SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Surgical Safety Products, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0- 11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing:
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No:
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(3) Filing party:
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(4) Date Filed:
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<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on February 28, 2000
To the Stockholders of Surgical Safety Products, Inc.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Surgical
Safety Products, Inc., a New York corporation (the "Company"), will be held on
February 28, 2000 at the offices of Surgical Safety Products, Inc., located at
2018 Oak Terrace, Sarasota, Florida 34231 at 10:00 AM for the following
purposes:
1. To elect nine (9) members to the Board of Directors to serve for a term of
one (1) year until the next annual meeting and until their successors are
duly elected and qualified.
2. To amend the Company's Articles of Incorporation, as amended, to increase
the authorized number of shares of Common Stock from 20,000,000 to
100,000,000.
3. To approve the Company's 2000 Stock Plan.
4. To consider and act upon a proposal to ratify the appointment of Kerkering,
Barbario & Co., P.A. as the Company's independent public accountants for
the fiscal years ending December 31, 2000.
5. To transact such other business as may be properly brought before the
Annual Meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on February 8, 2000
as the record date for the determination of Stockholders entitled to notice of
and to vote at the Annual Meeting and at any adjournments thereof. A list of
such Stockholders will be available for inspection at the Company's offices at
2018 Oak Terrace, Sarasota, Florida 34231 during ordinary business hours for the
ten-day period prior to the Annual Meeting.
All Stockholders are cordially invited to attend the Annual Meeting.
However, to ensure your representation, you are requested to complete, sign,
date and return the enclosed proxy as soon as possible in accordance with the
instructions on the proxy card. A return addressed envelope is enclosed for your
convenience.
BY ORDER OF THE BOARD OF DIRECT
David Collins
Corporate Secretary
Sarasota, Florida
February 7, 2000
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
2018 OAK TERRACE
SARASOTA, FLORIDA 34231
February 7, 2000
Dear Stockholder,
You are cordially invited to attend the 2000 Annual Meeting of
Stockholders of Surgical Safety Products, Inc. (the "Company") to be held at the
offices of Surgical Safety Products, Inc. on February 28, 2000 at 10:00 AM,
located at 2018 Oak Terrace, Sarasota, Florida 34231.
At the Annual Meeting, nine (9) people will be elected to the Board
of Directors. The Board of Directors recommends the election of the nine (9)
nominees named in the Proxy Statement. In addition, the Company will ask the
Stockholders to: approve and adopt an amendment to the Company's Articles of
Incorporation, as amended, to increase the authorized number of shares of Common
Stock; approve the Company's 2000 Stock Plan; and ratify the selection of
Kerkering, Barbario & Co. P.A. as the Company's independent public accountants.
Whether you plan to attend the Annual Meeting or not, it is important
that you promptly complete, sign, date and return the enclosed proxy card. This
will ensure your proper representation at the Annual Meeting.
Sincerely,
Dr. G. Michael Swor,
Chairman of the Board and
Chief Executive Officer
YOUR VOTE IS IMPORTANT
PLEASE REMEMBER PROMPTLY TO RETURN YOUR PROXY
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
2018 OAK TERRACE
SARASOTA, FLORIDA 34231
(941) 927-7874
-------------------------
PROXY STATEMENT
-------------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Surgical Safety Products, Inc. (the "Company" or
"SSP"), a New York corporation, of proxies, in the accompanying form, to be used
at the Annual Meeting of Stockholders to be held at the offices of Surgical
Safety Products, Inc., located at 2018 Oak Terrace, Sarasota, Florida 34231 on
February 28, 2000 at 10:00 AM, and any adjournments thereof (the "Meeting").
Where the Stockholder specifies a choice on the proxy as to how his or her
shares are to be voted on a particular matter, the shares will be voted
accordingly. If no choice is specified, the shares will be voted (1) FOR the
election of the nine (9) nominees for Director named herein, (2) FOR the
amendment of the Company's Articles of Incorporation, as amended, to increase
the authorized number of shares of Common Stock from 20,000,000 to 100,000,000,
(3) FOR the approval of the Company's 2000 Stock Plan, and (4) FOR the
ratification of the appointment of Kerkering, Barbario & Co. P.A. as the
Company's independent public accountants for the fiscal year ending December 31,
2000.
You can revoke your proxy at any time before the voting at the Meeting by
sending a properly signed written notice of your revocation to the Corporate
Secretary of the Company, by submitting another proxy that is properly signed
and bears a later date or by voting in person at the Meeting. Attendance at the
Meeting will not itself revoke an earlier submitted proxy. You should direct any
written notices of revocation and related correspondence to: Surgical Safety
Products, Inc., 2018 Oak Terrace, Sarasota, Florida 34231, Attention: Corporate
Secretary.
Shares represented by valid proxies in the form enclosed, received in time
for use at the Meeting and not revoked at or prior to the Meeting, will be voted
at the Meeting. The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of the Company's common stock, par value
$.001 per share ("Common Stock"), is necessary to constitute a quorum at the
Meeting. With respect to the tabulation of proxies for purposes of constituting
a quorum, abstentions and broker non-votes are treated as present. For purposes
of the proposal to amend the Company's Articles of Incorporation, as amended, to
increase the authorized number of shares of Common Stock (Item 2), abstentions
and broker non-votes will have the effect of a negative vote, and for purposes
of each of the other proposals, abstentions and broker non-votes will have no
effect on the vote.
The close of business on February 8, 2000 has been fixed as the record date
for determining the Stockholders entitled to notice of and to vote at the
Meeting. As of that date, the Company had 14,515,373 shares of Common Stock
outstanding and entitled to vote. Holders of Common Stock are entitled to one
vote per share on all matters to be voted on by Stockholders. This Proxy
<PAGE>
Statement and the accompanying proxy are being mailed on or about February 18,
2000 to all Stockholders entitled to notice of and to vote at the Meeting.
The cost of soliciting proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by the Company. In
addition, the Company will reimburse brokerage firms and other persons
representing beneficial owners of Common Stock of the Company for their expenses
in forwarding proxy material to such beneficial owners. Solicitation of proxies
by mail may be supplemented by telephone, telegram, telex, and other electronic
means, and personal solicitation by the Directors, officers or employees of the
Company. No additional compensation will be paid to Directors, officers or
employees for such solicitation.
The Form 10KSB for the fiscal year ended December 31, 1998 and the Form
10QSB for the period ended September 30, 1999 is being mailed to the
Stockholders with this Proxy Statement, but does not constitute a part hereof.
SHARE OWNERSHIP
The following table sets forth certain information as of December 31, 1999,
concerning the ownership of Common Stock by (i) each current member of the Board
of Directors of the Company, (ii) each nominee of the Board of Directors of the
Company, (iii) each executive officer of the Company named in the Summary
Compensation Table appearing under "Executive Compensation," below and (iv) all
current Directors, the nominee and executive officers of the Company as a group.
No Stockholder of the Company is known by the Company to be the beneficial owner
of more than 5% of the outstanding shares of Common Stock.
Shares Beneficially Owned (1)
------------------------------
<TABLE>
<S> <C> <C> <C>
Name and Address Type of Security Number of Shares Percentage
Current and Nominee Directors:
- -------------------------------- ---------------- ---------------- -----------
Dr. G. Michael Swor Common 3,763,890 (2) 25.93%
Frank M. Clark Common 62,000 (3) .43%
Donald K. Lawrence Common 250,000 (4) 1.72%
James D. Stuart Common 730,198 (5) 5.03%
Irwin Newman Common -0- 0.00%
Sam Norton Common 103,400 (6) .71%
David Swor Common 523,445 (6) 3.61%
Dr. William B. Saye Common 50,000 (6) .34%
David Collins Common 34,000 (3) .23%
---------------- -----------
All Executive Officers and Directors 5,516,933 38.00%
as a Group (nine (9) persons)
</TABLE>
<PAGE>
(1) The percentages are based upon 14,515,373 shares of Common Stock
outstanding, including the 6,000 shares to Ten Peaks for which the Company
is obligated, but has not delivered due to its belief that Ten Peaks has
failed to perform. In addition to the shares owned by the Executive
Officers and Directors, said officers and directors own (including those
beneficially held) options to purchase 5,497,149 shares of the Company's
Common Stock (without regard to the additional options to Dr. Saye which
accrue at the rate of 8,333 per month after December 31, 1999) pursuant to
Employee and Consultant Stock Option Plans adopted in 1994, 1998 and 1999.
In the event all such options to purchase were exercised, this group would
own a total of 11,014,082 shares of the Company's Common Stock which would
represent 55.04% of the total shares of Common Stock outstanding. Under the
1994 ESOP, 1998 Revised ESOP and 1999 Revised ESOP, none of these options
may be exercised within 60 days unless registered.
(2) This includes 631,260 owned by Dr. Swor's wife of which he is deemed the
beneficial owner.
(3) In April 1999, Mr. Clark and Mr. Collins received 12,000 and 34,000 shares,
respectively, of the Company's restricted Common Stock in lieu of salary in
the amount of $7,812 due to Mr. Clark and consulting fees equal to $23,410
due to Mr. Collins.
(4) Mr. Lawrence received his shares of restricted Common Stock as part of the
acquisition of all of the assets of Endex by the Company.
(5) These shares are a portion of the 816,619 shares which Mr. Stuart received
as a gift from Dr. Swor in 1996.
(6) Each of these Directors purchased 50,000 shares of the Company's restricted
Common Stock and warrants to purchase 25,000 shares of the Company's
restricted Common Stock exercisable at the price of $1.00 for a term of
five (5) years on the same terms as other investors in a self-directed
private placement commenced by the Company in April 1999.
MANAGEMENT
Directors
The Company's Bylaws provide for a Board of Directors, the number of which may
be set from time to time by resolution. The Board of Directors currently
consists of nine (9), all of which are standing for re-election. For information
on the Directors being nominated for election, see "Election of Directors (Item
1)."
