Document:

Prepared by R.R. Donnelley Financial -- 1998 NONOFFICER EMPLOYEE STOCK OPTION PLAN

  
 EXHIBIT 10.1 
  
 SONOSITE, INC. 
  
 1998 Nonofficer Employee
Stock Option Plan 
 (as amended and restated on July 25, 2002) 
  
 1.    Purpose 
  
 The purpose of the Plan is to enhance the
long-term shareholder value of the Corporation by offering opportunities to selected employees to participate in the Corporation’s growth and success, and to encourage them to remain in the service of the Corporation and its subsidiaries and to
acquire and maintain stock ownership in the Corporation. 
  
 2.    Definitions 
  
 The following terms have the corresponding meanings for purposes of the Plan: 
  
 “Change in Control” means 
  
 (a)  a “Board Change.” For purposes of the Plan, a Board Change shall have occurred if a majority of the seats (other than vacant seats) on the Corporation’s Board of Directors (the “Board”) were to
be occupied by individuals who were neither (i) nominated by a majority of the Incumbent Directors nor (ii) appointed by directors so nominated. An “Incumbent Director” is a member of the Board who has been either (i) nominated by a
majority of the directors of the Corporation then in office or (ii) appointed by directors so nominated, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person (as defined in Section 2(b)) other than the Board; or 
  
 (b)  The acquisition by any
individual, entity or group (within the meaning of Section 13(d) (3) or 14(d) (2) of the Exchange Act) (a “Person”) of “Beneficial Ownership” (within the meaning of Rule 13d3 promulgated under the Exchange Act) of (i) 20% or more
of either (A) the then outstanding shares of common stock (the “Outstanding Corporation Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Corporation entitled to vote generally in the election
of directors (the “Outstanding Corporation Voting Securities”), in the case of either (A) or (B) of this clause (i), which acquisition is not approved in advance by a majority of the Incumbent Directors or (ii) 33% or more of either (A)
the Outstanding Corporation Common Stock or (B) the Outstanding Corporation Voting Securities, in the case of either (A) or (B) of this clause (ii), which acquisition is approved in advance by a majority of the Incumbent Directors; provided,
however, that the following acquisitions shall not constitute a Change in Control: (x) any acquisition by the Corporation, (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any
corporation controlled by the Corporation, or (z) any acquisition by any corporation pursuant to
 

 
a reorganization, merger or consolidation, if, following such reorganization, merger or consolidation, the conditions described in clauses (i), (ii) and (iii) of the following subsection (c) are
satisfied; or 
  
 (c)  Approval by the shareholders of the Corporation of a reorganization, merger or
consolidation, in each case, unless, following such reorganization, merger or consolidation, (i) more than 60% of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities immediately prior to such reorganization, merger or consolidation in substantially the
same proportions as their ownership, immediately prior to such reorganization, merger or consolidation, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities, as the case may be, (ii) no Person (excluding the
Corporation, any employee benefit plan (or related trust) of the Corporation or such corporation resulting from such reorganization, merger or consolidation and any Person beneficially owning, immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 33% or more of the Outstanding Corporation Common Stock or Outstanding Corporation Voting Securities, as the case may be) beneficially owns, directly or indirectly, 33% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation or the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election
of directors, and (iii) at least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger or consolidation were Incumbent Directors at the time of the execution of the initial agreement
providing for such reorganization, merger or consolidation; or 
  
 (d)  Approval by the shareholders of the
Corporation of (i) a complete liquidation or dissolution of the Corporation or (ii) the sale or other disposition of all or substantially all of the assets of the Corporation, other than to a corporation, with respect to which following such sale or
other disposition, (A) more than 60% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the
election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Corporation Common Stock and Outstanding
Corporation Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities, as the case may be, (B) no Person (excluding the Corporation and any employee benefit plan (or related trust) of the Corporation or such corporation and any Person beneficially owning, immediately prior to
such sale or other disposition, directly or indirectly, 33% or more of the Outstanding Corporation Common Stock or Outstanding Corporation Voting Securities, as the case may be) beneficially owns, directly or indirectly, 33% or more of,
respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation 
 

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entitled to vote generally in the election of directors, and (C) at least a majority of the members of the board of directors of such corporation were approved by a majority of the Incumbent
Directors at the time of the execution of the initial agreement or action of the Board providing for such sale or other disposition of assets of the Corporation. 
  
 “Committee” means the Committee provided for in Section 5, which shall administer the Plan. 
  
 “Common Stock” means common stock, par value $0.01 per share, of the Corporation. 
  
 “Corporation” means SonoSite, Inc., a Washington corporation. 
  
 “Designated Beneficiary” means any person designated in writing by a Participant as a legal recipient of payments due under an award in the event of the Participant’s death, or in the absence of such designation, the
Participant’s estate. Such designation must be on file with the Corporation in order to be effective but, unless the Participant has made an irrevocable designation, may be changed from time to time by the Participant. 
  
 “Disability,” unless otherwise defined by the Committee, means a mental or physical impairment of the Participant that is
expected to result in death or that has lasted or is expected to last for a continuous period of 12 months or more and that causes the Participant to be unable, in the opinion of the Corporation, to perform his or her duties for the Corporation or
its subsidiaries and to be engaged in any substantial gainful activity. 
  
 “Early Retirement” means early
retirement as that term is defined by the Plan Administrator from time to time for purposes of the Plan. 
  
 “Fair Market Value” of the Common Stock as of any trading day means the average (rounded to the next highest cent in the case of fractions of a cent) of the high and low sales prices of the Common Stock as reported on such
trading day by the Nasdaq National Market. If no sales price is reported for the Common Stock on such trading day, then “Fair Market Value” shall mean the highest bid price reported for the Common Stock on such trading day by the National
Quotation Bureau Incorporated or any similar nationally recognized organization. If there is no such reported price for the Common Stock for the date in question, then such price on the last preceding date for which such price exists shall be
determinative of Fair Market Value. The Committee, in its sole discretion, shall make all determinations required by this definition. 
  
 “Participant” means a person who has received an award under the Plan. 
  
 “Plan” means this SonoSite, Inc. 1998 Nonofficer Employee Stock Option Plan. 
  
 “Retirement” means retirement as of the Participant’s normal retirement date under the Corporation’s 401(k) Plan or other similar successor plan applicable to salaried employees, unless otherwise defined by the
Committee from time to time for purposes of the Plan. 
 

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 “Withholding Tax” means any tax, including any federal, state or local income tax, required by any governmental
entity to be withheld or otherwise deducted and paid with respect to the transfer of shares of Common Stock as a result of the exercise of an option. 
  
 3.    Stock Subject to the Plan 
  
 There are reserved for issuance upon
the exercise of options under the Plan 1,750,000 shares of Common Stock. Such shares may be authorized and unissued shares of Common Stock or shares now held or subsequently acquired by the Corporation. If any option granted under the Plan shall
expire or terminate for any reason (including, without limitation, by reason of its surrender, pursuant to the provisions of the third paragraph of Section 7(b) or otherwise, or cancellation, in whole or in part, pursuant to the provisions of
Section 7(c) or otherwise, or the substitution in place thereof of a new option) without having been exercised in full, the shares subject thereto shall again be available for the purposes of issuance under the Plan. 
  
 4.    Administration 
  
 The Plan shall be administered by the Committee. Subject to the express provisions of the Plan, the Committee shall have plenary authority, in its discretion, to determine the individuals to whom, and the time or times at
which, options shall be granted and the number of shares to be covered by each such grant. In making such determinations, the Committee may take into account the nature of the services rendered by the respective Participants, their present and
potential contributions to the Corporation’s success and such other factors as the Committee in its discretion may deem relevant. Subject to the express provisions of the Plan, the Committee shall have plenary authority to interpret the Plan,
to prescribe, amend and rescind rules and regulations relating to it, to determine the terms and provisions of option agreements (which need not be identical) and to make all other determinations necessary or advisable for the administration of the
Plan. The Committee’s determinations of the matters referred to in this Section 4 shall be conclusive. 
  
 To
the extent consistent with applicable law, the Board may authorize a senior executive officer of the Corporation to grant options under the Plan, within the limits specifically prescribed by the Board. 
  
 5.    The Committee 
  
 The Board shall designate a Committee of members of the Board. Currently, the Committee shall consist solely of two or more members of the Board. The Committee shall be appointed by the Board, which may from time to time
appoint members of the Committee in substitution for members previously appointed and may fill vacancies, however caused, in the Committee. The Committee shall select one of its members as its Chairman and shall hold its meetings at such times and
places as it may determine. A majority of its members shall constitute a quorum. All determinations of the Committee shall be made by not less than a majority of its members. Any decision or determination reduced to writing and signed by all the
members shall be fully as effective as if it had been made by a majority vote at a meeting duly
 
 

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called and held. The Committee may appoint a secretary, shall keep minutes of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable.

  
 6.    Eligibility 
  
 The Committee may grant options only to employees of the Corporation and of its present and future subsidiary corporations (“subsidiaries”) who are not “executive officers,” within
the meaning prescribed by Rule 16a-1(f) promulgated under the Exchange Act, or directors of the Corporation. Any person eligible under the Plan may receive one or more grants of options as the Committee shall from time to time determine, and such
determinations may be different as to different Participants and may vary as to different grants. 
  
 7.    Option
Grants 
  
 (a)  The Committee is authorized under the Plan, in its discretion, to issue options as
“nonqualified stock options” that are not intended to qualify as “incentive stock options” under Section 422 of the United States Internal Revenue Code of 1986, as amended (the “Code”) and the options shall be
designated as nonqualified stock options in the applicable option agreement. Unless approved by the holders of a majority of the shares of the Corporation present in person or by proxy and entitled to vote thereon at a duly convened meeting of
shareholders, the Committee shall not (a) grant any options under the terms of the Plan with a purchase price that is less than 100% of the Fair Market Value of the Common Stock on the date of grant or (b) reduce the purchase price of any option
outstanding or to be granted in the future under the terms of the Plan; any amendment or repeal of the provisions of this sentence requires the affirmative vote of the holders of a majority of shares of the Corporation present at a duly convened
shareholders’ meeting in person or by proxy and entitled to vote thereon. Notwithstanding the previous sentence, any option may provide that the purchase price be equal to the average Fair Market Value of the Common Stock over any continuous
period of trading days beginning and ending no more than 30 business days before or after the date such option is granted. 
  
