U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1999
Commission file no. 0-24921
Surgical Safety Products, Inc.
--------------------------------------------
(Name of small business issuer in its charter)
New York 65-0565144
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2018 Oak Terrace
Sarasota, Florida 34231
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (941) 927-7874
Securities registered under Section 12(b) of the Exchange Act:
Name of each exchange on
Title of each class which registered
None
- ----------------------------- -------------------------
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.001 par value
-----------------------------------
(Title of class)
<PAGE>
Copies of Communications Sent to:
Mercedes Travis, Esq.
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
Tel: (561) 832-5696
Fax: (561) 659-5371
Indicate by Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
As of March 31,1999, there are 10,736,973 shares of voting stock of the
registrant issued and outstanding.
<PAGE>
PART I
Item 1. Financial Statements
Condensed Balance Sheets for the Quarters Ended March 31, 1999 and 1998 F-2
Condensed Statements of Operations for the Three Months Ended March
31, 1999 and 1998 F-3
Statements of Cash Flows for the Three Months Ended March 31, 1999
and 1998 F-4
Footnotes to the Financial Statements F-6
<PAGE>
<TABLE>
<CAPTION>
SURGICAL SAFETY PRODUCTS, INC.
CONDENSED BALANCE SHEET
<S> <C> <C>
Assets (Unaudited)
Current Assets March 31, 1999 December 31, 1998
------------- -----------------
Cash $ 0 $41,191
Accounts receivable 22,793 1,941
Deposits 0 58,700
Inventory 6,337 6,555
----------- -----------
Total current assets 29,130 108,837
----------- -----------
Property and equipment, net 176,995 112,772
----------- -----------
Other Assets
Intangible assets, net 47,821 49,232
Software development costs, net 125,917 92,873
Other assets 10,250 10,250
----------- -----------
Total other assets 183,988 152,355
----------- -----------
Total Assets $390,113 $373,514
======= =======
Liabilities and Stockholders' Equity
Current Liabilities
Line of credit $ 100,000 $
Notes payable - related parties 70,000
Accounts payable and accrued expenses 100,899 55,331
------------- -----------
Total current liabilities 270,899 55,331
------------- -----------
Stockholders' Equity
common stock, $.001 par value,
20,000,000 shares authorized;
10,786,973 shares issued and
outstanding in 1999 and 1998 10,787 10,787
Additional paid-in capital 1,907,129 1,998,242
Accumulated deficit (1,798,702) (1,690,846)
---------------- ----------------
Total stockholders' equity 119,214 318,183
---------------- ----------------
Total Liabilities and Stockholders' Equity $ 390,113 $373,514
========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
SURGICAL SAFETY PRODUCTS, INC.
CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
<S> <C> <C>
1999 1998
----- -----
Revenue $ 39,577 $ 15,980
Costs and expenses
Cost of medical products sold 261 153
Operating expenses 138,984 63,274
Research and development expenses 6,667 5,138
Interest expense 1,521 1,343
----------- -----------
Total costs 147,433 69,908
----------- -----------
Net loss before income taxes (107,856) (53,928)
Provision for income taxes 0 0
----------- -----------
Net loss $ (107,856) $ (53,928)
======== =======
Net loss per share $ (0.01) $ (0.01)
======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
SURGICAL SAFETY PRODUCTS, INC.
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
1999 1998
----- -----
<S> <C> <C>
Cash Flows From Operating Activities
Net loss $ (107,856) $ (53,928)
-------------- -----------
Adjustments to reconcile net loss to cash
used in operating activities
Depreciation and amortization 29,905 2,426
Common stock issued for services 12,500
Stock option compensation expense (91,113)
Decrease (increase) in operating assets
Receivables (20,852) 250,125
Inventory 218 (3,087)
Increase (decrease) in operating liabilities
Accounts payable and accrued expenses 45,570 (56,580)
---------- ----------
Total adjustments (36,272) 250,384
----------- ----------
Net cash used in operating activities (144,128) 151,456
----------- ----------
Cash Flows From Investing Activities
Furniture and equipment purchased (25,937) (8,568)
Software development additions (41,126) (9,888)
Patent and trademark costs
----------- ---------
Net cash used in investing activities (67,063) (18,456)
----------- ---------
Cash Flows From Financing Activities
Proceeds from related party loans 70,000
Advances (repayments) on line of credit, net 100,000 (75,000)
Repayment of stockholder loans (58,000)
---------- ---------
Net cash provided by financing activities 170,000 (133,000)
----------- ----------
Net increase (decrease) in cash (41,191) -
Cash at beginning of year 41,191 -
----------- ----------
Cash at end of year $ - $ -
======== =======
Supplemental Cash Flow Information: $ 1,521 $ 19,010
Cash paid for interest ======== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
For the 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:
For the Quarter Ended March 31, 1999
The Company received fixed assets in the amount of $ 58,700 for which it
had recorded deposits of such amount at December 31, 1998.
For the Quarter Ended March 31, 1998
The Company issued common stock for prepaid legal and public relations
services in the amount of $ 47,500 as of March 31, 1998.
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
Note 1 - Account Policies
Basis of Presentation
The condensed financial statements of Surgical Safety Products, Inc. (Company)
have been prepared without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. These consolidated financial statements should be read in
conjunction with the financial statement and notes thereto included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1998.
The results of operations for the three month period ended March 31, 1999 are
not necessarily indicative of the results to be expected for any other period or
for the full year.
In the opinion of Company's management the accompanying unaudited financial
statement contains all adjustments, consisting of only normally recurring
adjustment, necessary to present fairly the financial positions of March 31,
1999, the results of operations and cash flows for the three months ended March
31, 1999 and March 31, 1998.
Net Loss Per Share
Net loss per share has been computed in accordance with Statement of Financial
Accounting Standards (FASB) no. 128, "Earnings Per Share," by dividing net loss
by the weighted average number of shares outstanding during the period. Common
stock equivalents have not been include in the computation of weighted average
number of shares outstanding since the effect would have been anti-dilutive.
Reclassifications
Certain reclassification have been made in the prior year's financial statements
to conform to the current period presentations.
Note 2 - Stock Compensation Expense
During fiscal year 1998, the Company issued stock options with an exercise price
that was below market to certain of its employees. Accordingly, the Company
recorded $91,113 of compensation expense related to the issuance for the year
ended December 31, 1998.
In the first quarter of 1999, the Company canceled these stock options and
issued options with an exercise price above that of market. Accordingly, the
Company decreased its payroll expenses by $91,113 for the cancellation of these
options for the quarter ended March 31, 1999.
F-6
<PAGE>
Item 2. Management's Discussion and Analysis or Results of Operations.
General
In March 1999, the Company installed additional units under the US Surgical
agreement at the California Pacific Medical Center and the Kaiser Permeante
Medical Center, both in San Francisco, California.
In April, 1999, the Company shipped and did the preliminary installation at
three more US Surgical sites, a second California Pacific Medical Center in San
Francisco, the California Pacific Medical Center in Los Angeles, California and
the University of Washington in Seattle, Washington. All of these installation
are awaiting final connection and networking.
In April 1999, the Company again attended the AORN convention at which it
experienced more acceptance from potential content providers and users because
of the commencement of the arrangement with US Surgical.
The Company expects to complete the last three (3) US Surgical cites in May
and June 1999.
In April 1999 the Company commenced a self-directed private placement
offering of the Company's restricted Common Stock and warrants for an aggregate
of $500,000 in proceeds. This offering is being conducted pursuant to Section
4(2) of the Securities Act of 1933, as amended (the "Act") and Rule 506
promulgated under Regulation D of the Act to not more than thirty-five (35) non
accredited investors; Section 517.061(11) of the Florida Code, Section
292.410(h) of the Kentucky Code and Section 201.[70 P.S. 1/201] of the
Pennsylvania Code.. No memorandum is being used in connection with this
offering.
The basis for reliance upon the Section 4(2) exemption in connection with
this offering is (i) the sale of the shares of Common Stock and warrants does
not constitute a public offering and (ii) investors are or will be sophisticated
investors who have access to the information on the Company necessary to make an
informed investment decision by virtue of the Company's Registration Statement
on Form 10-SB, as amended, filed with the Securities and Exchange Commission
(the "SEC") and the Company's Form 10-KSB filed with the SEC. The Company is
required to file a Form D within fifteen (15) days of the first sale. Thus far,
the Company has received gross proceeds of $75,000 under this offering from two
(2) investors for a total of 150,000 shares of the Company's restricted Common
Stock and the issuance of warrants to purchase a total of 75,000 shares of the
Company's Common Stock at an exercise price of $1.00 within five (5) years.
The basis for reliance upon Section 517.061(11) of the Florida Code in
connection with this offering is (i) sales of the shares of restricted Common
Stock and warrants has been or will be made to not more than thirty-five (35)
persons; (ii) neither the offer nor the sale of any of the shares has been or
will be accomplished by the publication of any advertisement; (iii) all of the
purchasers either have or had a pre-existing personal or business relationship
with one or more of the executive officers and directors of the Company or, by
reason of their business or financial experience, could be reasonably assumed to
have the capacity to protect their own interest in connection with the
<PAGE>
transaction; (iv) each purchaser has or will represent that he was purchasing
for his own account and not with a view to or for sale in connection with any
distribution of shares; and (v) prior to sale, each purchaser had or will have
reasonable access to or was furnished all material books and records of the
Company, all material contracts and documents relating to the Company, and had
an opportunity to question the executive officers of the Company.