<PAGE>
The names of the Company's Directors and certain information about
them are set forth below:
<TABLE>
<S> <C> <C>
Name and Address (1) Age Position with the Company
- ---------------- --- -------------------------
Dr. G. Michael Swor 42 Chairman and Chief Executive Officer
4485 S. Shade Avenue
Sarasota, FL 34237
Frank M. Clark (1) 67 Director
7313 Oak Leaf Way
Sarasota, FL 34241
Donald K. Lawrence (1) 37 Director, President and Chief
716 Edgemer Lane Operating Officer
Sarasota, FL 34242
David Collins (1) 58 Director, Acting Chief Financial
6210 Sun Boulevard Officer, Treasurer and Secretary (2)
St. Petersburg, FL 33715
James D. Stuart 42 Director
880 Jupiter Park Drive
Suite 14
Jupiter, FL 33458
Irwin Newman 51 Director
1515 SW 22nd Avenue Circle
Boca Raton, FL 33486
Sam Norton 40 Director, Chairman of the Stock
1819 Main Street Compensation Committee
Suite 610
Sarasota, FL 34236
David Swor 67 Director
6385 Presidential Court
Suite 104
Fort Meyers, FL 33919
Dr. William B.Saye (1) 60 Director and Medical Director of
4614 Chattahoochee Crossing ALTC Virtual Labs
Marietta, GA 30067
</TABLE>
(1) Except for Mr. Clark, Mr. Lawrence, Dr. Saye and Mr. Collins, who had no
role in founding or organizing the Company, the above-named persons may be
<PAGE>
deemed to be "promoters" and "parents" of the Company, as those terms are
defined under the Rules and Regulations promulgated under the Act.
(2) Mr. Collins is not engaged as a full time employee of the Company. He is
devoting and will continue to devote such time as required to fulfill the
obligations as the Company's Acting Chief Financial Officer, Treasurer and
Secretary. At such time as the Company has sufficient additional revenue or is
successful in securing additional funding from outside sources, it is intended
that Mr. Collins will be employed by the Company as the Chief Financial Officer
and that he will devote his full time to the business of the Company.
G. Michael Swor, M.D., M.B.A, age 42, has served as Chairman of the Board
and Medical/Technical Advisor of the Company since its inception in 1992 and
served as Treasurer to the Company from June, 1998 until January 31, 2000 and
has served as Chief Financial Officer of the Company since February 2000.
Dr. Swor, a board certified, practicing physician with a specialty in
OB/GYN, is the founder of Surgical. From 1992 until June 12, 1998, Dr. Swor also
served as President and CEO. With a Masters in Business Administration, Dr.
Swor's duties for the Company include investor relations, corporate financing,
and overall corporate policy and management. He is a clinical assistant
professor in the OB/GYN department at University of South Florida. Dr. Swor was
the inventor of SutureMate(R) and Prostasert(TM) and the original holder of the
patents issued to each of these products. Dr. Swor has written numerous
articles, published the "Surgical Safety Handbook," and given numerous lectures
on safety and efficiency in the surgical environment. His professional
affiliations include American College of Surgeons, American College of
Obstetrics and Gynecology and the Florida Medical Association. From 1996 until
the present, Dr. Swor has acted as an independent consultant for Concise Advise
which provides consulting services related to product development, patent,
research, distribution, joint venture, mergers and other business issues. From
1994 through 1996, Dr. Swor oversaw the operation of WDC. From 1987 through
1995,Dr. Swor was the managing partner of Women's Care Specialists/Physicians
Services Inc. where he oversaw four (4) physicians, two (2) practitioners and a
staff of over twenty five (25). From 1987 through 1992, Dr. Swor was a partner
and board member of Women's Ambulatory Services, Inc., a diagnostic testing
facility. From 1982 through 1985, Dr. Swor was the President of University of
Florida at Jacksonville, Health Sciences Center resident staff association with
over 200 members. Dr. Swor received a B.A degree in 1978 from the University of
South Florida, a M.D. degree from the University of South Florida College of
Medicine in 1981, and an M.B.A. degree from the University of South Florida in
1998. From 1981 through 1985 he received his training in OB/GYN from the
University of Florida Department of Obstetrics and Gynecology in Jacksonville,
Florida. He has received several special achievement awards including being
honored by the University of South Florida in May, 1998 with the Alumni Award
for Professional Achievement.
Frank M. Clark, age 67, has served as a Director since June, 1998.
Mr. Clark was President and Chief Executive Officer of the Company from
June 1998 until January 31, 2000. Currently, Mr. Clark provides consulting
services to the Company. While serving in those capacities, he was responsible
for the day to day operations of the Company and was responsible for new product
development and manufacturing and manages new business ventures, including
mergers, acquisitions, joint ventures, strategic alliances and
licensing/distribution agreements for the Company. Mr. Clark also serves on the
<PAGE>
Board of GenSci Regeneration Sciences, Inc. From 1991 to 1997, Mr. Clark was
Chairman and CEO of Corporate Consulting Services Group where his primary
activities were providing consulting services to start-up companies,
under-performing companies and training people in career transitions. From 1984
to 1991, Mr. Clark was COO and Executive Vice President of Right Associates, a
consulting firm with responsibilities for business development with Fortune 100
corporations for which he acted. He acquired a Los Angeles based consulting firm
and became the Managing Principal. From 1981 to 1984, Mr. Clark was a Vice
President of National Medical Care, a subsidiary of W.R. Grace, Inc. where his
innovative marketing leadership helped the company recapture a dominant share of
the dialysis market. From 1978 to 1981, Mr. Clark served as President, Corporate
Vice President and a Director of R.P. Scherer, Inc., the world's leading
producer of soft gelatin capsules where he was in charge of worldwide
businesses. From 1959 to 1978, Mr. Clark was employed by Johnson & Johnson,
Inc., first with Ethicon, Inc. where he served as a Vice President and Director,
then with Ethnor Medical Products where he was a Vice President, General Manager
and a Director and then with Stimulation Technology, where he served as
Executive Vice President and a Director. From 1956 to 1958, Mr. Clark was
employed by Federated Department stores in the executive training program at
Bloomingdales in New York City. Mr. Clark received a certificate from Teachers
College in Connecticut in 1955.
Donald K. Lawrence, age 37, has served as a Director since January 1998,
served as Vice President, Sales & Marketing and Secretary from May, 1997 until
January 31, 2000, served as Executive Vice President from January, 1998 until
January 31, 2000 and has served as President and Chief Operating Officer since
February 2000.
Mr. Lawrence's responsibilities include sales management, market planning,
advertising, and management for Compliance Plus products and as the Executive
Director of OASiS. His arrival to the Company was facilitated by the Company's
acquisition in 1997 of InterActive PIE Multimedia, Inc., of which Mr. Lawrence
was founder and Chief Executive Officer. From February 1996 until February 1997,
Mr. Lawrence was the CEO of InterActive PIE. From December 1991 until February
1996, Mr. Lawrence was employed by Ethicon Endo-Surgery/Johnson & Johnson as a
surgical sales representative. From July 1989 until December 1991, Mr. Lawrence
acted as a surgical sales representative for Davis and Geck. Prior to entering
the area of medical device sales, from February 1985 until July 1989, Mr.
Lawrence was an account executive with DHL Worldwide Express. During college,
Mr. Lawrence was an independent dealer for Southwestern Publishing Co. Mr
Lawrence received a B.S degree in Marketing and Communications in 1984 from
Appalachian State University.
David Collins, age 58, has served as a Director since January 1999 and its
Acting Chief Financial Officer since March 1999 and has served as its Treasurer
and Secretary since February 2000.
Mr. Collins responsibilities include overseeing the financial affairs of
the Company on a part time basis and he is currently engaged as a consultant to
the Company. Mr. Collins devotes such time as is necessary to fulfill his duties
to the Company. During 1997 and 1998, Mr. Collins was Controller for the Sales
and Marketing Division for GES Exposition Services, a subsidiary of the NYSE
listed Viad Corporation. From 1993 to 1996, Mr. Collins was General Manager and
Chief Financial Officer of Spectra Services Corporation. From 1989 to 1992, Mr.
Collins was a Partner and Consultant to Quantum Corporation, a venture capital
firm. From 1977 to 1988, Mr. Collins rose from Controller to Vice President of
Finance (1982) and then to Vice President of Finance and Chief Financial Officer
<PAGE>
(1984) of R.P. Scherer Corporation, a NYSE listed company. From 1975 to 1977,
Mr. Collins was Vice President and Controller of Wheelhorse Products, a
subsidiary of American Motors/Chrysler. From 1971 to 1975, Mr. Collins rose from
Controller of the Midwest Dental Division to Vice President and Controller of
the American Hospital Division of American Hospital Supply Corporation (1974).
From 1969 to 1971, Mr. Collins was a Senior Auditor and Consultant in Public
Accounting with Deloitte & Touche. Mr. Collins received a BSBA from Northwestern
University in 1964 and a MBA from the Kellogg Graduate School of Management at
Northwestern University in 1967. He became a Certified Public Accountant in the
State of Illinois in 1971.
James D. Stuart, age 42, has served as a Director since 1993, initially
acting as Director of Marketing and Sales.
Mr. Stuart served as Executive Vice President from 1993 until June, 1998
and initially acted as the Director of Marketing and Sales. During his time as
an officer of the Company, Mr. Stuart was responsible for new product
development and manufacturing and manages new business ventures, including
mergers, acquisitions, joint ventures, strategic alliances and
licensing/distribution agreements for the Company. From November 1994 until July
1996, Mr. Stuart acted as President and CEO of WDC and was responsible for
managing and operating the facility. From March 1986 until May 1993, Mr. Stuart
was employed by Liquid Air Corporation, Buld Gases Division first as a Business
Manager for South Florida and then as a Program Manager for Food Freezing. From
February 1981 until February 1986, Mr. Stuart was employed by NCR Corporation in
the Systemedia Division initially as a Territory Manager and then as a Senior
Account Manager. Mr. Stuart received a B.A. degree in marketing in 1980 from the
University of South Florida.
