-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M5rXhuWev4djrWFSclUa4zt9ANxddyF1mKKhvvs5ZgA+xzoT6cTdw7ZbyYksti2V Pj5kg4ARgrNnsv4L7tujHA== /in/edgar/work/20000823/0001077357-00-000311/0001077357-00-000311.txt : 20000922 0001077357-00-000311.hdr.sgml : 20000922 ACCESSION NUMBER: 0001077357-00-000311 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000823 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SURGICAL SAFETY PRODUCTS INC CENTRAL INDEX KEY: 0001063530 STANDARD INDUSTRIAL CLASSIFICATION: [8090 ] IRS NUMBER: 650565144 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: SEC FILE NUMBER: 000-24921 FILM NUMBER: 708021 BUSINESS ADDRESS: STREET 1: 2018 OAK TERRACE CITY: SARASOTA STATE: FL ZIP: 34231 BUSINESS PHONE: 9419277874 MAIL ADDRESS: STREET 1: 2018 OAK TERRACE CITY: SARASOTA STATE: FL ZIP: 34231 10QSB/A 1 0001.txt QUARTERLY REPORT U.S. Securities and Exchange Commission Washington, D.C. 20549 Form 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended: June 30, 2000 Commission file no. 0-24921 Surgical Safety Products, Inc. -------------------------------------------- (Name of small business issuer in its charter) New York 65-0565144 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2018 Oak Terrace Sarasota, Florida 34231 - --------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Issuer's telephone number (941) 927-7874 Securities registered under Section 12(b) of the Exchange Act: Name of each exchange on Title of each class which registered None - ----------------------------- ------------------------- Securities registered under Section 12(g) of the Exchange Act: Common Stock, $.001 par value ----------------------------------- (Title of class) Copies of Communications Sent to: Mercedes Travis, Esq. Mintmire & Associates 265 Sunrise Avenue, Suite 204 Palm Beach, FL 33480 Tel: (561) 832-5696; Fax: (561) 659-5371 Indicate by Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- As of June 30, 2000, there are 14,515,373 shares of voting stock of the registrant issued and outstanding. PART I Item 1. Financial Statements Condensed Balance Sheets F-1 Condensed Statements of Operations F-3 Condensed Statements of Cash Flows F-4 Notes to the Financial Statements F-6 -1-
SURGICAL SAFETY PRODUCTS, INC CONDENSED BALANCE SHEETS (Unaudited) (Audited) June 30, December 31, 2000 1999 Assets Current Assets Cash $ 231,372 $ 516,799 Trade receivables 14,133 17,086 Prepaid expenses and deposits 66,855 118,569 ------------------ ------------------------ Total current assets 312,360 652,454 ------------------ ------------------------ Property and equipment, net 189,490 203,533 ------------------ ------------------------ Other Assets Intangible assets, net 506,088 270,487 Software development costs, net 235,040 139,382 Other assets 10,250 10,250 ------------------ ------------------------ Total other assets 751,378 420,119 ------------------ ------------------------ Total Assets $ 1,253,228 $ 1,276,106 ================== ========================
F-1
SURGICAL SAFETY PRODUCTS, INC CONDENSED BALANCE SHEETS (Unaudited) (Audited) June 30, December 31, 2000 1999 Liabilities and Stockholders' Equity Current Liabilities Line of Credit $ 100,000 $ 100,000 Notes Payable - related parties 37,500 52,500 Accounts payable and accrued expenses 199,136 438,057 Total current liabilities 336,636 590,557 Long-Term Liabilities Notes payable 1,110,905 650,000 Total Liabilities 1,447,541 1,240,557 Stockholders' Deficit Common stock, $.001 par value, 20,000,000 shares authorized; 14,515,373shares issued and outstanding in 2000 and 1999 respectively 14,516 14,516 Common stock held in escrow (2,187) (2,700) Additional paid-in capital 3,433,476 2,804,020 Accumulated deficit (3,640,118) (2,780,287) Total stockholders' deficit (194,313) 35,549 Total Liabilities and Stockholders' Equity $ 1,253,228 $ 1,276,106
The accompanying notes are an integral part of these financial statements. F-2
SURGICAL SAFETY PRODUCTS, INC CONDENSED STATEMENT OF OPERATIONS THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED) Six Months Ending Three Months Ending June 30, June 30, 2000 1999 2000 1999 Revenue $ 159,725 $ 52,734 24,069 $ 13,157 Costs and expenses Cost of revenues 23,372 8,135 7,339 7,874 Operating expenses 751,306 396,900 415,588 257,916 Research and development 33,181 20,085 18,837 13,418 expenses Interest expense 211,697 7,440 30,276 5,919 Total costs 1,019,556 432,560 472,040 285,127 Net loss before income taxes (859,831) (379,826) (447,971) (271,970) Provision for income taxes Net loss $ (859,831) $ (379,826) (447,971) $ (271,970) Net loss per share $ (0.072) $ (0.040) (0.037) $ (0.020)
The accompanying notes are an integral part of these financial statements. F-3
SURGICAL SAFETY PRODUCTS, INC. CONDENSED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED) 2000 1999 Cash Flows From Operating Activities Net loss $ (859,831) $ (379,826) Adjustments to reconcile net loss to cash used in operating activities Depreciation and amortization 125,698 58,013 Common stock and options issued for services and employee compensation - 41,303 Stock option compensation expense 4,682 (91,113) Accrued interest added to notes payable 37,663 Interest expense - convertible debt 167,143 Decrease (increase) in operating assets Receivables (2,953) (8,040) Inventory - 436 Prepaids and others 51,715 Increase (decrease) in operating liabilities Accounts payable and accrued expenses (238,920) 14,498 Total adjustments (149,066) 15,097 Net cash used in operating activities (708,897) (364,729) Cash Flows From Investing Activities Furniture and equipment purchased (21,549) (92,039) Software development additions (119,981) (48,923) Net cash used in investing activities (141,530) (140,962) Cash Flows From Financing Activities Proceeds/(repayments) -related party loans (15,000) 77,500 Advances/(repayments) on line of credit, net - 100,000 Loan costs (70,000) Proceeds from notes payable 650,000 Proceeds from issuance of common stock - 475,000 Net cash provided by financing activities 565,000 652,500 Net increase (decrease) in cash (285,427) 146,809 Cash at beginning of year 516,799 41,191 Cash at end of year $ 231,372 $ 188,000
The accompanying notes are an integral part of these financial statements. F-4 SURGICAL SAFETY PRODUCTS, INC. CONDENSED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED) 2000 1999 Supplemental Cash Flow Information: Cash paid for interest $ 5,783 $ 4,647 For purposes of the statement of cash flows, management considers all deposits and financial instruments with original maturities of less than three months to be cash and cash equivalents. Material non-cash transactions not reflected in the statement of cash flows include: For the Six Months Ended June 30, 2000 - - Deferred financing costs of $231,385 related to the issuance of warrants in conjunction with the issuance of notes payable in March 2000 - Common stock and additional paid in capital of $226,759 issued for conversion of notes payable For the Six Months Ended June 30, 1999 - The Company received fixed assets in the amount of $58,700 for which it had recorded deposits of such amount at December 31, 1998 The accompanying notes are an integral part of these financial statements. F-5 Note 1 - Accounting Policies Basis of Presentation The condensed financial statements of Surgical Safety Products, Inc. (Company) have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 1999. The results of operations for the six month period ended June 30, 2000 are not necessarily indicative of the results to be expected for any other period or for the full year. In the opinion of Company's management, the accompanying unaudited financial statements contain all adjustments, consisting of only normally recurring adjustments, necessary to present fairly the financial positions of June 30, 2000, the results of operations and cash flows for the six months ended June 30, 2000 and June 30, 1999. Net Loss Per Share Net loss per share has been computed in accordance with Statement of Financial Accounting Standards (FASB) No. 128, "Earnings Per Share," by dividing net loss by the weighted average number of shares outstanding during the period. Common stock equivalents have not been included in the computation of weighted average number of shares outstanding since the effect would have been anti-dilutive. Reclassifications Certain reclassifications have been made in the prior year's financial statements to conform to the current period presentation. Note 2 - Stock Compensation Expense During fiscal year 1998, the Company issued stock options with an exercise price that was below market price to certain of its employees. Accordingly, the Company recorded $91,113 of compensation expense related to the issuance for the year ended December 31, 1998. In the first quarter of 1999, the Company canceled these stock options and issued options with an exercise price above that of market. Accordingly, the Company decreased its payroll expense by $91,113 for the cancellation of these options for the quarter ended March 31, 1999. F-6 Note 3 -Conversions of Debt During the six months ended June 30, 2000, the investment banking firm that holds the notes payable related to the convertible line of credit, elected to convert $226,759 of principal and interest outstanding into 513,462 shares of common stock at prices ranging from $0.375 to $0.5625 per shares. These shares were released from the shares held in escrow by the firm. On July 11, 2000, the firm converted another $41,683 of principal and interest into 111,155 shares of common stock at a price of $0.375 per share. F-7 Item 2. Management's Discussion and Analysis of Results of Operations. General The Company's (OTC BB: SURG) overall mission is the research, development, production and distribution of innovative products and services for healthcare. Consisting of both traditional products and innovative business-to-business e-solutions, the common goal is a safer and more efficient environment for healthcare workers, manufacturers and patients. Originally formed as a medical device company, Surgical shifted focus to being an e-company when the Company's management recognized an untapped market niche: responding to the critical need for immediate communication and access to information in healthcare. Now, the Company operates two divisions providing products and services to the medical industry. The Information Systems Division, , formerly referred to as Oasis@work, through its Oasis Information Exchange product line provides business-to-business on-demand safety and efficiency driven e-business and information for healthcare workers. The Medical Products and Services Division develops, manufactures and distributes medical devices. About Oasis Information Exchange The Oasis Information Exchange strategy is healthcare e-business content aggregation and applications integration through a virtual private network. It links the entire healthcare continuum, which includes healthcare workers, administration, patients, and healthcare and pharmaceutical manufacturers. Oasis Information Exchange is a true healthcare data center with multiple access points. It is an Internet-based virtual private network consisting of points-of-access via intranets, the Internet, internet appliances, and through TouchPorts located throughout healthcare facilities across the country. Although the Company is now focusing on providing its services through the Internet, TouchPorts remain available as an alternative and are user-friendly touch-access internet appliances which allow healthcare professionals access to high quality clinical reference and agency mandated information services. During the second quarter of 2000, the Company realized that they were focusing too much attention to the installation of hardware rather than focusing its attention on its real product - information. In July 2000, the Company signed an agreement with the Association of periOperative Registered Nurses ("AORN"), one of the largest nursing organizations in the United States, to license their content - AORN Journal Online, OR Product Directory, Standards, Recommended Practices and Guidelines (SRPG) and other content. See "Corporate Developments". AORN has 43,000 members and other mailing lists comprising of an additional 100,000 people. As part of this initiative, the Company will be producing a CD-ROM that will be mailed to approximately 150,000 people. This CD-ROM will feature OASiS. The CD will be mailed in the AORN Journsal for members and as a separate mailing to others. Due to the increase and availability of PC's and Internet accessibility in the heathcare environment, the Company realizes that, while in some cases its OASiS network is needed in a particular environment, by an large, its larger market is for its content. Essentially the Company is -2- changing from a hardware network supplier to an information broker which will create an information exchange network for a defined healthcare community that links the end-users to the industry while adding value to both parties. This is essentially what the Company was doing all along; however, it had focused on the delivery system for its product rather than the product itself. Under the AORN arrangement, the Company's product will be delivered through the Internet via its website which will be called OasisOR.com. The data center will have the same type of content from device manufacturers, clinical associations and other relevant resources; however it will be for OR employees only, with the information relevant to them. Although the Company pays AORN a licensing fee, the Company expects to generate revenue from sponsorships of the CD and from user fees and advertising on its website. The Company is negotiating its first sponsorship agreement with US Surgical in lieu of the previous agreement which required massive expenditures for hardware installations. The Company plans to scale the concept for other niche markets by creating websites that cater to a particular speciality. The Company will focus on providing website and intranet development. Corporate Developments The Company entered into an agreement with IBM Global Services effective January 3, 2000 which included an IBM Customer Agreement and a Statement of Work (the "IBM Global Agreement"). Under the terms of the IBM Global Agreement IBM agreed to provide complete implementation and support service solutions for 1,200 OASiS terminals in an estimated 400 end user locations during the 12 month period commencing December 1, 1999. On February 3, 2000, IBM Global Services and the Company finalized the Statement of Work. The services to be provided under the agreement included project planning, site surveys, product acquisition, network design, web-site hosting services, premises wiring, OASiS TouchPort Implementation, help desk support and consulting services. The estimated cost for performing the work was approximately $10 million. In addition, IBM Global Services agreed to bill the Company a monthly service charge for pre and post installation support services, including 24-7 support, and for labor, travel and out of pocket expenses. The Company was to provide technical resources and oversee the IBM Global's activities. Due to the new Internet focus the Company has chosen to pursue for the delivery of its product, there is no longer any need for the services to be provided by IBM. Effective July 14, 2000, this contract was terminated. Amounts owed to IBM are being reconciled. In February 2000, the Company executed an Investment Banking Services Agreement with Dunwoody Brokerage Services Inc. d/b/a Swartz Institutional Finance ("Swartz"). Under the agreement, Swartz agreed to introduce entities to the Company for potential strategic partnerships, licensing arrangements, mergers, acquisitions, investments or funding. For such services, Swartz was to receive a scaled fee based upon the value of any completed transaction. Said fee was payable in cash or stock at Swartz's option and by the issuance of warrants, the number of which were to be based upon the fee divided by the market price of the Company's Common Stock. There was no obligation on the part of the Company to accept any transaction offered by the Swartz to the Company. Since no funding was provided, pursuant to the terms of the contract, the Company sent notice of cancellation effective July 31, 2000. -3- In February 2000, the Company executed a Consulting Agreement with Global Development Advisors, Inc. ("GDA")); however, shortly thereafter, further negotiations ensued and the agreement never became effective. Under the agreement, GDA was to provide business and marketing consulting services, assist in the implementation of a strategic plan and assist, coordinate and monitor the Company's investor relations program. The agreement was for a term of six (6) months and could have been extended by the Company. In lieu of cash payments for services, GDA agreed to accept 50,000 shares of the Company's Common Stock under the Company's 2000 Stock Plan approved by its shareholders on February 28, 2000 and options to purchase an additional 50,000 shares at an exercise price of $1.09. Due to the further negotiations, the issuance was never made. The parties have canceled this Agreement. On February 29, 2000, the Company entered into a contract with Steel Beach Productions, Inc. ("Steel Beach") to design, develop, implement and test the OASiS Version 3.0 web based application. The contract is for a total of $160,100 and is to be paid $80,500 in cash and $80,500 in stock options. The Company paid a deposit of $20,012.50 and the balance is to be paid upon delivery of the prototype, preliminary product and final product. The options are due at the time of delivery of the final product. The common stock option number will be calculated based on the average closing share price ("ACSP") in the twenty (20) days of trading prior to deliver of the final product. The exercise price will be 50% of the twenty (20) day average closing price as quoted on the OTC BB. The number of options issued will be calculated by multiplying $80,050 times two (2) and dividing by the ACSP. The options are to have a term of five (5) years and are to conform to Company's consultant option policy as far as additional terms and details. This agreement with Steel Beach replaces two earlier agreements; specifically, one agreement for Version 2.0 dated December 30, 1999 in the amount of $37,800 in cash and $37,800 in stock options, and one agreement for Version 3.0 dated December 30, 1999 in the amount of $42,250 in cash and $42,250 in stock options. All efforts expended by Steel Beach Productions under these two earlier contracts are compensated under the terms of this agreement. The Company retains all propriety rights in the application. Steel Beach is responsible for its own costs and expenses. The agreement may be canceled by either party on thirty (30) days written notice. The product was delivered and the parties are in the process of reconciling amounts owed between them. On May 16, 2000, the Company entered into a contract with Horizon Marketing Group ("Horizon") for the strategic planning, design and development for sales and marketing presentations by the Company and for the Company's website. The contract was amended on June 30, 2000. The initial contract was for $18,300 which was increased in the amendment by $14,405, for a total contract price of $32,705 of which the Company has thus far paid approximately one-third. The contract is for a designated schedule of work which is paid under a fee schedule and by a reward bonus. Under the reward bonus, Horizon will, as the last payment, receive the greater of 2% of the value of each contract with a partner secured by virtue of the work performed or $17,705 by December 1, 2000. Further, Horizon can be engaged to provide ongoing development services at the rate of $1000 per month. The contract terminates when the project is completed. On May 25, 2000, the Company entered a staff leasing agreement with EPIX IV, Inc. ("EPIX") as a replacement for comparable services previously provided by Staff Leasing. Like the Staff Leasing arrangement, the EPIX arrangment creates a co-employment relationship between EPIX and the Company relative to the employees who work at the Company. -4- Effective June 7, 2000, the Company's line of credit with SouthTrust renewed through August 12, 2000, with an option to extend the maturity until October 15, 2000 if the Company pledges a certificate of deposit in the amount of $25,000. The interest rate is prime plus 1.5% and the line is secured by the Company's equipment, receivables and inventory. The line is guaranteed personally by Dr. Swor. Effective July 1, 2000, the Company entered into an agreement with AORN under which AORN will provide certain of its proprietary content on a non-exclusive license basis to the Company. Under the agreement, AORN will deliver to the Company certain of its content for which it grants the Company a non-exclusive license to market and promote. The Company receives a substantial credit toward advertising in the AORN Journal and other AORN publications. The Company is required to provide the software and hardware to promote and market the AORN content. The Company is required to pay AORN $117,000 as the license fee and contact hours fee for the first year of the agreement. AORN will reimburse the Company for certain conversion costs and to pay the cost of web enabling Home Study Courses sponsored by AORN. The agreement is for a term of three (3) years and it may be terminated by either party on 180 day notice. If terminated without cause, the Company is entitled to a refund of any unused license and user fees. AORN retains ownership of its intellectual property while the Company retains the ownership of its OASiS intellectual property. On July 6, 2000, the Company entered into an agreement with Carver Cross Securities Corp. ("CCSC") for investment banking services, including financial advisory services and efforts to secure equity or debt financing. TK has given verbal approval for this arrangement, subject to final approval of any financing package. The CCSC agreement is exclusive for a term of 120 days commencing the later of September 6, 2000 or the date a placement memorandum is ready for distribution. Under the agreement, CCSC receives a retainer of $6,000, plus a warrant to purchase 40,000 shares of the Company's common stock for a period of 5 years at an exercise price of $0.625 per share and monthly payments of $2,5000 plus warrants for 40,000 shares of common stock.. In any case, under the agreement, CCSC will not receive warrants to purchase more than 120,000 shares. CCSC will receive compensation for equity financing arranged by CCSC, the sale of assets or a public offering placement. In the case equity financing is arranged, CCSC will receive complete warrants exercisable for 5 years at an exercise price equal to 101% of the amount paid by the investors. In addition, CCSC receives approved expenses. The Company is negotiating a new contract with US Surgical. It is intended that this agreement will supercedes all prior agreements between the parties. Under the terms of the new agreement, it is intended that US Surgical will pay the Company for all services provided by the Company under the previous agreements and will pay the Company an additional sum for future services. This new arrangement is principally due to the ineffective introduction by US Surgical of OASiS into the healthcare environment through hardware installations. Both companies realize that the value of OASiS is the content and product it delivers. This new content agreement, if completed as intended, will emphasize US Surgical's continued belief in the -5- information exchange network which the Company now had embarked upon as its focus. Although negotiations have progressed to the stage of where the agreement has been drafted and signed by US Surgical, to date, the said agreement has not been executed by the Company as the Board of Directors is in the processing of reviewing it. There can be no assurance that the agreement as drafted will be accepted by the Company's Board. In December 1999, the Company executed a Loan Agreement with Thomson Kernaghan & Co., Ltd. ("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"). 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. Further, 2,700,000 shares are held by TK in escrow for the potential conversion under the notes or exercise of the warrants. Under the terms of the TK Loan Agreement, an initial loan of $650,000 was made on December 30, 1999. On March 31, 2000 the Company received a second installment under the TK Commitment in the amount of $650,000. On April 28, 2000, TK elected to convert $100,000 of outstanding principal and $2,630 of the accrued interest into shares of Common Stock at a price of $0.5625 per share which represents 182,453 shares. On June 9, 2000, TK elected to convert $120,000 of outstanding principal and $4,129 of the accrued interest into shares of Common Stock at a price of $0.375 per share which represents 331,010 shares. On July 11, 2000, TK elected to convert $40,000 of outstanding principal and $1,683.13 of the accrued interest into shares of Common Stock at a price of $0.375 per share which represents 111,155 shares. The Company granted TK registration rights and was obligated to file a Form S-3 within sixty (60) days of the agreement. The Company filed a registration statement on Form S-3 on March 2, 2000 covering initially 20,038,097 shares of its Common Stock. The issuance of the securities was made pursuant to Regulation S of the Act. The Form S-3 registration statement was declared effective on April 11, 2000. Since the Company did not meet financial projections which were an integral part of the transaction, TK and the Company are re-negotiating an arrangement which it is anticipated will be in the form of an amendment to the TK Loan Commitment relative to future installments. The TK Loan Commitment, as draw downs are taken and as interest accrues, will increase the long term debt of the Company. The Company has entered into a consulting agreement with CCSC for other potential funding; however, to date, has not concluded terms for any financing under such agreements. With the TK Loan Commitment and in the event additional debt is raised, the Companyn will incur future interest expense. The TK Loan Commitment, if fully converted and all warrants are exercised will dilute the interest of existing shareholders and in the event additional equity is raised, management may be required to dilute the interest of existing shareholders further or forego a substantial interest in revenues, if any. In the event that the Company is successful in securing additional debt financing, the amount of such financing, depending upon its terms, would increase either the short or long term debt of the Company or both. Discussion and Analysis The Company was founded in 1992 to combat the potential spread of bloodborne pathogenic infections such as HIV and hepatitis. It has broadened its mission to research, develop, manufacturing, marketing and selling medical products and services to the healthcare community. -6- The Company was in the development stage until 1993 when it began commercial shipments of SutureMate(R), its first product. From inception in June, 1992 through December 31, 1999, the Company generated revenues of approximately $1,275,000 from a limited number of customers. Since inception through December 31, 1999, the Company has generated cumulative losses of approximately $2,780,000. Although the Company has experienced a significant percentage growth in revenues from fiscal 1992 to fiscal 1999, the Company does not believe prior growth rates are indicative of future operating results, especially in light of the contract with AORN and its new Internet-based site, OASiSOR.com and the anticipated contract with US Surgical. Due to the Company's operating history and limited resources, among other factors, there can be no assurance that profitability or significant revenues on a quarterly or annual basis will occur in the future. Moreover, the Company expects to continue to incur operating losses through at least the first three quarters of 2000, and there can be no assurance that losses will not continue after such date. As of the date hereof the Company has completed installations of fifteen (15) units in seven (7) hospitals. As discussed in the independent auditors' report, the operating losses incurred by the Company raise doubt about its ability to continue as a going concern. In addition, with the implementation of its agreement with AORN, and if executed, its new arrangement with US Surgical and/or with the establishment of one or more strategic alliances in addition to AORN and US Surgical, the Company expects to experience a period of growth, which requires it to significantly increase the scale of its operations. This will result in significantly higher operating expenses. The increase in operating expenses is expected to be partially funded by an increase in revenues. However, the Company's net loss may continue to increase. Expansion of the Company's operations may cause a significant strain on the Company's management, financial and other resources. The Company's ability to manage recent and any possible future growth, should it occur, will depend upon a significant expansion of its sales and marketing, research and development, accounting and other internal management systems and the implementation and subsequent improvement of a variety of