 (b)  The Committee shall be authorized in its discretion to prescribe in the option grant the installments, if any, in which an option granted under the Plan shall become exercisable, provided that no option shall be
exercisable prior to the six months prior to the date of grant thereof except as provided in Sections 7(c), (d), (g), (h) and (i) or except as the Committee otherwise determines, and provided further that options granted to employees of the
Corporation’s subsidiary in Spain, SonoSite Iberica, S.L., who are residents of Spain shall be subject to the vesting schedule set forth in Addendum 1 attached hereto. In no case may an option be exercised as to less than 50 shares at any one
time (or the remaining shares covered by the option if less than 50) during the term of the option. The Committee shall also be authorized to establish the manner of the exercise of an option. The term of each option shall be not more than 10 years
from the date of grant thereof. 
  
 In general, upon exercise, the option price is to be paid in full in cash;
however, the Committee can determine at any time prior to exercise of an option, that additional forms of payment will be permitted. To the extent permitted by the Committee and applicable laws and regulations (including, but not limited to, federal
tax and securities laws and regulations and state 
 

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corporate law), an option may be exercised (i) in Common Stock owned by the option holder having a Fair Market Value on the date of exercise equal to the aggregate option price, or in a
combination of cash and stock; provided, however, that payment in stock shall not be made unless such stock shall have been owned by the option holder for a period of at least six months prior thereto (or any shorter period necessary to avoid
a charge to the Corporation’s earnings for financial reporting purposes); or (ii) by delivery of a properly executed exercise notice, together with irrevocable instructions to a broker designated by the Corporation, all in accordance with the
regulations of the Federal Reserve Board, to deliver promptly to the Corporation the amount of sale or loan proceeds to pay the exercise price and any federal, state or local withholding tax obligations that may arise in connection with the
exercise. 
  
 In lieu of requiring an option holder to pay cash or stock and to receive in turn certificates for
shares of Common Stock upon the exercise of an option, if the option so provides, the Committee may elect to require the option holder to surrender the option to the Corporation for cancellation as to all or any portion of the number of shares
covered by the intended exercise and receive in exchange for such surrender a payment, at the election of the Committee, in cash, in shares of Common Stock or in a combination of cash and shares of Common Stock, equivalent to the appreciated value
of the shares covered by the option surrendered for cancellation. Such appreciated value shall be the difference between the option price of such shares (as adjusted pursuant to Section 10) and the Fair Market Value of such shares, which shall for
this purpose be determined by the Committee taking into consideration all relevant factors, but which shall not be less than the Fair Market Value of such shares on the date on which the option holder’s notice of exercise is received by the
Corporation. Upon delivery to the Corporation of a notice of exercise of option, the Committee may avail itself of its right to require the option holder to surrender the option to the Corporation for cancellation as to shares covered by such
intended exercise. The Committee’s right of election shall expire, if not exercised, at the close of business on the fifth business day following the delivery to the Corporation of such notice. Should the Committee not exercise such right of
election, the delivery of the aforesaid notice of exercise shall constitute an exercise by the option holder of the option to the extent therein set forth, and payment for the shares covered by such exercise shall become due immediately.

  
 (c)  In the event that a Participant’s services for the Corporation or one of its subsidiaries
shall cease and the termination of such individual’s service is for cause, the option shall automatically terminate upon first notification to the option holder of such termination of services, unless the Committee determines otherwise, and
such option shall automatically terminate upon the date of such termination of services for all shares which were not purchasable upon such date. For purposes of this Section 7(c), “cause” is defined as a determination by the Committee
that the option holder (i) has committed a felony, (ii) has engaged in an act or acts of deliberate and intentional dishonesty resulting or intended to result directly or indirectly in improper material gain to or personal enrichment of the
individual at the Corporation’s expense, or (iii) has willfully disobeyed the Corporation’s appropriate rules, instructions or orders, and such willful disobeyance has continued for a period of 10 days following notice thereof from the
Corporation. 
 

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 In the event of the termination of the services of the holder of an option
because of Retirement, Early Retirement at the Corporation’s request or Disability, he may (unless such option shall have been previously terminated pursuant to the provisions of the preceding paragraph or unless otherwise provided in his
option grant) exercise such option at any time prior to the expiration of the option, (i) in the event of Disability or Retirement, to the extent of the number of shares covered by such option, whether or not such shares had become purchasable by
him at the date of the termination of his services and (ii) in the event of Early Retirement at the Corporation’s request, to the extent of the number of shares covered by such option at such time or times as such option becomes purchasable by
him in accordance with its terms. 
  
 In the event of the death of an individual to whom an option has been granted
under the Plan, while he is performing services for the Corporation or a subsidiary, the option theretofore granted to him (unless his option shall have been previously terminated pursuant to the provisions of this Section 7(c) or unless otherwise
provided in his option grant) may, subject to the limitations described in Section 7(f), be exercised by his Designated Beneficiary, by his legatee or legatees of the option under his last will, or by his personal representatives or distributees, at
any time within a period of one year after his death, but not after the expiration of the option, to the extent of the remaining shares covered by his option whether or not such shares had become purchasable by such an individual at the date of his
death. In the event of the death of an individual (i) during the 30-day period, or the 90-day period, as applicable, following termination of his services or (ii) following termination of his services by reason of Retirement, Early Retirement at the
Corporation’s request or Disability, then the option (if not previously terminated pursuant to the provisions of this Section 7(c)) may be exercised during the one-year period following termination of his services or during the remaining term
of the option, respectively, but not after the expiration of the option, by his Designated Beneficiary, by his legatee under his last will, or by his personal representative or distributee, but only to the extent of the number of shares purchasable
by such Participant pursuant to the provisions of Section 7(d) at the date of termination of his services. 
  
 In the
event of the termination of the services of the holder of an option, other than by reason of Retirement, Early Retirement at the Corporation’s request, Disability or death, he may (unless his option shall have been previously terminated
pursuant to the provisions of this Section 7(c) or unless otherwise provided in his option grant) exercise his option at any time within 30 days after such termination, if such option was granted prior to February 8, 2001, or within 90 days after
such termination, if such option was granted on or after February 8, 2001, or such longer period as determined by the Committee, but not after the expiration of the option, to the extent of the number of shares covered by his option which were
purchasable by him at the date of the termination of his services, and such option shall automatically terminate upon the date of such termination of services for all shares which were not purchasable upon such date. 
  
 (d)  Notwithstanding the foregoing provisions, the Committee may determine, in its sole discretion, in the case of any
termination of services, that the holder of an option may exercise such option to the extent of some or all of the remaining shares covered thereby whether or not such shares had become purchasable by such an individual at the date of the

 

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termination of his services and may exercise such option at any time prior to the expiration of the original term of the option. Options granted under the Plan shall not be affected by any change
of relationship with the Corporation so long as the holder continues to be an employee, consultant or independent contractor of the Corporation or of a subsidiary. The Committee, in its absolute discretion, may determine all questions of whether
particular leaves of absence constitute a termination of services. Nothing in the Plan or in any option granted pursuant to the Plan shall confer on any individual any right to continue in the employ or other service of the Corporation or any other
person or interfere in any way with the right of the Corporation or any other person to terminate his employment or other services at any time. 
  
 (e)  The date of grant of an option pursuant to the Plan shall be the date specified by the Committee at the time it grants such option, provided that such date shall not be prior to the date
of such action by the Committee and that the price shall be determined in accordance with Section 7(a) on such date. The Committee shall promptly notify a grantee of an award and a written option grant shall promptly be duly executed and delivered
by or on behalf of the Corporation. 
  
 (f)  Notwithstanding any contrary waiting period, installment
period or other limitation or restriction in any option agreement or in the Plan, in the event of a Change in Control, each option outstanding under the Plan shall thereupon become exercisable at any time during the remaining term of the option, but
not after the term of the option, to the extent of the number of shares covered by the option, whether or not such shares had become purchasable by the Participant thereunder immediately prior to such Change in Control, by the holder of the option.

  
 (g)  Anything in the Plan to the contrary notwithstanding, during the 90-day period from and after a
Change in Control (x) an optionee (other than an optionee who initiated a Change in Control in a capacity other than as an officer or a director of the Corporation) who is an executive officer or a director of the Corporation (within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated thereunder) with respect to an option that was granted at least six months prior to the date of exercise pursuant to this sentence and is unaccompanied by a stock appreciation
right and (y) any other optionee who is not an executive officer or a director with respect to an option that is unaccompanied by a stock appreciation right shall, unless the Committee shall determine otherwise at the time of grant, have the right,
in lieu of the payment of the full purchase price of the shares of Common Stock being purchased under the option and by giving written notice to the Corporation, to elect (within such 90-day period) to surrender all or part of the option to the
Corporation and to receive in cash an amount equal to the amount by which the amount determined pursuant to Section 7(h) hereof on the date of exercise (determined as if the optionee had exercised a limited stock appreciation right on such date)
shall exceed the purchase price per share under the option multiplied by the number of shares of Common Stock granted under the stock option as to which the right granted by this sentence shall have been exercised. Such written notice shall specify
the optionee’s election to purchase shares granted under the option or to receive the cash payment referred to in the immediately preceding sentence. 
 

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 (h)  For the purpose of determining the amount payable under Section
7(g) hereof, the fair market value of the Common Stock will be equal to the higher of (a) the highest Fair Market Value of the Common Stock during the 90-day period ending on the date the limited stock appreciation right is exercised and (b)
whichever of the following is applicable: 
  
 (1)  the highest per share price paid in any
tender or exchange offer which is in effect at any time during the 90 calendar days preceding the exercise of the limited right; 
  
 (2)  the fixed or formula price for the acquisition of shares of Common Stock in a merger or similar agreement approved by the Corporation’s shareholders or Board, if such price is
determinable on the date of exercise; and 
  
 (3)  the highest price per share paid to any
shareholder of the Corporation in a transaction or group of transactions giving rise to the exercisability of the limited right. 
  
 (i)  Notwithstanding the foregoing provisions, the optionee’s employment or other contract with the Corporation may provide that upon termination of his employment or other services for other than cause or for
“good reason” (as defined in his contract), all stock options shall become immediately exercisable. 
  