The basis for reliance upon Section 292.410(h) of the Kentucky Code in
connection with this offering is (i) neither the offer nor the sale of any of
the shares has been or will be accomplished by any form of general solicitation;
(ii) the Company has received or will receive a written representation from the
purchaser that he is acquiring the securities for his own investment and is
aware of any and all restrictions imposed on transferability and that the
certificates and warrants do and shall bear a restrictive legend; (iii) sales of
the shares of restricted Common Stock and warrants has been or will be made to
not more than fifteen (15) persons in Kentucky all of whom will be or are
accredited investors; and (iv) there are no commissions, finders fees or other
remunerations being paid in connection with the sales.
The basis for reliance upon Section 201.[70 P.S. 1.201] is that
Pennsylvania does not require registration of federally exempted Rule 506
securities.
In April, 1999, the Company executed a Consulting and Assistance Agreement
with Koritz Group LLC, a Connecticut limited liability company ("Koritz"). Under
the terms of this agreement, Koritz has been engaged to identify sources of
capital or potential business relationships and to assist the Company in (i)
raising equity or debt financing in the amount of $15,000,000 (ii) arranging for
trade financing for production, sale, lease, rental or other disposal of the
Company's products; and (iii) arranging for the sale, merger, or consolidation
of the Company or for joint ventures or strategic alliances with other
appropriate business. This agreement is non-exclusive. In the event Koritz is
successful, 2.5% for any trade financing and 10% of the value of each business
arrangement. In the event Investment Financing is secured, the Company will pay
compensation equal to 10% for any investment financing to the person or entity
placing such investment; provided such person or entity is qualified to receive
such compensation in the state of residence of the investor. The Company is free
to reject any offered financing or arrangements; however, in the event that the
Company enters any arrangement within 180 days of its written rejection, on
terms less favorable to the Company, Koritz will receive a flat fee of $100,000.
In addition to the cash compensation, in the event the Company secures
investment financing, then the qualified, placing person or entity will receive
warrants to purchase the Company's Common Stock exercisable for 36 months after
the closing at the same price as the investment financing source receives, the
number of which warrants is equal to the amount of the financing divided by the
exercise price. Such warrants have anti-dilution and piggy-back registration
rights. Should the Company "shop" any offer of financing presented to it to
other potential sources and accept such other financing, the Koritz is entitled
to a success fee. Koritz will be reimbursed pre-approved disbursements and
expenses. The agreement provides for confidentiality and cross-indemnification .
The agreement may be canceled by either party with five (5) days written notice.
Any disputes under the agreement are required to be submitted to arbitration,
which costs payable by the losing party.
<PAGE>
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, manufacturing, marketing and selling medical
products and services to the healthcare community.
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 December 31, 1998, the Company generated revenues of
approximately $1,100,000 from a limited number of customers. Since inception
through December 31, 1998, the Company has generated cumulative losses of
approximately $1,690,000. Although the Company has experienced a significant
percentage growth in revenues from fiscal 1992 to fiscal 1998, the Company does
not believe prior growth rates are indicative of future operating results,
especially in light of the contract with US Surgical to assist in 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 first half of 2000, and there can be no assurance that losses will not
continue after such date.
With the implementation of its agreement with US Surgical and in the event
of the reactivation of its various distribution agreements and/or with the
establishment of one or more strategic alliances, 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 the areas of (i) customer service to provide technical support for
the hospitals at which installations are located and (ii) technical staff to
make changes requested by the installation hospitals. This will result in
significantly higher operating expenses. The increase in operating expenses is
expected to be partially funded by an increase in revenues. However, the
Company's net loss may 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
research and development, 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.
The Company's plan of operations for the next twelve months is to focus on
building revenue from the installation of the OASiS system in the ten (10)
hospitals designated by US Surgical and to install additional OASiS systems in
hospitals not under the US Surgical agreement but with whom the Company has
begun negotiations and in some cases reached a commitment. Additionally, the
Company intends to install the inservice modules from US Surgical and other
<PAGE>
medical product manufacturers at both the US Surgical and the other hospitals.
The Company also is seeking aggressively strategic alliances with targeted
industry partners such as manufacturers of devices, manufacturers of
pharmaceuticals, professional organizations such as nursing associations and
hospital group purchasing organizations and integrated health networks.
The Company estimates that if it is successful in consummating new
strategic alliances, the agreements will provide for infusion of sufficient
capital to fund ongoing operations for the balance of the year. The Company
estimates revenues from an expanded base of content providers and individual
installations may grow to the level where they can support ongoing operations.
The Company estimates that revenues will be sufficient to fund ongoing
operations at the current level when the number of OASiS installations reaches
30 to 35 and the total number of inservice modules reaches 60-70. The Company
has purchased 20 OASiS units from Kiosk Information Systems, Inc., 3 of which
were installed under the US Surgical agreement, 3 of which were installed at St.
Francis Hospital, and the balance of which are dedicated to its commitment to US
Surgical for hospitals it has ready for installation and to other hospitals
which are committed to proceed, which installations are scheduled on or before
June 30, 1999. Based upon potential additional commitments, the Company believes
that if it were to order 20 more units, that all such units would be placed by
the end of the third quarter 1999. The Company already has 30 inservice modules
under the US Surgical agreement and is in discussion with various manufacturers
interested in using OASiS to inservice more than 50 of their products. The
Company believes that each of the initial installations should have a position
as to long term acceptance within three (3) to six (6) months and that this
initial time is the test period to determine the potential for market acceptance
at that hospital. In the case of US Surgical hospitals, this period will be for
nine (9) months by contract. At the end of such test period, the Company
believes it will be in a position to execute three (3) year leases and finance
such leases through the Rockford leveraged leasing arrangement.
In the short term, to fund operations through the third quarter 1999, the
Company will be required to seek additional funds from its shareholders, seek
funds from a limited number of accredited investors in a private placement of
its restricted securities, seek additional third party financing or seek third
party debt or equity financing other than those planned by the current
anticipated private placement. In the event no such funding is available or only
partial funding is available, the Company will be required to scale back
operations and to reduce its breakeven point by such measures as salary
reductions, staffing cuts, or the licensing or sale of some of the Company's
assets or product lines to third parties. Provided such funding or scale back is
successful, the Company believes that it can meet its capital needs through the
testing period and until such time as the Company has sufficient additional long
term capital to expand. There can be no assurance that the Company will be
successful in these efforts.
Once the testing period is over, the Company will require between $2 and $5
million in additional capital in the form of debt or equity to fund the
continued expansion of the OASiS system and its development to meet increased
demand and to implement its plans for increased marketing of its medical device
products. The Company has met with several venture capital firms, investment
bankers, factoring companies and traditional lending sources, each of whom have
expressed early interest and many of whom are awaiting the conclusion of the
testing period. No definite offer has been accepted by the Company. There can
<PAGE>
be no assurance that such long term financing will be available to the Company
or that it will be on terms which the Company may seek.
Results of Operations for the Three Months Ended March 31, 1999 and 1998
Overview
From its inception, the Company has incurred losses from operations. As of
March 31, 1999, the Company had cumulative net losses totaling approximately
$1,799,000. Through fiscal 1997, the Company focused primarily on the design and
development of its propriety products, as well as providing consulting services.
During fiscal 1998, management shifted its focus to aggressively marketing its
proprietary products.
Financial Position
Working capital as of March 31, 1999 decreased to a deficit of $241,769 as
compared to working capital of $53,056 at December 31, 1998. This decrease is
primarily due to an increase in accounts payable of $45,568, advances on the
line of credit of $100,000 and loans from the major stockholder of $70,000
during the three months ended March 31, 1999.
Revenues
For the three ended March 31, 1999 and 1998, the Company had total revenues
of $39,577 and $15,980, respectively. Revenues for the three months ended March
31, 1998 are comprised primarily of consulting fees. For the three months ended
March 31, 1999, revenues are comprised of fees received for unit rentals and
production fees for inservice modules.
Selling, General, and Administrative Expenses
For the three months ended March 31, 1999, operating expenses increased by
$75,710 or 120% from $63,274 for the three months ended March 31, 1998. This
increase is primarily related to selling and staffing costs to initiate the
OASiS installations. Payroll and related expenses decreased to a negative
$10,000 due to the cancellation of stock options issued during fiscal 1998. Had
these options not been canceled, payroll expenses would have increased $70,000
to $87,860 for the three months ended March 31, 1999 from $17,860 during the
three months ended March 31, 1998. In accordance with the Company's marketing
plan for fiscal 1999, expenses related to promotion, trade shows, and
conventions increased $33,540 to $45,815 for the three months ended March 31,
1999 as compared to $12,275 for the three months ended March 31, 1998.