Irwin Newman, age 51, has served as a Director since 1993
Currently, Mr. Newman provides financial advisory services to the Board of
Directors. From 1993 to the present, Mr. Newman has served as the President and
CEO of Jenex Financial Services, Inc. ("Jenex"). Mr. Newman is the principal of
Jenex. Mr. Newman is and has been a practicing attorney since 1973. From 1993 to
1998, Mr. Newman served as Vice President and General Counsel for Boca Raton
Capital Corporation, a publicly owned, NASDAQ listed investment holding company
where he completed an Initial Public Offering for a $4 million subsidiary,
completed a $3.5 million secondary offering and was responsible for shareholder
and investor relations. From 1983 to 1988, Mr. Newman served with the New York
Stock Exchange firms of Gruntal & Co. and Butcher and Signer, specializing in
common and preferred stocks, options, municipal and corporate bonds and GNMA's.
During part of this period, he broadcast a daily television market comments
program over the Financial News Network. Mr. Newman received a B.S. degree in
Business Administration from Syracuse University in 1970 and a J.D. degree from
the University of Florida in 1973.
Sam Norton, age 40, has served as a Director since 1992.
Mr. Norton provides business and legal advisory services to the Board of
Directors. Mr. Norton is the Chairman of the Stock Compensation Committee. Mr.
Norton is an attorney with the firm Norton, Gurley, Hammersley & Lopez, P.A. in
Sarasota, Florida. Mr. Norton practices primarily in the areas of real estate,
banking, corporate and business transactions and is a Florida Bar board
certified real estate specialist, having earned such certification in 1991. He
has practiced law in Sarasota since 1985 and is the past Chairman of the Joint
<PAGE>
Committee of the Sarasota Board of Realtors/Sarasota County Bar Association. Mr.
Norton is active in Sarasota civic organizations and currently serves as a
member of the Board of Directors of Sarasota Bank. Mr. Norton graduated from the
University of Florida in 1981 and earned a J.D. degree from Stetson University
School of Law in 1984 where he graduated Cum Laude. While in law school, Mr.
Norton was chosen to serve on the Law Review. He was admitted to the Florida Bar
in 1985.
David Swor, age 67, has served as a Director since 1992.
Mr. Swor, who is the father of Dr. Swor, provides business advisory
services for the Board of Directors. From 1985 until the present, Mr. Swor had
been engaged in the real estate brokerage business as the owner of Swor, Inc.
The firm specializes in the development of commercial real estate properties
along with operating other related business interest, holdings and investment
properties. From 1992 to the present, Mr. Swor has been a member of the Board of
Directors of SunTrust Bank in Sarasota, Florida. From 1974 until 1985, Mr. Swor
was a co-owner of the real estate firm of Swor & Santini, Inc. which specialized
in commercial real estate and investments. From 1973 until 1975, Mr. Swor was a
realtor with Russ Gorgone, Inc. From 1971 until 1973, Mr. Swor was Vice
President and co-owner of Carroll Oil Company, which operated a Texaco
distributorship in Fort Myers, Florida. From 1959 until 1971, Mr. Swor was a
salesman for Texaco and from 1958 until 1959, Mr. Swor was in advertising sales
for the Orlando Sentinel Star. Mr. Swor received a B.A. degree from the
University of Kentucky in 1955 and holds teaching certificates from the states
of Kentucky and Florida.
William B. Saye, MD, FACOG, FACS, age 60, has served as Medical Director of
ALTC VirtualLabs since November 1998 and as a Director since January, 1999.
Dr. Saye is the founder, CEO and Medical Director of ALTC. ALTC was started
in 1990. Dr. Saye is also the Clinical Assistant Professor of OB/GYN for Emory
University School of Medicine in Atlanta, Georgia. Dr. Saye, with another
pioneering surgeon, made medical history when he performed the first
laparoscopic cholecystectomy (removal of the gall bladder) in the United States.
In the past nine (9) years, Dr. Saye has been instrumental in training more than
15,000 surgeons in various laparoscopic techniques and spearheaded the
development of a new minimally invasive therapy, laparoscopic Doderlien
hysterectomy. Dr. Saye received a BS from Georgia Institute of Technology in
1962 and his MD degree from Tulane University Medical School in 1965. Dr. Saye
is board certified in Obstetrics and Gynecology and in Advance Operative
Paparoscopy. Dr. Saye is the author of numerous articles on laparoscopic surgery
and techniques.
<PAGE>
Committees of the Board and Meetings
During the fiscal year ended December 31, 1999, there were four (4)
meetings of the Board of Directors, and there were no formal meetings of the
Stock Compensation Committee of the Board of Directors. No Director attended
fewer than fifty percent (50%) of the total number of meetings of the Board of
Directors and its Committees on which he served during the fiscal year. In
addition, the members of the Board of Directors and its Committee acted at
various times by unanimous written consent pursuant to New York law.
The Stock Compensation Committee, which did not met during fiscal 1999,
currently has three members, Irwin Newmann, David Swor and Sam Norton. Mr.
Norton is the Chairman. The Stock Compensation Committee reviews, approves and
makes recommendations on the Company's stock compensation plans, compensation
policies, practices and procedures to ensure that legal and fiduciary
responsibilities of the Board of Directors are carried out and that such
policies, practices and procedures contribute to the success of the Company. The
Committee also oversees the retention and development of key management
employees of the Company. The Committee administers the Company's stock plans.
Compensation of Directors
The Company's policy is not to pay cash compensation to members of the
Board for serving as a Director or for their attendance at Board meetings or
Committee meetings. Directors are eligible to participate in the Company's stock
plans.
Executive Officers
All of the Company's Executive Officers are Directors of the Company. The
executive officers serve at the pleasure of the Board of Directors and the Chief
Executive Officer.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table sets forth summary information as
to compensation received by the Company's Executive Officers as executive
officers of the Company through June 30, 1999 (collectively, the "named
executive officers") for services rendered to the Company in all capacities
during the three fiscal years ended December 31, 1998.
<PAGE>
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------------
Annual Compensation Awards Pay
outs
----------------------------- ----------------- --------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted Securities LTIP All Other
Name and Annual Stock Underlying Pay- Compen-
Principal Year Salary Bonus Compen- Award(s) Options/ outs sation ($)
Position ($) ($) sation ($) ($) SARs (f) (1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
G. Michael 1996 - 5,280
Swor, 1997 - 4,877
Chairman 1998 32,500 5,400
of the 1999 47,500 20,000
Board and
Chief
Executive
Officer (2)
- ------------------------------------------------------------------------------------------------------------
Frank M. 1996 -
Clark 1997 -
President 1998 32,731 50,000 70,417
and CEO 1999 50,000 20,000
(3)(4)
- ------------------------------------------------------------------------------------------------------------
Donald K. 1996 -
Lawrence 1997 16,675 13,657
President 1998 57,278 17,604
and Chief 1999 57,499 170,000
Operating
Officer (5)
- ------------------------------------------------------------------------------------------------------------
James D. 1996 49,536 8,944
Stuart 1997 47,166 5,676
Former 1998 6,000 4,020
Executive
Vice
President
(6)
- ------------------------------------------------------------------------------------------------------------
David 1999 30,000 85,000
Collins,
Acting
Chief
Financial
Officer,
Treasurer
and
Secretary
(4)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All other compensation includes certain health and life insurance benefits
paid by the Company on behalf of its employee.
<PAGE>
(2) Dr. Swor did not receive any salary prior to June 1998 at which time the
Company and he executed an Employment Agreement for a salary of $60,000 per
year. Other compensation includes life insurance paid by the Company.
(3) Mr. Clark executed an Employment Agreement with the Company in June 1998
for an annual salary of $60,000. As a signing bonus, Mr. Clark received
50,000 shares of restricted stock in the Company which is valued at $50,000
and options to purchase 200,000 shares of the Company's Common Stock at an
exercise price of $1.75 per share. The Company's options have no current
trading value. Mr. Clark retired as President and Chief Executive Officer
in January 2000.
(4) In April 1999, Mr. Clark and Mr. Collins received 12,000 and 34,000 shares
of the Company's restricted Common Stock in lieu of salary in the amount of
$7,812 due to Mr. Clark and consulting fees equal to $23,410 due to Mr.
Collins.
(5) Mr. Lawrence executed an Employment Agreement with the Company in May 1997
for an annual salary of $50,000. Effective in January 1998, the salary of
Mr. Lawrence was increased to $100,000 per year; however, he agreed to
defer receipt of the additional amounts until a mutually agreed date. The
Company began installment payments of the deferred amount on September 1,
1999. As consideration for the acquisition of the assets of Endex, Mr.
Lawrence received 250,000 shares of restricted stock in the Company. Such
shares were valued at the asset value of $13,657. In June 1998, the Company
granted Mr. Lawrence options to purchase 100,000 shares of the Company's
Common Stock at an exercise price of $1.75 per share. The Company's options
have no current trading value.
(6) Mr. Stuart acted as the Executive Vice President of the Company until June,
1998. Other compensation includes a portion of his health insurance
premiums which were paid by the Company and life insurance.
Option Grants in Last Fiscal Year
The following table provides information regarding the grant of stock
options during fiscal year 1999 to the named executive officers.
<TABLE>
<CAPTION>
Individual Grants Potential realizable value at Alternative to
assumed annual rates of stock (f) and (g):
price appreciation for option Grant date
term value
Name Number of Percentage of Exercise or Expiration 5% $/sh (f) 10% $/sh (g) Grant date
(a) Securities Total base price Date (e) present value
underlying options/SAR's ($/sh) (d) $/sh (f)
Options/SAR's granted to
Granted (#) (b) employees
during fiscal
year (c)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
G. 10,000 4.1% $1.00 12/26/09 $1.63 $2.59 $1.00
Michael 10,000 $1.00 12/31/08 $0.815 $1.295 $0.50
Swor
Frank M. 10,000 4.1% $1.00 12/26/09 $1.63 $2.59 $1.00
Clark 10,000 $1.00 12/31/08 $0.815 $1.295 $0.50
Donald 10,000 35.0% $1.00 12/26/09 $1.63 $2.59 $1.00
K. 150,000 $1.00 05/24/09 $1.271 $2.02 $0.78
Lawrence 10,000 $1.00 12/31/08 $0.815 $1.295 $0.50
David 10,000 17.5% $1.00 12/26/09 $1.63 $2.59 $1.00
Collins 65,000 $1.00 01/18/09 $1.532 $2.435 $0.94
10,000 $1.00 12/31/08 $0.815 $1.295 $0.50
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Values
The following table provides information regarding the aggregate exercises
of options by each of the named executive officers. In addition, this table
includes the number of shares covered by both exercisable and unexercisable
stock options as of December 31, 1998, and the values of "in-the-money" options,
which values represent the positive spread between the exercise price of any
such option and the fiscal year-end value of the Company's Common Stock.