 8.    Withholding Taxes 
  
 In connection with the transfer of shares of
Common Stock as a result of the exercise of an option, the Corporation (a) shall not issue a certificate for such shares until it has received payment from the Participant of any Withholding Tax in cash or by the retention or acceptance upon
delivery thereof by the Participant of shares of Common Stock sufficient in Fair Market Value to cover the amount of such Withholding Tax and (b) shall have the right to retain or sell without notice, or to demand surrender of, shares of Common
Stock in value sufficient to cover any Withholding Tax. The Corporation shall have the right to withhold from any cash amounts due from the Corporation to the award recipient pursuant to the Plan an amount equal to the Withholding Tax. In either
case, the Corporation shall make payment (or reimburse itself for payment made) to the appropriate taxing authority of an amount in cash equal to the amount of such Withholding Tax, remitting any balance to the Participant. For purposes of this
Section 8, the value of shares of Common Stock so retained or surrendered shall be equal to the Fair Market Value of such shares on the date that the amount of the Withholding Tax is to be determined (the “Tax Date”), and the value of
shares of Common Stock so sold shall be the actual net sale price per share (after deduction of commissions) received by the Corporation. 
  
 Notwithstanding the foregoing, the Participant may elect, subject to approval by the Committee, to satisfy the obligation to pay any Withholding Tax, in whole or in part, by providing the Corporation with funds sufficient to
enable the Corporation to pay such Withholding Tax or by having the Corporation retain or accept upon delivery thereof by the Participant shares of Common Stock sufficient in Fair Market Value to cover the amount of
 
 

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such Withholding Tax. Each election by a Participant to have shares retained or to deliver shares for this purpose must be in writing and made on or prior to the Tax Date. 

 
 9.    Transferability and Ownership Rights of Options 
  
 No option granted under the Plan shall be transferable otherwise than pursuant to the designation of a Designated Beneficiary or by will, descent or distribution, and an
option may be exercised, during the lifetime of the holder thereof, only by him. The holder of an option shall have none of the rights of a shareholder until the shares subject thereto shall have been registered in the name of such holder on the
transfer books of the Corporation. 
  
 10.    Adjustments Upon Changes in Capitalization 
  
 Except as otherwise provided in Section 7(f), in the event of any changes in the outstanding stock of the Corporation by reason of stock
dividends, stock splits, recapitalizations, mergers, consolidations, combinations or exchanges of shares, split-ups, split-offs, spin-offs, liquidations or other similar changes in capitalization, or any distribution to shareholders other than cash
dividends, the Committee shall make such adjustments, if any, in light of the change or distribution as the Committee in its sole discretion shall determine to be appropriate, in the number and class of shares or rights subject to options and the
exercise prices of the options. In the event of any such change in the outstanding Common Stock of the Corporation, the aggregate number and class of shares available under the Plan and the maximum number of shares as to which options may be granted
shall be appropriately adjusted by the Committee. 
  
 11.    Amendment and Termination 
  
 Unless the Plan shall theretofore have been terminated as hereinafter provided, the Plan shall terminate on, and no grants of options
shall be made after, December 11, 2008; provided, however, that such termination shall have no effect on grants of options made prior thereto. The Board of Directors of the Corporation may terminate the Plan, or modify or amend the Plan in
such respects as it shall deem advisable in order to conform to any change in any law or regulation applicable thereto, or in other respects; provided, however, that as specified in Section 7(a) of the Plan, any amendment or repeal of the applicable
provisions of such Section requires the affirmative vote of the holders of a majority of shares of the Corporation present at a duly convened shareholders’ meeting in person or by proxy and entitled to vote thereon. The amendment or termination
of the Plan shall not, without the consent of the recipient of any award under the Plan, alter or impair any rights or obligations under any award theretofore granted under the Plan. 
  
 12.    Effectiveness of the Plan 
  
 The
Plan shall become effective on December 11, 1998. The Committee may in its discretion authorize the granting of options, the issuance or exercise of which shall be expressly subject to the condition that a registration statement under the Securities
Act of 1933, as amended, with respect to such shares shall have become effective. 
 

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 Adopted by the Board on December 11, 1998. Plan amended and restated by the Board on May 6, 1999, July 27, 2000,
February 8, 2001, April 24, 2001, September 6, 2001, February 13, 2002, and on July 25, 2002. 
 

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 ADDENDUM TO THE SONOSITE, INC. 
 1998 Nonofficer Employee Stock Option Plan 
  
 FOR RESIDENTS OF SPAIN 
  
 This Addendum to the SonoSite, Inc. 1998 Nonofficer Employee Stock Option Plan (the “Addendum”) shall have application only to
Participants who are employees of SonoSite Iberica, S.L. and residents of Spain. Capitalized terms contained herein shall have the meanings given to them in the Plan, unless otherwise provided in this Addendum. Notwithstanding any provision to the
contrary in the Plan and to the extent required by applicable law, the following terms and conditions shall apply to all awards granted to residents of Spain, who are employees of SonoSite Iberica, S.L., until such time as the Board determines
otherwise. 
  
 Exercise of Options: Vesting 
  

	 	(a)
	 
	Except as otherwise determined by the Committee, options will vest and become exercisable in connection with the following schedule: 

  
 
	 Date on and After Which Option Is
Exercisable
 
	  	 Portion of Total Option Which Is Exercisable
 

	 Two years and one day after the Grant
 	  	 50%
 
	  	  	 

	 Each One-Year Anniversary of Date of Grant thereafter
 	  	 An additional 25%
 
	  	  	 

 
  

	 	(b)
	 
	Notwithstanding the preceding sentence, an option shall become one hundred percent (100%) vested upon termination of services due to Disability or Retirement.
If a Participant terminates services due to Early Retirement at the Company’s request, the Participant may exercise, at any time before the Expiration Date, the portion of his option that was vested on the date of termination. If the
Participant dies within 90 days after terminating services with the Company or after terminating services due to Retirement, Early Retirement at the Company’s request or Disability, the option may be exercised in accordance with the terms and
provisions contained in the Plan. 
 

 

 12EXHIBIT 10.14

                       DEVELOPMENT AND LICENSE AGREEMENT

         THIS DEVELOPMENT AND LICENSE AGREEMENT, made effective as of January 1,
2002 ("EFFECTIVE DATE"), by and between Safety Syringe Corporation, a
corporation duly organized and existing under the laws of the State of Utah and
a wholly owned subsidiary of Specialized Health Products International, Inc.,
having an address at 585 West 500 South, Bountiful, Utah 84010 (hereinafter
referred to as "SSC" or "LICENSOR") and TAP Pharmaceutical Products Inc., a
corporation duly organized and existing under the laws of the State of Delaware
having its principal place of business at 675 North Field Drive, Lake Forest, IL
60045 (hereinafter referred to as "TAP" or "LICENSEE"), SSC and TAP being
hereinafter sometimes jointly referred to as the "PARTIES".

                                  WITNESSETH:

         WHEREAS, SSC owns or controls PATENTS (defined hereinafter) related to
plastic components used as needle safety devices for syringes; and

         WHEREAS, TAP desires to obtain and SSC is willing to grant, a license
to the PATENTS;

         NOW, THEREFORE, in consideration of the promises and mutual covenants
made herein and other good and valuable consideration, receipt of which is
hereby acknowledged, it is agreed by and between the PARTIES as follows:

                                 I. DEFINITIONS

         1.1 AGREEMENT YEAR means each consecutive year measured from the first
day of January and ending on the last day of December of such year.

         1.2 END USER means any person that causes the LICENSED PRODUCT to be
attached to a syringe.

         1.3 FIELD shall mean the use of the LICENSED PRODUCT with pre-filled
syringes used to deliver androgen deprivation compounds wherein the safety
device is integrally joined at the distal end of a syringe barrel. "Syringe
barrel" means all external portions of the syringe barrel including the luer
lock skirt with the exception of the luer connection.

         1.4 INVENTION means the inventions disclosed and described in the U.S.
Patents and international patents and patent applications listed in Exhibit 1.4
attached hereto.

         1.5 LICENSED PRODUCT means a safety device the manufacture, use,
import, promotion, offer for sale or sale of which, but for the license granted
hereunder, would infringe one or more VALID CLAIMS of a patent within PATENTS in
the country into which such product is sold.

         1.6 NET UNITS means the number of units of the LICENSED PRODUCT sold
and delivered to an END USER thereof (FOB LICENSED PRODUCT manufacturer's
loading dock) net of returns of unusable units.

         1.7 PATENTS means all United States and foreign patents claiming needle
safety devices owned by or licensed to SSC, with the right to sublicense, listed
in Exhibit 1.4, and all substitutions, extensions, reissues, renewals,
divisions, continuations, improvements or continuations-in-part therefor or
thereof specific to LICENSED PRODUCT, and all foreign counterparts of the
foregoing.

<PAGE>

         1.8 SUB-LICENSED PATENTS means **, and other presently existing or
subsequently obtained patents resulting from any continuation, divisional,
parent or reissue application or foreign counterpart applications of the
foregoing, and shall also include such applications themselves and any
reexamination certificate based on any such patent.

         1.9 QUARTER means a calendar quarter ending on the last day of March,
June, September or December of each calendar year.

         1.10 ROYALTY means any amount payable by LICENSEE in accordance with
Article VIII and Exhibit 7.1 on any sales of LICENSED PRODUCT within the
TERRITORY and any extensions thereof.

         1.11 SUBLICENSEE means any entity selected by TAP and approved by SSC
to which TAP sublicenses any of its rights hereunder.

         1.12 TECHNOLOGY means all information, technical data or other know-how
which relates to the design, development, manufacture, use or sale of the
LICENSED PRODUCT (including but not limited to medical uses and methods, product
forms, specifications and manufacturing data) which SSC has heretofore developed
or acquired, and which SSC is free to disclose and furnish to LICENSEE
hereunder.

         1.13 TERRITORY means the United States (including Guam, Puerto Rico and
all other United States territories and protectorates) and Canada with an option
on the rest of the world as outlined in Article IV.