systems, procedures and controls. There can be no assurance that significant problems in these areas will not occur. Any failure to expand these areas and implement and improve such systems, procedures and controls in an efficient manner at a pace consistent with the Company's business could have a material adverse effect on the Company's business, financial condition and results of operations. As a result of such expected expansion and the anticipated increase in its operating expenses, as well as the difficulty in forecasting revenue levels, the Company expects to continue to experience significant fluctuations in its revenues, costs and gross margins, and therefore its results of operations. The Company's plan of operations for the next twelve months is to focus on building revenue from development of its website and registered user base. The Company also is aggressively seeking strategic alliances with targeted industry partners such as manufacturers of devices, manufacturers of pharmaceuticals, professional organizations such as nursing associations and hospital group purchasing organizations and integrated health networks along the lines created with the AORN contract. -7- The Company estimates that revenues will be sufficient to fund ongoing operations at the current level when the website is functional and registered users reach levels of 10,000 or more. In the short term, to fund operations through the first three quarters of 2000, the Company will seek to draw upon the funds available under the TK Commitment, to seek additional funds from strategic alliances with potential clients, its shareholders, from additional third party financing or seek third party debt or equity financing other than those planned by the current anticipated agreements. Currently, the Company has available its existing lines of credit. The Company has increased its staff from six (6) at fiscal 1999 year end to eleven (11) as of June 30, 2000. Provided that the TK Commitment and other funding is available when needed, the Company believes that it can meet its capital needs through year end. There can be no assurance that the Company will be successful in these efforts. As discussed in Note 10 to the Financial Statements, if the financing referred to above is not secured, the recoverability of the recorded asset amounts may be impaired. In 2000, the Company will require between $3 and $5 million in additional capital in the form of debt or equity to fund the continued expansion of the Oasis system and its development to meet increased demand and to implement its plans for increased marketing of its medical device products. This reduction is due to the new initiative which is less hardward intensive and requires less maintenance. Under the TK Commitment, $3,700,000 remains available under the terms of the agreement. The Company has met with several venture capital firms, investment bankers, factoring companies and traditional lending sources, each of whom have expressed early interest and many of whom are awaiting the conclusion of the testing period. Other than the TK Commitment, the Company has accepted no definite offer from any other source although it has entered into an agreement with Carver Cross. There can be no assurance that such long-term financing will be available to the Company or that it will be on terms that the Company may seek. Results of Operations for the Thee and Six Months Ended June 30, 2000 and 1999 Overview From its inception, the Company has incurred losses from operations. As of June 30, 2000, the Company had cumulative net losses totaling approximately $3,640,000. During fiscal 1999, management shifted its focus to aggressively marketing its proprietary products, especially those associated with Oasis Information Exchange. Financial Position As of June 30, 2000, the Company had a deficit of working capital of $24,276, as compared to a deficit of working capital of $43,229 at June 30, 1999. This decrease in deficit is primarily due to additional borrowings on the TK Commitment and revenues received from US Surgical. Revenues For the six months ended June 30, 2000 and 1999, the Company had total revenues of $159,725 and $52, 734, respectively. For the six months ended June 30, 2000, revenues were comprised primarily of license and production fees provided to US Surgical pursuant to the contract dated July 1999. For the three months ended June 30, 2000 and 1999, the Company generated revenues of $24,069 and $13,157, respectively. The increase of $10,912 is due to the services performed under the contract with US Surgical. Revenues for the three and six months ended June 30, 2000 are significatantly less than anticipated due to U.S. Surgicial's net having met the TOuchPort intallation and licensing requirements of its contract dated July 1999. Pursuant to such contract US Surgical was to have licensed Oasis for 200 hospital by July 2000. As of this date, only four licenses were purchased by U.S. Surgical. -8- Selling, General, and Administrative Expenses For the six months ended June 30, 2000, operating expenses increased by $354,406 or 89% from $396,900 for the six months ended June 30, 1999. This increase is primarily related to marketing support expenditures to sustain the launch of the Company's Oasis Information Exchange. For the three months ended June 30, 2000 and 1999, operating expenses increased $157,672 from $257,916 in 1999 to $415,588 in 2000 due to increased personnel and marketing. In accordance with the Company's marketing plan for fiscal 2000, expenses related to promotion, trade shows, and conventions were increased to enhance the industry awareness of the company's products and services. In the past, the Company has focused on the design and development of proprietary products. For fiscal 2000, the Company has launched an aggressive marketing plan that is designed to increase worldwide sales of its products. Surgical believes that the increased operating expenses incurred during the six months ended June 30, 2000 will position the Company to generate increased revenue in the 2000 fiscal year. Liquidity and Capital Resources The financial condition, liquidity and capital resources of the Company should be assessed in context with the ability of the Company to continue as a going concern as discussed in the independent auditors' report. The Company's operations have been funded primarily from the $1,300,000 proceeds of draw downs under the TK Commitment completed in the fourth quarter 1999 and from cash flow of approximately $150,000 from licensing and production fees for Oasis during the six months ended June 30, 2000. This allowed the Company to enhance its Oasis software and data base and fund current operations. At June 30, 2000, the Company has a $231,372 cash position. In addition to the balance of $3,700,000 available under the TK Commitment, the Company has a line of credit in the amount of $100,000 that matures on October 15, 2000 and is guaranteed by Dr. Swor. In the past, the line of credit also has been used to fund operations on a short-term basis and $100,000 is currently outstanding. Net cash used for investing for the six months ended June 30, 2000 was approximately $142,000, representing primarily enhancements to the current version of Oasis. In the short term, to fund operations through the balance of fiscal 2000, the Company will be required to make additional draw downs under the TK Commitment, seek additional funds from strategic alliances with potential clients, its shareholders, from additional third party financing or seek third party debt or equity financing other than those planned by the current agreements. Additionally, the Company anticipates that revenues will begin to be generated in the third and fourth quarter of 2000 and that such revenues will help to fund operations. Provided that additional funding is secured, the Company believes that it can meet its capital needs through year end. There can be no assurance that the Company will be successful in these efforts. Forward-Looking Statements This Form 10-QSB includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of -9- 1934, as amended. All statements, other than statements of historical facts, included or incorporated by reference in this Form 10-QSB which address activities, events or developments which the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), demand for the Company's products and services, expansion and growth of the Company's business and operations, and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. However, whether actual results or developments will conform with the Company's expectations and predictions is subject to a number of risks and uncertainties, general economic market and business conditions; the business opportunities (or lack thereof) that may be presented to and pursued by the Company; changes in laws or regulation; and other factors, most of which are beyond the control of the Company. Consequently, all of the forward-looking statements made in this Form 10-QSB are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. PART II Item 1. Legal Proceedings. The Company knows of no legal proceedings to which it is a party or to which any of its property is the subject, which are pending, threatened or contemplated or any unsatisfied judgments against the Company. Item 2. Changes in Securities and Use of Proceeds At a meeting of the Board of Directors held on June 6, 2000, a resolution was passed to modify the Company's 2000 Stock Option and Awards Plan by providing of the 10,000,000 shares authorized under the plan, that in any calendar year, options and awards to acquire no more than 1,000,000 shares will be granted. Further, at the same meeting, the Board adopted a resolution regarding lock-up provisions on holders of existing options and approved a form of voluntary restriction agreement. Under this arrangement, certain holders of such options, particularly current and certain prior members of the Board and current and certain prior officers of the Company, have agreed to specific lock-up provisions which restrict resale and provide for the placement of a legend upon their shares acquired under the options granted under the plans in force in 1994, 1998, and 1999. Voluntary restriction agreements have been executed by the parties to which it applies. Item 3. Defaults in Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders. No matters were submitted to the Security Holders for a vote during the quarter ended June 30, 2000. -10- Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) The exhibits required to be filed herewith by Item 601 of Regulation S-B, as described in the following index of exhibits, are incorporated herein by reference, as follows: Exhibit No. Description - ------------- ------------------------------------------------------------------ 3.(I).1 Articles of Incorporation of Surgical Safety Products, Inc., a Florida corporation filed May 15, 1992 [1] 3.(II).1 Bylaws of Sheffeld Acres, Inc., now known as Surgical Safety Products, Inc. [1] 3.(II).2 Amended Bylaws of Surgical Safety Products, Inc. [2] 4.1 * Voluntary Restriction Agreement between the Company and holders of Options under the 1994, 1998 and 1999 Stock Option Plan 10.1 Acquisition of Endex Systems, Inc. d/b/a/ InterActive PIE dated December 8, 1997 [1] 10.2 Prepaid Capital Lease Agreement with Community Health Corporation relative to Sarasota Medical Hospital OASiS Installation dated January 30, 1998 [1] 10.3 Letter of Intent with United States Surgical Corporation dated February 12, 1998 [1] 10.4 Form of Rockford Industries, Inc. Rental Agreement and Equipment Schedule to Master Lease Agreement [1] 10.5 Ad-Vantagenet Letter of Intent dated June 19, 1998 [1] 10.6 Distribution Agreement with Morrison International Inc. dated September 30, 1996 [1] 10.7 Distribution Agreement with Hospital News dated August 1, 1997 [1] 10.8 Clinical Products Testing Agreement with Sarasota Memorial Hospital dated January 30, 1998 [1] 10.9 Real Estate Lease for Executive Offices effective June 1, 1998 [1] 10.10 Employment Agreement with Donald K. Lawrence dated April 1, 1997 [1] 10.11 Employment Agreement with G. Michael Swor dated June 15, 1998 [1] 10.12 Employment Agreement with Frank M. Clark dated June 15, 1998 [1] 10.13 Agreement for Consulting Services with Stockstowatch.com Inc. dated March 30, 1988 [1] 10.14 Form of Employee Option Agreement dated July 1994 [1] 10.15 Form of Employee Option Agreement dated 1998 [1]
-11- 10.16 Form of Consultants Option Agreement dated July 1994 [1] 10.17 Form of Consultants Option Agreement dated 1998 [1] 10.18 Confidential Private Offering Memorandum dated May 30, 1995 [1] 10.19 Supplement to Private Offering Memorandum dated October 30, 1995 [1] 10.20 Stock Option Agreement with Bay Breeze Enterprises LLC dated April 9, 1998 [1] 10.21 Revolving Loan Agreement, Revolving Note, Security Agreement with SouthTrust Bank dated May 2, 1997 [1] 10.22 Agreement between the Company and T. T. Communications, Inc. dated October 15, 1998 [2] 10.23 Agreement between the Company and U.S. Surgical Corporation dated October 28, 1998. [2] 10.24 Collaborative Agreement between the Company and Dr. William B. Saye dated November 16, 1998. [2] 10.25 Kiosk Information System, Inc. Purchase Order dated November 3, 1998 [2] 10.26 Surgical Safety Products 1999 Stock Option Plan adopted January 1999 [2] 10.27 Form of the Employee Option Agreement under the Surgical Safety Products 1999 Stock Option Plan dated January 1999 [2] 10.28 Form of the Director, Consultant and Advisor Option Agreement under the Surgical Safety Products 1999 Stock Option Plan dated January 1999 [2] 10.29 Verio, Inc. Access Service Agreement dated February 16, 1999. [2] 10.30 Form of Investor Subscription Documents and Agreements relative to the April 1999 Self Directed Private Placement Offering under Rule 506 of Regulation D. [3] 10.31 Form of the Warrant issued pursuant to the April 1999 Self Directed Private Placement Offering under Rule 506 of Regulation D. [3] 10.32 Consulting Agreement dated April 1999 with Koritz Group, LLC. [3] 10.33 Agreement dated April 1999 with KJS Investment Corporation. [4] 10.34 Agreement dated May 1999 with Ten Peaks Capital Corp. [4] 10.35 Private Partner Network Agreement dated July 30, 1999 with US Surgical [5] 10.36 Staff/Client Leasing Agreement dated October 16, 1999, as amended September 15, 1999 [5] 10.37 Agreement dated July 15, 1999 with Triton Capital Inc.[6] 10.38 Effective December 30, 1999, Loan Agreement, Note, Security Agreement, Lender's Warrant, Agent's Warrant, Registration Rights Agreement and Escrow Agreement relative to the December 1999 transaction with Thomson Kernaghan & Co., Inc. and Amendment thereto. [7]
-12- 10.39 Effective January 3, 2000 IBM Customer Agreement and Statement of Work. [7] 10.40 Investment Banking Services Agreement dated February 2, 2000 with Dunwoody Brokerage Services Inc. [8] 10.41 Consulting Agreement dated February 15, 2000 with Global Development Advisors Inc. [8] 10.42 Surgical Safety Products 2000 Stock Option and Award Plan [8] 10.43 Agreement with Steel Beach Productions dated February 29, 2000 [9]. 10.44 * Agreement with Horizon Marketing Group dated May 16, 2000 10.45 * Agreement with EPIX dated May 25, 2000 10.46 * Amendment to the Company's 2000 Stock Option and Awards Plan dated June 6, 2000 10.47 * Revolving Loan Agreement, Revolving Note, Security Agreement with SouthTrust Bank dated June 7, 2000 10.48 * Agreement with AORN effective July 1, 2000 10.49 * Agreement with Carver Cross dated July 6, 2000 13.1 Definitive Proxy Statement filed February 28, 2000 [8] 27.1 * Financial Data Sheet
- ---------------- [1] Previously filed with the Company's Form 10SB [2] Previously filed with the Company's Amendment No. 1 to the Form 10SB [3] Previously filed with the Company's Form 10QSB for the Quarter ended March 30, 1999 [4] Previously filed with the Company's Form 10QSB for the Quarter ended June 30, 1999 [5] Previously filed with the Company's Amendment No. 2 to the Form 10SB [6] Previously filed with the Company's Form 10QSB for the Quarter ended September 30, 1999 [7] Previously filed with the Company's Form S-3 on March 2, 2000. [8] Previously filed with the Company's Form 10KSB for the fiscal year ended December 31, 1999. [9] Previously filed with the Company's Form 10QSB for the Quarter ended March 31, 2000. * Filed herewith (b) No Reports on Form 8-K were filed during the quarter ended March 31, 2000. -13- SIGNATURES In accordance with Section 12 of the Securities Exchange Act of 1934, the registrant caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized. Surgical Safety Products, Inc. (Registrant) Date: August 21, 2000 By:/s/ Pauline J. Parrish --------------------------------------- Pauline J. Parrish Chief Financial Officer -14- EX-4.1 2 0002.txt OPTION HOLDER RESTRICTION AGREEMENT EXHIBIT 4.1 VOLUNTARY RESTRICTION AGREEMENT THIS VOLUNTARY RESTRICTION AGREEMENT (the "Agreement") is made this ___ day of __________, 2000 by and between ___________________, whose address is _____________ ("Option Holder") and SURGICAL SAFETY PRODUCTS INC., with offices at 2108 Oak Terrace, Sarasota, Florida 34231 (the "Company"). WHEREAS Option Holder was granted options by the Company as more specifically set forth herein at a time when he/she was an officer, director or consultant to the Company as part of one or more of the Company's stock option plans as described herein; and WHEREAS the shares underlying the options granted to Option Holder have been registered on Form S-8 with the Securities and Exchange Commission ("SEC"); and WHEREAS, Option Holder voluntarily has agreed to restrictions on the sale of stock acquired upon exercise of its options in accordance with the terms and conditions of this Agreement; and WHEREAS the Company believes that such voluntary restrictions are in the best interest of the Company. NOW THEREFORE in consideration of the mutual promises contained herein and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties agree as follows: 1. Option Holder was granted the following options by the Company as set forth next to the plan under which they were granted: Name of Plan No. of Options Date Exercise - ------------ --------------- ---- -------- Granted Granted Price 1994 Employee Option or Consultant Option Plan ______ __/__/94 $_____ 1998 Employee Option or Consultant Option Plan ______ __/__/98 $_____ 1999 Stock Option Plan ______ __/__/99 $_____ (the "Options"). The shares underlying the Options have been registered with the SEC on Form S-8 on April 13, 2000. Upon exercise the shares may be issued as shares without a restrictive legend. 2. Upon exercise of any of the Options, the shares issued thereby are to be in the name of __________________ (name of individual Option Holder or if a company, name of an individual who will hold the shares). 3. Prior to the termination date as defined in paragraph 8 herein, Option Holder voluntarily -1- agrees that in the event it exercises the balance of its Options that it agrees the Company may place upon such shares the following legend: "THE SHARES REPRESENTED HEREBY ARE RESTRICTED UNDER THE TERMS OF A VOLUNTARY RESTRICTION AGREEMENT DATED ____________ BETWEEN THE PARTY TO WHOM THEY WERE ISSUED AND THE COMPANY AND SUCH SHARES MAY ONLY BE SOLD, ASSIGNED, TRANSFERRED OR HYPOTHECATED UNDER THE TERMS OF SUCH AGREEMENT. THIS CERTIFICATE INCORPORATES BY REFERENCE THE PROVISIONS OF SUCH AGREEMENT, A COPY OF WHICH IS ON FILE IN THE OFFICE OF THE SECRETARY OF THE COMPANY." 4. Prior to the termination dated as defined in paragraph 8 herein, the Option Holder voluntarily further agrees that he/she will not sell, assign, transfer or hypothecate any shares received upon exercise of his/her Options until such time as the Company has reported either (i) on any Form 10Q or Form 10K filed with the SEC revenues of $1,500,000 or (ii) positive pre- tax earnings on its Form 10Q or Form 10K filed with the SEC for two (2) out of three (3) calendar quarters. 5. Prior to the termination date as defined in paragraph 8 herein, in the event the Company has reported either (i) on any Form 10Q or Form 10K filed with the SEC revenues of $1,500,000 or (ii) positive pre-tax earnings on its Form 10Q or Form 10K filed with the SEC for two (2) out of three (3) consecutive calendar quarters and in the event Option Holder previously has exercised and wishes to sell, assign, transfer or hypothecate shares issued in accordance with such exercise, the Company agrees, within seven (7) business days of receipt of a written request from Option Holder, to notify Option Holder and the transfer agent for its shares in writing that the shares may be sold, assigned, transferred or hypothecated without the legend contained in paragraph 3 above. 6. Prior to the termination date as defined in paragraph 8 herein, in the event the Company has reported either (i) on any Form 10Q or Form 10K filed with the SEC revenues of $1,500,000 or (ii) positive pre-tax earnings on its Form 10Q or Form 10K filed with the SEC for two (2) out of three (3) consecutive calendar quarters and in the event Option Holder has not exercised but wishes to exercise, the Company agrees, within seven (7) business days of receipt of a written request from Option Holder accompanying the notice of exercise form, to request that the shares to be issued without the legend set forth in paragraph 3 above. 7. Until the termination date as defined in paragraph 8 herein, Option Holder agrees that the terms of the voluntary restrictions to which he/she has agreed may be reported by the Company on any form appropriate for such disclosure and consents to inclusion in such disclosure of the Options Holder's name, the number of his/her Options covered by the restriction and the terms of the voluntary restrictions. 8. Notwithstanding any provision contained herein, the parties agree that the voluntary restrictions contained herein shall terminate on the second anniversary date of the date of this Agreement (the "Termination Date"). From and after the Termination Date, any Options not previously exercised may be exercised without any legend and any shares acquired under the -2- Options may, at the election of the Option Holder, either have their legend removed or Option Holder may sell, assign, transfer or hypothecate such shares without any restriction and in either case without the need for any further action by the Company. From and after the Termination Date, upon receipt of a copy of this Agreement by the Transfer Agent, the Transfer Agent is authorized and instructed to effectuate the lifting of any restrictive legend or to transfer any shares as requested by the Option Holder. 9. For any Options not exercised by the Termination Date, Option Holder shall have ninety (90) days commencing on the Termination Date to exercise at the exercise price set forth herein. 10. This Agreement represents the entire agreement between the parties as to the matters contained herein and such agreement may not be modified, amended or revoked unless such modification, amendment or revocation is in writing and executed by the parties hereto. 11. This Agreement is binding upon the parties hereto, and each of their respective heirs, permitted assigns, executors and administrators. 12. This Agreement will be governed by and construed under the laws of the State of Florida and each party hereto grants exclusive jurisdiction to the courts of the State of Florida with venue in Sarasota County. IN WITNESS WHEREOF the parties have set their hand and seal on the date first above written. FOR AN ON BEHALF OF THE OPTION HOLDER: ---------------------------- FOR AND ON BEHALF OF SURGICAL SAFETY PRODUCTS INC. BY:_________________________ -3- EX-10.44 3 0003.txt MARKETING AGREEMENT EXHIBIT 10.44 [HORIZON LETTERHEAD] June 29, 2000 Don Lawrence Oasis at Work 2018 Oak Terrace Sarasota, FL 34231 Dear Don: Thank you for this opportunity to continue our partnership with Oasis at Work. Following your conversations with Bryn Tindall and Trevor Toenjes on this week, Horizon Marketing Group has prepared the following proposal. The current contract between Oasis and HMG is priced at $18,300. With the new contract additions and applicable partner discounts, the difference results in an additional $14,125 (See summary attached). Outlined in this document are proposed deliverables and budgets for the project. The development will be divided into 2 phases as outlined below: PHASE 1: Strategic Planning * HMG will collaborate with Oasis to develop the creative design, architecture and information flow best suited for the Oasis at Work Sales Presentations and web site. * HMG will work with Oasis to determine the best digital graphics, text, and data files deemed necessary to complete the presentation and web site. Deliverables: * Site Map for Web site * Information Flow diagram for Sales Presentation * Creative Brief outlining strategy behind the design of both * Budget for final site development PHASE 2: Web Site and Presentation Development Sales Presentation Development * HMG will provide Oasis graphic design services to create a browser-based sales presentation. HMG will develop the design per the creative specifications determined in Phase 1 in HTML and FLASH 4.0 and place on our development server for Oasis approval. -1- * Should digital files not be readily available, Oasis agrees to pay any fees may be incurred to convert, input, scan, etc. content. Web Site Development * HMG will design the site as outlined i the creative brief developed in Phase 1. * HMG will develop a database driven administration system on designated pages of the www.oasisatwork.com site. This will allow new information to be posted to content areas ------------------- with easy-to-use, browser-based, database admin system. Allows non-technical staff members create, edit, and delete content. Immediate update of changes to the web site * The sections that will be static versu database driven, will be determined by Oasis during the Phase 1 planning. This will ensure the most cost-effective solution for the client. Sales Wizard Intranet Oasis sales staff members will have an easy-to-use, browser-based, administrative system that will enable them to: * add and edit customers * set up new categories for sales presentations (testimonials, revenue opportunities, partner categories, etc) * upload new slides using their browser and assign to categories * select/deselect slides/links for each customer * view the customer's custom presentatio * create a calendar to track and schedul presentations * create a history database of presentations including the name of the creator, the date of creation, the date of presentation, the names of the Oasis presenters, and comments/summary about the presentation -2- Surgical Safety Products, Inc. Web Site Investment Summary - --------------------------------------------------------------------- ----------------- ------------ - --------------------------------------------------------------------- ----------------- ------------ PHASE 1: Strategic Planning - --------------------------------------------------------------------- ----------------- ------------ Communications and Strategic Market Planning 8 hours $1,200 Communication development including website content and @ $150/hour presentation material with brand strategy audit to be developed and implemented throughout Phase I with Senior Marketing Strategist - --------------------------------------------------------------------- ----------------- ------------ Meetings and preparation of site plan, information architecture, 12 hours $1,380 design specs for database admin systems @ $115/hour - --------------------------------------------------------------------- ----------------- ------------ PHASE 2: Custom Presentation & Web Site Development - --------------------------------------------------------------------- ----------------- ------------ Browser-Based Presentation & Web Site Design for 175 hours @ $20,125 www.oasisatwork.com $115/hour - --------------------------------------------------------------------- ----------------- ------------ Web Site Administration Module TBD $1,500- Webpages created with a database backend to allow non-technical $4,500/per staff members to create, edit, and delete content. The interface is page an easy-to-use, browser-based, database admin system for within immediate update of changes to the web site. Pages created using section a database will enable realtime delivery of personalized content based on user information entered into forms. This will be determined in the Phase 1 activities. - --------------------------------------------------------------------- ----------------- ------------ Sales Wizard 120 hours @ $15,000 **Calendaring is not part of the Sales Wizard. HMG will include $125/hour (less this function at no additional cost as an advanced sales partner administration function. discount) $10,000 - --------------------------------------------------------------------- ----------------- ------------ Investment Summary - --------------------------------------------------------------------- ----------------- ------------ Current Investment $18,300 - --------------------------------------------------------------------- ----------------- ------------ Updated Base Investment Cost $32,705 - --------------------------------------------------------------------- ----------------- ------------ Upgrade Investment $14,405 (additional investment for new projects) - --------------------------------------------------------------------- ----------------- ------------ Hourly/Monthly Fees - --------------------------------------------------------------------- ----------------- ------------ Account Management 5-7 hours $525- @ $105/hour $735/month - --------------------------------------------------------------------- ----------------- ------------ Additional Development $115-$150/hour As needed - --------------------------------------------------------------------- ----------------- ------------ *Monthly Retainer (see detail below) $1,000/month $1,000/month - --------------------------------------------------------------------- ----------------- ------------
