f10k2008a1ex10v_amersrgical.htm


    


     

    Exhibit
10.5

     

    AMERICAN
SURGICAL

    HOLDINGS,
INC.

     

     

     

    MASTER
SECURED

    PROMISSORY
NOTE

     

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    
    

     

     

    THIS
MASTER SECURED PROMISSORY NOTE HAS BEEN ACQUIRED FO INVESTMENT PURPOSES ONLY AND
MAY NOT BE TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") SHALL HAVE BECOME EFFECTIVE WITH RESPECT
THERETO OR (ii) RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT
REQUIRED
IN CONNECTION WITH SUCH PROPOSED TRANSFER
NOR IS IN VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS.

     

    AMERICAN
S1TRGICAL HOLDINGS, INC.

    Master
Secured Promissory Note

    $2,715,000.00                                                                                                               

    Dated:
July 23, 2008

     

    RECITALS

     

    WHEREAS,
American Surgical Holdings, Inc., a Delaware corporation with its principal
executive office at 10039 Bissonnet #250, Houston, Texas 77036-7852 (the "Company")
has previously received loans in the form of Promissory Notes (the "Notes")
from each of the noteholders set forth on Schedule
A hereto, each having an address set forth thereon (each a "Holder", and
collectively, the "Holders") in the aggregate face principal amounts set forth
thereon and on the dates set forth thereon;

     

    WHEREAS,
pursuant to the terms of that certain Noteholder Agency Agreement, dated
as of May 2, 2007, by and among the Holders and Dawson James Securities, Inc., a
Florida corporation ("Dawson
James"), the Company and the Holders appointed Dawson James as agent for
the Holders and Dawson James accepted such appointment (in such capacity, the
"Note
Holder's Agent");

     

    WHEREAS,
the Company has requested that the Holders agree to waive as Events of
Default the Company's failure to make interest payments as required under
Section 4 of the Notes and the failure to pay when due the principal amounts due
thereunder (the "Existing
Defaults");

     

    WHEREAS,
subject to the terms hereunder, the Holders have consented to such
request to waive the Existing Defaults;

     

    WHEREAS,
the Company hereby issues this Master Secured Promissory Note (as the same may
be amended, restated, modified or supplemented from time to time, the "Master
Note" and, together with all related agreements, instruments and
documents, including but not limited to the Security Agreement, dated as of the
date hereof, by and among the Company and the Holders (the "Security
Agreement") and any UCC Financing Statement Filings made by or on behalf
of the Company to or in favor of the Holders, as the same may be amended,
restated, modified or supplemented from time to time, the "Loan
Documents") in place of each of the Notes; and

     

    WHEREAS,
each of the Holders acknowledge receipt of this Master Note as a
replacement for the Notes.

     

    FOR VALUE
RECEIVED, the Company hereby promises to pay to the order of each of the
Holders, or his/her/its registered assigns, on the earlier of March 31, 2009, as
same may be extended in accordance with Section 2D, or upon the completion of a
Qualified Offering (as defined herein) or a Liquidity Event (as defined herein),
unless accelerated due to the occurrence of an Event of Default (the earlier of
such dates is referred to as the "Maturity
Date"), the aggregate face principal amount set forth next to
each of their names on Schedule A hereto
(collectively, the "Principal
Amount"), and interest on the Principal Amount (as set forth in Section
4) in such coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private debts.
Interest on this Master Note shall accrue on the Principal Amount outstanding
from time to time at a rate per annum computed in accordance with Section 4
hereof.

     

     

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

     

    As of the
date of this Master Note, by virtue of the Company's execution of this Master
Note and each of the Holders acceptance hereof , each of the Notes shall be
cancelled and shall cease to exist and the Holders shall cease to have any
rights with respect thereto.

     

    A "Qualified Offering" means the
completion of an offering or offerings of Company securities, including any
offering of debt or equity securities, or securities convertible into debt or
equity securities, in the amount of no less than $3.0 million, For the purposes
of this definition, if the Company completes multiple discrete offerings of
securities, such securities shall be aggregated in order to determine if the
$3.0 million amount has been obtained.

     

    A "Liquidity Event" means any of
the following: (i) a merger of the Company into or with another person or any
sale or transfer of the equity interests of the Company in any such case in
which the equity holders of the Company immediately prior to such transaction
possess less than 50% of the Company's or the surviving entity's issued and
outstanding equity interests immediately after such transaction; or (ii) the
sale by the Company of all or substantially all of its assets.

    Copies of
all payments shall be sent to Dawson James Securities, Inc., 925 South Federal
Highway, 6` Floor,
Boca Raton FL 33432, Attn: Donald Shek.

     

    Any
payment by the Company pursuant to this Master Note shall be made without
set-off or counterclaim and in immediately available funds and shall be applied
first toward interest, then toward any fees, expenses and costs due, and then
toward principal.

     

    The
Principal Amount of this Master Note may be prepaid in whole or in part at any
time, without penalty or premium and without any prior written notice to the
Holders before the Maturity Date; provided, that all accrued and unpaid interest
and any other charges accrued as of the date of prepayment are also paid in
full; provided further, that any prepayments will be distributed to the Holders
in accordance with their percentage interests as set forth on Schedule A hereto.
Any prepayments shall not result in deferment or delay of the due date of any
subsequent payment(s).

     

    The
Company (i) waives presentment, demand, protest or notice of any kind in
connection with this Master Note and (ii) agrees, in the event of an Event of
Default that continues for more than thirty (30) days, to pay to the holders of
this Master Note, on demand, all costs and expenses (including reasonable legal
fees) incurred in connection with the enforcement and collection of this Master
Note.

     

    1. Acknowledgment and Waiver of
Defaults. The Company hereby acknowledges and confirms that the Existing
Defaults have occurred under the Notes. Upon the acceptance of this Master Note
by the Note Holder's Agent for and on behalf of each of the Holders, the Holders
shall be deemed to have waived the Existing Defaults, provided that such
execution, delivery and effectiveness of this Waiver shall not operate as a
waiver of any right, power or remedy of any Holder under the Notes, nor
constitute a waiver of any subsequent violations of any of the provisions of
this Master Note or a waiver of any other Events of Defaults which may have
occurred.

    


     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

               2.Security; Unit Offering;
Extension.

     

    A. The
obligations of the Company hereunder shall be secured obligations of the
Company, to be secured by the collateral set forth in the Security Agreement and
any UCC Financing Statement Filings made by or on behalf of the Company to or in
favor of the Holders; provided that the Company is and shall be permitted to use
its current trade accounts receivables in connection with obtaining working
capital financing, so long as a minimum of $1,000,000 of the proceeds from any
such financing facility are used to pay down the outstanding Principal Amount on
this Master Note, and that upon the payment of an aggregate of such $1,000,000
on this Master Note, the security interests of the Holders in such receivables
shall be automatically released, and Debtor shall be authorized to file a
termination statement terminating any UCC-1 financing statements with respect to
such lien and security interest.

     

    B. Reference
is hereby made to the Loan Documents (which are incorporated herein by reference
as fully and with the same effect as if set forth herein at length) for a
statement of the covenants and agreements contained therein, a statement of the
rights, remedies, and security afforded thereby, and all matters therein
contained.

     

    C. The Notes
were part of a Unit issue (the "Offering") conducted by the
Company pursuant to its Private Placement Memorandum dated May 4, 2007
(including all exhibits and appendices thereto, the "Offering Documents") pursuant
to which the Company issued $2,715,000 in principal amount of
Notes.

     

    D. If, on or
before March 31, 2009, (i) the Company has paid down $1,357,500 of the Principal
Amount without using any of the amounts held in the Escrow Fund (as defined
herein) and (ii) no Event of Default is then continuing for more than thirty
(30) days, the Maturity Date shall automatically be extended to December 31,
2009 for the remaining Principal balance of this Master Note and any accrued and
unpaid interest.

     

    3.Right of Participation in a
Qualified Offering.

     

    A. If the
Company commences a Qualified Offering prior to the Maturity Date, in lieu of
repayment of principal and interest on this Master Note, a Holder, at its
option, may acquire securities in the Qualified Offering in the amount of such
principal and interest at a purchase price per security equal to eighty-five
percent (85%) of the price per security sold in the Qualified
Offering.