         1.14 VALID CLAIM shall mean a claim of an issued or granted and
unexpired patent included in PATENTS, which claim has not been held invalid or
unenforceable by a court or agency of competent jurisdiction, or which has not
been admitted by the patentee to be invalid or unenforceable.

                         II. GRANT OF EXCLUSIVE LICENSE

         2.1 SSC hereby grants to TAP and its AFFILIATES, subject to the terms
and conditions set forth herein, an exclusive right and license under the
PATENTS in the FIELD to make, have made, use, promote, offer for sale, sell and
import LICENSED PRODUCTS in the TERRITORY. SSC reserves its rights set forth in
Articles XII and XIII, however, subject to such reservation, SSC reserves no
other rights in the FIELD in the TERRITORY. As used in this Section 2.1 and in
Sections 3.1 and 4.3, "AFFILIATE" shall mean any person or entity directly or
indirectly controlled by, controlling or under common control with TAP, where
"control" shall mean having at least a fifty percent (50%) equity interest.

         2.2 LICENSEE further has the right to sublicense the PATENTS in the
FIELD to one or more SUBLICENSEES upon LICENSOR's prior approval, which approval
shall not be unreasonably withheld. LICENSEE may engage independent contractors
and subcontractors to manufacture, use, promote, sell, offer to sell, or import
LICENSED PRODUCT for any purpose without the approval of SSC, provided that, in
the event

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The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

<PAGE>

LICENSEE discloses Confidential Information (as defined in Section 17.1) of SSC
to such independent contractors or subcontractors, LICENSEE may do so only after
such independent contractors or subcontractors have executed confidentiality or
non-disclosure agreements with respect to such Confidential Information.

         2.3 For the avoidance of doubt, the licenses granted hereunder are not
limited to LICENSED PRODUCT adapted to only one needle size but shall apply to
any and all needle sizes, within the FIELD. Nothing contained hereafter in this
Agreement shall be construed to limit in any manner the scope of the licenses
set forth in this Article II.

                           III. GRANT OF SUB-LICENSE

         3.1 SSC hereby grants to TAP and its AFFILIATES, subject to the terms
and conditions set forth herein, a non-exclusive right and license under the
SUB-LICENSED PATENTS in the FIELD to make, have made, use, promote, offer for
sale, sell and import LICENSED PRODUCTS in the TERRITORY that are developed by
SSC or co-developed by TAP and SSC. SSC agrees not to grant an additional
sub-license(s) to the SUB-LICENSED PATENTS to a third party in the FIELD.

         3.2 The sub-license to the SUB-LICENSED PATENTS granted hereunder is
not transferable or assignable, except by TAP to a restructured or reorganized
form of TAP or to the successor or assignee of all or substantially all of TAP's
business.

                         IV. OPTION TO EXTEND TERRITORY

         4.1 TAP shall have an option to extend the TERRITORY beyond the United
States and Canada by declaring in writing its intention to market LICENSED
PRODUCT in countries outside of the United States and Canada by August 30, 2003,
after which TAP shall have no rights to any undeclared countries.

         4.2 In consideration of extending the TERRITORY, LICENSEE will pay or
cause to be paid to SSC, within thirty (30) days after the declaration described
in the preceding Section, a fee of ** ($**) for each of the following countries
selected: Japan; Australia; United Kingdom; France; Italy; and Germany. The fee
for extending the TERRITORY for any other countries shall be negotiated in good
faith upon terms to be mutually agreed upon.

         4.3 TAP and/or its AFFILIATES shall pay for any alterations to LICENSED
PRODUCT implemented for countries outside of the United States and Canada.

                          V. RESEARCH AND DEVELOPMENT
                          Initial Development Segment

         5.1 TAP shall pay to SSC the amount of ** Dollars ($**) according to
the milestones set forth in Exhibit 5.1 for fees associated with the development
of LICENSED PRODUCT and in addition shall re-imburse LICENSOR for all
pre-approved travel expenses associated with the development project. These
development fees

---------------
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

<PAGE>

include the costs of production of the prototype mold. Product development in
the Initial Development Segment includes all non-recurring engineering services
requested or approved by TAP; the design and manufacture of a prototype mold
solely for the purpose of producing parts for market testing; and the design and
manufacture of production quality molds.

                         Production Development Segment

         5.2 TAP shall fund SSC for product development of the LICENSED PRODUCT
at a rate of $** per hour for development services, with a total engineering and
regulatory cost not to exceed ** Dollars ($**), unless mutually agreed to by
both PARTIES in writing. TAP further agrees to pay SSC for other materials and
incidental expenses required in connection with the product development and for
travel expenses when such travel is requested by TAP. Production development
shall include the design and manufacture of one single cavity production mold
and one multi-cavity production mold and the preparation, submission and
prosecution of all information and application required for one FDA 510(k)
approval for LICENSED PRODUCT. SSC shall assist TAP, at TAP's expense, in the
preparation and submission of all future regulatory submissions related to
LICENSED PRODUCT.

         5.3 SSC shall be responsible for design verification, design
validation, and regulatory submissions relative to the LICENSED PRODUCT. TAP, at
its expense, shall assist and cooperate with SSC through the design
verification, design validation, and regulatory submission and activities.
Product funding and project development hereunder is for the safety device for
one needle size (length and gauge) to be pre-attached by TAP to syringes.

         5.4 Funding for the development of the LICENSED PRODUCT shall be paid
by TAP within forty-five (45) days of the date of invoice, or as otherwise
mutually agreed to by the PARTIES in writing.

         5.5 TAP shall pay the manufacturer directly for the cost of the molds
and shall own the same and be responsible for their maintenance and operation.

         5.6 TAP shall be responsible for process development and manufacturing
integration to attach the LICENSED PRODUCT to TAP's syringe. SSC shall assist
TAP on a reasonable basis concerning an attachment means and associated
processes as part of the LICENSED PRODUCT development. SSC and TAP shall jointly
own title to any and all intellectual property first conceived jointly or
discovered jointly by SSC's employees and TAP's employees or personnel,
including but not limited to inventions, processes, manufacturing techniques,
know how, and information, whether patentable or not, arising in connection with
the development segments described in this Article IV. SSC shall own inventions,
whether patentable or not, first conceived by employees of SSC. SSC agrees to
add the aforementioned intellectual property to the PATENTS licensed hereunder.
TAP agrees to grant SSC a royalty-free, exclusive worldwide license on all
rights to its jointly conceived inventions outside of the FIELD. TAP shall own
any intellectual property developed by itself and grants SSC a royalty-free,
non-exclusive worldwide license to its inventions outside of the FIELD.

---------------
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

<PAGE>

                          VI. EFFECTIVE DATE AND TERM

         6.1 This Agreement shall commence on the EFFECTIVE DATE and shall
continue thereafter until the end of the third AGREEMENT YEAR, unless sooner
terminated in accordance with the provisions of Section 6.2. Upon expiration of
the initial term, this Agreement shall be renewed automatically for additional,
consecutive one (1) year terms through the life of the PATENT, unless TAP
provides LICENSEE with written notice at least ninety (90) days prior to the
expiration of the then current term, of its intent to terminate the Agreement.

         6.2 Except as otherwise provided in this Agreement, in the event of a
material breach or default by either of the PARTIES hereto of any term or
provision of this Agreement on their respective parts to be observed or
performed, the PARTY not in breach or default shall have the right to give the
other PARTY notice thereof, whereupon the PARTY receiving such notice shall have
thirty (30) days to cure or cause the cure of such breach or default, or if the
same cannot reasonably be cured within such thirty (30) days, the PARTY
receiving such notice shall, within said period, commence or cause the
commencement of such cure and thereafter continue to diligently prosecute or
cause the prosecution of cure of the same. If such breach or default is cured,
this Agreement shall remain in full force and effect. If such breach or default
is not cured, this Agreement may be terminated, subject to Article XXI, by the
non-defaulting PARTY. The right of either PARTY to terminate this Agreement s
not be affected in any way by its waiver, or failure to take action with respect
to any previous default.

                6.3 In the event that LICENSEE is dissolved, whether voluntarily
or compulsorily (except in the case of a dissolution for the purposes of
recapitalization and/or non-bankruptcy reorganizations where the resulting
entity agrees to be bound by the terms of this Agreement), or has appointed a
receiver or trustee of its assets or a substantial part thereof, or enters into
a composition with creditors, this Agreement shall thereupon terminate and all
rights granted to Licensee hereunder shall immediately revert to and vest in
SSC; provided, however, in the case of an involuntary appointment of receivers
or trustees, such appointment shall not result in termination of the license if
the LICENSEE endeavors to set aside the appointment of the receiver or trustee
and is successful in setting aside the receiver or trustee within ninety (90)
days of appointment.

                           VII. REGULATORY APPROVALS

         SSC shall prepare and file and prosecute one application to the United
States Food and Drug Administration ("FDA") with respect to obtaining FDA 510(k)
approval on LICENSED PRODUCT and shall assist LICENSEE and any SUBLICENSEE, at
the expense of LICENSEE or such SUBLICENSEE, and on a reasonable basis, in
obtaining any necessary approvals from any other United States regulatory
agencies and from the regulatory agencies of any foreign nation. In the event
that FDA 510(k) approval is not obtained by December 31, 2002, LICENSEE may
terminate this Agreement immediately upon written notice and shall, thereafter,
have no liabilities or obligations hereunder. LICENSEE may, at its discretion,
but is not obligated to, seek and obtain approvals from the regulatory agencies
of any foreign nation or nations.