Year End Option Values for Executive Officers
<TABLE>
<CAPTION>
Name Exercised Value Realized No. of Value of
Unexercised Unexercised
Exercisable/ Exercisable/
Unexercisable Unexercisable
- ---------------------- ------------ --------------- ---------------- -------------
<S> <C> <C> <C> <C>
G. Michael 0 0 3,850,686/ 473,634/
Swor 0 0
Frank M. Clark 0 0 200,000/ 0/
0 0
Donald K. 0 0 100,000/ 0/
Lawrence 0 0
James D. Stuart 0 0 (1) (1)
- ---------------------- ------------ --------------- ---------------- -------------
</TABLE>
(1) Mr. Stuart was not an executive officer at the year end 1998 and the number
of unexercised exercisable/unexercised and the value of unexercised
exercisable/unexercised options were not included in this table.
Employment Contracts
The Company has an arrangement with Staff Leasing, a Florida licensed
employee leasing company, and has entered into Employee Agreements with Dr. Swor
and Mr. Lawrence and had an Employee Agreement with Mr. Clark prior to his
retirement. Dr. Swor, Mr. Lawrence and Mr. Clark are or were treaded as
co-employees by Staff and the Company.
The agreement with Dr. Swor was entered into on June 15, 1998 which was
renewed June 1999. Dr. Swor is employed as the Treasurer and Medical Director of
the Company at an annual salary of $60,000. The agreement is for a term of one
(1) year, which term is renewable year to year unless either party provides
notice to the other within fourteen (14) days prior to the expiration that it
seeks to terminate the agreement. Dr. Swor is required to devote such time as is
required to fulfill his duties to the Company. Dr. Swor is reimbursed reasonable
and necessary expenses incurred on behalf of the Company. Prior to the execution
of this agreement, Dr. Swor received no salary for his services to the Company
since its inception.
<PAGE>
The agreement with Mr. Clark was entered into on June 15, 1998 which was
renewed June 1999. Mr. Clark is employed as the President and CEO of the Company
for a term of one (1) year at a salary of $60,000, which term is renewable year
to year unless either party provides notice to the other within fourteen (14)
days prior to the expiration that it seeks to terminate the agreement. Mr. Clark
is required to devote such time as is required to fulfill his duties to the
Company. Mr. Clark is reimbursed reasonable and necessary expenses incurred on
behalf of the Company. Mr. Clark received a signing bonus of 50,000 shares of
restricted stock in the Company and was granted options to purchase 200,000
shares of the Company's Common Stock at an exercise price of $1.75 per share.
Mr. Clark retired as President and Chief Executive Officer in January 31, 2000.
The agreement with Mr. Lawrence was entered into on April 1, 1997 which was
renewed April 1998 and April 1999. Mr. Lawrence is employed as the Marketing
Director of the Company for a term of one (1) year at a salary of $50,000, which
term is renewable year to year unless either party provides notice to the other
within fourteen (14) days prior to the expiration that it seeks to terminate the
agreement. Commencing January 1, 1998, Mr. Lawrence became the Executive Vice
President of the Company. Effective January 1998, Mr. Lawrence's salary was
increased to $100,000 per year; however, he agreed to defer receipt of the
additional amount until a mutually agreed date. The Company began installment
payments on the deferred amount of September 1, 1999. Mr. Lawrence is required
to devote such time as is required to fulfill his duties to the Company. Mr.
Lawrence is reimbursed reasonable and necessary expenses incurred on behalf of
the Company.
Market Information
The Common Stock of the Company is quoted on the OTC Bulletin Board under
the symbol "SURG". The high and low bid information for each quarter for the
years ending December 31, 1996, December 31, 1997, December 31, 1998 and
December 31, 1999 are as follows:
<TABLE>
<CAPTION>
Quarter High Bid Low Bid Average Bid
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
First Quarter 1996 1/4 3/16 .218
Second Quarter 1996 3/4 1/8 .445
Third Quarter 1996 1/4 1/8 .177
Fourth Quarter 1996 1/4 1/8 .176
First Quarter 1997 1/4 3/32 .135
Second Quarter 1997 1/4 3/32 .106
Third Quarter 1997 3/8 1/8 .183
Fourth Quarter 1997 9/64 1/8 .132
First Quarter 1998 29/32 9/64 .215
Second Quarter 1998 3-1/8 11/16 2.299
Third Quarter 1998 2-9/64 1-9/64 1.646
Fourth Quarter 1998 31/32 17/32 .750
First Quarter 1999 13/16 1/3 .57
Second Quarter 1999 1-7/8 7/16 1.156
Third Quarter 1999 2-7/8 1-1/4 2.063
Fourth Quarter 1999 1-11/16 13/16 1.196
</TABLE>
The quotations may reflect inter-dealer prices, without retail mark-up,
mark-down or commissions and may not reflect actual transactions.
<PAGE>
REPORT ON EXECUTIVE COMPENSATION BY THE STOCK COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS
The Stock Compensation Committee (the "Committee") comprises three members
of the Board of Directors, each of which is an independent member at this time.
It is the responsibility of the Committee to review, recommend and approve
changes to the Company's compensation policies and benefits programs, to
administer the Company's stock plans, including approving stock awards to
directors, stock option grants to executive officers and certain other stock
option grants, and to otherwise ensure that the Company's compensation
philosophy is consistent with the Company's best interests and is properly
implemented.
Compensation Philosophy
The compensation philosophy of the Company is to (i) provide a competitive
total compensation package that enables the Company to attract and retain key
executive and employee talent needed to accomplish the Company's goals and (ii)
directly link compensation to improvements in Company financial and operational
performance and increases in Stockholder value as measured by the Company's
stock price.
Compensation Program
The Company's compensation program for all employees emphasizes variable
compensation, primarily through performance-based grants of long-term,
equity-based incentives in the form of stock options. Salaries at all employee
levels are generally targeted at median market levels. The Company also
maintains a cash-based incentive program with awards targeted to provide fully
competitive levels of total cash compensation based on the degree of achievement
of Company financial and operational performance measures.
The Committee conducts ongoing reviews of total compensation levels,
structure, and design with the assistance of independent members who are
consultants to the Board of Directors. The objective of the reviews is to ensure
that management and key employee total compensation opportunity links total
compensation to the Company's performance and stock price appreciation and keeps
pace with the Company's competitive trends.
The Company has actively managed compensation levels to ensure that they
are fully competitive and capable of retaining top performers over the long
term. As a result of the competitive reviews and compensation actions, the
Committee believes that the base salary, total cash compensation, and stock
appreciation opportunities for senior management, as well as those of the broad
employee population, are consistent with competitive market levels.
Base Salaries
The Committee reviews each senior executive officer's salary annually. In
determining appropriate salary levels, the Committee considers the officer's
impact level, scope of responsibility, prior experience, past accomplishments,
and data on prevailing compensation levels in relevant executive labor markets.
Based on the findings of the most recent compensation review, the Committee is
considering base salary increases for certain executive officers to be effective
in fiscal 2000 which, will maintain total cash compensation levels in line with
competitive levels and with the Company's compensation philosophy.
<PAGE>
Stock Options and Awards
The Committee believes that granting stock options on an ongoing basis
provides officers with a strong economic interest in maximizing stock price
appreciation over the longer term. The Company believes that the practice of
granting stock options is critical to retaining and recruiting the key talent
necessary at all employee levels to ensure the Company's continued success.
Further, the Committee believes that stock awards to Directors is critical
to recruiting and maintaining qualified persons to assist the Company in its
continuing development.
The Committee is responsible for administering the Company's stock
programs, including Director awards, individual stock option grants to officers
and aggregate grants to all plan participants. It is the Company's practice to
set option exercise prices at not less than 100% of the stock fair market value
on the date of grant. Thus, the value of the Stockholders' investment in the
Company must appreciate before an optionee receives any financial benefit from
the option. Options are generally granted for a term of ten years.
In determining the size of stock option grants, the Committee considers the
officer's responsibilities, the expected future contribution of the officer to
the Company's performance and the number of shares which continue to be subject
to vesting under outstanding options. In addition, the Committee examines the
level of equity incentives held by each officer relative to the other officers'
equity positions, their tenure, responsibilities, experience, and value to the
Company.
The Committee monitors the Company's equity-based compensation program on
an ongoing basis to ensure that Stockholders' resources are used effectively and
in the best interests of the Company. During the past several fiscal years, the
Committee has monitored the program to ensure that dilution from stock option
plans is managed within levels consistent with the Company's staffing levels,
market value and prevailing levels of option dilution for growth companies. Over
the past several years, the Company has steadily reduced the level of
outstanding options as a percentage of Common Stock outstanding.
The Committee will continue to monitor the Company's compensation program
in order to maintain the proper balance between cash compensation and
equity-based incentives and may consider further revisions in the future,
although it is expected that equity-based compensation will remain one of the
principal components of compensation.
The Committee believes that the Company's stock option plans have been very
effective in attracting, retaining, and motivating executives and employees of
the Company over time and have proven to be an important component of the
overall compensation program.