     

    B. If the
Company commences a Qualified Offering prior to the Maturity Date, the Company
will deliver to the Holders a notice (the "Offer Notice"), stating the price and
other terms and conditions thereof not later than fifteen (15) business days
prior to the closing date of the Qualified Offering. The Holders will thereafter
have the right to convert the Principal Amount and interest accrued pursuant to
this Master Note into the securities issuable in the Qualified Offering at a
purchase price per security equal to eighty-five percent (85%) of the price per
security sold in the Qualified Offering, calculated as of the date the Qualified
Offering is completed, by providing written notice to the Company delivered not
later than ten (10) days after the receipt of the Offer Notice. The notice
requirements set forth herein will apply to any Qualified Offerings commenced
prior to the Maturity Date. This right of conversion under this Section 3(B)
shall be available to the Holders only prior to (and not on or after) the Master
Note has been paid in full.

     

    4.            Computation of Interest;
Payments.

     

                                 
A.            Base Interest Rate.
Subject to Section 4B, the outstanding Principal Amount shall
bear a
simple interest at the rate of fifteen percent (15%) per annum, provided that in
no event shall the
interest rate exceed the Maximum Rate provided in Section 4B below. Accrued
interest will be due and payable on the Maturity Date. Interest shall be based
on a 360 day year.

     

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    B.             Maximum Rate. In the
event that it is determined that, under the laws relating to usury applicable to
the Company or the indebtedness evidenced by this Master Note ("Applicable Usury Laws"), the interest charges
and fees payable by the Company in connection herewith or in connection with any
other document or instrument executed and delivered in connection herewith cause
the effective interest rate applicable to the indebtedness evidenced by this
Master Note to exceed the maximum rate allowed by law (the "Maximum Rate"), then such
interest shall be recalculated for the period in question and any excess over
the Maximum Rate paid with respect to such period shall be credited, without
further agreement or notice, to the Principal Amount outstanding hereunder to
reduce said balance by such amount with the same force and effect as though the
Company had specifically designated such extra sums to be so applied to
principal and the Holders had agreed to accept such extra payment(s) as a
premium-free prepayment. All such deemed prepayments shall be applied to the
principal balance payable at maturity, In no event shall any agreed-to or actual
exaction as consideration for this Master Note exceed the limits imposed or
provided by Applicable Usury Laws in the jurisdiction in which the Company is
resident applicable to the use or detention of money or to forbearance in
seeking its collection in the jurisdiction in which the Company is
resident.

     

    C.            Initial Payment. Upon
execution of this Master Note, $419,934.42 shall be due and payable by the
Company to the Holders to pay down outstanding interest owed through June 30,
2008 on the Principal Amount pursuant to the terms of the original
Notes.

     

    D.            Escrow. The Monthly
Payments described in Section 4E below required to be made by the Company shall
be placed in an escrow account for the benefit of the Holders pursuant to, and
subject to the conditions of, an escrow agreement, dated as of the Effective
Date, by and among [Sterling Bank], as escrow agent (the "Escrow Agent"), the Note
Holder's Agent and the Company (the "Escrow Agreement").

     

    E.            Monthly Payments. So
long as any amounts due hereunder remain outstanding, the Company shall be
required to make monthly payments to the Escrow Agent to be to be held in escrow
and disbursed pursuant to and in accordance with the terms of the Escrow
Agreement as follows (collectively, the "Escrow Fund"):

     

    (i) $50,000
due on the last day of each month with the first such payment due August 30,
2008; provided that the $50,000 shall be increased to $65,000 starting with the
payment due January 31, 2009 until the Master Note has been repaid in full;
provided further that, at a minimum, such funds shall be used to pay down
interest due on the Principal Amount on a quarterly basis and that any amounts
remaining shall continue be held as part of the Escrow Fund to be released in
accordance with the terms of the Escrow Agreement, including to pay down
principal as may be determined in the Note Holder's Agent's sole and absolute
discretion; and

     

    (ii) $52,000,
representing a holdback of compensation and expense allowances of the four
principals of the Company as calculated on Exhibit A, with the
first of such monthly payments due upon execution of the Escrow Agreement and,
thereafter, each payment shall be due on the first day of the month thereafter
until the Maturity Date.

     

    5.            Covenants of
Company.

     

                                   
A.              Affirmative Covenants. The
Company (for this purpose to include all subsidiaries
of the Company) covenants and agrees that, so long as this Master Note shall be
outstanding, it will perform the obligations set forth in this Section
5A:

     

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    (i)            Maintenance of Existence.
The Company will do or cause to be done all things reasonably necessary
to preserve and keep in full force and effect its corporate existence, rights
and franchises and comply with all laws applicable to the Company, except where
the failure to comply would not have a material adverse effect on the
Company;

     

    (ii)            Maintenance of Property.
The Company will at all times maintain, preserve, protect and keep its
property used or useful in the conduct of its business in good repair, working
order and condition, and from time to time make all needful and proper repairs,
renewals, replacements and improvements thereto as shall be reasonably required
in the conduct of its business;

     

    (iii)            Books and Records.
The Company will at all times keep true and correct books, records and
accounts reflecting all of its business affairs and transactions in accordance
with GAAP. Such books and records shall be open at reasonable times and upon
reasonable notice to the inspection of the Holders or their agents;

     

    (iv)            Monthly Financial Reports.
From the date hereof until the Maturity Date, the Company will submit a
financial reporting package to the Note Holder's Agent on a monthly basis which
shall include a sales/billing journal, a receivables collection report, payroll
register reports (salaried, 1099 and principals) and any other information as
may be requested by the Note Holder's Agent (the "Monthly Report"). The Company
shall be required to deliver the Monthly Report to the Note Holder's Agent
within twenty (20) calendar days of the end of each calendar month prior to the
Maturity Date and until such time as this Master Note has been repaid in
full;

     

    (v)            Certain Expenses.
Within five (5) business days of approving any individual expenses in
excess of $25,000 and/or any expenditures not in the ordinary course of
business, the Company shall deliver to the Note Holder's Agent a copy of the
relevant board or audit committee minutes or written consent setting forth the
resolutions approving such expense(s);

     

    (vi)            Notice of Certain Events.
The Company will give prompt written notice (with a
description in reasonable detail) to the Holders of:

     

    (a) the
occurrence of any Event of Default or any event which, with the
giving of notice or the lapse of time, would constitute an Event of Default;
and

     

    (b) the
delivery of any notice effecting the acceleration of any indebtedness.

     

    B. Negative Covenants,
The Company (for this purpose to include all subsidiaries of the Company)
covenants and agrees that, so long as this Master Note shall be outstanding, it
will perform the obligations set forth in this Section 5B (unless waived by or
on behalf of the Holders):

     

                  
(i)            
Liquidation,
Dissolution, etc. The Company will not engage in a Liquidity
Event;

     

                                                                    (a)
Sales of Assets.
The Company will not sell, transfer, lease or otherwise
dispose of any of its properties or assets to any person or entity, provided
that this clause (ii) shall not restrict any disposition made in the ordinary
course of business

     

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    (ii)            Redemptions. The
Company will not redeem or repurchase any outstanding equity securities of the
Company;

     

    (iii)            Indebtedness. The
Company will hereafter not create, incur, assume or suffer to exist,
contingently or otherwise, any indebtedness for borrowed money (except for the
incurrence of trade and vendor payables in the ordinary course of business)
except that outstanding on the date hereof and indebtedness which has the prior
approval of the Holders or their representative;

     

    (iv)             Transactions with
Affiliates, Except as set forth in the Offering Documents, without the
prior consent of the Holders or any of his/her/its representative, which consent
shall not be unreasonably withheld, the Company will not enter into any
transaction, including, without limitation, the purchase, sale, lease or
exchange of property, real or personal, the purchase or sale of any security,
the borrowing or lending of any money, or the rendering of any service, with any
person or entity affiliated directly or indirectly with the Company (including
officers, directors and shareholders owning five percent (5%) or more of the
Company's outstanding capital stock), except in the ordinary course of and
pursuant to the reasonable requirements of its business and upon fair and
reasonable terms not less favorable than would be obtained in a comparable
arms-length transaction with any other person or entity not affiliated with the
Company.