-3- Payment Terms: A development fee of $15,825 will be paid in total by Aug 1, 2000. The payment schedule is as follows: * $5,825 already received as deposit for current contract. * $5,000 of the additional development fee is due immediately and prior to project commencement. * $5,000 will be paid by Aug 1, 2000 as part of the development fee. The remaining payment schedule is as follows: A. Reward Bonus. When Oasis is successful in securing partner contracts, HMG will immediately receive a bonus equal to 2% of the total value of each contract upon each successful partner contract signed before the launch date estimated to be December 1, 2000 or later. (Oasis is forecasting total partner contracts to total $4,000,000 or $80,000 Reward Bonus.) B. If the Reward Bonus as described above does not exceed $17,705 by December 1,2000 HMG shall receive $17,705 less the previously paid Reward Bonus total on December 1, 2000 as final payment on this agreement. Additionally, please be advised that this estimate will be effective for only a thirty (30) day period from the date of this proposal. Should said proposal not be signed within 30 days of its submission, the above quoted rates may change. Ongoing Development: Ongoing development and marketing begins upon completion of the projects described in this document. Ongoing development is defined as additions, deletions, or modifications to this agreement. *HMG proposes to make any changes requested by Oasis (within reasonable guidelines established between both parties) and cover all work under a retainer fee of $1,000 /month. This retainer shall be reviewed within 2 months of implementation. HMG will develop online content that can be re-used for print collateral to minimize print costs for Oasis. As HMG develops print collateral for Oasis, HMG will not charge Oasis for the use of existing graphics and content used in the website and presentation material. Deployment: HMG will place the source files on our web server for review and approval. If any additional software is determined necessary for hosting during Phase 1 planning, HMG will specify the required software and related costs. If Oasis selects a hosting solution other than one provided by HMG, HMG will charge $125/hour for communications, file transfer, etc. for "live" implementation. Account Management: In addition, during the course of development for the project, HMG estimates that we will spend 5-7 hours per month on account management, client communication, travel time, etc. HMG's hourly rate for these AE activities is $105.00 per hour, above and beyond the development fee. HMG will not exceed 5-7 hours per month without written consent from Oasis. Payment Terms: 50% of the development fee for each phase is due prior to project commencement. -4- The final 50% shall be billed on final sign-off and deployment of the each phase. Additionally, please be advised that this estimate will be effective for only a thirty (30) day period from the date of this proposal. Should said proposal not be signed within 30 days of its submission, the above quoted rates may change. Jurisdiction & Venue: The parties hereto shall be bound by, and this Agreement shall be construed according to the laws of the State of Florida. The parties to this Agreement agree that the venue of any action, proceeding, complaint, counterclaim, cross-claim, or other litigation relating to, involving, or resulting from the enforcement of this agreement shall be in Hillsborough County, Tampa, Florida. Attorneys' Fees: If either party defaults in the performance of any of the terms or provisions of this Agreement, and by reason thereof the other party employs the services of an attorney to enforce performance of this Agreement, or to perform any service based upon defaults, then in any of said events, the prevailing party shall be entitled to receive from the other party reasonable attorneys' fees and all expenses and costs incurred by the prevailing party pertaining thereto (including costs and fees relating to any appeal) and in enforcement of any remedy. Late Charges: If any payment due Horizon Marketing Group, Inc. under this Agreement shall not be paid within 15 (fifteen) days of the date when due (including any instrument of money being dishonored for any reason including stop payment) the client shall pay in addition to the payment then due, an administrative charge equal to the greater of: (1) five (5%) percent of the past due payment; or (2) Two Hundred Fifty ($250.00) dollars. Interest: If any payment due Horizon Marketing Group, Inc. under this Agreement shall not be paid within 15 (fifteen) days of the date when due, the client shall pay, in addition to the principal amount due and the administrative fee provided above, interest on the outstanding balance at the rate of 12% until payment is made. Entire Agreement: The Agreement sets forth all of the promises, agreements, conditions and understandings between the parties; there are no other promises, agreements, conditions or understandings, either oral or written, other than as herein set forth. Modifications: No alteration, amendment, change, or addition to this Agreement shall be binding upon the parties to this Agreement until reduced to writing and signed by each of the parties. Partial Invalidity: If any term, covenant or condition of this Agreement shall be deemed to be unenforceable or otherwise invalid, the remainder of this Agreement shall not be affected thereby and each term, covenant, or condition of this Agreement shall be valid and be enforced to the fullest extent permitted by law. Waiver: The waiver by Horizon Marketing Group, Inc. of any breach or default of any term, covenant, or condition set forth herein shall not be deemed to be a waiver of any subsequent breach or default of the same or any other term, covenant, or condition, nor shall the acceptance of payment or partial payment be deemed to be a waiver of any such breach or default. No term, covenant, or condition of this Agreement shall be deemed to have been waived by Horizon Marketing Group, Inc. unless such waiver is in writing. -5- Please keep a copy of the signed agreement, fax a copy to (941) 926-9020 or send the original, along with a check for the initial payment of the development cost, to Horizon Marketing Group, Inc., P.O. Box 20537, Sarasota, Florida 34276. Sincerely, /s/ Heather LaBrecque Heather LaBrecque Account Executive Accepted By: Oasis at Work Date: ___ /___ -6- EX-10.45 4 0004.txt CLIENT SERVICE AGREEMENT Exhibit 10.45 CLIENT SERVICE AGREEMENT This AGREEMENT (the "Agreement") is made this 25th day of May, 2000, by and between EPIX IV, INC. (d/b/a EPIX) ("EPIX") whose principal office is located at 3710 Corporex Park Drive, Suite 300, Tampa, Florida 33619 and SURGICAL SAFETY PRODUCTS, INC. ("Client"), whose principal office is located at 2018 Oak Terrace, Sarasota, Florida 34231. (EPIX and Client may sometimes together be referred to as the "Parties" and individually as a "Party.") 1. TERM. This Agreement shall commence on the date first above written and remain in full force and effect, unless sooner terminated by either Party (a) upon not less than 30 days' prior written notice to the other Party or (b) in accordance with Section 9 hereof. During the 30-day period from the date of such notice, each of the Parties will continue to satisfy all of its obligations set forth in this Agreement. The period that this Agreement shall be in full force and effect is referred to as the "Term." 2. SERVICES PROVIDED BY EPIX. (a) Commencing on the effective dates specified on Schedule A and Schedule B annexed hereto and incorporated herein by reference ("Schedule A" and "Schedule B," respectively), throughout the Term, EPIX shall provide the following services in respect of the employees leased under this Agreement (the "Employees"): (i) payroll administration, including payment of applicable federal, state and local taxes; (ii) workers' compensation insurance, claims management and claims filings; (iii) the employee benefits specified in this Agreement; (iv) human resources consulting services; and (v) related record keeping. (b) Client acknowledges that EPIX is an independent contractor engaged in the business of providing professional employer organization services to Client, upon the terms and subject to the conditions set forth in this Agreement. 3. FEES. (a) Client shall pay to EPIX a fee in an amount equal to, without limitation, gross payroll; applicable federal, state and local taxes; the fees in respect of applicable insurance and benefits; and EPIX's administration fee in respect of the Employees, as specified on Schedule A (collectively, the "Fee"). The Fee shall be paid by Client immediately upon its receipt of the related invoice or telephonic confirmation of the Fee due, in the manner and with the frequency specified on Schedule A. (b) If Client agrees (with EPIX's consent) to make all payments required hereunder by ACH transfer and EPIX attempts to complete an ACH transfer and is informed that the account to be drafted has insufficient funds, Client shall, upon its receipt of notice from EPIX, immediately deliver to EPIX by certified check or wire transfer funds equal to the sum of (i) any -1- previously invoiced and unpaid Fee(s) and (ii) any bank or other service charges imposed upon EPIX. If any payment to EPIX is not made when due pursuant to ACH transfer or otherwise, Client shall pay to EPIX (at such time as Client's next Fee is payable), in addition to all other amounts otherwise due (x) a 3% administration charge on the delinquent amount and (y) an additional 1 1/2% of such delinquent amount for each 30-day period that the unpaid balance remains outstanding, but in no event shall the amount payable to EPIX hereunder exceed the applicable maximum lawful rate of interest. (c) The Fee may be adjusted by EPIX upon the effective date of any statutory increase or decrease in employment taxes or applicable insurance rates and EPIX may adjust the applicable administration fee upon 30 days' prior written notice to Client. 4. CO-EMPLOYMENT RELATIONSHIP. (a) The Parties acknowledge that each is entering into a co-employment relationship in respect of the Employees. Client further acknowledges that (i) EPIX is a Professional Employer Organization supplying Employees which are governed by ss.414(n) of the Internal Revenue Code of 1986, as amended, (the "Code"); (ii) an employment relationship is being established between EPIX and the Employees; and (iii) EPIX is an employer under ss.3401(d) of the Code as controlling the payment of wages. As such, EPIX shall have sufficient authority so as to maintain a right of direction and control over the Employees assigned to Client's location, and shall retain authority to hire, terminate, discipline, and reassign the Employees; provided, however, that nothing set forth in this Agreement shall impair Client's right and obligation to direct the Employees as is necessary to conduct Client's business and without which Client would be unable to conduct its business, discharge any fiduciary responsibility that it may have or comply with any applicable licensure, regulatory or statutory requirements. In furtherance of the foregoing, the individual designated on Schedule A (the "On-Site Supervisor") shall (x) direct operational and administrative matters on a day-to-day basis in respect of the services provided to Client by EPIX and (y), with direction from EPIX's Human Resources Department, determine the procedures to be followed by Employees regarding their duties. Notwithstanding the foregoing, Client has the right to accept or cancel the assignment of any Employee, provided that such rejection or cancellation is not otherwise prohibited by law (including, but not limited to, applicable anti-discrimination laws). (b) Client shall have sole and exclusive control over the day-to-day job duties of all Employees and EPIX shall have no responsibilities with regard to such Employees' performance of such day-to-day job duties. Furthermore, EPIX shall have no control over the job site at which, or from which, such Employees perform their services. Control over the day-to-day job duties of such Employees and over the job site at which, or from which, such Employees perform their services is solely and exclusively assigned to Client. Client expressly absolves EPIX of control over the day- to-day job duties of such Employees and over the job site at which, or from which, such Employees perform their services. This Agreement in no way alters any responsibilities of Client which arise from Section 768.096, Florida Statutes and Client assumes all responsibilities pursuant to Section 768.096 -2- including, without limitation, responsibility to perform any and all work history, reference checks and background checks in respect of the Employees. (c) Client represents and warrants to EPIX that (i) it has completed and/or furnished to EPIX all of the information required by Schedule A and Schedule B and (ii) that the information set forth on Schedule A and Schedule B is true and complete in all respects. Client acknowledges that EPIX has justifiably relied on such information in preparing this Agreement. 5. ADDITIONAL OBLIGATIONS OF EPIX. (a) EPIX assumes responsibility for the payment of wages to the Employees without regard to payments by Client to EPIX and EPIX assumes full responsibility for the payment of payroll taxes and collection of taxes from payroll in respect of the Employees. (b) EPIX will keep in full force and effect during the Term, workers' compensation insurance covering the Employees and shall provide Client a certificate of insurance evidencing the same and naming Client in the alternate employer endorsement. (c) EPIX hereby waives any claim against Client by way of subrogation or otherwise which may arise during the Term for any and all bodily injury, loss or damage to any of its property, which bodily injury, loss or damage is covered by policies of insurance; provided, however, that the waiver of any claim shall only be to the extent that such loss or damage is recovered under such policies of insurance; and provided, further, that the foregoing waiver shall be inapplicable in the event any such bodily injury, loss or damage is caused, in whole or in part, by Client's gross negligence or willful misconduct. (d) EPIX shall, together with Client, evaluate all Employees on the basis of performance, skills and experience, and without regard to race, color, ancestry, national origin, religion, sex, age, disability or any other classification protected by federal, state or local equal employment opportunity laws. 6. OBLIGATIONS OF CLIENT. (a) Payroll. With respect to payroll processing, Client shall be responsible for: (i) maintaining a record of actual time worked by the Employees and verifying the accuracy of wages and salaries reported to and paid by EPIX for each payroll period; (ii) conveying to EPIX in writing within 48 hours prior to the Client's pay date, a report of total hours worked by, or corresponding salary information for, each Employee; (iii) otherwise providing accurate information to EPIX including, without limitation, in respect of an individual's job status as "exempt" or "non-exempt" under federal or state wage-hour laws and the ability of any Employee to lawfully be employed in the United States; and (iv) paying each Employee all wages including, without limitation, bonuses through EPIX pursuant to this Agreement. -3- Client agrees that (x) the On-Site Supervisor shall be responsible for reporting any and all information to EPIX including, without limitation, in respect of payroll, (y) such On-Site Supervisor shall be fully authorized to report such information and (z) EPIX may rely on the same. (b) Workplace Safety. With respect to workplace safety, Client shall be responsible for: (i) ensuring compliance with safe work practices and use of protective equipment and devices imposed by applicable federal, state and local safety and health laws, regulations or rules; (ii) implementing a workplace safety program or adopting EPIX's program including, without limitation, cooperating with any drug-free workplace and/or post-accident/injury drug testing program implemented by EPIX; (iii) immediately reporting to EPIX all accidents or injuries involving Employees; (iv) cooperating with EPIX and its workers' compensation insurance carrier (or its agents) in the inspection of worksite locations and the investigation of workplace accidents or injuries; (v) in conjunction with EPIX, taking all reasonable measures to provide any Employee suffering from a workplace injury with light-duty work if EPIX or its workers' compensation insurance carrier (or its agents) recommends the same; and (vi) paying EPIX (at such time as Client's next Fee is payable) an administrative fee of $100 for failing to report to EPIX a workplace injury within 48 hours of its occurrence (increasing to $250 for the second such failure and to $500 for each subsequent failure thereafter). While EPIX shall retain a right of direction and control over the management of safety, risk and hazard control in respect of Employees performing work at Client work sites, as may be required by applicable law, compliance with all applicable laws related to such matters is the responsibility of Client. (c) Daily Operations. With respect to the daily operations of Client's business, Client shall be responsible for: (i) unless otherwise provided in this Agreement, complying with all applicable federal, state and local laws, regulations and rules including, without limitation, the Occupational Health and Safety Act, National Labor Relations Act and any federal, state or local discrimination laws; (ii) verifying skills and qualifications for employment; (iii) verifying the existence and validity of any applicable or required licenses; (iv) instituting any control procedures and/or executing confidentiality agreements to ensure against unauthorized disclosure, if any Employee is required in the performance of his duties, to have access to Client's confidential and/or proprietary information; (v) upon becoming known by Client, immediately providing EPIX with written notice of the assertion of any and all claims, complaints, charges, allegations or incidents of tortious misconduct or workplace safety violations, regardless of the source and cooperating with EPIX in the investigation and defense of such claims; and (vi) paying EPIX (at such time as Client's next Fee is payable) an administrative fee of $100 for failing to report to EPIX an Employee's termination of employment with Client for any reason within 48 hours of its occurrence (increasing to $250 for the second such failure and to $500 for each subsequent failure thereafter). -4- (d) Insurance. (i) If any Employee is required to drive a motor vehicle of any kind for Client, Client will keep in full force and effect at all times during the Term liability insurance which will insure against public liability for bodily injury, death and property damage with a minimum combined single limit of $1,000,000 and uninsured motorist insurance with a minimum combined single limit of $500,000, in states where no fault laws apply. Not later than five business days after its execution and delivery of this Agreement, Client shall cause its insurance carrier to (x) issue a certificate of insurance to EPIX verifying such coverage and providing for not less than 30 days' prior written notice to EPIX of cancellation of or any change to such coverage and (y) identify EPIX as an additional insured, if requested by EPIX. (ii) Client agrees to keep in full force and effect at all times during the Term a comprehensive general liability insurance policy in the minimum limit of $1,000,000 insuring Client against bodily injury and property damage caused by Client's operations. Not later than five business days after its execution and delivery of this Agreement, Client shall cause its insurance carrier to (x) issue a certificate of insurance to EPIX verifying such coverage and providing for not less than 30 days' prior written notice to EPIX of cancellation of or any change to such coverage and (y) identify EPIX as an additional insured, if requested by EPIX. (iii) If any Employee performs any duties which requires the maintenance of a professional license and corresponding professional liability insurance, Client agrees to keep in full force and effect at all such times during the Term professional liability insurance which shall cover any acts, errors or omissions including, without limitation, the negligent acts of the professional Employee with a minimum limit of $500,000. Not later than five business days after its execution and delivery of this Agreement, Client shall cause its insurance carrier to (x) issue a certificate of insurance to EPIX verifying such coverage and providing for not less than 30 days' prior written notice to EPIX of cancellation of or any change to such coverage and (y) identify EPIX as an additional insured. (iv) Client hereby waives any claim against EPIX by way of subrogation or otherwise which may arise during the Term for any and all bodily injury, loss or damage to any of its property, which bodily injury, loss or damage is covered by policies of insurance; provided, however, that the waiver of any claim shall only be to the extent that such loss or damage is recovered under such policies of insurance; and provided, further, that the foregoing waiver shall be inapplicable in the event any such bodily injury, loss or damage is caused, in whole or in part, by EPIX's gross negligence or willful misconduct. Since mutual waivers will preclude the assignment of any of the aforementioned claims by way of subrogation or otherwise, Client hereby agrees to immediately give each insurance carrier which insures any of its property, written notice of the terms of such mutual waiver, and have said insurance policies properly endorsed, if necessary, to prevent the invalidation of such insurance coverage by reason of such waiver. -5- 7. EMPLOYMENT PRACTICES. Client represents and warrants to EPIX that (a) in respect of any Employee that has been employed by Client prior to the date of this Agreement: (i) all wages, benefits, liabilities and/or other obligations are fully paid and there exists no liability for the same; (ii) there are no claims or threatened claims alleging that Client engaged in any work practices which were allegedly in violation of any employment-related law; and (iii) each has been evaluated on the basis of performance, skills and experience, and without regard to race, color, ancestry, national origin, religion, sex, age, disability or any other classification protected by federal, state or local equal employment opportunity laws; and (b) Client has (i), in connection with the operation of its business, complied in all respects with all applicable federal, state and local laws, regulations and rules and (ii) disclosed to EPIX any agreement between Client and any Employee including, without limitation, any employment agreement, collective bargaining agreement or deferred compensation agreement. 8. INDEMNIFICATION. (a) Client shall release, defend, indemnify and hold harmless EPIX and its officers, directors, shareholders, affiliates, subsidiaries, employees and agents (collectively, the "EPIX Indemnified Parties") from and against any losses, liabilities, claims, obligations and/or expenses including, without limitation, court costs and reasonable attorneys' fees (collectively "Damages") that may be incurred by, or asserted against, any of the EPIX Indemnified Parties, arising from, relating to, or in connection with, in whole or in part, (i) the alleged acts, errors or omissions of Client (or its agents) or the Employees; (ii) any alleged breach of this Agreement by Client; and (iii) except as otherwise provided in this Agreement, any claims asserted by, or liability to, third parties arising from, relating to, or in connection with, in whole or in part, Client's business. Except as otherwise provided in this Agreement, at no time shall Client be liable for EPIX's loss of profits, business goodwill or other consequential, special, incidental or punitive damages. (b) EPIX shall release, defend, indemnify and hold harmless Client and its officers, directors, shareholders, affiliates, subsidiaries, employees and agents (collectively, the "Client Indemnified Parties") from and against any Damages that may be incurred by, or asserted against, any of the Client Indemnified Parties, to the extent such Damages arise from, are related to, or are in connection with (i) the alleged acts, errors or omissions of EPIX (or its agents); and (ii) any alleged breach of this Agreement by EPIX. At no time shall EPIX be liable for Client's loss of profits, business goodwill or other consequential, special, incidental or punitive damages. (c) All indemnification obligations set forth herein shall survive the termination of this Agreement. 9. TERMINATION. (a) In addition to the right to terminate this Agreement set forth in Section 1, EPIX may terminate this Agreement immediately without prior notice to Client in the event of the following material breaches by Client: -6- (i) failure to timely make any payment required by this Agreement; (ii) failure to comply with any directive regarding the safety of the workplace from EPIX or EPIX's workers' compensation insurance carrier (or its agents) or providing incorrect workers' compensation classification codes; (iii) failure to provide and maintain the insurance required by this Agreement; (iv) providing EPIX with any inaccurate payroll or other information; (v) failure to cooperate with EPIX in the investigation of a workplace complaint or committing any act which restricts or limits EPIX's rights as an employer; or (vi) if a petition in bankruptcy is filed by or against Client, if Client shall have made an assignment for the benefit of creditors, if Client shall have voluntarily or involuntarily been adjudicated a bankrupt, or if a petition is filed for the reorganization of Client. (b) In addition to the right to terminate this Agreement set forth in Section 1, Client may terminate this Agreement upon providing EPIX not less than five business days' prior written notice in the event of the following material breaches by EPIX: (i) failure to provide and maintain the insurance required by this Agreement; or (ii) failure to provide benefits in accordance with this Agreement. 10. INDEPENDENT LEGAL ADVICE. Client acknowledges that it is solely responsible for obtaining independent legal advice regarding this Agreement, the co-employment relationship created hereby, as well as the related tax and employment law and other ramifications of transacting business with an organization that supplies Employees governed by ss.414(n) of the Code. 11. PRIOR EMPLOYEE LEASING RELATIONSHIPS. Client understands that pursuant to Florida law, it may not enter into an employee leasing relationship with EPIX if Client owes a current or prior employee leasing company any money pursuant to any service agreement which existed between that current or prior employee leasing company and Client, or if Client owes a current or prior insurer any premium for workers' compensation insurance. Client hereby represents and warrants to EPIX that it has met any and all prior premium and fee obligations with regard to workers' compensation premiums and employee leasing payments. 12. ENTIRE AGREEMENT. This Agreement, together with Schedule A, Schedule B and Exhibit A attached hereto (and incorporated herein by reference), constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, written or oral, with respect to such subject matter. 13. MODIFICATION. This Agreement may not be altered or amended except by written agreement duly executed by the Parties. 14. ASSIGNMENT. Neither this Agreement nor any interest herein may be assigned by either Party without the prior written consent of the other Party; provided, however, that EPIX may assign this Agreement, in whole or in part, to any affiliate thereof without the prior consent of Client. -7- 15. SEVERABILITY. Should any term, condition or provision of this Agreement be held to be invalid or unenforceable, the balance of this Agreement shall remain in full force and effect and shall be interpreted as if the unenforceable part did not exist. 16. NOTICES. All notices hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered personally, (b) on the second business day following the day such notice or other communication is sent, for next-day or next-business-day delivery, by a nationally- recognized overnight courier, (c) by confirmed telecopy, or (d) on the fifth day following the date of deposit in the United States mail if sent first class, postage prepaid, by registered or certified mail. The addresses for any notices hereunder shall be: EPIX IV, Inc. Surgical Safety Products, Inc. 342 Madison Avenue 2018 Oak Terrace Suite 622 Sarasota, Florida 34231 New York, New York 10173 Attention: Donald Lawrence, Attention: Peter D. Deutsch, President and Chief Operating General Counsel Officer (T) (212) 557-7777 (T) (941) 927-7874 (F) (212) 557-0677 (F) (941) 925-0515 Each Party may change its address for notices by written notice in accordance with this Section 16. 