Policy on Deductibility of Compensation
Section 162(m) of the U.S. Internal Revenue Code limits the tax
deductibility by a company of compensation in excess of $1 million paid to any
of its five most highly compensated executive officers. However, compensation
which qualifies as "performance-based" is excluded from the $1 million limit if,
among other requirements, the compensation is payable only upon attainment of
pre-established, objective performance goals under a plan approved by
Stockholders. Accordingly, the Committee has recommended that an Executive
Incentive Plan be considered for the future, and, if determined to be in the
best interest of the Company, submitted to the Company's Stockholders. The
<PAGE>
Committee has also approved the adoption of the 2000 Stock Plan and has
recommended that such plan be submitted to the Company's Stockholders so that
the options granted under the plan will be qualified as "performance- based"
under Section 162(m) and the income recognized by participants upon exercise
will be deductible by the Company.
Very truly yours,
Sam Norton,
Chairman, Stock Compensation Committee
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's Directors and officers, and persons who
own more than ten percent (10%) of a registered class of the Company's equity
securities, to file with the Securities and Exchange Commission (the "SEC")
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Directors, officers and greater than
ten percent (10%) holders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) reports they file.
To the Company's knowledge, except as noted below, based solely on review
of the copies of the above-mentioned reports furnished to the Company and
written representations regarding all reportable transactions, during the fiscal
year ended December 31, 1998 and for the quarters ended March 31, 1999, June 30,
1999, September 30, 1999 and December 31, 1999, all Section 16(a) filing
requirements applicable to its Directors and officers and greater than ten
percent (10%) beneficial owners were complied with on time. The Company became a
reporting company subject to Section 16(a) on November 27, 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no transactions between the Company and any of its officers,
directors, principal shareholders, employees or consultants which have not been
reported in the Company's filings with the Securities and Exchange Commission,
except for the following:
In May 1999, the Company granted Mr. Lawrence options to purchase 150,000
shares of the Company's restricted Common Stock under the 1999 ESOP for his work
in developing the Long Term US Surgical agreement and for his contributions to
the development of OASiS. At the same time, the Company granted options to
purchase 1,000 shares under the 1999 ESOP to each of two (2) persons who
assisted Mr. Lawrence in his efforts. The options are exercisable for a term of
ten (10) years at an exercise price of $1.00 per share. The issuance was made
pursuant to Section 4(2) of the Act and Rule 506.
In June 1999, the Company granted options to purchase 25,000 shares of the
Company's restricted Common Stock under the 1999 ESOP to each of its five (5)
outside directors, that is Mr. Newmann, Mr. Norton, Dr. Saye, Mr. David Swor and
Mr. Stuart. The options are exercisable for a term of ten (10) years at an
exercise price of $1.72 per share. The issuance was made pursuant to Section
4(2) of the Act and Rule 506.
In December 1999, the Company granted three (3) consultants a total of
12,500 shares, one person was granted 7,500 shares the Company's restricted
Common Stock for his work with the Company's patents, one person was granted
2,500 shares of restricted Common Stock for his work on OASiS, and the third, a
<PAGE>
nurse at SMH, was granted 2,500 shares of restricted Common Stock for her work
on OASiS. The nurse at SMH declined, stating that such grant would not be
appropriate under SMH policy. The issuance was made pursuant to Section 4(2) of
the Act and Rule 506.
In December 1999, the Company executed the TK Loan Commitment with TK, as
Agent and Lender, whereby TK agreed to make loans to the Company of up to
$5,000,000 in installments for a period commencing with the date of the
agreement and ending on November 30, 2002. The TK Loan Commitment permits
instalments aggregating $500,000 in any 90-day period. The proceeds of the loan
are to pay agent fees and for working capital purposes. The TK Loan Commitment
provides that the offering has been conducted under Regulation S of the Act.
Under the terms of the TK Loan Commitment, each installment is supported by a
convertible note and security agreement and the Agent and Lender are granted
warrants to purchase shares of the Company's Common Stock. Prior to each
instalment, the Company is obligated to escrow shares under the terms of an
escrow agreement. The convertible note bears interest at 8% per annum and may be
prepaid at any time. The note is convertible at any time at the option of TK at
the higher of (i) $.375 or (ii) the lower of $.8203 or 75% of the closing bid
price of the Company's Common Stock on the conversion date. The security
agreement grants TK a security interest in all of the Company's equipment,
inventory, accounts, contract rights, chattel paper and instruments, and the
proceeds of any of the collateral. Both the Lender's and the Agent's warrants
are exercisable at $1.09375 per share, subject to defined adjustments. The
warrants are exercisable 20% immediately and at the rate of 1% for each $25,000
of principal borrowed. The Company was obligated to issue 2,700,000 shares of
its Common Stock to be held in escrow for the potential conversion under the
notes or exercise of the warrants. TK acts as escrow agent for the shares and is
authorized to release such shares upon receipt of a notice of note conversion
notice or warrant exercise. The Company granted TK registration rights and is
obligated to file a Form S-3 within sixty (60) days of the agreement. The Form
S-3 registration is to cover 20,038,097 shares. In the event the Company's
registration statement is not declared effective within 120 days of a specified
deadline, the Company is required to pay a penalty equal to 2% of the principal
amount of the loans outstanding plus the total number of warrant outstanding at
their closing bid price. Under the terms of the TK Loan Commitment, an initial
loan of $650,000 was made on December 30, 1999, the Lender was granted a warrant
to purchase 3,428,571 shares and the Agent was granted a warrant to purchase
1,142,857 shares. The issuance of the securities was made pursuant to Regulation
S of the Act.
In December 1999, the Company granted options to purchase 2,500 shares of
the Company's restricted Common Stock under the 1999 ESOP to two (2) persons who
assisted the Company in its efforts over the year. The options are exercisable
for a term of ten (10) years at an exercise price of $1.00 per share. In
addition, at year end, the Company granted options exercisable for a term of ten
(10) years at a price of $.75 per share under the 1999 ESOP to key employees and
officers as follows:
Dr. Swor 10,000
Mr. Clark 10,000
Mr. Lawrence 10,000
Mr. Collins 10,000
Kim Conroy 2,500
Eric Hill 10,000
Stacy Quaid 5,000
Michael Williams 10,000
The granting of such options was made pursuant to Section 4(2) of the Act and
Rule 506.
<PAGE>
ELECTION OF DIRECTORS
(Item 1)
The Company's Bylaws provide for a Board of Directors, the number of which
may be set from time to time by resolution. The Board of Directors currently
consists of nine (9), all of which are standing for re-election.
Background information appears below for each of the nominees for election
as Directors. Although the Company does not anticipate that any of the persons
named below will be unwilling or unable to stand for election, in the event of
such an occurrence, proxies may be voted for a substitute designated by the
Board of Directors.
Name Age Business Experience
- ------- ----- --------------------
Dr. G. Michael Swor 42
Dr. Swor has served as Chairman of the Board and
Medical/Technical Advisor of the Company since its inception
in 1992, served as Treasurer to the Company from June, 1998
until January 31, 2000 and has served as Chief Executive
Officer sinceFebruary 2000. Dr. Swor, a board certified,
practicing physician with a specialty in OB/GYN, is the
founder of Surgical. From 1992 until June 12, 1998, Dr. Swor
also served as President and CEO. With a Masters in Business
Administration, Dr. Swor's duties for the Company include
investor relations, corporate financing, and overall
corporate policy and management. He is a clinical assistant
professor in the OB/GYN department at University of South
Florida. Dr. Swor was the inventor of SutureMate(R)and
Prostasert(TM)and the original holder of the patents issued
to each of these products. Dr. Swor has written numerous
articles, published the "Surgical Safety Handbook," and
given numerous lectures on safety and efficiency in the
surgical environment. His professional affiliations include
American College of Surgeons, American College of Obstetrics
and Gynecology and the Florida Medical Association. From
1996 until the present, Dr. Swor has acted as an independent
consultant for Concise Advise which provides consulting
services related to product development, patent, research,
distribution, joint venture, mergers and other business
issues. From 1994 through 1996, Dr. Swor oversaw the
operation of WDC. From 1987 through 1995,Dr. Swor was the
managing partner of Women's Care Specialists/Physicians
Services Inc. where he oversaw four (4) physicians, two (2)
practitioners and a staff of over twenty five (25). From
1987 through 1992, Dr. Swor was a partner and board member
of Women's Ambulatory Services, Inc., a diagnostic testing
facility. From 1982 through 1985, Dr. Swor was the President
of University of Florida at Jacksonville, Health Sciences
Center resident staff association with over 200 members. Dr.
Swor received a B.A degree in 1978 from the University of
South Florida, a M.D. degree from the University of South
Florida College of Medicine in 1981, and an M.B.A. degree
from the University of South Florida in 1998. From 1981
through 1985 he recieved his training in OB/GYN from the
<PAGE>
University of Florida Department of Obstetrics and
Gynecology in Jacksonville, Florida. He has received several
special achievement awards including being honored by the
University of South Florida in May, 1998 with the Alumni
Award for Professional Achievement.
Frank M. Clark (1) 67
Mr. Clark has served as a Director since June 1998, served
as CEO and President from June, 1998 to January 31, 2000
when he retired. Mr. Clark continues to provide consulting
services to the Company. While President, Mr. Clark was
responsible for the day to day operations of the Company and
was responsible for new product development and
manufacturing and manages new business ventures, including
mergers, acquisitions, joint ventures, strategic alliances
and licensing/ distribution agreements for the Company. Mr.
Clark also serves on the Board of GenSci Regeneration
Sciences, Inc. From 1991 to 1997, Mr. Clark was Chairman and
CEO of Corporate Consulting Services Group where his primary
activities were providing consulting services to start-up
companies, under-performing companies and training people in
career transitions. From 1984 to 1991, Mr. Clark was COO and
Executive Vice President of Right Associates, a consulting
firm with responsibilities for business development with
Fortune 100 corporations for which he acted. He acquired a
Los Angeles based consulting firm and became the Managing
Principal. From 1981 to 1984, Mr. Clark was a Vice President
of National Medical Care, a subsidiary of W.R. Grace, Inc.
where his innovative marketing leadership helped the company
recapture a dominant share of the dialysis market. From 1978
to 1981, Mr. Clark served as President, Corporate Vice
President and a Director of R.P. Scherer, Inc., the world's
leading producer of soft gelatin capsules where he was in
charge of worldwide businesses. From 1959 to 1978, Mr. Clark
was employed by Johnson & Johnson, Inc., first with Ethicon,
Inc. where he served as a Vice President and Director, then
with Ethnor Medical Products where he was a Vice President,
General Manager and a Director and then with Stimulation
Technology, where he served as Executive Vice President and
a Director. From 1956 to 1958, Mr. Clark was employed by
Federated Department stores in the executive training
program at Bloomingdales in New York City. Mr. Clark
received a certificate from Teachers College in Connecticut
in 1955.
