Document:

NOTE  EXTENSION

     The  undersigned  officer  of Alster Finance hereby extends the due date of
that certain Promissory Note, dated January 12, 2000, from March 1, 2000 to June
1,  2000.  Interest  shall  be payable as set forth in the Note and shall be due
and  payable  together  with  principal  on  the  due  date, as herein extended.

     Agreed  to  as  of  this  24th  day  of  February,  2000.

     ALSTER  FINANCE

     /s/

     By:______________________
     Name:___________________
     Title:____________________

Agreed  and  Accepted:

INTERNET  GOLF  ASSOCIATION,  INC.

/s/
By:______________________________
     Vincent  Castagnola,  PresidentEXHIBIT 10.38
                                 LOAN AGREEMENT

ss.1.  Parties

     1.1.  This  Agreement is made and entered into as of December 20, 1999 (the
"Effective  Date"),  by and between Surgical Safety Products,  Inc., and Thomson
Kernaghan & Co. Ltd.

ss.2.  Definition and Accounting Terms

     2.1. Definitions. As used in this Agreement:

          (a)  "Affiliate"  means any Person  (i) that  directly  or  indirectly
          controls,  or is  controlled  by, or is under common  control with the
          Borrower  or  a  Subsidiary;  or  (ii)  that  directly  or  indirectly
          beneficially  owns or holds five  percent (5%) or more of any class of
          voting stock of the Borrower or any Subsidiary;  or (iii) five percent
          (5%) or more of the voting  stock of which is directly  or  indirectly
          beneficially owned or held by the Borrower or a Subsidiary.

          (b)  "Agent"  means  Thomson  Kernaghan  & Col.  Ltd.,  a  corporation
          incorporated  under the laws of  Ontario,  for itself and as agent for
          the Lenders.

          (c) "Agent's Fee" shall have the meaning  ascribed in paragraph  10.12
          of this Agreement.

          (d) "Agent's  Principal  Office" means the Agent's principal office at
          365 Bay Street, Toronto, Ontario M5H 2V2.

          (e)  "Agent's  Warrant"  shall have the meaning  ascribed in paragraph
          6.2(a) of this Agreement.

          (f) "Agreement" means this Loan Agreement, as amended, supplemented or
          modified from time to time.

          (g) "Borrower"  means Surgical  Safety  Products,  Inc., a corporation
          incorporated under the laws of the U.S. state of New York.

          (h)  "Business  Day"  means any day other than a  Saturday,  Sunday or
          other day on which  commercial  banks in  Toronto  are  authorized  or
          required to close under the laws of the province of Ontario.

          (i) "Capital Lease" means all leases that have been or should be
          capitalized on the books of the lessee in accordance with GAAP.

                                      -36-

<PAGE>

          (j) "Closing  Date" means December 22, 1999, or such other date as the
          Agent,  the  Borrower  and the  Parent  may agree in writing to be the
          Closing Date.

          (k) Code" means the US Internal  Revenue Code of 1986, as amended from
          time  to  time,  and the  regulations  and  published  interpretations
          thereof.

          (l)  "Collateral"  means  all  property  that is  subject  to the Lien
          granted by the Security Agreement;

          (m)  "Commitment"  means the Agent's  obligation  to make Loans to the
          Borrower pursuant to Section 2.01 in the amounts referred to therein.

          (n) "Common  Stock" means the  Borrower's  common  stock,  US$.001 par
          value.

          (o)  "Commonly  Controlled  Entity"  means an  entity,  whether or not
          incorporated,  that is under common control with the Borrower,  within
          the meaning of Section 414(b) or 414(c) of the Code.

          (p)  "Control"  (whether  or not  capitalized)  means the  possession,
          directly or indirectly,  of the power to direct or cause the direction
          of the  management  and  policies  of a Person,  whether  through  the
          ownership of voting securities, by contract, or otherwise.

          (q)  "Conversion  Shares"  means the shares of Common Stock into which
          the Notes are convertible.

          (r) "Debt" means (i)  indebtedness  or liability  for borrowed  money;
          (ii)  obligations  evidenced  by  bonds,  debentures,  notes  or other
          similar instruments; (iii) obligations for the deferred purchase price
          of  property  or  services   (including   trade   obligations);   (iv)
          obligations  under Capital Leases;  (v)  obligations  under letters of
          credit;  (vi)  obligations  under  acceptance  facilities;  (vii)  all
          guaranties,  endorsements (other than for collection or deposit in the
          ordinary  course of business),  and other  contingent  obligations  to
          purchase,  to provide funds for payment,  to supply funds to invest in
          any Person or entity,  or otherwise to assure a creditor against loss;
          and (viii) all  obligations  secured by any Liens,  whether or not the
          obligations have been assumed.

          (s)  "Default"  means any of the events  specified in  paragraph  9.1,
          whether or not any requirement for the giving of notice,  the lapse of
          time, or both, or any other condition has been satisfied.

                                      -37-

<PAGE>

          (t) "Effective Date" means the date set forth in paragraph 1.1 of this
          Agreement.

          (u) "Escrow  Agreement"  shall have the meaning  ascribed in paragraph
          6.2(d) of this Agreement.

          (v) "ERISA" means the Employee Retirement Income Security Act of 1974,
          as  amended  from  time to time,  and the  regulations  and  published
          interpretations thereof.

          (w) "Event of Default"  means any of the events  specified  in Section
          9.01,  provided  that any  requirement  for the giving of notice,  the
          lapse of time, or both, or any other condition, has been satisfied.

          (x)  "Exchange  Act" means the United  States of  America.  Securities
          Exchange Act of 1934, as amended.

          (y) "GAAP" means generally accepted accounting principles in the U.S.

          (z) "Lenders"  means Thomson  Kernaghan & Co.,  Ltd., and Persons that
          purchase participations in the Loans from Thomson Kernaghan & Co. Ltd.

          (aa) "Lenders'  Warrant" shall have the meaning  ascribed in paragraph
          6.2(a) of this Agreement.

          (bb)  "Lien"  means  any  mortgage,  deed of trust,  pledge,  security
          interest, hypothecation, assignment, deposit arrangement, encumbrance,
          lien (statutory or other), or preference,  priority, or other security
          agreement or  preferential  arrangement,  charge or encumbrance of any
          kind  or  nature   whatsoever   (including   without   limitation  any
          conditional  sale or other title  retention  agreement,  any financing
          lease  having  substantially  the same  economic  effect as any of the
          foregoing,  and the  filing  of any  financing  statement,  charge  or
          similar  notice under the law of any  jurisdiction  to evidence any of
          the foregoing.

          (cc) "Loan" shall have the meaning  ascribed in paragraph  3.1 of this
          Agreement.

          (dd) "Loan  Documents"  means this Agreement,  the Notes, the Security
          Agreement, the Lenders' Warrant, the Agent's Warrant, the Registration
          Rights Agreement, and the Escrow Agreement.

          (ee) Multiemployer  Plan" means a Plan described in Section 4001(a)(3)
          of ERISA.

                                      -38-

<PAGE>

          (ff) "Notes" shall have the meaning  ascribed in paragraph 3.4 of this
          Agreement.

          (gg) "PBGC"  means the Pension  Benefit  Guaranty  Corporation  or any
          entity succeeding to any or all of its functions under ERISA.

          (hh) "Person" means an individual, partnership,  corporation, business
          trust, joint stock company, trust, unincorporated  association,  joint
          venture, governmental authority, or other entity of whatever nature.

          (ii)  "Plan"  means any  pension  plan which is covered by Title IV of
          ERISA and in respect of which the  Borrower  or a Commonly  Controlled
          Entity is an "employer" as defined in Section 3(5) of ERISA.

          (jj)  "Prohibited  Transaction"  means  any  transaction  set forth in
          Section 406 of ERISA or Section 4975 of the Code.

          (kk)  "Registration  Rights Agreement" shall have the meaning ascribed
          in paragraph 6.2(b) of this Agreement.

          (ll)  "Reportable  Event" means any of the events set forth in Section
          4043 of ERISA.

          (mm) "SEC" means the Securities and Exchange  Commission of the United
          States of America.

          (nn)  "Securities  Act" means the United States of America  Securities
          Act of 1933, as amended.

          (oo) "Security  Agreement" means a Security Agreement in substantially
          the form of Exhibit B to be delivered by the  Borrowerunder  the terms
          of this Agreement.

          (pp) "Subsidiary"  means a corporation of which shares of stock having
          ordinary  voting  power  (other  than stock  having such power only by
          reason of the happening of a  contingency)  to elect a majority of the
          board of directors or other  managers of that  corporation  are at the
          time  owned,  or the  management  of  which is  otherwise  controlled,
          directly or indirectly through one or more intermediaries, or both, by
          the Borrower.

          (qq) "Termination Date" means November 30, 2002.

          (rr) "U.S." means the United States of America.

                                      -39-

<PAGE>

          (ss) "Warrant  Shares" means the shares of Common Stock  issuable upon
          exercise of the Warrants.

          (tt) "Warrants" means the Lenders' Warrant and the Agent's Warrant.

     2.2. Singular and Plural Terms. As used in this Agreement, terms defined in
the singular have the same meaning when used in the plural, and terms defined in
the plural have the same meaning when used in the singular.

     2.3.  Accounting  Terms. All accounting  terms not specifically  defined in
this  Agreement  shall be construed in accordance  with GAAP. All financial data
submitted pursuant to this Agreement shall be prepared in accordance with GAAP.

     2.4. Currency.  All currency described or otherwise referred to in the Loan
Documents is the currency of the United States of America.

ss.3.  Amount and Terms of the Loans

     3.1. The Loans.  The Agent agrees on the terms and  conditions set forth in
this Agreement to make loans (each a "Loan" and collectively the "Loans") to the
Borrower from time to time during the period from the date of this  Agreement up
to but not including the Termination  Date, up to a maximum  principal amount of
Five  Million  Dollars  in the  currency  of the United  States of America  (US$
5,000,000).  The  initial  Loan shall be in the  principal  amount of  $650,000.
Unless the Agent  otherwise  agrees,  the aggregate  amount of Loans made in any
90-day period shall not exceed $500,000.

     3.2.  Notice and Manner of Borrowing.  The Borrower shall give the Agent at
least  five (5)  Business  Days'  notice  of any  Loans  under  this  Agreement,
specifying the date and amount thereof.  Not later than 2:00 P.M.  Toronto time,
on the date of such Loan and upon  fulfillment of the applicable  conditions set
forth in Section 4, the Agent will make such Loan  available  to the Borrower in
immediately  available  funds by wire  transfer to the  Borrower's  account at a
commercial  bank. The Borrower shall give the Agent written wiring  instructions
for such transfer,  specifying the name,  address and ABA routing number for the
Bank, and the Borrower's account number to be credited with the Loan proceeds.

     3.3.  Interest.  The  Borrower  shall  pay  interest  to the  Agent  on the
outstanding and unpaid principal amount of the Loan at the rate of eight percent
(8%) per year, calculated on the basis of a year of 360 days comprised of twelve
30-day months. Interest shall be payable upon any prepayment of principal and at
maturity, at the Agent's Principal Office.

     3.4.  The  Notes.  The  Borrower's  obligation  to repay each Loan shall be
evidenced by its promissory note (each a "Note" and collectively the "Notes") in

                                      -40-

<PAGE>

substantially  the form of  Exhibit A attached  to this  Agreement  with  blanks
appropriately  filled in and payable to the order of the Agent.  Each Note shall
be dated the date on which the Agent advances the Loan proceeds to the Borrower,
and each of the Notes shall be due and payable on the  Termination  Date. At any
time prior to their respective payment in full, all or any part of the principal
and  interest of the Notes may, at the option of the Agent or other  holder,  be
converted  into  Common  Stock,  at a price per share  equal to the lower of (i)
$0.8203125 or (ii) 75% of the closing bid price on  Conversion  Date, as defined
in the Note;  provided however,  that the conversion price per share shall in no
event be less than $0.375 per share.

     3.5.  Collateral.  The Notes,  together  with all of the  Borrower's  other
obligations  under this Agreement,  shall be secured by a Security  Agreement in
the form of Exhibit B hereto executed by the Borrower.

     3.6.  Prepayments.  The Borrower may prepay the Notes, in whole or in part,
at any time with the  Agent's  consent.  The  Borrower  may  prepay the Notes in
whole, or in part in increments of $500,000 or less with accrued interest to the
date of such  prepayment  on the amount  prepaid,  without the Agent's  consent,
provided  that: (i) the Borrower gives the Agent not less than 10 Business Days'
prior  written  notice of its intention to do so, which notice shall specify the
amount being prepaid and the  prepayment  date;  (ii) a  registration  statement
under the Securities Act shall be in effect  registering the issuance and resale
of the Conversion  Shares and the Warrant Shares;  (iii) the average closing bid
price of the Common Stock for the 20 trading days  preceding the notice shall be
in excess of $1.00;  and the average daily  trading  volume for the Common Stock
for the 20 trading days  preceding the notice shall be in excess of 20,000.  The
Agent may convert  all or any part of the Notes being  prepaid at any time prior
to receipt of the prepayment.

     3.7.  Method of Payment.  The Borrower  shall make each payment  under this
Agreement  and under the Notes at the  Agent's  Principal  Office not later than
2:00 P.M.,  Toronto  time on the date when due in lawful  currency of the United
States of America and in immediately available funds. Whenever any payment to be
made under this  Agreement or under the Notes shall be stated to be due on a day
other than a Business  Day,  such payment  shall be made on the next  succeeding
Business  Day, and such  extension of time shall in such case be included in the
computation of interest due on the Loan.

     3.8.  Use of  Proceeds.  The  Borrower  shall use the  proceeds of the Loan
solely for the  following  purposes:  (a) to pay the Agent's Fee; (b) to pay the
fees and expenses of the Agent's  counsel in the  negotiation and preparation of
this Agreement;  (c) to repay the Borrower's  promissory note dated November 30,
1999, in the principal amount of $50,000, plus interest, payable to the order of
Thomson  Kernaghan & Co.  Limited,  and (d) for the Borrower's  working  capital
purposes.  The  Borrower  hereby  authorizes  the Agent to withhold  the amounts
necessary to repay that note,  the Agent's Fee and such fees and expenses of its
counsel from the proceeds of the Loans.

                                      -41-

<PAGE>

ss.4.  Conditions Precedent.

     4.1.  Condition  Precedent to Initial Loan.  The obligation of the Agent to
make the initial Loan to the Borrower is subject to the condition precedent that
the Agent  shall  have  received  on or  before  the day of the Loan each of the
following, in form and substance satisfactory to the Agent and its counsel:

     (a) Note. A Note for the principal amount of the initial Loan duly executed
     by the Borrower;

     (b) Security Agreement. A Security Agreement duly executed by the Borrower;
     together  with an  undertaking  by the Borrower to (i) file within the time
     proscribed  by law for  perfecting  the  Agent's  security  interest in the
     Collateral, and deliver to the Agent acknowledgment copies of the Financing
     Statements  (UCC-1)  duly filed  under the Uniform  Commercial  Code of all
     jurisdictions  necessary  or, in the  opinion  of the Agent,  desirable  to
     perfect the security interest created by the Security  Agreement,  and (ii)
     certified  copies of  Request  for  Copies  or  Information  (Form  UCC-11)
     identifying  all of the  financing  statements  on file with respect to the
     Borrower  in  all  jurisdictions  referred  to  under  (i),  including  the
     Financing  Statement  filed by the Agent against the  Borrower,  indicating
     that no party  claims an  interest in any of the  Collateral  except as set
     forth on Schedule 5.1(o);

     (c) Evidence of all corporate action by the Borrower.  Certified (as of the
     Effective  Date)  copies of all  corporate  action  taken by the  Borrower,
     including resolutions of its Board of Directors, authorizing the execution,
     delivery,  and performance of the Loan Documents and each other document to
     be delivered pursuant to this Agreement;

     (d)  Incumbency and signature  certificate  of the Borrower.  A certificate
     (dated  as of  the  Effective  Date)  of  the  Secretary  of  the  Borrower
     certifying  the names and true  signatures  of the officers of the Borrower
     authorized  to sign  the  Loan  Documents  and any  other  documents  to be
     delivered by the Borrower under this Agreement;

     (e) Lenders' Warrant. The Lenders' Warrant;

     (f) Agent's Warrant. The Agent's Warrant;

     (g) Registration Rights Agreement. The Registration Rights Agreement;

     (h) Escrow Agreement. The Escrow Agreement; and

                                      -42-

<PAGE>

     (i) Opinion of counsel for the Borrower. A favorable opinion of counsel for
     the Borrower, in substantially the form of Exhibit C hereto, and as to such
     other matters as the Agent may reasonably request.

     4.2. Conditions Precedent to All Loans. The obligation of the Agent to make
each  Loan  (including  the  initial  Loan)  shall  be  subject  to the  further
conditions precedent that on the date of such Loan:

     (a) The  following  statements  shall  be true  and the  Agent  shall  have
     received a certificate signed by a duly authorized officer of the Borrower,
     dated  the date of such  Loan,  stating  that (i) the  representations  and
     warranties contained in Section 5.1 of this Agreement,  and in Section 4.01
     of the Security Agreement are correct on and as of the date of such Loan as
     though made on and as of such date; and (ii) no Default or Event of Default
     has occurred and is continuing, or would result from such Loan;

     (b) The Agent  shall  have  received  a  detailed  statement  of the use of
     proceeds from the Loan, reasonably  satisfactory to the Agent, certified by
     the Borrower's chief financial officer and chief executive officer;

     (c) The Agent  shall have  received  such  other  approvals,  opinions,  or
     documents as the Agent may reasonably request;

     (d) The  closing  bid price of the  Common  Stock for the 20  trading  days
     preceding the date of the Loan shall have been above $1.00; and

     (e) The average daily trading  volume for the 20 trading days preceding the
     date of the Loan shall have been in excess of 20,000.

ss.5.  Representations and Warranties.

     5.1. Borrower's Representations and Warranties. The Borrower represents and
warrants to the Lenders that:

     (a) Incorporation,  Good Standing, and Due Qualification. The Borrower is a
     corporation duly incorporated,  validly existing and in good standing under
     the laws of the jurisdiction of its incorporation;  has the corporate power
     and authority to own its assets and to transact the business in which it is
     now engaged  and  proposes  to be engaged  in; and is duly  qualified  as a
     foreign  corporation  and in good  standing  under  the laws of each  other
     jurisdiction in which such  qualification is required.  The Borrower has no
     Subsidiaries.

     (b) Corporate Power and Authority. The execution,  delivery and performance
     by the  Borrower of the Loan  Documents  have been duly  authorized  by all

                                      -43-

<PAGE>

     necessary  corporate action and do not and will not (i) require any consent
     or approval of the shareholders of such  corporation;  (ii) contravene such
     corporation's  charter or bylaws;  (iii)  violate any provision of any law,
     rule, regulation, order, writ, judgment,  injunction, decree, determination
     or award presently in effect having applicability to such corporation; (iv)
     result in a breach of or  constitute a default  under any indenture or loan
     or credit  agreement or any other  agreement,  lease or instrument to which
     such  corporation  is a party or by which it or its properties may be bound
     or  affected;  (v) result in or require the creation or  imposition  of any
     Lien upon or with respect to any to the  properties  now owned or hereafter
     acquired  by such  corporation;  and (vi) cause such  corporation  to be in
     default  under any such  law,  rule,  regulation,  order,  writ,  judgment,
     injunction,   decree,  determination  or  award,  or  any  such  indenture,
     agreement, lease or instrument.

     (c) Legally Enforceable Agreement. This Agreement is, and each of the other
     Loan Documents when  delivered  under this Agreement will be, legal,  valid
     and binding  obligations of the Borrower,  enforceable against the Borrower
     in accordance with their respective  terms,  except to the extent that such
     enforcement may be limited by applicable  bankruptcy,  insolvency and other
     similar laws affecting creditors' rights generally.

     (d) Financial  Statements.  Borrower's  Financial  Statements.  The balance
     sheet of the  Borrower  as at  December  31,  1998 and 1997,  and,  and the
     related  statements  of  income,  retained  earnings  and cash flows of the
     Borrower for the fiscal years then ended, and the  accompanying  footnotes,
     together with the opinion thereon of Kerkering, Barberio & Co., independent
     certified   public   accountants,   and  the   interim   consolidated   and
     consolidating  balance sheet of the Borrower as at September 30, 1999,  and
     the related  statements of income,  retained earnings and cash flows of the
     Borrower  for the nine (9) month  period then  ended,  copies of which have
     been  included by the  Borrower in its reports  filed with the SEC on Forms
     10-K and 10-Q,  respectively,  are complete and correct and fairly  present
     the financial condition of the Borrower as at such dates and the results of
     the operations of the Borrower for the periods covered by such  statements,
     all in  accordance  with GAAP  consistently  applied  (subject  to year-end
     adjustments  in the case of the interim  financial  statements),  and since
     September  30,  1999,  there  has been no  material  adverse  change in the
     condition (financial or otherwise), business, or operations of the Borrower
     or  any  Subsidiary.  There  are no  liabilities  of  the  Borrower  or any
     Subsidiary,  fixed or contingent,  which are material but are not reflected
     in the financial statements or in the notes thereto, other than liabilities
     arising in the ordinary course of business since September 30, 1999.

     (e) Full  Disclosure.  No information,  exhibit or report  furnished by the
     Borrower, to the Agent in connection with the negotiation of this Agreement
     contained any material  misstatement of fact or omitted to state a material
     fact or any fact  necessary  to make the  statement  contained  therein not
     materially misleading.

                                      -44-

<PAGE>

     (f) Labor Disputes and Acts of God. Neither the business nor the properties
     of the  Borrower or any  Subsidiary  are  affected by any fire,  explosion,
     accident,  strike,  lockout or other labor dispute,  drought,  storm, hail,
     earthquake,  embargo,  act of God or of the public enemy, or other casualty
     (whether or not covered by insurance)  materially  and adversely  affecting
     such  business  properties  or  the  operation  of  the  Borrower  or  such
     Subsidiary.

     (g) Other Agreements.  Except as set forth on Schedule 5.1 (g) the Borrower
     is not a party to any indenture, loan, or credit agreement, or to any lease
     or other  agreement or  instrument,  or subject to any charter or corporate
     restriction  which could have a material  adverse  effect on the  business,
     properties,  assets, operations, or conditions,  financial or otherwise, of
     the Borrower to carry out its  obligations  under the Loan  Documents.  The
     Borrower is not in default in any respect in the  performance,  observance,
     or  fulfillment  of  any  of  the  obligations,  covenants,  or  conditions
     contained in any agreement or instrument  material to its business to which
     it is a party.

     (h)  Litigation.  There is no pending or  threatened  action or  proceeding
     against or affecting the Borrower before any court, governmental agency, or
     arbitrator  which  may,  in any one  case or in the  aggregate,  materially
     adversely  affect  the  financial  condition,  operations,  properties,  or
     business  of the  Borrower  or the  ability of the  Borrower to perform its
     obligations under the Loan Documents.

     (i) No  Defaults on  Outstanding  Judgments  or Orders.  The  Borrower  has
     satisfied all judgments (if any), and is not in default with respect to any
     judgment,  writ,  injunction,  decree,  rule,  or  regulation of any court,
     arbitrator,  or federal, state, municipal, or other governmental authority,
     commission, board, bureau, agency or instrumentality, domestic or foreign.

     (j)  Ownership  and Liens.  The Borrower  has title to, or valid  leasehold
     interests  in,  all  of its  properties  and  assets,  real  and  personal,
     including the properties and assets and leasehold interest reflected in the
     financial  statements  referred to in  paragraph  5.1(d) of this  Agreement
     (other than any properties or assets  disposed of in the ordinary course of
     business),  and none of the properties and assets owned by the Borrower and
     none of its leasehold  interests is subject to any Lien, except such as may
     be permitted pursuant to paragraph 7.1(a) of this Agreement.

     (k) ERISA. The Borrower is in compliance in all material  respects with all
     applicable provisions of ERISA. Neither a Reportable Event nor a Prohibited
     Transaction  has occurred and is  continuing  with respect to any Plan;  no
     notice of intent to terminate a Plan has been filed,  nor has any Plan been
     terminated;  no circumstances  exist which constitute grounds entitling the
     PBGC to  institute  proceedings  to  terminate,  or  appoint a  trustee  to
     administer,  a Plan,  nor has the PBGC  instituted  any  such  proceedings;
     neither the Borrower nor any Commonly Controlled

                                      -45-

<PAGE>

     Entity has completely or partially withdrawn from a Multiemployer Plan; the
     Borrower and each Commonly Controlled Entity have met their minimum funding
     requirements  under  ERISA  with  respect  to all of their  Plans,  and the
     present  value of all vested  benefits  under each Plan does not exceed the
     fair  market  value of all  Plan  assets  allocable  to such  benefits,  as
     determined on the most recent  valuation date of the Plan and in accordance
     with the  provisions of ERISA;  and neither the Borrower nor the Parent nor
     any Commonly Controlled Entity has incurred any liability to the PBGC under
     ERISA.