In the past, the Company has focused on the design and development of
proprietary products. For fiscal 1999, 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 three
months ended March 31, 1999 will position the Company to generate increased
product sales in the second half of the fiscal year.
<PAGE>
Liquidity and Capital Resources
The Company's operations are being funded primarily from the cash flow of
$170,000 generated from shareholder loans and advances on the line of credit
during the three months ended March 31, 1999. This allowed the Company to
purchase capital assets, enhance its OASiS software and fund current operations.
At March 31, 1999, the Company is in a $0 cash position. Subsequent to March 31,
1999, receipts from the Company's self directed private placement have been used
to fund operations and the Company has several other investors which have been
committed but not reduced to writing as of this date.
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 also has
been used to fund operations on a short-term basis and $100,000 is currently
outstanding.
Net cash used for investing for the three months ended March 31, 1999 was
approximately $67,000, representing primarily costs related to the new version
of OASiS which have been capitalized.
Revenues of $39,577 for the quarter ended March 31, 1999 have been
generated primarily from the leasing of OASiS units to various hospitals
pursuant to the Agreement with US Surgical. Leasing and installation fees
related to the Agreement accounted for 99% of the revenue generated. For the
quarter ended March 31, 1998, $15,355 or 96% of revenues of $15,980 were
generated from consulting services provided to US Surgical.
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 1999, 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 Issues 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 a 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 is being
upgraded to support Year 2000 versions. Further, the Year 2000 will not impact
upon 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
<PAGE>
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.
Forward-Looking Statements
This Form 10-QSB includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included or incorporated by reference in this
Form 10-QSB which address activities, events or developments which the Company
expects or anticipates will or may occur in the future, including such things as
future capital expenditures (including the amount and nature thereof), demand
for the Company's products and services, expansion and growth of the Company's
business and operations, and other such matters are forward-looking statements.
These statements are based on certain assumptions and analyses made by the
Company in light of its experience and its perception of historical trends,
current conditions and expected future developments as well as other factors it
believes are appropriate in the circumstances. However, whether actual results
or developments will conform with the Company's expectations and predictions is
subject to a number of risks and uncertainties, general economic market and
business conditions; the business opportunities (or lack thereof) that may be
presented to and pursued by the Company; changes in laws or regulation; and
other factors, most of which are beyond the control of the Company.
Consequently, all of the forward-looking statements made in this Form 10-QSB are
qualified by these cautionary statements and there can be no assurance that the
actual results or developments anticipated by the Company will be realized or,
even if substantially realized, that they will have the expected consequence to
or effects on the Company or its business or operations. The Company assumes no
obligations to update any such forward-looking statements.
PART II
Item 1. Legal Proceedings.
The Company knows of no 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 2. Changes in Securities and Use of Proceeds
None
<PAGE>
Item 3. Defaults in Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the quarter ending March 31, 1999, covered
by this report to a vote of the Company's shareholders, through the solicitation
of proxies or otherwise.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits required to be filed herewith by Item 601 of Regulation
S-B, as described in the following index of exhibits, are incorporated herein by
reference, as follows:
Exhibit No. Description
- -------------------------------------------------------------------------------
3.(i).1 Articles of Incorporation of Surgical Safety Products, Inc., a
Florida corporation filed May 15, 1992
3.(i).2 Articles of Amendment filed December 9, 1992
3.(i).3 Articles of Amendment filed July 19, 1994
3.(i).4 Articles of Amendment filed October 11, 1994
3.(i).5 Articles of Incorporation of Sheffeld Acres, Inc., a New York
Corporation filed May 7, 1993
3.(i).6 Articles of Merger filed in the State of Florida October 12, 1994
3.(i).7 Certificate of Merger filed in the State of New York February 8,
1995
3.(i).8 Certificate to Do Business in the State of Florida filed April 11,
1995
3.(i).9 Certificate of Amendment filed May 1, 1998
3.(ii).1 Bylaws of Sheffeld Acres, Inc., now known as Surgical Safety
Products, Inc.
3.(ii).2 Amended Bylaws of Surgical Safety Products, Inc.
10.1 Acquisition of Endex Systems, Inc. d/b/a/ InterActive PIE dated
December 8, 1997
<PAGE>
10.2 Prepaid Capital Lease Agreement with Community Health Corporation
relative to Sarasota Medical Hospital OASiS Installation dated
January 30, 1998
10.3 Letter of Intent with United States Surgical Corporation dated
February 12, 1998
10.4 Form of Rockford Industries, Inc. Rental Agreement and Equipment
Schedule to Master Lease Agreement
10.5 Ad-Vantagenet Letter of Intent dated June 19, 1998
10.6 Distribution Agreement with Morrison International Inc. dated
September 30, 1996
10.7 Distribution Agreement with Hospital News dated August 1, 1997
10.8 Clinical Products Testing Agreement with Sarasota Memorial Hospital
dated January 30, 1998
10.9 Real Estate Lease for Executive Offices effective June 1, 1998
10.10 Employment Agreement with Donald K. Lawrence dated April 1, 1997
10.11 Employment Agreement with G. Michael Swor dated June 15, 1998
10.12 Employment Agreement with Frank M. Clark dated June 15, 1998
10.13 Agreement for Consulting Services with Stockstowatch.com Inc. dated
March 30, 1988
10.14 Form of Employee Option Agreement dated July 1994
10.15 Form of Employee Option Agreement dated 1998
10.16 Form of Consultants Option Agreement dated July 1994
10.17 Form of Consultants Option Agreement dated 1998
10.18 Confidential Private Offering Memorandum dated May 30, 1995
10.19 Supplement to Private Offering Memorandum dated October 30, 1995
10.20 Stock Option Agreement with Bay Breeze Enterprises LLC dated
April 9, 1998
10.21 Revolving Loan Agreement, Revolving Note, Security Agreement with
SouthTrust Bank dated May 2, 1997
<PAGE>
10.22 Agreement between the Company and T. T. Communications, Inc. dated
October 15, 1998
10.23 Agreement between the Company and U.S. Surgical Corporation dated
October 28, 1998.
10.24 Collaborative Agreement between the Company and Dr. William B. Saye
dated November 16, 1998.
10.25 Kiosk Information System, Inc. Purchase Order dated November 3, 1998
10.26 Surgical Safety Products 1999 Stock Option Plan adopted January 1999
10.27 Form of the Employee Option Agreement under the Surgical Safety
Products 1999 Stock Option Plan dated January 1999
10.28 Form of the Director, Consultant and Advisor Option Agreement under
the Surgical Safety Products 1999 Stock Option Plan dated
January 1999
10.29 Verio, Inc. Access Service Agreement dated February 16, 1999.
10.30 * Form of Investor Subscription Documents and Agreements relative to
the April 1999 Self Directed Private Placement Offering under Rule
506 of Regulation D.
10.31 * Form of the Warrant issued pursuant to the April 1999 Self
Directed Private Placement Offering under Rule 506 of Regulation D.
10.32 * Consulting Agreement dated April 1999 with Koritz Group, LLC.
23.2 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
23.3 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 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.
23.4 Publisher's Consents and Article - Mark S. Davis, MD. Sharps
Management in Surgery. Infection Control & Sterilization
Technology, Vol. 1, No. 4, April 1995.
27.1 * Financial Data Street
<PAGE>
- ----------------
(* Filed herewith, all other exhibits previously filed as exhibits to the
Company's Form 10-SB and Form 10-SB Amendment No. 1)
(b) No Reports on Form 8-K were filed during the quarter ended March 31,
1999.
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: May 24, 1999 By:/s/ Frank M. Clark
------------------------------------------------
Frank M. Clark, President and CEO
By:/s/ Donald K. Lawrence
------------------------
Donald K. Lawrence
Vice President and Secretary
By:/s/ G. Michael Swor
---------------------
G. Michael Swor
Treasurer
By:/s/ David Collins
------------------
David Collins
Acting Chief Financial Officer
[sign page SSP 10QSB 3.31.99]
EXHIBIT 10.30
CONFIDENTIAL
Surgical Safety Products, Inc., a New York corporation
INVESTOR SUITABILITY EVALUATION QUESTIONNAIRE
1. NAME ___________________________________________________
2. ADDRESS ___________________________________________________
---------------------------------------------------
---------------------------------------------------
3. PHONE Residence ( )_____________________________
Business ( )_____________________________
4. SOCIAL SECURITY NUMBER ___________________________
TAX IDENTIFICATION NUMBER ___________________________
5. DATE OF BIRTH _____________________________________________
6. REPRESENTATIONS (Investor should initial the appropriate blanks to which an
affirmative representation can be made)
_______________ The total purchase price does not exceed
twenty percent (20%) of my net worth at the time of the sale
and my subscription is at least One Hundred Fifty Thousand
Dollars ($150,000.00).
_______________ I have a net worth of One Million Dollars
($1,000,000.00) or more.
_______________ I have an income of Tow Hundred Thousand
Dollars ($200,000.00) or more in each of the past two (2)
years and during the current year.
_______________ The total purchase price does not exceed
twenty percent (20%) of my net worth.
I further represent that I can bear the economic risk of this investment
and that I have substantial experience in making investment decisions of this
type.