                                VIII. ROYALTIES

         8.1 In consideration of the licenses and rights granted by SSC to
LICENSEE hereunder, LICENSEE will pay or cause to be paid to SSC the ROYALTY per

<PAGE>

unit on NET UNITS according to the schedule set forth in Exhibit 8.1. After
AGREEMENT YEAR 3, the ROYALTY per unit on NET UNITS shall be adjusted for each
AGREEMENT YEAR thereafter in the same percentage as the percentage change in the
United States Consumer Price Index for the preceding AGREEMENT YEAR, provided,
however, that no such change shall exceed four percent (4%) for any AGREEMENT
YEAR. Within thirty (30) days of the close of each of the first three QUARTERS
of each AGREEMENT YEAR, except for any such QUARTER terminating before the
EFFECTIVE DATE, LICENSEE shall provide LICENSOR with a report of NET UNITS for
the QUARTER just ended and shall, within fifteen (15) days of the date of such
report, pay the ROYALTY due with respect to such NET UNITS calculated at a cost
per unit of ** ($**). Within thirty (30) days of the end of each AGREEMENT YEAR,
LICENSEE shall provide LICENSOR with a report of the total NET UNITS for the
AGREEMENT YEAR and the total ROYALTY due with respect thereto, calculated at the
cost per unit indicated in Exhibit 8.1 for the last unit included in NET UNITS
for such AGREEMENT YEAR. TAP may take a credit against any future ROYALTIES and
any ROYALTIES then due in the amount of any adjustment necessary to reflect a
cost per unit below ** ($**) and shall, within fifteen (15) days of the date of
such report pay LICENSOR any amount then remaining to be paid with respect to
the total ROYALTIES for such AGREEMENT YEAR provided, in the event that, at the
end of any AGREEMENT YEAR the aggregate ROYALTIES payable with respect to NET
UNITS during such AGREEMENT YEAR is less than any applicable ROYALTY for the
minimum units set forth in Exhibit 8.1 for such AGREEMENT YEAR, LICENSEE shall
pay, together with its ROYALTY payment for the fourth QUARTER, and subject to
Article XIII, an amount sufficient to satisfy the ROYALTY payment required with
respect to such minimum units. If there will not be enough future ROYALTIES
payable hereunder to fully utilize any credit due LICENSEE at the end of any
AGREEMENT YEAR, pursuant to the calculation set forth above, LICENSOR shall,
upon the request of LICENSEE, pay LICENSEE the amount of any such unutilized
credit. In the event LICENSEE shall sell LICENSED PRODUCT in any country in
which no PATENT is obtained or in which patent protection is supported by the
PATENT is not available, LICENSEE shall nevertheless be obligated to make
payments for sales in such country provided such sales would infringe a VALID
CLAIM if such sales were made in the United States.

         8.2 In the event of any dispute with respect to the amount of any
ROYALTY payable hereunder, LICENSEE shall pay any undisputed amount and may
withhold the disputed amount, pending resolution of such dispute.

         8.3 The obligation to make payments to SSC under this Article VIII is
imposed only once with respect to the same unit of LICENSED PRODUCT.

---------------
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

<PAGE>

         8.4 If a patent or patents of a third party that is not a subsidiary of
LICENSEE should exist during the term of this Agreement in any country, covering
the manufacture, use, promotion, offer for sale, importation or sale of LICENSED
PRODUCT and it should prove, in LICENSOR's and LICENSEE'S good faith judgment,
impractical or impossible for LICENSEE or its subsidiaries or SUBLICENSEES to
continue the activity or activities licensed hereunder in such country without
obtaining a royalty-bearing license from such third party under the third
party's patent or patents, then LICENSEE shall be entitled to a credit against
up to one-half the payments due hereunder for sales of the LICENSED PRODUCT made
in such country, arising from the manufacture, use, promotion, offer for sale or
sale of the LICENSED PRODUCT in that country.

                             IX. MINIMUM NET UNITS

         9.1 LICENSEE shall pay a ROYALTY calculated in accordance with Section
8.1 on the minimum NET UNITS as set forth in Exhibit 8.1 for each AGREEMENT YEAR
provided, that in the event FDA 510(k) approval is not obtained by October 1,
2002, the minimum number of NET UNITS in the United States and Canada for the
first AGREEMENT YEAR shall be adjusted by multiplying the minimum number of NET
UNITS for such AGREEMENT YEAR as set forth in Exhibit 8.1 by a fraction, the
numerator of which is the number of days left in such AGREEMENT YEAR at the date
the FDA approval is received, and the denominator of which is 365.

         9.2 The minimum NET UNITS of the LICENSED PRODUCT sold in countries
outside of the United States and Canada shall become effective September 1, 2004
and shall be equal to Fifty percent (50%) of the overall product brand volume
for the previous year for such country, pro rated for the first year of sales of
the product with the LICENSED PRODUCT by multiplying the minimum number of NET
UNITS for such AGREEMENT YEAR as thus determined by a fraction, the numerator of
which is the number of days left in such AGREEMENT YEAR at the date of the first
sale of the product with the LICENSED PRODUCT in such country, and the
denominator of which is 365. For countries outside of the United States and
Canada, LICENSEE shall pay a ROYALTY calculated in accordance with Section 8.1
on the minimum NET UNITS as set forth in Exhibit 8.1 for each AGREEMENT YEAR.

                          X. ACCOUNTS AND DOCUMENTATION

         10.1 LICENSEE shall, during the term of this Agreement, keep at its
principal place of business, clear and detailed accounts and records showing
receipt of LICENSED PRODUCT for which payments are due and payable or paid under
this Agreement. Copies of such records shall be supplied to SSC at SSC's expense
upon SSC's written request, which request shall not be more often than once per
AGREEMENT YEAR.

         10.2 SSC, at its expense, shall have the right, once each AGREEMENT
YEAR, during regular business hours and upon thirty (30) days prior notice, to
have an independent auditor reasonably acceptable to both PARTIES inspect and
audit the accounts and records of LICENSEE relating to the manufacture, purchase
and receipt of LICENSED PRODUCT and all other facts and matters reasonably
relating to the calculation of the ROYALTIES due hereunder. All information
provided to SSC by TAP under this Article X shall be considered Confidential
Information and treated by SSC in accordance with Article XVII.

<PAGE>

                             XI. METHOD OF PAYMENT

         All payments made pursuant to the terms of this Agreement shall be paid
in United States Dollars. LICENSEE shall deduct or withhold from such payments
and pay to the proper taxing authority, all taxes or fees required by law or
regulation to be deducted or withheld with respect to payments otherwise due
SSC, if any, and proof of payment credited to SSC shall be promptly forwarded by
LICENSEE to SSC as evidence of such payment. If applicable, the rate of exchange
to be used in computing the amount of local currency equivalent to the United
States Dollars due to SSC as payment shall be the commercial exchange rate in
effect in New York, New York, on the business day preceding the date on which
payment is being made, as published in the Wall Street Journal. If at any time
conditions or legal restrictions prevent the prompt remittance of the payments
due to SSC, LICENSEE shall have the right and option to make such payments by
depositing the amount thereof, subject to an appropriate adjustment due to the
inability to obtain appropriate tax deduction, in local currency to SSC's
account in a bank or other depository selected by SSC. LICENSEE shall be excused
from remitting such payments in accordance with the provisions of this Article
during the pendency of such legal restrictions.

                               XII. INFRINGEMENT

         12.1 In the event that there is infringement of the PATENTS, the
PARTIES shall notify each other in writing to that effect. Except as set forth
in Section 12.2, during the one hundred twenty (120) day period after such
notice, SSC will have the right, but not the obligation to bring suit against
the alleged infringer. SSC shall bear the expenses of any suit brought by it and
shall retain all damages or other monies awarded or received in settlement of
such suit. SSC shall have the final decision on all matters relating to
litigation and any settlement discussions. LICENSEE will use reasonable efforts
to cooperate with SSC in any such suit and shall have the right to consult with
SSC and be represented by its own counsel at its own expense.

         If, after the expiration of said one hundred twenty (120) days from the
date of such notice, SSC has not brought suit against a third party infringer,
then LICENSEE shall have the right after such one hundred twenty (120) day
notice period, but not the obligation, to bring suit against such infringer and
join SSC as a party plaintiff provided that LICENSEE shall bear all expenses of
such suit. LICENSEE shall retain all damages or other monies awarded or received
in settlement of such suit. SSC shall have the right to consult with LICENSEE or
join as a party plaintiff to such suit at its own expense. At LICENSEE'S
request, SSC will reasonably cooperate with LICENSEE in any suit for
infringement of the PATENT brought by LICENSEE, including being joined as a
party plaintiff to such suit, against a third party and shall have the right to
consult with LICENSEE and to participate in and be represented by independent
counsel in such litigation. All reasonable costs incurred by SSC associated with
providing cooperation at LICENSEE's request shall be paid by LICENSEE. Where it
is necessary for LICENSEE to have standing to file the suit, SSC shall assign
limited concurrent rights to the licensed PATENTS for the terms of the suit.
Notwithstanding the foregoing, LICENSEE shall not enter into any settlement
agreement, or take any position in litigation which adversely impacts SSC's
rights under this Agreement without the written consent by SSC.

<PAGE>

         12.2 In the event that there is infringement of the PATENTS and such
infringement affects the FIELD, LICENSEE shall, during the one hundred twenty
(120) day period after notice thereof, have the same rights as SSC has pursuant
to its Development and License Agreement with Tyco Healthcare Group ("Tyco
Agreement"), but not the obligation, to bring suit against such infringer and
join SSC as a party plaintiff provided that LICENSEE shall bear all expenses of
such suit. SSC will not waive or relinquish any rights it may have under the
Tyco Agreement to bring suits against infringers of the PATENTS, where any such
waiver or relinquishment would adversely impact LICENSEE's rights under this
Section. LICENSEE shall retain the greater of (i) all damages or other monies
awarded or received in settlement of such suit and attributable to the
infringement of its FIELD and (ii) an amount equal to its and SSC's, if any,
reasonable costs and expenses (including legal fees and expenses) of prosecuting
such suit or settlement. SSC will reasonably attempt to cooperate with LICENSEE
in any such suit for infringement of the PATENTS and shall have the right to
consult with LICENSEE and to participate in and be represented by independent
counsel in such litigation at its own expense. All reasonable costs incurred by
SSC associated with providing cooperation to LICENSEE at LICENSEE's request
shall be paid by LICENSEE to the extent not paid for by any monies awarded or
received in settlement of such suit. Where it is necessary for LICENSEE to have
standing to file the suit, SSC shall assign limited concurrent rights to the
licensed PATENTS for the terms of the suit. Notwithstanding the foregoing,
LICENSEE shall not enter into any settlement agreement, or take any position in
litigation which adversely impacts SSC's rights under this Agreement without the
written consent by SSC.

