We consent to the inclusion in the Registration Statement of Surgical Safety
Products, Inc. on Form 10-SB to be filed with the Securities and Exchange
Commission a reprint of the article entitled "Sharps Management in Surgery" by
Dr. Mark S. Davis, M.D. which appeared in our publication, Infection Control &
Sterilzation Technology, in Vol. 1, No. 4 dated April 1995.
/s/ Dan Mayworm
Dan Mayworm, Publisher
Libertyville, IL
July 20, 1998
133 E. Cook Avenue Libertyville, IL 60048-2035 (847) 680-7878 FAX
(847) 680-8180
www.maywormpublishing.com e-mail: [email protected]
INFECTION CONTROL
& STERILIZATION
TECHNOLOGY
INFECTION CONTROL SURGERY CENTRAL SERVICE
CONSENT
We consent to the inclusion in the Registration Statement of Surgical Safety
Products, Inc. on Form 10-SB to be filed with the Securities and Exchange
Commission a reprint of the article entitled "Sharps Management in Surgery" by
Dr. Mark S. Davis, M.D. which appeared in our publication, Infection Control &
Sterilzation Technology, in Vol. 1, No. 4 dated April 1995.
/s/ Dan Mayworm
Dan Mayworm, Publisher
Libertyville, IL
July 20, 1998
133 E. Cook Avenue Libertyville, IL 60048-2035 (847) 680-7878 FAX
(847) 680-8180
www.maywormpublishing.com e-mail: [email protected]
<PAGE>
Sharps management in surgery
By Mark S. Davis, MD
ABSTRACT
Hospital costs resulting from percutaneous injuries in the bloodborne
pathogen era may be more or less obvious. Every time a hospital healthcare
worker sustains a percutaneous injury or mucocutaneous splash, the hospital will
spend up to $1300 if the source patient is HIV negative and up to $2500 if the
patient is HIV positive. This only covers testing the patient and worker for HIV
and hepatitis B and C, medications, vaccinations, record keeping and additional
personnel hours. Additional costs comprise counseling for stress-related
disorders of victims, worker's compensation, disability, replacement of key
personnel, negative publicity, and loss of market share as managed care entities
monitor medical and financial outcomes. All are real or potential costs now
absorbed by hospitals.
Whether the concern is for cost control or occupational safety, most
percutaneous injuries can be prevented by the use of currently available
safety-engineered devices and by the application of known safety protocols and
techniques. Form using blunt needles and retractors to using alternative
equipment for cutting, sharp safety could be practiced in surgical settings.
Other techniques, such as double gloving and suturing with a device requiring
only one hand, offers some protection against the growing threat of HIV, and
hepatitis B and C.
Sharps injuries to healthcare workers occur in 7 to 15% of surgeries.
1The required follow-up and the potential sequelae of cuts and needlesticks
incur major costs to hospitals. As the bloodborne pathogen era evolves, rising
rates of HIV and hepatitis strains will only increase these costs. Only
hepatitis B has a vaccine, which is sadly under-utilized, and since none of
these lethal viral illnesses have an effective treatment or pre/post exposure
prophylaxis of proven worth, prevention depends on measures such as Universal
Precautions, supported by new protocols, techniques, and safety-engineered
devices that limit the opportunities for exposure in the workplace. Industry is
responding to the need for safer work practices with safety engineered devices
for use in surgery and other invasive areas of healthcare. Those hospitals most
interested in improving their bottom line will likely be the quickest to find
out which devices their surgeons and nurses like, and will make certain those
devices are always available. Hospitals will also gain by establishing a
co-leadership role with their surgical clinicians; thus sharing the
responsibility of choosing safety equipment as mandated by OSHA. Continuing
evaluations of newer products will be necessary, as will monitoring rates of
staff compliance with their use, both for enhancing safety and for averting
potential claims of negligence. Periodic communication to the staff regarding
ongoing risk, and continuing education programs on how to reduce exposure risk
will be necessary parts of the total approach to risk reduction leading to cost
containment.
Sharps avoidance
Although there are situations in which only
SHARPS MANAGEMENT
TABLE 1: DEVICES WITH BUILT-IN SHARPS AVOIDANCE
o Blunt-tipped suture needles
o Blunt (vs. Sharp) retractors
o Alternatives to scalpels (cautery, scissors for cutting
o Staples for skin closure
o Synthetic (vs. wire) sutures
o Vascular clips (vs. sutures) for hemostosis
TABLE 2: DEVICES REQUIREING SHAREPS MANAGEMENT
o Neutral zone 9safe zone) basins, mats, trays
o Disposable scalpels, shielded safety scalpels
o Pin-cushion type of needle-tip protector (one-handed
suturing device such as Suturemate)
o Thimble for non-dominant hand index finger
o Double gloving
TABLE 3: SAFER SURGICAL TECHNIQUES
o Avoid handling needles manually, including blunt ones
o Avoid manual retracting, use retractors or sponge sticks
o Avoid reflexive sponging of tissue by assistants.
o Avoid finger contact with tissue being sutured.
o Remove needle from suture before tying.
o Use controlled-release sutures whenever possible.
o Use forceps rather than fingers for grasping needle (or use
on-handed suturing device).