------------------------------ ------------------------------
Name of Investor Signature of Investor
Date:___________________________
<PAGE>
INVESTOR SUITABILITY STANDARDS AND
INVESTMENT RESTRICTIONS
------------------------------------
Suitability
Shares will be offered and sold pursuant an exemption under the Securities
Act, and exemptions under applicable state securities and Blue Sky laws. There
are different standards under these federal and state exemptions which must be
met by prospective investors in the Company.
The Company will sell Shares only to those Investors it reasonably believes
meet certain suitability requirements described below.
Each prospective Investor must complete a Confidential Purchaser
questionnaire and each Purchaser Representative, if any, must complete a
Purchaser Representative Questionnaire.
EACH INVESTOR MUST BE RESPONSIBLE FOR DETERMINING THAT IT IS PERMITTED TO
INVEST IN THE COMPANY, THAT ALL APPROPRIATE ACTIONS TO AUTHORIZE SUCH AN
INVESTMENT HAVE BEEN TAKEN, AND THAT ANY REQUIREMENTS THAT ITS INVESTMENTS BE
DIVERSIFIED OR SUFFICIENTLY LIQUID HAVE BEEN MET.
An investor will qualify as an accredited Investor if it falls within any
one of the following categories at the time of the sale of the Shares to that
Investor:
(1) A bank as defined in Section 3(a)(2) of the Securities Act, or a
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; a broker or dealer registered pursuant to Section 15 of
the Securities Exchange Act of 1934; an insurance company as defined in
Section 2(13) of the Securities Act; an investment company registered under
the Investment Company Act of 1940 or a business development company as
defined in Section 2(a)(48) of that Act; a Small Business Investment
Company licensed by the United States Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of 1958; a 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; an employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974, if the investment decision is made
by a plan fiduciary, as defined in Section 3(21) of that Act, which is
either a bank, savings and loan association, insurance company, or
registered investment adviser, or if the employee benefit plan has total
assets in excess of $5,000,000, or, if a self-directed plan with the
investment decisions made solely by persons that are accredited investors;
(2) A private business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940;
(3) An organization described in Section 501(c)(3) of the Internal
Revenue Code with total assets in excess of $5,000,000;
(4) A director or executive officer of the Company.
(5) A natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of such person's purchase of the
Shares exceeds $1,000,000;
(6) A 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;
<PAGE>
(7) A 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 describe in Rule 506(b)(2)(ii) of
Regulation D; and
(8) An entity in which all of the equity owners are accredited
investors (as defined above).
As used in this Memorandum, the term "net worth" means the excess of total
assets over total liabilities. In computing net worth for the purpose of (5)
above, the principal residence of the investor must be valued at cost, including
cost of improvements, or at recently appraised value by an institutional lender
making a secured loan, net of encumbrances. In determining income an investor
should add to the investor's adjusted gross income any amounts attributable to
tax exempt income received, losses claimed as a limited partner in any limited
partnership, deductions claimed for depletion, contributions to an IRA or KEOGH
retirement plan, alimony payments, and any amount by which income form long-term
capital gains has been reduced in arriving at adjusted gross income.
In order to meet the conditions for exemption from the registration
requirements under the securities laws of certain jurisdictions, investors who
are residents of such jurisdiction may be required to meet additional
suitability requirements.
An Investor that does not qualify as an accredited Investor is a
non-accredited Investor and may acquire Shares only if:
(1) The Investor is knowledgeable and experienced with respect to
investments in limited partnerships either alone or with its Purchaser
Representative, if any; and
(2) The Investor has been provided access to all relevant documents it
desires or needs; and
(3) The Investor is aware of its limited ability to sell and/or
transfer its Shares in the Company; and
(4) The Investor can bear the economic risk (including loss of the
entire investment) without impairing its ability to provide for its
financial needs and contingencies in the same manner as it was prior to
making such investment.
THE COMPANY RESERVES THE RIGHT IN ITS ABSOLUTE DISCRETION TO DETERMINE IF A
POTENTIAL INVESTOR MEETS OR FAILS TO MEET THE SUITABILITY STANDARDS SET FORTH IN
THIS SECTION.
Additional Suitability Requirements for Benefit Plan Investors
In addition to the foregoing suitability standards generally applicable to
all Investors, the Employee Retirement Income Security Act of 1934, as amended
("ERISA"), and the regulations promulgated thereunder by the Department of Labor
impose certain additional suitability standards for Investors that are qualified
pension, profit-sharing or stock bonus plans ("Benefit Plan Investor"). In
considering the purchase of Shares, a fiduciary with respect to a prospective
Benefit Plan Investor must consider whether an investment in the Shares will
satisfy the prudence requirement of Section 404(a)(1)(B) of ERISA, since there
is not expected to be any market created in which to sell or otherwise dispose
of the Shares. In addition, the fiduciary must consider whether the investment
in Shares will satisfy the diversification requirement of Section 404(a)(1)(C)
of ERISA.
Restrictions on Transfer or Resale of Shares
The Availability of Federal and state exemptions and the legality of the
offers and sales of the Shares are conditioned upon, among other things, the
fact that the purchase of Shares by all Investors are for investment purposes
only and not with a view to resale or distribution. Accordingly, each
prospective Investor will be required to represent in the Subscription Agreement
that it is purchasing the Shares for its own account and for the purpose of
investment only, not with a view to, or in accordance with, the distribution of
sale of the Shares and that it will not sell, pledge, assign or transfer or
offer to sell, pledge, assign or transfer any of its Shares without an effective
registration statement under the Securities Act, or an exemption therefrom
(including an exemption under Regulation D, Section 504) and an opinion of
counsel acceptable to the Company that registration under the Securities
<PAGE>
Act is not required and that the transaction complies with all other applicable
Federal and state securities or Blue Sky laws.
<PAGE>
Surgical Safety Products, Inc.
(A New York corporation)
==================
SUBSCRIPTION DATA SHEET
==================
Name of Subscriber
(Offeree):________________________________________________________________
Address of Residence
(if natural person):_______________________________________________________
- ---------------------------------------------------------------------------
Address of
Business:_________________________________________________________________
- ---------------------------------------------------------------------------
Subscriber's
Telephone No.:____________________________________________________________
Subscriber's Social
Security No. or
Tax I.D. No.:______________________________________________________________
Preferred Address for
receiving ma( ) Residenc( ) Business( ) Other, if any:
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Date of Subscription:_______________________________________________________
Amount of Subscrip$______________________________
<PAGE>
SUBSCRIPTION AGREEMENT AND INVESTMENT
REPRESENTATION OF INVESTORS
Surgical Safety Products, Inc.
SSP Corporate Center
2018 Oak Terrace
Sarasota, FL 34231
Gentlemen:
1. Subject to the terms and conditions hereof, the undersigned, intending to
be legally bound, hereby irrevocably subscribes for and agrees to accept
and subscribe to (a)_________ shares of Rule 144 Restricted common stock of
Surgical Safety Products, Inc., a New York corporation (the Company), and,
(b) ___________________ five (5) year Warrants to purchase a share of Rule
144 Restricted Common Stock of the Company at an exercise price of $1.00
per share, for a total consideration of $______________, the receipt and
sufficiency of which is hereby acknowledged.
2. In order to induce the Company to accept the subscription made hereby, the
undersigned hereby represents and warrants to the Company, and each other
person who acquires or has acquired the Shares, as follows :
(a) The undersigned, if an individual (i) has reached the age of
majority in the state in which he resides and (ii) is a bona fide resident
and domiciliary (not a temporary or transient resident) of the state set
forth beneath his signature below.
(b) The undersigned has the financial ability to bear the economic
risk of an investment in the Shares has adequate means of providing for his
current needs and personal contingencies, has no need for liquidity in such
investment, and could afford a complete loss of such investment. The
undersigned's overall commitment to investments that are not readily
marketable is not disproportionate to his net worth, and his investment in
the Company will not cause such overall commitment to become excessive.
(c) The undersigned meets at least one of the following criteria:
(i) the undersigned is a natural person whose individual net
worth or joint net worth with his spouse, at the time of his purchase,
exceeds $1,000,000 (ONE MILLION DOLLARS); or (ii) the undersigned is a
natural person and had an individual income in excess of $200,000
(TWO-HUNDRED THOUSAND DOLLARS) in each of the two most recent years,
or jointly with his spouse in excess of $300,000 (THREE-HUNDRED
THOUSAND DOLLARS) in each of those years, and who reasonably expects
to achieve at least the same income level in the current year; or
(iii) qualifies as an accredited investor under Regulation D of the
Securities Act of 1933 (the "Act").
(d) The investment is one in which I am purchasing for myself and not
for others, the investment amount does not exceed 10% of my net worth and I
have the capability to understand the investment and the risk.
(e) The undersigned has been given a full opportunity to ask questions
of and to receive answers from the Company concerning the terms and
conditions of the offering and the business of the Company, and to obtain
additional information necessary to verify the accuracy of the information
given him or to obtain such other information as is desired in order to
evaluate an investment in the Shares. All such questions have been answered
to the full satisfaction of the undersigned.