<PAGE>
Donald K. Lawrence (1) 37
Mr. Lawrence has served as a Director since May 1997, served
as Vice President, Sales & Marketing and Secretary from May,
1997 to January 31, 2000, served as Executive Vice President
from January, 1998 to January 31, 2000 and has served as
President and Chief Operating Officer since February 2000.
Mr. Lawrence's responsibilities include sales management,
market planning, advertising, and management for Compliance
Plus products and acting as the Executive Director of OASiS.
His arrival to the Company was facilitated by the Company's
acquisition in 1997 of InterActive PIE Multimedia, Inc., of
which Mr. Lawrence was founder and Chief Executive Officer.
From February 1996 until February 1997, Mr. Lawrence was the
CEO of InterActive PIE. From December 1991 until February
1996, Mr. Lawrence was employed by Ethicon Endo-
Surgery/Johnson & Johnson as a surgical sales
representative. From July 1989 until December 1991, Mr.
Lawrence acted as a surgical sales representative for Davis
and Geck. Prior to entering the area of medical device
sales, from February 1985 until July 1989, Mr. Lawrence was
an account executive with DHL Worldwide Express. During
college, Mr. Lawrence was an independent dealer for
Southwestern Publishing Co. Mr Lawrence received a B.S
degree in Marketing and Communications in 1984 from
Appalachian State University.
David Collins(1) 58
Mr. Collins has served as a Director since January 1999, has
served as the Acting Chief Financial Officer since March
1999 and has served as Secretary and Treasurer since
February 2000. Mr. Collins responsibilities include
overseeing the financial affairs of the Company on a part
time basis and he is currently engaged as a consultant to
the Company. Mr. Collins devotes such time as is necessary
to fulfill his duties to the Company. During 1997 and 1998,
Mr. Collins was Controller for the Sales and Marketing
Division for GES Exposition Services, a subsidiary of the
NYSE listed Viad Corporation. From 1993 to 1996, Mr. Collins
was General Manager and Chief Financial Officer of Spectra
Services Corporation. From 1989 to 1992, Mr. Collins was a
Partner and Consultant to Quantum Corporation, a venture
capital firm. From 1977 to 1988, Mr. Collins rose from
Controller to Vice President of Finance (1982) and then to
Vice President of Finance and Chief Financial Officer (1984)
of R.P. Scherer Corporation, a NYSE listed company. From
1975 to 1977, Mr. Collins was Vice President and Controller
of Wheelhorse Products, a subsidiary of American
Motors/Chrysler. From 1971 to 1975, Mr. Collins rose from
Controller of the Midwest Dental Division to Vice President
and Controller of the American Hospital Division of American
Hospital Supply Corporation (1974). From 1969 to 1971, Mr.
Collins was a Senior Auditor and Consultant in Public
<PAGE>
Accounting with Deloitte & Touche. Mr. Collins received a
BSBA from Northwestern University in 1964 and a MBA from the
Kellogg Graduate School of Management at Northwestern
University in 1967. He became a Certified Public Accountant
in the State of Illinois in 1971.
James D. Stuart 42
Mr. Stuart has served as a Director since 1993. Mr. Stuart
served as Executive Vice President from 1993 until June,
1998 and initially acted as the Director of Marketing and
Sales. During his time as an officer of the Company, Mr.
Stuart was responsible for new product development and
manufacturing and manages new business ventures, including
mergers, acquisitions, joint ventures, strategic alliances
and licensing/distribution agreements for the Company. From
November 1994 until July 1996, Mr. Stuart acted as President
and CEO of WDC and was responsible for managing and
operating the facility. From March 1986 until May 1993, Mr.
Stuart was employed by Liquid Air Corporation, Buld Gases
Division first as a Business Manager for South Florida and
then as a Program Manager for Food Freezing. From February
1981 until February 1986, Mr. Stuart was employed by NCR
Corporation in the Systemedia Division initially as a
Territory Manager and then as a Senior Account Manager. Mr.
Stuart received a B.A. degree in marketing in 1980 from the
University of South Florida.
Irwin Newman 51
Mr. Newman has served as a Director since 1993. Currently,
Mr. Newman provides financial advisory services to the Board
of Directors. From 1993 to the present, Mr. Newman has
served as the President and CEO of Jenex Financial Services,
Inc. ("Jenex"). Mr. Newman is the principal of Jenex. Mr.
Newman is and has been a practicing attorney since 1973.
From 1993 to 1998, Mr. Newman served as Vice President and
General Counsel for Boca Raton Capital Corporation, a
publicly owned, NASDAQ listed investment holding company
where he completed an Initial Public Offering for a $4
million subsidiary, completed a $3.5 million secondary
offering and was responsible for shareholder and investor
relations. From 1983 to 1988, Mr. Newman served with the New
York Stock Exchange firms of Gruntal & Co. and Butcher and
Signer, specializing in common and preferred stocks,
options, municipal and corporate bonds and GNMA's. During
part of this period, he broadcast a daily television market
comments program over the Financial News Network. Mr. Newman
received a B.S. degree in Business Administration from
Syracuse University in 1970 and a J.D. degree from the
University of Florida in 1973.
<PAGE>
Sam Norton 40
Mr. Norton has served as a Director since 1992 and is the
Chairman of the Stock Compensation Committee. Mr. Norton
provides business and legal advisory services to the Board
of Directors. Mr. Norton is an attorney with the firm
Norton, Gurley, Hammersley & Lopez, P.A. in Sarasota,
Florida. Mr. Norton practices primarily in the areas of real
estate, banking, corporate and business transactions and is
a Florida Bar board certified real estate specialist, having
earned such certification in 1991. He has practiced law in
Sarasota since 1985 and is the past Chairman of the Joint
Committee of the Sarasota Board of Realtors/Sarasota County
Bar Association. Mr. Norton is active in Sarasota civic
organizations and currently serves as a member of the Board
of Directors of Sarasota Bank. Mr. Norton graduated from the
University of Florida in 1981 and earned a J.D. degree from
Stetson University School of Law in 1984 where he graduated
Cum Laude. While in law school, Mr. Norton was chosen to
serve on the Law Review. He was admitted to the Florida Bar
in 1985.
David Swor 67
Mr. Swor has served as a Director since 1992. Mr. Swor, who
is the father of Dr. Swor, provides business advisory
services for the Board of Directors. From 1985 until the
present, Mr. Swor had been engaged in the real estate
brokerage business as the owner of Swor, Inc. The firm
specializes in the development of commercial real estate
properties along with operating other related business
interest, holdings and investment properties. From 1992 to
the present, Mr. Swor has been a member of the Board of
Directors of SunTrust Bank in Sarasota, Florida. From 1974
until 1985, Mr. Swor was a co-owner of the real estate firm
of Swor & Santini, Inc. which specialized in commercial real
estate and investments. From 1973 until 1975, Mr. Swor was a
realtor with Russ Gorgone, Inc. From 1971 until 1973, Mr.
Swor was Vice President and co-owner of Carroll Oil Company,
which operated a Texaco distributorship in Fort Myers,
Florida. From 1959 until 1971, Mr. Swor was a salesman for
Texaco and from 1958 until 1959, Mr. Swor was in advertising
sales for the Orlando Sentinel Star. Mr. Swor received a
B.A. degree from the University of Kentucky in 1955 and
holds teaching certificates from the states of Kentucky and
Florida.
Dr. William B.Saye (1) 60
Dr. Saye has served as Medical Director of ALTC VirtualLabs
since November 1998 and as a Director since January, 1999.
Dr. Saye is the founder, CEO and Medical Director of ALTC.
ALTC was started in 1990. Dr. Saye is also the Clinical
Assistant Professor of OB/GYN for Emory University School of
Medicine in Atlanta, Georgia. Dr. Saye, with another
pioneering surgeon, made medical history when he performed
the first laparoscopic cholecystectomy (removal of the gall
bladder) in the United States. In the past nine (9) years,
<PAGE>
Dr. Saye has been instrumental in training more than 15,000
surgeons in various laparoscopic techniques and spearheaded
the development of a new minimally invasive therapy,
laparoscopic Doderlien hysterectomy. Dr. Saye received a BS
from Georgia Institute of Technology in 1962 and his MD
degree from Tulane University Medical School in 1965. Dr.
Saye is board certified in Obstetrics and Gynecology and in
Advance Operative Paparoscopy. Dr. Saye is the author of
numerous articles on laparoscopic surgery and techniques.
Vote
A plurality of the votes cast at the Meeting is required to elect each
nominee as a Director. Unless authority to vote for any of the nominees named
above is withheld, the shares represented by the enclosed proxy will be voted
FOR the election as Directors of such nominees.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF EACH OF THE ABOVE NAMED
INDIVIDUALS AS DIRECTORS AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN
FAVOR OF SUCH ELECTIONS.
AMENDMENT OF THE COMPANY'S ARTICLES OF INCORPORATION, AS AMENDED, TO
INCREASE THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK
(Item 2)
The Company's Articles of Incorporation, as amended (the "Certificate of
Incorporation"), authorizes the issuance of 20,000,000 shares of Common Stock,
$.001 par value, and Preferred Stock, the aggregate number of which, the class
or series of classes, whether a class is with or without par value, the relative
rights and preferences and the limitations, if any, of which are determined by
the Board of Directors. As of February 7, 2000, the Board of Directors of the
Company approved an amendment to the Certificate of Incorporation to increase
the authorized number of shares of Common Stock from 20,000,000 to 100,000,000
and to submit the proposed amendment to the Stockholders at this Meeting.