<PAGE>
o Use cautery or injection for hemostasis in conization (to
avoid use of sharp sutures), or choose LLETZ or laser.
o Pass sharps to Neutral Zone with constant visual contact and
caution.
o Place and remove scalpel blades with instruments or devices
(or use disposables).
o Clamp needle holder over needle tip when returning to
Neutral Zone, or place tip down.
A sharp instrument allows the operator to perform a task
optionally; often the choice of a blunt alternative produces equally good or
even better results for the patient. A prime example in the blunt-tipped suture
needle (Table 1). Some clinicians who use them extensively have reported less
bleeding in gynecological surgery compared to traditional sharp needles. 23 This
has also been my experience, having used them in this manner almost exclusively
for the past two years.
The proper technique for blunt-tipped suture needle use is mostly
dictated by common sense. Needle holders should be fully locked; the needle
should be mounted midway between point and suture; tissue to be sutured must be
stabilized. Attention to these details facilitates penetration of tissue by the
blunt point. The instant reward for using a blunt needle is the realization that
it is unlikely to puncture the fingers of anyone on the surgical team. This
leads to immediate and lasting stress reduction. There are some pitfalls to be
avoided when using blunt needles. One must never be tempted to grasp a needle
with fingers. Some of the smaller gauge blunt needles used on 3/0 sutures are
almost sharp due to the thinness of the wire used to make them. Another problem
is the inexplicable practice of cryptic and confusing labeling of blunt sutures
by some manufacturers. This frequently causes the circulating nurse to pull a
sharp needle by mistake. Then a sharp needle gets mixed in with the blunt ones
on the table. The danger here is obvious.
Blunt needles on the market vary greatly in their degree of bluntness,
from almost too blunt to penetrate tissue, to almost too sharp to retain their
safety advantage. Surgeons should examine critically all of the blunt needles on
the market before using them clinically, and decide on selection criteria
matching the type of surgery they perform. Surgeons have always chosen sharp
sutures based on the suture material desired. With blunt needles, however, they
should choose the needle first and then see if it comes with their favorite
suture. In time, manufacturers will respond to the needs of surgeons. Until
then, surgeons will have to settle for whatever suture comes attached to the
best blunt needle for the task.
An additional safeguard when using sharp or blunt sutures is the
pin-cushion type of needle tip protector, or a on-handed suturing device called
the Suturemate (Figure 1, Table 2). At this writing, the surgical and OB/GYN
staff at our institution are evaluating this device. Additionally, we have also
pulled out all of the sharp retractors in our operating rooms, and critically
examined them to consider whether each one could be replaced by a blunt version,
determining if the tasks performed could be done with equal ease. This followed
a recent injury to a surgeon by a sharp Gelpi retractor. Like sharp needles,
sharp retractors can injure both patient and surgeon should they slip to an
unintended location.
Anytime a scissors or cautery may be used instead of a scalpel, the
potential for injury during that step is reduce. For instance, I have
successfully performed vaginal and abdominal hysterectomies without using a
scalpel or any other sharp instrument. Blunt needles cannot be used to close
skin, but skin closure with modern stapling devices produces satisfactory
healing and eliminates the risk of needlesticks.
Wire sutures are associates with very high rates of skin puncture.
Their use should be avoided unless there is absolutely no alternative. A recent
case report, for example, associates the tying of wire sutures with the
acquisition of AIDS in a cardiothoracic surgeon. 4 Hemostatic clips may be
considered instead of sharp sutures in some appropriate situations, although
clips are not always as secure as sutures.
Managing necessary sharps
The neutral zone (safe zone) should always be established before the
operation begins, and maintained by the scrub person for the maximal convenience
of the surgeon. Emesis basins, mats, and various trays have been employed to
create a neutral zone to avoid hand-to-hand passing of sharps between surgeons
and scrub personnel. More creative products may be forthcoming from industry in
the future. The passing of any sharp should be accompanied by a clear
announcement by the person holding the instrument.
Disposable scalpels and "safety scalpels" provide opportunities for
reduction of risk of injury to all members of the team because the blade need
not be attached nor removed by personnel. Some models have the added advantage
of a retractable shield for the blade, and can lock out the blade for disposal,
thus protecting the clean-up crew as well. We are also evaluating these devices
at our institution at present.