(f) In making his decision to purchase the Shares herein subscribed
for, the undersigned has relied solely upon independent investigations made
by him. He has received no representation or warranty from the Company or
from a broker-dealer, if any, or any of the affiliates, employees or agents
of either. In addition, he is not subscribing pursuant hereto for any
Shares as a result of or subsequent to (i) any advertisement, article,
notice or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, or (ii) any seminar or
meeting whose attendees, including the undersigned, had been invited as a
result of, subsequent to, or pursuant to any of the foregoing.
<PAGE>
(g) The undersigned understands that the Shares have not been
registered under the Act in reliance upon specific exemptions from
registration thereunder, and he agrees that his Shares may not be sold,
offered for sale, transferred, pledged, hypothecated, or otherwise disposed
of except in compliance with the Act and applicable state securities laws,
which restrictions require the approval of the Company for the transfer of
any Shares (which approval, except under limited circumstances, may be
withheld by the Company in its sole discretion). The undersigned has been
advised that the Company has no obligations to cause the Shares to be
registered under the Act or to comply with any exemption under the Act,
including but not limited to that set forth in Rule 144 promulgated under
the Act, which would permit the Shares to be sold by the undersigned. The
undersigned understands that it is anticipated that there may not be any
market for resale of the Shares, and that it may not be possible for the
undersigned to liquidate an investment in the Shares. The undersigned
understands the legal consequences of the foregoing to mean that he must
bear the economic risk of his investment in the Shares. He understands that
any instruments representing the Shares will bear legends restricting the
transfer thereof.
3. To the extent I have the right to rescind my purchase of the Shares, which
right of recission is hereby offered, I waive and relinquish such rights
and agree to accept certificate(s) evidencing such Shares.
4. This Agreement and the rights and obligations of the parties hereto shall
be governed by, and construed and enforced in accordance with, the laws of
the State of New York.
5. All pronouns contained herein and any variations thereof shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the
identity of the parties hereto may require.
6. The shares referred to herein may be sold to the subscriber in a
transaction exempt under Section 517.061 of the Florida Securities Act. The
shares have not been registered under said act in the State of Florida. In
addition, if sales are made to five or more persons in the State of
Florida, any sale in the State of Florida is voidable by the purchaser
within three (3) days after the first tender of consideration is made by
such purchaser to the issuer, an agent of the issuer, or an escrow agent or
within three (3) days after the availability of that privilege is
communicated to such purchaser, whichever occurs later.
IN WITNESS WHEREOF, the undersigned has executed and agrees to be bound by
this Subscription Agreement and Investment Representation on the date written
below as the Date of Subscription:
(TO BE USED FOR INDIVIDUAL(S))
---------------------------- -----------------------------
Print Name of Individual Signature of Individual
----------------------------- -----------------------------
State of Residence Date of Subscription
(TO BE USED FOR PARTNERSHIPS, CORPORATIONS,
TRUSTS OR OTHER ENTITIES)
_____________________________ By:_______________________________
Name of Partnership, Corporation, Signature of Authorized Representative
Trust, or Entity
- ------------------------------- -------------------------------
Capacity of Authorized Representativ Print Name of Authorized Representative
- ------------------------------- -------------------------
Jurisdiction of Incorporation Date of Subscription
or Organization
EXHIBIT 10.31
______________ , 1999
SURGICAL SAFETY PRODUCTS, INC
Redeemable Common Stock Purchase Warrant
VOID AFTER 5:00 P.M., EASTERN TIME
___________________, 2004
FOR VALUE RECEIVED, Surgical Safety Products, Inc., a New York corporation
(the "Company"), promises to issue in the name of, and sell and deliver to,
__________________, (the "Holder"), or the Holder's registered transferee or
assignee (also the "Holder"), a certificate or certificates for an aggregate of
________ shares (the "Shares") of Common Stock, $0.001 par value per share (the
"Common Stock"), of the Company, at any time on or before the later of 5:00
p.m., Eastern Time, on ___________, 2004 (the "Exercise Period"), upon payment
therefore of $1.00 per Share in lawful funds of the United States of America.
1. Exercise of the Warrant. In case the Holder of this Warrant shall desire
to exercise this Warrant in whole or in part, the Holder shall surrender this
Warrant, with the form of exercise notice on the last page hereof duly executed
by the Holder, to the Company, accompanied by payment of the Exercise Price of
$1.00 per Warrant. This Warrant may be exercised in whole or in part but not for
fractional Shares. In case of the exercise in part only, the Company will
deliver to the Holder a new Warrant of like tenor in the name of the Holder
evidencing the right to purchase the number of Shares as to which this Warrant
has not been exercised.
2. Covenants of the Company. The Company hereby covenants and agrees that
prior to the expiration of this Warrant by exercise or by its terms:
(a) The Company shall at all times reserve and keep available, out
of its authorized and unissued share capital, solely for the purpose of
providing for the exercise, forthwith upon the request of the Holder of the
Warrants then outstanding and in effect, such number of shares of Common Stock,
as shall, from time to time, be sufficient for the exercise of the Warrants. The
Company shall, from time to time, in accordance with the laws of the State of
Florida, increase the authorized amount of its share capital if at any time the
number of shares of Common Stock remaining unissued and unreserved for other
purposes shall not be sufficient to permit the exercise of the Warrants then
outstanding and in effect.
(b) The Company covenants and agrees that all shares that may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance, be validly issued, fully paid and non-assessable, and free from all
taxes, liens and charges with respect to the issue thereof.
3. Loss, Theft, Destruction or Mutilation. In case this Warrant shall
become mutilated or defaced or be destroyed, lost or stolen, the Company shall
execute and deliver a new Warrant in exchange for and upon surrender and
cancellation of such mutilated or defaced Warrant or in lieu of and in
substitution for such warrant so destroyed, lost, or stolen, upon the Holder of
such Warrant filing with the Company such evidence satisfactory to it that such
Warrant has been so mutilated, defaced, destroyed, lost or stolen and of the
ownership thereof by the Holder; provided, however, that the Company shall be
entitled, as a condition to the execution and delivery of such new Warrant, to
demand indemnity satisfactory to it and payment of expenses and charges incurred
in connection with the delivery of such new Warrant, and may demand a bond from
the Holder. Any Warrant so surrendered to the Company shall be canceled.
4. Record Owner. At the time of the surrender of this Warrant, together
with the form of subscription properly executed and payment of the Exercise
Price, the person exercising this Warrant shall be deemed to be the Holder of
record of the Common Stock deliverable upon such exercise, in whole or in part,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such securities shall not then be
actually delivered to such person.
<PAGE>
5. Mailing of Notices, etc. All notices and other communications from the
Company to the Holder of this Warrant shall be mailed by first-class registered
or certified mail, return receipt requested, potage prepaid, to the Holder at
the address set forth in the records of the Company, or to such other address
furnished to the Company in writing from time to time by the Holder of this
Warrant.
6. Registration Under the Securities Act of 1933, as amended. Neither this
Warrant nor the Shares underlying it have been registered under the Securities
Act of 1933, as amended (the "Act"). Unless and until registered under the Act,
this Warrant and all replacement Warrants shall bear the following legend:
This Warrant, and the securities issuable upon the exercise of this
Warrant, have not been registered under the Securities Act of 1933, as
amended (the "Act") or applicable state law and may not be sold,
transferred or otherwise disposed of unless registered under the Act and
any applicable state act or unless the Company is satisfied that this
Warrant and the underling securities may be transferred without
registration under the Act.
The Shares issuable upon exercise of this Warrant shall be Rule 144
restricted shares (the "Restricted Securities"). After issuance of the
Shares, Company agrees to use its best efforts to assist Holder in
registering the Shares or to register the Shares under the Act subject to
the rules, regulations, and other provisions of said Act.
7. Piggyback Registration.
(a) At any time that the Company proposes to file a Company
registration statement on Form S-1 or other appropriate registration form under
the Act (the "Registrations Statement"), either for its own account or for the
account of a stockholder or stockholders, the Company shall give the Holder
written notice of its intention to do so and of the intended method of sale (the
"Registration Notice") within a reasonable time prior to the anticipated filing
date of the Company's Registration Statement effecting such Company
registration. Holder may request inclusion of any Restricted Securities in such
Registration Statement by delivering to the Company, within ten (10) Business
Days after receipt of the Registration Notice, a written notice (the "Piggyback
Notice") stating the number of Restricted Securities proposed to be included and
that such shares are to be included in any underwriting only on the same terms
and conditions as the shares of Common Stock otherwise being sold through
underwriters under such Company Registration Statement. The Company shall use
its best efforts to cause all Restricted Securities specified in the Piggyback
Notice to be included in the Company Registration Statement and any related
offering, all to the extent requisite to permit the sale by the Holder of its
Restricted Securities in accordance with the method of sale applicable to the
other shares of Common Stock included in such Company Registration Statement;
provided, however, that if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
Company Registration Statement filed in connection with such registration, the
Company shall determine for any reason not to register or to delay registration
of Holder's Restricted Securities, the Company may, at its election, give
written notice of such determination to Holder and, thereupon:
(i) in the ease of a determination not to register, shall be
relieved of its obligation to register Holder's Restricted Securities in
connection with such registration (but not from its obligation to pay the
registration expenses in connection therewith), and
(ii) in the case of a delay in registering, shall be permitted
to delay registering Holder's Restricted Securities for the same period as the
delay in registering such other securities.