     

    (v)            Dividends. The
Company will not declare or pay any cash dividends or distributions on its
outstanding capital stock.

     

    (vi)
Compensation of
Principals. The Company will not, in any form or any manner, increase or
add to the compensation and/or benefits received by the four principals set
forth on Exhibit A
unless unanimously consented to by the independent members of the board
of directors;

     

    6.            Events of
Default,

     

    A.            General. The term
"Event of Default" shall
mean any of the events set forth in

     

    this
Section 6A (the term "Company" for this purpose shall include all subsidiaries
of the Company):

     

    (i)            Non-Payment of Obliaations.
The Company shall default in the payment of the principal or accrued
interest of this Master Note as and when the same shall become due and payable,
whether by acceleration or otherwise, and such amount shall remain unpaid for a
period of thirty (30) days after the due date.

     

    (ii)            Non-Performance of
Affirmative Covenants. The Company shall default in the due observance or
performance of any covenant set forth in Section 5A, which default shall
continue uncured for thirty (30) days after notice thereof.

     

    (iii)            Non-Performance of Negative
Covenants. The Company shall default in the due observance or performance
of any covenant set forth in Section 5B, which default shall continue uncured
for thirty (30) days after notice thereof.

     

    (iv)            Bankruptcy, Insolvency, etc.
The Company shall:

     

    


    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    (a)admit
in writing its inability to pay its debts as they become due;

     

    (b) apply
for, consent to, or acquiesce in, the appointment of a trustee, receiver,
sequestrator or other custodian for the Company or any of its property, or make
a
general assignment for the benefit of creditors;

     

    (c) in the
absence of such application, consent or acquiesce in, permit or suffer to exist
the appointment of a trustee, receiver, sequestrator or other custodian for the
Company or for any part of its property;

     

    (d) permit or
suffer to exist the commencement of any bankruptcy, reorganization, debt
arrangement or other case or proceeding under any bankruptcy or insolvency law,
or any dissolution, winding up or liquidation proceeding, in respect of the
Company, and, if such case or proceeding is not commenced by the Company or
converted to a voluntary case, such case or proceeding shall be consented to or
acquiesced in by the Company or shall result in the entry of an order for
relief; or

     

    (e) take any
corporate or other action authorizing, or in furtherance of, any
of the foregoing.

     

                  
(v)           Cross-Default. The
Company shall default in the payment when due of any amount payable under any
other obligation of the Company for money borrowed in excess of $50,000 or the
Company breaches any of the terms of any Agreement with the Holders, including
but not limited to this Master Note, the Security Agreement or the Escrow
Agreement, and such is not cured within thirty (30) days.

     

    B.             Action if Bankruptcy.
If any Event of Default described in clauses (iv)(a) through (d) of
Section 6A shall occur, the outstanding Principal Amount of this Master Note and
all other obligations hereunder shall automatically be and become immediately
due and payable, without notice or demand.

     

    C.             Action if Other Event of
Default. If any Event of Default (other than any Event of Default
described in clauses (iv)(a) through (d) of Section 6A) shall occur for any
reason, whether voluntary or involuntary, and be continuing, for thirty (30)
days after notice, the Holders may, upon notice to the Company, declare all or
any portion of the outstanding Principal Amount of this Master Note, together
with interest accrued thereon, to be due and payable and any or all other
obligations hereunder to be due and payable, whereupon the full unpaid Principal
Amount hereof, such accrued interest and any and all other such obligations
which shall be so declared due and payable shall be and become immediately due
and payable, without further notice, demand, or presentment.

     

    7.Reimbursement of
Expenses.

     

    A. From and
after the Effective Date, the Company shall be required to reimburse the Note
Holder's Agent's expenses and costs in equal monthly installments of $3,000 per
month for so long as any amounts under this Master Note remain outstanding. The
first such payment shall be due upon execution of this Master Note and each such
monthly payment shall be due on the 15th of the
month until the Master Note has been paid in full and shall be paid directly to
the Note Holder's Agent.

     

    B. Upon
execution, legal fees in the amount of not more than $          
NEED O
DETERMINE] shall be due and payable directly to Greenberg Traurig,
P.A.

    


     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

     

    8  Miscellaneous.

     

    A.              Parties in Interest.
All covenants, agreements and undertakings in this Master Note binding
upon the Company or the Holders shall bind and inure to the benefit of the
successors and permitted assigns of the Company and the Holders, respectively,
whether so expressed or not.

     

    B.              Governing Law. This
Master Note shall be governed by the laws of the State of Texas as applied to
contracts entered into and to be performed entirely within the State of Texas
..

     

    C.              Consent to Jurisdiction.
The Debtor irrevocably consents to the jurisdiction of the Courts of the
State of Texas, County of Harris or the United States District Court for the
Southern District of Texas located in the County of Harris in any and all
actions and proceedings whether arising hereunder or under any other agreement
or undertaking and irrevocably agrees to service of process to the address of
the Debtor set forth herein by certified mail, return receipt
requested.

     

    D.              Notice. All notices
shall be in writing, and shall be deemed given when actually delivered to a
party at its address set forth herein personally, by a reputable overnight
messenger.

     

    E.            
No Waiver. No
delay in exercising any right hereunder shall be deemed a waiver thereof, and no
waiver shall be deemed to have any application to any future default or exercise
of rights hereunder.

     

    [Signature
Page Follows]

     

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

     

    IN
WITNESS WHEREOF, this Master Note has been executed and delivered on the date
first above written by a duly authorized representative of the
Company.

     

    
      
        	
                AMERICAN
      SURGICAL HOLDINGS, INC

                a
      Delaware corporation

              
	 
	By: /s/
      Zak W.
  Elgamal


      

    


    
      
        	
                Name:
      Zak W. Elgamal

                Title:
      Chairman and Chief Executive
      Officer

              


      

    

     

    
       

    

    AGREED TO
AND ACCEPTED:

     

    Note
Holder's Agent,

    for and
on behalf of the Holders

     

    DAWSON
JAMES SECURITIES, INC

    a
Florida corporation

     

    By: /s/
Albert J. Pollak  

    Name:
Albert J. Pollak 

    Title:
President

     

     


     

    
      
         

      

      
        -9-

        
          
 

      

      
         

      

    

     

     

    
      
        	

              	
                SCHEDULE
      A

              


      

    

     


     

    Promissory
Notes

     

    
      
        
          
            
              
                
                  
                    	 
      	
                            NOTEHOLDER

                          	
                            AGGREGATE
      FACE PRINCIPAL AMOUNT

                          	
                            ORIGINAL
      ISSUE

                            /DATE

                          	
                            PERCENTAGE
      

                          
	
                            1.

                          	
                             

                          	 
      	
                             

                             

                             

                          	 
      
	
                            2.

                          	 
      	 
      	 
      	 
      
	
                            3.

                          	 
      	 
      	 
      	 
      
	
                            4.

                          	 
      	 
      	 
      	 
      
	
                            5.

                          	 
      	 
      	
                             

                          	 
      
	
                            6.

                          	 
      	 
      	 
      	 
      
	
                            7.

                          	 
      	 
      	 
      	 
      
	
                            TOTAL:

                          	 
      	 
      	 
      


                  

                

              

            

          

        

      

    

     

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

     

     

     

    
    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              	
                                                                      American
      Surgical Holdings, Inc.

                                                                    
	
                                                                      Noteholders
      pursuant to Master Secured Promissory Note dated July 23,
    2008

                                                                    	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                                                                      Name

                                                                    	 
      	
                                                                      Address

                                                                    	
                                                                      Amount

                                                                    	
                                                                      Closing

                                                                      Date

                                                                    	
                                                                      %
      Note owned

                                                                    	 
      
	
                                                                      Samax
      Family Ltd. Partnership

                                                                    	 
      	
                                                                      Attn:
      Dr. Andrew Margulies

                                                                      413
      N. Queens Ave.  

                                                                      Massapequa,
      NY
      11758

                                                                    	
                                                                      $10,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      0.368%

                                                                    	 
      
	
                                                                      Barbour,
      Catherine C.