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Some have advocated the use of thimbles for the index finger of the
surgeon's non-dominant hand, which has been shown to be at the highest risk of
puncture. 5 Thimbles have not been popular, perhaps because of the clumsiness,
real or imagined, they may cause. Another objection to using a thimble is the
fact that the entire non-dominant hand is still in juxtaposition with the needle
point. What may make more sense is removing the non- dominant hand from the
danger zone by the use of one-handed suturing technique (Figure 1). This gives
the additional advantage of freeing the hand for following a running suture in
surgery, typically a non-assisted procedure, such as in the repair of episiotomy
or vaginal laceration.
Figure 1: This pin-cushion type of needle-tip protector, the
Suturemate, requires only one hand for suturing (photograph of
pin cushion shown)
The CDC has identified obstetrics as a high risk area for bloodborne
pathogen exposure. This is not surprising if one considers the complicating
factors of moving patients, poor lighting, high volume of blood and body fluids
in the surgical field obscuring visibility and increasing the size of the
potential innoculum, as well as the lack of a surgical assistant and multiple
distractions in the delivery room.
The use of double gloving is supported by multiple studies.6789 This
lowers the risk of patients' blood contacting the skin of the surgeon's hands
from 40 to 50% down to 2-4%. This is important because often the operator's skin
is not intact, creating a portal of entry for HIV and hepatitis viruses.
Lessons learned during surgical training are not always followed in the
real world. In this age of increasing risk from bloodborne pathogens, it is
imperative to universally practice safe techniques, and add newer ones based on
logical choices to create and maintain a safe surgical environment. (Table 3).
Operating on patients with known viral bloodborne pathogens can become
difficult when the staff over zealously gears up. Paradoxically, surgeons who
might not take Universal Precautions with the majority of patients, when faced
with operating on a patient with HIV, AIDS, hepatitis B, C. or D, encumber
themselves with various pieces of non-user-friendly equipment. The bulky gear
could possibly make surgery less efficient and even more dangerous for both
surgeon and patient (Figure 2). Heavy-duty gloves and face barriers may be
appropriate in some situations, such as sharp foreign objects in trauma cases
are encountered; however, for routine surgeries these devices may limit to some
extent the surgeon's ability to feel, hear, and be heard. These negative factors
could make a dangerous situation even more dangerous.
Future precautions
The CDC has reported on only 123 healthcare workers to date known or
suspected to be occupationally HIV infected. Many believe this data to be
incomplete, the tip of the iceberg, giving false and inappropriate reassurance
to surgeons and hospital administrators regarding the true daily risk in the
surgical workplace. Hepatitis C, with its high chronicity rate and lethal
potential, is much more communicable than HIV, and lacks a vaccine as well.
Yet, a large percentage of cuts needlesticks, and blood exposures go
unreported by surgeons and nurses. 10 In a recent interview, an occupationally
HIV-infected physician who now lectures extensively on exposure prevention
revealed that she has already heard from 50 to 60 healthcare workers over the
last eighteen months who have become HIV positive following occupational
exposures.11 The CDC has no knowledge or documentation of these cases, leading
one to speculate with concern on how many others may be infected but have not
come forward, or indeed may not be diagnosed. This chilling though can only be
balanced by the knowledge that most exposures can be prevented in the absence of
vaccines or cures, but only by getting past the denial of the risk, focusing on
safety, and using the protective devices available. In the meantime, we search
for even better ones while promoting communication and education. This problem
will not be solved overnight, and it will not go away. Tomorrow would be a good
day to start saving money and lives.
Mark S. Davis, MD is a practicing physician at Atlanta Gynecology & Obstetrics,
PC (Decatur, GA). He voluntarily serves as clinical liaison for occupational
health and infection control at DeKalf Medical Center in Decatur, Georgia.
TABLE 4: SURGERY ON INFECTED PATIENTS
o Develop a plan pre-operatively, preferably the day before.
o Strive for no sharps on the field. If feasible, this can
obviate the need for extra-clumsy protective devices.
o Double glove (or triple lightweight glove) and change outer
layer every hour or two to ensure barrier integrity.
o If sharps are necessary, follow all precautions.
o Consider non-surgical therapy before scheduling surgery.
Some ectopic pregnancies, biliary disorders, and fractures can be
successfully treated without surgery.
o In the operating room, focus on safety with every hand
motion. Think before acting or speaking
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Figure 2: Potentially non-user friendly equipment, such as heavy-duty gloves and
face barriers are appropriate when bone fragments, splinters, and sharp foreign
objects are encountered, such as in trauma cases. For routine surgeries, these
devices may limit to some extent the surgeon's ability to feel, hear, and be
heard. Protective, yet less cumbersome devices may be more appropriate.
(photograph)
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