17. WAIVER. The failure of either Party to enforce any provision of this Agreement shall not be construed as a waiver of such provision or any other provisions of this Agreement or of the right of such Party thereafter to enforce each and every provision of this Agreement. 18. HEADINGS. The headings of this Agreement are inserted solely for the convenience of reference and shall in no way define, limit, extend or aid in the construction, extent or intent of this Agreement. 19. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, without regard to the conflicts of laws principles thereof. The Parties mutually submit to the exclusive jurisdiction, and stipulate to the venue, in any Florida state court or U.S. federal court located in Hillsborough County, Florida, for the resolution of any dispute or claim arising under or in accordance with this Agreement. 20. PREVAILING PARTY. For any cause of action commenced under this Agreement, the prevailing party shall have the right to recover any and all costs and reasonable attorneys' fees associated with such cause of action. 21. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be an original and all of which, taken together, shall constitute one and the same instrument. -8- IN WITNESS WHEREOF, the Parties have entered into this Agreement as of the date first above written. EPIX IV, INC. (D/B/A EPIX) By: _____________________________________ Name: Title: Under penalties of perjury, I declare that I have read the foregoing document and that the facts stated in it are true. Additionally, the foregoing Agreement is agreed to. SURGICAL SAFETY PRODUCTS, INC. By: _____________________________________ Name: Title: Guaranty The undersigned Guarantor hereby guarantees the prompt payment and/or performance of all obligations of Client to be paid and/or performed hereunder, and agrees to pay all costs, legal expenses and reasonable attorneys' fees incurred by EPIX in the collection and enforcement of all of Client's obligations under this Agreement. By: ------------------------------- Name: Guarantor Signature -9- EPIX SCHEDULE A Client Name: Address: City: State: Zip Code: Telephone: ( ) Fax #: ( ) On-Site Supervisor: Title: BILLING DETAIL W/C Classification W/C Rate Total Code - ---------- --------------------------- ------------ ----- ----- ----- -------- - ---------- --------------------------- ------------ ----- ----- ----- -------- - ---------- --------------------------- ------------ ----- ----- ----- -------- - ---------- --------------------------- ------------ ----- ----- ----- -------- - ---------- --------------------------- ------------ ----- ----- ----- -------- - ---------- --------------------------- ------------ ----- ----- ----- -------- - ---------- --------------------------- ------------ ----- ----- ----- -------- Medical Information: Please Refer to the Schedule B for Health Rates and Owner Contributions DEPARTMENTAL INFORMATION Dept. # Description State W/C Code - --------- ------------------------- ------------- ------------------------ - --------- ------------------------- ------------- ------------------------ - --------- ------------------------- ------------- ------------------------ - --------- ------------------------- ------------- ------------------------ - --------- ------------------------- ------------- ------------------------ - --------- ------------------------- ------------- ------------------------ - --------- ------------------------- ------------- ------------------------ - --------- ------------------------- ------------- ------------------------ Payment Type: Debit _ Wire _ Certified Check _ Frequency: Weekly _ Bi-Weekly _ Semi-Monthly _ Monthly _ -10- Effective Date:____________ Call In: Mon _ Tue _ Wed_ Thur _ Fri _ Deliver: Mon _ Tue _ Wed_ Thur _ Fri _ Delivery Via: US Mail_ Fed Ex_ Courier Service_ Pick Up_ - ------------------------------------------ ----------------------- Authorized Signatory of Client Date - ------------------------------------------ ----------------------- Authorized Signatory of EPIX Date EPIX SCHEDULE B Client Name ------------------------------------------------------ Company Contribution Less than 50% contribution Benefit Effective Date: # of Employees: ---------------- ---------------- Benefits Paid: Current: _ Prepaid: _ Waiting period: _____(default 90 days) Medical Rates - Florida Plan Employee EE/Spouse EE/Child (ren) EE/Family Only - --------------- ---------------- ---------------- ---------------- ------------- BC/BS BCP15 - --------------- ---------------- ---------------- ---------------- ------------- BC/BS BCP9 - --------------- ---------------- ---------------- ---------------- ------------- BC/BS BCP 2 - --------------- ---------------- ---------------- ---------------- ------------- BC/BS BCP A6 - --------------- ---------------- ---------------- ---------------- ------------- PHCS PPO - --------------- ---------------- ---------------- ---------------- ------------- - --------------- ---------------- ---------------- ---------------- ------------- Company Medical Contribution Table -11- Dept # Dept # Dept # Dept # - --------------- ---------------- ---------------- ---------------- ------------- Employee Only - --------------- ---------------- ---------------- ---------------- ------------- EE/Spouse - --------------- ---------------- ---------------- ---------------- ------------- EE/Child(ren) - --------------- ---------------- ---------------- ---------------- ------------- EE/Family - --------------- ---------------- ---------------- ---------------- ------------- Dental Rates Plan Employee EE/Spouse EE/Child (ren) EE/Family Only - --------------- ---------------- ---------------- ---------------- ------------- American - Prepaid - --------------- ---------------- ---------------- ---------------- ------------- American - Shenan - --------------- ---------------- ---------------- ---------------- ------------- Prudential Dental - --------------- ---------------- ---------------- ---------------- ------------- - --------------- ---------------- ---------------- ---------------- ------------- Company Dental Contribution Table Dept # Dept # Dept # Dept # - --------------- ---------------- ---------------- ---------------- ------------- Employee Only - --------------- ---------------- ---------------- ---------------- ------------- EE/Family - --------------- ---------------- ---------------- ---------------- ------------- Vision Rates Plan Employee EE/Spouse EE/Child (ren) EE/Family Only - --------------- ---------------- ---------------- ---------------- ------------- - --------------- ---------------- ---------------- ---------------- ------------- - --------------- ---------------- ---------------- ---------------- ------------- Company Vision Contribution Table Dept # Dept # Dept # Dept # - --------------- ---------------- ---------------- ---------------- ------------- Employee Only - --------------- ---------------- ---------------- ---------------- ------------- EE/Family - --------------- ---------------- ---------------- ---------------- ------------- - -------------------------------- ------------------- Client Authorization Date Exhibit A Client Account Agreement Company Code _________________ Total Invoice per Payroll Cycle______________ Company Name: _______________________________________________________ -12- Bank # Trans/ABA: ____________________ Bank Account #: __________________ Bank Name: ___________________________ Bank Contact: ____________________ Bank Address: ________________________ Bank Phone: ______________________ Client agrees to the following terms: 1. Client agrees that any amounts due under the Client Service Agreement between Client and EPIX (the "Agreement") will be paid by ACH or bank wire transfer. 2. In respect of the amounts due under this Agreement, Client agrees that such amounts will be deposited in Client's account and available to EPIX at least one business day prior to Client's scheduled pay date. 3. If available funds are not present in Client's account i accordance herewith, Client agrees that EPIX shall have the right to debit Client's account in an amount equal to any amount then due and payable by Client to EPIX and such right shall survive termination of the Agreement. 4. Client shall provide EPIX with an original check from th account where the funds are to be debited. 5. Unless otherwise provided herein, this authorization shall remain in full force and effect until revoked in writing by Client. SURGICAL SAFETY PRODUCTS, INC. By: - ------------------------------- Name: Title: Date: - ------------------------------- -13- EX-10.46 5 0005.txt AMENDMENT TO STOCK OPTION Exhibit 10.46 AMENDMENT TO THE SURGICAL SAFETY PRODUCTS, INC. 2000 STOCK OPTION AND AWARDS PLAN THIS AMENDMENT TO THE SURGICAL SAFETY PRODUCTS, INC. 2000 STOCK OPTION AND AWARDS PLAN (the "Amendment") is approved and adopted by the Board of Directors of Surgical Safety Products Inc. this 6th day of June 2000. 1. The terms contained herein shall have the same meaning as those contained in the SURGICAL SAFETY PRODUCTS, INC. 2000 STOCK OPTION AND AWARDS PLAN (the "Plan"). 2. The Plan amended hereby was adopted by the Board of Directors on February 7, 2000 and approved by the shareholders of the Company at the annual meeting held on February 28, 2000. 3. The shares underlying the Plan, that is 10,000,000 shares, were registered with the Securities and Exchange Commission on April 13, 2000 on Form S-8. 4. The Board of Directors has decided that it is in the best interest of the Company to modify the Plan under paragraph 21 thereof such that in any calendar year, options and awards to acquire no more than 1,000,000 shares will be granted. 5. To date, no options or awards have been granted under the Plan and accordingly, the rights of no Eligible Person will be altered by this modification. 6. All other terms and conditions of the Plan will remain in full force and effect and this Amendment shall be effective on February 7, 2000. 7. Copies of this Amendment will be provided to participants in the Plan along with the copy of the Plan. ADOPTED AND APPROVED: /s/ G. Michael Swor June 6, 2000 - ----------------------- G. Michael Swor /s/ Donald K. Lawrence June 6, 2000 - ----------------------- Donald K. Lawrence /s/ Sam Norton June 6, 2000 - ----------------------- Sam Norton /s/ James Stuart June 6, 2000 - ----------------------- James Stuart /s/ David Swor June 6, 2000 - ----------------------- David Swor /s/ Dr. William Saye June 6, 2000 - ----------------------- Dr. William Saye EX-10.47 6 0006.txt REVOLVING NOTE Exhibit 10.47 REVOLVING NOTE Renewal* $100,000.00 SARASOTA FL 06/07/00 (City)(State) (Date) For value received, the undersigned (whether one or more, hereinafter called the "Obligors") promise(s) to pay to the order of SOUTHTRUST BANK of Florida, National Association (hereinafter called the "Bank" or, together with any other holder of this note, the "Holder"), at any office of the Bank in Sarasota, FL, or at such other place as the Holder may designate, the sum of ONE HUNDRED THOUSAND AND NO/100 Dollars, together with Interest thereon at the rate and one the date(s) provided below from the date of this note until maturity, and with interest on the aggregate unpaid principal and accrued interest after maturity at the rate which is 2 percent per annum in excess of the rate stated below or the maximum rate allowed by law, whichever is less, from maturity until said aggregate indebtedness is paid in full. X VARIABLE RATE Interest will accrue on the above-stated principal sum at the rate per annum which is 1.500 percentage points in excess of the Base Rate. As used in this note, the term 'Base Rate' means the rate of interest designated by the Bank periodically as its Base Rate. The Base Rate is not necessarily the lowest rate charged by the Bank. The Base Rate on the date of this note is 9.500 percent. The rate of interest payable under this note will change to reflect any change in the Base Rate: X on any day the Base Rate changes. ___On the day of each month thereafter. _ on the day each payment of interest is due as provided below. Obligors may prepay this note in full at any time without penalty. FIXED RATE Interest will accrue on the above-stated principal sum at the rate of _____ percent per annum from the date of this note until maturity. The above-stated principal sum shall be paid In full: X On August 12,2000. on demand. on demand, but if no demand is made, then on . Accrued Interest on the unpaid balance of the principal sum shall be paid: X monthly on the 12th day of each month beginning JULY 12, 2000, quarterly beginning on ______________________, on the day of each month thereafter, and at maturity. Until the earlier of maturity of this note, or the occurrence of any event giving Bank the right to accelerate maturity of this note as provided below. or written or oral notice to any Obligor of Bank's election to terminate the line of credit (which notice Bank may give at its discretion), the undersigned may borrow hereunder. prepay the principal sum in whole or in part without penalty, and reborrow hereunder, so long as the aggregate unpaid principal balance of such borrowings does not exceed the principal amount of this note at any time. Bank may require that borrowings be made -1- only upon at 'east one banking day's written notice to Bank. For the privilege of having such credit available, the undersigned agrees to pay Bank a commitment fee of n/a percent per annum on the unused portion of the principal sum of this note, such fee to be calculated and payable as follows: INTEREST the principal sum will be calculated at the rate set forth above on the basis of a 360 day year and the actual number of days elapsed by multiplying the principal sum by the per annum rate set forth above, multiplying the product thereof by We actual number of days elapsed, and dividing the product so obtained by 360. LOAN FEE (this provision applicable only if completed): A loan fee in the amount of $500.00 has been _____ advanced to Obligors as a loan under this note and paid to the Bank x paid to the Bank by cash or check at closing. The loan fee is earned by the Bank when paid and is not subject to refund except to the extent required by law. LATE CHARGE: If a payment of the principal sum is late 10 days or more, in addition to interest after maturity as provided above. Obligors promise to pay a late charge equal to one-half of one percent (1/2%) of the amount of the payment which is late, subject to a minimum late charge of $.50 and a maximum late charge of $250.00 This note is secured by every security agreement, pledge, assignment, stock power and/or mortgage covering personal or real properly (all of which are hereinafter included in the term "Separate Agreements") which secures an obligation so defined as to Include this note, including without limitation all such Separate Agreements which are of even date herewith and delivered to the Bank and/or described in the space below. In addition, as security for the payment of any and all liabilities and obligations of the Obligors to the Holder (including the Indebtedness evidenced by this note and all extensions, renewals, and substitutions thereof) and all claims of every nature of the Holder against the Obligors, whether present or future, and whether joint, several, absolute, contingent, matured, unmatured, liquidated, unliquidated, direct or Indirect (all of the foregoing are hereinafter included In the term 'Obligations") the Obligors hereby grant to the Holder a security Interest in and security title to the properly described below: (Describe Separate Agreements and Collateral) AS FURTHER DESCRIBED IN SECURITY AGREEMENT DATED 06/07/00 AND ALSO AS DESCRIBED IN UCC FILING #970000107342, FILED 05/19/97. If this note is payable on demand, or on demand but not later than a stated date, all of the Obligations shall be due and payable in full upon demand by Holder, whether or not any default described below has occurred and whether or not the Holder reasonably deems itself to be insure. If this note has no provision for payment on demand, the following terms apply: If default occurs in the payment of any of the Obligations when due or with respect to any condition or agreement contained in this note; or if for any reason whatever the Collateral shall cease to be satisfactory to the Holder; or in the event of death (if an individual) or dissolution (if a partnership or corporation) of, insolvency of, general assignment by, filing of petition under any chapter of the Federal Bankruptcy code by or against, filing of application in any court for receiver, for judgment against, issuance of a writ of execution, attachment or garnishment against, or against any of the property of, -2- any Obligor or any Indorser or guarantor of this note; or if there occurs any default or event authorizing acceleration as contained in any Separate Agreement; or if at any time in the sole opinion of the Holder the financial responsibility of any Obilgor or any Indorser or guarantor of this note shall become impaired; then, if any of the foregoing occur, all unpaid amounts of any and all of the Obligations shall, at the option of the Holder and without notice or demand, become immediately due and payable, notwithstanding any time or credit allowed under any of the obligations or under any instrument evidencing the same. With respect to any and all Obligations, the obligors and any indorsers of this note severally waive the following: (1) all rights of exemption of property from levy or sale under execution or other process for the collection of debts under the constitution and laws of the United States or of any state thereof; (2) demand, presentment, protect, notice of dishonor, suit against any party and all other requirements necessary to charge or hold any Obligor liable on any Obligation; (3) any further receipt for or acknowledgment of the Collateral now or hereafter deposited or statement of indebtedness; (4) all statutory provisions and requirements for the benefit of any Obligor, now or hereafter in force (to the extent that same may be waived); (5) the right to interpose any set-off or counterclaim of any nature or description in any litigation in which the Holder and any Obligor shall be adverse parties. The Obligors severally agree that any Obligations of any Obligor may from time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised, discharged or released by the Holder, and any Collateral, lien and/or right of set-off securing any Obligation may from time to time, in whole or in part, be exchanged, sold, or released, all without notice to or further reservations of rights against any Obligor and all without in any way affecting or releasing the liability of any Obligor. The Obligors jointly and severally agree to pay all filing fees and taxes in connection with this note or the Collateral and all costs of collecting or securing or attempting to collect or secure any obligations, including a reasonable attorney's fee if an attorney, not a salaried employee of the Holder, is consulted with reference to suit or otherwise. The Obligors shall be jointly and severally liable for all indebtedness represented by this note and have subscribed their names hereto without condition that anyone else should sign or become bound hereon and without any other condition whatever being made. The provision printed on the back of this page are a part of this note. The provisions of this note are binding on the heirs, executors, administrators, assigns and successors of each and every Obligor and shall inure to the benefit of the Holder, its successors and assigns. This note is executed under the seal of each of the Obligors and of the Indorsers, If any. *This is a renewal of a note that matured. 1/1/00. SURGICAL SAFETY PRODUCTS, INC. No. 7301868-00002 By /s/ G Michael Swor -------------------------- PRESIDENT/DIRECTOR Title G. MICHAEL SWOR Officer: B. EDWIN WYATT, JR. Signature /s/ B. EDWIN WYATT, JR. (SEAL) Branch: Business Banking -3- THIS NOTE IS A RENEWAL OF A NOTE ON WHICH DOCUMENTARY STAMP TAXES HAVE BEEN PAID Additional Terms and Conditions of Revolving Note (Terms Continued from Reverse Side) As additional Collateral for the payment of all Obligations, the Obligors jointly and severally transfer, assign, pledge, and set over to the Holder and grant the Holder a continuing lien upon and security interest in, any and all properly of each Obligor that for any purpose. whether In trust for any Obligor or for custody, pledge, collection or otherwise. is now or hereafter in the actual or constructive possession of, or In transit to, the Holder In any capacity, Its correspondents or agents, and also a continuing lien upon and or right of set-off against all deposits and credits of each Obligor with, and all claims of each Obligor against, the Holder now or at any time hereafter existing. The Holder is hereby authorized, at any time or times and without prior notice, to apply such property, deposits, credits, and claims, In whole or In part and in such order as the Holder may elect, to the payment of, or as a reserve against, one or more of the Obligations, whether other Collateral therefor Is deemed adequate or not. Ali such properly, deposits. credits and claims of the Obligors are Included In the term Collateral. and the Holder shall have (unless prohibited by law) the same rights with respect to such Collateral as It shall have with respect to other Collateral. Without the necessity for notice to or consent of any Obligor, the Holder may exercise any rights of any of the Obligors with respect to any Collateral, including without limitation thereto the following rights: (1) to record or register In, or otherwise transfer Into, the name of the Holder or Its nominee any part of the Collateral, without disclosing that the Holder's Interest Is that of a secured party; (2) to pledge or otherwise transfer any or all of the Obligations and/or Collateral, whereupon any pledgee or transferee shall have all the rights of the Holder hereunder, and the Holder shall thereafter be fully discharged and relieved from all responsibility and liability for the Collateral so transferred but shall retain all rights and powers hereunder as to all Collateral not so transferred; (3) to take possession of any Collateral and to receive any proceeds of and dividends and Income on any Collateral, Including money, and to hold the same as Collateral or apply the same to any of the Obligations, the manner, order and extent of such application to be In the sole discretion of the Holder; (4) to exercise any and all rights of voting, conversion, exchange, subscription or other rights or options pertaining to any Collateral; and (5) to liquidate, demand, sue for, collect, compromise, receive and receipt for the cash or surrender value of any Collateral. It for any reason whatsoever the Collateral shall cease to be satisfactory to the Holder. the Obligors shall upon demand deposit with the Holder additional Collateral satisfactory to the Holder. Surrender of this note. upon payment or otherwise, shall not affect the right of the Holder to retain the Collateral as security for other Obligations, Upon default. the Obligors agree to assemble the Collateral and make it available to Holder at such place or places as the Holder shall designate. The Holder shall be deemed to have exercised reasonable care In the custody and preservation of any of the Collateral which Is in Its possession If It takes such reasonable actions for that purpose as the pledgor of such Collateral shall request In writing, but the Holder shall have sole power to determine whether such actions are reasonable. Any omission to do any act not requested by said pledgor shall not be deemed a failure to exercise reasonable care. The Obligors shall be -1- responsible for the preservation of the Collateral and shall lake all steps to preserve rights against prior parties. The Holder shall have the right to, but shall not be obligated to, preserve rights against prior parties; nor shall the Holder be liable for any failure to realize upon, or to exercise any right or power with respect to. any of the Obligations or Collateral, or for any delay in so doing. The Holder, without making any demands whatsoever, shall have the right to sell all or part of the Collateral, although the Obligations may be contingent or unmatured, whenever the Holder considers such sale necessary for its protection. Sale of the Collateral may be made, at any time and from time to time, at any public or private sale, at the option of the Holder. without advertisement or notice to any Obligor, except such notice as Is required by law and cannot be waived. The Holder may purchase the Collateral at any such sale (unless prohibited by law) free from any equity or redemption and from all other claims. After deducting all expenses. including legal expenses and attorney's fees, for maintaining or selling the Collateral and collecting the proceeds of sale, the Holder shall have the right to apply the remainder of said proceeds in payment of, or as a reserve against, any of the Obligations, the manner, order and extent of such application to be In the sole discretion of the Holder. To the extent notice of any sale or other disposition of the Collateral Is required by law to be given to any Obligor. the requirement of reasonable notice shall be met by sending such notice, as provided below, at least five (5) calendar days before the time of sale or disposition. The Obligors shall remain liable to the Holder for the payment of any deficiency, with interest at the rate provided herein above. However, the Holder shall not be Obligated to resort to any Collateral but, at Its election. may proceed to enforce any of the Obligations In default against any or all of the Obligors. The Obligors understand that the Bank may enter Into participation agreements with participating banks whereby the Bank will sell undivided Interests In this note to such other banks. The Obligors consent that the Bank may furnish Information regarding the Obligors, Including financial Information, to such banks from time to time, and also to prospective participating banks in order that such banks may make an Informed decision whether to purchase a participation In this note. The Obligors hereby grant to each such participating bank. to the extent of Its participation In this note, the right to set off deposit accounts maintained by the Obligors, or any of them. with such bank, against unpaid sums owed under this note. Upon written request from the Holder, the Obligors agree to make each payment under this note directly to each such participating bank in proportion to the participant's Interest In this note as set forth In such request from the Holder. If, at any time, the rate of interest payable under this note shall exceed the maximum rate of Interest permitted by applicable law, then, for such lime as the Interest rate would be excessive, Its application shall be suspended and there shall be charged Instead the maximum rate of Interest permitted under such law, and any excess interest paid by the Obligors or collected by the Holder shall be refunded to the Obligors or credited against the principal sum of this note, at the election of the Holder or as required by applicable law. The Holder shall not by any act, delay, omission or otherwise be deemed to have waived any of Its rights or remedies, and no waiver of any kind shall be valid, unless In writing and signed by the Holder. All rights and remedies of the Holder under the terms of this note and under any statutes or rules of law shall be cumulative and may be exercised successively or concurrently. The Obligors -2- jointly and severally agree that the Holder shall be entitled to all the rights of a holder In due course of a negotiable instrument. This note shall be governed by and construed In accordance with the substantive laws of the United States and the state where the office of the Bank set forth above in the first paragraph of this note is located, other than the rules of such state governing conflicts of law. Any provision of this note which may be unenforceable or invalid under any law shall be Ineffective to the extent of such unenforceability or Invalidity without affecting the enforceability or validity of any other provision hereof. Any notice required to be given to any person shall be deemed sufficient It delivered to such person or It mailed. postage prepaid, to such person's address as It appears on this note or. If none appears, to any address of such person In the Holder's files. The Holder shall have the right to correct patent errors in this note. A photocopy of this note may be filed as a financing statement In any public office. EACH INDORSER OF THIS NOTE AGREES TO BE BOUND BY THE PROVISIONS PRINTED OR OTHERWISE APPEARING ABOVE AND ON THE FACE OF THIS NOTE. INCLUDING THE PROVISION FOR PAYMENT OF ATTORNEYS' FEES FOR COLLECTION. Signature See Separate Guaranty Dated 06/07/00 (SEAL) Address Signature Address____________________________ Signature__________________________ Address____________________________ Signature__________________________ Address____________________________ -3- SECURITY AGREEMENT DEBTOR: SECURED PARTY: [Last name(s) first, if individual(s)] __________________________________________ SOUTHTRUST BANK of Florida, SURGICAL SAFETY PRODUCTS, INC. National Association 2018 OAK TERRACE, SUITE 400 P.O. BOX 4705 Mailing address SARASOTA, FL 34236 SARASOTA SARASOTA FL 33431 City County State Zip Date: 06/07/00 1. For valuable consideration, receipt of which is hereby acknowledged, and in further consideration of the Secured Obligations (as hereinafter defined), the undersigned (whether one or more than one, hereinafter referred to as "Debtor") hereby grants, bargains, sells conveys, assigns, and sets over to the Secured Party named above (hereinafter referred to as "Secured Party"), and grants to Secured Party a security interest in, the following property and rights of Debtor (check applicable box(es)): XA. (Inventory and Documents) all inventory of Debtor, whether now owned or hereafter acquired by Debtor and whenever located, including, without limitation, all goods, merchandise, raw material, work in process, finished goods, and other tangible personal property held for sale or lease or furnished under contracts of service or used or consumed in Debtors business and returned and repossessed goods; all Documents now or hereafter evidencing any such inventory; and all proceeds and products of the foregoing; and XB. (Accounts, Intangibles, Instruments, Chattel Paper) all Accounts, General intangibles, instruments, and Chattel Paper, whether now existing or hereafter arising, and all proceeds of the foregoing, whether cash or non- cash, including returned and repossessed goods; and XC. (Equipment) all Equipment, including without limitation, all machinery, computer equipment and peripherals, furniture, furnishings, and motor vehicles, and all replacements thereof and substitutes therefor, and all accessories, additions, attachments and other goods now or hereafter installed in or affixed thereto or used in connection therewith, whether any of the foregoing now owned or hereafter acquired by Debtor and wherever located, and all proceeds thereof (but inclusion of proceeds shall not be deemed to imply that Secured Party authorizes the sale or other transfer or disposition of any such Equipment); _ If this box is checked, the term "Equipment" as used in this agreement also includes Fixtures, including leasehold improvements and machinery and appliances which are attached to the real property in such a manner as to become Fixtures; and -1- _D. (Farm Products) all crops (whether annual or perennial) and all livestock (including fowl) and all natural increase thereof, all feed, seed, fertilizer and other supplies used or produced in farming operations, and all products of crops and livestock in their unmanufactured states, whether any of the foregoing is now owned or hereafter acquired by Debtor and wherever located, all contracts for the sale by Debtor of any of the foregoing, and all crop or acreage allotments, price supports or supplements and rights under governmental programs, and all proceeds of all of the foregoing, provided that no security interest attaches hereunder to crops which become such more than one year after this Security Agreement is executed unless the security interest in crops is given in conjunction with a lease or a land purchase or improvement transaction evidenced by a separate contract, mortgage, deed of trust or deed to secure debt. The security interest herein granted covers, without limitation, all crops growing or to be grown on the real property described on any Exhibit attached hereto. (All of the property and rights described in A, B, C, and D above (as applicable) are sometimes hereinafter referred to collectively as "the Collateral.") 