                                                                    	 
      	
                                                                      551
      Park Estates Square  

                                                                      Venice,
      FL 34293

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Booth,
      Robert & Miriam

                                                                    	 
      	
                                                                      5364
      Lakemont Himrod Rd. 

                                                                      Dundee,
      NY 14837

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Halprin,
      Robert & Jacqueline JT/WROS

                                                                    	 
      	
                                                                      16541
      Greenview Lane 

                                                                      Huntington
      Beach, CA 92649

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Zippmart,
      Lisa

                                                                    	 
      	
                                                                      1759
      Praire View 

                                                                      Lane
      Ovieda, FL, 32765

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      VlacDonald,
      Evan

                                                                    	 
      	
                                                                      17
      Ester
      Drive                                  

                                                                      Bedford,
      NJ 03110

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Raz,
      James

                                                                    	 
      	
                                                                      4482
      Ashlwn Drive  

                                                                      Flint,
      MI 48507

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Roesch,
      Ben

                                                                    	 
      	
                                                                      331
      McKinley
Blvd.        

                                                                      Paramus,
      NJ07652

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Schroeder,
      Harold & Patricia

                                                                    	 
      	
                                                                      7584
      Congress Road     

                                                                      Lodi,
      OH 44254

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Witt,
      Steve

                                                                    	 
      	
                                                                      134
      Sunrise Court      

                                                                      Oconto
      Falls, WI
      54154

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Bodenstein,
      Dr. Alvin

                                                                    	 
      	
                                                                      53
      Bristol Drive    

                                                                      Boynton
      Beach,
      FL 33436

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Caranfiiian,
      James

                                                                    	 
      	
                                                                      235
      S. Dwight
      Place        

                                                                      Englewood,
      NJ 07631

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Ezratty,
      Era S. 

                                                                      Ezratty,
      Rochelle B.

                                                                    	 
      	
                                                                      2105
      Holland
      Way         

                                                                      Merrick,
      NY 11566

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Burgess,
      Robert E.

                                                                    	 
      	
                                                                      28455
      SW Herd
      Lane         

                                                                      Hillsboro,
      OR
      97123

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Calaco,
      Cleto

                                                                    	 
      	
                                                                      383
      Durnsford
      Road         

                                                                      London
      SW198EF

                                                                      United
      Kingdom

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Habbyshaw,
      Patricia Habbyshaw, James

                                                                    	 
      	
                                                                      12061
      Chamberlain Road 

                                                                      Aurora,
      OH 44202

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Friedman,
      Jack

                                                                    	 
      	
                                                                      506
      NW Skyline Crest Road Portland, OR 97229

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      White,
      Michael R.

                                                                    	 
      	
                                                                      2117
      Kelton Ave.        

                                                                      Los
      Angeles, CA
      90025

                                                                    	
                                                                              
      $25,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Liu,
      Douglas

                                                                    	 
      	
                                                                      6801
      Wolf Creet
      Court         

                                                                      Clarksville,
      MD
      21029

                                                                    	
                                                                               $30,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      1.105%

                                                                    	 
      
	
                                                                      Samax
      Family Ltd. Partnership

                                                                    	 
      	
                                                                      Attn:
      Dr. Andrew Margulies

                                                                      413
      N. Queens Ave.  

                                                                      Massapequa,
      NY
      11758

                                                                    	
                                                                                $35,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.289%

                                                                    	 
      
	
                                                                      Gulati,
      Subhash

                                                                    	 
      	
                                                                      157
      Davenport Ave.   

                                                                      New
      Rochelle, NY
      10805

                                                                    	
                                                                               
      $40,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.473%

                                                                    	 
      
	
                                                                      Dunkin,
      Art

                                                                    	 
      	
                                                                      5028
      Hunting Hills Circle 

                                                                      Roanoke,
      VA 24014

                                                                    	
                                                                               
      $50,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      1.842%

                                                                    	 
      
	
                                                                      Inghilterra,
      Carmela

                                                                    	 
      	
                                                                      320
      Greens Ridge Road     

                                                                      Stuartsville,
      NJ
      08886

                                                                    	
                                                                                
      $50,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      1.842%

                                                                    	 
      


                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                                 

                                                 

                                                 

                                                
                                                  
                                                     

                                                  

                                                  
                                                    -11-

                                                    
                                                      

                                                    

                                                  

                                                  
                                                     

                                                  

                                                

                                                 

                                                 

                                                 

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              	
                                                                      Meikrantz,
      James

                                                                    	 
      	
                                                                      677
      Linden Ave.       

                                                                      Los
      Altos, CA
      94022

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Curley,
      John - Curley-Jennings Patricia

                                                                    	 
      	
                                                                      58
      Valley View Ave.     

                                                                      Summit,
      NJ 07901

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      IVM
      Productions C/O Rosenberg, Alex

                                                                    	 
      	
                                                                      IVM
      Productions - 321 190th Street, Sunny Isle Beach, FL 33160

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Genna,
      Thomas

                                                                    	 
      	
                                                                      126
      Bold Maine Shore Rd. Barnegat, NJ 08005

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Burley,
      John IRA

                                                                    	 
      	
                                                                      58
      Valley View Ave. 

                                                                      Summit,
      NJ 07901

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Equidebt
      Financial Group, Inc. 

                                                                      Attn:
      Gharitzis, Mark

                                                                    	 
      	
                                                                      88885
      S. Hwy AlA       

                                                                      Melbourne
      Beach,
      FL 32951

                                                                    	
                                                                       

                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                       

                                                                      1.842%

                                                                    
	
                                                                      Giamanco,
      Joseph

                                                                    	 
      	
                                                                      4
      Whiterock Terrance      

                                                                      Holmdel,
      NJ 07733

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Brunker,
      Philip

                                                                    	 
      	
                                                                      38
      Cromwell Road       

                                                                      Luton
      Bedfordshire
      Lu31D-N UK

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Marcin,
      Mary Lou

                                                                    	 
      	
                                                                      8752
      W. Leland Ave.    

                                                                      Chicago,
      IL 60656    

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Fitzmaurice,
      M. Paul Shean, M. Lisabeth

                                                                    	 
      	
                                                                      130
      Linden Ave.   

                                                                      Haddonfield,
      NJ 08033

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Blan,
      Jay R.

                                                                    	 
      	
                                                                      15
      Mohawk Drive      

                                                                      Livingston,
      NJ 07039

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Garofalo,
      Frank J.

                                                                    	 
      	
                                                                      One
      Devonshire Place #3109 

                                                                      Boston,
      MA 02109

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      O'Mara,
      Robert

                                                                    	 
      	
                                                                      8
      Youngs Road       

                                                                      Basking
      Ridge,
      NJ 07920

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Mirotznik,
      Michael

                                                                    	 
      	
                                                                      2995
      Judith Drive South 

                                                                      Bellmore,
      NY 11710

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Gugerman,
      Nathan

                                                                    	 
      	
                                                                      205
      Harding Drive      

                                                                      South
      Orange, NJ
      07079

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Christensen,
      John

                                                                    	 
      	
                                                                      2900
      N. Flagler
      Drive             

                                                                      West
      Palm Beach,
      FL 33407

                                                                    	
                                                                      S100,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      3.683%

                                                                    
	
                                                                      Bourge,
      Dr. Robert

                                                                    	 
      	
                                                                      UAB
      School of Medicine

                                                                      311
      Tinsley Harrison Tower

                                                                      1900
      University Blvd. 

                                                                      Birmingham,
      AL 35294

                                                                    	
                                                                      $100,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      3.683%

                                                                    
	
                                                                      Rockmore
      Investment Master Fund LTD

                                                                    	 
      	
                                                                      Rock:more
      Capital   

                                                                      Attn:
      Brian Daly

                                                                      150
      E. 58th St. 28th Floor

                                                                      New
      York, NY
      10155

                                                                    	
                                                                      $100,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      3.683%

                                                                    
	
                                                                      Jenkins,
      David

                                                                    	 
      	
                                                                      1342
      N. Lakeway       

                                                                      Palm
      Beach, FL
      33480

                                                                    	
                                                                      $125,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      4.604%

                                                                    
	
                                                                      David
      J. Jenkins Family Foundation

                                                                    	 
      	
                                                                      Attn.
      David Jenkins , 

                                                                      Trustee
      1342
      N. Lakeway     

                                                                      Palm
      Beach, FL
      33480

                                                                    	
                                                                      $125,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      4.604%

                                                                    
	
                                                                      Sack,
      Steve

                                                                    	 
      	
                                                                      1795
      Harvard
      Ave.          

                                                                      Merrick,
      NY 11566

                                                                    	
                                                                      $150,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                         
      5.525%

                                                                    
	
                                                                      Sack,
      Steve

                                                                    	 
      	
                                                                      1795
      Harvard Ave.  

                                                                      Merrick,
      NY 11566

                                                                    	
                                                                      $150,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                         
      5.525%

                                                                    
	
                                                                      Vestal
      Venture Capital

                                                                    	 
      	
                                                                      Attn.
      Mr Allan Lyons 6471 Enclave Way Boca Raton, FL 33496

                                                                    	
                                                                      $475,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      17.495%

                                                                    
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                                                                      Totals

                                                                    	
                                                                      $2,715,000

                                                                    	 
      	
                                                                      100.000%

                                                                    
	 
      	 
      	 
      	 
      	 
      	 
      


                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

     

     

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

    
 

     

    AMERICAN
SURGICAL

    HOLDINGS,
INC.