     (l) Operation of Business.  The Borrower  possesses all licenses,  permits,
     franchises,  patents,  copyrights,  trademarks,  and trade names, or rights
     thereto,  to  conduct  their  respective  businesses  substantially  as now
     conducted and as presently  proposed to be  conducted,  and the Borrower is
     not in  violation  of any valid rights of others with respect to any of the
     foregoing.

     (n) Taxes.  The Borrower  has filed all tax returns  (federal,  state,  and
     local)  required  to be filed and have  paid all  taxes,  assessments,  and
     governmental  charges and levies thereon to be due,  including any interest
     and penalties.

     (o) Debt.  Schedule  5.1(o) is a complete  and  correct  list of all credit
     agreements,  indentures,  purchase agreements,  guaranties, Capital Leases,
     and other  investments,  agreements,  and arrangements  presently in effect
     providing for or relating to extensions of credit (including agreements and
     arrangements  for the  issuance  of  letters  of credit  or for  acceptance
     financing)  in respect of which the  Borrower is in any manner  directly or
     contingently  obligated;  and the maximum  principal or face amounts of the
     credit in question, which are outstanding and which can be outstanding, are
     correctly  stated,  and all Liens of any nature given or agreed to be given
     as security  therefor  are  correctly  described  or  indicated in Schedule
     5.1(o).

     (p)  Environment.  The Borrower has duly complied with, and its businesses,
     operations,  assets, equipment,  property,  leaseholds, or other facilities
     are in compliance  with,  the provisions of all federal,  state,  and local
     environmental, health, and safety laws, codes and ordinances, and all rules
     and regulations  promulgated  thereunder.  The Borrower has been issued and
     will maintain all required  federal,  state,  and local permits,  licenses,
     certificates,  and approvals relating to (1) air emissions;  (2) discharges
     to surface water or groundwater;  (3) noise emissions;  (4) solid or liquid
     waste  disposal;  (5) the  use,  generation,  storage,  transportation,  or
     disposal of toxic or hazardous  substances or wastes  (intended  hereby and
     hereafter  to include  any and all such  materials  listed in any  federal,
     state,  or local  law,  code or  ordinance  and all rules  and  regulations
     promulgated thereunder as hazardous or potentially hazardous); or (6) other
     environmental,  health, or safety matters. A true,  accurate,  and complete
     list of all such permits, licenses, certificates, and approvals is attached
     hereto as Schedule 5.1(p). The Borrower  has  not  received  notice of, nor

                                      -46-

<PAGE>

     knows of, or suspects  facts which might  constitute  any violations of any
     federal,  state, or local  environmental,  health, or safety laws, codes or
     ordinances,  and any  rules  or  regulations  promulgated  thereunder  with
     respect  to  its  businesses,   operations,  assets,  equipment,  property,
     leaseholds,  or  other  facilities.  Except  in  accordance  with  a  valid
     governmental permit, license,  certificate,  or approval listed in Schedule
     5.1(p),  there has been no emission,  spill,  release, or discharge into or
     upon (1) the air;  (2) soils;  or any  improvements  located  thereon;  (3)
     surface  water or  groundwater;  or (4) the sewer,  septic  system or waste
     treatment,  storage or disposal system  servicing the premises of any toxic
     or hazardous substances or wastes at or from the premises;  and accordingly
     the  premises of the  Borrower  and its  Subsidiaries  are free of all such
     toxic or  hazardous  substances  or  wastes.  There has been no  complaint,
     order, directive,  claim, citation, or notice by any governmental authority
     or any person or entity  with  respect to (1) air  emissions;  (2)  spills,
     releases or discharges to soils or improvements  located  thereon,  surface
     water, groundwater or the sewer, septic system or waste treatment,  storage
     or disposal systems servicing the premises; (3) noise emissions;  (4) solid
     or liquid waste disposal; (5) the use, generation, storage, transportation,
     or  disposal  of toxic or  hazardous  substances  or  waste;  or (6)  other
     environmental,  health,  or safety  matters  affecting  the Borrower or its
     business,  operations,  assets, equipment,  property,  leaseholds, or other
     facilities.   Neither  the   Borrower   nor  its   Subsidiaries   have  any
     indebtedness,  obligation, or liability, absolute or contingent, matured or
     not matured, with respect to the storage,  treatment,  cleanup, or disposal
     of  any  solid  wastes,  hazardous  wastes  or  other  toxic  or  hazardous
     substances (including without limitation any such indebtedness, obligation,
     or  liability  with  respect to any  current  regulation,  law,  or statute
     regarding such storage, treatment, cleanup, or disposal) which is not shown
     on  Schedule  5.1(p).  Set forth in  Schedule  5.1(p) is a list of all real
     property owned or leased by the Borrower and its Subsidiaries,  and a brief
     description of the business conducted at such location.

     (p)  Registration  and Listing of Common Stock. The Borrower is a reporting
     company  (although  its Form  10-SB  has yet to  clear  the  SEC),  and has
     continuously  been a reporting company for more than the 11 calendar months
     preceding  the Closing Date,  and the Common Stock is registered  under the
     Exchange Act and listed on the OTC Bulletin  Board.  The Borrower has filed
     all reports and other  documents  required of it by the  Exchange  Act, the
     rules and  regulations of the SEC, and the rules and regulations of the OTC
     Bulletin Board.

     (q) No U.S.  Offering.  The Borrower has not offered any of the Notes,  the
     Conversion  Shares, the Warrants or the Warrant Shares to a U.S. Person (as
     defined in SEC Rule 902(k)) or to a person in the United States.

     (r)  Offshore  Transaction.  The  negotiations  for and the issuance of the
     Notes  and  the  Warrants  to  the  Agent  has  been  made  in an  offshore
     transaction as defined in SEC Rule 902(h).

                                      -47-

<PAGE>

     (s) No  Directed  Selling  Efforts.  The  Company  has not  engaged  in any
     directed  selling efforts,  as defined in SEC Rule 902(c),  with respect to
     the Notes and the Warrants.

     (t)  Category  3  Securities.  The  Company  has  complied  with all of the
     conditions  required  of it under SEC Rule  903(b)(3)  with  respect to the
     issuance of the Notes and Warrants.

     (u)  Exemption  of Notes and Warrants  from  Registration.  The  Borrower's
     issuance  of the Notes and the  Warrants  is exempt  from the  registration
     requirements  of Section 5 of the Securities Act pursuant to the provisions
     of SEC Regulation S.

     5.2.  Agent's  Representations  and  Warranties.  The Agent  represents and
warrants to the Borrower that:

     (a)  Accredited  Investor.  Each of the Agent and the other  Lenders  is an
     accredited investor as that term is defined in Rule 501(a)(3) of Regulation
     D of the SEC.

     (b) U. S.  Persons.  Neither  the Agent nor any Lender is a U.S.  Person as
     defined in SEC Rule 902(k).

     (c) The Agent has complied with all of the conditions required of it by SEC
     Rule  903(b)(3)  to  be  complied  with  by  it  in  connection   with  the
     transactions contemplated by this Agreement.

ss.6.  Affirmative Covenants.

     6.1.  Financial and  Operational.  So long as any of the Notes shall remain
unpaid, the Borrower will:

     (a) Maintenance of Existence. Preserve and maintain its corporate existence
     and good standing in the jurisdiction of its incorporation, and qualify and
     remain  qualified as a foreign  corporation in each  jurisdiction  in which
     such qualification is required.

     (b) Maintenance of Records.  Keep adequate records and books of account, in
     which complete  entries will be made in accordance  with GAAP  consistently
     applied, reflecting all material financial transactions of the Borrower.

     (c)  Maintenance  of  Properties.  Maintain,  keep and  preserve all of its
     properties  (tangible  and  intangible)  necessary  or useful in the proper
     conduct of its business in good working order and condition,  ordinary wear
     and tear excepted.

                                      -48-

<PAGE>

     (d) Conduct of Business.  Continue to engage in an efficient and economical
     manner in a business of the same  general  type as  conducted  by it on the
     date of this Agreement.

     (e) Maintenance of Insurance. Maintain insurance with financially sound and
     reputable  insurance companies or associations in such amounts and covering
     such risks as are  usually  carried by  companies  engaged in the same or a
     similar  business and similarly  situated,  which insurance may provide for
     reasonable deductibility from its coverage.

     (f)  Compliance  With  Laws.   Comply  with  all  applicable  laws,  codes,
     regulations,  rules,  ordinances and orders,  including without  limitation
     paying  before  the same  become  delinquent  all  taxes,  assessments  and
     governmental charges imposed upon it or upon its property.

     (g)  Right of  Inspection.  At any  reasonable  time and from time to time,
     permit the Agent or any of its  agents or  representatives  to examine  and
     make copies of and abstracts  from the records and books of account of, and
     visit the properties of, the Borrower, and to discuss its affairs, finances
     and  accounts  with  any  of  its  officers,   directors  and   independent
     accountants.

     (h) Reporting Requirements. Furnish to the Agent:

          (i) Quarterly  Financial  Statements.  The Borrower's  reports on Form
          10-Q or 10-QSB contemporaneously with their filing with the SEC.

          (ii) Annual  Financial  Statements.  The Borrower's  annual reports on
          Form 10-K or 10-KSB contemporaneously with their filing with the SEC.

          (iii) Management Letters. Promptly upon receipt thereof, copies of any
          reports  submitted to the Borrower or any  Subsidiary  by  independent
          accountants  in  connection  with their  examination  of the financial
          statements of the Borrower.

          (iv) Certificate of No Default. Within twenty-five (25) days after the
          end of each month a  certificate  of the  Borrower's  chief  financial
          officer certifying that to the best of his or her knowledge no Default
          or Event of Default has occurred and is continuing or, if a Default or
          Event of Default has occurred and is continuing, a statement as to the
          nature  thereof  and the  action  that is  proposed  to be taken  with
          respect thereto.

                                      -49-

<PAGE>

          (v) Notice of  Litigation.  Promptly after the  commencement  thereof,
          notice of all  actions,  suits  and  proceedings  before  any court or
          governmental  department,   commission,   board,  bureau,  agency,  or
          instrumentality  (domestic or foreign) or  arbitrator,  affecting  the
          Borrower, which, if determined adversely to the Borrower, could have a
          material  adverse  effect on the  financial  condition,  properties or
          operations of the Borrower.

          (vi) Notice of Defaults and Events of Default. As soon as possible and
          in any  event  within  ten (10)  days  after  the  occurrence  of each
          material  Default  or  material  Event of  Default,  a written  notice
          setting  forth the details of such Default or Event of Default and the
          action  that is  proposed  to be taken by the  Borrower  with  respect
          thereto.

          (vii) ERISA  reports.  As soon as  possible,  and in any event  within
          thirty (30) days after the  Borrower  knows or has reason to know that
          any circumstances  exist that constitute grounds entitling the PBGC to
          institute  proceedings  to  terminate  a Plan  subject  to ERISA  with
          respect  to  the  Borrower  or any  Commonly  Controlled  Entity,  and
          promptly but in any event  within two (2) Business  Days of receipt by
          the Borrower or any Commonly Controlled Entity of notice that the PBGC
          intends to  terminate  a Plan or appoint a trustee to  administer  the
          same,  and promptly but in any event within five (5) Business  Days of
          the  receipt  of  notice   concerning  the  imposition  of  withdrawal
          liability  with  respect to the  Borrower or any  Commonly  Controlled
          Entity,  the Borrower will deliver to the Agent a  certificate  of the
          chief  financial  officer of the Borrower  setting  forth all relevant
          details  and the  action  which  the  Borrower  proposes  to take with
          respect thereto.

          (vii)  Reports  to Other  Creditors.  Promptly  after  the  furnishing
          thereof,  copies of any statement or report  furnished by the Borrower
          or any  Subsidiary  to any other  party  pursuant  to the terms of any
          indenture,  loan,  credit  or  similar  agreement  and  not  otherwise
          required to be furnished to the Agent  pursuant to any other clause of
          this Agreement.

          (viii)  Other  Regulatory  Reports  and  Filings.  Promptly  after the
          sending or filing thereof,  copies of all proxy statements,  financial
          statements  and reports that the Borrower or any  Subsidiary  sends to

                                      -50-

<PAGE>

          its  shareholders,  and copies of all  regular,  periodic  and special
          reports, and all registration  statements that the Borrower files with
          the  securities  regulatory  authorities  of any country,  province or
          state, or with any securities exchange.

          (ix)  General  Information.  Such  other  information  respecting  the
          condition or  operations,  financial or otherwise,  of the Borrower as
          the Agent may from time to time reasonably request.

          (i) Environment,  Health and Safety.  Be and remain in compliance with
          the provisions of all federal, state, and local environmental, health,
          and safety laws,  codes and ordinances,  and all rules and regulations
          issued  thereunder;  notify the Agent  immediately  of any notice of a
          hazardous  discharge  or  environmental  complaint  received  from any
          governmental  agency or any other party;  notify the Agent immediately
          of any hazardous discharge from or affecting its premises; immediately
          contain and remove the same, in compliance  with all applicable  laws;
          promptly  pay any fine or penalty  assessed in  connection  therewith;
          permit the Agent to inspect the premises,  to conduct  tests  thereon,
          and to  inspect  all books,  correspondence,  and  records  pertaining
          thereto;  and at the Agent's request,  and at the Borrower's  expense,
          provide a report of a qualified environmental  engineer,  satisfactory
          in scope,  form, and content to the Agent,  and such other and further
          assurances reasonably satisfactory to the Agent that the condition has
          been corrected.

     6.2. The Borrower hereby further covenants and agrees with the Agent that:

     (a) Warrants.  Contemporaneously with the execution of this Agreement,  the
     Borrower  shall issue and deliver to the Agent (i) a warrant in the form of
     Exhibit D hereto to purchase up to  3,428,571  shares of Common  Stock (the
     "Lenders' Warrant"),  and (ii) a warrant in the form of Exhibit E hereto to
     purchase up to  1,142,857shares  of Common Stock (the  "Agent's  Warrant"),
     each at a price  per  share of  $1.09375,  and  each  vesting  as  provided
     therein.  The  Lenders'  Warrant  and the  Agent's  Warrant  each  shall be
     exercisable from time to time, pro rata, as follows: (i) the Warrants shall
     be immediately  exercisable for 20% of the number of Warrant  Shares;  and,
     (ii) the Warrants shall be exercisable for an additional1% of the number of
     Warrant  Shares  for each  $25,000  of  principal  of Loans made under this
     Agreement.

     (b)   Registration   of  Common  Stock   Underlying   Notes  and  Warrants.
     Contemporaneously with the execution of this Agreement,  the Borrower shall
     execute and deliver to the Agent a  registration  rights  agreement  in the
     form  of  Exhibit  F  hereto.  (the  "Registration  Rights  Agreement").The
     Borrower shall  register the issuance and sale of the Conversion  Stock and
     the Warrant Stock in  accordance  with the  provisions of the  Registration
     Rights Agreement.

                                      -51-

<PAGE>

     (d) Escrow.  Contemporaneously  with the execution of this  Agreement,  the
     Borrower shall executed an escrow agreement with the Agent as escrow holder
     (the  "Escrow  Agreement")  in the  form of  Exhibit  G to this  Agreement.
     Contemporaneously with the execution of this Agreement,  the Borrower shall
     execute and deliver to the Escrow Holder a certificate for 2,700,000 shares
     of Common Stock as a portion of the number of Conversion Shares (based upon
     a conversion price of $0.375 per share)  underlying the principal amount of
     the Note  evidencing  the initial Loan and the number of Warrant Shares for
     which the Warrants  shall be  exercisable  upon  funding the initial  Loan.
     Prior to each  additional  Loan,  the Borrower shall execute and deliver to
     the  Escrow  Holder a  certificate  for 200% of the  number  of  additional
     Conversion  Shares  (based  upon a  conversion  price of $0.375  per share)
     underlying the principal  amount of the Note  evidencing that Loan and 200%
     the number of  additional  Warrant  Shares for which the Warrants  shall be
     exercisable upon funding that Loan, until all of the Conversion  Shares and
     Warrant Shares have been delivered to the Escrow Holder..  All certificates
     for  Conversion  Shares and Warrant  Shares  delivered to the Escrow Holder
     shall be registered in the name of Thomson  Kernaghan & Co. Limited.  Until
     such time as the registration  statement covering the Conversion Shares and
     the  Warrant  shares is  effective,  the  certificates  shall bear a legend
     indicating that they have been issued in a transaction  that is exempt from
     the  registration  requirements  of the  Securities  Act,  and  may  not be
     transferred  except pursuant to registration under the Securities Act or an
     exemption from such registration.  Except for such legend, the Common Stock
     underlying the Lenders'  Warrant and the Agent's  Warrant shall be free and
     clear of any legends, liens, claims, stop orders or other restrictions. Not
     later than the third  Business  Day  following  the  effective  date of the
     Registration   Statement,   the  Borrower  shall  cause  the  Common  Stock
     underlying the Lenders' Warrant and the Agent's Warrant to be registered in
     Agent's  street name,  in DTC form,  free and clear of any legends,  liens,
     claims, stop orders or other restrictions.

ss.7.  Negative Covenants.

     7.1.  So long as any of the Notes  remains  unpaid,  or the Agent  shall be
obligated to make Loans under this Agreement, the Borrower will not:

     (a)  Liens.  Create,  incur,  assume,  or suffer to  exist,  or permit  any
     Subsidiary to create,  incur,  assume, or suffer to exist, any Lien upon or
     with respect to any of its  properties,  now owned or  hereafter  acquired,
     except:

          (1) Liens in favor of the Agent;

          (2) Liens for taxes or  assessments  or other  government  charges  or
          levies if not yet due and payable or, if due and payable,  if they are
          being contested in good faith by appropriate proceedings and for which
          appropriate reserves are maintained;

                                      -52-

<PAGE>

          (3)  Liens  imposed  by  law,  such  as   mechanics',   materialmen's,
          landlords',  warehousemen's,  and carriers'  Liens,  and other similar
          Liens,  securing  obligations  incurred  in  the  ordinary  course  of
          business  which  are not past due for more  than  thirty  (30) days or
          which are being contested in good faith by appropriate proceedings and
          for which appropriate reserves have been established;

          (4) Liens under workers' compensation,  unemployment insurance, Social
          Security, or similar legislation;

          (5) Liens,  deposits,  or pledges to secure the  performance  of bids,
          tenders,  contracts  (other than  contracts for the payment of money),
          leases  (permitted  under  the  terms of this  Agreement),  public  or
          statutory obligations,  surety, stay, appeal, indemnity,  performance,
          or other similar bonds,  or other similar  obligations  arising in the
          ordinary course of business;

          (6) Liens disclosed on Schedule 5.1(o);

          (7) Judgment and other similar Liens arising in connection  with court
          proceedings, provided the execution or other enforcement of such Liens
          is  effectively  stayed  and the  claims  secured  thereby  are  being
          actively contested in good faith and by appropriate proceedings;

          (8)  Easements,   rights-of-way,   restrictions,   and  other  similar
          encumbrances which, in the aggregate, do not materially interfere with
          the  occupation,  use, and enjoyment by the Borrower or any Subsidiary
          of the property or assets  encumbered  thereby in the normal course of
          its business or  materially  impair the value of the property  subject
          thereto; and

          (9) Liens  securing  obligations  of a  Subsidiary  to the Borrower or
          another Subsidiary

     (b)  Debt.  Create,  incur,  assume,  or suffer  to  exist,  or permit  any
     Subsidiary to create, incur, assume, or suffer to exist, any Debt, except:

          (1) Debt of the Borrower under this Agreement or the Note;

          (2) Debt  described in Schedule  5.1(o) but no voluntary  prepayments,
          renewals,  extensions,   refinancings,  or  increases  in  he  amounts
          thereof;

                                      -53-

<PAGE>

          (3) Debt of the Borrower  subordinated  on terms  satisfactory  to the
          Agent to the Borrower's obligation under this Agreement and the Note;

          (4) Debt of the Borrower to any Subsidiary or of any Subsidiary to the
          Borrower or another Subsidiary; and

          (5) Accounts  payable to trade  creditors for goods or services  which
          are not aged more than  sixty  (60)  days  from the  billing  date and
          current  operating  liabilities  (other than for borrowed money) which
          are not more than ten (10) days past due, in each case incurred in the
          ordinary course of business,  as presently conducted,  and paid within
          the specified time,  unless contested in good faith and by appropriate
          proceedings.

     (c) Mergers, Etc. Wind up, liquidate or dissolve itself, reorganize,  merge
     or consolidate with or into, or convey, sell, assign,  transfer,  lease, or
     otherwise  dispose  of  (whether  in  one  transaction  or in a  series  of
     transactions)  all or substantially all of its assets (whether now owned or
     hereafter  acquired) to any Person,  or acquire all or substantially all of
     the assets or the business of any Person, and the Borrower shall not permit
     any  Subsidiary to do so, except that (1) any  Subsidiary may merge into or
     transfer  assets to the Borrower,  and (2) any Subsidiary may merge into or
     consolidate with or transfer assets to any other Subsidiary.

     (d)  Leases.  Create,  incur,  assume,  or suffer to exist,  or permit  any
     Subsidiary  to create,  incur,  assume,  or suffer to exist,  any  material
     obligation  as  lessee  for the  rental  or hire  of any  real or  personal
     property,  except:  (i) Capital Leases  created  pursuant to existing lease
     financing  agreements disclosed on Schedule 5.1(o); (ii) leases existing on
     the date of this  Agreement  and any  extensions or renewals  thereof;  and
     (iii)  leases  between  the  Borrower  and any  Subsidiary  or between  any
     Subsidiaries.

     (e) Sale and Leaseback.  Sell, transfer, or otherwise dispose of, or permit
     any  Subsidiary  to sell,  transfer,  or otherwise  dispose of, any real or
     personal property to any Person and thereafter directly or indirectly lease
     back the same or similar property.

     (f) Dividends.  Declare or pay any dividends; or purchase,  redeem, retire,
     or  otherwise  acquire for value any of its capital  stock now or hereafter
     outstanding; or make any distribution of assets to its stockholders as such
     whether in cash,  assets,  or obligations  of the Borrower;  or allocate or
     otherwise set apart any sum for the payment of any dividend or distribution

                                      -54-

<PAGE>

     on, or for the  purchase,  redemption,  or  retirement of any shares of its
     capital stock;  or make any other  distribution  by reduction of capital or
     otherwise in respect of any shares of its capital  stock;  or permit any of
     its  Subsidiaries  to do any of the  foregoing  or to purchase or otherwise
     acquire for value any stock of the Borrower or another Subsidiary.

     (g) Sale of Assets. Sell, lease, assign, transfer, or otherwise dispose of,
     or permit any Subsidiary to sell,  lease,  assign,  transfer,  or otherwise
     dispose of, any of its now owned or hereafter  acquired assets  (including,
     without  limitation,  shares of stock  and  indebtedness  of  Subsidiaries,
     receivables, and leasehold interests), except: (1) inventory disposed of in
     the  ordinary  course of  business;  (2) the sale or other  disposition  of
     assets no longer  used or useful in the  conduct of its  business;  and (3)
     that any  Subsidiary may sell,  lease,  assign,  or otherwise  transfer its
     assets to the Borrower.

     (h)  Investments.  (i) Make, or permit any  Subsidiary to make, any loan or
     advance to any Person, or (ii) purchase or otherwise acquire, or permit any
     Subsidiary to purchase or otherwise  acquire,  any capital  stock,  assets,
     obligations,  or other securities of, make any capital  contribution to, or
     otherwise  invest in or acquire any interest in any Person,  or participate
     as a partner or joint  venturer with any other Person,  except:  (1) direct
     obligations of the U.S. or any agency  thereof with  maturities of one year
     or less from the date of  acquisition;  (2) commercial  paper of a domestic
     issuer  rated at least "A-1" by Standard & Poor's  Corporation  or "P-1" by
     Moody's  Investors   Service,   Inc.;  (3)  certificates  of  deposit  with
     maturities of one year or less from the date of  acquisition  issued by any
     commercial bank having capital and surplus in excess of One Hundred Million
     U.S. Dollars (US$100,000,000);  and (4) stock,  obligations,  or securities
     received  in  settlement  of  debts  (created  in the  ordinary  course  of
     business) owing to the Borrower or any Subsidiary.

     (i) Guaranties,  Etc. Assume, guaranty,  endorse, or otherwise be or become
     directly or contingently responsible or liable, or permit any Subsidiary to
     assume,   guaranty,   endorse,  or  otherwise  be  or  become  directly  or
     contingently  responsible  or liable  (including,  but not  limited  to, an
     agreement to purchase any obligation, stock, assets, goods, or services, or
     to supply or advance any funds, assets, goods, or services, or an agreement
     to maintain or cause such Person to maintain a minimum  working  capital or
     net worth,  or  otherwise  to assure the  creditors  of any Person  against
     loss), for obligations of any Person,  except  guaranties by endorsement of
     negotiable instruments for deposit or collection or similar transactions in
     the ordinary course of business.