2. This agreement, and the security interest herein granted, secures the payment and performance of Eery loan and other extension of credit heretofore, now, or hereafter made to Debtor by Secured Party, and extensions or renewals thereof, all interest due or to become due to Secured Party on each such loan or other extension of credit, every note or other writing now or hereafter evidencing the obligation of Debtor to repay any such loan or other extension of credit and/or the interest thereon, every guaranty of payment or collection of the debt of another heretofore, now, or hereafter entered into by Debtor with Secured Party, every letter of credit reimbursement agreement heretofore, now, or hereafter entered into by Debtor with Secured Party, every lease of personal property heretofore, now, or hereafter entered into by Debtor with Secured Party, the payment and performance of all of Debtor's obligations under this agreement, and all other indebtedness and other obligations of Debtor to Secured Party, including all sums paid to Secured party for Debtor's account by Debtor or any other person which are later recovered back from Secured Party by Debtor or any creditor of Debtor or any representative of Debtor or of Debtor's creditors, such as a trustee in bankruptcy, whether any of the foregoing debts and other obligations are joint or several, primary or secondary, direct or indirect, otherwise secured or unsecured, whether originally payable or owed to Secured Party or acquired by Secured Party from another (the terms "with Secured Party" and "by Secured Party" in this sentence being expressly intended to include Secured Party's assignors and predecessors in interest), and whether now existing or hereafter incurred prior to termination of this agreement as hereinafter provided. (All the debts and other obligations described in the preceding sentence are hereinafter referred to collectively as the "Secured Obligations.") -2- 3. Debtor represents and warrants to Secured Party that: (a) Debtor's inventory, Equipment and/or Farm Products are kept or stored only at the address shown below Debtor's name at the beginning of this agreement and at the following address(s)(use separate schedule if necessary): Street Address City County State Zip (Failure to list any address where Inventory, Equipment and/or Farm Products are kept shall not limit Secured Party" security interest, which covers all Inventory, Equipment and/or Farm Products of Debtor, wherever located.) Debtor agrees not to keep or store any Inventory, Equipment and /or Farm Products at any address other than those set forth above except upon not less than 10 days advance notice in writing to Secured Party and upon compliance with the remaining terms of this agreement. (b) The address where the records concerning Debtor's Accounts are kept and the address of Debtor's chief executive office is the address shown below Debtor's name at the beginning of this agreement. Debtor agrees not to change the address where the records concerning Debtor's Accounts are kept or the address of Debtor's chief executive office except upon not less than 10 days advance notice in writing to Secured Party and compliance with the remaining terms of this agreement. (c) If Debtor is a corporation, Debtor is duly organized and existing in good standing under the laws of the state of its incorporation and is duly qualified and in good standing in every other state in which the nature of its business or the ownership of its properties makes qualification necessary. (d) If Debtor is a corporation, the execution, delivery, and performance of this agreement are within Debtor's corporate powers, have been duly authorized, are not in contravention of law or the terms of Debtor's certificate of incorporation, by-laws, or other incorporation papers, or of an indenture, agreement, or undertaking to which Debtor is a party or by which Debtor is bound. (e) Except for the security Interest granted herein, and except as otherwise noted in writing hereon or on a schedule attached hereto, Debtor is, and as to Collateral acquired after the date hereof, will be, the owner of the Collateral free from any adverse lien, security interest or encumbrance. 4. If paragraph 1.A., 1.C., or 1.D. above is marked, Debtor agrees with Secured Party as follows: Debtor will maintain insurance at all times with respect to all Inventory, Equipment and Farm Products against risk of fire (including so-called extended coverage), theft, water damage and such other risks as Secured Party may require from time to time and, in the case of motor vehicles, against risk of collision and vandalism, in such form, for such perils, and written by such companies as may be satisfactory to Secured Party. Secured Party shall be named as loss payee under such policies of insurance. Debtor my furnish such insurance through an existing policy or policy independently -3- obtained and paid for by Debtor. All policies of insurance shall provide for a minimum of 10 days written notice to Secured Party before cancellation. At request of Secured Party, Debtor will deliver such policies, or at Secured Party's option, certificates thereof, to Secured Party to be held by it. Debtor hereby appoints Secured Party the attorney -in-fact for Debtor for purposes of obtaining, adjusting, settling, and canceling such insurance and of endorsing in Debtor's name and giving receipt for checks and drafts issued in payment of losses and as return premium. In the event Debtor fails to provide any insurance as required herein, Secured Party may, at its option, purchase such insurance or, at Secured Party's option after 10 days notice to Debtor, insurance covering only Secured Party's interest in Inventory, Equipment and Farm Products and all return or unearned premiums thereon to Secured Party as additional collateral for the Secured Obligations. 5. If paragraph 1.A. above is marked, Debtor agrees with Secured Party as follows: (a) Debtor will allow Secured Party and any of its officers, agents, attorney, or accountants to examine or inspect the inventory wherever located at all reasonable times and to examine, inspect, and make extracts from Debtor's books and records. (b) Debtor will keep the Inventory, all Documents with respect thereto, and proceeds of both free from any adverse lien, security interest or encumbrance, except that Debtor may, with Secured Party's written consent obtained in advance, grant a security interest in its Accounts. General intangibles, instruments, and/or Chattel Paper to another creditor. Debtor will keep the Inventory in good condition, and will not waste or destroy any of the same. Debtor will not use the Inventory in violation of any statute or ordinance. (c) Until the occurrence of a default hereunder, Debtor may use the Inventory in any lawful manner which is consistent with Debtor's usual business and is not inconsistent with this agreement or with the terms or conditions of any policy of insurance thereon, and may sell the Inventory in the ordinary course of business. A sale in the ordinary course of business does not include a transfer in partial or total satisfaction of a debt. Until the occurrence of a default, Debtor may also use and consume any raw materials or supplies, the use and consumption of which is necessary in order to carry on Debtor's usual business. IN WITNESS WHEREOF, Debtor has executed this agreement under seal, or the officers or agents of Debtor thereunto duly authorized have executed this agreement on behalf of Debtor, on or as the date set forth above. The provisions on the reverse side and on any attachments are part of this agreement. ATTEST OR WITNESS: /s/ B. Edwin Wyatt SURGICAL SAFETY PRODUCTS, INC.(SEAL) ______________________ By /s/ G M Swor ---------------------------------- PRESIDENT/DIRECTOR G. MICHAEL SWOR Title Signature (SEAL) -4- (d)Upon request of Secured Party at any time, Debtor will deliver to Secured Party lists or copies of all Accounts which are proceed of Inventory or Farm Products promptly after they arise. Unless Secured Party shall have otherwise agreed with Debtor in writing, Debtor will deliver to Secured Party, promptly upon receipt, all proceeds (except goods) of the Inventory of Farm Products received by Debtor, including proceeds of such Accounts, in precisely the form received by Debtor, except for the endorsement of Debtor where necessary to permit the collection of such proceeds (which endorsement Debtor hereby agreed to make) Debtor agrees not to mingle any proceeds of the Inventory or Farm Products with any of Debtor's own funds, goods or property, and at all times to hold such proceeds upon express trust for the Secured Party until delivery thereof is made to Secured Party. To evidence Secured Party's rights hereunder, Debtor will assign or endorse proceeds to Secured Party in such form as Secured Party may request and Secured Party shall have the full power and authority to collect, compromise, endorse, sell, or otherwise deal with proceeds in its own name or that of Debtor. Secured Party in its discretion may apply cash proceed to the payment of any of the Secured Obligations or may release such cash proceeds to Debtor for use in the operation of Debtor's business. (e)With respect to proceeds of the Collateral in the form of Accounts, Secured Party may at any time before or after default notify account debtors that the Accounts have been assigned to Secured Party and shall be paid to Secured Party. Upon request of Secured Party at any time Debtor will so notify such account debtors and will indicate on all invoices to such account debtors that the Accounts are payable to Secured Party. 6. If paragraph 1.B. is marked above, Debtor hereby agrees with Secured Party as follows: (a)For the consideration recited in paragraph 1 above, Debtor hereby leases to Secured Party, during the term of this agreement, all file cabinets, books, ledgers, microfilm, microfiche, magnetic tapes, magnetic discs, and other information retrieval or storage systems, on which, any of Debtor's records concerning its Accounts, General Intangibles, Instruments, and Chattel Paper, are kept or stored. Debtor agrees to deliver all of the foregoing property, or any part thereof specified by Secured Party, to Secured Party upon request. Debtor agrees that Secured Party may come on any premises where any of such property is located at any reasonable time to take possession of such property, and that the entry of such premises by Secured Party will not constitute a trespass and the taking of such property by Secured Party will not constitute a trespass to, or conversion of, any such property. (b)Secured Party shall have the right at any time, whether before or after the occurrence of a default hereunder by Debtor, to notify any or all account debtors on the Accounts or General Intangibles, and any or all obligors on the Instruments or Chattel Paper, to make payment directly to Secured Party, or to make payment to an address (a "lock box") under the exclusive control of Secured Party. Upon request of Secured Party, Debtor agrees immediately to notify such account debtors and obligors to make payment directly to Secured Party or to such lock box and to place Secured Party's address or such lock box's address on Debtor's invoices and statements as the address to which payment should be made. To the extent Secured Party does not so elect to notify, or does not request Debtor to notify, the account debtor or obligors, Debtors shall continue to collect the Collateral. Debtor agrees not to mingle any proceeds of any of the Collateral with any of -5- Debtor's own funds, goods or property, and at all times to hold such proceeds upon express trust for the Secured Party until delivery thereof is made to Secured Party. Debtor agrees to deliver all proceeds of the Collateral, in precisely the form received by Debtor, except for the endorsement of Debtor where necessary to permit the collection of such proceeds (which endorsement Debtor hereby agrees to make). Secured Party may apply such proceeds to any of the Secured Obligations, whether or not such Secured Obligations shall have matured by their terms, or Secured Party may at its option, release such proceed to Debtor for use in Debtor's business. Secured Party need not apply nor give credit for any item included in such proceeds until Secured Party has received final payment therefor at its offices in cash or solvent credits acceptable to Secured Party. (c)Weekly, monthly, or at such other intervals as Secured Party shall designate, Debtor will deliver to Secured Party lists and agings of all of Debtor's Accounts in such form, and in such detail, as Secured Party shall require, together with copies of invoices, delivery receipts, bills of lading, and such other documents in support of Debtor's Accounts as Secured Party shall require. (d)If any of the Accounts arise out of contracts with the United States or any agency thereof, Debtor agrees to notify Secured Party thereof and to execute such documents as shall be necessary to permit Secured Party to perfect its right to receive payment under the federal Assignment of Claims Act. (e)Upon request of Secured Party, Debtor will purchase insurance covering the loss of, and cost of reconstruction of, Debtor's records of its Accounts, General Intangibles, Chattel Paper and Instruments, such insurance to be issued by an insurer acceptable to Secured Party and to contain such coverage provisions as Secured Party shall request. 7. Debtor hereby covenants, represents, and warrants as follows: (a)Debtor agrees to keep all records concerning the Collateral in a fireproof and safe place and, upon request of Secured Party, to make such records available to Secured Party, its agents, attorneys, and accountants, at any reasonable time and without hindrance or delay to allow Secured Party to inspect, audit, check or make extracts from such records. (b)Debtor hereby represents, warrants and agrees with Secured Party that: (i) (except as otherwise noted in writing hereon or in a schedule attached to this agreement) Debtor is the owner of the Collateral, free and clear of all liens and encumbrances, and has the full right and power to transfer the Collateral to Secured Party and to grant to Secured Party the security interest provided in this agreement; (ii) Debtor will not make any other assignments of the Collateral, nor create any other security interest therein, nor permit any other financing statement to filed in any public office with respect thereto (except as otherwise expressly agreed in writing by Secured Party), nor permit either Debtor's or Secured Party's rights therein to be reached by attachment, levy, garnishment, or other judicial process; (iii) each debt owing to Debtor which is a part of the Collateral, and all names of all account debtors, amounts owing, due dates, and other facts appearing on Debtor's records relating thereto, are true, correct and genuine and are what they purport to be, and each such debt arises out of a bona fide sale of goods or other property sold and delivered to, or out of services heretofore rendered by Debtor to, the account debtors so indicated, and the amount of each such debt is unconditionally owed to Debtor by each such account debtor, except for normal cash discounts, -6- and is not subject to any offset, credit, deduction, or counterclaim, and Debtor is sole owner thereof; (iv) Debtor will promptly notify Secured Party in writing in the event any such account debtor refuses to accept or returns any goods which are subject to any debt owed to Debtor for credit allowance, adjustment, offset or counterclaim by any such account debtor; (v) Debtor agrees not to sell or otherwise dispose of any Equipment except worn out or obsolete Equipment which are immediately replaced with the certificate of title therefore; (vi) Debtor agrees not to sell, collect, assign, negotiate, or otherwise transfer any of Debtor's Inventory, Accounts, General Intangibles, Instruments, or Chattel Paper outside the ordinary course of Debtor's business as conducted on the date of this agreement; and (vii) all of Debtor's Inventory is and will be produced in compliance with the federal Fair Labor Standards Act. (c)Debtor hereby irrevocably makes, constitutes, and appoints Secured Party and any of its officers or designees as Debtor's true and lawful attorney-in-fact with full power and authority to do any and all acts necessary or proper to carry out the Intent of this agreement, including, without limitation, the right, power and authority (i) to receive and give receipt for any amount or amounts due or to become due to Debtor on account of the Collateral and to endorse and negotiate in the name of Debtor any check or other item issued in payment or on account thereof, and in the name of Secured Party or of Debtor to enforce by suit or otherwise, compromise, settle, discharge, extend the time of payment, file claims or otherwise participate in bankruptcy proceedings, and otherwise deal in and with the collateral and any proceeds thereof; (ii) to open mail addressed to Debtor, remove any Collateral or proceeds of the Collateral therefrom, and deliver the remainder of such mail to Debtor; and (iii) to do all acts and things deemed by Secured Party to be appropriate to protect, preserve and realize upon Secured Party's security interest hereunder; but Secured Party shall not be under any duty to exercise such authority or power or in any way responsible for collecting or realizing upon the Collateral. Debtor hereby ratifies and confirms all that Secured Party, its officers or designees, shall do as such attorney-in-fact by virtue of the foregoing powers, which power is coupled with an interest and are irrevocable until this agreement has been terminated as hereinafter provided. 8. (a)Debtor shall do, make, execute, and deliver to Secured Party all such additional and further acts, assignments, assurances, and instruments as Secured Party may require to more completely vest in and assure to Secured Party its rights hereunder and in or to the Collateral and the proceeds thereof. Debtor will deliver all Instruments, Documents, and Chattel Paper which constitute a part of the Collateral to Secured Party upon request, duly endorsed by Debtor to the order of Secured Party or in blank in form satisfactory to Secured Party. (b)Debtor will pay promptly when due all taxes and assessments upon the Collateral or any part thereof, upon its use or operation, upon the proceeds thereof, upon this Security Agreement, or upon any note or notes evidencing the Secured Obligations. At its option, Secured Party may discharge any taxes, liens, security interests or other encumbrances at any item levied or placed on the Collateral or any part thereof and my pay for the maintenance and preservation of the Collateral, but Secured Party shall not be under any duty to exercise any such authority. Debtor agrees to reimburse Secured Party, upon demand, for any payment made or any expense incurred by the Secured Party pursuant to the foregoing authorization. -7- (c)All sums expended by Secured Party which Debtor is obligated to reimburse Secured Party under this agreement shall bear interest from the date reimbursement is due until the date paid at the rate provided in the note evidencing the Secured Obligation with respect to which the sum was expended by Secured Party, or if no single such note exists or is identifiable, then at the rate which is two percentage points in excess of the average of the prime rates of the three largest banks in New York City three business days before expenditure was made, but in any event not more than the maximum rate allowed by law. All such sums and the interest thereon shall be secured by the security interest granted in this agreement. (d)At the request of Secured Party, Debtor will execute financing statements pursuant to the Uniform Commercial Code in form and number satisfactory to Secured Party and will pay the cost of filing the same in all public offices where filing is deemed by Secured Party to be necessary or desirable. Debtor agrees that a carbon or photostatic copy of this agreement may be filed as a financing statement in any public office. If certificates of title are issued or outstanding with respect to any of the Collateral, Debtor will cause the interest of Secured Party to be properly noted thereon at Debtor's expense. Without the written consent of Secured Party, Debtor will not allow an adverse financing statement covering any of the Collateral to be on file in any public office. Secured Party may elect not to perfect its security interest in all or any part of the Collateral without discharging or otherwise impairing its rights against Debtor or any other party. 9. Any or all of the Secured Obligations shall, at the option of Secured Party and notwithstanding the stated maturity date of any instrument evidencing any such Secured Obligation, become immediately due and payable without notice or demand upon the occurrence of any of the following events, each of which shall constitute a default hereunder; (a) Debtor's failure to pay or perform as and when due any of the Secured Obligations or any note evidencing the same; (b)Debtor's failure to pay or perform as and when due any covenant contained in this agreement or if any warranty or representation made or any writing furnished to Secured Party by or on behalf of Debtor in or in connection with this agreement is breached or is false or inaccurate in any material respect when made or furnished; (c)Any event occurs which results in the acceleration of maturity of any indebtedness or Debtor to others under any indenture, agreement, or undertaking; (d)Loss, theft, damage, or destruction of any material part of the Collateral, or any levy seizure, garnishment or attachment thereof or thereon; (e)Death, dissolution termination of existence, insolvency, cessation of business, or appointment of a receiver for any part of the property of, general assignment for the benefit of creditors by, or the commencement of any proceeding under any chapter of the Federal Bankruptcy Code or any insolvency laws by or against, Debtor or any guarantor or surety for Debtor on any of the Secured Obligations. -8- 10. Upon the occurrence of any event of default set forth in the preceding paragraph, and at any time thereafter, Secured Party shall have the right to take possession of all or any part of the Collateral and, with or without taking possession thereof, to sell the Collateral at one or more public or private sales, at Secured Party's option and collect the Accounts, Instruments, Chattel Paper, and General Intangibles which are a part of the Collateral. At Secured Party's request, Debtor agrees to assemble the Collateral and to make it available to Secured Party at a place to be designated by Secured Party which is reasonably convenient to both parties. Debtor waves any notice of sale or other disposition of the Collateral and agrees that notice of sale or other disposition of the Collateral hereunder, or any part thereof, which cannot be waived shall be sufficient if such notice is delivered to Secured Party in writing for such purpose, at least ten (10) calendar days before the time of the sale or disposition. Debtor agrees to pay Secured Party on demand any and all expenses, including attorneys' fees in the amount of 15% of the unpaid balance of the Secured Obligations at the time of default(or the maximum fee allowed by law, if less than 15%, or a reasonable attorneys' fee if applicable law does not permit the parties to agree to the amount of the attorney's fee prior to default) incurred or paid by Secured Party in protecting or enforcing the Secured Obligations and the rights of Secured Party hereunder, including Secured Party's right to take possession of and sell or dispose of the Collateral, and in repossessing and storing the Collateral, collecting the Collateral, preparing the Collateral for sale, advertising and conducting such sale, and collecting the proceeds of such sale. Payment of all such expenses and the interest thereon shall be secured by the security interest granted in this agreement. The proceeds of any sale or other disposition or collection of the Collateral shall be applied, first, to the payment of all costs and expenses incurred by Secured Party in connection with such sale or other realization including, without limitation, attorneys' fees as specified above and all costs of litigation, and to the repayment of all advances made by Secured Party hereunder for the account of Debtor and the payment of all costs and expenses paid or incurred by Secured Part in connection with this agreement or in the exercise of any right or remedy hereunder or under applicable law, to the extent that such advances, costs and expenses have not previously been paid to Secured Party upon demand to Debtor therefor; second, to the payment of the Secured Obligation in such order as Secured Party may elect; and third, to Debtor, or the person then entitled thereto, or as a court of competent jurisdiction may direct. No sale or other disposition are applied thereto. Debtor will remain obligated to pay any deficiency. 11. Secured Party shall have the right to set off the Secured Obligations against any indebtedness or liability of Secured Party to Debtor at any time existing. As additional security for the Secured Obligations, Debtor hereby transfers and assigns to Secured Party, and grants to Secured Party a security interest in, all account balances, credits, deposits, and rights of withdrawal of Debtor with Secured Party, whether now owned or hereafter acquired, and whether jointly or severally held, and Debtor agrees that Secured Party shall have a lien upon and security interest in all property of Debtor of every kind now or hereafter in the possession or control of Secured Party for any reason. 