     

     

     

    LOAN AND
SECURITY

     

    AGREEMENT

     

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    LOAN AND SECURITY
AGREEMENT

     

     

    This LOAN
AND SECURITY AGREEMENT (this "Agreement"), dated as of July
23, 2008, by American Surgical Holdings, Inc., a Delaware corporation with its
principal executive office at 10039 Bissonnet #250, Houston, Texas 77036-7852
(the "Debtor"),
and each of the noteholders listed on Annex A
hereto, or any oftheir designees or assignees (each, a "Secured
Party", collectively, the "Secured
Parties").

     

    BACKGROUND

     

    A. The
Debtor has entered into a Master Secured Promissory Note, dated as of the date
hereof, in favor of the Secured Parties in aggregate face principal amount of
Two Million Seven Hundred Fifteen Thousand Dollars and 00/100 (82,715,00.00) (as
the same may be amended, restated, modified or supplemented from time to time,
the "Master
Note" and, together with all related agreements, instruments and
documents, including but not limited to this Agreement, as the same may be
amended, restated, modified or supplemented from time to time, the "Loan
Documents"). Capitalized terms used but not defined herein shall have the
meanings given to such terms as set forth in the Master Note.

     

    B. The
Debtor desires to grant to the Secured Parties security interests in the
property described herein to secure all of the Debtor's obligations and
undertakings to the Secured Parties under the Loan Documents.

     

    C.
Pursuant to the terms of that certain Noteholder Agency Agreement, dated as of
May 2, 2007, by and among the Secured Parties and Dawson James Securities, Inc.,
a Florida corporation ("Dawson
James"), the Secured Parties appointed Dawson James as agent for the
Secured Parties and Dawson James accepted such appointment (in such capacity,
the "Note
Holder's Agent");

     

    NOW,
THEREFORE, the Note Holder's Agent, for and on behalf of the Secured Parties,
and the Debtor, intending to be legally bound hereby, agrees as
follows:

     

    SECTION
1

    SECURITY
INTEREST

     

    1.1 Description. As
security for the payment of all obligations and undertakings of every kind or
nature whatsoever of the Debtor to the Secured Parties, whether now existing or
hereafter incurred, matured or unmatured, direct or indirect, primary or
secondary, related or unrelated or due or to become due, arising under the Loan
Documents, and any extensions, modifications, substitutions, increases and
renewals thereof, and substitutions therefor; the payment of all amounts
advanced by the Secured Parties to preserve, protect, defend, and enforce its
rights hereunder and in the following property in accordance with the terms of
this Agreement; and the payment of all expenses incurred by the Secured Parties
in connection therewith, the Debtor hereby assigns and grants to the Secured
Parties a continuing
lien on and security interest in, upon and to the following property (the "Collateral"):

     

     

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

     

     

    (a)             Accounts, Contract Rights,
Etc. All of the Debtor's now owned and hereafter acquired, created, or
arising accounts, accounts receivable, notes receivable, contract rights,
chattel paper, documents (including documents of title), instruments, letters of
credit and goods; provided however, that the Debtor's current trade accounts
receivables may be used in connection with obtaining working capital financing
so long as a minimum of One Million Dollars and 00/100 ($1,000,000.00) of
proceeds from any such financing facility are used to pay down principal on the
Master Note, provided, however, that upon receipt of an aggregate of such
$1,000,000 by the Holders, this lien and security interest on Debtor's trade
accounts receivable created under this Section 1(a) shall be automatically
released, and Debtor shall be authorized to file a termination statement
terminating any UCC-1 financing statements with respect to such lien and
security interest.

     

    (b)             Litigation. All of
the Debtor's right, title and interest to pending and threatened claims,
actions, suits, etc., including, but not limited to the pending and threatened
claims with the United Healthcare Insurance Company ("United")
with respect to charge-backs in 2007 and 2008; the denied and underpaid
reimbursement claims by United and the claims against Aetna Insurance ("Aetna")
for underpayments of reimbursement claims during the Debtor's Aetna
contract period from March 2007 to May 2008.

     

    (c)             Commercial Tort Claims.
All of the Debtor's commercial tort claims executed and delivered by the
Debtor to the Secured Parties; and

     

    (d)             Proceeds. The
proceeds specified in section 1.1(a) and (b) less any expenses, fees and
attorneys fees accrued in the course of realizing such proceeds.

     

    All terms
defined in the Uniform Commercial Code as in effect in the State of Texas from
time to time (the "UCC")
and used herein shall have the same definitions as specified in the UCC.
However, if a term is defined in Article 9 of the UCC differently than in
another Article of the UCC, the term has the meaning specified in
Article 9.

     

    1.2 Lien Documents. As
the Secured Parties deems necessary, the Debtor shall execute and deliver to the
Secured Parties, or have executed and delivered (all in form and substance
satisfactory to the Secured Parties), any agreements, documents, instruments and
writings, required to evidence, perfect or protect the Secured Parties' lien and
security interest in the Collateral required hereunder or as the Secured Parties
may request from time to time. Each Secured Party agrees not to exercise any of
its rights or remedies with respect to any of the Collateral unless and until
the Debtor incurs an Event of Default.

     

    1.3 Other
Actions.

     

    (a) Each
Secured Party is hereby authorized to file financing statements and amendments
to financing statements without the Debtor's signature in accordance with the
UCC. The Debtor hereby authorizes each Secured Party to file all financing
statements and amendments to financing statements describing the Collateral in
any filing office as a Secured Party, in its sole discretion may determine,
including financing statements listing the Collateral described in section 1.1
The Debtor agrees to comply with the requirements of all state and federal laws
and requests of a Secured Party in order for a Secured Party to have and
maintain a valid and
perfected first security interest in the Collateral including, without
limitation, executing such documents as a Secured Party may require to obtain
control (as defined in the UCC) over all deposit accounts, letter of credit
rights and investment property.

     

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    (b) In
addition to the foregoing, the Debtor shall do anything further that may be
reasonably required by the Secured Parties to secure the Secured Parties and
effectuate the intentions and objects of this Agreement, including, without
limitation, the execution and delivery of security agreements, contracts and any
other documents required hereunder. At the Secured Parties request, the Debtor
shall also immediately deliver (with execution by the Debtor of all necessary
documents or forms to reflect, implement or enforce the security interest of the
Secured Parties described herein) to the Secured Parties all items of which the
Secured Parties must receive possession to obtain a perfected security interest,
including without limitation, all notes, stock powers, letters of credit,
certificates and documents of title, chattel paper, warehouse receipts,
instruments, and any other similar instruments constituting
Collateral.

     

    1.4 Filing Security Agreement.
A carbon, photographic or other reproduction or other copy of this
Agreement or of a financing statement is sufficient as and may be filed in lieu
of a financing statement.