     (j) Transactions  With Affiliates.  Enter into any transaction,  including,
     without  limitation,  the  purchase,  sale,  or exchange of property or the
     rendering of any service,  with any Affiliate,  or permit any Subsidiary to
     enter into any transaction,  including,  without limitation,  the purchase,
     sale,  or exchange of property or the  rendering of any  service,  with any
     Affiliate, except in  the ordinary course of and pursuant to the reasonable

                                                                            -55-

<PAGE>

     requirements of the Borrower's or such Subsidiary's  business and upon fair
     and reasonable  terms no less favorable to the Borrower or such  Subsidiary
     than would obtain in a comparable  arm's-length  transaction  with a Person
     not an Affiliate.

     (k) Capital  Expenditures.  Purchase or  otherwise  acquire,  or permit any
     Subsidiary to purchase or otherwise  acquire,  any material capital assets,
     without the Agent's prior written consent.

ss.8.  Financial Covenants

     8.1.  So long as the Note shall  remain  unpaid or the Agent shall have any
Commitment under this Agreement, the Borrower shall not, nor shall it permit any
Subsidiary to, increase the amount of any  borrowings,  or obtain any additional
advances on any existing lines of credit in excess of their currently contracted
limits, except for Loans under this Agreement, without the Agent's prior written
consent.

ss.9.  Events of Default

     9.1. Events of Default. If any of the following events shall occur:

     (a) The  Borrower  should fail to pay the  principal  of or interest on any
     Note as and when due and  payable,  or any  amount  of any  other fee by or
     within 10 days after the date that it is due and payable;

     (b) Any  representation  or warranty made or deemed made by the Borrower in
     this  Agreement  or any other Loan  Document,  or which is contained in any
     certificate,  document,  opinion, or financial or other statement furnished
     at any time under or in connection  with any Loan Document,  shall prove to
     have been incorrect,  incomplete,  or misleading in any material respect on
     or as of the date made or deemed made;

     (c) The Borrower  shall fail to perform or observe any term,  covenant,  or
     agreement contained in this Agreement to be performed or observed by it ;

     (d) The Borrower or any Subsidiary  shall (i) fail to pay any  indebtedness
     for  borrowed  money  (other  than  the  Note)  of  the  Borrower  or  such
     Subsidiary,  as the case may be, or any interest or premium  thereon,  when
     due  (whether by scheduled  maturity,  required  prepayment,  acceleration,
     demand,  or  otherwise),  or (ii) fail to perform or observe  any  material
     term, covenant,  or condition on its part to be performed or observed under
     any  agreement  or  instrument  relating  to any  such  indebtedness,  when
     required to be  performed  or  observed,  if the effect of such  failure to
     perform or  observe  is  to  accelerate, or  to permit the acceleration of,

                                                                            -56-

<PAGE>

     after the giving of notice or passage of time,  or both,  the  maturity  of
     such indebtedness,  whether or not such failure to perform or observe shall
     be waived  by the  holder of such  indebtedness;  or any such  indebtedness
     shall be declared to be due and payable,  or required to be prepaid  (other
     than by a regularly  scheduled  required  prepayment),  prior to the stated
     maturity thereof;

     (e) The Borrower or any Subsidiary (i) shall generally not pay, or shall be
     unable to pay, or shall admit in writing its  inability to pay its debts as
     such debts become due; or (ii) shall make an assignment  for the benefit of
     creditors,  or petition or apply to any tribunal for the  appointment  of a
     custodian, receiver, or trustee for it or a substantial part of its assets;
     or  (iii)   shall   commence   any   proceeding   under   any   bankruptcy,
     reorganization,   arrangement,   readjustment  of  debt,  dissolution,   or
     liquidation law or statute of any jurisdiction, whether now or hereafter in
     effect;  or (iv) shall have had any such petition or  application  filed or
     any such  proceeding  commenced  against it in which an order for relief is
     entered  or an  adjudication  or  appointment  is made,  and which  remains
     undismissed for a period of thirty (30) days or more; or (v) shall take any
     corporate action indicating its consent to, approval of, or acquiescence in
     any such  petition,  application,  proceeding,  or order for  relief or the
     appointment of a custodian, receiver, or trustee for all or any substantial
     part of its  properties;  or (vi)  shall  suffer  any  such  custodianship,
     receivership,  or  trusteeship  to  continue  undischarged  for a period of
     thirty (30) days or more;

     (f) One or more  judgments,  decrees,  or orders  for the  payment of money
     shall  be  rendered  against  the  Borrower  or  any  Subsidiary  and  such
     judgments,  decrees, or orders shall continue unsatisfied and in effect for
     a period of thirty (30) consecutive days without being vacated, discharged,
     satisfied, or stayed or bonded pending appeal;

     (g) The  Security  Agreement  shall at any time  after  its  execution  and
     delivery  and for any  reason  cease (a) to  create a valid  and  perfected
     security  interest in and to the  property  purported to be subject to such
     Security  Agreement,  and in the priority  disclosed on Schedule 5.1(o); or
     (b) to be in full force and effect or shall be declared  null and void,  or
     the validity or enforceability  thereof shall be contested by the Borrower,
     or the Borrower shall deny it has any further liability or obligation under
     the Security  Agreement,  or the Borrower  shall fail to perform any of its
     material obligations under the Security Agreement;

     (h) Any of the  following  events  shall occur or exist with respect to the
     Borrower or any Commonly  Controlled  Entity under  ERISA:  any  Reportable
     Event shall occur;  complete or partial  withdrawal from any  Multiemployer
     Plan shall take place; any Prohibited  Transaction shall occur; a notice of
     intent to terminate a Plan shall be filed,  or a Plan shall be  terminated;
     or circumstances shall exist which constitute grounds entitling the PBGC to
     institute proceedings to terminate a Plan,

                                      -57-

<PAGE>

     or the PBGC shall institute such proceedings;  and in each case above, such
     event or condition,  together with all other events or conditions,  if any,
     could subject the Borrower to any tax, penalty, or other liability which in
     the aggregate may exceed Ten Thousand Dollars ($10,000); or

     (i) If the Agent  receives its first notice of a hazardous  discharge or an
     environmental  complaint  regarding  the  Borrower or a  Subsidiary  from a
     source  other  than the  Borrower,  and the Agent does not  receive  notice
     (which may be given in oral form,  provided  same is followed  with all due
     dispatch  by  written  notice  given  by  Certified  Mail,  Return  Receipt
     Requested) of such hazardous discharge or environmental  complaint from the
     Borrower within twenty-four (24) hours of the time the Agent first receives
     said  notice  from a source  other than the  Borrower;  or if any  federal,
     state,  or local  agency  asserts  or creates a Lien upon any or all of the
     assets,  equipment,  property,  leaseholds,  or  other  facilities  of  the
     Borrower  or a  Subsidiary  by  reason  of the  occurrence  of a  hazardous
     discharge or an environmental complaint; or if any federal, state, or local
     agency  asserts  a  claim  against  the  Borrower,  a  Subsidiary,  or  its
     respective assets, equipment, property, leaseholds, or other facilities for
     damages  or  cleanup  costs  relating  to  a  hazardous   discharge  or  an
     environmental  complaint;  provided,  however,  that such  claim  shall not
     constitute a default if,  within five (5) Business  Days of the  occurrence
     giving  rise to the  claim,  (i) the  Borrower  can  prove  to the  Agent's
     satisfaction  that the Borrower has commenced  and is  diligently  pursuing
     either:  (a) a cure or correction of the event which  constitutes the basis
     for the claim,  and continues  diligently to pursue such cure or correction
     to completion or (b) proceedings for an injunction, a restraining order, or
     other  appropriate  emergent relief preventing such agency or agencies from
     asserting such claim, which relief is granted within ten (10) Business Days
     of the occurrence  giving rise to the claim and the  injunction,  order, or
     emergent relief is not thereafter  resolved or reversed on appeal; and (ii)
     in either of the foregoing  events,  the Borrower has posted a bond, letter
     of credit, or other security satisfactory in form, substance, and amount to
     both the Agent and the agency or entity  asserting  the claim to secure the
     proper and complete cure or correction of the event which  constitutes  the
     basis for the claim;

     (j) A change of Control of the Borrower or any Subsidiary occurs, including
     without limitation any Person shall acquire securities  representing 25% or
     more of the voting securities of the Borrower;

then,  and in any such  event,  the Agent may,  by notice to the  Borrower,  (i)
declare its obligation to make Loans to be terminated,  whereupon the same shall
forthwith  terminate,  and (ii) declare the Notes, all interest thereon, and all
other  amounts  payable  under this  Agreement to be forthwith  due and payable,
whereupon the Notes, all such interest, and all such amounts shall become and be
forthwith due and payable,  without  presentment,  demand,  protest,  or further
notice of any kind, all of which are hereby  expressly  waived by the Parent and
the Borrower.

                                      -58-

<PAGE>

     9.2.  Agent's  Right  to  Setoff.   Upon  the  occurrence  and  during  the
continuance of any Event of Default,  the Agent is hereby authorized at any time
and from time to time,  without  notice to the  Borrower  (any such notice being
expressly  waived by the  Borrower),  to set off and  apply  any and all  funds,
deposits and accounts at any time held and other  indebtedness at any time owing
by the Agent to or for the credit or the account of the Borrower against any and
all of the  obligations  of the Borrower now or  hereafter  existing  under this
Agreement or the Note or any other Loan Document, irrespective of whether or not
the Agent shall have made any demand  under this  Agreement  or the Note or such
other Loan Document and although such  obligations  may be unmatured.  The Agent
agrees  promptly to notify the Borrower  after any such setoff and  application,
provided  that the failure to give such notice  shall not affect the validity of
such setoff and application.  The rights of the Agent under this Section 9.2 are
in addition to other rights and remedies (including,  without limitation,  other
rights of setoff) which the Agent may have.

ss.10.  Miscellaneous.

     10.1. Amendments, Etc. No amendment,  modification,  termination, or waiver
of any  provision  of any Loan  Document to which the  Borrower is a party,  nor
consent to any departure by the Borrower from any Loan Document to which it is a
party,  shall in any event be effective  unless the same shall be in writing and
signed by the Agent,  and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.

     10.2.  Notices,  Etc. All notices given under this  Agreement and under the
other Loan Documents shall be in writing,  addressed to the parties as set forth
below, and shall be effective on the earliest of (i) the date received,  or (ii)
if given by facsimile  transmittal on the date given if transmitted  before 5:00
p.m. the recipient's  time,  otherwise it is effective the next day, or (iii) on
the second business day after delivery to a major  international air delivery or
air courier service (such as Federal Express or Network Couriers):

If to the Agent:
            Thomson Kernaghan & Co. Ltd.
            365 Bay Street
            Toronto, Ontario M5H 2V2
            Attention: Mark E. Valentine, Chairman
            Facsimile No. (416)  367-8055

With a copy (that does not constitute notice) to:
            John M. Mann
            Attorney at Law
            1330 Post Oak Boulevard, Suite 2800
            Houston, Texas 77056-3060
            Facsimile No. (713) 622-7185

If to the Borrower:
            Surgical Safety Products, Inc.
            2018 Oak Terrace
            Sarasota, Florida 34231
            Attention: Frank M. Clark, President
            Facsimile No. (941) 925-0510

With a copy (that does not constitute notice) to:
            Mintmire & Associates
            265 Sunrise Avenue, Suite 204
            Palm Beach, FL  33480
            Attn:  Donald F. Mintmire, Esq.
            Facsimile No. (561) 659-5371

                                      -59-

<PAGE>

     10.3. No Waiver. No failure or delay on the part of the Agent in exercising
any right,  power, or remedy  hereunder  shall operate as a waiver thereof;  nor
shall  any  single or  partial  exercise  of any such  right,  power,  or remedy
preclude  any other or further  exercise  thereof or the  exercise  of any other
right,  power, or remedy hereunder.  The rights and remedies provided herein are
cumulative,  and are not exclusive of any other rights, powers,  privileges,  or
remedies, now or hereafter existing, at law or in equity or otherwise.

     10.4.  Successors  and Assigns.  This  Agreement  shall be binding upon and
inure to the  benefit  of the  Borrower  and the  Agent,  and  their  respective
successors and assigns,  except that the Borrower may not assign or transfer any
of its rights under any Loan  Document to which the Borrower is a party  without
the prior written consent of the Agent.

     10.5 Costs,  Expenses,  and Taxes. The Borrower agrees to pay on demand all
costs and expenses  incurred by the Agent in  connection  with the  preparation,
execution,  delivery,  filing, and administration of the Loan Documents,  and of
any amendment,  modification,  or supplement to the Loan  Documents,  including,
without limitation, the fees and out-of-pocket expenses of counsel for the Agent
incurred  in   connection   with  advising  the  Agent  as  to  its  rights  and
responsibilities  hereunder.  The Borrower also agrees to pay all such costs and
expenses,  including court costs, incurred in connection with enforcement of the
Loan Documents, or any amendment,  modification,  or supplement thereto, whether
by negotiation, legal proceedings, or otherwise. In addition, the Borrower shall
pay any and all stamp  and other  taxes and fees  payable  or  determined  to be
payable in connection with the execution, delivery, filing, and recording of any
of the Loan  Documents  and the other  documents to be delivered  under any such
Loan  Documents,  and agree to hold the Agent  harmless from and against any and
all  liabilities  with  respect  to or  resulting  from any  delay in  paying or
omission to pay such taxes and fees. This provision shall survive termination of
this Agreement.

     10.6. Integration. This Agreement and the Loan Documents contain the entire
agreement  between  the  parties  relating  to the  subject  matter  hereof  and
supersede all oral statements and prior writings with respect thereto.

     10.7. Indemnity.  The Borrower shall defend, protect,  indemnify,  and hold
harmless  the  Agent  and each  Lender,  and all of their  respective  officers,
directors,  employees, and agents (including, without limitation, those retained
in  connection   with  the   transactions   contemplated   by  this   Agreement)
(collectively,  the "Indemnitees") from and against any and all actions,  causes
of action,  suits, claims,  losses, costs,  penalties,  fees,  liabilities,  and
damages, and expenses in connection therewith  (irrespective of whether any such
Indemnitee  is a party to the  action  for which  indemnification  hereunder  is
sought),  and  including  reasonable  attorneys'  fees  and  disbursements  (the
"Indemnified  Liabilities"),  incurred  by the  Indemnitees  or any of them as a
result of, or arising out of, or relating to (a) any misrepresentation or breach
of any  representation or warranty made by the Borrower in this Agreement or any
other  Loan  Document,  or  any  other  certificate,   instrument,  or  document
contemplated hereby or thereby; or (b) any breach of any covenant, agreement, or
obligation  of the  Borrower  contained  in this  Agreement  or any  other  Loan
Document; or (c) the activities of the Borrower or any Subsidiary, each of their
respective  predecessors  in interest or third  parties with whom they or any of
them have or had a contractual  relationship,  or arising directly or indirectly

                                      -60-

<PAGE>

from the  violation  of any  environmental  protection,  health,  or safety law,
whether such claims are asserted by any governmental agency or any other person;
or (d) any  cause  of  action,  suit,  or claim  brought  or made  against  such
Indemnitee  and  arising  out of or  resulting  from  the  execution,  delivery,
performance, or enforcement of this Agreement or any Loan Document, or any other
instrument, document, or agreement executed pursuant hereto or thereto by any of
the Indemnities, any transaction financed or to be financed in whole or in part,
directly or  indirectly,  with the proceeds of the Loans or from the exercise of
the  Warrants,  or the status of the Agent or any Lender or holder of any of the
Notes, Warrants, Conversion Shares or Warrant Shares, or as a stockholder in the
Borrower.  To the extent that the foregoing  undertaking  by the Borrower may be
unenforceable for any reason,  the Borrower shall make the maximum  contribution
to the payment and satisfaction of each of the Indemnified  Liabilities which is
permissible  under  applicable law. This indemnity shall survive  termination of
this Agreement.

     10.8.  Governing Law. This Agreement and the Note shall be governed by, and
construed  in  accordance  with,  the laws of the  Province of Ontario,  Canada;
provided,  however,  if any provision of this Agreement is  unenforceable  under
Ontario law,  but is  enforceable  under the laws of the U.S.  State of Florida,
then  Florida  law  shall  govern  the  construction  and  enforcement  of  that
provision.

     10.9. Severability of Provisions.  Any provision of any Loan Document which
is  prohibited  or  unenforceable  in  any  jurisdiction   (after  applying  the
provisions of paragraph 10.8 of this Agreement to that  provision)  shall, as to
such  jurisdiction,  be  ineffective  to  the  extent  of  such  prohibition  or
unenforceability  without  invalidating  the  remaining  provisions of such Loan
Document or affecting the validity or  enforceability  of such  provision in any
other jurisdiction.

     10.10  Headings.  Section and paragraph  headings in the Loan Documents are
included for the  convenience  of reference only and shall not constitute a part
of the applicable Loan Documents for any other purpose.

     10.11.  Dispute  Resolution.  Any  controversy  or claim  arising out of or
relating to this  Agreement  (whether in contract or tort, or both, or at law or
in equity) shall be determined by binding  arbitration  at Toronto,  Canada,  in
accordance with the commercial arbitration rules of the International Chamber of
Commerce.  The prevailing  party in any arbitration  proceeding shall be awarded
reasonable  attorneys fees and costs of the proceeding.  The  arbitration  award
shall be final, and may be entered in any court having jurisdiction.  Nothing in
this  paragraph  shall  preclude  either  party  from  applying  to a court  for
temporary  equitable  relief,  when  appropriate,  pending  and  subject to such
temporary  orders and permanent award as the arbitrator or arbitrators may make.
The parties agree that the courts of the Province of Ontario, Canada, shall have
exclusive  jurisdiction  and venue  for the  adjudication  of any  civil  action
between them arising out of relating to this Agreement,  and hereby  irrevocably
consent to such jurisdiction and venue.

     10.12.  Agent's Fee. The Borrower shall pay Thomson  Kernaghan & Co. Ltd. a
fee for their  services as Agent (the  "Agent's  Fee") in an amount equal to ten
percent (10%) of the aggregate  principal amount of all Loans,  payable pro rata
upon the disbursement of each Loan.

                                      -61-

<PAGE>

             IN WITNESS  WHEREOF,  the parties have caused this  Agreement to be
executed by their  respective  officers  thereunto  duly  authorized,  as of the
Effective Date.

The Agent:

THOMSON KERNAGHAN & CO. LTD.

By _________________________________
Name _______________________________
Title ________________________________
Date signed __________________________
The Borrower:

SURGICAL SAFETY PRODUCTS, INC.

By _________________________________
Name _______________________________
Title ________________________________
Date signed __________________________

                                      -62-

<PAGE>

                                      NOTE

US$............[amount of Loan]     Toronto, Ontario     ........  ...., .......

FOR VALUE RECEIVED,  on demand,  and if no demand then on November 30, 2002, the
undersigned,  SURGICAL SAFETY PRODUCTS, INC., (the "Borrower"), a New York (USA)
corporation,  whose address is 2018 Oak Terrace,  Sarasota,  Florida 34231, USA,
hereby  promises  to pay to the order of  THOMSON  KERNAGHAN  & CO.  LTD.,  (the
"Agent"),  at the Agent's  office at 365 Bay Street,  Toronto,  Ontario M5H 2V2,
Canada,  in lawful  currency of the United States of America and in  immediately
available  funds,  the principal sum of  .................  DOLLARS AND NO CENTS
(US$...............)  together with interest on the unpaid  principal  amount of
this Note at the rate of EIGHT PERCENT (8%) per year, from the date of this Note
until paid.

This Note is one of the Notes  referred to in, and is  entitled to the  benefits
of, the Loan Agreement,  dated as of December 20, 1999, between the Borrower and
the Agent (the "Loan  Agreement").  Terms used  herein  which are defined in the
Loan  Agreement  shall have their defined  meanings  when used herein.  The Loan
Agreement,  among other things,  contains  provisions  for  acceleration  of the
maturity of this Note upon the  happening of certain  stated events and also for
prepayments  on account of  principal  hereof prior to the maturity of this Note
upon the terms and  conditions  specified  in the Loan  Agreement.  This Note is
secured by a Security Agreement  referred to in the Loan Agreement,  executed by
the  Borrower,  reference  to which is  hereby  made  for a  description  of the
collateral  provided  for under the  Security  Agreement,  and the rights of the
parties with respect thereto.

This Note shall be  governed by the laws of the  Province  of  Ontario,  Canada;
provided,  however,  if any provision of this Agreement is  unenforceable  under
Ontario law,  but is  enforceable  under the laws of the U.S.  State of Florida,
then Florida shall govern the construction and enforcement of that provision.

The Agent or other holder of this Note is entitled, at its option, to convert at
any time and from time to time,  all or any part of the principal  amount of the
Note,  plus  accrued  interest,  into  shares (the  "Conversion  Shares") of the
Borrower's  common  stock,  $0.001 par value  ("Common  Stock").  No fraction of
shares or scrip  representing  fractions of shares will be issued on conversion,
but the number of shares  issuable  shall be rounded to the nearest whole share.
To convert this Note,  this Note must be surrendered at the principal  executive
office of the Escrow Agent pursuant to an Escrow  Agreement  between the Company
and Thomson  Kernaghan & Co.  Ltd.,  dated  December 20,  1999,  accompanied  by
written  notice of  conversion  substantially  in the form of  Exhibit A to this
Note, with appropriate  insertions.  The date upon which the conversion shall be
effective  (the  "Conversion  Date") shall be deemed to be the date on which the
Agent or other holder has delivered this Note,  with the conversion  notice duly
executed to Escrow Holder,  or if earlier,  the date set forth in such notice of
conversion  if the Note and such  conversion  notice is  received  by the Escrow
Holder within three (3) business days therefrom.  The Escrow Holder will deliver
certificates  representing the Conversion  Shares within three (3) business days

                                      -63-

<PAGE>

following  receipt  of the Note and  conversion  notice.  The price per share of
Common Stock into which this Note is convertible (the "Conversion  Price") shall
be the higher of (i) US$0.375, or (ii) the lower of (x) $0.8203125 or (y) 75% of
the closing bid price of the Borrower's  Common Stock quoted on the OTC Bulletin
Board on the Conversion  Date;  i.e., in no event shall the Conversion  Price be
less that US$0.375 per share of Common Stock.

The Borrower is obligated to register the issuance and resale of the  Conversion
Shares under the  Securities  Act of 1933, as amended,  pursuant to the terms of
the Registration Rights Agreement between the Borrower and the Agent referred to
in the Loan Agreement.

Any  controversy  or claim  arising out of or relating to this Note  (whether in
contract  or tort,  or both,  or at law or in  equity)  shall be  determined  by
binding  arbitration  at Toronto,  Canada,  in  accordance  with the  commercial
arbitration rules of the International Chamber of Commerce. The prevailing party
in any arbitration  proceeding  shall be awarded  reasonable  attorneys fees and
costs of the  proceeding.  The  arbitration  award  shall be  final,  and may be
entered  in any court  having  jurisdiction.  Nothing  in this  paragraph  shall
preclude either party from applying to a court for temporary  equitable  relief,
when  appropriate,  pending and subject to such  temporary  orders and permanent
award as the arbitrator or  arbitrators  may make. The parties hereby consent to
the  exclusive  jurisdiction  of the courts of the  Province of Ontario for that
purpose.

SURGICAL SAFETY PRODUCTS, INC.

By _________________________________
Name _______________________________
Title ________________________________
Date signed __________________________

                                      -64-

<PAGE>

                                   EXHIBIT "A"

                              NOTICE OF CONVERSION
           (To be executed by the Holder in order to Convert the Note)

TO SURGICAL SAFETY PRODUCTS, INC.
C/O THOMSON KERNAGHAN & CO. LIMITED

      The undersigned hereby irrevocably elects to convert  $________________ of
the  principal  amount of the above Note into Shares of Common Stock of Surgical
Safety  Products,  Inc.  according to the conditions  stated therein,  as of the
Conversion Date written below.

Conversion Date

Applicable Conversion Price

Signature
Name __________________________________________________________

Address:

                                      -65-

<PAGE>

                               SECURITY AGREEMENT

      This SECURITY AGREEMENT, PLEDGE AND ASSIGNMENT (this ASecurity Agreement@)
dated and effective as of December 9, 1998, is made by Surgical Safety Products,
Inc.  (the  ABorrower@),  a New York  corporation,  as the  debtor,  to  Thomson
Kernaghan & Co. Ltd. (the AAgent@), as the secured party, in connection with the
Loan Agreement (as hereinafter defined).

            PRELIMINARY STATEMENTS:

            (1) The  Borrower  and the Agent have made and  entered  into a Loan
Agreement  (as  it  now  exists  or  subsequently  may be  modified,  the  ALoan
Agreement@)  effective  as of  December  __,  1999.  The  Borrower  will  derive
substantial  direct and indirect benefit from the  transactions  contemplated by
the Loan Agreement.

            (2) It is a condition  precedent to the making of Loans by the Agent
under the Loan  Agreement  that the  Borrower  shall  have made the  pledge  and
granted the  assignment  and security  interest  contemplated  by this  Security
Agreement.

            (3) All  capitalized  terms used but not  defined  in this  Security
Agreement shall have the meanings ascribed to them in the Loan Agreement.

