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                                                                  EXHIBIT 10.26

                                October 21, 1997



Norman Frankel, Vice President Sales/Marketing
Standard Textile Co., Inc.
P.O. Box 371805
Cincinnati, Ohio  45222-1805

Dear Norman:

         This confirms the terms under which Sterile Recoveries, Inc. ("SRI")
and Standard Textile Co., Inc. ("Standard") will engage in certain transactions
with each other and sales efforts on each other's behalf.

Background

         Standard manufactures and distributes reusable products to hospitals
and their vendors, including gowns, drapes, and towels. Standard enjoys
long-standing contractual relationships with VHA, which represents hospitals in
purchasing products and services. Standard's relationship with VHA makes it a
preferred vendor to VHA's member hospitals. Standard's relationship with VHA is
evidenced by a Purchase Agreement dated September 25, 1995, and letter
agreement of the same date directed by William J. Elliott of VHA to Gary Heiman
of Standard (collectively, the "Purchase Agreement").

         SRI provides daily delivery and retrieval of its reusable surgical
products to hospitals and surgery centers located throughout most of the United
States. Its reusable surgical products include gowns, towels, drapes, stainless
steel basins, and boots. SRI owns its products and supplies them to hospitals
on a per use basis. SRI's hospital customers can offer their staff the comfort
and protection of reusable surgical products, without the substantial product
and facility investments typically required to use them.

         SRI and Standard desire to establish mutually beneficial arrangements
for the following:


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Standard Textile Co., Inc.
October 21, 1997
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         1. Beginning October 1, 1997, SRI will contract with Standard to
     manufacture a portion of SRI's liquid resistant gowns, using fabric
     provided by SRI's selected suppliers.

         2. Standard will initiate efforts to develop a substitute fabric for
     SRI's liquid resistant gowns that compares favorably with SRI's existing
     fabric in cost, quality, and performance.

         3. Standard will develop additional high quality reusable surgical
     products.

         4. SRI will contract with Standard to purchase its draping system and
     patented drape products, as necessary to support a portion of its customer
     needs, subject to further discussions regarding implementation of the
     program.

         5. SRI and Standard plan to continue offering competitive reusable
     surgical product services in those markets in which they currently offer
     those services.

The parties also desire to establish the other elements of their relationship
set forth in this letter agreement.

Agreements

         Gown supply. SRI will purchase liquid resistant reusable surgical
gowns from Standard in minimum quantities that roughly correspond to SRI's new
gown needs generated by the parties' joint sales efforts with VHA as described
below. Standard will assemble the gowns according to SRI's specifications from
fabric provided by SRI's suppliers under arrangements made by SRI. SRI will
order gowns through periodic purchase orders that specify size, quantity, and
other product attributes and provide for price and payment terms (net 30 days
proposed) that are market competitive. The purchased gowns need not be
dedicated to VHA hospitals.

         New Product Development. The parties contemplate that Standard will
devote resources to developing reusable surgical products that look, act, feel,
and test at least comparably in quality to the products that SRI has available
from time to time from other suppliers. Although it makes no minimum purchase
commitment, SRI expects to purchase these products, provided they satisfy SRI's
cost and quality tests.

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Standard Textile Co., Inc.
October 21, 1997
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         Additional Products. SRI may purchase from Standard additional
reusable surgical products, including some of Standard's patented products such
as drapes, to fulfill a portion of its needs for reusable surgical product
service. SRI will order drapes through periodic purchase orders that specify
size, quantity, and other product attributes and provide for price and payment
terms that are competitive in the market.

         Joint Sales Efforts. Beginning October 1, 1997, Standard will
facilitate SRI's direct sale of its reusable surgical product service to
targeted VHA member hospitals. Standard will confirm that VHA will include SRI
services as products offered under the Purchasing Agreement currently in effect
between Standard and VHA. SRI and Standard will jointly develop a sales plan
for VHA and coordinate their respective sales forces' efforts to effectively
introduce and implement SRI's program at each targeted hospital. Nothing in
this Agreement precludes each party from continuing to offer competitive
reusable surgical product services in the markets that they currently service.