     

    1.5 Landlord/Warehouseman
Waiver. The Debtor will cause each owner of any premises occupied by the
Debtor or to be occupied by the Debtor and each warehouseman of any warehouse,
where, in either event, Collateral is held, to execute and deliver to the
Secured Parties an instrument, in form and substance satisfactory to the Secured
Parties, under which such owner(s) or warehouseman subordinates its/his/their
interests in and waives its/his/their right to distrain on or foreclose against
the Collateral and agrees to allow the Secured Parties to remain on such
premises to dispose of or deal with any Collateral located thereon.

     

    1.6 Power of Attorney.
Zak Elgamal or his representative is hereby irrevocably made, constituted
and appointed the true and lawful attorney for the Debtor (without requiring it
to act as such) with full power of substitution to do the following: (a) execute
in the name of the Debtor, schedules, assignments, instruments, documents and
statements that the Debtor is obligated to give the Secured Parties hereunder or
is necessary to perfect (or continue to evidence the perfection of such security
interest); (b) during the continuance of an Event of Default, endorse the name
of the Debtor upon any and all checks, drafts, money orders and other
instruments for the payment of monies that are payable to the Debtor and
constitute collections on the Debtor's accounts or other Collateral; and (c)
during the continuance of any Event of Default, do such other and further acts
and deeds in the name of the Debtor that the Secured Parties may reasonably deem
necessary or desirable to enforce any Account or other Collateral or perfect a
Secured Party's security interest in the Collateral.

     

    SECTION 2

    REPRESENTATIONS
AND WARRANTIES

     

    The
Debtor represents and warrants to the Secured Parties each of the
following:

     

    2.1 Corporate Organization.
The Debtor (i) is duly organized and validly existing under the laws of
its state of formation, (ii) has the power and authority to operate its business
and to
own its property and (iii) is duly qualified, is validly existing and in good
standing and has lawful power and authority to engage in the business it
conducts in each state where the nature and extent of its business requires
qualification.

     

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    2.2 Non-Contravention.
The making and performance of this Agreement and other agreements
executed in connection herewith will not (immediately, with the passage of time
or with the giving of notice or both):

     

    (a) violate
the certificate of incorporation or by-laws of the Debtor or result in a default
under any contract, agreement or instrument to which the Debtor is a party or by
which the Debtor or its property is or may be bound, or

     

    (b) result in
the creation or imposition of any security interest in, or lien or encumbrance
upon, any of the assets of the Debtor, except such as are in favor of the
Secured Parties.

     

    2.3 Power and Authority,
The Debtor has the power and authority to enter into and perform this
Agreement and to incur the obligations herein and therein provided for, and has
taken all proper and necessary action, corporate or otherwise, to authorize the
execution, delivery and performance of this Agreement.

     

    2.4 Enforceable. This
Agreement is valid, binding and enforceable against the Debtor in accordance
with its terms.

     

    2.5 Consents and Approvals.
All necessary consents, approvals or authorizations of, or filing,
registration or qualification with, any person, required to be obtained by the
Debtor in connection with the execution and delivery of this Agreement or the
undertaking or performance of any obligation hereunder has been
obtained.

     

    2.6 Names and Intellectual
Property.

     

    (a) For
the past five (5) years, the Debtor has not conducted business under or used any
other name (whether corporate or assumed). The Debtor is the sole owner of the
corporate name identified in this Agreement as American Surgical Holdings, Inc.
and any and all business done and all invoices issued in such trade name are the
Debtor's sales, business and invoices.

     

    2.7
Title. The Collateral is free and clear of any and all liens, claims,
encumbrances or security interests other than the security interests, except for
any security arrangement resulting from selling or pledging of trade accounts
receivable provided that the Secured Party receives a minimum of One Million
Dollars ($1,000,000) from such financing to be applied towards any outstanding
balance owing on the Master Note at the time of such financing.

     

    2.8 Perfection. This
Agreement is effective to create in favor of the Secured Parties legal, valid
and enforceable security interest in all right, title and interest of the Debtor
in the Collateral, and when financing statements and mortgages have been filed
in the offices of the jurisdiction of formation
under the Debtor's name, the Secured Parties will have a perfected security
interest in the Collateral, superior in right to any and all other liens,
security interest or other encumbrances existing or future, other than the
security interest in favor of the Secured Parties, and provided, however, that
upon receipt of an aggregate of such $1,000,000 by the Holders, the Security
Holders' lien and security interest on Debtor's trade accounts receivable
created under this Section 1(a) shall be automatically released, and Debtor
shall be authorized to file a termination statement terminating any UCC-1
financing statements with respect to such lien and security
interest.

     

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

     

    2.8 Places of Business.
The only places of business of the Debtor, and the places where the
Debtor keeps and intends to keep its Collateral, are at the addresses set forth
below:

     

    10039
Bissonnet #250, Houston, Texas 77036-7852;

     

    2.9 Insurance. The Debtor
currently maintains insurance from reputable insurance carriers and which is
adequate for the business of the Debtor.

     

    2.10
Litigation.
There is no claim, suit, litigation, proceeding or investigation pending
or (to best of the Debtor's knowledge) threatened by or against or affecting the
Debtor in any court or before any governmental agency (or any basis therefore
known to the Debtor) which may result, either separately or in the aggregate, in
a material adverse effect on the Debtor. The Debtor will promptly inform the
Secured Parties in writing of any claim, proceeding, litigation or investigation
in the future threatened or instituted by or against the Debtor.

     

    SECTION
3

    COVENANTS

     

    3.1 The
Debtor covenants that:

     

    (a)            Payment of Taxes and Claims.
The Debtor shall pay, before they become delinquent,
the following:

     

    (i) All
taxes, assessments and governmental charges or levies imposed upon it or upon
the Debtor's property, and

     

    (ii) All
claims or demands of materialmen, mechanics, carriers, warehousemen, landlords
and other persons entitled to the benefit of statutory or common law liens or
other encumbrances, which, if unpaid, would result in the imposition of a lien
or other encumbrance upon its property; provided, however, that the Debtor shall
not be required to pay any such tax, assessment, charge, levy, claim or demand
if the amount, applicability or validity thereof shall at the time be contested
in good faith and by appropriate proceedings by the Debtor, and if the Debtor
shall have set aside on its books adequate reserves in respect thereof, if so
required in accordance with generally accepted accounting principles ("GAAP");
which deferment of payment is permissible so long as no lien or other
encumbrance has been entered and the Debtor's title to, and its right to use,
its property are not materially adversely affected thereby.

     

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

     

    (b)             Property. The Debtor
shall maintain its property in its current condition (normal wear and tear
excepted) and make all necessary renewals, replacements, additions, betterments
and improvements thereto and will pay and discharge when due the cost of repairs
and maintenance to its property, and will pay all rentals when due for all real
estate leased by the Debtor.

     

    (c)             Property Insurance, Public
and Products Liability Insurance. The Debtor shall maintain insurance (i)
on all insurable tangible property against fire, flood, casualty and such other
hazards (including, without limitation, extended coverage, workmen's
compensation, boiler and machinery, with inflation coverage by endorsement) and
(ii) against public liability, product liability and business interruption, in
each case in such amounts, with such deductibles and with such insurers as are
customarily used by companies operating in the same industry as the Debtor. In
the event the Debtor fails to procure or cause to be procured any such insurance
or to timely pay or cause to be paid the premium(s) on any such insurance, a
Secured Party may do so for the Debtor, but the Debtor shall continue to be
liable for the same. The policies of all such casualty insurance shall contain
standard lender loss payable clauses (and, with respect to liability and
interruption insurance, additional insured clauses) issued in favor of the
Secured Parties under which all losses thereunder shall be paid to the Secured
Parties as the Secured Parties interest may appear. Such policies shall
expressly provide that the requisite insurance cannot be altered or canceled
without thirty (30) days prior written notice to the Secured Parties and shall
insure the Secured Parties notwithstanding the act or neglect of the Debtor. The
Debtor further covenants that all insurance premiums owing under its current
policies have been paid. The Debtor shall notify the Secured Parties,
immediately, upon the Debtor's receipt of a notice of termination, cancellation,
or non-renewal from its insurance company of any such policy.

     

    (d)             Financial Records.
The Debtor shall keep current and accurate books of records and accounts
in which full and correct entries will be made of all of its business
transactions, and will reflect in its financial statements adequate accruals and
appropriations to reserves, all in accordance with GAAP. The Debtor shall not
change its fiscal year end date without the prior written consent of the Secured
Parties.