            NOW,  THEREFORE,  in  consideration  of the premises and in order to
induce the Agent to make Loans under the Loan  Agreement,  the  Borrower  hereby
agrees with the Agent as follows:

            Section 1.01. Pledge, Assignment and Grant of Security. The Borrower
hereby  assigns  and  pledges  to the Agent,  and  hereby  grants to the Agent a
security interest in all of the Borrower=s  right,  title and interest in and to
the following, whether now owned or hereafter acquired (the ACollateral@):

            (1)  All  equipment  in all  its  forms,  wherever  located,  now or
hereafter  existing,  all  fixtures  and all parts  thereof  and all  accessions
thereto (any and all such equipment,  fixtures,  parts, and accessions being the
AEquipment@);

            (2) All  inventory  in all of its forms,  wherever  located,  now or
hereafter  existing and raw  materials  and work in process  therefor,  finished
goods thereof,  and materials used or consumed in the  manufacture or production
thereof;  (b) goods in which the  Borrower has an interest in mass or a joint or
other interest or right of any kind  (including,  without  limitation,  goods in
which the Borrower has an interest or right as  consignee);  and (c) goods which
are returned to or repossessed by the Borrower),  and all accessions thereto and
products thereof and documents therefor (any and all such inventory, accessions,
products, and documents being the AInventory@); and

            (3) All accounts,  contract  rights,  chattel paper and instruments,
now or hereafter  existing,  whether or not arising out of or in connection with
the sale or lease of goods or the  rendering  of sevices,  and all rights now or

                                      -66-

<PAGE>

hereafter  existing  in  and to  all  security  agreements,  leases,  and  other
contracts securing or otherwise relating to any such accounts,  contract rights,
chattel  paper and  instruments  (any and all such  accounts,  contract  rights,
chattel paper and  instruments,  being the  AReceivables,@  and any and all such
leases, security agreements, and other contracts being the ARelated Contracts@);

            (4)  All  proceeds  of  any  and  all of  the  foregoing  Collateral
(including, without limitation,  proceeds which constitute property of the types
described in clauses (1) through (4) of this Section  1.01),  and, to the extent
not otherwise  included,  all (a) payments under  insurance  (whether or not the
Agent is the loss payee  thereof),  or any  indemnity,  warranty,  or  guaranty,
payable by reason of loss or damage to or  otherwise  with respect to any of the
foregoing Collateral, and (b) cash.

            Section 2.01.  Security for  Obligations.  This  Security  Agreement
secures  the  payment  for all  obligations  of the  Borrower  now or  hereafter
existing  under  the Loan  Agreement,  the  Notes  and the  Registration  Rights
Agreement,  whether for principal,  interest,  fees, expenses, or otherwise, and
all  obligations  of the Borrower now or hereafter  existing under this Security
Agreement (collectively, the AObligations@).  Without limiting the generality of
the foregoing,  this Security Agreement secures the payment of all amounts which
constitute  part of the  Obligations  and would be owed by the  Borrower  to the
Agent  under  any of  the  Loan  Documents  but  for  the  fact  that  they  are
unenforceable   or  not  allowable   owing  to  the  existence  of   bankruptcy,
reorganization, or similar proceedings involving the Borrower.

            Section  3.01.  Borrower  Remains  Liable.  Anything  herein  to the
contrary  notwithstanding,  (1) the  Borrower  shall  remain  liable  under  the
contracts  and  agreements  included in the  collateral  to the extent set forth
therein to perform  all of its duties  and  obligations  thereunder  to the same
extent as if this Security Agreement had not been excluded;  (2) the exercise by
the Agent of any rights hereunder shall not release the Borrower from any of its
duties or  obligations  under  the  contracts  and  agreements  included  in the
Collateral;  and (3) the Agent shall not have any obligation or liability  under
the  contracts  and  agreements  included  in the  Collateral  by reason of this
Security  Agreement,  nor shall the Agent be  obligated  to  perform  any of the
obligations  or  duties  of the  Borrower  thereunder  or to take any  action to
collect or enforce any claim for payment assigned hereunder.

           Section 4.01. Representations and Warranties. The Borrower represents
and warrants as follows:

            (1) All of the  Equipment  and  Inventory  are located at the places
specified in Schedule I hereto.  The chief place of business and chief executive
office of the  Borrower  and the office  where the  Borrower  keeps its  records
concerning the Receivables, and the originals of all chattel paper that evidence
Receivables,  and the original copies of the Assigned Agreements, are located at
its address  specified in Section 17.01. None of the Receivables is evidenced by
a promissory note or other instrument.

            (2) The Borrower is the legal and beneficial owner of the Collateral
free and clear of any Lien except for (i) the security  interest created by this
Security Agreement, and (ii) the security interests described in Schedule II. No
effective  financing  statement or other document similar in effect covering all
or any part of the  Collateral  is on file in any recording  office,  except (i)
such as may have been  filed in favor of the  Agent  relating  to this  Security
Agreement,  and (ii) the  financing  statements  described  in Schedule  II. The
Borrower has no trade names except as set forth on Schedule III.

                                      -67-

<PAGE>

            (3) Except as provided on Schedule  I, the  Borrower  has  exclusive
possession and control of the Equipment and Inventory.

            (4)  Except as set forth on  Schedule  I,  this  Security  Agreement
creates  a  valid  and  perfected  first  priority   security  interest  in  the
Collateral,  securing the payment of the Obligations,  and all filings and other
actions  necessary or desirable  to perfect and protect such  security  interest
have been duly taken.

            (5)  The  Borrower  is  a  corporation  duly  incorporated,  validly
existing,  and in  good  standing  under  the  laws of the  jurisdiction  of its
incorporation;  has the  corporate  power and authority to own its assets and to
transact its business, and is duly qualified and in good standing under the laws
of each jurisdiction in which qualification is required.

            (6) The execution and  performance  by the Borrower of this Security
Agreement have been duly authorized by all necessary corporate action and do not
and will not (a) require any consent or approval of the Borrower=s stockholders;
(b) contravene the  Borrower=s  charter or bylaws;  (c) violate any provision of
any law,  rule,  or  regulation;  or (d) result in a breach of or  constitute  a
default  under any indenture or loan or Loan  Agreement or any other  agreement,
lease,  or  instrument  to which the  Borrower  is a party or by which it or its
properties may be bound or affected.

            (7)  This  Security  Agreement  is the  legal,  valid,  and  binding
obligation of the Borrower, enforceable in accordance with its respective terms,
except  to the  extent  that  such  enforcement  may be  limited  by  applicable
bankruptcy,  insolvency,  and other  similar laws  affecting  creditors=  rights
generally.

            (8) No consent of any other  person or entity and no  authorization,
approval,  or other action by, and no notice to or filing with, any governmental
authority or  regulatory  body is required (a) for the pledge by the Borrower of
the Security Collateral  pursuant to this Security  Agreement,  for the grant by
the Borrower of the assignment and security  interest  granted hereby or for the
execution,  delivery, or performance of this Security Agreement by the Borrower;
(b) for the perfection or maintenance  of the pledge,  assignment,  and security
interest  created hereby  (including  the first priority  nature of such pledge,
assignment,  and security interest); or (c) for the exercise by the Agent of the
voting or other rights  provided for in this Security  Agreement or the remedies
in respect of the Collateral  pursuant to this Security Agreement (except as may
be required in connection  with the  disposition  of any portion of the Security
Collateral by laws affecting the offering and sale of securities generally).

            (9) The  Inventory  has been  produced by the Borrower in compliance
with all requirements of the Fair Labor Standards Act.

            (10) There are no conditions  precedent to the effectiveness of this
Security Agreement that have not been satisfied or waived.

            (11) The  Borrower  has, independently and without reliance upon the
Agent and based on such documents and information as it has deemed  appropriate,
made its own credit analysis and decision to enter into this Security Agreement.

                                      -68-

<PAGE>

            Section 5.01. Further Assurances.

            (1) The  Borrower  agrees that from time to time,  at the expense of
the  Borrower,  the  Borrower  will  promptly  execute  and  deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable,  or that the Agent may  reasonably  request,  in order to perfect and
protect any pledge,  assignment or security  interest granted or purported to be
granted  hereby or to enable the Agent to  exercise  and  enforce its rights and
remedies  hereunder  with  respect  to  any  Collateral.  Without  limiting  the
generality of the  foregoing,  the Borrower will execute and file such financing
or continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Agent may request, in order
to perfect and preserve the pledge, assignment, and security interest granted or
purported to be granted hereby.

            (2) The  Borrower  hereby  authorizes  the Agent to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Collateral without the signature of the Borrower where permitted
by law. A photocopy  or other  reproduction  of this  Security  Agreement or any
financing  statement  covering  the  Collateral  or any  part  thereof  shall be
sufficient as a financing statement where permitted by law.

            (3)  The  Borrower  will  furnish  to the  Agent  from  time to time
statements and schedules  further  identifying and describing the Collateral and
such other reports in connection with the Collateral as the Agent may reasonably
request, all in reasonable detail.

            Section 6.01. As to Equipment and Inventory.

            (1) The Borrower shall keep the Equipment and Inventory  (other than
Inventory  sold in the  ordinary  course of  business)  at the  places  therefor
specified  in Section  4.01(1)  or, upon 10 days=  prior  written  notice to the
Agent,  at such other  places in a  jurisdiction  where all action  required  by
Section 5.01 shall have been taken with respect to the Equipment and Inventory.

            (2) The  Borrower  shall cause the  Equipment to be  maintained  and
preserved in the same condition, repair, and working order as when new, ordinary
wear and tear excepted,  and in accordance with any  manufacturer=s  manual, and
shall forthwith, or in the case of any loss or damage to any of the Equipment as
quickly as practicable  after the occurrence  thereof,  make or cause to be made
all repairs,  replacements, and other improvements in connection therewith which
are necessary or desirable to such end. The Borrower shall  promptly  furnish to
the Agent a statement respecting any loss or damage to any of the Equipment.

            (3) The Borrower  shall pay promptly when due all property and other
taxes,  assessments,  and  governmental  charges or levies imposed upon, and all
claims  (including  claims for labor,  materials,  and  supplies)  against,  the
Equipment and Inventory.  In producing the Inventory,  the Borrower shall comply
with all requirements of the Fair Labor Standards Act.

                                      -69-

<PAGE>

            Section 7.01. Insurance.

            (1) the Borrower shall, at  its own expense, maintain insurance with
respect to the Equipment and Inventory in such amounts,  against such risks,  in
such form and with such  insurers,  as shall be  satisfactory  to the Agent from
time to time. The Borrower's  current  insurers are  satisfactory  to the Agent.
Each policy for liability  insurance  shall provide for all losses to be paid on
behalf of the Agent and the Borrower as their  respective  interests  may appear
and each  policy for  property  damage  insurance  shall  provide for all losses
(except for losses of less than $10,000 per  occurrence)  to be paid directly to
the Agent.  Each such policy  shall in addition  (a) name the  Borrower  and the
Agent as insured parties  thereunder  (without any representation or warranty by
or obligation  upon the Agent) as their  interests  may appear;  (b) contain the
agreement by the insurer that any loss thereunder  shall be payable to the Agent
notwithstanding any action, inaction, or breach of representation or warranty by
the Borrower;  (c) provide that there shall be no recourse against the Agent for
payment of premiums or other amounts with respect thereto;  and (d) provide that
at least ten days= prior  written  notice of  cancellation  or of lapse shall be
given to the Agent by the insurer.  The Borrower  shall,  if so requested by the
Agent,  deliver to the Agent  original or duplicate  policies of such  insurance
and,  as often as the  Agent may  reasonably  request,  a report of a  reputable
insurance broker with respect to such insurance. Further, the Borrower shall, at
the request of the Agent, duly execute and deliver  instruments of assignment of
such  insurance  policies to comply with the  requirements  of Section  6.01 and
cause the insurers to acknowledge notice of such assignment.

            (2) Reimbursement  under any liability  insurance  maintained by the
Borrower  pursuant to this Section  7.01 may be paid  directly to the person who
shall have incurred  liability  covered by such  insurance.  In case of any loss
involving  damage to Equipment or Inventory when  subsection (3) of this Section
7.01 is not  applicable,  the  Borrower  shall  make  or  cause  to be made  the
necessary  repairs to or  replacements  of such Equipment or Inventory,  and any
proceeds of insurance  maintained by the Borrower  pursuant to this Section 7.01
shall be paid to the Borrower as reimbursement  for the costs of such repairs or
replacements.

            (3) Upon (a) the occurrence and during the  continuance of any Event
of Default, or (b) the actual or constructive total loss (in excess of US$10,000
per occurrence) of any Equipment or Inventory, all insurance payments in respect
of such  Equipment  or  Inventory  shall be paid to and  applied by the Agent as
specified in Section 13.01(2).

          Section 8.01. Place of Perfection; Records, Collection of Receivables.

            (1) The  Borrower  shall keep its chief place of business  and chief
executive  office  and the  office  where it keeps its  records  concerning  the
Receivables,  and  the  original  copies  of the  Assigned  Agreements  and  the
originals  of all  chattel  paper that  evidence  Receivables,  at the  location
therefor  specified in Section 4.01(1) or, upon 30 days= prior written notice to
the Agent, at any other locations in a jurisdiction  where all actions  required
by Section  6.01 shall have been  taken  with  respect to the  Receivables.  The
Borrower will hold and preserve such records,  Assigned  Agreements  and chattel
paper and will permit  representatives  of the Agent at any time  during  normal
business  hours to inspect  and make  abstracts  from such  records  and chattel
paper.

            (2)  Except  as  otherwise  provided  in this  subsection  (2),  the
Borrower  shall continue to collect,  at its own expense,  all amounts due or to
become  due  the  Borrower  under  the  Receivables.  In  connection  with  such
collections,  the Borrower may take (and, at the Agent=s direction,  shall take)
such action as the  Borrower or the Agent may deem  necessary  or  advisable  to
enforce collection of the Receivables:  provided,  however, that the Agent shall

                                      -70-

<PAGE>

have the right upon the  occurrence  and during the  continuance  of an Event of
Default or an event  which,  with the giving of notice or the lapse of time,  or
both,  would become an Event of Default and upon written  notice to the Borrower
of its intention to do so, to notify the account  debtors or obligors  under any
Receivables  of the  assignment of such  Receivables to the Agent and subject to
any priority interests of other secured creditors to direct such account debtors
or obligors to make  payment of all amounts due or to become due to the Borrower
thereunder  directly to the Agent and upon such  notification and at the expense
of the Borrower,  to enforce collection of any such Receivables,  and to adjust,
settle,  or compromise the amount or payment thereof,  in the same manner and to
the same extent as the Borrower  might have done.  After receipt by the Borrower
of the  notice  from the  Agent  referred  to in the  proviso  to the  preceding
sentence,  (a) all amounts and proceeds (including  instruments) received by the
Borrower  in  respect  of the  Receivables  shall be  received  in trust for the
benefit of the Agent  hereunder,  shall be  segregated  from other  funds of the
Borrower,  and shall be forthwith  paid over to the Agent in the same form as so
received  (with any necessary  endorsement)  to be held as cash  collateral  and
either (i)  released to the  Borrower so long as no Event of Default  shall have
occurred and be  continuing  or (ii) if any Event of Default shall have occurred
and be continuing, applied as provided by Section 13.01(2), and (b) the Borrower
shall not adjust, settle, or compromise the amount or payment of any Receivable,
release  wholly or partly any account  debtor or obligor  thereof,  or allow any
credit or discount thereon.

            Section 9.01. Transfers and Other Liens; Additional Shares.

            (1) The Borrower shall not (a) sell,  assign (by operation of law or
otherwise), or otherwise dispose of, or grant any option with respect to, any of
the  Collateral,  except  Inventory in the ordinary  course of business,  or (b)
create  or  permit  to  exist  any  Lien  upon  or  with  respect  to any of the
Collateral, except for the security interest under this Security Agreement.

            Section 10.01. Agent Appointed Attorney-In-Fact. The Borrower hereby
irrevocably  appoints  the  Agent  the  Borrower=s  attorney-in-fact,  with full
authority in the place and stead of the Borrower and in the name of the Borrower
or otherwise,  from time to time in the Agent=s  discretion,  to take any action
and to execute any instrument which the Agent may deem necessary or advisable to
accomplish the purposed of this Security Agreement (subject to the rights of the
Borrower under Section 8.01),  including,  without  limitation,  upon five days=
notice to the Borrower:

     (1)  To  obtain  and  adjust  insurance  required  to be paid to the  Agent
          pursuant to Section 8.01;

     (2)  To ask, demand,  collect,  sue for, recover,  compromise,  receive and
          give  acquittance  and receipts for moneys due and to become due under
          or in connection with the Collateral;

     (3)  To receive,  endorse,  and  collect  any drafts or other  instruments,
          documents, and chattel paper, in connection therewith; and

     (4)  To file any claims or take any  action or  institute  any  proceedings
          which the Agent may deem  necessary or desirable for the collection of
          any of the  Collateral or otherwise to enforce the rights of the Agent
          with respect to any of the Collateral.

            Section 11.01.  Agent May Perform.  If the Borrower fails to perform
any  agreement  contained  herein,  the  Agent  may  itself  perform,  or  cause
performance  of,  such  agreement,  and the  expenses  of the Agent  incurred in
connection therewith shall be payable by the Borrower under Section 14.01 (2). 5
days after notice and failure

                                      -71-

<PAGE>

            Section 12.01. The Agent=s Duties. The powers conferred on the Agent
hereunder  are solely to protect its  interest in the  Collateral  and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any  Collateral in its  possession  and the  accounting  for moneys  actually
received by it hereunder, the Agent shall have no duty as to any Collateral,  as
to ascertaining or taking action with respect to calls, conversions,  exchanges,
maturities,  tenders,  or other  matters  relative to any  Security  Collateral,
whether or not the Agent has or is deemed to have knowledge of such matters,  or
as to the taking of any necessary steps to preserve rights against prior parties
or any other rights  pertaining to any Collateral.  The Agent shall be deemed to
have exercised reasonable care in the custody and preservation of any Collateral
in its possession if such Collateral is accorded treatment  substantially  equal
to that which it accords its own property.

            Section 13.01 Remedies. If any Event of Default shall have occurred
            and be continuing:

            (1) The Agent may exercise in respect of the collateral, in addition
to other rights and remedies  provided for herein or otherwise  available to it,
all the rights and  remedies  of a secured  party on default  under the  Uniform
Commercial  Code in effect in the State of  Delaware  at that time (the  ACode@)
(whether or not the Code applies to the affected  Collateral),  and also may (a)
require the  Borrower  to, and the  Borrower  hereby  agrees that it will at its
expense and upon  request of the Agent  forthwith,  assemble  all of part of the
Collateral  as  directed  by the Agent and make it  available  to the Agent at a
place to be  designated  by the Agent  which is  reasonably  convenient  to both
parties  and (b) upon five days=  notice to the  Borrower  (except as  specified
below), sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any of the Agent=s offices or elsewhere, for cash, on credit
or for  future  delivery,  and  upon  such  other  terms as the  Agent  may deem
commercially reasonable.  The Borrower agrees that, to the extent notice of sale
shall be required by law, at least ten days=  notice to the Borrower of the time
and place of any public sale or the time after  which any private  sale is to be
made shall constitute reasonable notification.  the Agent shall not be obligated
to make any sale of  Collateral  regardless of notice of sale having been given.
The  Agent  may  adjourn  any  public  or  private  sale  from  time  to time by
announcement  at the time and place fixed therefor,  and such sale may,  without
further notice, be made at the time and place to which it was so adjourned.

            (2) Any cash held by the Agent as  Collateral  and all cash proceeds
received  by the Agent in  respect  of any sale of,  collection  from,  or other
realization upon all or any part of the Collateral may, in the discretion of the
Agent,  be held  by the  Agent  as  Collateral  for,  and/or  then  or any  time
thereafter  be  applied  (after  payment  of any  amounts  payable  to the Agent
pursuant to Section 19.01) in whole or in part by the Agent against,  all or any
part of the  Obligations in such order as the Agent shall elect.  Any surplus of
such cash or cash proceeds held by the Agent and remaining after payment in full
of all the  Obligations  shall be paid over to the Borrower or to whomsoever may
be lawfully entitled to receive such surplus.

            (3) The Agent may  exercise  any and all rights and  remedies of the
Borrower  under or in  connection  with the Assigned  Agreements or otherwise in
respect of the Collateral,  including, without limitation, any and all rights of
the  Borrower to demand or otherwise  require  payment of any amount  under,  or
performance of any provision of, any Assigned Agreement.

            (4) All  payments  received by the Borrower  under or in  connection
with any Assigned  Agreement or otherwise in respect of the Collateral  shall be

                                      -72-

<PAGE>

received in trust for the benefit of the Agent,  shall be segregated  from other
funds of the Borrower and shall be forthwith  paid over to the Agent in the same
form as so received (with any necessary endorsement).

            Section 14.01. Indemnity and Expenses.

            (1) The Borrower  agrees to indemnify the Agent from and against any
and all claims,  losses, and liabilities  (including  reasonable  attorney fees)
growing out of or resulting  from this Security  Agreement  (including,  without
limitation,  enforcement of this Security Agreement),  except claims, losses, or
liabilities resulting from the Agent=s gross negligence or willful misconduct.

            (2) The Borrower will upon demand pay to the Agent the amount of any
and all reasonable  expenses,  including the reasonable fees and expenses of its
counsel and of any experts and agents,  which the Agent may incur in  connection
with  (a)  the  administration  of this  Security  Agreement;  (b) the  custody,
preservation,  use or operation  of, or the sale of,  collection  from, or other
realization upon, any of the Collateral;  (c) the exercise or enforcement of any
of the rights of the Agent  hereunder;  or (d) the  failure by the  Borrower  to
perform or observe any of the provisions hereof.

            Section 15.01. Security Interest Absolute.  All  rights of the Agent
and the pledge, assignment, and security interest hereunder, and all obligations
of the Borrower hereunder, shall be absolute and unconditional, irrespective of:

            (1) Any lack of validity,  regularity, or enforceability of the Loan
Agreement, the Notes or any other agreement or instrument relating thereto;

            (2) Any change in the time,  manner,  or place of payment  of, or in
any other  term of, all or any of the  Obligations,  or any other  amendment  or
waiver of or any consent to any departure  from the Loan Agreement or the Notes,
including,  without limitation,  any increase in Obligations  resulting from the
extension of  additional  credit to the Borrower or any of its  Subsidiaries  or
otherwise.

            (3) Any taking,  exchange,  release,  or  nonperfection of any other
collateral,  or any taking,  release,  or  amendment  or waiver of or consent to
departure from any guaranty, for all or any of the Obligations;

            (4) Any manner of application of Collateral, or proceeds thereof, to
all or any of the Obligations, or any manner of sale or other disposition of any
Collateral for all or any of the Obligations or any other assets of the Borrower
or any of its subsidiaries;

            (5) Any change,  restructuring,  or  termination  of  the  corporate
structure or existence of the Borrower or any of its subsidiaries; or

            (6) Any  other  circumstance  which  might  otherwise  constitute  a
defense available to, or a discharge of, the Borrower.

            Section  16.01.  Amendments;   Etc.  No   amendment,   modification,
termination,  or waiver of any  provision  of this  Security  Agreement,  and no
consent  to any  departure  by the  Borrower  herefrom,  shall  in any  event be

                                      -73-

<PAGE>

effective  unless the same shall be in writing and signed by the Agent, and then
such waiver or consent shall be effective only in the specific  instance and for
the specific purpose for which given.

            Section 17.01.  Addresses for Notices.  All notices given under this
Security  Agreement  shall be in writing,  addressed to the parties as set forth
below, and shall be effective on the earliest of (i) the date received,  or (ii)
if given by facsimile  transmittal on the date given if transmitted  before 5:00
p.m. the recipient=s  time,  otherwise it is effective the next day, or (iii) on
the second business day after delivery to a major  international air delivery or
air courier service (such as Federal Express or Network Couriers):

If to the Agent:                         If to the Borrower:
   Thomson Kernaghan & Co. Ltd.             Surgical Safety Products, Inc.
   365 Bay Street                           2018 Oak Terrace
   Toronto, Ontario M5H 2V2                 Sarasota, Florida 34231
   Attention: Robert F. Wilson              Attention: Frank M. Clark, President
   Executive Vice President                 Facsimile No. (941) 925-0510
   Facsimile No. (416)  367-8055
                                         With a copy (that does not constitute
With a copy (that does not constitute                notice) to:
               notice) to:                  Mintmire & Associates
   John M. Mann                             265 Sunrise Avenue, Suite 204
   Attorney at Law                          Palm Beach, FL  33480
   1330 Post Oak Boulevard, Suite 2800      Attn:  Donald F. Mintmire, Esq.
   Houston, Texas 77056-3060                Facsimile No. (561) 659-5371
   Facsimile No. (713) 622-7185

            Section 18.01. Continuing Security Interest;  Assignments Under Loan
Agreement.  This Security Agreement shall create a continuing  security interest
in the  Collateral  and shall (1) remain in full force and effect  until (a) the
payment in full of the  Obligations  and all other  amounts  payable  under this
Security  Agreement,  and (b) the expiration or termination of any obligation of
the Agent to make Loans;  (2) be binding upon the Borrower,  its  successors and
assigns;  and (3) inure to the benefit of, and be enforceable  by, the Agent and
its successors, transferees, and assigns. Without limiting the generality of the
foregoing  clause (3),  the Agent may assign or  otherwise  transfer  all or any
portion of its  rights  and  obligations  under the Loan  Agreement  (including,
without  limitation,  all or any  portion  of any Notes held by it) to any other
person or entity,  and such other person or entity shall thereupon become vested
with all the  benefits  in  respect  thereof  granted  to the  Agent  herein  or
otherwise.  Upon the later of the  payment  in full of the  Obligations  and all
other  amounts  payable  under this  Security  Agreement  and the  expiration or
termination of any obligation of the Agent to make Loans, the security  interest
granted hereby shall terminate and all rights to the Collateral  shall revert to
the  Borrower.  Upon any such  termination,  the Agent will,  at the  Borrower=s
expense,  execute and deliver to the  Borrower  such  documents  as the Borrower
shall reasonably request to evidence such termination.