(b) The Company's obligation to include Restricted Securities in a
Company's Registration Statement pursuant to Section 7(a) shall be subject to
the following limitations:
<PAGE>
(i) The Company may elect, at its sole option and for any
reason, not to register Holder's Restricted Shares, provided however, that this
right is limited to one (1) time and relative to one (1) particular Company
Registration Statement.
(ii) The Company shall not be obligated to include any
Restricted Securities in a registration statement filed on Form S-4, Form S-8 or
such other similar successor forms then in effect under the Securities Act.
(iii) If a Company Registration Statement involves an
underwritten offering and the managing underwriter advises the Company in
writing that in its opinion, the number of securities requested to be included
in such Company Registration Statement exceeds the number which can be sold in
such offering without adversely affecting the offering, the Company shall
include in such Company Registration Statement the number of such securities
which the Company is so advised can be sold in such offering without adversely
affecting the offering, determined as follows:
(A) first, the securities proposed by the Company to be sold for it own
account, and
(B) second, any Restricted Securities requested to be included in such
registration and any other securities of the Company in accordance with the
priorities, if and then existing among the holders of such securities pro rata
among the holders thereof requesting such registration on the basis of the
number of shares of such securities requested to be included by such holders.
(iv) The Company shall not be obligated to include Restricted
Securities in more than one (1) Company Registration Statement.
(c) To the extent Holder's Restricted Securities are intended to be
included in a Company Registration Statement, Holder may include any of its
Restricted Securities in such Company Registration Statement pursuant to this
Agreement only if Holder furnishes to the Company in writing, within ten (10)
business days after receipt of a written request therefor, such information
specified in Item 507 of Regulation S-K under the Act or such other information
as the Company may reasonably request for use in connection with the Company
Registration Statement or Prospectus or preliminary Prospectus included therein
and in any application to the NASD. Holder as to which the Company Registration
Statement is being effected agrees to furnish promptly to the Company all
information required to be disclosed in order to make all information previously
furnished to the Company by Holder not materially misleading.
8. Antidilution Provision. The Exercise Price in effect from time to time
shall be, subject to adjustment in accordance with the provisions of this
Section 8.
(a) Adjustments for Stock Splits and Combinations. If the Company
shall at any time or from time to time after the date hereof, effect a stock
split of the outstanding Common Stock, the applicable Exercise Price in effect
immediately prior to the stock split shall be proportionately decreased. If the
Company shall at any time or from time to time after the date hereof, combine
the outstanding shares of Common Stock, the applicable Exercise Price in effect
immediately prior to the combination shall be proportionately increased. Any
adjustments under this Section 8(a) shall be effective at the close of business
on the date the stock split or combination occurs.
(b) Adjustments for Certain Dividends and Distributions. If the
Company shall at any time or from time after the date hereof, make or issue or
set a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in shares of Common Stock,
then, and in each event, the applicable Exercise Price in effect immediately
prior to such event shall be decreased as of the time
<PAGE>
of such issuance or, in the event such a record date shall have been fixed, as
of the close of business on such record date, by multiplying, as applicable, the
applicable Exercise Price then in effect by a fraction;
(i) the numerator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date; and
(ii) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus the number of
shares of Common Stock issuable in payment of such dividend or distribution.
(c) Adjustment for Other Dividends and Distributions. If the Company
shall at any time or from time to time after the date hereof, make or issue or
set a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in other than shares of Common
Stock, then, and in each event, an appropriate revision to the Exercise Price
shall be made and provision shall be made (by adjustments of the Exercise Price
or otherwise) so that the holder of this Note shall receive upon conversions
thereof, in addition to the number of shares of Common Stock receivable thereon,
the number of securities of the Company which they would have received had this
Note been converted into Common Stock on the date of such event and had
thereafter, during the period from the date of such event to and including the
date hereof, retained such securities (together with any distributions payable
thereon during such period), giving application to all adjustments called for
during such period under this Section 8(c) with respect to the rights of the
holders of the Warrant.
(d) Adjustments for Reclassification, Exchange or Substitution. If
the Common Stock issuable upon conversion of this Warrant at any time or from
time to time after the date hereof shall be changed into the same or different
number of shares of any class or classes of stock, whether by reclassification,
exchange, substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections 8(a), (b) and
(c), or a reorganization, merger, consolidation, or sale of assets provided for
in Section 8(e), then, and in each event, an appropriate revision to the
Exercise Price shall by made and provisions shall be made (by adjustments of the
Exercise Price of otherwise) so that the holder of this Warrant shall have the
right thereafter to convert such Warrant into the kind and amount of shares of
stock and other securities receivable upon reclassification, exchange,
substitution or other change, by holders of the number of shares of Common Stock
into which such Warrant might have been converted immediately prior to such
reclassification, exchange, substitution or other change, all subject to further
adjustment as provided herein.
(e) Adjustments for Reorganization, Merger, Consolidation or Sales
of Assets. If at any time or from time to time after the date hereof there shall
be a capital reorganization of the Company (other than by way of a stock split
or combination of shares or stock dividends or distributions provided for in
Section 8(a), (b), and (c), or a reclassification, exchange or substitution of
shares provided for in Section 8(d), or a merger or consolidation of the Company
with or into another corporation, or the sale of all or substantially all of the
Company's properties or assets to any other person, then as a part of such
reorganization, merger, consolidation, or sale, an appropriate revision to the
Exercise Price shall be made and provision shall be made (by adjustments of the
Exercise Price or otherwise) so that the holder of this Warrant shall have the
right thereafter to convert this Warrant into the kind and amount of shares of
stock and other securities or property of the Company or any successor
corporation resulting from such reorganization, merger, consolidation, or sale,
to which a holder of Common Stock deliverable upon conversion of such shares
would have been entitled upon such reorganization, merger, consolidation, or
sale, to which a holder of Common Stock deliverable upon conversion of such
shares would have been entitled upon such reorganization, merger, consolidation,
or sale. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 8(e) with respect to the rights of
the
<PAGE>
holders of this Warrant after the reorganization, merger, consolidation, or sale
to the end that the provisions of this Section 8(e) (including any adjustment in
the applicable conversion ratio then in effect and the number of shares of stock
or other securities deliverable upon conversion of this Warrant) shall be
applied after that event in as nearly an equivalent manner as may be
practicable.
9. Laws of the State of Florida. This Warrant shall be governed by,
interpreted under and construed in all respects in accordance with, the laws of
the State of Florida, irrespective of the place of domicile or residence of any
party.
10. Entire Agreement and Modification. The Company and the Holder of this
Warrant hereby represent and warrant that this Warrant is intended to and does
contain and embody all of the understandings and agreements, both written and
oral, of the parties hereto with respect to the subject matter of this Warrant,
and that there exists no oral agreement or understanding, express or implied,
whereby the absolute, final and unconditional character and nature of this
Warrant shall be in any way invalidated, empowered or affected. A modification
or waiver of any of the terms, conditions or provisions of this Warrant shall be
effective only if made in writing and executed with the same formality as this
Warrant.
This Warrant will become wholly void and of no effect and the rights
evidenced hereby will terminate unless exercised in accordance with the terms
and provisions hereof at or before 5:00 p.m., Eastern Time, on the Expiration
Date.
IN WITNESS WHEREOF, the Company, by its duly authorized officer, has
executed this Warrant this ____ day of _____________, 1999.
Attest: Surgical Safety Products, Inc.
____________________________ By: ______________________________
Frank Clark, President
(CORPORATE SEAL)
<PAGE>
FORM OF EXERCISE
The undersigned hereby irrevocably elects to exercise the purchase rights
represented by this Warrant for, and to purchase thereunder, _________________
Shares of Common Stock, $0.001 par value per share, of Surgical Safety Products,
Inc., and herewith makes payment of $1.00 per Share, or a total of
$____________________ therefore, and request that such Shares be issued to:
(print name)
- ---------------------------------
(address)
- ---------------------------------
(social security number)
Dated:
(signature must conform in all respects to name
of Holder as specified on the face of this Warrant)
Exhibit 10.32
CONSULTING AND ASSISTANCE AGREEMENT
AGREEMENT dated this ____ day of April, 1999, by and between SURGICAL SAFETY
PRODUCTS, INC., a Florida corporation with a principal place o business at 2018
Oak Terrace, Sarasota, Florida 34231 (hereinafter the "Company"), and THE KORITZ
GROUP, LLC, a Connecticut limited liability company in formation with a
principal place of business at 48 Old Mill Road, Greenwich, Connecticut 06831
(hereinafter "Koritz").