     

    (e)             Corporate Existence and
Rights, The Debtor shall do (or cause to be done) all things necessary to
preserve and keep in full force and effect its existence, good standing, rights
and franchises. The Debtor shall maintain any and all licenses, permits,
franchises or other governmental authorizations necessary to the ownership of
its property or to the conduct of its businesses.

     

    (f) Compliance with Laws,
The Debtor: (i) shall be in compliance with any and all laws, ordinances,
governmental rules and regulations, and court or administrative orders or
decrees to which it is subject, whether federal, state or local, (including,
without limitation, environmental laws) and (ii) shall obtain any and all
licenses, permits, franchises or other governmental authorizations necessary to
the ownership of its property or to the conduct of its businesses. The Debtor
shall timely satisfy all assessments, fines, costs and penalties imposed (after
exhaustion of all appeals, provided a stay has been put in effect during such
appeal) by any governmental authority against Debtor or any property of the
Debtor.

     

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

     

    (g)             Issue Taxes. The
Debtor shall pay all taxes (other than taxes based upon or measured by any of
the Secured Party's income or revenues or any personal property tax), if any, in
connection with the recording of any lien documents. The obligations of the
Debtor hereunder shall survive the termination of this Agreement

     

    (h)             Merger, Consolidation,
Dissolution or Liquidation. The Debtor shall not merge or consolidate
with any other person or commence a dissolution or liquidation.

     

    (i) Sale of Property. The
Debtor shall not engage in any sale of its assets, except in the ordinary course
of business and other than equipment that is replaced by other equipment of
comparable or superior quality and value within ninety (90) days of such sale
and such equipment becomes part of the Collateral.

     

    0) Liens and
Encumbrances/Indebtedness. The Debtor shall not: (i) execute a negative
pledge agreement with any person covering any of the Collateral, or (ii) cause
or permit or agree or consent to cause or permit in the future (upon the
happening of a contingency or otherwise), the Collateral, whether now owned or
hereafter acquired, to be subject to a lien, security interest or other claim or
encumbrance except for Permitted Liens. As used herein, "Permitted Liens" means: (i)
liens securing taxes, assessments or governmental charges or levies or the
claims or demands of materialmen, mechanics, carriers, warehousemen, landlords,
and other like persons; (ii) liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance, social security and other like laws; and (iii) provided however, that
the Debtor's current trade accounts receivables may be used as collateral in
connection with obtaining working capital financing so long as a minimum of One
Million Dollars and 00/100 ($1,000,000.00) of proceeds from any such financing
facility are used to pay down principal on the Master Note, provided, however,
that upon receipt of an aggregate of such $1,000,000 by the Holders, this lien
and security interest on Debtor's trade accounts receivable created under this
Section 1(a) shall be automatically released, and Debtor shall be authorized to
file a termination statement terminating any UCC-1 financing statements with
respect to such lien and security interest..

     

    (k) First Priority Lien.
Subject to the provisions of Section 1.1, the Secured Parties shall have
a perfected, first priority lien in and upon all of the Collateral. The Debtor
represents and warrants that it has no indebtedness of any kind, other than
trade payables in the ordinary course of business as of the date hereof, and
shall not enter into any loan, credit agreement, revolver, debenture transaction
or incur any other indebtedness during the time any outstanding balance is due
under the Master Note, provided, however, that the Debtor's current trade
accounts receivables may be used as collateral in connection with obtaining
working capital financing so long as a minimum of One Million Dollars and 00/100
($1,000,000.00) of proceeds from any such financing facility are used to pay
down principal on the Master Note, provided, however, that upon receipt of an
aggregate of such $1,000,000 by the Holders, this lien and security interest on
Debtor's trade accounts receivable created under this Section 1(a) shall be
automatically released, and Debtor shall be authorized to file a termination
statement terminating any UCC-1 financing statements with respect to such lien
and security interest,

     

    (l)           Other Agreements. The
Debtor shall not become or be a party to any contract
or agreement which at the time of becoming a party to such contract or agreement
materially
impairs the Debtor's ability to perform under this Agreement, or under any other
instrument, agreement or document to which the Debtor is a party or by which it
is or may be bound.

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

     

     

    (m)             Change of Location or
Jurisdiction of Organization. The Debtor agrees that it shall not change
its name or jurisdiction of organization without thirty (30) days prior written
notice to the Secured Parties and that if the location of the Collateral changes
from the locations set forth herein or if its principal place of business
changes from that indicated in Section 2.9 of this Agreement, the Debtor will
immediately notify each Secured Party in writing of the additions or changes to
the locations of the Collateral,

     

    (n)             Commercial Tort Claims.
The Debtor shall provide written notice to each Secured Party of any
commercial tort claim claiming to which the Debtor is or becomes a party or
which otherwise inures to the benefit of the Debtor. Such notice shall contain a
sufficient description of the commercial tort claim including the parties, the
court in which the claim was commenced (if applicable), the docket number
assigned to the case (if applicable) and an explanation of the events giving
rise to such claim. If requested by the Secured Parties, the Debtor shall grant
the Secured Parties a security interest in such commercial tort claim in which
the Debtor is plaintiff or cross-claimant as additional Collateral. The Debtor
shall execute and deliver such instruments, documents and agreements as
the Secured Parties may require in order to obtain and perfect such
security interest including, without limitation, a security agreement or
amendment to any existing security agreement all in form and substance
satisfactory to the Secured Parties. The Debtor authorizes the Secured Parties
to file (without the Debtor's signature), financing statements or amendments to
existing financing statements as the Secured Parties deems necessary to perfect
the security interest.

     

    (o)            Maintenance of Collateral,
The Debtor will maintain the Collateral in good order, and the Debtor
will not use the Collateral for any unlawful purpose and will not sell any
Collateral without the written consent of the Secured Parties, except if such
sale is in the ordinary course of business or as otherwise permitted by this
Agreement. The Debtor will immediately advise the Secured Parties in writing of
any material loss or damage to the Collateral.

     

    (p)            Litigation Matters.
The Debtor shall provide monthly reports on the status of the United and
Aetna matters set forth in Section 1.1(b) above

     

    (q)            Master Note Compliance.
The Debtor shall comply with all covenants contained
in the Master Note.

     

    SECTION
4 

    DEFAULT

     

    4.1 Events of Default.
The breach or non-performance of any covenant, representation or warranty
in this Agreement and the occurrence of a default under any of the Loan
Documents (after any applicable cure or grace period) shall constitute an event
of default hereunder (each, an "Event
of Default") and the Secured Parties shall thereupon have the option to
declare the Debtor in default under this Agreement, and all other existing and
future agreements
of any kind (related or unrelated) with the Secured Parties, and declare all
existing and future liabilities, indebtedness and obligations of the Debtor to
the Secured Parties, whether matured or contingent, related or unrelated, due or
to become due, immediately due and payable including, but not limited to,
interest, principal, reasonable and actual expenses, advances to protect the
Secured Parties position and all of the Secured Parties rights hereunder and
thereunder, all without demand, notice, presentment or protest or further action
of any kind.