            Section 19.01. Governing Law; Terms.  This  Security Agreement shall
be governed by and  construed  in  accordance  with the laws of the  Province of
Ontario,   except:   (a)  if  any  provision  of  this  Security   Agreement  is
unenforceable  under Ontario law but is  enforceable  under the laws of the U.S.
State of Florida, then Florida law shall govern the construction and enforcement

                                      -74-

<PAGE>

of that provision;  and (b) the validity or perfection of the security  interest
hereunder,  or remedies hereunder, in respect of any particular Collateral shall
be  governed  by the  Uniform  Commercial  Code as  adopted in  Florida.  Unless
otherwise  defined in this Security  Agreement or in the Loan  Agreement,  terms
used in Article 9 of the UCC are used herein as therein defined.

            Section 20.01. Dispute Resolution.  Any controversy or claim arising
out of or relating to this  Agreement  (whether in contract or tort, or both, or
at law or in equity)  shall be  determined  by binding  arbitration  at Toronto,
Canada, in accordance with the commercial arbitration rules of the International
Chamber of Commerce. The prevailing party in any arbitration proceeding shall be
awarded reasonable  attorneys fees and costs of the proceeding.  The arbitration
award  shall be final,  and may be  entered  in any court  having  jurisdiction.
Nothing in this paragraph  shall preclude  either party from applying to a court
for temporary  equitable relief,  when appropriate,  pending and subject to such
temporary  orders and permanent award as the arbitrator or arbitrators may make.
The parties  hereby consent to the exclusive  jurisdiction  of the courts of the
Province of Ontario for that purpose.

             IN WITNESS WHEREOF, the parties have caused this Security Agreement
to be executed by their respective officers thereunto duly authorized, as of the
date first above written.

The Agent:                                 The Borrower:

THOMSON KERNAGHAN & CO. LTD.               SURGICAL SAFETY PRODUCTS, INC.

By _________________________________       By _________________________________
Name _______________________________       Name _______________________________
Title ______________________________       Title ______________________________
Date signed ________________________       Date signed ________________________

                                      -75-

<PAGE>

                                   SCHEDULE I

                                     Part 1

                                      -76-

<PAGE>

                                   Schedule II

                      Locations of Equipment and Inventory

                                      -77-

<PAGE>

                                   SCHEDULE II

     Description of Other Liens, Security Interests and Financing Statements

                                      -78-

<PAGE>

                                  SCHEDULE III

                      Description of Borrower=s Trade Names

                                      -79-

<PAGE>

                                LENDERS' WARRANT

Warrant No. _____

     Void after 5:00 p.m. Toronto, Ontario time, on November 30, 2002, 2002
                   Warrant to Purchase Shares of Common Stock

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES  SECURITIES AND
EXCHANGE  COMMISSION OR THE SECURITIES  COMMISSION OF ANY STATE.  THE SECURITIES
ARE BEING OFFERED PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER REGULATION S
PROMULGATED  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "ACT").  THE
SECURITIES ARE  "RESTRICTED" AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES
OR TO U.S.  PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S  PROMULGATED  UNDER
THE ACT)  UNLESS  THE  SECURITIES  ARE  REGISTERED  UNDER THE ACT,  PURSUANT  TO
REGULATION  S  OR  PURSUANT  TO  AVAILABLE   EXEMPTIONS  FROM  THE  REGISTRATION
REQUIREMENTS  OF THE ACT AND THE SELLER WILL BE PROVIDED WITH OPINION OF COUNSEL
OR OTHER SUCH  INFORMATION  AS IT MAY  REASONABLY  REQUIRE TO CONFIRM  THAT SUCH
EXEMPTIONS ARE AVAILABLE.  FURTHER HEDGING TRANSACTIONS INVOLVING THE SECURITIES
MAY NOT BE MADE EXCEPT IN COMPLIANCE WITH THE ACT.

          -------------------------------------------------------------

              WARRANT TO PURCHASE 3,428,571 SHARES OF COMMON STOCK

                                       OF

                         SURGICAL SAFETY PRODUCTS, INC..
        ----------------------------------------------------------------

            This it to certify that, FOR VALUE RECEIVED, Thomson Kernaghan & Co.
Limited as Agent or assigns  ("Holder") is entitled to purchase,  subject to the
provisions of this  Warrant,  from SURGICAL  SAFETY  PRODUCTS,  INC., a New York
corporation (the "Company"),  the fully paid,  validly issued and non-assessable
shares of Common Stock, $0.001 par value, of the Company ("Common Stock") at any
time or from time to time  during the period from the date  hereof,  through and
including November 30, 2002, but not later than 5:00 p.m. Toronto, Ontario time,
on November  30, 2002 (the  "Exercise  Period") at the price of  US$1.09375  per
share (the "Exercise  Price").  The total number of shares of Common Stock to be
issued upon exercise of this Warrant shall be 3,428,571 shares.  The price to be
paid for  each  share of  Common  Stock  may be  adjusted  from  time to time as
hereinafter  set  forth.  The  shares  of  Common  Stock  deliverable  upon such
exercise,  and as adjusted from time to time, are hereinafter sometimes referred
to as "Warrant  Shares" and the  respective  exercise price of a share of Common
Stock in effect  at any time and as  adjusted  from time to time is  hereinafter
sometimes referred to as the "Exercise Price."

                                      -80-

<PAGE>

            This Warrant is being issued pursuant to the Loan  Agreement,  dated
as of December 20, 1999, between the Company and the Holder.  This Warrant shall
be  exercisable  from  time  to time as  follows:  (i)  this  Warrant  shall  be
immediately  exercisable for 20% of the number of Warrant Shares;  and, (ii) the
Warrants  shall be  exercisable  for an  additional1%  of the  number of Warrant
Shares for each $25,000 of principal of Loans made under the Loan Agreement.

            The Company has agreed to register  the  issuance  and resale of the
Common Stock  issuable upon  exercise of this Warrant under the U.S.  Securities
Act of 1933, as amended, pursuant to a Registration Rights Agreement between the
Company and the Holder of even date herewith.

A.          EXERCISE OF WARRANT

            This  Warrant  may be  exercised  in whole or in part at any time or
from time to time during the Exercise Period; provided, however, that (i) if the
last day of the Exercise  Period is a day on which banking  institutions  in the
City of Toronto are authorized by law to close,  then the Exercise  Period shall
terminate  on the next  succeeding  day that shall not be such a day, and during
such period the Holder  shall have the right to exercise  this  Warrant into the
kind and amount of shares of stock and other securities and property  (including
cash)  receivable by a holder of the number of shares of Common Stock into which
this Warrant might have been exercisable immediately prior thereto. This Warrant
may be exercised by presentation and surrender hereof to Thomson Kernaghan & Co.
Limited  as Escrow  Holder at the  Escrow  Holder's  principal  office,  365 Bay
Street,  Tenth Floor,  Toronto,  Ontario M5H 2V2, Canada, with the Exercise Form
annexed  hereto duly executed and  accompanied  by payment of the Exercise Price
for the number of Warrant Shares  specified in such form. As soon as practicable
after each such exercise of the Warrants, but not later than seven (7) days from
the date of such  exercise,  the Escrow  Holder  shall,  to the extent  that the
Company has  deposited  shares of Common  Stock with the Escrow  Holder for that
purpose,  issue and deliver to the Holder a certificate or certificates  for the
designee.  If this Warrant  should be exercised in part only, the Company shall,
upon  surrender  of this  Warrant  for  cancellation,  execute and deliver a new
Warrant  evidencing  the rights of the Holder thereof to purchase the balance of
Warrant  Shares  purchasable  thereunder.  Upon  receipt by the  Company of this
Warrant at its principal  office,  or by the stock transfer agent of the Company
at its office,  in proper form for  exercise,  the Holder  shall be deemed to be
holder of record of the  shares of Common  Stock  issuable  upon such  exercise,
notwithstanding  that the stock  transfer  books of the  Company  shall  then be
closed or that  certificates  representing such shares of Common Stock shall not
then be physically delivered to the Holder.

THIS WARRANT MAY BE EXERCISED ONLY (i) BY A PERSON WHO IS NOT A U.S.  PERSON (AS
DEFINED IN  REGULATION S  PROMULGATED  UNDER THE ACT),  (ii) IF NOT EXERCISED ON
BEHALF  OF A U.S.  PERSON,  (iii)  IF NO U.S.  PERSON  HAS ANY  INTEREST  IN THE
WARRANTS  BEING  EXERCISED  OR  THE  UNDERLYING  SECURITIES  TO BE  ISSUED  UPON
EXERCISE,  AND (iv) OUTSIDE THE UNITED STATES AND THE WARRANT SHARES  UNDERLYING
THE WARRANTS ARE TO BE DELIVERED  OUTSIDE THE UNITED STATES. IF THE ABOVE CANNOT
BE COMPLIED WITH, THEN THE WARRANT CAN BE EXERCISED ONLY IF A WRITTEN OPINION OF
COUNSEL,  THE FORM AND  SUBSTANCE  OF WHICH IS  ACCEPTABLE  TO THE  COMPANY,  IS
DELIVERED TO THE COMPANY PRIOR TO EXERCISE OF THE WARRANTS BEING  EXERCISED THAT
REGISTRATION  IS NOT  REQUIRED,  OR THE  UNDERLYING  SECURITIES  DELIVERED  UPON
EXERCISE HAVE BEEN REGISTERED UNDER THE ACT.

                                      -81-

<PAGE>

B.          RESERVATION OF SHARES AND COVENANTS OF THE COMPANY

            The  Company  shall at all times  have  allotted  and  reserved  for
issuance,  and  deposited  with the Escrow  Holder for delivery upon exercise of
this  Warrant such number of shares of its Common Stock as shall be required for
issuance and delivery upon exercise of the Warrant.

            The Company  covenants  with the Holder that so long as any Warrants
remain outstanding and may be exercised:

     1.   it will  cause  the  shares  of  Common  Stock  and  the  certificates
          representing  the Common Stock subscribed and paid for pursuant to the
          exercise  of the  Warrants to be duly  issued and  deposited  with the
          Escrow  Holder  for  delivery  in  accordance  herewith  and the terms
          hereof;

     2.   all shares of Common  Stock that shall be issued upon  exercise of the
          right to purchase provided for herein,  upon payment of the prevailing
          Exercise   Price   herein   provided,   shall   be   fully   paid  and
          non-assessable;

     3.   it will use its best efforts to maintain its corporate existence; and

     4.   generally,  it will  well and truly  perform  and carry out all of the
          acts or things to be done by it as provided herein.

C.          FRACTIONAL SHARES

            No fractional shares or script representing  fractional shares shall
be issued upon the exercise of this  Warrant.  With respect to any fraction of a
share called for upon any exercise  hereof,  the Company shall pay to the Holder
an amount in cash equal to such fraction  multiplied by the current market value
of a share, determined as follows:

     1.   If the Common  Stock is listed on a National  Securities  Exchange  or
          admitted to unlisted trading privileges on such exchange or listed for
          trading on the NASDAQ  system,  the current  market value shall be the
          last  reported  sale price of the  Common  Stock on such  exchange  or
          system on the last  business day prior to the date of exercise of this
          Warrant  or, if no such sale is made (or  reported)  on such day,  the
          average  closing bid and asked prices for such day on such exchange or
          system; or

     2.   If the Common  Stock is not so listed or admitted to unlisted  trading
          privileges,  the  current  market  value shall be the mean to the last
          reported bid and ask prices reported by the Electronic  Bulletin Board
          or National  Quotation Bureau,  Inc. on the last business day prior to
          the date of the exercise of this Warrant; or

     3.   If the Common  Stock is not so listed or admitted to unlisted  trading
          privileges  and bid and ask prices are not so  reported,  the  current
          market value shall be an amount,  not less than book value  thereof as
          at the end of the most recent fiscal year of the Company  ending prior
          to the  date  of the  exercise  of the  Warrant,  determined  in  such
          reasonable  manner as may be  prescribed  by the Board of Directors of
          the Company.

                                      -82-

<PAGE>

D.          EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT

            This Warrant is exchangeable,  without expense, at the option of the
Holder, upon presentation and surrender hereof to the Company for other warrants
of  different  denominations  entitling  the holder  thereof to  purchase in the
aggregate the same number of shares of Common Stock purchasable hereunder.  Upon
surrender  of this  Warrant to the  Company at its  principal  office,  with the
Assignment  Form annexed  hereto duly  executed and funds  sufficient to pay any
applicable transfer tax, the Company shall, without charge,  execute and deliver
a new Warrant in the name of the assignee named in such Assignment Form and this
Warrant shall promptly be canceled. This Warrant may be divided or combined with
other  warrants  that  carry the same  rights  upon  presentation  hereof at the
principal office of the Company,  together with a written notice  specifying the
names and denominations in which new Warrants are to be issued and signed by the
Holder  hereof.  The term  "Warrant" as used herein  includes any Warrants  into
which this Warrant may be divided or  exchanged.  Upon receipt of the Company of
evidence  satisfactory  to it of the loss,  theft,  destruction or mutilation of
this  Warrant,  and (in the case of loss,  theft or  destruction)  of reasonably
satisfactory  indemnification,  and  upon  surrender  and  cancellation  of this
Warrant,  if  mutilated,  the Company  will execute and deliver a new Warrant of
like  tenor  and  date.  Any such  new  Warrant  executed  and  delivered  shall
constitute  an  additional  contractual  obligation  on the part of the Company,
whether or not this Warrant so lost, stolen,  destroyed or mutilated shall be at
any time enforceable by anyone.

            This Warrant and the Common  Stock  issuable  upon  exercise of this
Warrant were issued under Regulation S under the Act and may be transferred only
in  accordance  therewith  and as  provided  in the  legends  set  forth in this
Warrant.

E.          RIGHTS OF THE HOLDER

            The Holder shall not, by virtue hereof, be entitled to any rights of
a  shareholder  in the Company,  either at law or equity,  and the rights of the
Holder are limited to those  expressed  in the  Warrant and are not  enforceable
against the Company except to the extent set forth herein.

F.          ANTI-DILUTION PROVISIONS

            The  respective  Exercise Price in effect at any time and the number
and kind of  securities  purchasable  upon the exercise of the Warrant  shall be
subject to adjustment from time to time upon the happening of certain events are
follows:

     1.   In  case  the  Company   shall  (i)  declare  a  dividend  or  make  a
          distribution  on its  outstanding  shares of Common Stock in shares of
          Common Stock,  (ii) subdivide or reclassify its outstanding  shares of
          Common  Stock  into a greater  number of shares,  or (iii)  combine or
          reclassify  its  outstanding  shares  of Common  Stock  into a smaller
          number of shares, the respective  Exercise Price in effect at the time
          of the  record  date  for  such  dividend  or  distribution  or of the
          effective date of such  subdivision,  combination or  reclassification
          shall be  adjusted  so that it shall  equal  the price  determined  by
          multiplying  the  respective   Exercise  Price  by  a  fraction,   the
          denominator  of which  shall be the  number of shares of Common  Stock
          outstanding  after giving effect to such action,  and the numerator of

                                      -83-

<PAGE>

          which  shall be the  number  of shares  of  Common  Stock  outstanding
          immediately  prior  to such  action.  Such  adjustment  shall  be made
          successively whenever any event listed above shall occur.

     2.   Whenever the  respective  Exercise Price payable upon exercise of each
          Warrant is adjusted  pursuant to Subsection  (1) above,  the number of
          Shares purchasable upon exercise of this Warrant shall  simultaneously
          be adjusted by multiplying the respective  number of Shares  initially
          issuable upon exercise of this Warrant by a fraction,  the denominator
          of which  shall be the  Exercise  Price  after  giving  effect to such
          action  and the  numerator  of which  shall be the  Exercise  Price in
          effect immediately prior to such action.

     3.   No  adjustment  in the  respective  Exercise  Price  shall be required
          unless  such  adjustment  would  require an increase or decrease of at
          least one cent  ($0.01) in such  price;  provided,  however,  that any
          adjustment that by reason of this Subsection (3) is not required to be
          made shall be carried forward and taken into account in any subsequent
          adjustment required to be made hereunder.  All calculations under this
          Section  (F)  shall  be made  to the  nearest  cent or to the  nearest
          one-hundredth of a share, as the case may be. Anything in this Section
          (F) to the contrary  notwithstanding,  the Company  shall be entitled,
          but shall not be  required,  to make such  changes  in the  respective
          Exercise  Price, in addition to those required by this Section (F), as
          it shall determine,  in its sole discretion,  to be advisable in order
          that any dividend or  distribution  in shares of Common Stock,  or any
          subdivision,   reclassification   or   combination  of  Common  Stock,
          hereafter  made by the Company shall not result in any federal  income
          tax liability to the holders of Common Stock or securities convertible
          into Common Stock (including the Warrants).

     4.   In the event  that at any  time,  as a result  of an  adjustment  made
          pursuant  to  Subsection  (1)  above,   the  Holder  of  this  Warrant
          thereafter shall become entitled to receive any shares of the Company,
          other than Common Stock, thereafter the number of such other shares so
          receivable   upon  exercise  of  this  Warrant  shall  be  subject  to
          adjustment  from  time to time in a  manner  and on  terms  as  nearly
          equivalent as practicable to the provisions with respect to the Common
          Stock contained in Subsections (1) to (3) inclusive above.

     5.   Irrespective  of any  adjustments in the respective  Exercise Price or
          the related number or kind of shares purchasable upon exercise of this
          Warrant,  Warrants  theretofore  or thereafter  issued may continue to
          express  the same price and number and kind of shares as are stated in
          the similar Warrants initially issuable pursuant to this Warrant.

G.          OFFICER'S CERTIFICATE

            Whenever the respective Exercise Price shall be adjusted as required
by the provisions of the foregoing Section (F), the Company shall forthwith file
in the custody of its  Secretary  or an  Assistant  Secretary  at its  principal
office, an officer's  certificate showing the adjusted Exercise Price determined
as herein provided,  setting forth in reasonable detail the facts requiring such
adjustment,  including a statement of the number of related additional shares of
Common  Stock,  if any,  and such other facts as shall be  necessary to show the
reason for and the manner of  computing  such  adjustment.  Each such  officer's
certificate  shall be made available at all  reasonable  times for inspection by

                                      -84-

<PAGE>

the holder or any holder of a Warrant executed and delivered pursuant to Section
(A) and the Company shall, forthwith after each such adjustment,  mail a copy by
certified mail of such certificate to the Holder or any such holder.

H.          NOTICES TO WARRANT HOLDERS

            So long as this  Warrant  shall be  outstanding,  (i) if the Company
shall pay any dividend or make any distribution upon the Common Stock or (ii) if
the  Company  shall  offer to the holders of Common  Stock for  subscription  or
purchase by them any share of any class or any other rights, options or warrants
(other than this Warrant) or (iii) if a capital  reorganization  of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation,  sale, lease or transfer of all or
substantially  all  of  the  property  and  assets  of the  Company  to  another
corporation, or voluntary or involuntary dissolution,  liquidation or winding up
of the Company shall be effected, then in any such case, the Company shall cause
to be mailed by certified  mail to the Holder,  at least fifteen (15) days prior
to the  date  specified,  as the  case  may  be,  a  notice  containing  a brief
description  of the proposed  action and stating the date on which a record date
is to be determined for the purpose of such dividend,  distribution  or issue of
rights,   options,  or  warrants  or  such   reclassification,   reorganization,
consolidation, merger, conveyance, lease, dissolution, liquidation or winding up
is to take place and the date,  if any is to be fixed as of which the holders of
Common  Stock  or  other   securities  shall  receive  cash  or  other  property
deliverable upon such reclassification,  reorganization,  consolidation, merger,
conveyance,  dissolution,  liquidation  or winding  up. The failure to give such
notice shall not otherwise affect the action take by the Company.

I.          RECLASSIFICATION, REORGANIZATION OR MERGER

            In case of any  reclassification,  capital  reorganization  or other
change of  outstanding  shares  Common Stock of the  Company,  or in case of any
consolidation or merger of the Company with or into another  corporation  (other
than a merger with a subsidiary  in which  merger the Company is the  continuing
corporation  and  that  does  not  result  in  any   reclassification,   capital
reorganization  or other  change of  outstanding  shares of Common  Stock of the
class  issuable upon exercise of this Warrant) or in case of any sale,  lease or
conveyance to another corporation of the property of the Company as an entirety,
the Company shall, as a condition precedent to such transaction, cause effective
provisions  to be made so that the Holder  shall have the right  thereafter,  by
exercising  this Warrant at any time prior to the expiration of the Warrant,  to
purchase the kind and amount of shares of stock an other securities and property
receivable upon such reclassification,  capital reorganization and other change,
consolidation,  merger,  sale or conveyance by a holder of such number of shares
of Common  Stock that might have been  purchased  upon  exercise of this Warrant
immediately prior to such reclassification,  change, consolidation, merger, sale
or conveyance.  Any such provision shall include  provision for adjustments that
shall be as nearly equivalent as may be practicable to the adjustments  provided
for in this  Warrant.  The  foregoing  provisions  of  this  Section  (I)  shall
similarly apply to successive  reclassifications,  capital  reorganizations  and
changes of shares of Common  Stock and to  successive  consolidations,  mergers,
sales or  conveyances.  In the event that in  connection  with any such  capital
reorganization or reclassification,  consolidation,  merger, sale or conveyance,
additional  shares of Common  Stock  shall be  issued in  exchange,  conversion,
substitution  or  payment,  in whole or in part,  for a security  of the Company
other than Common  Stock,  any such issue shall be treated as an issue of Common
Stock covered by the provisions of Subsection (1) of Section (F) hereof.

                                      -85-

<PAGE>

J.          WARRANTS TO RANK PARI PASSU

            All Warrants shall rank pari passu,  whatever may be the actual date
of issue of the same.

K.          GOVERNING LAW; JURISDICTION AND VENUE

            This Warrant shall be governed by and interpreted in accordance with
the laws of the State of Florida;  provided,  however,  that if any provision of
this Agreement is unenforceable  under the laws of the State of Florida,  but is
enforceable  under  the laws of the  Province  of  Ontario,  Canada,  then  such
provision  shall be governed by and  interpreted in accordance  with the laws of
the Province of Ontario.

            Any  controversy  or  claim  arising  out  of or  relating  to  this
Agreement  (whether in contract or tort,  or both, or at law or in equity) shall
be determined by binding arbitration at Toronto,  Canada, in accordance with the
commercial  arbitration  rules of the  International  Chamber of  Commerce.  The
prevailing  party in any  arbitration  proceeding  shall be  awarded  reasonable
attorneys  fees and costs of the  proceeding.  The  arbitration  award  shall be
final,  and may be entered  in any court  having  jurisdiction.  Nothing in this
paragraph  shall  preclude  either party from  applying to a court for temporary
equitable relief, when appropriate, pending and subject to such temporary orders
and permanent award as the arbitrator or arbitrators may make.

            The  parties  agree  that the  courts of the  Province  of  Ontario,
Canada, shall have exclusive  jurisdiction and venue for the adjudication of any
civil action between them arising out of relating to this Agreement,  and hereby
irrevocably consent to such jurisdiction and venue.

            IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and  attested by the  undersigned,  each being duly  authorized,  as of the date
below.

                                         SURGICAL SAFETY PRODUCTS, INC..
                                         By:_____________________________
                                         Its:_____________________________
DATED:  December __, 1999

ATTEST:
=======================

                                      -86-

<PAGE>

                           FORM OF NOTICE OF EXERCISE

THIS WARRANT MAY BE EXERCISED ONLY (i) BY A PERSON WHO IS NOT A U.S.  PERSON (AS
DEFINED  IN  REGULATION  S  PROMULGATED  UNDER THE  SECURITIES  ACT OF 1933,  AS
AMENDED),  (ii) IF NOT  EXERCISED ON BEHALF OF A U.S.  PERSON,  (iii) IF NO U.S.
PERSON HAS ANY  INTEREST  IN THE  WARRANTS  BEING  EXERCISED  OR THE  UNDERLYING
SECURITIES  TO BE ISSUED UPON  EXERCISE,  AND (iv) OUTSIDE THE UNITED STATES AND
THE WARRANT  SHARES  UNDERLYING  THE WARRANTS  ARE TO BE  DELIVERED  OUTSIDE THE
UNITED  STATES.  IF THE ABOVE CANNOT BE COMPLIED  WITH,  THEN THE WARRANT CAN BE
EXERCISED ONLY IF A WRITTEN OPINION OF COUNSEL,  THE FORM AND SUBSTANCE OF WHICH
IS ACCEPTABLE  TO THE COMPANY,  IS DELIVERED TO THE COMPANY PRIOR TO EXERCISE OF
THE  WARRANTS  BEING  EXERCISED  THAT  REGISTRATION  IS  NOT  REQUIRED,  OR  THE
UNDERLYING  SECURITIES  DELIVERED UPON EXERCISE HAVE BEEN  REGISTERED  UNDER THE
SECURITIES ACT OF 1933.