         12.3 In the event that any third party brings proceedings challenging
the validity of the PATENTS, SSC shall provide prompt notice of such proceedings
to LICENSEE and LICENSEE shall, during the one hundred twenty (120) day period
after notice thereof, have the same rights as SSC has pursuant to the Tyco
Agreement, but not the obligation, to contest such proceedings and join SSC as a
party provided that LICENSEE shall bear all expenses of such suit. SSC will not
waive or relinquish any rights it may have under the Tyco Agreement to contest
such proceedings, where any such waiver or relinquishment would adversely impact
LICENSEE's rights under this Section. SSC will reasonably attempt to cooperate
with LICENSEE in any such proceedings challenging the validity of the PATENTS
and shall have the right to consult with LICENSEE and to participate in and be
represented by independent counsel in such litigation at its own expense. All
reasonable costs incurred by SSC associated with providing cooperation to
LICENSEE at LICENSEE's request shall be paid by LICENSEE. Where it is necessary
for LICENSEE to have standing to contest the proceedings, SSC shall assign
limited concurrent rights to the licensed PATENTS for the terms of the
proceedings. Notwithstanding the foregoing, LICENSEE shall not enter into any
settlement agreement, or take any position in the proceedings which adversely
impacts SSC's rights under this Agreement without the written consent by SSC.

               XIII. PATENT MARKING, MAINTENANCE AND APPLICATIONS

         13.1 LICENSEE will include with all LICENSEE products incorporating the
LICENSED PRODUCT the appropriate legal notice with respect to PATENTS under
which the LICENSED PRODUCT is made and licensed.

<PAGE>

         13.2 Within SSC's rights as set forth in the Tyco Agreement, SSC shall
take all actions reasonably necessary to prosecute and maintain the PATENTS.

                             XIV. PRODUCT LIABILITY

         14.1 LICENSEE shall be responsible for its acts and omissions with
respect to the manufacture, packaging and sale of the LICENSED PRODUCT. LICENSEE
shall indemnify, defend and hold SSC, its directors, officers, employees and
shareholders harmless from and against any and all claims, actions, suits,
proceedings, losses, costs, judgments, deficiencies, penalties, obligations,
liabilities, damages, fines, expenses (including attorneys' fees and
disbursements) relating to or arising out of LICENSEE'S manufacture, use or
misuse, or sales of the LICENSED PRODUCT anywhere in the TERRITORY, directly or
indirectly.

         14.2 SSC shall indemnify, defend and hold LICENSEE, its directors,
officers, employees and shareholders harmless from and against any and all
claims, actions, suits, proceedings, losses, costs, judgments, deficiencies,
penalties, obligations, liabilities, damages, fines, expenses (including
attorneys' fees and disbursements) up to a limit of ** Dollars ($**), relating
only to property damage or personal injury arising out of the use, attempted
use, or improper use of the LICENSED PRODUCT by third parties. SSC will not be
obligated to pay any sums under this indemnity until such time as LICENSEE has
paid ** Dollars ($**), in aggregate, to third parties on claims otherwise
indemnified under this Section 14.2. SSC will, during the term of this Agreement
and for a period ending no sooner than four (4) years after the last ROYALTY
payment made hereunder, procure and maintain, with an insurance carrier
reasonably acceptable to LICENSEE, on LICENSED PRODUCTS manufactured during the
term of this Agreement, product liability insurance covering the risks and in an
amount sufficient (without regard to any deductibles) to satisfy the indemnity
obligation set forth in this Section. The insurance shall name the LICENSEE as
an additional insured and shall not name any third party as an additional
insured with respect to LICENSED PRODUCT. The policies of insurance required
hereby shall provide that they may not be cancelled or modified without
providing LICENSEE at least thirty (30) days prior written notice. Within thirty
(30) days of the execution hereof, SSC shall provide LICENSEE an insurance
certificate evidencing the coverage required herein.

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The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

<PAGE>

                               XV. FORCE MAJEURE

         The obligations of either PARTY to perform under this Agreement shall
be excused if such failure to perform or any delay is caused, in whole or in
part, by reason beyond the reasonable control of such PARTY, including without
limitation, acts of God, embargo, law or governmental regulation, compliance
with any government request or directive, war, riot, insurrection, destruction
of production facilities or materials by fire, earthquake or storm, labor
disturbance, epidemic, failure of public utilities or common carriers or any
other cause whether similar or dissimilar to those enumerated which is
reasonably beyond the control of the PARTY obligated to perform ("Force
Majeure"). Such delay shall be excused during the continuance of and to the
extent of such Force Majeure, without liability for any failure to perform this
AGREEMENT. The PARTY claiming Force Majeure shall promptly notify the other
PARTY of the termination of such event. Upon the occurrence of such an event,
the duties and obligations of the PARTIES shall be suspended for the duration of
the event preventing proper performance under this Agreement. The affected PARTY
shall resume the performance of its obligations as soon as practicable after the
Force Majeure event ceases. In the event that LICENSEE is unable to manufacture
or have manufactured any LICENSED PRODUCT for a period of more than ninety (90)
days as a result of an event of Force Majeure and as a consequence does not,
during any AGREEMENT YEAR, manufacture or have manufactured sufficient units of
the LICENSED PRODUCT to meet the minimum NET UNITS for such AGREEMENT YEAR, as
set forth in Exhibit 8.1, its obligation under Section 8.1 to pay ROYALTIES on
such minimum NET UNITS will be excused for the AGREEMENT YEAR during which the
Force Majeure event prevented its fulfillment of such obligation, and that
obligation and all succeeding obligations of the same sort, if any, shall be
deferred to the next succeeding AGREEMENT YEAR of each.

                XVI. INDEMNIFICATION, INSURANCE AND DISCLAIMER,
                         REPRESENTATIONS AND WARRANTEES

         16.1 LICENSEE agrees that it shall be solely responsible for all the
expenses connected with its business related to the manufacture and sale of
LICENSED PRODUCT, and for taxes and levies of any and all kinds in connection
with that business and the income therefrom and SSC shall not be liable for any
such expenses, taxes or levies, or disbursements otherwise paid and incurred.
LICENSEE agrees to procure, and to maintain at LICENSEE's expense during the
term of this Agreement, insurance coverage naming SSC as an insured, from
product liability claims arising out of the manufacture, sale, use or operation
of the LICENSED PRODUCT. Such insurance coverage shall include liability
coverage of not less than Five Million Dollars ($5,000,000.00) per occurrence
and Ten Million Dollars ($10,000,000) in the aggregate.

         16.2 SSC hereby represents and warrants to LICENSEE as follows:

         (a) Neither the execution nor delivery of this Agreement nor the
         consummation of the transactions provided for herein, violates any
         agreement, lien, instrument, decree, order or judgment to which the
         PATENTS, the SUB-LICENSED PATENTS, the INVENTIONS, the TECHNOLOGY or
         SSC or any of its officers, directors, shareholders or partners is a
         party or by which it or they are bound. SSC has the authority to grant
         to LICENSEE the licenses of the PATENTS, the SUB-LICENSED PATENTS, the
         TECHNOLOGY and the INVENTION that are licensed and transferred pursuant
         to this Agreement.

         (b) There are no licenses or other similar agreements entered into by
         SSC pertaining to or affecting any of the PATENTS, the SUB-LICENSED
         PATENTS, the INVENTION or the TECHNOLOGY, relating to safety device
         components for the needle safety feature for syringes in the FIELD,
         which would otherwise diminish the licenses granted to LICENSEE under
         this Agreement.

         (c) To SSC's knowledge, neither the licenses granted hereunder nor the
         manufacture, import, use or sale of the LICENSED PRODUCT in accordance
         with the terms hereof by LICENSEE or any SUBLICENSEE will violate any
         proprietary rights of any third party, including, without limitation,
         confidential relationships, patent, trademark and copyright rights, and
         trade secrets.

         (d) SSC is not aware of any patents that it owns or controls , other
         than the PATENTS and the SUB-LICENSED PATENTS licensed to TAP according
         to the terms of this Agreement, having claims that would cover TAP's
         making, having made, using, selling, offering for sale or importing
         LICENSED PRODUCT.

         (e) There are no suits pending that challenge the validity of any of
         the patents within PATENTS.

         (f) There are no third party obligations which would adversely affect
         SSC's performance under this Agreement.

         16.3 The Parties hereby agree to indemnify and hold each other harmless
from and against all liabilities, claims, losses, damages, costs and expenses
(including attorneys' fees) resulting from or arising in connection with the
breach by SSC or TAP of any of the warranties set forth in this Article XVI.
Upon receiving notice of any claim for liability under this Article, the
indemnified party shall promptly notify the indemnifying party in writing;
provided, however, that failure to give notice shall not limit or otherwise
reduce the indemnity provided for in this Agreement. The indemnifying party may,
in its sole discretion, assume and conduct the legal defense of the indemnified
party in any suit that could result in claims under this Article. Unless made
with the express written consent of the indemnifying party, no sums paid by the
indemnified party in settlement of any claim shall be recoverable under this
Article.

         16.4 With respect to SSC, nothing in this Agreement shall be construed
as:

         (a) A warranty or representation that any patent applications filed or
         that may be filed disclosing and claiming any aspect of the PATENTS
         will mature into issued patents; or

         (b) Granting by implication, estoppel, or otherwise any licenses or
         rights other than those expressly granted in this Agreement.

         16.5 Each of the PARTIES represents and warrants that it has accepted
and will accept no commitments or restrictions which will materially affect the
value of the rights granted in this Agreement to the other PARTY.

<PAGE>

         16.6 LICENSOR MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, WITH
RESPECT TO THE LICENSED INTELLECTUAL PROPERTY NOT EXPRESSLY SET FORTH IN THIS
AGREEMENT. THE LICENSED INTELLECTUAL PROPERTY IS MADE AVAILABLE TO LICENSEE
STRICTLY ON AN "AS IS" BASIS. LICENSOR DOES NOT WARRANT THAT THE LICENSED
INTELLECTUAL PROPERTY IS ERROR FREE OR THAT IT WILL MEET LICENSEE'S
REQUIREMENTS. ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE ARE EXPRESSLY DISCLAIMED AND EXCLUDED.

         16.7 LICENSEE will in all material respects comply with all applicable
local, foreign and international law during the term of this Agreement. LICENSEE
further agrees to register this Agreement as, where, and when required by law,
rule, or regulation of any government or governmental entity, and to pay when
due all costs and fees connected therewith, and to otherwise fully comply with
all applicable laws, rules, and regulations of any government or governmental
authority.