     

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

    4.2 Rights and Remedies on
Default. In addition to all other rights, options and remedies granted to
the Secured Parties under this Agreement (each of which is also then exercisable
by the Secured Parties), the Secured Parties may, upon the occurrence of an
Event of Default, exercise any other rights granted to it under the UCC and any
other applicable law, including, without limitation, the following rights and
remedies:

     

    (a) the right
to take possession of, send notices, and directly collect the Collateral, with
or without judicial process (including, without limitation the right to notify
the United States postal authority to redirect all mail addressed to the Debtor
to an address designated by the Secured Parties);

     

    (b) by its
own means or with judicial assistance, enter the Debtor's premises and take
possession of the Collateral, or render it unusable, or dispose of the
Collateral on such premises without any liability for rent, storage, utilities
or other sums, and the Debtor shall not resist or interfere with such
action;

     

    (c) require
the Debtor at the Debtor's expense to assemble all or any part of the Collateral
and make it available to the Secured Parties at any place designated by the
Secured Parties;

     

    (d) The
Debtor hereby agrees that a notice received by it at least ten (10) days before
the time of any intended public sale or of the time after which any private sale
or other disposition of the Collateral is to be made, shall be deemed to be
reasonable notice of such sale or other disposition. If permitted by applicable
law, any perishable inventory or Collateral which threatens to speedily decline
in value or which is sold on a recognized market may be sold immediately by the
Secured Parties without prior notice to the Debtor. The Debtor covenants and
agrees not to interfere with or impose any obstacle to the Secured Parties'
exercise of its rights and remedies with respect to the Collateral, after the
occurrence of an Event of Default hereunder; and

     

    (e) To
the extent that applicable law imposes duties on the Secured Parties to exercise
remedies in a commercially reasonable manner, the Debtor acknowledges and agrees
that it is not commercially unreasonable for the Secured Parties to do any of
the following:

     

    (i) fail to
incur expenses reasonably deemed significant by the Secured Parties to prepare
the Collateral for disposition or otherwise to complete raw material or work in
process into finished goods or other finished products for
disposition;

     

    (ii) fail to
obtain third party consents for access to the Collateral to be disposed of or to
obtain or, if not required by other law, to fail to obtain governmental or
third
party consents for the collection or disposition of the Collateral to be
collected or disposed of;

     

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

     

     

    (iii) fail to
exercise collection remedies against account debtors or other persons obligated
on the Collateral or to remove liens, security interests or other encumbrances
on or any adverse claims against the Collateral;

     

    (iv) exercise
collection remedies against account debtors and other persons obligated on the
Collateral directly or through the use of collection agencies and other
collection specialists;

     

    (v) advertise
dispositions of the Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized
nature;

     

    (vi) contact
other persons, whether or not in the same business as the Debtor, for
expressions of interest in acquiring all or any portion of the
Collateral;

     

    (vii) hire one
or more professional auctioneers to assist in the disposition of the Collateral,
whether or not the collateral is of a specialized nature;

     

    (viii) dispose
of the Collateral by utilizing Internet sites that provide for the auction of
assets of the types included in the Collateral or that have the reasonable
capability of doing so, or that match buyers and sellers of assets;

     

    (ix) dispose
of assets in wholesale rather than retail markets;

     

    (x) disclaim
disposition warranties;

     

    (xi) purchase
insurance or credit enhancements to insure the Secured Parties against risks of
loss, collection or disposition of the Collateral or to provide to the Secured
Parties a guaranteed return from the collection or disposition of the
Collateral; or

     

    (xii) (1) to
the extent deemed appropriate by the Secured Parties, obtain the services of
other brokers, investment bankers, consultants and other professionals to assist
the Secured Parties in the collection or disposition of any of the
Collateral.

     

    The
Debtor acknowledges that the purpose of this Section 4.2(e) is to provide
non-exhaustive indications of what actions or omissions by the Secured Parties
would not be commercially unreasonable in the Secured Parties' exercise of
remedies against the Collateral and that other actions or omissions by the
Secured Parties shall not be deemed commercially unreasonable solely on account
of not being indicated in this Section 4.2(e). Without limitation upon the
foregoing, nothing contained in this Section 4.2(e) shall be construed to grant
any rights to the Debtor or to impose any duties on the Secured Parties that
would not have been granted or imposed by this Agreement or by applicable law in
the absence of this Section 4.2(e)

     

    4.3 Nature of Remedies.
The Secured Parties shall have the right to proceed against all or any
portion of the Collateral in any order and may apply such Collateral to the
liabilities and obligations of the Debtor to the Secured Parties in any order.
All rights and remedies granted
the Secured Parties hereunder and under any agreement referred to herein, or
otherwise available at law or in equity, shall be deemed concurrent and
cumulative, and not alternative remedies, and the Secured Parties may proceed
with any number of remedies at the same time until all existing and future
liabilities and obligations of the Debtor to the Secured Parties, are satisfied
in full. The exercise of any one right or remedy shall not be deemed a waiver or
release of any other right or remedy, and the Secured Parties, upon the
occurrence of an Event of Default, may proceed against the Debtor, and/or the
Collateral, at any time, under any agreement, with any available remedy and in
any order.

     

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

     

    SECTION
5

    MISCELLANEOUS

     

    5.1 Governing Law. This
Agreement, and all related agreements and documents shall be governed by and
construed in accordance with the laws of the State of Texas, without regard to
its otherwise applicable principles of conflicts of laws. The provisions of this
Agreement and other agreements and documents referred to herein are to be deemed
severable, and the invalidity or unenforceability of any provision shall not
affect or impair the remaining provisions which shall continue in full force and
effect.

     

       
5.2 Waiver,

     

    (a) No
omission or delay by the Secured Parties in exercising any right or power under
this Agreement or any other document will impair such right or power or be
construed to be a waiver of any default, or Event of Default or an acquiescence
therein, and any single or partial exercise of any such right or power will not
preclude other or further exercise thereof or the exercise of any other right,
and no waiver of the Secured Parties' rights hereunder will be valid unless in
writing and signed by the Secured Parties, and then only to the extent
specified.

     

    (b) The
Debtor releases the Secured Parties, their agents, administrators and executors,
their officers, employees and agents, of and from any claims for loss or damage
resulting from acts or conduct of any or all of them arising through the date
hereof, unless caused solely by wilful misconduct or gross
negligence.

     

    5.3 Modification. No
modification hereof or any agreement referred to herein shall be binding or
enforceable unless in writing and signed on behalf of the party against whom
enforcement is sought.

     

    5.4 Signatories. Each
individual signatory hereto represents and warrants that he/she/it is duly
authorized to execute this Agreement on behalf of his/her/its principal and that
he/she/it executes the Agreement in such capacity and not as a
party.

     

    5.5 Successors and Assigns.
All provisions herein shall inure to, become binding upon the successors,
representatives, trustees, administrators, executors, heirs and assigns of
the parties hereto.

     

     

    
 

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

     

     

      
5.6 Consent to
Jurisdiction. The Debtor irrevocably consents to the jurisdiction of the
Courts of the State of Texas, County of Harris or the United States District
Court for the Southern District of Texas located in the County of Harris in any
and all actions and proceedings whether arising hereunder or under any other
agreement or undertaking and irrevocably agrees to service of process to the
address of the Debtor set forth herein by certified mail, return receipt
requested.

     

      
 5.7 Waiver of
Jury Trial. The Debtor and the Secured Parties hereby waive any and all
rights any may have to a jury trial in connection with any litigation commenced
by or against the Secured Parties with respect to rights and obligations of the
parties hereto.

     

      
5.8 No Marshalling.
The Secured Parties shall not be required to marshal any present or
future collateral security (including but not limited to this Agreement and the
Collateral) for, or other assurances of payment of, the obligations (or any of
them) secured hereunder or to resort to such collateral security or other
assurances of payment in any particular order, and all of its rights hereunder
and in respect of such collateral security and other assurances of payment shall
be cumulative and in addition to all other rights, however existing or arising.
To the extent that it lawfully may, the Debtor hereby agrees that it will not
invoke any law relating to the marshalling of collateral which might cause delay
in or impede the enforcement of the Secured Parties' rights under this Agreement
or under any other instrument creating or evidencing any of the obligations
secured hereunder or under which any of such obligations is outstanding or by
which any of such obligations is secured or payment thereof is otherwise
assured, and, to the extent that it lawfully may, the Debtor hereby irrevocably
waives the benefits of all such laws.

     

    [Signature
Page Follows]

     

     

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

    
 

     

    IN
WITNESS WHEREOF, the undersigned parties have executed this Agreement the day
and year first above written.

    
       

      
        
          	
                  AMERICAN
      SURGICAL HOLDINGS, INC

                  a
      Delaware corporation

                
	 
	By: /s/
      Zak W.
  Elgamal


        

      


      
        
          	
                  Name:
      Zak W. Elgamal

                  Title:
      Chairman and Chief Executive
      Officer

                


        

      

       

      
         

      

      AGREED TO
AND ACCEPTED:

       

      Note
Holder's Agent,

      for and
on behalf of the Holders

       

      DAWSON
JAMES SECURITIES, INC

      a
Florida corporation

       

      By: /s/
Albert J. Pollak  

      Name:
Albert J. Pollak 

      Title:
President

       

       

       

       

      -13-