<PAGE>
Purpose and Effect of the Amendment
The general purpose and effect of the proposed amendment to the Company's
Certificate of Incorporation will be to authorize 80,000,000 additional shares
of Common Stock. The Board of Directors believes that it is prudent to have the
additional shares of Common Stock available for general corporate purposes,
including payment of stock dividends, stock splits or other recapitalizations,
acquisitions, equity financings, grants of stock options and to satisfy
obligations relative to financing made available to the Company in December
1999.
Although the Board of Directors has not decided to effect a stock split,
the Board wants to maintain the ability to effect a stock split. The Company has
never split its stock, but would like the ability to make such decision if it
believes that it will improve the liquidity afforded its Stockholders or if it
believes that it will allow the the Company's shares to become more attractive
to individual investors when it is possible to acquire a larger number of them
for the same total dollar amount. Prior to such determination, the Board of
Directors will consider a number of factors, including general market
conditions, in deciding whether or when to effect a stock split, and any of
these factors could cause the Board to decide against effecting a stock split at
any particular time. The Company has determined that securing Stockholder
approval of 80,000,000 additional authorized shares of Common Stock would be
appropriate in order to provide the Company with the flexibility to consider a
combination of possible actions, including acquisitions or stock splits, that
might require the issuance of additional shares of Common Stock.
The Company currently has 20,000,000 authorized shares of Common Stock. As
of December 31, 1999, the Company had approximately 14,515,373 shares issued and
outstanding and of the remaining 5,484,627 authorized but unissued shares, the
Company negotiated convertible debt and a commitment to lend up to $5,000,000 to
the Company under terms which require the Company to reserve shares in
connection with the possible conversion of such debt and to register initially
20,038,097 shares. Such commitment to register requires the Company to amend its
Articles of Incorporation in any event. In addition, 10,000,000 shares are
reserved pursuant to the Company's option plans.
Except in connection with the reserved shares described above or the
anticipated reserve for the contemplated convertible debt, the Company currently
has no arrangements or understandings for the issuance of additional shares of
Common Stock, although opportunities for acquisitions and equity financings
could arise at any time. If the Board of Directors deems it to be in the best
interests of the Company and the Stockholders to issue additional shares of
Common Stock in the future, the Board of Directors generally will not seek
further authorization by vote of the Stockholders, unless such authorization is
otherwise required by law or regulations.
The increase in the authorized number of shares of Common Stock could have
an anti-takeover effect. If the Company's Board of Directors desired to issue
additional shares in the future, such issuance could dilute the voting power of
a person seeking control of the Company, thereby deterring or rendering more
difficult a merger, tender offer, proxy contest or an extraordinary corporate
transaction opposed by the Company.
<PAGE>
Vote
The affirmative vote of a majority of the outstanding shares of Common
Stock entitled to vote at the Meeting will be required to approve the amendment
to the Company's Certificate of Incorporation increasing the number of
authorized shares of Common Stock from 20,000,000 to 100,000,000.
THE BOARD OF DIRECTORS RECOMMENDS THE APPROVAL OF THE AMENDMENT TO THE
COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF
COMMON STOCK FROM 20,000,000 to 100,000,000, AND PROXIES SOLICITED BY THE BOARD
WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON
THE PROXY.
APPROVAL OF THE COMPANY'S 2000 STOCK PLAN
(Item 3)
General
The Company's Stockholders are being asked to approve the adoption of the
Company's 2000 Stock Plan (the "2000 Plan"). The 2000 Plan will supercede the
Company's existing stock option plans under which option grants have been made
to officers, directors, employees and consultants of the Company. All of the
Company's officers, directors, employees and select consultants are eligible to
participate in the 2000 Plan. The 2000 Plan will become effective immediately
upon such Stockholder approval. It is anticipated that, if approved by the
Stockholders, the 2000 Plan will be used in lieu of the all other plans
previously adopted by the Company. The 2000 Plan is similar to the Company's
1999 Revised ESOP.
The 2000 Plan will be funded initially with 10,000,000 shares of Common
Stock reserved for issuance under the plan. The Company has experienced the
need, on occasion, to make grants of options to purchase restricted stock in
connection with the hiring of officers and anticipates encountering such need in
the future. Including stock options in the 2000 Plan will enable the Company to
use awards of options in those instances the Company determines it appropriate
and necessary in connection with the hiring or retention of selected employees.
Further, the Company believes that to attract and maintain quality persons
to act as Directors, it should have a mechanism to grant awards of restricted
stock and/or options to purchase restricted stock when a new Director first
joins the Board and annually upon reelection. Including stock awards and/or
options to purchase restricted stock to Directors in the 2000 Plan will enable
the Company to use awards and options in those instances the Company determines
it appropriate and necessary in connection with the attracting and maintaining
Directors.
The Company's growth during recent years have generated substantial need
for meaningful option grants to attract and retain talented employees critical
to the Company's ongoing growth and success. In order to continue to attract and
retain key talent, the Company must offer market competitive long-term
compensation opportunities. Stock options, because of their upside potential and
vesting requirements, are a key component in recruiting and retaining these
employees.
The Company's Board of Directors believes that the stock option plans have
been very effective for these purposes over time and have proven to be an
important component of the Company's overall compensation strategy for all
employees. The Company is committed to broad-based participation in the stock
<PAGE>
option program by employees at all levels. Under the stock options program, all
full-time employees are eligible for and most key employees receive option
grants at hire and annually thereafter, in accordance with a performance
assessment process. During fiscal year 1998, non-officer employees received
15.4% of the stock options granted and in fiscal year 1999, non-officer
employees received 35.1% of the stock options granted. The Company believes that
the stock option program, with its emphasis on highly competitive
performance-based grants to nearly all employees, is important in order to
maintain the Company's culture, employee motivation, and continued success.
The Stock Compensation Committee of the Board of Directors (the
"Committee") monitors the Company's stock programs on an ongoing basis to ensure
that stock options and other stock awards are used effectively and in the best
interests of the Company and its Stockholders.
During the past fiscal year, the Committee has revised and monitored the
program to ensure that dilution from stock option plans is managed within levels
consistent with the Company's staffing levels and market value and taking into
account market and industry analysis. By carefully managing Stockholder
resources, the Company seeks to continue providing stock-price growth to
Stockholders and meaningful performance-based compensation opportunities for its
employee population.
The Company is seeking Stockholder approval of the 2000 Plan in order for
option grants under the 2000 Plan to qualify as "performance-based" compensation
under Section 162(m) of the Internal Revenue Code and to allow for non-qualified
awards of restricted stock to Directors. The 2000 Plan will be funded initially
with 10,000,000 shares reserved for issuance under the plan.
Pursuant to the Company's ESOP adopted in 1994, the Company has granted
options to purchase 4,166,316 shares of the Company's Common Stock representing
proceeds on exercise of $1,320,000, 708,329 shares of the Company's Common Stock
representing proceeds on exercise of $708,329 under the 1998 Revised ESOP
(without regard to the additional options to Dr. Saye which accrue at the rate
of 8,333 per month after December 31, 1999) and 345,000 shares of the Company's
Common Stock representing proceeds on exercise of $435,000 under the 1999
Revised ESOP to date.
Pursuant to the Company's CSOP adopted in 1994, the Company has granted
options to purchase 346,115 shares of the Company's Common Stock representing
proceeds of $110,700 to the Company under the 1994 CSOP, options to purchase
129,000 shares of the Company's Common Stock representing proceeds of $114,500
to the Company under the 1998 Revised CSOP and 312,500 shares of the Company's
Common Stock representing proceeds of $312,500 under the 1999 Revised ESOP to
date.
The following is a summary of the principal features of the 2000 Plan.
Material Features of the 2000 Plan
The purpose of the 2000 Plan is to attract, retain and motivate employees,
directors, officers and consultants through the issuance of awards to Directors
and options to purchase Common Stock of the Company and to encourage ownership
of Common Stock by most employees, directors and certain consultants of the
Company. The 2000 Plan will be administered by the Stock Compensation Committee
of the Board of Directors (the "Committee"). Subject to the provisions of the
2000 Plan, the Committee determines the persons to whom awards and options will
be granted, the number of shares to be covered by each award or option and the
terms and conditions upon which an awards or option may be granted.
<PAGE>
All employees, directors and consultants of the Company and its affiliates
(as defined in the 2000 Plan, "Affiliates") are eligible to participate in the
2000 Plan, although the Company has discretion in identifying those people who
actually receive grants.
Options granted under the 2000 Plan may be either (i) options intended to
qualify as "incentive stock options" under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), or (ii) non-qualified stock options.
Other than certain minimum requirements described below, the Committee has the
discretion to fix the terms of options granted under the 2000 Plan. Incentive
stock options may be granted under the 2000 Plan to employees of the Company and
its Affiliates. Non-qualified stock options may be granted, in the Company's
discretion, to consultants, directors and employees of the Company and its
Affiliates.
Directors of the Company may receive non-qualified stock awards and/or
options as the sole form of compensation for their services (not including
reimbursement of expenses). The 2000 Plan provides for an initial grant to each
Director, upon first being elected or appointed to the Board of Directors,
awards of 25,000 shares of Common Stock and/or options to purchase 25,000 shares
of Common Stock (or such higher number of awards and/or options as determined by
the Committee for recruitment purposes) if the Stock Compensation Committee or
the Board decides to make the award. The 2000 Plan also provides for an annual
grant on the date following the annual meeting of Stockholders of the Company of
each year, after giving effect to the election of any director or directors at
such annual meeting of Stockholders, to each Director (who has served for at
least six months as a director) of an award of 25,000 shares of Common Stock
and/or option to purchase 25,000 shares of Common Stock if the Stock
Compensation Committee or the Board decides to make the award.
All options granted under the 2000 Plan will (i) have an exercise price
equal to the fair market value of the Common Stock on the grant date, (ii) have
a term of ten years, and (iii) be immediately exercisable (subject to the rules
under Section 16 of the Exchange Act).