         16.8 LICENSEE hereby covenants that it will not, directly or
indirectly, export, license, distribute, sell, transfer or dispose of any
products sold as a result of this Agreement to or within any country in
contravention of any applicable law, including, but not limited to, the U.S.
Export Administration Act of 1979, as amended. LICENSEE shall require that its
distributors covenant to comply with this same prohibition and restriction. If
LICENSEE shall become aware that a third party has exported or distributed
LICENSED PRODUCT in contravention of any applicable law, or is known to be
contemplating such an act, LICENSEE shall immediately notify SSC thereof.
LICENSEE shall then immediately (i) cease making LICENSED PRODUCT available to
such third person, and (ii) use its best efforts to prevent any further
contravention of law by such third party.

                         XVII. CONFIDENTIAL INFORMATION

         17.1 The term "Confidential Information" shall mean the terms and
conditions of this Agreement and all financial, technical and other information,
including all copies thereof (including, without limitation, all agreements,
discoveries, ideas, designs, specifications, drawings, techniques, models, data,
programs, documentation, processes, know-how, customer lists, marketing plans,
books, logs, charts, records, studies, reports, etc.) which may be furnished or
disclosed to recipient by, or acquired by recipient directly or indirectly from,
the disclosing PARTY or its Affiliates (defined below), including as a result of
an inspection of any facility of the disclosing PARTY or its Affiliates, or
disclosing PARTY's licensors, licensees or customers. For purposes of this
Agreement, Confidential Information shall not include, and the obligations
herein shall not apply to, information that: (a) was legally in the public
domain prior to the time of disclosure to the recipient, (b) is now or
subsequently becomes generally available to the public through no fault of
recipient; (c) recipient can demonstrate was rightfully in its possession prior
to disclosure to recipient by the disclosing PARTY; (d) is independently
developed by recipient without the use of any Confidential Information provided
by the disclosing PARTY; (e) recipient rightfully obtains from a third party who
has the right, without obligation to the disclosing PARTY, to transfer or
disclose such information; or (f) is required by law, regulation, rule, act, or
order of any governmental authority or agency to be disclosed by the receiving

<PAGE>

PARTY provided, that in all cases the PARTY receiving the Confidential
Information shall, to the extent permitted, give the other PARTY prompt notice
of the pending disclosure and shall cooperate in such other PARTY's attempts, at
such other PARTY's sole expense, to seek an order maintaining the
confidentiality of the Confidential Information.

         17.2 The term "Affiliate" shall mean (a) any person or entity directly
or indirectly controlled by, controlling or under common control with such
PARTY, where "control" shall mean having at least a fifty percent (50%) equity
interest in such entity, and (b) any officer, director, management employee or
trustee of such PARTY.

         17.3 Each PARTY agrees not to use any Confidential Information
disclosed by the other PARTY for any purpose except as outlined in this
Agreement. Each PARTY agrees not to disclose any Confidential Information
received from the other PARTY to third parties or to employees of the recipient,
except to those employees who are required to have the Confidential Information
in connection with the performance of such PARTY hereunder.

         17.4 Each PARTY agrees to take all reasonable measures to protect the
secrecy of and prevent the disclosure and unauthorized use of the other PARTY's
Confidential Information. Without limiting the foregoing, the recipient shall
take at least those measures that the recipient takes to protect its own
Confidential Information of a like nature. A recipient shall immediately notify
the disclosing PARTY in the event that it becomes aware of any unauthorized use
or disclosure of the disclosing PARTY's Confidential Information.

         17.5 All Confidential Information is provided "as is". Neither PARTY
makes any warranties, express, implied or otherwise, regarding its accuracy,
completeness or performance.

         17.6 All documents and other tangible objects containing or
representing Confidential Information of a disclosing PARTY and all copies
thereof which are in the possession of a recipient shall be and remain the
property of the disclosing PARTY and shall be promptly returned to the
disclosing PARTY upon the disclosing PARTY's request, unless the retention of
such Confidential Information is required in connection with any performance or
usage under this Agreement and subject to retention of one (1) complete record
copy thereof to monitor compliance with this Agreement.

         17.7 Each PARTY hereby acknowledges that each PARTY's Confidential
Information is and shall continue to be the exclusive property of such PARTY,
whether or not disclosed or entrusted to the other PARTY pursuant to this
Agreement.

         17.8 The confidentiality requirements under this Article XVII shall
survive until such time as all Confidential Information disclosed hereunder
becomes publicly known and made generally available through no action or
inaction of recipient, not to exceed a maximum of three (3) years from the
termination of this Agreement.

                               XVIII. TERMINATION

         LICENSEE shall have the right at any time after the initial term of the
Agreement and for no cause to terminate this Agreement upon ninety (90) days
written notice to SSC provided, that in the event of any termination pursuant to
this Article XVIII, LICENSEE shall pay the applicable ROYALTY for the minimum
NET UNITS for the AGREEMENT YEAR in which such termination occurs in accordance
with Section 8.1 and Exhibit 8.1.

<PAGE>

                  XIX. RIGHTS AND OBLIGATIONS UPON TERMINATION

         Any termination of this Agreement shall be without prejudice to the
rights of either PARTY against the other which may have accrued up to the date
of such termination and shall be without prejudice to the right of LICENSEE (i)
to dispose of any inventory of the LICENSED PRODUCT manufactured up to the date
of such termination, and (ii) for a period of up to six (6) months following
termination, to complete binding contracts then in existence subject to the
payments thereon as agreed to herein.

                                 XX. ASSIGNMENT

         LICENSEE may assign its rights under this Agreement in whole or in part
to any Affiliate or subsidiary or subsidiaries, which shall be substituted
directly for it hereunder, except as set forth in Article III. This Agreement
shall not otherwise be assignable by either PARTY without the prior written
consent of the other PARTY, except by LICENSEE to the successor or assignee of
all or substantially all of its business related to pharmaceutical products or
by SSC to the successor or assignee of all or substantially all of its business.
It is expressly understood and agreed, however, that the assignor of any rights
hereunder shall remain bound by the obligations thereof. XXI. DISPUTE RESOLUTION

        Any disputes that arise under this Agreement shall be resolved in
accordance with the dispute resolution process set forth in Exhibit 21 hereof,
and no PARTY may terminate this Agreement (other than in accordance with Article
XVIII) without first having recourse to such alternative dispute resolution.

XXII. MISCELLANEOUS

         22.1 Nothing contained herein shall constitute the PARTIES as partners
or joint venturers and neither PARTY shall be the agent of or have the power to
incur any obligations on behalf of or to pledge the credit of the other PARTY in
any manner whatsoever.

         22.2 The failure or delay by either PARTY hereto in the enforcement of
any rights under this Agreement shall not be deemed a waiver or modification
thereof and either PARTY may within the time provided by applicable law commence
appropriate legal proceedings to enforce any or all of such rights.

         22.3 Notices given pursuant to this Agreement shall be sent to the
addresses set forth in the opening paragraph of this Agreement, or at such other
address as a PARTY may specify in accordance herewith, and shall be deemed to
have been received according to the following provisions:

         (a) In the case of the personal delivery of the notice, the notice
         shall be deemed to have been received on the actual day of delivery or
         on the next following working day if delivered after 5:00 p.m. on any
         working day.

         (b) If notice is sent by certified mail to the address of the PARTY
         referred to herein or such other address as may be provided in writing
         by a PARTY from times to time, such notice to be deemed to have been
         received not later than on the fifth (5th) day after posting or
         earlier, if receipt is confirmed in writing.

<PAGE>

         (c) If notice is sent by cable, telegram, e-mail, overnight courier, or
         facsimile transmission, the notice shall be deemed to have been
         received on the working day next following the day of sending (provided
         proof can be shown that the notice was received by the intended
         recipient). Notices sent to LICENSEE shall be addressed to its Vice
         President, Licensing and notices sent to SSC shall be addressed to its
         President.

         22.4 This Agreement sets forth the entire agreement and understanding
between the PARTIES relating to the subject matter of this Agreement and merges
all prior negotiations between the PARTIES. Neither of the PARTIES shall be
bound by any conditions, undertakings, warranties or representations with
respect to the subject matter of this Agreement other than as expressly provided
in this Agreement, or if subsequent to the date hereof, as may be made in
writing and signed by the PARTIES to be bound thereby.

         22.5 No pubic announcement or other disclosure to any third party
concerning the terms or existence of this Agreement or of the relationship
created thereby shall be made, either directly or indirectly, by either PARTY
except as may be legally required, without first obtaining the approval of the
other PARTY and agreement upon the nature and text of such announcement or
disclosure, which approval shall not be unreasonably withheld. The PARTY
desiring to make such public announcement or other disclosure shall inform the
other PARTY of the proposed announcement or disclosure in reasonably sufficient
time prior to public release and shall provide the other PARTY with a written
copy thereof, in order to allow such other PARTY to comment upon and revise such
announcement or disclosure. If legally required to disclose any information
regarding this Agreement, the PARTY so required will consult with the other
PARTY regarding such disclosure and shall make such reasonable changes as may be
requested by such other PARTY in the text of such disclosure, to the extent
compatible with the legal requirements of such disclosure.

         22.6 If any term or provision of this Agreement shall for any reason be
held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other term or provision
hereof, and this Agreement shall be interpreted and construed as if such term or
provision, to the extent the same shall have been held to be invalid, illegal or
unenforceable, had never been contained herein.

         22.7 No waiver or modification of any of the terms of this Agreement
shall be valid unless in writing and signed by an authorized representative of
the Parties. Failure by either Party to enforce any rights under this Agreement
shall not be construed as a waiver of such rights, nor shall a waiver by either
Party in one or more instances be construed as constituting a continuing waiver
or as a waiver in other instances.

         22.8 The headings used in this Agreement are for convenience and
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.

         22.9 This Agreement shall be construed in accordance with the laws of
the State of Illinois, without regard to its conflict of laws provisions.

<PAGE>

         IN WITNESS WHEREOF, the PARTIES hereto have caused this Agreement to be
executed as of the date first above written.