         VHA Administrative Fees. SRI will deliver to Standard each month a
report listing SRI's VHA accounts originated since October 1, 1997, the amounts
that SRI billed to those accounts during the previous month, and a computation
of the administrative fees due VHA under the Purchase Agreement. These monthly
reports will be based on successive four week, four week, and five week periods
in each quarter. SRI will provide the reports and remit the associated
administrative fees to Standard within ten days following the close of each
reporting period. For purposes of this calculation, only those VHA hospital
accounts initiating service or executing a new agreement after October 1, 1997
will be listed in the reports and included in the VHA administrative fees.
Standard will promptly pay to VHA the gross amount of SRI's payments, and
provide the corresponding hospital accounts listing and sales totals.

         Term. This Agreement will be for an initial term of two years. After
this initial two-year term, this Agreement is terminable by either party with
90 days prior written notice to the other party. On any termination of this
Agreement, Standard will return to SRI any unused fabric, but the parties will
not otherwise have any further obligations under this Agreement.

         Relationship of the Parties. Neither party to this Agreement is an
agent, partner, or legal representative of the other for any purpose, and
neither party is authorized to assume or create, in writing or otherwise, an
obligation of any kind in the name or on behalf of the other party. This
Agreement is not to be construed to create a financial

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Standard Textile Co., Inc.
October 21, 1997
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interest in the other party's business or to constitute a partnership or joint
venture between the parties.

         VHA Approval. Standard has confirmed with VHA that it will include SRI
services as products offered under the Purchase Agreement and otherwise secured
from VHA any requisite approvals for SRI to perform the services contemplated
by this Agreement. The Purchase Agreement is Standard's entire agreement with
VHA with respect to Standard's provision of reusable surgical products to VHA
member hospitals.

         Confidentiality. During the term of this Agreement, each party might
furnish or make available to the other party proprietary or confidential
information pertaining to their products, services, customers, and business
operations that is designated by name, trademark, or other appropriate text to
be proprietary or confidential in nature ("Restricted Information"). All
Restricted Information furnished or made available to the other party during
the term of this Agreement, however and whenever acquired, will remain the
property of the party furnishing the information. Each party shall treat this
information as strictly confidential, shall use it solely for the purposes
contemplated by this Agreement, and shall not reveal, divulge, disclose, or
duplicate any Restricted Information without the other party's written consent,
except for the party's employees who need to know the information for purposes
of carrying out the purposes of this Agreement. However, the party receiving
the Restricted Information shall direct its employees who have access to the
Restricted Information to treat it as strictly confidential, and shall
indemnify the other party and hold it harmless from, any damage resulting from
a breach of confidentiality caused by any of its employees.

         Legal Provisions. The parties may execute this Agreement in
counterparts. Each executed counterpart to this Agreement will constitute an
original document, and all executed counterparts, together, will constitute the
same agreement.

        Notices. Except for oral requests and notices expressly authorized by
this Agreement, every notice, request, demand, consent, approval, and other
communication required or permitted under this Agreement will be valid only if
it is given in writing (or sent by telecopy and promptly confirmed in writing),
conspicuously marked "FOR IMMEDIATE ATTENTION," and addressed by the sender to
the appropriate party in the manner set forth below:


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Standard Textile Co., Inc.
October 21, 1997
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                (a)      If to Standard:

                         Standard Textile Co., Inc.
                         P.O. Box 371805
                         Cincinnati, Ohio  45222-1805
                         Attention:  Norman Frankel
                                     Vice President Sales/Marketing
                         Telecopier: (513) 761-0379

                (b)      If to SRI:

                         Sterile Recoveries, Inc.
                         28100 U.S. Highway 19 North, State 201
                         Clearwater, FL  34621
                         Attention:   Bertram T. Martin, Jr.
                                      Executive Vice President
                         Telecopier: (813) 725-8037

or to such other address as a party designates by notice to the other party. A
validly given notice, request, demand, consent, approval, or other
communication will be effective on its receipt.

                                           Very truly yours,

                                           STERILE RECOVERIES, INC.

                                           By:  /s/ Bertram T. Martin, Jr.
                                              -------------------------------
                                              Bertram T. Martin, Jr.
                                              Executive Vice President
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Standard Textile Co., Inc.
October 21, 1997
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ACCEPTED AND AGREED this 21st day of October, 1997.

STANDARD TEXTILE CO., INC.

By: /s/   Norman Frankel
   ---------------------
   Norman Frankel
   Vice President Sales/Marketing