WITNESSETH:
WHEREAS, Koritz is, inter alia, engaged in the business of identifying,
reviewing, analyzing, structuring and implementing various and diverse business
and financial relationships and transactions on behalf of its clients;
WHEREAS, the Company has expressed an interest in retaining Koritz, on a
non-exclusive basis, to provide consulting services in connection with the
review, analysis, structure and , if feasible, implementation of various and
diverse business and financial relationships and transactions; and
WHEREAS, Koritz is prepared to use its best efforts, expertise and network of
clients and contacts to provide said consultation services to the Company.
NOW, THEREFORE, in consideration of the mutual covenants contained, herein, the
parties hereto agree as follows:
1. Engagement
A. The Company hereby engages Koritz, and Koritz hereby accepts to be come
engaged by the Company, as a Consultant to seek to "assist" ( as such term is
hereinafter defined) the Company in accomplishing the following tasks:
(a) initially raise equity or debt financing in an amount up to
Fifteen Million ($15,000,000.00) Dollars, either in lump sum or in staged
financing, as the case may be, and to thereafter raise equity or debt financing
as the Company may request ("Investment Financing");
(b) arrange trade financing for the production, sale, lease, rental
or other disposal of its products and services ("Trade Financing"); and
(c) arrange a sale, a merger, a consolidation of the Company, joint
ventures or strategic alliances with other appropriate businesses ("Business
Arrangements").
B. For the Purpose of this Agreement, as ti concerns Koritz' activities,
"assist" will mean the introduction of a party to the Company, as
<PAGE>
evidenced in a writing from Koritz, from whom the Company has not previously
obtained investment or trade financing, with whom the Company is ;not presently
in ;negotiation with for such financing or with whom the Company otherwise has
not done business with and at the request and direction of the Company to assist
the Company in structuring and negotiating an arrangement with such a party. If
the Company obtained financing from, is in negotiation with any party introduced
by Koritz or otherwise has done business with such a party, the Company will
provide evidence of such prior business to Koritz upon its written notification
of such party.
2. Scope of Services and Non-Exclusivity. It is understood and agreed between
the parties that:
(a) Koritz will work in concert with the Company , at each time at
the Company's request, to identify sources of capital and potential business
relations with the objective of arranging meetings and thereafter, at the
Company's request and expense, participate in such meetings, for:
(i) Investment Financing with such parties as venture capital
firms, institutional and strategic investors and investment banks and others
potentially interested in effecting or facilitating an investment into the
Company;
(ii) Trade Financing with such parties as leasing- and
insurance companies and other finance companies; and
(b) the Company will use its best efforts to assist and cooperate
with Koritz in the performance of its duties hereunder, including promptly
providing all information and documentation reasonably requested by Koritz;
(c) Koritz may provide its services at those times (day or evening)
and from those locations (via telephone, telefax and/or e-mail) as mutually
agreed between Koritz and the Company; and
(d) the Company may engage other third parties to assist it in
raising and/or providing investment or trade financing and arranging business
arrangements.
4. Success Fee.
A. Unless otherwise specifically agreed in writing between the parties, in
consideration for the consulting services to be rendered by Koritz hereunder,
the Company will pay Koritz a fee (the "Success Fee") if Koritz successfully
assists the Company to:
(a) secure Trade Financing, a Success Fee equal to two and one-half
(2.5%)percent of the aggregate amounts of such Trade Financing, payable in cash
each time and for so long as the Company avails itself of such Trade Financing;
(b) arrange Business Arrangements, a Success Fee equal to ten (10%)
percent of the value of each such Business Arrangement, payable in the same
currency (cash or in kind, as the case may be) at each closing thereof and /or
thereafter as the Company and/or its shareholders receive
<PAGE>
remuneration and/or benefits deriving from such Business Arrangement.
Notwithstanding the foregoing, if the value of a business Arrangement is not
readily ascertainable at each closing thereof, as Koritz in its sole judgement
shall determine, the Success Fee due at such closing will be computed in arrears
over a period of sixty (60) months as of the end of each anniversary date from
the date of such closing and be paid on or before the fifteenth (15th) day
following each such anniversary date.
B. All cash remuneration to which Koritz is entitled will be paid via wire
transfer into such bank account as Koritz may direct.
C. The Company will be free to accept or reject any prospective Investment
Financing, Trade Financing or Business Arrangement Koritz proposes b so
notifying Koritz in writing. Notwithstanding, if the Company enters into an
arrangement for Investment financing, Trade Financing or Business Arrangement
within one hundred eighty (180) days following its written notice of rejection
on terms and conditions less favorable to the Company (excluding computation of
the Success Fee), the Company will pay Koritz the sum of One Hundred Thousand
(100,000.00) Dollars at each such closing thereon.
5. Investment Financing. In the event Investment Financing is secured, the
Company will pay compensation equal to ten percent (10%) of the amount of equity
or debt raised as a success fee to the person or entity placing such equity or
debt; provided that such person or entity is qualified to receive such
compensation in the state of residence of the investor, and in addition, the
Company will issue warrants, exercisable at any time up to the last business day
of the thirty sixth (36th) month from the date of each such closing, and which
will provide that such person or entity will have the right to acquire equity
securities of the Company of the same class and at the same price as the party
making the Investment Financing is entitled, if any, each time up to the amount
of the Success Fee. The said warrant and underlying securities will be issued to
Koritz subject to usual and standard restrictions, such as restrictions pursuant
to Rule 144 under the Securities Act of 1933, as amended (the "Act"), and rights
and privileges, such as:
(a) pre-emptive and anti-dilution rights; in the event of a change or
adjustment in or to the Company's capital structure and/or total number of
outstanding securities, each warrant, if and when issued, and the underlying
securities will be subject to standard proportional dilution and, if provided to
other, pre-emptive rights, and the appropriate proportional adjustments will be
made in the number and/or kind of underlying securities for which the
unexercised portion of warrant may thereafter be exercised; and
(b) piggy back registration; if the party making the Investment Financing
is granted the right to register his/its securities, such person or entity will
have the same right of registration at the Company's sole cost and expense.
5. Conflict. The Company expressly understands that Koritz and/or its managers,
partners, shareholders, officers, directors, affiliates or representatives may
have an ownership interest in, be a director or officer of, or otherwise be in a
contractual relationship with a party (a) from whom the Company may obtain
Investment Financing or Trade Financing, (b) with whom the Company may enter
into a Business Arrangement, or (c) from whom/which Koritz, et al., may receive
compensation independent of, and in addition to, the Success Fee due and payable
pursuant to this Agreement. The Company hereby expressly waives and all direct
or indirect conflict that may arise from any such relationships; provided that
in each instance the Company has been informed of its existence.
<PAGE>
6. "No Shopping".
A. In the event the Company discloses the existence or contents of any
letter of intent or other documentation procured by Koritz in respect of any
Investment Financing, Trade Financing or Business Arrangement to any third party
for the purpose of seeking to obtain financing or establishing a business
relationship without having first obtained Koritz's written consent each time,
the Company's right of termination will be waived until Koritz has been
compensated as follows: (a) this Agreement will remain in effect in accordance
with its terms, (b) any third party to whom unauthorized information was
disclosed, directly or indirectly, will be deemed Investment Financing, Trade
Financing or a Business Arrangement, as the case may be, procured by Koritz
pursuant to this Agreement, and (c) Koritz will be entitled in each such
instance to the Success Fee as herein provided.
B. To prevent any such unauthorized disclosure, the Company will make its
best efforts to exercise such control and take such actions as are necessary and
appropriate with respect to the officers, directors and employees of the Company
and related companies controlling, controlled by or under common control with
the Company.
7. Expenses. Forthwith upon its submission of an invoice therefor to the
Company, the Company will reimburse Koritz for any pre-approved disbursements or
expenses advanced by Koritz on behalf of the Company in the performance of this
Agreement.
8. Confidentiality and Non-Circumvention.
A. Each party will treat information provided by the other party pursuant
to this Agreement as confidential ( as it relates to the Company, the
"Confidential Information"; as it relates to Koritz, the "Confidential
Contacts"). The recipient thereof will not, directly or indirectly (a) transfer
or disclose any Confidential Information or Confidential Contacts, as the case
may be, to any third party (other than its representatives as hereinafter
provided or otherwise as required by law), (b) use any Confidential Information
or Confidential Contacts, as the case may be, for any purpose other than for its
representatives without the prior written approval of the disclosing party.
B. As used herein:
(a) as it relates to the Company, "Confidential Information" will
include, regardless of the medium, all confidential and proprietary information
so marked when disclosed, including financial data, research, know-how, test
data, technology, and other trade secrets relating to the Company, furnished or
made available by the Company. Notwithstanding the foregoing, the Company's
Confidential Information will not include information Koritz can evidence was
prior to its receipt (i) in the public domain (other than as a result of a
breach of this Agreement), (ii) in Koritz's possession, or (iii) independently
known through a party other thank the Company, which party has no duty of
confidentiality and otherwise has the right to disclose same; and
(b) as it relates to Koritz, "Confidential Contacts" will include
any person, firm or entity with whom/which Koritz has contact or done business,
except any Confidential Contact from whom/which the Company can evidence it has
previously obtained Investment Financing or Trade Financing or with whom/which
it has otherwise done business, as the case may be, prior to the date Koritz
makes such Confidential Contact available to the Company.