12. (a)Secured Party's rights and remedies hereunder, under other agreements or instruments, and under applicable law (including the Uniform Commercial Code) are cumulative and may be exercised successively or concurrently. Secured Party shall not be deemed to have waived any of its rights hereunder, under any other agreement or instrument, or under law except in a writing signed by Secured Party. No delay or omission on the part of Secured Party in exercising any right -9- or remedy shall operate as a waiver thereof, and a written waiver on any one occasion shall not be construed as a bar or waiver of any right or remedy on any future occasion. (b)Whenever there is no outstanding Secured Obligation and no commitment on the part of Secured Party under any agreement which might give rise to a Secured Obligation, Secured Party will deliver to Debtor a written termination of this agreement upon written request therefor from Debtor. Prior to such termination this shall be a continuing agreement in every respect. (c)This agreement and all rights and obligations hereunder, including matters of construction, validity, and performance, shall be governed by the laws of the state where the address of Secured Party set forth above is located. This agreement is effective when signed by Debtor and delivered to Secured Party, and binds Debtor and inures to the benefit of Secured Party and their respective heirs, successors, and assigns. The provisions of this agreement are severable, and the invalidity or unenforceability of any provision hereof shall not affect the remaining provisions of this agreement. (d)All terms used in this agreement which are not expressly defined herein shall have the meaning, if any, assigned to them in Article 9 of the Uniform Commercial Code. (e)Time is of the essence of every provision of this Agreement. -10- REVOLVING LOAN AGREEMENT This Agreement dated June 7, 2000, made by and between SURGICAL SAFETY PRODUCTS, INC., ("Borrower") and SOUTHTRUST BANK of Florida, National Association ("Bank"). WITNESSETH: That for valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and in consideration of the mutual promises herein made, Bank and Borrower, intending to be legally bound, agree as follows: ARTICLE I - THE REVOLVING LOAN Section 1.1 Bank hereby agrees to lend to Borrower, and Borrower hereby agrees to borrow from Bank, upon the terms and conditions set forth in this Agreement, the principal sum of up to ONE HUNDRED THOUSAND AND NO/100 ($100,000.00) (the "Revolving Loan"). Borrower's obligation is repay the Revolving Loan and the interest thereon shall be evidenced by a promissory note (the "Note") in form and substance satisfactory to Bank. Until the earlier of August 2, 2000, or the occurrence of any Event of Default (as defined under Article VI of this Agreement), or written notice to Borrower of Bank's election to terminate the availability of new loans under this Agreement (which notice Bank may give at its discretion, whether or not an Event of Default has occurred or is threatened), Borrower may borrow hereunder, prepay the principal sum of such loans in whole or in part without penalty, and reborrow hereunder, so long as the aggregate unpaid principal balance of such loans does not exceed the maximum principal amount set forth in the preceding sentence of this Section 1.1. Bank may require at any time the loans be made upon at least one banking day's notice to Bank. Bank may also require at any time that loans be requested in writing on Bank's loan request form. Bank may disburse each loan by credit to Borrower's transaction account with Bank, by check, or in such other manner as Borrower and Bank may agree. Section 1.2. Borrower agrees to pay interest on the Revolving Loan at the rate(s), on the date(s) and calculated by the method, set forth in the Note. Section 1.3. Unless payment is required to be made earlier under the terms of the Note or pursuant to Section 6.2 of this Agreement following an Event of Default, Borrower shall pay the unpaid principal balance of the Revolving Loan in full on the maturity date of the Note. Section 1.4. For the privilege of having the Revolving Loan available, until the earlier of the termination of this Agreement or the effective date of Bank's election to terminate the availability of new loans, Borrower agrees to pay to Bank a commitment fee of 0.00% per annum on the unused portion of the maximum principal amount of the Revolving Loan, such fee to be calculated and paid as follows: ---------------------------------------------------------------- - -------------------------------------------------------. -1- ARTICLE II - COLLATERAL Section 2.1. The repayment of Borrower of its indebtedness under the Revolving Loan and the Note, and the performance by Borrower of all obligations under this Agreement, shall be secured by every mortgage and every security agreement (every "Separate Agreement") which secures obligations so defined as to include the Revolving Loan or the Note, and by all property of Borrower in, or coming into, the possession, control or custody of Bank, or it which Bank has or hereafter acquires a lien, security interest, or other right, including without limitation, the following (describe Collateral and Separate Agreements): AS FURTHER DESCRIBED IN SECURITY AGREEMENT DATED 06/07/00 AND ALSO AS DESCRIBED IN UCC FILING #970000107342, FILED 05/19/97. (individually and collectively the "Collateral"). Section 2.2. Borrower shall execute and deliver, or shall cause to be executed and delivered, such documents relating to the Collateral as Bank may from time to time request. ARTICLE III - REPRESENTATIONS AND WARRANTIES; CONDITIONS PRECEDENT Section 3.1. Borrower is a Corporation duly organized and existing under the laws of the State of Florida, and is qualified to do business in all jurisdictions in which it conducts its business. Section 3.2. The execution and delivery by Borrower of, and the performance by Borrower of its obligations under, this Agreement, the Note and the Separate Agreements have been duly authorized by all requisite action on the part of Borrower and do not and will not (i) violate any provision of Borrower's articles of incorporation by-laws, or other organizational documents, any law or any judgment, order or ruling of any court or governmental agency, or (ii) be in conflict with, result in a breach of, or constitute, following notice or lapse of time or both, a default under any indenture, agreement or other instrument to which Borrower is a party or by which Borrower or any of its property is bound. Section 3.3. Each of this Agreement and the Note is the legal, valid and binding agreement of Borrower enforceable against Borrower in accordance with its terms. Section 3.4. There are no pending or threatened actions or proceedings before any court or administrative or governmental agency that may, individually or collectively, adversely affect the financial condition or business operation of Borrower. Section 3.5. The financial statement dated ____________, previously delivered by Borrower to Bank, fairly and accurately presents the financial condition of Borrower as of such date and has been prepared in accordance with generally accepted accounting principles consistently applied. Since the date of that financial statement, there has been no mention -2- adverse change in the financial condition of Borrower, and, after due inquiry, there exists no material contingent liability or obligation assertable against Borrower. Section 3.6. All federal, state and other tax returns of Borrower required by law to be filed have been completed in full and have been duly filed, and all taxes, assessments and withholds shown on such returns or billed to Borrower have been paid, and Borrower maintains adequate reserves and accruals in respect of all such federal, state and other taxes, assessments and withholdings. There are no unpaid assessments pending against Borrower for any taxes or withholdings, and Borrower knows of no basis therefor. Section 3.7. The obligations of Borrower under this Agreement and the Note are not subordinated in right of payment to any other obligation of Borrower. Section 3.8. Borrower possesses all permits, memberships, franchises, contracts, licenses, trademark rights, trade names, patents, and other authorizations necessary to enable it to conduct its business operations as now conducted, and no filing with, and no consent, permission, authorization, order or license of, any individual, entity, or governmental authority is necessary in connection with execution, delivery, performance or enforcement of this Agreement or the Note. Section 3.9. No event has occurred and is continuing which is, or which with the giving of notice or lapse to time or both would be, an Event of Default (as defined in Article VI) of this Agreement. Section 3.10. Borrower has good and marketable title to all of its properties and assets including, without limitation, the Collateral and the properties and assets reflected in the above- described financial statement. Section 3.11. The minimum funding standards of Section 302 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") have been met at all times with respect to all "plans" of Borrower to whish such standards apply; Borrower has not made a "partial withdrawal" or a "completed withdrawal" from any "multi-employer plan"; and no "reportable event" or "prohibited transaction" has occurred with respect to any such "plan" (as all of the quoted terms are defined in ERISA). Section 3.12. Except as otherwise expressly disclosed by Borrower to Bank in writing on the date of this Agreement: No "hazardous substance" (as that term is defined in Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ["CERCLA"]) has been released, discharged, disposed of, or stored on any of Borrower's owned or leased real or personal property by Borrower, by any third party, or by any predecessor in interest or title to Borrower; Borrower and all of Borrower's properties are in compliance with all applicable local, state and federal environmental laws and regulations; no notice has been served on Borrower by any governmental authority or any individual or entity claiming violation of any environmental protection law or regulation, or demanding compliance with any environmental protection law or regulation, or demanding payment, indemnity, or -3- contribution for any environmental damage or injury to natural resources; no "hazardous substance" (as defined in CERCLA) is produced or used in Borrower's business; and no improvement on any real property owned or leased by Borrower contains any asbestos, including, without limitation, asbestos insulation on ceilings, piping or structural members or supports. Section 3.13. Bank shall not be obligated to make any loan under the Revolving Loan until Borrower shall have furnished Bank, at Borrower's expense, such evidence as Bank shall require regarding the truth or continue truth of the foregoing representations and warranties, including, without limitation, opinions of Borrower's outside legal counsel, opinions and certificates of Borrower's independent certified public accountants, surveys, appraisals, environmental audits by qualified environmental engineers selected by Bank, reports of other independent consultants selected by Bank, and certificates of Borrower's officers. All such evidence must be in form and content satisfactory to Bank. ARTICLE IV - AFFIRMATIVE COVENANTS Borrower covenants and agrees that, so long as it may borrow under this Agreement or so long as any indebtedness remains outstanding under the Revolving Loan or under the Note, Borrower shall: Section 4.1. Deliver to Bank (i) within 30 days after fiscal quarter an unaudited income and expense statement and balance sheet, (ii) within 120 days after the end of each fiscal year statements of income and retained earnings of Borrower for the just-ended fiscal year, and a balance sheet of Borrower as of the end of such year, certified or compiled (at Bank's election) by the present independent certified public accountants of Borrower or by such other firm of independent public accountants as may be designated by Borrower and bee satisfactory to Bank, and (iii) with reasonable promptness, such other information as Bank may reasonably request. Section 4.2. Maintain its books, accounts and records in accordance with generally accepted accounting principles and shall permit any person or entity designated in writing by Bank to visit and inspect any of its properties, books and financial records, and to make copies thereof and take extracts therefrom, and to discuss Borrower's financial affairs with Borrower's financial officers and accountants. Section 4.3. Pay and discharge all taxes, assessments, fees, withholdings and other governmental charges or levies imposed upon it, or upon its income and profits, or upon any property belonging to it, prior to the date on which penalties attach thereto, unless the legality thereof shall be promptly and actively contested in good faith by appropriate proceedings, and unless adequate reserves for such liability are maintained by Borrower pending determination of such contest. Section 4.4. Maintain its existence in good standing in the state of its organization or incorporation of its qualification and good standing in all jurisdictions where such qualification is -4- required under applicable law, and conduct its business in the manner in which it is now conducted subject only to changes made in the ordinary course of business. Section 4.5. Promptly notify Bank in writing of the occurrence on any Event of Default or of any pending or threatened litigation claiming damages in excess of $25,000 or seeking relief that, if granted, would adversely affect the financial condition or business operations of Borrower. Section 4.6. Maintain and keep in force insurance of the types and in the amounts customarily carried in lines of business similar to Borrower's and such other insurance as Bank may require, including, without limitation, fire, public liability, casualty, property damage, flood damage, and worker's compensation insurance, which insurance shall be carried with companies and in amounts satisfactory to Bank. All casualty and property damage insurance shall name Bank as mortgagee or loss payee, as appropriate. Borrower shall deliver to Bank from time to time at Bank's request copies of all such insurance policies and certificates of insurance and schedules setting forth all insurance then in effect. Section 4.7. Keep all of its properties in good repair and condition, and from time to time make necessary repairs, renewals and replacements thereto so that Borrower's property shall be fully and efficiently preserved and maintained. Section 4.8. Perform or take, on request of Bank, such action as may be necessary or advisable to perfect any lien or security interest in the Collateral or otherwise to carry out the intent of this Agreement. Section 4.9. Pay or reimburse Bank for any out-of-pocket expenses, including attorney's fees, incurred by Bank in preparing or enforcing this Agreement, the Note, and the Separate Agreements, or in collecting the Revolving Loan and any other sum due under the Note or this Agreement after default by Borrower in the payment thereof. Section 4.10. Fund all of its "plans" to which the minimum funding standards of Section 302 of ERISA apply in accordance with such standards; furnish Bank, promptly upon Bank's request, copies of all reports or other statements filed with, or received from, the United States Department of Labor, the Internal Revenue Service, or the Pension Benefit Guaranty Corporation with respect to all of Borrower's "plans"; and promptly advise Bank of the occurrence of any "reportable event" or "prohibited transaction" with respect to any such "plan" (as all of the quoted terms are defined in ERISA). Section 4.11. Comply with all applicable present and future local, state and federal laws, including, without limitation, environmental laws and regulations; notify Bank immediately if any "hazardous substance" (as defined in CERCLA) is released, discharged, disposed of, stored, or discovered on any real or personal property owned or leased by Borrower; notify Bank in writing within three days after Borrower receives notice from any governmental authority or any individual or entity claiming violation of any environmental protection law or regulation, or demanding compliance with any environmental protection law or regulation, or demanding -5- payment, indemnity, or contribution for any environmental damage or injury to natural resources; and permit Bank from time to Time to observe Borrower's operations and to perform tests (including soil tests and ground water tests) for "hazardous substances" on any real or personal property owned or leased by Borrower. Section 4.12. Maintain its principal transaction account with Bank. Section 4.13. Use the proceeds of the Revolving Loan only for RENEWAL OF REVOLVING LINE OF CREDIT - PROVIDING NEW MATURITY DATE OF 8/12/00 Section 4.14. NOTIFY BANK OF INTENTIONS REGARDING LOAN NO LATER THAN 7/12/00. BORROWER AGREES TO EITHER P/O & CLOSE LINE OR PROVIDE ACCEPTABLE COLLATERAL. BORROWER AGREES THAT THE FULL GUARANTEES OF G. MICHAEL SWOR AND ANDREA SWOR FROM THE ORIGINAL LOAN AGREEMENT DATED 5/2/97 ARE STILL IN FULL EFFECT WITH THE EXTENSION OF THIS OBLIGATION. ARTICLE V - NEGATIVE COVENANTS Borrower covenants and agrees that, without the prior written consent of Bank, so long as it may borrow under this Agreement or so long as any indebtedness remains outstanding under the Revolving Loan or under the Note, Borrower shall not: Section 5.1. Use any proceeds of the Revolving Loan except for the purposes stated in Section 4.13. Section 5.2. Make any additional investment in fixed assets in any one fiscal year in excess of a yearly aggregate of $_______________. Section 5.3. Create, incur, assume, or suffer to exist any indebtedness of any description whatsoever not existing as of the date of this Agreement, except (I) indebtedness incurred under this Agreement, (ii) any trade indebtedness incurred in the ordinary course of business payable within 60 days of its incurrence, and (iii)________________________________________. Section 5.4. Merge, consolidate or enter into a partnership or joint venture with any other person or entity; or sell, lease, transfer or otherwise dispose of all or any substantial portion of its assets, except sales of inventory in the ordinary course of business, or change its name, or change the location of its chief executive office. Section 5.5. Guarantee or become contingently liable for any obligation or indebtedness of any other person or entity, except that Borrower may endorse negotiable instruments for collection in the ordinary course of business. Section 5.6. Make any loans, advances or extensions of credit to any person or entity -6- Section 5.7. Pay or declare any dividend on any of its capital stock after the date hereof, provided, however, that if Borrower is an S Corporation, it may pay dividends not to exceed the amount of income taxes payable by its shareholders attributable to Borrower's income. Section 5.8. Grant any lien on or security interest in, or otherwise encumber, any of its properties or assets including, without limitation, the collateral, and, except for liens for taxes not yet due and payable or which are being actively contested in good faith by appropriate proceedings and for which adequate reserves are being maintained by Borrower and those liens disclosed to Bank by Borrower in writing prior to the execution of this Agreement, Borrower shall not permit to exist any lien, security interest or other encumbrance on any of its properties or assets. Section 5.9. Take, or fail to take, any act if such act or failure to act results in the imposition of withdrawal liability under Title IV of ERISA. Section 5.10. Release, discharge, dispose of, store, accept or receive for storage or disposal, or allow to be stored or disposed of, any "hazardous substance" (as defined in CERCLA) on or in any real or personal property owned or leased by Borrower, except as otherwise expressly consented to by Bank in writing; or release, discharge, use, transport, or dispose of any "hazardous substance" in an unlawful manner. Section 5.11. (a) Permit its working capital to be at any time less than $ n/a; (b) Permit the ratio of its current assets to its current liabilities to be at any time less than n/a to 1.0; (c) Permit its tangible net worth to be at any time less than $ _____; (d) Permit the ratio of its total liabilities to its tangible net worth to be at any time greater than n/a to 1.0; (e) Permit is Fixed Charge Coverage to be less than n/a; (f) Change the dates of its fiscal year now employed for financial and accounting purposes; (g)______________________________________________; (h)______________________________________________. ARTICLE VI - EVENTS OF DEFAULT AND REMEDIES Section 6.1. Any one or more of the following shall constitute an Event of Default hereunder by Borrower; (a) Failure to pay when due any payment of principal or interest due on the Note or any other sum due hereunder; or -7- (b)Failure to pay when due any payment of principal or interest due on any other obligation for money borrowed or the deferred purchase price of goods or services; or (c)Default under any Separate Agreement or any other document, note, agreement, mortgage, security agreement, instrument, or understanding with, held by, or executed in favor of Bank; or (d)Should any representation or warranty contained herein or made by or furnished on behalf of Borrower in connection herewith be false or misleading in any material respect as of the date made; or (e)Failure to perform or observe any covenant or agreement contained in Articles IV or V of this Agreement; or (f)Failure to pays its debts generally as they become due; or (g) Borrower's or any Guarantor's making or taking any action to make an assignment for the benefit of creditors, or petitioning or taking any action to petition any tribunal for the appointment of a custodian, receiver or any trustee for it or a substantial part of its assets, or commencing or taking any action to commence any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or debtor relief law or statute of any jurisdiction, whether now or hereafter in effect, including without limitation, any chapter of the federal Bankruptcy Code; or, if there shall have been filed or commenced against Borrower or any Guarantor any such petition, application or proceeding which is not dismissed within 30 days or in which an order for relief is entered; or should Borrower or any such Guarantor by any act or omission indicate its approval of or acquiescence in any such petition, application or proceeding or order for relief or the appointment of a custodian, receiver or any trustee for it or any substantial part of any of its properties; or should Borrower or any such Guarantor suffer to exist any such custodianship, receivership or trusteeship; or (h) Borrower's or any Guarantor's concealing, removing, or permitting to be concealed or removed, any part of its property, with intent to hinder, delay or defraud its creditors or any of the, making or suffering a transfer of any of its property which may be fraudulent under any bankruptcy, fraudulent conveyance or similar law; or making any transfer of its property to or for the benefit of a creditor at a time when other creditors similarly situated have not been paid, or suffering or permitting, while insolvent, any creditor to obtain a lien upon any of its property through legal proceedings or distraint which is not vacated within 30 days after the date thereof; or (i) Occurrence of any of the following with respect to Borrower or any Guarantor: death (if individual), death of a general partner (if a partnership), dissolution or cessation of business (if a partnership, corporation, or other organization), or insolvency. Section 6.2. Upon the occurrence and continuation of an Event of Default, Bank may (i) terminate all obligations of Bank to Borrower, including, without limitation, all obligations to lend money under this Agreement, (ii) declare immediately due and payable, without presentment, demand, protest or -8- any other notice of any kind, all of which are expressly waived, the Note and any other note of Borrower held by Bank, including, without limitation, principal, accrued interest and costs of collection (including, without limitation, a reasonable attorney's fee if collected by or through an attorney who is not a salaried employee of Bank, in bankruptcy or in other judicial proceedings) and (iii) pursue any remedy available to it under this Agreement, under the Note, under any note of Borrower held by Bank, or available at law or in equity. ARTICLE VII - DEFINITIONS Section 7.1. As used in this Agreement, the following terms shall have the meanings set forth below: (a) Accounting terms used in this Agreement such as "net income", "working capital", "current assets", "current liabilities", "tangible net worth", and "total liabilities" shall have the meanings normally given them by, and shall be calculated, both as to amounts and classification of items, in accordance with, generally accepted accounting principles. (b) "Agreement" means this Revolving Loan Agreement, as amended or supplemented in writing from time to time. (c) "Bank" means the banking corporation or association name in the first sentence of this Agreement and which executes this Agreement below as "Bank". (d) "Borrower" means the person or entity named in the first sentence of this Agreement and who executes this Agreement below as "Borrower". For the purposes of Section 3.11, 4.10, and 5.9, such term also includes any member of a "controlled group" (as defined in ERISA) of which the named Borrower is a member. (e) "CERCLA" is defined in Section 3.12. (f) "Collateral" is defined in Section 2.1. (g) "ERISA" is defined in Section 3.11. (h) "Event of Default" is defined in Section 6.1. (i) "Fixed Charge Coverage" means a fraction in which the numerator is the sum of the net income of Borrower (after provision for federal and state taxes) for the 12-month period proceeding the applicable date plus the interest, lease and rental expense of Borrower for the period plus the sum of non-cash expenses or allowances for such period (including, without limitation, amortization or write-down of intangible assets, depreciation, depletion, and deferred taxes and expenses) and the denominator is the sum of the current portion of the long-term debt of Borrower as of the applicable date plus the interest, lease and rental expenses for the 12-month period proceeding the applicable date. If Borrower has elected treatment as an S Corp9oration under the Internal Revenue Code, however, "Fixed Charge Coverage" means a fraction in which -9- the numerator is the sum of the net income of Borrower (after deduction of an amount equal to the federal and state income taxes, calculated at the marginal rates which would otherwise have been applicable to Borrower at such time, which Borrower would have been required to pay if it had not elected treatment as an S Corporation for federal and state income tax purposes) for the 12-month period preceding the applicable date plus the interest, lease and rental expenses of Borrower for the period plus the sum of noncash expenses or allowances for such period (including, without limitation, amortization or write-down of intangible assets, depreciation, depletion, and expenses), and the denominator is the sum of the current portion of the long-term debt of Borrower as of the applicable date plus the interest, lease and rental expenses for the 12- month period preceding the applicable date. (j) "Guarantor" means any person or entity who endorses the Note or who now or hereafter guarantees payment or collection of the Revolving Loan in whole or in part. (k) "Note" is defined in Section 1.1 and includes any promissory note or notes given in extension or renewal of, or in substitution for, the original Note. (l) "Revolving Loan" is defined in Section 1.1. (m) "Separate Agreement" is defined in Section 2.1. ARTICLE VIII - MISCELLANEOUS Section 8.1. No delay or failure on the part of the Bank in the exercise of any right, power or privilege granted under this Agreement or the Note, or available at law or in equity, shall impair any such right, power or privilege or be construed as a waiver of any Event of Default or any acquiescence therein. No single or partial exercise of any such right, power or privilege shall preclude the further exercise of such right, power or privilege. No waiver shall be valid against Bank unless made in writing or signed by Bank, and then only to the extent expressly specified therein. Section 8.2. All notices and communications provided for hereunder shall be in writing, delivered by hand or sent by first-class or certified mail, postage prepaid to the following addresses: (a) If to Bank SOUTHTRUST BANK of Florida P.O. BOX 4705 SARASOTA, FL 34230 Attention: B. EDWIN WYATT, JR. AVP (b) If to Borrower: SURGICAL SAFETY PRODUCTS, INC. 2018 OAK TERRACE, SUITE 400 SARASOTA, FL 34231 Attention: G. MICHAEL SWOR President/Director -10- Either Borrower or Bank, or both, may change its addresses for notice of purposes by notice to the other party in the mater provided herein. Section 8.3. This Agreement and the Note shall be governed by and construed and enforced in accordance with the substantive laws of the United States and the state in which the principal office of Bank is located, without regard to that state's