            The  undersigned  hereby  irrevocably  elects to exercise the within
Warrant to the extent of  purchasing  __________  shares of Common  Stock at the
Exercise Price of US$1.09375 per share, for a total of US$ _________________.

INSTRUCTIONS FOR REGISTRATION OF STOCK

Name_________________________________________
            (Please typewrite or print in block letters)

Address________________________________________
            =========================================

The undersigned represents and warrants to U.S. Surgical Products, Inc. that the
conditions for exercise of the within Warrant set forth in the first sentence of
the first  paragraph  above have been fully complied with and no U.S. Person has
any interest in the Warrant or the Warrant Shares.

Signature____________________________________________________
(Sign exactly as your name appears on the first page of this Warrant)

                                      -87-

<PAGE>

                                 ASSIGNMENT FORM

            FOR VALUE RECEIVED,

-------------------------------------------------------
hereby sells, assigns and transfers unto

Name

----------------------------------------------------------
(Please typewrite or print in block letters)

Address

----------------------------------------------------------

----------------------------------------------------------

the right to purchase shares of Common Stock of Surgical Safety Products,  Inc.,
represented  by this  Warrant  as to which such  right is  exercisable  and does
hereby   irrevocably    constitute   and   appoint    __________________________
________________  Attorney, to transfer the same on the books of Surgical Safety
Products, Inc., with full power of substitution in the premises.

Date:  __________________________

Signature:  ____________________________________
(sign exactly as your name appears on the first page of this Warrant)

Note:  The Warrant and the Common Stock  issuable  upon  exercise of the Warrant
were issued under Regulation S under the Securities Act of 1933, as amended, and
may be transferred  only in accordance  therewith and as provided in the legends
set forth in the Warrant.

                                      -88-

<PAGE>

                                 AGENTS' WARRANT

Warrant No. _____

        Void after 5:00 p.m. Toronto, Ontario time, on November 30, 2002
                   Warrant to Purchase Shares of Common Stock

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES  SECURITIES AND
EXCHANGE  COMMISSION OR THE SECURITIES  COMMISSION OF ANY STATE.  THE SECURITIES
ARE BEING OFFERED PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER REGULATION S
PROMULGATED  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "ACT").  THE
SECURITIES ARE  "RESTRICTED" AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES
OR TO U.S.  PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S  PROMULGATED  UNDER
THE ACT)  UNLESS  THE  SECURITIES  ARE  REGISTERED  UNDER THE ACT,  PURSUANT  TO
REGULATION  S  OR  PURSUANT  TO  AVAILABLE   EXEMPTIONS  FROM  THE  REGISTRATION
REQUIREMENTS  OF THE ACT AND THE SELLER WILL BE PROVIDED WITH OPINION OF COUNSEL
OR OTHER SUCH  INFORMATION  AS IT MAY  REASONABLY  REQUIRE TO CONFIRM  THAT SUCH
EXEMPTIONS ARE AVAILABLE.  FURTHER HEDGING TRANSACTIONS INVOLVING THE SECURITIES
MAY NOT BE MADE EXCEPT IN COMPLIANCE WITH THE ACT.

          -------------------------------------------------------------

              WARRANT TO PURCHASE 1,142,857 SHARES OF COMMON STOCK

                                       OF

                         SURGICAL SAFETY PRODUCTS, INC..
        ----------------------------------------------------------------

            This it to certify that, FOR VALUE RECEIVED, Thomson Kernaghan & Co.
Limited or assigns ("Holder") is entitled to purchase, subject to the provisions
of this Warrant,  from SURGICAL SAFETY  PRODUCTS,  INC., a New York  corporation
(the "Company"),  the fully paid,  validly issued and  non-assessable  shares of
Common Stock,  $0.001 par value, of the Company  ("Common Stock") at any time or
from time to time during the period from the date hereof,  through and including
November  30,  2002,  but not later than 5:00 p.m.  Toronto,  Ontario  time,  on
November 30, 2002 (the  "Exercise  Period") at the price of US$1.09375 per share
(the "Exercise Price").  The total number of shares of Common Stock to be issued
upon  exercise of this Warrant shall be 1,142,857  shares.  The price to be paid
for each share of Common Stock may be adjusted from time to time as  hereinafter
set forth.  The shares of Common Stock  deliverable  upon such exercise,  and as
adjusted from time to time, are  hereinafter  sometimes  referred to as "Warrant
Shares" and the  respective  exercise price of a share of Common Stock in effect
at any time and as adjusted from time to time is hereinafter  sometimes referred
to as the "Exercise Price."

                                      -89-

<PAGE>

            This Warrant is being issued pursuant to the Loan  Agreement,  dated
as of December 20, 1999, between the Company and the Holder.  This Warrant shall
be  exercisable  from  time  to time as  follows:  (i)  this  Warrant  shall  be
immediately  exercisable for 20% of the number of Warrant Shares;  and, (ii) the
Warrants  shall be  exercisable  for an  additional1%  of the  number of Warrant
Shares for each $25,000 of principal of Loans made under the Loan Agreement.

            The Company has agreed to register  the  issuance  and resale of the
Common Stock  issuable upon  exercise of this Warrant under the U.S.  Securities
Act of 1933, as amended, pursuant to a Registration Rights Agreement between the
Company and the Holder of even date herewith.

A.          EXERCISE OF WARRANT

            This  Warrant  may be  exercised  in whole or in part at any time or
from time to time during the Exercise Period; provided, however, that (i) if the
last day of the Exercise  Period is a day on which banking  institutions  in the
City of Toronto are authorized by law to close,  then the Exercise  Period shall
terminate  on the next  succeeding  day that shall not be such a day, and during
such period the Holder  shall have the right to exercise  this  Warrant into the
kind and amount of shares of stock and other securities and property  (including
cash)  receivable by a holder of the number of shares of Common Stock into which
this Warrant might have been exercisable immediately prior thereto. This Warrant
may be exercised by presentation and surrender hereof to Thomson Kernaghan & Co.
Limited  as Escrow  Holder at the  Escrow  Holder's  principal  office,  365 Bay
Street,  Tenth Floor,  Toronto,  Ontario M5H 2V2, Canada, with the Exercise Form
annexed  hereto duly executed and  accompanied  by payment of the Exercise Price
for the number of Warrant Shares  specified in such form. As soon as practicable
after each such exercise of the Warrants, but not later than seven (7) days from
the date of such  exercise,  the Escrow  Holder  shall,  to the extent  that the
Company has  deposited  shares of Common  Stock with the Escrow  Holder for that
purpose,  issue and deliver to the Holder a certificate or certificates  for the
designee.  If this Warrant  should be exercised in part only, the Company shall,
upon  surrender  of this  Warrant  for  cancellation,  execute and deliver a new
Warrant  evidencing  the rights of the Holder thereof to purchase the balance of
Warrant  Shares  purchasable  thereunder.  Upon  receipt by the  Company of this
Warrant at its principal  office,  or by the stock transfer agent of the Company
at its office,  in proper form for  exercise,  the Holder  shall be deemed to be
holder of record of the  shares of Common  Stock  issuable  upon such  exercise,
notwithstanding  that the stock  transfer  books of the  Company  shall  then be
closed or that  certificates  representing such shares of Common Stock shall not
then be physically delivered to the Holder.

            THIS WARRANT MAY BE EXERCISED ONLY (i) BY A PERSON WHO IS NOT A U.S.
PERSON (AS  DEFINED IN  REGULATION  S  PROMULGATED  UNDER THE ACT),  (ii) IF NOT
EXERCISED ON BEHALF OF A U.S.  PERSON,  (iii) IF NO U.S. PERSON HAS ANY INTEREST
IN THE WARRANTS BEING  EXERCISED OR THE UNDERLYING  SECURITIES TO BE ISSUED UPON
EXERCISE,  AND (iv) OUTSIDE THE UNITED STATES AND THE WARRANT SHARES  UNDERLYING
THE WARRANTS ARE TO BE DELIVERED  OUTSIDE THE UNITED STATES. IF THE ABOVE CANNOT
BE COMPLIED WITH, THEN THE WARRANT CAN BE EXERCISED ONLY IF A WRITTEN OPINION OF
COUNSEL,  THE FORM AND  SUBSTANCE  OF WHICH IS  ACCEPTABLE  TO THE  COMPANY,  IS
DELIVERED TO THE COMPANY PRIOR TO EXERCISE OF THE WARRANTS BEING  EXERCISED THAT
REGISTRATION  IS NOT  REQUIRED,  OR THE  UNDERLYING  SECURITIES  DELIVERED  UPON
EXERCISE HAVE BEEN REGISTERED UNDER THE ACT.

                                      -90-

<PAGE>

B.          RESERVATION OF SHARES AND COVENANTS OF THE COMPANY

            The  Company  shall at all times  have  allotted  and  reserved  for
issuance,  and  deposited  with the Escrow  Holder for delivery upon exercise of
this  Warrant such number of shares of its Common Stock as shall be required for
issuance and delivery upon exercise of the Warrant.

            The Company  covenants  with the Holder that so long as any Warrants
remain outstanding and may be exercised:

     1.   it will  cause  the  shares  of  Common  Stock  and  the  certificates
          representing  the Common Stock subscribed and paid for pursuant to the
          exercise  of the  Warrants to be duly  issued and  deposited  with the
          Escrow  Holder  for  delivery  in  accordance  herewith  and the terms
          hereof;

     2.   all shares of Common  Stock that shall be issued upon  exercise of the
          right to purchase provided for herein,  upon payment of the prevailing
          Exercise   Price   herein   provided,   shall   be   fully   paid  and
          non-assessable;

     3.   it will use its best efforts to maintain its corporate existence; and

     4.   generally,  it will  well and truly  perform  and carry out all of the
          acts or things to be done by it as provided herein.

C.          FRACTIONAL SHARES

            No fractional shares or script representing  fractional shares shall
be issued upon the exercise of this  Warrant.  With respect to any fraction of a
share called for upon any exercise  hereof,  the Company shall pay to the Holder
an amount in cash equal to such fraction  multiplied by the current market value
of a share, determined as follows:

     1.   If the Common  Stock is listed on a National  Securities  Exchange  or
          admitted to unlisted trading privileges on such exchange or listed for
          trading on the NASDAQ  system,  the current  market value shall be the
          last  reported  sale price of the  Common  Stock on such  exchange  or
          system on the last  business day prior to the date of exercise of this
          Warrant  or, if no such sale is made (or  reported)  on such day,  the
          average  closing bid and asked prices for such day on such exchange or
          system; or

     2.   If the Common  Stock is not so listed or admitted to unlisted  trading
          privileges,  the  current  market  value shall be the mean to the last
          reported bid and ask prices reported by the Electronic  Bulletin Board
          or National  Quotation Bureau,  Inc. on the last business day prior to
          the date of the exercise of this Warrant; or

     3.   If the Common  Stock is not so listed or admitted to unlisted  trading
          privileges  and bid and ask prices are not so  reported,  the  current
          market value shall be an amount,  not less than book value  thereof as
          at the end of the most recent fiscal year of the Company  ending prior
          to the  date  of the  exercise  of the  Warrant,  determined  in  such
          reasonable  manner as may be  prescribed  by the Board of Directors of
          the Company.

                                      -91-

<PAGE>

D.          EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT

            This Warrant is exchangeable,  without expense, at the option of the
Holder, upon presentation and surrender hereof to the Company for other warrants
of  different  denominations  entitling  the holder  thereof to  purchase in the
aggregate the same number of shares of Common Stock purchasable hereunder.  Upon
surrender  of this  Warrant to the  Company at its  principal  office,  with the
Assignment  Form annexed  hereto duly  executed and funds  sufficient to pay any
applicable transfer tax, the Company shall, without charge,  execute and deliver
a new Warrant in the name of the assignee named in such Assignment Form and this
Warrant shall promptly be canceled. This Warrant may be divided or combined with
other  warrants  that  carry the same  rights  upon  presentation  hereof at the
principal office of the Company,  together with a written notice  specifying the
names and denominations in which new Warrants are to be issued and signed by the
Holder  hereof.  The term  "Warrant" as used herein  includes any Warrants  into
which this Warrant may be divided or  exchanged.  Upon receipt of the Company of
evidence  satisfactory  to it of the loss,  theft,  destruction or mutilation of
this  Warrant,  and (in the case of loss,  theft or  destruction)  of reasonably
satisfactory  indemnification,  and  upon  surrender  and  cancellation  of this
Warrant,  if  mutilated,  the Company  will execute and deliver a new Warrant of
like  tenor  and  date.  Any such  new  Warrant  executed  and  delivered  shall
constitute  an  additional  contractual  obligation  on the part of the Company,
whether or not this Warrant so lost, stolen,  destroyed or mutilated shall be at
any time enforceable by anyone.

            This Warrant and the Common  Stock  issuable  upon  exercise of this
Warrant were issued under Regulation S under the Act and may be transferred only
in  accordance  therewith  and as  provided  in the  legends  set  forth in this
Warrant.

E.          RIGHTS OF THE HOLDER

            The Holder shall not, by virtue hereof, be entitled to any rights of
a  shareholder  in the Company,  either at law or equity,  and the rights of the
Holder are limited to those  expressed  in the  Warrant and are not  enforceable
against the Company except to the extent set forth herein.

F.          ANTI-DILUTION PROVISIONS

            The  respective  Exercise Price in effect at any time and the number
and kind of  securities  purchasable  upon the exercise of the Warrant  shall be
subject to adjustment from time to time upon the happening of certain events are
follows:

     1.   In  case  the  Company   shall  (i)  declare  a  dividend  or  make  a
          distribution  on its  outstanding  shares of Common Stock in shares of
          Common Stock,  (ii) subdivide or reclassify its outstanding  shares of
          Common  Stock  into a greater  number of shares,  or (iii)  combine or
          reclassify  its  outstanding  shares  of Common  Stock  into a smaller
          number of shares, the respective  Exercise Price in effect at the time
          of the  record  date  for  such  dividend  or  distribution  or of the
          effective date of such  subdivision,  combination or  reclassification
          shall be  adjusted  so that it shall  equal  the price  determined  by
          multiplying  the  respective   Exercise  Price  by  a  fraction,   the
          denominator  of which  shall be the  number of shares of Common  Stock
          outstanding  after giving effect to such action,  and the numerator of

                                      -92-

<PAGE>

          which  shall be the  number  of shares  of  Common  Stock  outstanding
          immediately  prior  to such  action.  Such  adjustment  shall  be made
          successively whenever any event listed above shall occur.

     2.   Whenever the  respective  Exercise Price payable upon exercise of each
          Warrant is adjusted  pursuant to Subsection  (1) above,  the number of
          Shares purchasable upon exercise of this Warrant shall  simultaneously
          be adjusted by multiplying the respective  number of Shares  initially
          issuable upon exercise of this Warrant by a fraction,  the denominator
          of which  shall be the  Exercise  Price  after  giving  effect to such
          action  and the  numerator  of which  shall be the  Exercise  Price in
          effect immediately prior to such action.

     3.   No  adjustment  in the  respective  Exercise  Price  shall be required
          unless  such  adjustment  would  require an increase or decrease of at
          least one cent  ($0.01) in such  price;  provided,  however,  that any
          adjustment that by reason of this Subsection (3) is not required to be
          made shall be carried forward and taken into account in any subsequent
          adjustment required to be made hereunder.  All calculations under this
          Section  (F)  shall  be made  to the  nearest  cent or to the  nearest
          one-hundredth of a share, as the case may be. Anything in this Section
          (F) to the contrary  notwithstanding,  the Company  shall be entitled,
          but shall not be  required,  to make such  changes  in the  respective
          Exercise  Price, in addition to those required by this Section (F), as
          it shall determine,  in its sole discretion,  to be advisable in order
          that any dividend or  distribution  in shares of Common Stock,  or any
          subdivision,   reclassification   or   combination  of  Common  Stock,
          hereafter  made by the Company shall not result in any federal  income
          tax liability to the holders of Common Stock or securities convertible
          into Common Stock (including the Warrants).

     4.   In the event  that at any  time,  as a result  of an  adjustment  made
          pursuant  to  Subsection  (1)  above,   the  Holder  of  this  Warrant
          thereafter shall become entitled to receive any shares of the Company,
          other than Common Stock, thereafter the number of such other shares so
          receivable   upon  exercise  of  this  Warrant  shall  be  subject  to
          adjustment  from  time to time in a  manner  and on  terms  as  nearly
          equivalent as practicable to the provisions with respect to the Common
          Stock contained in Subsections (1) to (3) inclusive above.

     5.   Irrespective  of any  adjustments in the respective  Exercise Price or
          the related number or kind of shares purchasable upon exercise of this
          Warrant,  Warrants  theretofore  or thereafter  issued may continue to
          express  the same price and number and kind of shares as are stated in
          the similar Warrants initially issuable pursuant to this Warrant.

G.          OFFICER'S CERTIFICATE

            Whenever the respective Exercise Price shall be adjusted as required
by the provisions of the foregoing Section (F), the Company shall forthwith file
in the custody of its  Secretary  or an  Assistant  Secretary  at its  principal
office, an officer's  certificate showing the adjusted Exercise Price determined
as herein provided,  setting forth in reasonable detail the facts requiring such
adjustment,  including a statement of the number of related additional shares of
Common  Stock,  if any,  and such other facts as shall be  necessary to show the
reason for and the manner of  computing  such  adjustment.  Each such  officer's
certificate  shall be made available at all  reasonable  times for inspection by

                                      -93-

<PAGE>

the holder or any holder of a Warrant executed and delivered pursuant to Section
(A) and the Company shall, forthwith after each such adjustment,  mail a copy by
certified mail of such certificate to the Holder or any such holder.

H.          NOTICES TO WARRANT HOLDERS

            So long as this  Warrant  shall be  outstanding,  (i) if the Company
shall pay any dividend or make any distribution upon the Common Stock or (ii) if
the  Company  shall  offer to the holders of Common  Stock for  subscription  or
purchase by them any share of any class or any other rights, options or warrants
(other than this Warrant) or (iii) if a capital  reorganization  of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation,  sale, lease or transfer of all or
substantially  all  of  the  property  and  assets  of the  Company  to  another
corporation, or voluntary or involuntary dissolution,  liquidation or winding up
of the Company shall be effected, then in any such case, the Company shall cause
to be mailed by certified  mail to the Holder,  at least fifteen (15) days prior
to the  date  specified,  as the  case  may  be,  a  notice  containing  a brief
description  of the proposed  action and stating the date on which a record date
is to be determined for the purpose of such dividend,  distribution  or issue of
rights,   options,  or  warrants  or  such   reclassification,   reorganization,
consolidation, merger, conveyance, lease, dissolution, liquidation or winding up
is to take place and the date,  if any is to be fixed as of which the holders of
Common  Stock  or  other   securities  shall  receive  cash  or  other  property
deliverable upon such reclassification,  reorganization,  consolidation, merger,
conveyance,  dissolution,  liquidation  or winding  up. The failure to give such
notice shall not otherwise affect the action take by the Company.

I.          RECLASSIFICATION, REORGANIZATION OR MERGER

            In case of any  reclassification,  capital  reorganization  or other
change of  outstanding  shares  Common Stock of the  Company,  or in case of any
consolidation or merger of the Company with or into another  corporation  (other
than a merger with a subsidiary  in which  merger the Company is the  continuing
corporation  and  that  does  not  result  in  any   reclassification,   capital
reorganization  or other  change of  outstanding  shares of Common  Stock of the
class  issuable upon exercise of this Warrant) or in case of any sale,  lease or
conveyance to another corporation of the property of the Company as an entirety,
the Company shall, as a condition precedent to such transaction, cause effective
provisions  to be made so that the Holder  shall have the right  thereafter,  by
exercising  this Warrant at any time prior to the expiration of the Warrant,  to
purchase the kind and amount of shares of stock an other securities and property
receivable upon such reclassification,  capital reorganization and other change,
consolidation,  merger,  sale or conveyance by a holder of such number of shares
of Common  Stock that might have been  purchased  upon  exercise of this Warrant
immediately prior to such reclassification,  change, consolidation, merger, sale
or conveyance.  Any such provision shall include  provision for adjustments that
shall be as nearly equivalent as may be practicable to the adjustments  provided
for in this  Warrant.  The  foregoing  provisions  of  this  Section  (I)  shall
similarly apply to successive  reclassifications,  capital  reorganizations  and
changes of shares of Common  Stock and to  successive  consolidations,  mergers,
sales or  conveyances.  In the event that in  connection  with any such  capital
reorganization or reclassification,  consolidation,  merger, sale or conveyance,
additional  shares of Common  Stock  shall be  issued in  exchange,  conversion,
substitution  or  payment,  in whole or in part,  for a security  of the Company
other than Common  Stock,  any such issue shall be treated as an issue of Common
Stock covered by the provisions of Subsection (1) of Section (F) hereof.

                                      -94-

<PAGE>

J.          WARRANTS TO RANK PARI PASSU

            All Warrants shall rank pari passu,  whatever may be the actual date
of issue of the same.

K.          GOVERNING LAW; JURISDICTION AND VENUE

            This Warrant shall be governed by and interpreted in accordance with
the laws of the State of Florida;  provided,  however,  that if any provision of
this Agreement is unenforceable  under the laws of the State of Florida,  but is
enforceable  under  the laws of the  Province  of  Ontario,  Canada,  then  such
provision  shall be governed by and  interpreted in accordance  with the laws of
the Province of Ontario.

            Any  controversy  or  claim  arising  out  of or  relating  to  this
Agreement  (whether in contract or tort,  or both, or at law or in equity) shall
be determined by binding arbitration at Toronto,  Canada, in accordance with the
commercial  arbitration  rules of the  International  Chamber of  Commerce.  The
prevailing  party in any  arbitration  proceeding  shall be  awarded  reasonable
attorneys  fees and costs of the  proceeding.  The  arbitration  award  shall be
final,  and may be entered  in any court  having  jurisdiction.  Nothing in this
paragraph  shall  preclude  either party from  applying to a court for temporary
equitable relief, when appropriate, pending and subject to such temporary orders
and permanent award as the arbitrator or arbitrators may make.

            The  parties  agree  that the  courts of the  Province  of  Ontario,
Canada, shall have exclusive  jurisdiction and venue for the adjudication of any
civil action between them arising out of relating to this Agreement,  and hereby
irrevocably consent to such jurisdiction and venue.

            IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and  attested by the  undersigned,  each being duly  authorized,  as of the date
below.

                                         SURGICAL SAFETY PRODUCTS, INC..
                                         By:_____________________________
                                         Its:_____________________________

DATED:  December __, 1999

ATTEST:
=======================

                                      -95-

<PAGE>

                           FORM OF NOTICE OF EXERCISE

THIS WARRANT MAY BE EXERCISED ONLY (i) BY A PERSON WHO IS NOT A U.S.  PERSON (AS
DEFINED  IN  REGULATION  S  PROMULGATED  UNDER THE  SECURITIES  ACT OF 1933,  AS
AMENDED),  (ii) IF NOT  EXERCISED ON BEHALF OF A U.S.  PERSON,  (iii) IF NO U.S.
PERSON HAS ANY  INTEREST  IN THE  WARRANTS  BEING  EXERCISED  OR THE  UNDERLYING
SECURITIES  TO BE ISSUED UPON  EXERCISE,  AND (iv) OUTSIDE THE UNITED STATES AND
THE WARRANT  SHARES  UNDERLYING  THE WARRANTS  ARE TO BE  DELIVERED  OUTSIDE THE
UNITED  STATES.  IF THE ABOVE CANNOT BE COMPLIED  WITH,  THEN THE WARRANT CAN BE
EXERCISED ONLY IF A WRITTEN OPINION OF COUNSEL,  THE FORM AND SUBSTANCE OF WHICH
IS ACCEPTABLE  TO THE COMPANY,  IS DELIVERED TO THE COMPANY PRIOR TO EXERCISE OF
THE  WARRANTS  BEING  EXERCISED  THAT  REGISTRATION  IS  NOT  REQUIRED,  OR  THE
UNDERLYING  SECURITIES  DELIVERED UPON EXERCISE HAVE BEEN  REGISTERED  UNDER THE
SECURITIES ACT OF 1933.

            The  undersigned  hereby  irrevocably  elects to exercise the within
Warrant to the extent of  purchasing  __________  shares of Common  Stock at the
Exercise Price of US$1.09375 per share, for a total of US$ _________________.