<PAGE>
C. Except as specifically agreed to in writing between the parties, the
Company agrees it will not, directly or indirectly without first having obtained
Koritz' written consent: (a) negotiate or enter into, or attempt to negotiate or
enter into, any agreement, covenant or understanding, written or oral, with any
Confidential Contacts in regard to Investment Financing, Trade Financing or
Business Arrangements, nor (b) advise others to utilize Confidential Contacts
for investment or trade finance or business arrangements, nor (c) deal directly
or interfere with, circumvent, frustrate or otherwise impede in any manner the
relationship of Koritz with any Confidential Contacts.
D. The recipient of any Confidential Information and Confidential Contacts,
as the case may be:
(a) will take all necessary or appropriate action to (i) protect the
Confidential Information or the Confidential Contacts, as the case may be, which
standard of protection will be no less stringent than it takes to protect its
own proprietary and confidential information, and (ii) prevent its employees,
agents and/or representatives from acting in a manner inconsistent with the
terms of this Agreement; and
(b) may disclose same to its employees, agents and/or
representatives having a need for access thereto by virtue of his/its employment
or engagement by recipient, and who/which have been instructed as to, and have
agreed in writing to be bound by, the terms and conditions of this Agreement or
other agreement no less stringent than herein set forth prior to the disclosure
of the Confidential Information or Confidential Contacts, as the case may be.
9. Equitable Relief. Each party hereto agrees that any violation of this
Agreement by one party will result in irreparable injury to the other party,
because the Confidential Information, as it concerns the Company, and the
Confidential Contacts, as it concerns Koritz, and the fruits thereof are
valuable in ways not susceptible to full and accurate valuation or have an
adequate remedy at law in the event the other party breaches the provisions of
this Agreement. Accordingly, the Company and Koritz, as the case may be, will be
entitled to injunctive relief or other equitable remedy (without the necessity
of posting a bond) to prevent, curtail or enforce any such breach, threatened or
actual, or the performance of this Agreement. The foregoing will be in addition,
and without prejudice, to such other rights as the Company and Koritz may have
law or in equity. The parties each acknowledge and agree that the covenants
contained herein are necessary for the protection of the other party's
legitimate business interest, and are reasonable in scope.
10. Indemnification. The Company and Koritz will indemnify and hold each other
and their respective directors, employees, agents and controlling persons,
harmless from and against any and all losses, claims, damages, liabilities and
expenses, joint or several, including all reasonable fees and expenses of
counsel, whether or not resulting in any liability relating to or arising from
any acts taken by Koritz and the Company, as the case may be, for the other
pursuant to this Agreement; provided, however, that neither the Company no
Koritz will not be responsible for any losses, claims, damages, liabilities or
expenses relating to or arising from the other's gross negligence or intentional
wrongdoing. Nothing in this Agreement will be interpreted so as to create an
agency between the Company and Koritz, nor will Koritz or the Company act in any
manner so as to bind the other vis-a-vis third parties without first having
obtained the other party's written consent.
<PAGE>
12 Termination.
A. Either party may terminate this Agreement upon five (5) days prior
written notice to the other party.
B. As of the date that termination of this Agreement becomes effective:
(a) Koritz will forthwith cease to perform its duties hereunder;
(b) the Company will pay, or complete the payment of, each Success
Fee and issue warrants due or to become due and owing to Koritz for it services
rendered prior to termination of this Agreement to, and the permissible use of
Confidential Contacts by the Company prior to and following termination of this
Agreement, together with any outstanding invoices for approved expenses; and
(c) Notwithstanding anything to the contrary contained herein, the
provisions of this Agreement relating to the payment of fees, warrants,
expenses, confidentiality, and their enforcement, indemnification and evidence
of transactions will survive termination of this Agreement.
13. Evidence of Transactions. The Company will provide Koritz with copies of all
documents relating to any potential or completed transaction relating to this
Agreement forthwith upon its receipt or creation, and will keep Koritz appraised
of all communications and financial information relating to such transaction.
16. Arbitration.
A. Any controversy or dispute arising out of or in connection with this
Agreement, or the breach thereof ("Dispute"), will be finally settled by
arbitration conducted in accordance with the Commercial Arbitration Rules of the
American Arbitration Association ("AAA") in effect at that time. Any such
arbitration will take place in the City of New York, New York before one (1)
arbitrator; however, if the parties hereto disagree as to such appointment, the
arbitration will be before three (3) arbitrators, one of whom to be designated
by the Company, one by Koritz and the third by the two arbitrators so
designated. All of the arbitrators so designated will be practicing attorneys in
the State of New York, but none need be designated from any list or panel
published by the AAA or any other arbitration association. The decision by the
arbitrators will state the reasons for the award, and will be binding and
conclusive upon the parties, their successors and assigns, all of whom will
comply with such decision in good faith as if it were a final decision of a
court. Each party hereby submits itself to the jurisdiction of the appropriate
courts in the City of New York, New York for the entry of judgment with respect
to the decision of the arbitrators hereunder. Notwithstanding the foregoing,
judgment upon the award may be entered in any court having jurisdiction thereof.
B. The arbitrators will have the power to (i) order the production of
documents under the New York Rules of Civil Procedures by one party for
inspection and reproduction by the other party, (ii) in addition to damages and
other remedies available at law, grant preliminary and/or permanent injunctive
relief, and (iii) order specific performance and/or other equitable relief.
C. Notwithstanding anything to be contrary contained in this Agreement, a
party may seek equitable relief in court until such time as the arbitrator(s)
have been appointed as set forth above.
<PAGE>
17. Costs.
A. In the event of a Dispute leading to arbitration or a court proceeding
as set forth hereinabove, the losing party will reimburse the prevailing party
its "Costs" (as hereinafter defined). As used herein, the term "Costs" will
include reasonable attorneys' fees and costs of arbitration or court recovery of
a money award and other relief (including, but not limited to, settlement
negotiations), and all costs of preparing for and pursuing claims or defenses or
both, as the case may be, including, but not limited to, gathering and compiling
evidence, witness fees and travel and related costs, document reproduction, as
well as costs incurred in determining the reasonableness of attorneys' fees and
executing the award or the settlement agreement, as the case may be. The
arbitrators will, in the first instance, include Costs of the arbitration in the
award, and the arbitrator or the courts, as the case may be, will adjudge any
other Costs on the basis of the Dispute as a whole.
B. If the arbitrators or the court determines that: (i) neither party
prevailed, each party will bear it's own Costs; or (ii) if a party only
partially prevailed, such partially prevailing party will be awarded a pro-rata
portion of its Costs.
18. Notice. Any notice or other communication required or authorized to be given
by either party to the other hereunder will be deemed given by either party to
the other hereunder will be deemed given when received in writing, either
personally or by registered mail, telex, telegraph, cable or telefax (postage or
other charges prepaid), addressed as first above written or to such other
address as a party has given notice in like manner. Any notice give to Koritz
will also be given to Gregory Harmer, Esq., Robinson & Cole, LLP, Financial
Centre, 695 Main Street, Stamford, Connecticut 06904-2305, and any notice given
to the Company will also be given to ___________________________________________
- -----------------------------------------------------------------------.
19. Entire Agreement. This Agreement contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof, and merges and supercedes all prior discussions and writings with
respect hereto. No modifications or alterations of this Agreement or waiver of
any of its provisions will be effective unless made in writing, and signed by
each party hereto.
20. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York (without giving effect to
principles of conflicts of laws.)
21. Cooperation. Each party hereto agrees to execute all documents and take such
actions as are appropriate or may be reasonably requested by the other party so
as to effectuate the terms and discharge the responsibilities of such party
under this Agreement.
23. Miscellaneous. This Agreement may be executed in counterparts. No
representations relating to the subject matter of this Agreement have been made
or relied upon by any party that is not set forth herein. This Agreement may not
be assigned by either party without the prior written consent of the other
party. Notwithstanding the foregoing, Koritz may assign this Agreement to a
person, firm or entity controlling, controlled by or under common control with
Koritz. The invalidity or uneforceability of any particular provision of this
Agreement will not affect the other provisions, and this Agreement will be
construed in all respects as if such invalid or unenforceable provision were
omitted.
NOW, THEREFORE, the parties hereto have executed this Agreement as of the date
first above written.
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
By: /s/ FRANK CLARK
- --------------------------------
Frank Clark,
President & CEO
THE KORITZ GROUP, LLC
By: /S/BJORN KORITZ
- ------------------------------
Bjorn Koritz
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001063530
<NAME> Surgical Safety Products, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 22,793
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<INVENTORY> 6,337
<CURRENT-ASSETS> 29,130
<PP&E> 176,995
<DEPRECIATION> 29,905
<TOTAL-ASSETS> 390,113
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 10,787
<OTHER-SE> 108,427
<TOTAL-LIABILITY-AND-EQUITY> 390,113
<SALES> 0
<TOTAL-REVENUES> 39,577
<CGS> 0
<TOTAL-COSTS> 147,433
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,521
<INCOME-PRETAX> (107,856)
<INCOME-TAX> 0
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