rules governing conflicts of law. Section 8.4. All representations and warranties contained in this Agreement or made or furnished on behalf of Borrower in connection herewith shall survive the execution and delivery of this Agreement and the Note, shall be deemed to be made anew each time Borrower requests a loan under this Agreement, and shall survive until the Revolving Loan and all interest thereon are paid in full. Section 8.5. This Agreement shall bind and inure to the benefit of Borrower and Bank, and their respective successors and assigns; provided, however, Borrower shall have no right to assign its rights or obligations hereunder to any person or entity. Section 8.6. Time is of the essence in the payment and performance of every term and covenant of this Agreement and the Note. Section 8.7. This Agreement may be amended or modified, and Borrower may take any action herein prohibited, or omit to perform any action required to be performed by it, only if Borrower shall obtain the prior written consent of Bank to such amendment, modification, action or omission to act, and no course of dealing between Borrower and Bank shall operate as a waiver of any right, power or privilege granted under this Agreement, under the Note or the Separate Agreements, or available at law or in equity. This Agreement, the Note, and the Separate Agreement contain the entire agreement between Borrower and Bank regarding the Revolving Loan and the Collateral. No oral representations or statements shall be binding on Bank, and no agent of Bank has the authority to vary the terms of this Agreement except in writing on the face hereof or on a separate page attached hereto. Section 8.8. All rights, powers and privileges granted hereunder shall be cumulative, and shall not be exclusive of any other rights, powers and privileges granted by the Note or any other document or agreement, or available at law or in equity. Section 8.9. Upon the occurrence and during the continuation of an Event of Default, Borrower recognizes Bank's right, without notice or demand, to apply any indebtedness due or to become due to Borrower from Bank in satisfaction of any of the indebtedness, liabilities or obligations of Borrower under this Agreement, under the Note, or under any other note, instrument, agreement, document or writing of Borrower held by or executed in favor of Bank, including, without limitation, the right to set off against any deposits or cash collateral of Borrower held by Bank. In addition to the right to setoff, as additional collateral for the Revolving Loan, Borrower hereby grants to Bank a continuing lien on and security interest in all deposit accounts of Borrower now or hereafter held by Bank, including all certificates of deposit now or hereafter issued to Borrower by Bank. -11- Section 8.10. Borrower hereby agrees to indemnify Bank and its officers, directors, agents and attorneys against, and to hold Bank and all such other persons harmless from, any claims, demands, liabilities, costs, damages, and judgments (including without limitation, liability under CERCLA, the Federal Resource Conservation and Recovery Act, or other environmental law or regulation, and costs of defense and attorneys' fees) resulting from any Representation or Warranty made by Borrower or on Borrower's behalf pursuant to Article III of this Agreement having been false when made, or resulting from Borrower's breach of any of the covenants set forth in Articles IV or V of this Agreement. This Agreement of indemnity shall be a continuing agreement and shall survive payment of the Revolving Loan and the Note and termination of this Agreement. WITNESS the hand and seal of the parties hereto or as of the date first above written. BANK: SOUTHTRUST BANK of Florida BORROWER: SURGICAL SAFETY National Association PRODUCTS, INC. By: /S/B. Edwin Wyatt, Jr By:/s/ G Michael Swor - -------------------------- --------------------- B. EDWIN WYATT, JR. G. MICHAEL SWOR Title: First Vice President Title: President Attest: ____________________ Title: _____________________ (Corporate Seal) -12- WAIVER OF LANDLORD'S LIEN STATE OF FLORIDA ) ) Sarasota COUNTY ) KNOW ALL MEN BY THESE PRESENTS: That the undersigned Savannah Leasing, Inc. (whether one or more, hereinafter called "Landlord") is the owner of the real property located in the State of Florida, Sarasota County, described as follows: 2018 OAK TERRACE, SARASOTA, FLORIDA Landlord has leased said real property to SURGICAL SAFETY PRODUCTS, INC. ("Tenant"). Landlord recognizes that all equipment and/or inventory owned by Tenant and now or hereafter installed in or located on said real property is to be collateral for loans made by SOUTHTRUST BANK OF FLORIDA, NATIONAL ASSOCIATION ("Bank") to Tenant. To induce Bank to make such loans to Tenant, and in consideration of such loans, Landlord hereby (a) agrees with Bank that all machinery, furniture and equipment now or hereafter owned by Tenant and now or at any time hereafter located on said real property shall remain personal property and may be removed by Bank at any time; and (b) waives and subordinates in favor of Bank (but not in favor of any other person or entity) any right, title, lien or claim which Landlord (or any of them, if more than one) might otherwise have, whether by statute, agreement or otherwise in, to or on any of said machinery, furniture, or equipment and in, to or on any inventory (as defined in the Uniform Commercial Code) now or hereafter owned by Tenant and now or at any time hereafter located on said real property. IN WITNESS WHEREOF, Landlord has executed these presents, or has caused these presents to be executed by its officer or partner thereunto duly authorized, this 7TH day of JUNE, 2000. Savannah Leasing, Inc. (Name of Corporation, Partnership Or firm) _____________________ By:/s/G. Michael Swor Title: Witness G. Michael Swor & Andrea Swor or - --------------------- -------------------------------- Witness (Name of Individual) INDIVIDUAL ACKNOWLEDGMENT STATE OF FLORIDA COUNTY OF ___________ The foregoing instrument was acknowledged before me this ____ day of ___________, 19____ by ________________________ |_| who is personally known to me |_| who has produced ___________________ ______________ as identification, and who did not take an oath. - ------------------------------ Notary Signature - -------------------------------------- Notary Name (typed, Printed or Stamped) - -------------------------------------- Serial Number CORPORATE ACKNOWLEDGMENT STATE OF FLORIDA COUNTY OF ___________ The foregoing instrument was acknowledged before me this ____ day of _______, 19____ by _________________, A ___________________ corporation, on behalf of the corporation. He/She |_| who is personally known to me |_| who has produced _____________________ ___________ as identification, and who did not take an oath. - ------------------------------------- Notary Signature - -------------------------------------- Notary Name (typed, Printed or Stamped) - -------------------------------------- Serial Number PARTNERSHIP ACKNOWLEDGMENT STATE OF FLORIDA COUNTY OF ___________ The foregoing instrument was acknowledged before me this ____ day of _______, 19__ by _______________ a partnership, He/She |_| who is personally known to me |_| who has produced ___________________ as identification, and who did not take an oath. - ------------------------------------- Notary Signature - -------------------------------------- Notary Name (typed, Printed or Stamped) - -------------------------------------- Serial Number CERTIFIED CORPORATE RESOLUTIONS I HEREBY CERTIFY that I am Secretary of SURGICAL SAFETY PRODUCTS, INC. A corporation organized and existing under the laws of the State of FLORIDA. I FURTHER CERTIFY that a meeting of the Board of Directors of said corporation was duly called and held at its offices in the City of SARASOTA and State of FLORIDA on the 7th day of JUNE 2000, that at said meeting a quorum was present and voting throughout, and that the following resolutions were duly adopted: "Resolved, that SURGICAL SAFETY PRODUCTS, INC., (hereinafter called the "corporation") borrow from SOUTHTRUST BANK (hereinafter called the "Bank"), from time to time, such sums of money as, in the judgment of the officer or officers hereinafter authorized, this corporation may require: "Resolved Further, that any 2 (specify number, any one is authorized if no greater number is specified) of the following named officers of this corporation, G. MICHAEL SWOR the C.E.O AND CHAIRMAN, DON LAWRENCE, PRESIDENT/C.O.O., and their respective successors in office, (the officer or officers authorized to act pursuant hereto being hereinafter designated as "authorized officers") be and they are hereby authorized, directed and empowered, for and on behalf and in the name of this corporation (1) to execute and deliver to the Bank agreements for the borrowing of money and to execute and deliver to the Bank such notes or other evidences of indebtedness of this corporation for the monies so borrowed, with interest thereon, as the Bank may require, and to execute and deliver, from time to time, renewals or extensions of such notes or other evidences of indebtedness; (2) to convey, grant, assign, transfer, pledge, mortgage or otherwise hypothecate and deliver by such instruments in writing or otherwise as may be demanded by Bank, any of the property of this corporation, including real and personal property and chooses in action, as may be required by the Bank to secure the payment of any notes or other indebtedness of this corporation or any other person or entity to the Bank, whether arising under authority of this resolution or otherwise; (3) to endorse and guarantee notes and other indebtedness of any other person or entity to the Bank; and (4) to perform all acts and execute and delivery all agreements and instruments which the authorized officers may deem necessary or appropriate to carry out the purposes of this resolution; "Resolved Further, that said authorized officers be and they are hereby authorized, directed and empowered, and that any one of said authorized officers be and he is hereby authorized, directed and empowered (1) to discount with, assign or sell to the Bank conditional sales contracts, notes, acceptances, drafts, receivables and evidences of indebtedness payable to this corporation, upon such terms as may be agreed upon by them and the Bank, and to endorse in the name of this corporation said conditional sales contracts, notes, acceptances, drafts, receivables and evidences of indebtedness so discounted, assigned or sold, and to guarantee the payment of the same to the Bank; (2) to apply for an obtain from the Bank letters of credit and in connection therewith to execute such agreements, applications, trust receipts, pledge agreements, guarantees, indemnities, agreements for cover and other financial undertakings as Bank may require; and (3) to enter into leases of personal property from the Bank containing such terms as said officers shall deem to be appropriate, whether such leases are true leases or leases intended as security, and whether such leases contain options on the part of this corporation to purchase the lease property or not; "Resolved Further, that this resolution will continue in full force and effect until the Bank shall receive official notice in writing from this corporation of the revocation thereof by a resolution duly adopted by the Board of Directors of this corporation, which revocation shall have prospective effect only, and that the certification of the Secretary of this corporation as to the signature of the above-named persons shall be binding on this corporation." I FURTHER CERTIFY, that the foregoing resolutions are withing the power of the Board of Directors to adopt as provided in the Articles of Incorporation and By-Laws of this corporation, and that said resolutions are still in full force and effect and have not been amended or revoked, and that the specimen signatures appearing below are the genuine signatures of the officers authorized to sign for this corporation by virtue of said resolutions. Authorized Signatures: /s/ G Michael Swor (Signature) G. MICHAEL SWOR, C.E.O/CHAIRMAN /s/Don Lawrence (Signature) DON LAWRENCE, PRESIDENT/C.O.O. Federal ID# 65-0565144 IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary and affixed the corporate seal to said corporation this ____ day of ____________. Corporate Seal (if none, so state) /s/ Pauline Parrish (Signature) PAULINE PARRISH FURTHER ASSURANCE AND COMPLIANCE AGREEMENT For and in consideration of Ten Dollars ($10.00) and other good and valuable consideration, and the funding of that certain Loan of even date in the amount of $ 100,000.0 from SOUTHTRUST BANK OF Florida, National Association (herein, "Bank") to the borrower agrees to cooperate, adjust, initial, re-execute and re-deliver any and all closing documents, including but not limited to any notes, mortgages, deeds, affidavits and closing statements if deemed necessary or desirable at the sole discretion of the bank in order to consummate or complete the Loan from the Bank to Borrower or to perfect the Bank's lien or mortgage. It is the intention of the Borrower that all documentation for the Loan shall be an accurate reflection of the Bank's requirements. The Borrower agrees and covenants to assure that the Loan and its documentation will conform to the Bank's requirements. The Bank is relying upon this Agreement and the covenants contained herein in closing this transaction and funding the Loan to Borrower. Bank shall have the right to bring suit to enforce the obligations incurred in connection with this Agreement, and in the event any suit is brought to enforce this Agreement, the Bank shall be entitled to recover all costs and expenses incurred, including a reasonable attorney fee. DATED this 7th day of JUNE 2000. WITNESSES: "BORROWER(S)" Surgical Safety Products, Inc. /s/ B. Edwin Wyatt /s/G Michael Swor G. MICHAEL SWOR, M.D. Loan # 7301868-00002 SouthTrust Bank [Logo] SOUTHTRUST BANK OF Florida, National Association CLOSING STATEMENT FOR LOAN DATED 06/07/00 Florida State Documentary Stamps $ N/A Loan Fee to SouthTrust Bank 500.00 DOC. PREP FEE 150.00 INTEREST DUE 6-7-00 789.69 LATE FEE DUE 250.00 UCC-1 FILING FEE 25.00 ____________________________ n/a _____________________________ n/a _____________________________ n/a TOTAL $ 1689.69 SURGICAL SAFETY PRODUCTS, INC. /S/ G. MICHAEL SWOR -------------------------------------- G. MICHAEL SWOR, PRESIDENT ------------------------------------- EX-10.48 7 0007.txt AGREEMENT Exhibit 10.48 AGREEMENT This Agreement, dated June 29, 2000, is between Surgical Safety Products, Inc., a New York corporation ("Oasis") and AORN, Inc., a New York corporation ("AORN"). The parties agree to the following terms and conditions. WHEREAS, AORN has and will develop certain materials described on Exhibit 1 ("AORN Deliverables") for use by health care professionals and health care facilities; WHEREAS, Oasis wishes to market its products and services, and those of others which may be similar in nature to the AORN deliverables contained herein, to perioperative nurses, perioperative technologists, and operating room decision makers via its various Oasis delivery channels which include but are not limited to TouchPort kiosks, CD-ROM's, and the Internet ("Oasis System"); add valuable content to its Oasis System; and earn income to develop its business model; WHEREAS, AORN wishes to increase its membership, increase the usage of the AORN Deliverables; and enhance the value of AORN as an information and solution provider to operating room supervisors, leaders, managers and others who need perioperative data. Now, therefore, in consideration of the mutual promises set forth in this Agreement as well as other good and sufficient consideration, the parties agree as follows: 1. AORN Obligations: AORN shall be responsible for the following under the terms of this agreement: A. Develop and deliver to Oasis at AORN's sole cos and expense the AORN Deliverables described on Exhibit 1 to this Agreement. These AORN Deliverables shall be provided to Oasis within fifteen (15) days of the execution of this Agreement, with the exception of the AORN Surgical Knowledgebase, the AORN Journal and the AORN Journal Home Studies. Delivery of the Surgical Knowledgebase, AORN Journal, and AORN Journal Home Studies shall be as set forth on Exhibit 1. Updates will be provided to Oasis by AORN at mutually agreed times. B. Grant Oasis a non-exclusive license to use specified AORN databases, logos, trademarks and copyrighted materials ("Intellectual Property") subject to the terms and conditions of this Agreement. Such use is limited to the marketing and promotion of AORN Deliverables and the Oasis system by Oasis, as approved by AORN. C. Provide certain marketing opportunities to Oasis by providing up to a $75,000 credit for advertising and promotion during the first year of this agreement, and for each contract year thereafter when Oasis payments to AORN for licensing fees, usage fees, and contact hours, for the preceding year are a minimum $375,000. If Oasis payments to AORN for licensing fees, usage fees, and contact hours is less than $375,000 -1- during any contract year, the advertising and promotion credit for the following contract year will be set at 20% of the amount paid to AORN. This credit is to be used by Oasis to promote the AORN Deliverables and Oasis System in the AORN Journal, the SSM Supplement, the SSM Online web site, OR Product Directory, and AORN Online. Oasis may also purchase additional advertising space from AORN at the 60x rate published in the then current AORN rate card. The parties may mutually agree to additional marketing opportunities. D. Provide a liaison from the AORN Publications Department to serve as AORN's representative to Oasis and provide project management assistance. Such person shall also assist Oasis in developing marketing concepts and content production for the AORN Deliverables. E. Be responsible for developing and updating the AORN Deliverables as well as any disclaimer information concerning use or misuse of the AORN Deliverables. Deliverables will contain disclosure/disclaimer that Oasis has no responsibility or liability for the content contained therein. The disclosure/disclaimer must be approved by Oasis. 2. Oasis Obligations: Oasis shall be responsible for the following: A. Providing the necessary hardware and software associated with the Oasis System at Oasis sole cost and expense to enable integration of the AORN Deliverables into the Oasis System and to provide a co-branded ("AORN/Oasis") module, with Internet access, on the Oasis System. B. Assign a project manager to coordinate, track and manage the use of the AORN Deliverables via the Oasis System. C. Develop a link from the Oasis system to AORN's online membership application and promote AORN membership on the Oasis system. Oasis will be entitled to a $30 one-time payment for each new member who joins AORN from the Oasis system. AORN will provide Oasis with an accounting each quarter reflecting those new memberships for which Oasis will be entitled to its payment. D. Subject to authorization from users of the Oasis System, provide copies of data, reports and other reasonably necessary information generated by the Oasis System to AORN for use by AORN in updating and developing AORN Deliverables. E. Develop marketing and promotional materials for the AORN Deliverables on the Oasis System subject to the prior written approval of AORN. AORN will not withhold approval unreasonably. Such materials shall be submitted to AORN at least ten (10) business days prior to the date of use. AORN shall have five (5) business days after receipt of such materials to either approve or disapprove their use. If AORN does not take action within those five (5) business days, the materials shall be deemed approved. -2- F. Be solely responsible for all costs and expenses associated with marketing its products and services to its customers including, but not limited to, the distribution of Oasis Touchports and costs of the hardware, networking, connectivity and servicing of the network. All management, support and updating of the network will be the sole responsibility of Oasis. G. Provide a quarterly accounting, and an audited annual report, of all usage of the AORN Deliverables through the Oasis System. H. Report customer feedback including complaints and compliments concerning the AORN Deliverables on a periodic basis, but no less than quarterly. 3. License & Usage Fees: AORN and Oasis agree that the AORN Deliverables will be licensed to Oasis pursuant to the fee and Usage schedules set forth on Exhibits 2 to this Agreement. The total annual license fees and contact hours for the first year of this Agreement total $117,000. This amount is considered earned and due to AORN upon the signing of this Agreement. Under no circumstances, including termination by Oasis, will Oasis claim any refunds or reimbursements of these fees. Oasis agrees to pay AORN one-half of the one hundred seventeen thousand dollars ($117,000), or fifty eight thousand five hundred dollars ($58,500) within thirty (30) days of execution of this Agreement. The balance of the first year's licensing and contact hour fees shall be paid in two equal installments on March 1, 2000 and June 1, 2000. Payments in excess of ten (10) days after the due date will be assessed a $25 per day late fee. The Usage Fees set forth on Exhibit 2 will be calculated (based upon the number of Users) commencing ninety (90) days after the online publication by Oasis of each of the particular AORN Deliverables. A "User" shall be defined as anyone who accesses any of the AORN deliverables. If a User access any of the AORN Deliverables in any quarter, that User shall be counted once as a user of that particular Deliverable for the purpose of calculating the Usage Fee due to AORN. All such users shall be added together to determine the Usage Fee due for that quarter. Usage Fees will be due and payable on April 31, July 31, October 31, and January 31 during each year of the Agreement. Payment of the Usage Fees shall be incurred as soon as Oasis system users have online access through Oasis to a particular AORN Deliverable. Once Oasis has paid $1,426,000 in any contract year for the annual license and quarterly usage fees, no additional fees will be due for that year. A contract year begins on July 1 and ends on June 30 of each year. 4a. Recovery of File Conversion Costs: AORN will reimburse Oasis for 50% of the cost of converting the AORN Deliverables to XML, HTML, databases, or other format necessary for Oasis to implement access to the AORN Deliverables on the Oasis System. Any amounts paid under this paragraph shall require the submission of invoices from Oasis describing the services and costs associated therewith. In no event shall such reimbursement from AORN exceed $50,000 during the term of this Agreement. Oasis will itemize and report all file conversion costs it would like rebated from AORN. 4b. Recovery of CE Web Enablement Costs: AORN will also reimburse Oasis up to $10,000 per year, to pay for the cost of web enabling the Home Study Courses, the SRPG Study -3- Guide. This reimbursement is separate and aside from the reimbursements under "4a". Oasis will itemize and report all web enablement costs it would like rebated from AORN. Any amounts paid under this paragraph shall require the submission of invoices from Oasis describing the services and costs associated therewith. If the usage fees paid by Oasis to AORN for any quarter are less than $5,000, AORN shall not be obligated to make these payments. Payments will be made based on invoices generated from Oasis. Payments cannot exceed 50% of the license and usage fees paid to AORN in any quarter. 5. Continuing Education: Oasis agrees to clearly designate all CE Courses provided by AORN as AORN CE Courses and will display a copyright notice and/or credit line throughout the Content. The following language is deemed approved and shall be used by Oasis throughout the content: "AORN (Association of periOperative Registered Nurses) is accredited as a provider of continuing education in nursing by the American Nurses Credentialing Center's (ANCC) Commission on Accreditation. AORN recognizes this activity as continuing education for registered nurses. This recognition does not imply that AORN or the ANCC Commission on Accreditation approves or endorses any product. AORN maintains the following state board of nursing provider numbers: Alabama Provider #ABNP0075; California Provider #BRN00667; Florida Provider #FBN 2296; and Kansas Provider #LT0114-0316." Oasis is hereby granted a nontransferable, non-exclusive right to use AORN's trademarks and logos for the purpose of identifying the origin of the Content. These trademarks and logos may be used by Oasis, in its sole discretion, in connection with the Content on the Sites, and in any form, format, forum, media, medium, means or method by which the Content is delivered, and marketing and advertising materials therefor subject to AORN's approval, not to be unreasonably withheld. The use of AORN's trademarks and logos as set forth herein is subject to the limitations set forth in Section 6. Termination: This Agreement shall be for a term of thirty-six (36) months commencing effective July 1, 2000, and terminating on June 30, 2003, ("Expiration Date"). Either party may terminate this Agreement without cause upon one hundred eighty (180) days notice to the other party at anytime. If this Agreement is terminated without cause by AORN, Oasis shall be entitled to a prorated refund of any license and user fees paid by Oasis but not realized, except as specified in section 3, "License & Usage Fees". If Oasis gives notice that they are terminating this Agreement without cause, then AORN will not be obligated to fulfill its obligations under section "1.C." and no additional advertising and promotion credit will be due Oasis. This Agreement may be terminated before the Expiration Date by either party for cause as defined below provided that the breaching party has received at least sixty days (60) written notice of the breach and has been given thirty days (30) from the date of such notice to remedy the breach to the breached party. -4- "Termination for cause" is defined as follows: a. A breach by either party of any of their respective obligations as set forth in this Agreement; b. Failure by Oasis to make any payment of monies to AORN when due; c. Either party ceases or threatens to cease to function as a going concern, becomes insolvent, makes an assignment for the benefit of creditors, files a petition in bankruptcy, permits a petition in bankruptcy to be filed against it, admits in writing its inability to pay its debts as they become due, or has a receiver appointed for a substantial part of its assets or stock; d. Misuse or misrepresentation of the Intellectual Property by either AORN or Oasis of the other party Upon termination by either party, the parties' respective obligation to surrender all Intellectual Property, Confidential Information, AORN Deliverables and associated materials as well as any other terms and conditions which are intended to survive this contract shall continue in full force and effect. Upon termination, Oasis shall surrender any and all right, title or interest in the AORN Deliverables as well as in all Confidential Information and the AORN Intellectual Property. Upon termination, AORN shall surrender any and all right, title or interest in the Oasis Confidential Information and the Oasis Intellectual Property 7. Additional Development: The parties acknowledge that the AORN Deliverables product described in this Agreement is limited to the inclusion of AORN Deliverables into the Oasis System and that all other programs of AORN and Oasis are separate and distinct. The parties reserve the right to develop any or all of their other programs as they may determine in their sole discretion. The parties acknowledge that they each have a proprietary interest in such additional programs and that neither party will do anything to interfere with the other party's development or marketing of such programs. 8. Financial Records & Accounting: The parties agree that the financial records and accounts concerning the payment of license and usage fees to AORN for the AORN Deliverables shall be available to AORN at anytime upon reasonable notice to Oasis. 