INSTRUCTIONS FOR REGISTRATION OF STOCK

Name_________________________________________
            (Please typewrite or print in block letters)

Address________________________________________

                    =========================================

The undersigned represents and warrants to U.S. Surgical Products, Inc. that the
conditions for exercise of the within Warrant set forth in the first sentence of
the first  paragraph  above have been fully complied with and no U.S. Person has
any interest in the Warrant or the Warrant Shares.

Signature____________________________________________________
(Sign exactly as your name appears on the first page of this Warrant)

                                      -96-

<PAGE>

                                 ASSIGNMENT FORM

            FOR VALUE RECEIVED,

-------------------------------------------------------
hereby sells, assigns and transfers unto

Name

--------------------------------------------------------
(Please typewrite or print in block letters)

Address

--------------------------------------------------------

--------------------------------------------------------

the right to purchase shares of Common Stock of Surgical Safety Products,  Inc.,
represented  by this  Warrant  as to which such  right is  exercisable  and does
hereby    irrevocably    constitute   and   appoint    _________________________
________________  Attorney, to transfer the same on the books of Surgical Safety
Products, Inc., with full power of substitution in the premises.

Date:  __________________________

Signature:  _____________________________________________________________
(sign exactly as your name appears on the first page of this Warrant)

Note:  The Warrant and the Common Stock  issuable  upon  exercise of the Warrant
were issued under Regulation S under the Securities Act of 1933, as amended, and
may be transferred  only in accordance  therewith and as provided in the legends
set forth in the Warrant.

                                      -97-

<PAGE>

                          REGISTRATION RIGHTS AGREEMENT

            THIS  REGISTRATION  RIGHTS AGREEMENT (this  "Agreement") is made and
entered into as of December 20, 1999, by and between  Surgical Safety  Products,
Inc.,  a New York  corporation  (the  "Company"),  and  Thomson  Kernaghan & Co.
Limited (the "Agent"),  for itself and certain lenders (the "Lenders") described
in the Loan Agreement defined below..

Preliminary Statements

            In connection with the consummation of the transactions contemplated
by that certain  Loan  Agreement  (including  all  exhibits  thereto,  the "Loan
Agreement") of even date herewith by and between the Company and the Agent,  the
Company has agreed,  upon the terms and  subject to the  conditions  of the Loan
Agreement,  at the option of the Agent or other holders of the Notes (as defined
in the Loan Agreement), to convert the Notes into shares of the Company's Common
Stock (the "Conversion Shares").

            The  Company  has also  agreed,  upon the terms and  subject  to the
conditions of the Loan Agreement, to issue to the Agent a Warrant (the "Lender's
Warrant") to purchase up to 3,428,571  shares of the Company's Common Stock (the
"Lender's  Warrant  Shares") and to issue to the Agent a Warrant  (the  "Agent's
Warrant") to purchase up to1,142,857  shares of the Company's  Common Stock (the
"Agent's Warrant Shares").

            The  Lender's  Warrant  Shares and the  Agent's  Warrant  Shares are
collectively  referred to as the Warrant Shares.  The Conversion  Shares and the
Warrant  Shares are  hereinafter  collectively  referred to as the  "Registrable
Securities." The Registrable Securities are issuable pursuant and subject to the
provisions of the Loan Agreement.

            To induce the Agent to execute and deliver the Loan Agreement and to
make  Loans  thereunder,  the  Company  has  agreed,  pursuant  to the terms and
conditions  of this  Agreement,  to provide  certain  registration  rights  with
respect to the Registrable Securities.

Agreement

            In  consideration  of  the  foregoing,   the  mutual  covenants  and
conditions  set  forth  in  this  Agreement  and for  other  good  and  valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to become legally bound, hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

            As used in this  Agreement,  the  following  terms  shall  have  the
following respective meanings:

          "Agent" shall mean Thomson Kernaghan & Co. Limited.

          "Agent's  Warrant" shall have the meaning ascribed to such term in the
     Preliminary Statements to this Agreement.

                                      -98-

<PAGE>

          "Agent's  Warrant Shares" shall have the meaning ascribed to such term
     in the Preliminary Statements to this Agreement.

          "Agreement" shall mean this Registration Rights Agreement.

          "Commission" shall mean the Securities and Exchange  Commission or any
     other federal agency at the time administering the Securities Act.

          "Conversion  Shares"  shall have the meaning  ascribed to such term in
     the Preliminary Statements to this Agreement.

          "Company"  shall  mean  Surgical  Safety  Products,  Inc.,  a New York
     company.

          "Exchange  Act" shall mean the  Securities  Exchange  Act of 1934,  as
     amended, or any successor federal statute, and the rules and regulations of
     the Commission thereunder, all as in effect from time to time.

          "Filing  Deadline"  shall have the  meaning  ascribed  to such term in
     Section 2.1 of this Agreement.

          "Holder" or "Holders" shall mean (a) the Agent, to the extent that the
     Agent holds Registrable Securities,  and (b) any Person holding Registrable
     Securities as a transferee of the Agent (directly or indirectly,  including
     subsequent transfers).

          "Lender's Warrant" shall have the meaning ascribed to such term in the
     Preliminary Statements to this Agreement.

          "Lender's Warrant Shares" shall have the meaning ascribed to such term
     in the Preliminary Statements to this Agreement.

          "Loan  Agreement"  shall have the meaning ascribed to such term in the
     Preliminary Statements to this Agreement.

          "Person" shall mean any individual,  corporation,  partnership,  joint
     venture,   association,    joint-stock   company,   trust,   unincorporated
     organization or government or any agency or political subdivision thereof.

          The terms "register," "registered" and "registration" shall refer to a
     registration  effected by preparing and filing with the  Commission  one or
     more registration  statements covering Registrable Securities in compliance
     with the Registrable  Securities Act that is declared or ordered  effective
     by the Commission.

          "Registrable   Securities"  shall  mean  the  Conversion  Shares,  the
     Lender's  Warrant Shares and the Agent's Warrant Shares,  and any shares of
     capital stock issued or issuable with respect to the Conversion Shares, the
     Lender's  Warrant  Shares or the Agent's  Warrant Shares as a result of any
     stock split, stock dividend,  recapitalization,  exchange or similar event;
     provided,  however,  that such  Registrable  Securities  shall  cease to be
     Registrable  Securities  when (a) a registration  statement with respect to
     such Registrable  Securities  shall have been declared  effective under the

                                      -99-

<PAGE>

     Registrable  Securities Act and such Registrable Securities shall have been
     disposed of pursuant to the  registration  statement,  (b) such Registrable
     Securities are  distributed  to the public  pursuant to Rule 144(k) (or any
     successor  provisions)  promulgated  under the  Securities  Act or (c) such
     Registrable Securities shall have ceased to be outstanding.

          "Registration  Deadline" shall have the meaning  ascribed to such term
     in Section 2.1 of this Agreement.

          "Registration  Expenses" shall mean all expenses  incurred in order to
     comply  with  Article  II  hereof,  including,   without  limitation,   all
     registration and filing fees, printing expenses,  fees and disbursements of
     counsel  for the  Company,  reasonable  fees and  disbursements  of one (1)
     counsel for the Holders, blue sky fees and expenses, and the expense of any
     special  audits  incident  to or  required  by any such  registration,  but
     excluding the compensation of regular employees of the Company (which shall
     be paid in any event by the Company) and excluding Selling Expenses.

          "Restricted  Registrable Securities" shall mean Registrable Securities
     that are "restricted  Registrable  Securities" as defined in Rule 144 under
     the Securities Act.

          "Registrable  Securities" shall have the meaning ascribed to such term
     in the Preliminary Statements to this Agreement.

          "Securities Act" shall mean the Registrable Securities Act of 1933, as
     amended, or any successor federal statute, and the rules and regulations of
     the Commission thereunder, all as in effect from time to time.

          "Selling  Expenses" shall mean all underwriting  discounts and selling
     commissions incurred in connection with the sale of Registrable  Securities
     pursuant to a registration effected hereunder.

          "Warrant  Shares" shall have the meaning  ascribed to such term in the
     Preliminary Statements to this Agreement.

          Capitalized  terms used in this  Agreement and not  otherwise  defined
     herein  shall have the  respective  meanings  ascribed to such terms in the
     Loan Agreement.

                                   ARTICLE II
                               REGISTRATION RIGHTS

          Section 2.1    Mandatory Registration.

(a)  The Company  shall prepare and file with the  Commission  within sixty (60)
     days from the date of this Agreement (the "Filing Deadline") a registration
     statement or registration statements (as is necessary) on Form S-3 covering
     the  issuance  and the resale of all of the  Registrable  Securities.  Such
     registration  statement  shall  initially  register  for  resale  at  least
     21,750,000  Conversion  Shares, and 100% of the Warrant Shares. The Company
     shall use its best  efforts  to have the  registration  statement  declared
     effective by the Commission  within one hundred and twenty (120) days after
     the Filing Deadline (the "Registration Deadline"). The Company shall permit
     the  registration  statement to become  effective  within five (5) business
     days after  receipt  of a "no  review"  notice  from the  Commission.  Such

                                      -100-

<PAGE>

     registration  statement shall be kept current and effective for the greater
     of (i) a period of at least three (3) years from the Closing  Date and (ii)
     a period of at least ninety (90) days after (x) all of the Notes shall have
     been converted into Conversion  Shares or paid in full, and (y) the Agent's
     Warrant and the Agent's Warrant shall have been fully exercised or expired.
     If a registration  statement with respect to the Registrable  Securities is
     not effective on the Registration  Deadline date, the Company agrees to and
     shall pay the Agent  liquidated  damages of US$13,000 per month,  pro-rated
     for partial months, until the registration statement is effective.

            Section 2.2  Expenses of  Registration.  All  Registration  Expenses
incurred  in  connection  with any  registration,  qualification  or  compliance
pursuant to Section 2.1 shall be borne by the Company;  and all Selling Expenses
in connection with such registration, qualification or compliance shall be borne
by the holders of the Registrable Securities so registered pro rata on the basis
of the number of shares so registered.

            Section   2.3   Registration   Procedures.   In  the  case  of  each
registration,  qualification  or compliance  effected by the Company pursuant to
this Article II, the Company will keep each Holder  advised in writing as to the
initiation of each  registration,  qualification  and  compliance  and as to the
completion thereof. At its expense, the Company will:

     (a) prepare and file with the Commission such amendments and supplements to
such  registration  statement and the  prospectus  used in connection  with such
registration  statement as may be necessary to comply with the provisions of the
Registrable  Securities Act with respect to the  disposition of all  Registrable
Securities covered by such registration statement;

     (b)  furnish  to the  Holders  such  numbers  of  copies  of a  prospectus,
including a preliminary  prospectus,  in conformity  with the requirement of the
Registrable  Securities  Act, and such other  documents  as they may  reasonably
request (including a conformed copy of the registration statement filed with the
Commission  and any  amendments  thereto and an original  executed  underwriting
agreement  entered  into in  connection  with  such  registration)  in  order to
facilitate the disposition of Registrable Registrable Securities owned by them;

     (c)  use  reasonable  efforts  to  register  and  qualify  the  Registrable
Securities  covered by such registration  statement under such other Registrable
Securities  or blue  sky  laws of one (1)  jurisdiction  (in  addition  to those
jurisdictions  in which the Company  has  otherwise  agreed to so  register  and
qualify such  Registrable  Securities)  as shall be reasonably  requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions;

     (d) in the  event  of any  underwritten  public  offering,  enter  into and
perform  its  obligations  under an  underwriting  agreement  with the  managing
underwriter(s) of such offering;  each Holder participating in such underwriting
shall  also enter  into and  perform  its  obligations  under such  underwriting
agreement;

     (e)  notify  each  Holder  of  Registrable   Securities   covered  by  such
registration  statement,  at any time  when a  prospectus  relating  thereto  is
required to be  delivered  under the  Securities  Act, of the  happening  of any

                                      -101-

<PAGE>

of any event as a result of which the prospectus  included in such  registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material  fact  required to be stated  therein or  necessary to
make the  statements  therein not  misleading in the light of the  circumstances
then existing; and

     (f)  furnish,  at the  request of any  Holder  requesting  registration  of
Registrable  Securities  pursuant  to this  Article  II,  on the date  that such
Registrable  Securities are delivered to the underwriters for sale in connection
with  registration  pursuant to this Article II, if such Registrable  Securities
are  being  sold  through  underwriters,  or on the date  that the  registration
statement with respect to such Registrable Securities becomes effective, if such
Registrable  Securities are not being sold through  underwriters,  (i) a copy of
any opinion,  dated such date, of the counsel  representing  the Company for the
purposes of such registration, addressed to the underwriters of the Company, and
(ii) a copy of any letter, dated such date, from the independent  accountants of
the Company, addressed to the underwriters of the Company.

     Each  Holder of  Registrable  Securities  agrees  that upon  receipt of any
notice from the Company of the  happening of any event of the kind  described in
clause  (f)  of  this  Section  2.3,  such  Holder  will  forthwith  discontinue
disposition of Registrable  Securities  pursuant to the  registration  statement
covering such  Registrable  Securities until such Holder's receipt of the copies
of a supplemented or amended prospectus and, if so directed by the Company, such
Holder will deliver to the Company (at the Company's expense), all copies, other
than permanent file copies then in such Holder's  possession,  of the prospectus
covering such Registrable  Securities that was in effect prior to such amendment
or supplement.  In the event the Company shall give any such notice,  the period
set forth in clause (a) of this  Section  2.3 shall be extended by the number of
days during the period from and  including the date of the giving of such notice
pursuant to clause (e) of this Section 2.3 to and  including  the date when each
seller of Registrable  Securities  covered by such registration  statement shall
have received the copies of a supplemented or amended prospectus.

            Section 2.4             Indemnification.

     (a) The  Company  will  indemnify  each  Holder,  each  Holder's  officers,
directors and partners,  and each Person controlling such Holder  (collectively,
"Holder's  Parties"),  participating  in  any  registration,  qualification,  or
compliance  effected  pursuant to this  Article II with  respect to  Registrable
Securities held by such Holder and each underwriter, if any, and each Person who
controls any underwriter,  against all claims,  losses,  damages and liabilities
(or actions in respect  thereof),  including  any of the  foregoing  incurred in
settlement of any litigation,  commenced or threatened, to which they may become
subject under the Registrable  Securities Act, the Exchange Act or other federal
or state law,  arising out of or based on (i) any untrue  statement  (or alleged
untrue  statement)  of a material  fact  contained in any  prospectus,  offering
circular  or  other  similar  document   (including  any  related   registration
statement,  notification  or  the  like)  incident  to  any  such  registration,
qualification or compliance,  or based on any omission (or alleged  omission) to
state therein a material fact required to be stated therein or necessary to make
the statements  therein not misleading,  or (ii) any violation by the Company of
any federal, state or common law rule or regulation applicable to the Company in
connection with any such  registration,  qualification  or compliance,  and will
reimburse each such Holder's Parties each such underwriter,  and each Person who
controls any such underwriter, for any legal and any other expenses reasonably

                                      -102-

<PAGE>

incurred in connection  with  investigating  or defending any such claim,  loss,
damage, liability or action, as incurred,  provided that the Company will not be
liable  in any  such  case to the  extent  that any such  claim,  loss,  damage,
liability  or  expense  arises  out of or is based on any  untrue  statement  or
omission,  made  in  reliance  on and in  conformity  with  written  information
furnished  to the  Company by such  Holder's  Parties or  underwriter  or Person
controlling such underwriter specifically for use in the preparation thereof.

(b) Each Holder will, if Registrable Securities held by such Holder are included
in the Registrable  Securities as to which such  registration,  qualification or
compliance is being effected,  severally and not jointly, indemnify the Company,
each of its  directors and officers,  each  underwriter,  if any, of the Company
Registrable Securities covered by such a registration statement, and each Person
who  controls  the  Company  or  such  underwriter  within  the  meaning  of the
Registrable  Securities Act, against all claims, losses, damages and liabilities
(or  actions  in  respect  thereof)  arising  out of or based on (i) any  untrue
statement (or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other similar document,
or any omission (or alleged  omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company, such directors,  officers, Persons, underwriters
or control  Persons for any legal or any other expenses  reasonably  incurred in
connection  with  investigating  or  defending  any such  claim,  loss,  damage,
liability or action,  as incurred,  in each case to the extent,  but only to the
extent, that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement,  prospectus,  offering
circular or other  document in reliance upon and in conformity  with the written
information  furnished to the Company by such Holder specifically for use in the
preparation  thereof,  or (ii) any  violation by any such Holder of any federal,
state or common law rule or  regulation  applicable to such Holder in connection
with the  distribution  of  Registrable  Securities  pursuant to a  registration
statement,  and will  reimburse  the  Company,  such  Holders,  such  directors,
officers,  Persons,  underwriters  or  control  Persons  for any legal any other
expenses  reasonably  incurred in connection with investigating or defending any
such claim, loss, damage, liability, or action, as incurred;  provided, however,
that the obligations of each such Holder hereunder shall be limited to an amount
equal to the aggregate proceeds received by such Holder in such offering.

     (c) Each party  entitled  to  indemnification  under this  Section 2.4 (the
"Indemnified  Party")  shall  give  notice  to the  party  required  to  provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has received  written  notice of any claim as to which  indemnity may be sought,
and shall permit the Indemnifying  Party to assume the defense of any such claim
or  any  litigation   resulting   therefrom,   provided  that  counsel  for  the
Indemnifying  Party,  who shall conduct the defense of such claim or litigation,
shall  be  approved  by  the   Indemnified   Party  (whose  approval  shall  not
unreasonably be withheld). The Indemnified Party may participate in such defense
at such party's expense;  provided,  however,  that the Indemnifying Party shall
bear the expense of such  defense of one counsel  representing  the  Indemnified
Party  if   representation  of  both  parties  by  the  same  counsel  would  be
inappropriate due to actual or potential  conflicts of interest.  The failure of
any  Indemnified  Party to give notice as provided  herein shall not relieve the
Indemnifying  Party of its  obligations  under this Section  2.4,  except to the
extent such failure to give notice shall materially and adversely  prejudice the
Indemnifying Party in  the defense of any such claim or any such litigation.  No

                                      -103-

<PAGE>

Indemnifying  Party,  in the  defense  of any such claim or  litigation,  shall,
except  with the  consent  of each  Indemnified  Party,  consent to entry of any
judgment or enter into any settlement that does not include as an  unconditional
term thereof the giving by the claimant or plaintiff to such  Indemnified  Party
of a release from all liability in respect to such claim or litigation.

     (d)

          (i) If the indemnification provided for in this Section 2.4 is held by
     a court of competent jurisdiction to be unavailable to an Indemnified Party
     with respect to any loss,  liability,  claim, damage or expense referred to
     herein,  then the  Indemnifying  Party  hereunder  shall  contribute to the
     amount paid or payable by such Indemnified  Party as a result of such loss,
     liability,  claim,  damage or expense, in such proportion as is appropriate
     to reflect the relative fault of the Indemnifying Party on the one hand and
     the  Indemnified  Party on the other hand in connection with the statements
     or  omissions  which  resulted in such loss,  liability,  claim,  damage or
     expense  as  well  as any  other  relevant  equitable  considerations.  The
     relative fault of the Indemnifying Party and of the Indemnified Party shall
     be determined  by reference  to, among other things,  whether the untrue or
     alleged  untrue  statement  of a material  fact or the  omission to state a
     material fact relates to information  supplied by the Indemnifying Party or
     by the  Indemnified  Party and the  parties'  relevant  intent,  knowledge,
     access  to  information  and  opportunities  to  correct  or  prevent  such
     statement or omission.

          (ii) The  parties  agree  that it would not be just and  equitable  if
     contribution  pursuant  to this  Section  2.4 were  determined  by pro rata
     allocation or by any other method of allocation  that does not take account
     of the  equitable  considerations  referred  to above.  The amount  paid or
     payable by an Indemnified Party as a result of the claims,  losses, damages
     and  liabilities  referred to above shall be deemed to include,  subject to
     the  limitations  set forth above,  any legal or other expenses  reasonably
     incurred by such  Indemnified  Party in connection  with  investigating  or
     defending any such action or claim.

          (iii) No Holder that is a seller of Registrable  Securities covered by
     such  registration  statement or Person  controlling such seller other than
     the Company shall be obligated to make  contribution  hereunder that in the
     aggregate  exceeds  the  total  public  offering  price of the  Registrable
     Securities  sold by such Holder,  less the aggregate  amount of any damages
     that such Holder and its  controlling  Persons have otherwise been required
     to pay pursuant to this Section  2.4.  The  obligations  of such Holders to
     contribute are several in proportion to their  respective  ownership of the
     Registrable  Securities  covered  by such  registration  statement  and not
     joint.

          (iv)  The  indemnity  and  contribution  provided  herein  shall be in
     addition  to,  and not in lieu of, any other  liability  that one party may
     have to another.

            Section  2.5  Information  by  Holder.  Each  Holder of  Registrable
Securities  included  in any  registration  shall  furnish to the  Company  such
information  regarding such Holder and the distribution  proposed by such Holder
as the Company  may  request in writing  and as shall be required in  connection
with any registration,  qualification or compliance  referred to in this Article
II.

                                      -104-

<PAGE>

            Section 2.6 Rule 144 Reporting.  With a view to making available the
benefits of certain rules and regulations of the Commission that may at any time
permit the sale of the Restricted  Registrable  Securities to the public without
registration, the Company agrees to:

     (a)  use  its  best  efforts  to  facilitate  the  sale  of the  Restricted
Registrable  Securities to the public without registration under the Registrable
Securities Act, pursuant to Rule 144 under the Registrable Securities Act;

     (b)  make  and keep  public  information  available,  as  those  terms  are
understood and defined in Rule 144 under the Registrable  Securities Act, at all
times after the effective date of the first registration  statement filed by the
Company for an offering of its Registrable Securities to the general public;

     (c) file with the  Commission  in a timely  manner  all  reports  and other
documents  required of the Company under the Registrable  Securities Act and the
Exchange  Act (at  any  time  after  it has  become  subject  to such  reporting
requirements); and

     (d) so long as a  Holder  owns any  Restricted  Registrable  Securities  to
furnish to the Holder forthwith upon request a written  statement by the Company
as to its compliance with the public information  requirements of said Rule 144,
and  the  reporting  requirements  of the  Registrable  Securities  Act  and the
Exchange  Act,  a copy of the most  recent  annual  or  quarterly  report of the
Company,  and such other  reports  and  documents  so filed by the  Company as a
Holder may  reasonably  request in availing  itself of any rule or regulation of
the Commission allowing a Holder to sell any such Registrable Securities without
registration.

            Section 2.7  Transfer of  Registration  Rights.  The rights  granted
under this  Article II may be  assigned or  otherwise  conveyed by any Holder of
Registrable  Securities  to any  transferee,  subject  to  compliance  with  all
applicable Registrable Securities laws and regulations.

            Section 2.8   Certain  Limitations in  Connection with Future Grants
of Registration Rights.

            From and after the date of this Agreement, without the prior written
consent of the Holders of a majority of the Registrable Securities,  the Company
shall not enter into any agreement with any holder or prospective  holder of any
Registrable  Securities of the Company providing for the granting to such holder
of  registration  rights  that  would be  superior  to those  granted to Holders
pursuant to Section 2.1.

            Section 2.9  Restrictions on Market  Manipulation.  In the event any
shares of Common Stock are offered or sold by any Holder in a registration, each
such Holder will:

     (a) advise the Company in writing of any offer,  sale or other  disposition
by it of any  Common  Stock  in any  manner  other  than  as  set  forth  in the
registration  statement or any prospectus  included therein on or for the 30-day
period prior to the filing of such registration statement until the distribution
under the registration statement has been completed;

     (b) not effect any stabilization  activity in connection with the Company's
Common Stock;

                                      -105-

<PAGE>

     (c) not bid or  purchase,  for any  account  in which  it has a  beneficial
interest,  any Common Stock  except as may be  permitted  pursuant to Rule 10b-6
under the Exchange Act (if applicable);

     (d) not until it has sold all of such  shares of Common  Stock,  attempt to
induce  any  Person to  purchase  any Common  Stock  except as may be  permitted
pursuant to Rule 10b-6; and

     (e) not  until it has  sold  all  such  shares  of  Common  Stock,  pay any
compensation  for soliciting  another to purchase any Registrable  Securities of
the Company, except as may be permitted pursuant to Rule 10b-6.