TAP PHARMACEUTICAL PRODUCTS INC.            SAFETY SYRINGE CORPORATION

By:   /s/ H. Thomas Watkins                 By:   /s/ Jeffrey M. Soinski
   -----------------------------                ------------------------------
   H. Thomas Watkins, President                 Jeffrey M. Soinski, President

<PAGE>
EXHIBIT 1.4

COUNTRY     SERIAL NO.   FILING DATE   PATENT NO.   ISSUE DATE     SSC DOCKET
**

---------------
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

<PAGE>
EXHIBIT 5.1

Project Milestones for Initial Development Segment:

*        Milestone 1: Upon ordering the rapid development marketing prototype
         mold and to initiate non-recurring engineering development services,
         TAP shall pay SSC the non-refundable amount of $**. The Parties
         acknowledge this amount has been paid.

*        Milestone 2: Upon completion of the engineering for marketing prototype
         mold, completion of the marketing prototype mold (this mold is intended
         only to satisfy the need for producing parts for the market study) and
         delivery of 480 components for the marketing study, TAP shall pay SSC
         the non-refundable amount of $**.

*        Milestone 3: Upon completion of the exploratory marketing focus group
         strategy, focus group questionnaire, and focus group studies, TAP shall
         pay SSC the non-refundable amount of $**.

*        Milestone 4: Upon filing of the 510(k) preparation, TAP shall pay SSC
         the non-refundable amount of $**. The Parties acknowledge this amount
         has been paid.

---------------
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

<PAGE>
EXHIBIT 8.1

Minimum Units for the United States and Canada:
       AGREEMENT YEAR   Minimum NET UNITS
        Year 1  (2002)          **
        Year 2  (2003)          **
        Year 3  (2004)          **

Minimum NET UNITS shall continue at ** for each AGREEMENT YEAR thereafter

ROYALTIES:

                Annual Units             Cost/Unit

                0 -   500,000                **
          500,001 - 1,500,000                **
        1,500,001 - 2,500,000                **
        2,500,001 - 3,500,000                **
        3,500,000+                           **

---------------
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
<PAGE>
Exhibit 21

                         Alternative Dispute Resolution

The parties recognize that bona fide disputes as to certain matters may arise
from time to time during the term of this Agreement that relate to either
party's rights and/or obligations. To have such a dispute resolved by this
Alternative Dispute Resolution (ADR) provision, a party first must send written
notice of the dispute to the other party for attempted resolution by good faith
negotiations between their respective presidents (or their equivalents) of the
affected subsidiaries, divisions, or business units within twenty-eight (28)
days after such notice is received (all references to days in this ADR provision
are to calendar days).

If the matter has not been resolved within twenty-eight (28) days of the notice
of dispute, or if the parties fail to meet within such twenty-eight (28) days,
either party may initiate an ADR proceeding as provided herein. The parties
shall have the right to be represented by counsel in such a proceeding.

1.       To begin an ADR proceeding, a party shall provide written notice to the
         other party of the issues to be resolved by ADR, including the specific
         provisions of the Agreement in issue. Within fourteen (14) days after
         its receipt of such notice, the other party may, by written notice to
         the party initiating the ADR, add additional issues to be resolved
         within the same ADR.

2.       Within twenty-one (21) days following receipt of the original ADR
         notice, the parties shall select a mutually acceptable neutral to
         preside in the resolution of any disputes in this ADR proceeding. If
         the parties are unable to agree on a mutually acceptable neutral within
         such period, either party may request the President of the CPR
         Institute for Dispute Resolution (CPR), 366 Madison Avenue, 14th Floor,
         New York, New York 10017, to select a neutral pursuant to the following
         procedures:

         (a)      The CPR shall submit to the parties a list of not less than
                  five (5) candidates within fourteen (14) days after receipt of
                  the request, along with a Curriculum Vitae for each candidate.
                  No candidate shall be an employee, director, or shareholder of
                  either party or any of their subsidiaries or affiliates.

         (b)      Such list shall include a statement of disclosure by each
                  candidate of any circumstances likely to affect his or her
                  impartiality.

         (c)      Each party shall number the candidates in order of preference
                  (with the number one (1) signifying the greatest preference)
                  and shall deliver the list to the CPR within seven (7) days
                  following receipt of the list of candidates. If a party
                  believes a conflict of interest exists regarding any of the
                  candidates, that party shall provide a written explanation of
                  the conflict to the CPR along with its list showing its order
                  of preference for the candidates. Any party failing to return
                  a list of preferences on time shall be deemed to have no order
                  of preference.

         (d)      If the parties collectively have identified fewer than three
                  (3) candidates deemed to have conflicts, the CPR immediately
                  shall designate as the neutral the candidate for whom the
                  parties collectively have indicated the greatest preference,
                  excluding any candidate deemed by a party to have conflicts.
                  If a tie should result between two candidates, the CPR may
                  designate either candidate. If the parties collectively have
                  identified three (3) or more candidates deemed to have
                  conflicts, the CPR shall review the explanations regarding
                  conflicts and, in its sole discretion, may either (i)
                  immediately designate as the neutral the candidate for whom
                  the parties collectively have indicated the greatest
                  preference, or (ii) issue a new list of not less than five (5)
                  candidates, in which case the procedures set forth in
                  subparagraphs 2(a) - 2(d) shall be repeated.

3.       No earlier than twenty-eight (28) days or later than fifty-six (56)
         days after selection, the neutral shall hold a hearing to resolve each
         of the issues identified by the parties. The ADR proceeding shall take
         place at a location agreed upon by the parties. If the parties cannot
         agree, the neutral shall designate a location other than the principal
         place of business of either party or any of their subsidiaries or
         affiliates.

<PAGE>

4.       At least seven (7) days prior to the hearing, each party shall submit
         the following to the other party and the neutral:

         (a)      a copy of all exhibits on which such party intends to rely in
                  any oral or written presentation to the neutral;

         (b)      a list of any witnesses such party intends to call at the
                  hearing, and a short summary of the anticipated testimony of
                  each witness;

         (c)      a proposed ruling on each issue to be resolved, together with
                  a request for a specific damage award or other remedy for each
                  issue. The proposed rulings and remedies shall not contain any
                  recitation of the facts or any legal arguments and shall not
                  exceed one (1) page per issue.

         (d)      a brief in support of such party's proposed rulings and
                  remedies, provided that the brief shall not exceed twenty (20)
                  pages. This page limitation shall apply regardless of the
                  number of issues raised in the ADR proceeding.

         Except as expressly set forth in subparagraphs 4(a) - 4(d), no
         discovery shall be required or permitted by any means, including
         depositions, interrogatories, requests for admissions, or production of
         documents.

5.       The hearing shall be conducted on two (2) consecutive days and shall be
         governed by the following rules:

         (a)      Each party shall be entitled to five (5) hours of hearing time
                  to present its case. The neutral shall determine whether each
                  party has had the five (5) hours to which it is entitled.

         (b)      Each party shall be entitled, but not required, to make an
                  opening statement, to present regular and rebuttal testimony,
                  documents or other evidence, to cross-examine witnesses, and
                  to make a closing argument. Cross-examination of witnesses
                  shall occur immediately after their direct testimony, and
                  cross-examination time shall be charged against the party
                  conducting the cross-examination.

         (c)      The party initiating the ADR shall begin the hearing and, if
                  it chooses to make an opening statement, shall address not
                  only issues it raised but also any issues raised by the
                  responding party. The responding party, if it chooses to make
                  an opening statement, also shall address all issues raised in
                  the ADR. Thereafter, the presentation of regular and rebuttal
                  testimony and documents, other evidence, and closing arguments
                  shall proceed in the same sequence.

         (d)      Except when testifying, witnesses shall be excluded from the
                  hearing until closing arguments.

         (e)      Settlement negotiations, including any statements made
                  therein, shall not be admissible under any circumstances.
                  Affidavits prepared for purposes of the ADR hearing also shall
                  not be admissible. As to all other matters, the neutral shall
                  have sole discretion regarding the admissability of any
                  evidence.

6.       Within seven (7) days following completion of the hearing, each party
         may submit to the other party and the neutral a post-hearing brief in
         support of its proposed rulings and remedies, provided that such brief
         shall not contain or discuss any new evidence and shall not exceed ten
         (10) pages. This page limitation shall apply regardless of the number
         of issues raised in the ADR proceeding.

7.       The neutral shall rule on each disputed issue within fourteen (14) days
         following completion of the hearing. Such ruling shall adopt in its
         entirety the proposed ruling and remedy of one of the parties on each
         disputed issue but may adopt one party's proposed rulings and remedies
         on some issues and the other party's proposed rulings and remedies on
         other issues. The neutral shall not issue any written opinion or
         otherwise explain the basis of the ruling.

<PAGE>

8.       The neutral shall be paid a reasonable fee plus expenses. These fees
         and expenses, along with the reasonable legal fees and expenses of the
         prevailing party (including all expert witness fees and expenses), the
         fees and expenses of a court reporter, and any expenses for a hearing
         room, shall be paid as follows:

         (a)      If the neutral rules in favor of one party on all disputed
                  issues in the ADR, the losing party shall pay 100% of such
                  fees and expenses.

         (b)      If the neutral rules in favor of one party on some issues and
                  the other party on other issues, the neutral shall issue with
                  the rulings a written determination as to how such fees and
                  expenses shall be allocated between the parties. The neutral
                  shall allocate fees and expenses in a way that bears a
                  reasonable relationship to the outcome of the ADR, with the
                  party prevailing on more issues, or on issues of greater value
                  or gravity, recovering a relatively larger share of its legal
                  fees and expenses.

9.       The rulings of the neutral and the allocation of fees and expenses
         shall be binding, non-reviewable, and non-appealable (except in the
         case of fraud or bad faith on the part of the neutral), and may be
         entered as a final judgment in any court having jurisdiction.

10.      Except as provided in paragraph 9 or as required by law, the existence
         of the dispute, any settlement negotiations, the ADR hearing, any
         submissions (including exhibits, testimony, proposed rulings, and
         briefs), and the rulings shall be deemed Confidential Information
         (except for information contained in exhibits or testimony that is
         already public or later becomes public through no fault of the parties
         or that is lawfully disclosed to a party through an independent third
         party). The neutral shall have the authority to impose sanctions for
         unauthorized disclosure of Confidential Information.

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