Incentive and non-qualified stock options granted under the 2000 Plan may
not be granted with an exercise price less than the fair market value of the
Common Stock on the date of grant (or 110% of fair market value in the case of
incentive stock options granted to participants holding 10% or more of the
voting stock of the Company). Stock options granted under the 2000 Plan expire
not more than ten years from the date of grant, or not more than five years from
the date of grant in the case of incentive stock options granted to a
participant holding more than 10% of the voting stock of the Company. The
aggregate fair market value (determined at the time of grant) of shares issuable
pursuant to incentive stock options which become exercisable in any calendar
year under any incentive stock option plan of the Company by an employee may not
exceed $100,000. An option granted under the 2000 Plan is not transferable by an
optionholder except by (i) will or by the laws of descent and distribution or
(ii) as determined by the Committee and set forth in the Option Agreement. An
option is exercisable only by the optionholder or one who receives the option
pursuant to a permitted transfer.
An incentive stock option granted under the 2000 Plan may be exercised
after the termination of the optionholder's employment with the Company (other
than by reason of death, disability or termination for cause as defined in the
2000 Plan) to the extent exercisable on the date of such termination, for up to
thirty (30) days following such termination, provided that such incentive stock
option has not expired on the date of such exercise. In granting any
non-qualified stock option, the Committee may specify that such non-qualified
stock option shall be subject to such termination or cancellation provisions as
the Committee may specify. In the event of death or permanent and total
disability while an optionholder is employed by the Company or within three (3)
months of termination of employment, incentive stock options and non-qualified
<PAGE>
stock options may be exercised, to the extent exercisable on the date of
termination of employment (as calculated under the 2000 Plan), by the
optionholder or the optionholder's survivors at any time prior to the earlier of
the option's specified expiration date or one year from the date of the
optionholder's termination of employment (all as more specifically provided in
the 2000 Plan). In the event of retirement, the optionee has ninety (90) days in
which to exercise and all rights to exercise terminate in the event of
termination for cause.
If the shares of Common Stock are subdivided or combined into a greater or
smaller number of shares or if the Company issues any shares of Common Stock as
a stock dividend on its outstanding Common Stock, the number of shares of Common
Stock deliverable upon surrender of awarded stock or upon the exercise of an
option or award granted under the 2000 Plan shall be appropriately increased or
decreased proportionately, and appropriate adjustments shall be made in the
purchase price per share to reflect such subdivision, combination or stock
dividend.
The Stockholders of the Company may amend the 2000 Plan. The 2000 Plan may
also be amended by the Board of Directors or the Committee, provided that any
amendment approved by the Board of Directors or the Committee which is of a
scope that the Committee determines requires Stockholder approval, shall be
subject to obtaining such Stockholder approval. The Committee may amend
outstanding option agreements and terms of an award of stock as long as the
amendment is not materially adverse to the participant. Amendments that are
materially adverse to the participant can be effected only with the consent of
the participant.
The Committee has not made any awards or granted any options under the 2000
Plan. The maximum number of options that can be granted to an individual in any
fiscal year of the Company may not exceed $100,000.
Federal Income Tax Considerations
The following is a description of certain U.S. Federal income tax
consequences of the issuance and exercise of options under the 2000 Plan:
Incentive Stock Options. An incentive stock option ("ISO") does not result
in taxable income to the optionee or a deduction to the Company at the time it
is granted or exercised, provided that the optionee does not dispose of any
acquired ISO shares within two years after the date the ISO was granted or
within one (1) year after he acquires the shares (the "ISO holding period").
However, the difference between the fair market value of the stock on the date
he exercises the option (and acquires the stock) and the option price therefor
will be an item of tax preference includible in "alternative minimum taxable
income." Upon disposition of the stock after the expiration of the ISO holding
period, the optionee will generally recognize long term capital gain or loss
based on the difference between the disposition proceeds and the option price
paid for the stock. If the stock is disposed of prior to the expiration of the
ISO holding period, the optionee generally will recognize ordinary income, and
the Company will have a corresponding deduction, in the year of the disposition
equal to the excess of the fair market value of the stock on the date of
exercise of the option over the option price. If the amount realized upon such a
disqualifying disposition is less than the fair market value of the stock on the
date of exercise, the amount of ordinary income will be limited to the excess of
the amount realized over the optionee's adjusted basis in the stock.
Non-Qualified Stock Options. The grant of a non-qualified stock option will
not result in taxable income to the optionee or deduction to the Company at the
time of grant. When the Optionee exercises his or her option to purchase the
<PAGE>
stock, the amount of the excess of the then fair market value of the shares
acquired over the option price is treated as supplemental compensation and is
taxable as ordinary income. The Company is entitled to a corresponding
deduction.
Awards of Stock to Directors. The grant of an award of stock to a Director
will result in taxable income to the recipient and a deduction to the Company at
the time of grant.
Deductibility of Compensation. If the Stockholders approve the 2000 Plan,
options granted under this Plan will qualify as "performance-based" compensation
under Section 162(m) of the Internal Revenue Code, so as to allow the Company to
take corresponding deductions for all supplemental income that Optionees realize
upon the exercise of their stock options. Awards of stock granted to Directors
under the 1999 Plan will not qualify as "performance based" compensation under
Section 162(m) of the Internal Revenue Code, Directors should not be deemed to
be"covered employees," as such term is defined under Section 162(m), and
therefore the Company should be able to deduct related expenses to the extent
such expenses exceed $1,000,000 in any year. Reference is made to the Report of
the Stock Compensation Committee, under "Deductibility of Compensation
Expenses," above.
Approval
The affirmative vote of a majority of the votes cast at the Meeting is
required to approve the 2000
Plan.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE 2000 PLAN, AND PROXIES
SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF SUCH PLAN UNLESS A STOCKHOLDER
HAS INDICATED OTHERWISE ON THE PROXY.
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
(Item 4)
The Board of Directors has appointed Kerkering, Barbario & Co., P.A.,
independent public accountants, to audit the financial statements of the Company
for the fiscal year ending December 31, 2000. The Board proposes that the
Stockholders ratify this appointment. Kerkering, Barbario & Co., P.A. has
audited the Company's financial statements since 1994. The Company expects that
representatives of Kerkering, Barbario & Co., P.A. will be present at the
Meeting, with the opportunity to make a statement if they so desire, and will be
available to respond to appropriate questions.
In the event that ratification of the appointment of Kerkering, Barbario &
Co., P.A. as the independent public accountants for the Company is not obtained
at the Meeting, the Board of Directors will reconsider its appointment.
Ratification
The affirmative vote of a majority of the votes cast at the Meeting is
required to ratify the appointment of the independent public accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE RATIFICATION OF THE
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS, AND PROXIES SOLICITED BY THE
BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED
OTHERWISE ON THE PROXY.
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other business which will be presented
to the Meeting. If any other business is properly brought before the Meeting, it
is intended that proxies in the enclosed form will be voted in respect thereof
in accordance with the judgment of the persons voting the proxies.
STOCKHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy statement relating to
the 2001 Annual Meeting of Stockholders, Stockholder proposals must be received
no later than October 1, 2000. To be considered for presentation at the Annual
Meeting, although not included in the proxy statement, proposals must be
received no later than November 1, 2000, nor earlier than October 1, 2000. All
Stockholder proposals should be marked for the attention of Corporate Secretary,
Surgical Safety Products, Inc., 2018 Oak Terrace, Sarasota, Florida 34231.
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, YOU ARE URGED TO
FILL OUT, SIGN, DATE AND RETURN THE ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE.
By order of the Board of Directors:
David Collins
Corporate Secretary
Sarasota, Florida
February 7, 2000
<PAGE>
SURGICAL SAFETY PRODUCTS, INC.
THIS PROXY IS BEING SOLICITED BY SURGICAL SAFETY PRODUCTS, INC.'S
BOARD OF DIRECTORS
The undersigned, revoking previous proxies relating to these shares, hereby
acknowledges receipt of the Notice and Proxy Statement dated February 7, 2000 in
connection with the Annual Meeting to be held at Surgical Safety Products Inc.
on February 28, 2000 at 10:00 AM, located at 2018 Oak Terrace, Sarasota, Florida
34231 and hereby appoints Dr. Michael Swor, Frank Clark and Donald K. Lawrence
and each of them (with full power to act alone), the attorneys and proxies of
the undersigned, with power of substitution to each, to vote all shares of the
Common Stock of Surgical Safety Products, Inc. registered in the name provided
herein which the undersigned is entitled to vote at the 2000 Annual Meeting of
Stockholders, and at any adjournment or adjournments thereof, with all the
powers the undersigned would have if personally present. Without limiting the
general authorization hereby given, said proxies are, and each of them is,
instructed to vote or act as follows on the proposals set forth in said Proxy.
This Proxy when executed will be voted in the manner directed herein. If no
direction is made this Proxy will be voted FOR each of the proposals set forth
on the reverse side. With respect to the tabulation of proxies for purposes of
the proposal to amend the Company's Articles of Incorporation to increase the
authorized number of shares, abstentions and broker non-votes are treated as
votes against the proposal.
In their discretion the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournments thereof.
SEE REVERSE SIDE FOR ALL OF THE PROPOSALS. If you wish to vote in
accordance with the Board of Directors' recommendations, just sign on the
reverse side. You need not mark any boxes.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
[SEE REVERSE SIDE]
<PAGE>
[x] Please mark
votes as in
this example.
The Board of Directors recommends a vote FOR Proposals 1-4.
1. Election of Nine (9)Directors (or if any nominee is not available for
election, such substitute as the Board of Directors may designate).
Nominees: G. Michael Swor, Frank M. Clark, Donald K.
Lawrence, James D. Stuart, Irwin Newman, Sam Norton,
David Swor, Dr. William Saye and David Collins.
FOR [ ] [ ] WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[ ]
-----------------------------
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. Amendment of Articles [ ] [ ] [ ]
3. Approval of the Company's 2000 [ ] [ ] [ ]
Stock Plan.
4. Proposal to ratify the appointment of [ ] [ ] [ ]
Kerkering, Barbario & Co., P.A.as the
Company's independent public accountants
for the fiscal year ending December 31, 2000.
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting or any adjournments thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please sign exactly as name(s) appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
Signature:_________________ Date______ Signature:__________________ Date_______