9. Ownership & Control of AORN Intellectual Property: "AORN Intellectual Property" means all of the names, logos, and trademarks which are owned by or licensed by AORN to AORN as well as any information or materials including, but not limited to, copyrighted materials, databases and any related programs together with all intangible rights associated therewith whether or not included in the AORN Deliverables. Oasis acknowledges and agrees that AORN has and will invest substantial time, money and other resources in the development of the AORN Deliverables as well as all other AORN Intellectual Property including derivative works of any kind. Oasis acknowledges AORN's ownership of its AORN Deliverables and AORN Intellectual Property as well as all licensing and copyrights to any materials developed in conjunction with the AORN Deliverables. All such materials developed as a part of the Oasis System will have AORN's logo or name and AORN will have on-going use of such materials. Oasis agrees that it will place the appropriate copyright, disclosure, and disclaimer statements on all AORN content used in the Oasis system. -5- Oasis agrees it d shall not do anything to invalidate any of AORN's rights and licenses. Nothing contained in this Agreement shall give Oasis any right, title or interest in the AORN Deliverables or AORN Intellectual Property. Oasis shall not use the AORN Deliverables, AORN Intellectual Property, or any part thereof, as a part of Oasis's corporate or trade name or the corporate or trade name of any parent, subsidiary, associated, affiliated or related company. Oasis agrees that it will not take any action that would create any confusion in the AORN Intellectual Property. Oasis shall not assign, transfer or otherwise convey the AORN Intellectual Property nor grant a license to use the AORN Intellectual Property to any person, firm or entity, including but not limited to, any parent, subsidiary, associated, affiliated or related company. Oasis agrees to notify AORN of any unauthorized use of the AORN Intellectual Property within five (5) days after such unauthorized use comes to the attention of Oasis. All rights not specifically granted herein to Oasis are expressly reserved to AORN. Such rights shall include, but not be limited to, derivative works, anthology, abridgement and condensation rights, as well as all subsidiary rights in any form of media whatsoever. If AORN requests that any portion of the Intellectual Property be deleted, corrected or made inaccessible because such Property contains material errors, requires updated material, or is or could be subject to a claim that it is defamatory, obscene, invades the privacy of certain persons, or infringes any copyright, then Oasis shall take the requested action as soon as practicable after receiving AORN's request but in no less than thirty (30) days. 10. Ownership & Control of Oasis Intellectual Property: "Oasis Intellectual Property" means all of the names, logos, and trademarks that are owned by Oasis as well as any information or materials including, but not limited to, copyrighted materials, databases and any related programs together with all intangible rights associated therewith. AORN acknowledges and agrees that Oasis has and will invest substantial time, money and other resources in the development of the Oasis System as well as the Oasis Intellectual Property. AORN acknowledges Oasis's ownership of the Oasis System and Oasis Intellectual Property as well as all licensing and copyrights to any materials developed by Oasis in conjunction with the Oasis System. All such materials developed as a part of the Oasis System will have Oasis's logo or name and AORN will have on-going use of such materials. AORN agrees that it shall not do anything to invalidate any of Oasis's rights and licenses. Nothing contained in this Agreement shall give AORN any right, title or interest in the Oasis Intellectual Property except as specifically provided for in this Agreement. AORN shall not use the Oasis Intellectual Property or any part thereof as a part of AORN's corporate or trade name or the corporate or trade name of any parent, subsidiary, associated, affiliated or related company. AORN agrees that it will not take any action that would create any confusion in the Oasis Intellectual Property. AORN shall not assign, transfer or otherwise convey the Oasis Intellectual Property nor grant a license to use the Oasis Intellectual Property to any person, firm or entity, including but not limited to, any parent, subsidiary, associated, affiliated or related company. AORN agrees to notify Oasis of any unauthorized use of the Oasis Intellectual Property within five (5) days after such unauthorized use comes to the attention of AORN. 11. Infringement: In the event either party becomes aware of an infringing use of either AORN Deliverables, the Oasis System or the AORN or Oasis Intellectual Property, such party will notify the other party of such infringement immediately, but no later than five (5) days. Upon receipt of such notice, the parties shall meet to discuss the appropriate action including, but not -6- limited to, filing an action in federal or state court to enjoin such infringement. In the event either party decides not to pursue any action against an infringing party, the remaining party may pursue whatever remedy it deems appropriate (at its own cost) to protect all its rights and interests to its Intellectual Property. 12. Confidentiality of Data and Information: Oasis and AORN agree and acknowledge that any and all copyrighted materials, data, statistics, client lists and other informational materials generated by either party ("Confidential Information"), shall remain the property of the providing or generating party. None of this information which is directly related to the AORN Deliverables may be disclosed or used by the non-generating or providing party for any other purpose other than in connection with the AORN Deliverables or as otherwise specifically authorized in writing by the generating or providing party. Upon the expiration or termination of this Agreement, irrespective of the cause thereof, all such information shall be immediately surrendered to the other, which will retain ownership. 13. Indemnification: Oasis and AORN each agree to indemnify and hold the other party, as well as that party's officers, members, directors, employees or agents harmless from and against any lawsuits, claims, actions or causes of action, arising out of, or in connection with, any errors or missions of the other party, its agents, representatives or employees, with respect to that party's duties and obligations set forth in this Agreement: AORN further agrees to indemnify and hold harmless Oasis with respect to any claims, lawsuits or actions relating to the content set forth in the deliverables. This obligation includes, but is not limited to, the costs of defense, payment of any judgments and payment of any expenses for attorneys' fees and other costs that may be incurred. 14. Arbitration: In the event of any dispute arising out this Agreement, AORN and Oasis will first seek to mediate that dispute. If either party rejects such mediation, then AORN and Oasis agree that any controversy or claim arising out of or relating in any way to this Agreement shall be settled by arbitration in Denver, Colorado, according to the Commercial Arbitration Rules of the American Arbitration Association ("AAA"). Any judgment or award rendered by the arbitrator(s) shall be entered in any court having jurisdiction. AORN and Oasis agree to pay their own out-of- pocket expenses associated with the arbitration including attorneys fees. This provision shall not prohibit either party from seeking injunctive or other relief in any court of competent jurisdiction to enforce its rights in and to their Intellectual Property or Confidential Information. 15. Compliance with Applicable Laws: Oasis represents and warrants that it shall perform all of its duties and responsibilities in compliance with all federal, state and local laws. 16. Assignment: Except as otherwise provided in this Agreement, Oasis may not assign this Agreement or any of the rights granted to Oasis hereunder without the prior written approval of AORN. Any assignment without AORN's prior written approval shall be void. AORN reserves the right to assign any development of its AORN Deliverables to qualified third parties, including but not limited to AORN. 17. Relationship of the Parties: Neither party to this Agreement shall represent or hold itself out to be a legal representative, joint venture, partner, employee or servant of the other party for any purpose, whatsoever. Neither party is authorized to make any contract, agreement, warranty -7- or representation on behalf of the other party or to create any obligations, express or implied, on behalf of the other party except as otherwise provided in this Agreement. 18. Entire Agreement: This Agreement contains the entire agreement between the parties with respect to this Agreement and any related transactions, and supersedes all prior arrangements, understandings, agreements and covenants among the parties including, but not limited to the Letter of Intent, dated May 12, 2000 between AORN and Oasis. 19. Severability: Should any term of this Agreement be declared by any court of competent jurisdiction to be invalid for any reason, then the remainder of this Agreement shall remain in full force and effect and that portion which is determined to be invalid shall be severed. 20. Waiver and Amendment: Any term or condition of this Agreement may be waived at any time by a party entitled to the benefit thereof if such waiver is in writing and signed by the waiving party. A waiver of any term or provision shall not be construed as a waiver of any other term or provision of this Agreement. This Agreement may be amended at any time if such amendment is in writing and signed by each of the parties hereto. 21. Governing Law: This Agreement shall be interpreted and governed by the laws of the State of Florida and shall be construed in accordance with those laws. 22. Notice:. Any notice required or permitted to be given to the parties pursuant to the terms of this Agreement shall be sent certified mail, return receipt requested, or by facsimile transmission to the parties at the address stated below. All notices shall be deemed given when deposited in the mails, postage prepaid. AORN: 2170 S. Parker Road, Suite 300, Denver, CO 80231 Oasis: 2018 Oak Terrace, Sarasota, FL 34231 Either party may change the address at which it is to receive notice by notifying the other party in writing of the change. 23. Force majeure: Neither party shall be deemed to be in default to the extent that performance is delayed or prevented by Acts of God, public enemy, war, civil disorder, fire, flood, explosion, riot, labor disputes, work stoppages or strike, any act or order of any governmental authority or any other cause beyond the parties control making performance impossible. 24. Execution by Facsimile: An acceptance shall occur when both parties are in possession of an original agreement or conformed copies signed by the other party. If a fax transmittal is used by either party, then a conformed fax copy shall be treated as an original. For record keeping purposes only, the parties may subsequently exchange signed copies of the agreement in duplicate original so that each party shall have a signed document, either of which shall be deemed an original. -8- 25. Binding Effect:. This Agreement is binding upon and is for the benefit of the parties and their respective successors and assigns. 26. Headings: Paragraphs and other headings contained in this Agreement are for reference purposes only, and are not intended to affect in any way the meaning or interpretation of this agreement. 27. Counterparts: This agreement may be executed in counterparts, each of which shall be deemed an original document, but all of which will constitute a single document. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above. AORN, Inc. By --------------------------- Warren Kolber, Publisher SURGICAL SAFETY PRODUCTS, INC. By -------------------------- -9- EXHIBIT 1 AORN Deliverables * AORN Standards, Recommended Practices and Guidelines ("SRPG") with annual updates (Quark format) * AORN Journal with annual index (Quark format) * AORN OR Product Directory with annual update (Access format) * AORN Journal Home Studies (15 previously published courses) (Quark format). * SRPG Study Guide (Word format) * AORN Surgical Knowledgebase. The AORN Surgical Knowledgebase is currently in development but is expected to be available during the summer of 2000. This database will be updated periodically. The SKB database, including; * text and illustration for a minimum of 130 procedures * a Patient's Surgical Dictionary * a review of surgical Internet sites * all related articles and content within 15 days after November 31, 2000 in an Access format The Deliverables will be provided to Oasis in their exiting formats that are set forth above. -10- EXHIBIT 2 AORN Deliverables Annual License Fees AORN Standards, Recommended Practices and Guidelines $42,000 annual license fee AORN Journal $18,000 annual license fee AORN OR Product Directory $ 2,000 annual license fee AORN Journal Home Studies (15 previously Published courses and the SRPG Study Guide $ 3,000 annual license fee; plus 5,000 contact hours at $6.00 per hour ($30,000). New courses can be licensed each month for $300 a course. Additional contact hours can be purchased for $5.00 per hour. AORN Surgical Knowledgebase. $22,000 annual license fee Quarterly Usage Fees (See Attached Schedule) -11- EX-10.49 8 0008.txt AGREEMENT Exhibit 10.49 6 July 2000 Private and Confidential Surgical Safety Products, Inc. 2018 Oak Terrace Sarasota, FL 34231 Surgical Safety Products, Inc. (the "Company") has informed Carver Cross Securities Corp. ("CCSC") that the Company seeks to raise capital and has asked CCSC to act as the Company's exclusive financial advisor and placement agent in this regard. CCSC would be pleased to assist the Company and this letter sets forth the basis on which CCSC will act as financial advisor and confirms the terms of CCSC's engagement as such. As requested and in conjunction with the appropriate Company executives, the financial- advisory services will include: 1. advice on the preparation of written materials required in presenting the Company to potential sources of financing; 2. advice on the preparation of analyses of the likely financial performance and prospects of the Company; 3. assistance in the design, presentation, and discussion o specific transactions to be proposed to potential sources of financing, addressing such issues as: * corporate valuation; pricing of securities; and returns to investors; * transaction structure; and the design of securities to be issued; * non-economic terms, such as those relating to key governance issues; * shareholder agreements, including shar transfer agreements; * voting agreements; and * exit strategies; 4. identifying and approaching potential financing sources; 5. assistance in preparing for and engaging in discussions with potential financing sources; 6. managing the process of developing the interest of and negotiating with potential investors, including maintaining the pace of the process to move potential investors towards a closing; 7. assistance in negotiating the terms and conditions of financing transactions; 8. assistance in reviewing and negotiating drafts of the definitive transaction documents; and 9. coordination of and consultation with other professional (e.g., lawyers and accountants) retained by the Company in the capital-raising process. -1- Surgical Safety Products, Inc. -2- 6 July 2000 For its financial-advisory services as contemplated above herein, CCSC will be paid financial advisory retainer fees of (i) $6,000 cash plus 40,000 "Retainer Warrants" for the first month and (ii) $2,500 cash plus 40,000 Retainer Warrants for each month thereafter provided, however, that the total number of Retainer Warrants shall not exceed 120,000. The Retainer Warrants will have a term of five years and an exercise price of $0.625 per share. In addition, CCSC shall be paid a cash Completion Fee relating to financings or financing facilities which are closed or signed. The Completion Fee shall be equal to the sum of (a) eight percent (8%) of the first $5 million of equity capital which financing sources actually provide or commit to provide to the Company; plus (b) if more than $5 million is raised, seven percent (7%) of the amount of equity capital in excess of $5 million which financing sources actually provide or commit to provide to the Company; plus (c) three percent (3%) of the total maximum amount of debt capital which financing sources actually provide or commit to provide to the Company. The foregoing fees shall also apply to all capital provided to the Company for a period of two (2) years from the date(s) of closing(s) which give rise to a Completion Fee pursuant to the foregoing sentence by investors who invest in such closing(s). The foregoing paragraph notwithstanding, CCSC shall not receive compensation in respect of additional draw-downs under the $5 million Convertible Secured Line of Credit maturing on 30th November 2002 that the Company currently has in place with Thomson Kernaghan & Co. Limited as Agent for Lenders. If CCSC's efforts pursuant hereto result in the sale of substantially all of the businesses, assets, and/or equity shares of the Company, the Completion Fee shall be four percent (4%) of the Transaction Value, defined as the sum of (i) the aggregate fair market value of all cash, securities, assets, and other consideration which is transferred or to be transferred to the Company, its affiliates, and/or its shareholders in exchange for the business, assets, or equity of the Company, and (ii) the amount of liabilities for borrowed money of the Company assumed by the acquirer. If the Company effects a public offering, the Completion Fee shall be equal to two percent (2%) of the gross proceeds from such offering. Immediately after each closing of an equity financing for the Company in respect of which a Completion Fee is payable, the Company will sell to CCSC (or individuals/entities designated by CCSC), at a nominal price, five-year Completion Warrants to purchase one share of the security purchased by investors for each ten shares purchased by investors. The per-share exercise price of the Completion Warrants will be 101% of the price paid by the investors. The Company will reimburse CCSC no less often than monthly for reasonable out-of-pocket disbursements made on the Company's behalf including, without limitation, travel, due diligence expenses, communications, research and databases, the fees and expenses of attorneys, accountants, consultants, and other third-party professionals, and the cost of publication of notices of the transaction(s). CCSC will adhere to the Company's travel policy which calls for coach/business/first class air travel on flights shorter than four hours and coach/business/first class air travel on flights longer than four hours. All disbursements will be fully accounted for and any single expense that is expected to exceed $1,000 will be pre-approved by the Company. Upon execution of this letter Surgical Safety Products, Inc. -3- 6 July 2000 agreement, the Company agrees to establish a $5,000 deposit to be held by CCSC against reimbursable expenses. This deposit will be applied to the final invoice for expense reimbursement. The Company will be solely responsible for all fees, disbursements, and expenses in connection with any transaction. Procedures and Representations The retainer fees and the Company's obligation to reimburse CCSC for out-of-pocket expenses are related to professional services and are unrelated to the consummation of a transaction, if any. The Company agrees to remit payment for each cash retainer fee such that the full amount of such fee is received by CCSC in U.S. dollars in good funds upon execution of this letter, in the case of the first month's fee, and thereafter on the monthly anniversaries of the date hereof. (If remittance is made via bank wire transfer, payment to CCSC will be made without deduction for any bank fees.) Certificates evidencing the Retainer Warrants will be delivered upon execution hereof in the case of the first month's Retainer Warrants and on the two monthly anniversaries hereof in the case of the second and third months' Retainer Warrants. Non-payment of fees in full by the due date constitutes breach of this agreement. Payment for all cash Completion Fees will be made at closing via bank wire transfer (without deduction for any bank fees) such that the full amount of the Completion Fee is credited to CCSC's account in U.S. dollars in good funds on the closing date; certificates evidencing the Completion Warrants will be delivered at closing. The Company agrees that no closing can be completed or effective until all Completion Fees have been paid. Non-payment of Completion Fees on the closing date constitutes breach of this agreement. As used herein above, the term "closing" refers to the formal closing of a transaction pursuant to which equity investors, corporate partners, and/or lenders make capital available to the Company, and/or execute definitive agreements pursuant to which the Company may receive investment capital. The Company agrees to remit payment for all expense invoices such that the full amount of each invoice is received by CCSC in U.S. dollars in good funds no later than ten (10) days after the date of the invoice. (If remittance is made via bank wire transfer, payment to CCSC will be made without deduction for any bank fees.) Non-payment of expense invoices for more than twenty calendar days after the due date constitutes breach of this agreement. Unpaid amounts due CCSC (fees, expense reimbursements, etc.) attract an interest charge of one percent (1.0%) per month as from the statement date or, in the case of monthly retainer fees, as from the monthly anniversaries hereof. The financial advisory relationship described herein will commence on the date on which this letter agreement is executed by the Company. The financial advisory relationship will be subject to a right of termination by either party hereto upon thirty days' written notice to the other party at any time after the expiration of the "Marketing Period." No termination will become effective until the Surgical Safety Products, Inc. -4- 6 July 2000 Company has fully reimbursed CCSC for all outstanding out-of-pocket expenses incurred on the Company's behalf through the termination date and has paid CCSC all fees due in respect of periods prior to the termination date and in connection with the termination. Upon such termination there shall be no further obligation on the part of either party to the other, provided, however, that (i) the provisions below regarding indemnification shall remain in effect indefinitely, notwithstanding any termination of CCSC's engagement, and (ii) for a period of two (2) years from the termination date the Company will continue to have an obligation to pay Completion Fees to CCSC relating to financing provided by sources which CCSC introduced to the Company and/or with which CCSC assisted the Company prior to the termination hereof. All contacts and negotiations entered into by the Company prior to the date of this agreement will be included in the process conducted by CCSC hereunder and subject to the compensation arrangements herein described. The Company agrees to not make future contacts or conduct future negotiations regarding the subject of this agreement outside the process conducted by CCSC for so long as this letter agreement remains in effect. CCSC shall be the Company's exclusive financial advisor and agent from the date hereof until the later of (a) the expiration of the Marketing Period, and (b) such time as one of the parties hereto terminates this agreement in accordance with the termination provisions set forth herein. The Marketing Period will commence on the later of (x) 6th September 2000, and (y) the date the Company, CCSC, and securities counsel formally approve the placement memorandum and any collateral materials that CCSC expects to require during the marketing of the Company to potential investors and during investors' "due diligence" investigation. The Marketing Period will expire one hundred twenty (120) days after the commencement of the Marketing Period. The Company recognizes that CCSC is engaged hereunder on a "best efforts" basis. The Company represents and warrants that all information previously and hereafter furnished by it or on its behalf to CCSC (including financial statements for the Company) is and shall be complete, accurate, and not misleading. The Company agrees to notify us promptly of any material change in the Company's businesses, business plans, condition (financial or other), assets, prospects, or liabilities, whether or not such change is adverse. It is understood and agreed that CCSC assumes no responsibility for the accuracy, completeness, or fairness of information provided by the Company and presented to third parties. CCSC agrees to treat the Company's Confidential Information with the same degree of care and confidentiality that CCSC accords confidential information relating to its business. CCSC agrees that, except on the Company's instructions or with its prior consent, CCSC will not divulge any Confidential Information relating to the Company's business affairs to any third party. "Confidential Information" includes information that is proprietary to the Company and not available from sources other than the Company. CCSC agrees that it will use the Confidential Information solely in connection with its financial-advisory work on the Company's behalf and in no event for any other purpose whatsoever or in any way detrimental to the Company. In connection with the engagement of CCSC to advise and assist the Company with the matters set forth in this letter, the Company hereby agrees to indemnify and hold harmless CCSC and Surgical Safety Products, Inc. -5- 6 July 2000 each of CCSC's respective partners, officers, agents, and employees (each of the foregoing being hereinafter referred to as an "Indemnified Person") to the fullest extent permitted by law from and against any and all losses, claims, damages, expenses (including reasonable fees and disbursements of counsel), actions (including shareholder derivative actions), proceedings or investigations (whether formal or informal), or threats thereof (all of the foregoing being hereinafter referred to as "Liabilities"), based upon, relating to or arising out of any actions taken or omitted or services performed pursuant to, or matters contemplated by, such engagement or any Indemnified Person's role therein; provided, however, that the Company shall not be liable under this paragraph: (a) for any amount paid in settlement of claims without the Company's consent, which consent shall not be unreasonably withheld, or (b) to the extent that a court of competent jurisdiction finally judicially determines that such Liabilities were caused by the willful misconduct or gross negligence of the Indemnified Person seeking indemnification. Neither CCSC nor any other Indemnified Person shall have any liability to the Company related to or arising out of the engagement described in this letter, except for liability for losses, claims, damages, or expenses incurred by the Company which are finally judicially determined to have been caused by CCSC's willful misconduct or gross negligence. In connection with the Company's obligation to indemnify for expenses as set forth above, the Company further agrees to reimburse each Indemnified Person for all such expenses (including reasonable fees and disbursements of counsel) as they are incurred by such Indemnified Person; provided, however, that if an Indemnified Person is reimbursed hereunder for any expenses, such reimbursement of expenses shall be refunded to the extent that a court of competent jurisdiction finally judicially determines that the Liabilities in question were caused by the willful misconduct or gross negligence of such Indemnified Person. The rights accorded to Indemnified Persons hereunder shall be in addition to any rights that any Indemnified Person may have at common law, by separate agreement, or otherwise. This letter agreement shall be governed by and construed in accordance with the laws of the U.S. State of New York applicable to agreements made and to be performed entirely in such state. This letter agreement may not be amended or otherwise modified except by an instrument signed by both CCSC and the Company. If any provision hereof shall be determined to be invalid or unenforceable in any respect, such determination shall not affect such provision in any other respect or any other provision of this letter agreement, which shall remain in full force and effect. All costs and expenses associated with enforcing the terms of this letter agreement, including any costs and expenses associated with collecting amounts due CCSC hereunder, shall be borne by the Company. This letter agreement supercedes all understandings and agreements, whether written or oral, reached prior to the date hereof in respect of the matters addressed herein. The Company hereby represents and warrants that (a) it has all requisite authority to enter into this agreement, (b) the individual executing this agreement on behalf of the Company is empowered to so do, and (c) the Company has no agreement or fee obligation of any kind, whether written or oral or whether formal or informal, currently in force with any advisor, broker, finder, or similar person or entity relating to capital-raising, mergers, acquisitions, joint ventures, or similar transactions. Surgical Safety Products, Inc. -6- 6 July 2000 If the foregoing accurately sets forth our understanding, please execute the enclosed copy of this letter below, and return same to us. Yours very truly, CARVER CROSS SECURITIES CORP. By: /s/ Bruce Carver Jackson President & Chief Executive Officer Accepted and Agreed: SURGICAL SAFETY PRODUCTS, INC. By: /s/G. Michael Swor, G. Michael Swor, CEO Date: -6- EX-27 9 0009.txt FDS --
5 0001063530 Surgical Safety Products, Inc. 1 U.S. Currency 6-mos Dec-31-1999 Jan-1-2000 Jun-30-2000 1 231,372 0 14,133 0 0 312,360 189,490 0 1,253,228 336,636 0 0 0 14,516 (194,313) 1,253,228 0 159,725 23,372 1,019,556 751,306 0 211,697 (859,831) 0 0 0 0 0 (859,831) (0.072) 0
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