                                   ARTICLE III
                                  MISCELLANEOUS

            Section 3.1 Governing Law;  Jurisdiction  and Venue.  This Agreement
shall be governed by and interpreted in accordance with the laws of the State of
Florida;  provided,  however,  that  if  any  provision  of  this  Agreement  is
unenforceable  under the laws of the State of Florida,  but is enforceable under
the laws of the  Province  of  Ontario,  Canada,  then such  provision  shall be
governed  by and  interpreted  in  accordance  with the laws of the  Province of
Ontario.  Any  controversy or claim arising out of or relating to this Agreement
(whether  in  contract  or  tort,  or  both,  or at law or in  equity)  shall be
determined by binding  arbitration at Toronto,  Canada,  in accordance  with the
commercial  arbitration  rules of the  International  Chamber of  Commerce.  The
prevailing  party in any  arbitration  proceeding  shall be  awarded  reasonable
attorneys  fees and costs of the  proceeding.  The  arbitration  award  shall be
final,  and may be entered  in any court  having  jurisdiction.  Nothing in this
paragraph  shall  preclude  either party from  applying to a court for temporary
equitable relief, when appropriate, pending and subject to such temporary orders
and permanent award as the arbitrator or arbitrators may make. The parties agree
that the  courts of the  Province  of  Ontario,  Canada,  shall  have  exclusive
jurisdiction  and venue for the  adjudication  of any civil action  between them
arising out of relating to this  Agreement,  and hereby  irrevocably  consent to
such jurisdiction and venue.

            Section 3.2 Successors and Assignees.  Except as otherwise  provided
herein,  the  provisions  hereof  shall  inure to the benefit of, and be binding
upon, the successors,  assignees,  heirs,  executors and  administrators (as the
case may be) of the parties hereto.

            Section 3.3  Entire Agreement.  This  Agreement constitutes the full
and entire  understanding  and agreement  between the parties with regard to the
subject matter hereof.

            Section 3.4 Notices, etc. All notices given under this Agreement and
under the other Loan Documents shall be in writing,  addressed to the parties as
set  forth  below,  and  shall  be  effective  on the  earliest  of (i) the date
received,  or (ii) if  given  by  facsimile  transmittal  on the  date  given if
transmitted before 5:00 p.m. the recipient's time, otherwise it is effective the
next  day,  or  (iii) on the  second  business  day  after  delivery  to a major
international  air delivery or air courier  service (such as Federal  Express or
Network Couriers):

                                      -106-

<PAGE>

If to the Agent:
            Thomson Kernaghan & Co. Ltd.
            365 Bay Street
            Toronto, Ontario M5H 2V2
            Attention: Mark E. Valentine,
            Chairman
            Facsimile No. (416)  367-8055

With a copy (that does not constitute notice) to:
            John M. Mann
            Attorney at Law
            1330 Post Oak Boulevard
            Suite 2800
            Houston, Texas 77056-3060
            Facsimile No. (713) 622-7185

                                      -107-

<PAGE>

If to the Borrower:
            Surgical Safety Products, Inc.
            2018 Oak Terrace
            Sarasota, Florida 34231
            Attention: Frank M. Clark, President
            Facsimile No. (941) 925-0510

With a copy (that does not constitute notice) to:
            Mintmire & Associates
            265 Sunrise Avenue, Suite 204
            Palm Beach, FL  33480
            Attn:  Donald F. Mintmire, Esq.
            Facsimile No. (561) 659-5371

            Section  3.5 Delays or  Omissions.  No delay or omission to exercise
any right, power or remedy accruing to any Holder of any Registrable Securities,
upon any breach or default of the Company under this Agreement, shall impair any
such  right,  power or remedy of such Holder nor shall it be  construed  to be a
waiver of any such breach or default or an acquiescence  therein or of or in any
similar  breach or  default  thereunder  occurring  nor shall any  waiver of any
single  breach or  default  be deemed a waiver  of any other  breach or  default
theretofore or thereafter occurring.  Any waiver, permit, consent or approval of
any kind or character  on the part of any Holder of any breach or default  under
this  Agreement  or any  waiver on the part of any Holder of any  provisions  or
conditions of this  Agreement  must be in writing and shall be effective only to
the extent  specifically set forth in such writing.  All remedies,  either under
this Agreement or by law or otherwise afforded to any Holder shall be cumulative
and not alternative.

            Section  3.6  Counterparts.  This  Agreement  may be executed in any
number of  counterparts,  each of which may be  executed by less than all of the
parties hereto,  each of which shall be enforceable against the parties actually
executing  such  counterparts  and all of which  together  shall  constitute one
instrument.

            Section  3.7  Severability.  In the  event  any  provision  of  this
Agreement shall be invalid, illegal or unenforceable, the validity, legality and
enforceability  of the remaining  provisions shall not in any way be affected or
impaired thereby.

            Section 3.8  Amendments.  The  provisions  of this  Agreement may be
amended at any time and from time to time,  and  particular  provisions  of this
Agreement may be waived,  with and only with, an agreement or consent in writing
signed by the  Company  and by the  Holders  of a  majority  of the  Registrable
Securities voting as a single class.

                                      -108-

<PAGE>

            The parties have executed this  Registration  Rights Agreement as of
the date first written above.

The Agent:

THOMSON KERNAGHAN & CO. LTD.

By ________________________________
Name ______________________________
Title _____________________________
Date signed _______________________
The Company:

SURGICAL SAFETY PRODUCTS, INC.

By ________________________________
Name ______________________________
Title _____________________________
Date signed________________________

                                      -109-

<PAGE>

                         SURGICAL SAFETY PRODUCTS, INC.,
                                      AND
                          THOMSON KERNAGHAN & CO. LTD
                                ESCROW AGREEMENT

1.  Parties

             1.1. This Escrow  Agreement (this  AAgreement@) is made and entered
into effective December 20, 1999 (the AEffective Date@), by and between Surgical
Safety Products,  Inc. (the ACompany@) and Thomson  Kernaghan & Co. Limited (the
AEscrow Holder@).

2.  Recitals.

     2.1.  This  Agreement  is made with  reference to the  following  facts and
circumstances:

     (a) The Company and Thomson Kernaghan & Co. Limited, as Agent, are entering
into a Loan Agreement dated December 20, 1999 (the ALoan  Agreement@),  pursuant
to which the Company will issue to the Agent up to an aggregate of  US$5,000,000
of notes (the ANotes@).  The Notes are convertible,  at the option of the holder
or holders thereof,  into shares of the Company=s common stock, $0.001 par value
(ACommon Stock@). Under the terms of the Loan Agreement,  the Company has agreed
to issue and deliver to the Agent (i) a warrant to  purchase up to an  aggregate
of up to 3,428,571shares of the Company=s Common Stock.(the ALenders= Warrant@),
and (ii) a warrant to purchase up to an aggregate  of up to 1,142,857  shares of
the Company=s Common Stock (the AAgent=s Warrant@). The Lenders= Warrant and the
Agent=s  Warrant are  referred to each as a AWarrant@  and  collectively  as the
AWarrants.@  The Common Stock into which the Notes are  convertible are referred
to as the Conversion  Shares. The Common Stock to which the Warrants are subject
are referred to as the AWarrant  Shares.@ The Conversion  Shares and the Warrant
Shares are  issuable  in such  amounts  and upon the terms set forth in the Loan
Agreement.

     (b) The  conversion  price of the  Conversion  Shares is the  higher of (i)
US$0.375,  or (ii) the lower of (x)  $0.8203125  or (y) 75% of the  closing  bid
price of the  Borrower=s  Common Stock  quoted on the OTC Bulletin  Board on the
Conversion  Date;  i.e.,  in no event  shall the  Conversion  Price be less that
US$0.375 per share of Common Stock.

     (c) The exercise price for the Warrant Shares is US$1.09375 per share.

     (d) The Notes mature, unless sooner paid or converted, on November 30, 2002

     (e) The Warrants,  unless sooner exercised or redeemed,  expire on November
30, 2002.

     (f) Under the terms of a Registration  Rights Agreement between the Company
and the Agent,  the Company  has agreed to file a  registration  statement  (the
ARegistration  Statement@)  under the United  States  Securities  Act of 1933 as
Amended (the ASecurities  Act@), for the purpose of registering the issuance and
resale of the Conversion Shares and the Warrant Shares.

     (g)  Under the  terms of the Loan  Agreement,  the  Company  has  agreed to
execute this  Agreement with the Escrow Holder,  to issue  certificates  for the
Conversion Shares (the AConversion Shares  Certificates@) and the Warrant Shares
(the AWarrant Shares

                                      -110-

<PAGE>

Certificates@),  registered  in the name of the  Escrow  Holder,  and to deliver
those certificates to the Escrow Holder pursuant to the terms of this Agreement.

     (h) In  accordance  with the terms of the Loan  Agreement,  the  Company is
issuing a Note for US$650,000 upon the execution of this Agreement (the AInitial
Note@).

     2.1. In consideration of the premises, and in order to establish the escrow
for the Conversion Shares and the Warrant Shares required by the Loan Agreement,
the Company is entering into this Agreement with the Escrow Holder.

3.  Escrow

     3.1.  Contemporaneously with the execution of this Agreement,  the Borrower
shall execute and deliver to the Escrow  Holder a certificate  for the number of
Conversion Shares underlying the Note evidencing the initial Loan and the number
of Warrant Shares for which the Warrants  shall be exercisable  upon funding the
initial Loan.  Prior to each  additional  Loan,  the Borrower  shall execute and
deliver  to the  Escrow  Holder  a  certificate  for the  number  of  additional
Conversion  Shares  underlying the Note  evidencing  that Loan and the number of
additional  Warrant  Shares for which the  Warrants  shall be  exercisable  upon
funding that Loan.

     3.2. All certificates for Conversion Shares and Warrant Shares delivered to
the Escrow  Holder shall be  registered  in the name of Thomson  Kernaghan & Co.
Ltd..  Until such time as the  registration  statement  covering the  Conversion
Shares and the Warrant shares is effective, the certificates shall bear a legend
indicating  that they have been issued in a transaction  that is exempt from the
registration  requirements  of the  Securities  Act, and may not be  transferred
except  pursuant to  registration  under the Securities Act or an exemption from
such  registration.  Except for such  legend,  the Common Stock  underlying  the
Lenders= Warrant and the Agent=s Warrant shall be free and clear of any legends,
liens, claims, stop orders or other restrictions.

     3.3. Not later than the third  Business Day following the effective date of
the Registration Statement, the Borrower shall cause the Common Stock underlying
the Lenders=  Warrant and the Agent=s Warrant to be registered in Agent=s street
name, in DTC form, free and clear of any legends,  liens, claims, stop orders or
other restrictions.

     3.4.  All  Conversion  Shares and Warrant  Shares  deposited by the Company
after the effective date of the  Registration  Statement  shall be registered in
the street name of Thomson  Kernaghan & Co. Ltd., in DTC form, free and clear of
any legends, liens, claims, stop orders or other restrictions.

4. Release of Conversion Shares and Warrant Shares

     4.1. Upon receipt of a Conversion  Notice, the Escrow Holder shall promptly
(and in any event within three  business  days) release the number of Conversion
Shares specified in the Conversion  Notice to the person specified  therein.  If
all of the unpaid principal of and interest on the Note is being converted; then
the Escrow Holder shall endorse the Note as paid in full, and transmit the Note,
so endorsed, and the Conversion Notice, to the Company. If the conversion is for
less than all of the unpaid  principal of and  interest on the Note,  the Escrow
Holder shall endorse upon the Note the amount of principal  thereof and interest
thereon that is being  converted,  and transmit a copy of the Note, so endorsed,
and the Conversion Notice, to the Company.

                                      -111-

<PAGE>

     4.2. Upon receipt of a Warrant, together with an executed Purchase Form and
the  Exercise  Price for the number of Warrant  Shares  specified  therein,  the
Escrow Holder shall  promptly  (and in any event within three  business days (i)
release  the number of Warrant  Shares  specified  in the  Purchase  Form to the
person specified therein;  (ii) transmit a copy of the Warrant and Purchase Form
to the Company;  and (ii) disburse the Exercise Price for such Warrant Shares to
the Company,  either by check or wire  transfer as the Company  shall specify by
written instructions to the Escrow Holder.  Promptly upon the written request of
the Escrow Holder, the Company shall issue replacement Warrants and deliver them
to the  Escrow  Holder,  upon any  partial  exercise  of a Warrant  ,or upon the
transfer of a Warrant or any interest therein.

5.  Termination and Resignation

     5.1. This Agreement, unless sooner terminated,  shall terminate on the date
on which  all of the Notes  have  been  redeemed  or  converted,  and all of the
Warrants have been exercised or expired.

     5.2. The Escrow  Holder may resign as such at any time,  without  liability
therefor,  by giving  the  Company  and the  Agent  not less than 10 days  prior
written  notice of its  election  to do so. In the event of the Escrow  Holder=s
resignation,  the  Company  shall  promptly  appoint a successor  Escrow  Holder
acceptable to the Agent.

6.  Limitation on the Escrow Holder=s Liability; Indemnification.

     6.1.  The Escrow  Holder  shall not be liable to the  Company,  to any Note
holder,  to any Warrant holder,  or to any other person or entity for any action
taken or omitted by it, except for the Escrow  Holder=s own gross  negligence or
wilful misconduct. Without limiting the generality of the foregoing:

     (a) The Escrow  Holder may rely upon,  and shall be  protected in acting or
refraining  from acting in reliance upon, any notice,  certificate,  instrument,
request,  paper or other document  believed by it to be genuine and made,  sent,
signed or presented by the Company,  any Note holder, any Warrant holder, or any
other person or entity.

     (b)  The  Escrow  Holder  shall  not  be  responsible  or  liable  for  the
genuineness,  validity or sufficiency of any Note,  Warrant,  stock certificate,
notice or other  instrument  delivered to it, including  without  limitation the
genuineness  of any  signature  thereon,  or of the identity or authority of any
person executing or delivering the same.

     6.2. The Escrow  Holder shall not be obligated to take any action to defend
or enforce this  Agreement,  or to appear in,  prosecute or defend any action or
legal proceeding,  or to file any income or other tax return that, in the Escrow
Holder=s opinion,  would or might involve any cost, expense,  loss or liability,
unless,  and as often as  required  by it,  the  Company  shall  furnish it with
security and indemnity  satisfactory to it against all such cost, expense,  loss
and liability.

                                      -112-

<PAGE>

     6.3.  The  Escrow  Holder  shall not be  responsible  for the  validity  or
enforceability of any provision of this Agreement,  or for the execution thereof
by the Company, or for the truth or accuracy of any recitals or other statements
of fact contained in this Agreement.

     6.4.  The Escrow  Holder is not, and shall not be deemed for any purpose to
be, a fiduciary under this Agreement or otherwise, for the Company, for any Note
holder, for any Warrant holder, or for any other person or entity.

     6.5.  Except  for  matters  for  which the  Escrow  Holder is liable to the
Company under  paragraph  6.1 of this  Agreement,  the Company  hereby agrees to
defend  and  indemnify  the  Escrow  Holder  and  its  shareholders,  directors,
officers,  employees  and  agents,  and to hold each of them  harmless  from and
against  any  and all  judgments,  awards,  orders,  damages,  claims,  demands,
liability,  penalties, costs, and expenses (including attorney fees and court or
arbitration costs) of any nature whatsoever,  directly or indirectly arising out
of or relating to this  Agreement,  or any act or omission of the Escrow  Holder
hereunder. This indemnity shall survive termination of this Agreement.

7.  Miscellaneous Provisions.

     7.1. No amendment, modification, termination, or waiver of any provision of
this  Agreement,  nor consent to any  departure  by the Company  from any of its
provisions,  shall in any event be effective unless the same shall be in writing
and  signed by the  Escrow  Holder,  and then such  waiver or  consent  shall be
effective only in the specific  instance and for the specific  purpose for which
given.

     7.2. All notices given under this Agreement shall be in writing,  addressed
to the parties as set forth below, and shall be effective on the earliest of (i)
the date received,  or (ii) if given by facsimile  transmittal on the date given
if transmitted before 5:00 p.m. the recipient=s time,  otherwise it is effective
the next day,  or (iii) on the second  business  day after  delivery  to a major
international  air delivery or air courier  service (such as Federal  Express or
Network Couriers):

If to the Escrow Holder:                   If to the Company:
  Thomson Kernaghan & Co. Ltd.               Surgical Safety Products, Inc.
  365 Bay Street                             2018 Oak Terrace
  Toronto, Ontario M5H 2V2                   Sarasota, Florida 34231
 Attention: Mark E. Valentine, Chairman     Attention: Frank M. Clark, President
  Facsimile No. (416)  860-6140              Facsimile No. (941) 925-0510

With a copy (that does not                 With a copy (that does not constitute
 constitute notice) to:                     notice) to:
  John M. Mann                               Mintmire & Associates
  Attorney at Law                            265 Sunrise Avenue, Suite 204
  1330 Post Oak Boulevard, Suite 2800        Palm Beach, FL  33480
  Houston, Texas 77056-3060                  Attn:  Donald F. Mintmire, Esq.
  Facsimile No. (713) 622-7185               Facsimile No. (561) 659-5371

     7.3. No failure or delay on the part of the Escrow Holder in exercising any
right,  power, or remedy hereunder shall operate as a waiver thereof;  nor shall
any single or partial exercise of any such right,  power, or remedy preclude any
other or further exercise thereof or the exercise of any other right,  power, or
remedy hereunder.  The rights and remedies  provided herein are cumulative,  and
are not exclusive of any other rights, powers,  privileges,  or remedies, now or
hereafter existing, at law or in equity or otherwise.

     7.4. This  Agreement  shall be binding upon and inure to the benefit of the
Company and the Escrow  Holder,  and their  respective  successors  and assigns,
except that the Company  may not assign or  transfer  any of its r rights  under
this Agreement without the prior written consent of the Escrow Holder.

     7.5 The Company agrees to pay on demand all costs and expenses  incurred by
the Escrow  Holder in  connection  with the  preparation,  execution,  delivery,
filing,   and   administration   of  this  Agreement,   and  of  any  amendment,
modification,  or supplement hereto, including, without limitation, the fees and
out-of-pocket  expenses of counsel for the Escrow Holder  incurred in connection
with advising the Escrow Holder as to its rights and responsibilities hereunder.
The Company  also  agrees to pay all such costs and  expenses,  including  court
costs,  incurred  in  connection  with  enforcement  of this  Agreement,  or any
amendment,  modification,  or supplement thereto, whether by negotiation,  legal
proceedings,  or otherwise. In addition, the Company shall pay any and all stamp
and other taxes and fees payable or determined to be payable in connection  with
the issuance,  transfer and deliver of any Warrant or Warrant Shares, and agrees
to hold the Escrow Holder harmless from and against any and all liabilities with
respect to or  resulting  from any delay in paying or omission to pay such taxes
and fees. This provision shall survive termination of this Agreement.

     7.6. This Agreement shall be governed by, and construed in accordance with,
the laws of the Province of Ontario, Canada; provided, however, if any provision
of this Agreement is unenforceable  under Ontario law, but is enforceable  under
the laws of the U.S.  State of  Florida,  then  Florida  law  shall  govern  the
construction and enforcement of that provision.

     7.7. Any  controversy or claim arising out of or relating to this Agreement
(whether  in  contract  or  tort,  or  both,  or at law or in  equity)  shall be
determined by binding  arbitration at Toronto,  Canada,  in accordance  with the
commercial  arbitration  rules of the  International  Chamber of  Commerce.  The
prevailing  party in any  arbitration  proceeding  shall be  awarded  reasonable
attorneys  fees and costs of the  proceeding.  The  arbitration  award  shall be
final,  and may be entered  in any court  having  jurisdiction.  Nothing in this
paragraph  shall  preclude  either party from  applying to a court for temporary
equitable relief, when appropriate, pending and subject to such temporary orders
and permanent  award as the  arbitrator  or  arbitrators  may make.  The parties
hereby  consent to the exclusive  jurisdiction  of the courts of the Province of
Ontario for that purpose.

                                      -113-

<PAGE>

       IN WITNESS WHEREOF,  the Company and the Escrow Holder have executed this
Agreement as of the Effective Date.

The Escrow Holder:                           The  Company:

THOMSON KERNAGHAN & CO. LIMITED              SURGICAL SAFETY PRODUCTS, INC..

By _________________________________         By ________________________________
Name _______________________________         Name ______________________________
Title ______________________________         Title _____________________________
Date signed ________________________         Date signed _______________________

                                      -114-

<PAGE>

AMENDMENT NO. 1 TO THE

(1)         LOAN AGREEMENT WITH THE EFFECTIVE DATE DECEMBER 20, 1999;
(2)         SECURITY AGREEMENT, PLEDGE AND ASSIGNMENT EFFECTIVE
            DECEMBER 9, 1999;
(3)         REGISTRATION RIGHTS AGREEMENT EXECUTED THE 22ND DAY OF
            DECEMBER 1999; AND
(4)         THE ESCROW AGREEMENT EFFECTIVE DECEMBER 20, 1999
            EACH OF WHICH IS BY AND BETWEEN SURGICAL SAFETY PRODUCTS,
            INC.  (the "Company" and "Borrower")  AND THOMSON KERNAGHAN & CO.
            (the "Agent" and "Escrow Holder")

                                       and

(5)         THE NOTE DATED DECEMBER 30, 1999 IN THE AMOUNT OF $650,000
            PAYABLE TO THOMSON KERNAGHAN & CO.  LTD;
(6)         THE LENDER'S WARRANT GRANTED TO THOMSON KERNAGHAN & CO.
            LTD. FOR THE PURCHASE OF 3,428,571 SHARES; and
(7)         THE AGENT'S WARRANT GRANTED TO THOMSON KERNAGHAN & CO.
            LTD.  FOR THE PURCHASE OF 1,142,857 SHARES

            THIS  AMENDMENT  effective  the 30th day of December  1999 is by and
between the Company/Borrower and Agent/Escrow Holder as noted in the heading.

1. The defined  terms set forth  herein shall have the same meaning as set forth
in the (1) Loan  Agreement  with the Effective Date December 20, 1999 (the "Loan
Agreement"); (2) Security Agreement, Pledge and Assignment Effective December 9,
1999 (the "Security Agreement");  (3) Registration Rights Agreement Executed the
22nd Day of December  1999 (the "RR  Agreement");  and (4) the Escrow  Agreement
Effective  December  20, 1999 (the "Escrow  Agreement")  each of which is by and
between  Surgical  Safety  Products,  Inc. (the  "Company" and  "Borrower")  and
Thomson Kernaghan & Co. (the "Agent" and "Escrow Holder") and (5) the Note dated
December 30, 1999 in the amount of $650,000  payable to Thomson  Kernaghan & Co.
Ltd (the "Note"); (6) the Lender's Warrant granted to Thomson Kernaghan & Co for
the purchase of 3,428,571 Shares (the "Lender's  Warrant");  and (7) the Agent's
Warrant granted to Thomson  Kernaghan & Co for the purchase of 1,142,857  Shares
(the "Agent's Warrant").

2.   This Amendment amends, modifies and revokes the following and replaces each
of them as set out herein.

     o    The Loan Agreement "Effective Date" and "Closing Date" are amended and
          modified to December 30, 1999.

     o    The effective  date of the Security  Agreement is amended and modified
          to December 30, 1999 and paragraph 1 of the  Preliminary  Statement is
          amended  and  modified  to  reflect  the  effective  date of the  Loan
          Agreement as December 30, 1999.

     o    The  effective  date of the RR Agreement is made December 30, 1999 and
          Article II, Section 2.1(a) in the RR Agreement is amended and modified
          and replaced with the following:

"Section 2.1 Mandatory Registration.

     o    The Company  shall prepare and file with the  Commission  within sixty
          (60) days from the date of this  Agreement  (the "Filing  Deadline") a

<PAGE>

          registration statement or registration statements (as is necessary) on
          Form  S-3  covering  the  issuance  and  the  resale  of  all  of  the
          Registrable  Securities.  Such registration  statement shall initially
          register for resale 20,038,097  shares. The Company shall use its best
          efforts to have the registration  statement  declared effective by the
          Commission  within one hundred and twenty  (120) days after the Filing
          Deadline (the "Registration  Deadline").  The Company shall permit the
          registration  statement to become  effective  within five (5) business
          days after receipt of a "no review" notice from the  Commission.  Such
          registration  statement  shall be kept current and  effective  for the
          greater of (i) a period of at least  three (3) years from the  Closing
          Date and (ii) a period of at least  ninety  (90) days after (x) all of
          the Notes shall have been converted into Conversion  Shares or paid in
          full, and (y) the Lender's  Warrant and the Agent's Warrant shall have
          been fully  exercised or expired.  If a  registration  statement  with
          respect  to  the  Registrable  Securities  is  not  effective  on  the
          Registration  Deadline  date,  the Company agrees to and shall pay the
          Agent liquidated damages of US$13,000 per month, pro-rated for partial
          months, until the registration statement is effective."

     o    The Escrow  Agreement  "Effective  Date" is amended  and  modified  to
          December 30, 1999.

     o    Paragraph 2 of the Note is amended and modified to reflect the date of
          the Loan Agreement as December 30, 1999 and Paragraph 4 of the Note is
          amended and  modified to reflect the date of the Escrow  Agreement  as
          December 30, 1999.

     o    Page 2, first full  paragraph of the Lender's  Warrant and the Agent's
          Warrant are each  amended and modified to reflect the date of the Loan
          Agreement as December 30, 1999.

            IN  WITNESS  WHEREOF,  the  parties  have  set  their  hand and seal
effective on the date first above written.

SURGICAL SAFETY PRODUCTS, INC.           THOMSON KERNAGHAN & CO., LTD.

BY:____________________________          BY:_____________________________

                                      -116-

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