EXHIBIT 10.14
(Form of Loan Agreement)
LOAN AGREEMENT
This Loan Agreement ("Agreement") is entered into this date by and
between Specialized Health Product International, Inc., a Delaware corporation
("Borrower") and ___________________ ("Lender").
WHEREAS, this Agreement is one of several agreements between Borrower
and various lenders on substantially the same terms; and
WHEREAS, Borrower wishes to borrow funds and Lender desires to lend
funds on the terms and conditions set forth herein.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
Section 1. Loan. Lender hereby agrees to loan to Borrower in an aggregate
principal amount of _______________ DOLLARS ($________). The Loan proceeds shall
be transferred via wire transfer to the "Disbursement Account," as defined
below, on the date hereof. The amounts lent hereunder shall be evidenced by a
twelve percent (12%) convertible promissory note in substantially the same form
as attached hereto as Exhibit "A" (the "Note") and secured under the Master
Security Agreement attached hereto as Exhibit "B" (the "Security Agreement").
Borrower shall deliver to Lender the Note upon transfer of the loan proceeds to
the Disbursement Account.
Section 2. Finance Charges. Principal and any interest not paid when due shall
bear interest at the rate of eighteen percent (18%) per annum.
Section 3. Payments. All principal and interest outstanding on the Note
shall be due and payable by Borrower to Lender in a single balloon payment on
the earlier of (i) September 20, 2001 or (ii) the date the Company receives an
equity investment of at least $4,000,000 (the "Due Date"). The Due Date may be
extended from time to time, however, by the Agent (as defined in the Security
Agreement), in the Agent's sole and absolute discretion, to a date no later than
June 30, 2002. Borrower may, from time to time, in Borrower's discretion, make
one or more periodic payments to Lender. Such payments shall be credited to
Borrower's account on the date that such payment is physically received by
Lender. Such payments shall be applied first to the interest accrued to the date
of payment, and then to the principal outstanding.
Section 4. Lender Representations. Lender hereby represents and warrants that:
(a) Lender's representations in this Agreement are complete and
accurate to the best of Lender's knowledge, and Borrower and any sales agent may
rely upon them. Lender will notify Borrower and any such agent immediately if
any material change occurs in any of this information before the sale of the
Notes.
(b) Lender is able to bear the economic risk of an investment in the
Notes for an indefinite period of time, can afford the loss of the entire
investment in the Notes, and will, after making an investment in the securities,
have sufficient means of providing for Lender's current needs and possible
future contingencies. Additionally, Lender's overall commitment to investments
that are not readily marketable is not disproportionate to Lender's net worth
and this Subscription will not cause such overall commitment to become
excessive.
(c) The Notes will not be sold by Lender without registration under
applicable securities acts or a proper exemption from such registration.
(d) The Notes are being acquired for Lender's own account and risk, for
investment purposes, and not on behalf of any other person or with a view to, or
for resale in connection with, any distribution thereof within the meaning of
the Securities Act of 1933. Lender is aware that there are substantial
restrictions on the transferability of the Notes.
(e) Lender has had access to any and all information concerning
Borrower that Lender and Lender's financial, tax and legal advisors required or
considered necessary to make a proper evaluation of this investment.
Specifically, Lender represents that it has had access to Borrower's annual
report on Form 10-KSB for the period ended December 31, 2000, Form 10-QSB for
the period ended March 31, 2001 and all other filings by Borrower with the SEC
during 2001 (collectively, the "SEC Documents"). Borrower has advised Lender
that Borrower has information that supplements and updates the SEC Documents and
which information may be material to Lender's investment decision. Lender has
requested, however, that Borrower not supply Lender with any information
regarding Borrower in connection with this transaction. It is understood that
the Borrower is in negotiations with the Subsequent Unit Holders and certain of
the Series G Warrant Holders regarding a modification or termination of the
Subsequent Units and some or all of the Series G Warrants and that the
consideration required to modify and/or extinguish those rights may be
substantial. In making the decision to purchase the Notes, Lender and his or her
advisers have relied solely upon their own independent investigations, and fully
understand that there are no guarantees, assurances or promises in connection
with any investment hereunder and understand that the particular tax
consequences arising from this investment in Borrower will depend upon the
individual circumstances of Lender. Lender further understands that no opinion
is being given as to any securities or tax matters involving the offering.
(f) All of the representations and warranties of Lender contained
herein and all information furnished by Lender to Borrower are true, correct and
complete in all respects, and Lender agrees to notify Borrower immediately of
any change in any representation, warranty or other information set forth
herein.
(g) Lender also understands and agrees that stop transfer instructions
relating to the Notes will be placed in Borrower's stock transfer ledger, and
that the Notes sold will bear legends in substantially the following form:
The securities represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act") and are "restricted
securities" as that term is defined in Rule 144 under the Act. The
securities may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Act or
pursuant to an exemption from registration under the Act, the
availability of which is to be established to the satisfaction of
Borrower.
(h) Lender knows that the Notes are offered and sold pursuant to
exemptions from registration under the Securities Act of 1933, and state
securities law based, in part, on these warranties and representations, which
are the very essence of this Agreement, and constitute a material part of the
bargained-for consideration without which this Agreement would not have been
executed.
(i) Lender has the capacity to protect Lender's own interest in
connection with this transaction or has a pre-existing personal or business
relationship with Borrower or one or more of its officers, directors or
controlling persons consisting of personal or business contacts of a nature and
duration such as would enable a reasonably prudent purchaser to be aware of the
character, business acumen and general business and financial circumstances of
such person with whom such relationship exists.
(j) This Agreement when fully executed and delivered by Borrower will
constitute a valid and legally binding obligation of Lender, enforceable in
accordance with its terms. Lender, if it is a partnership, joint venture,
corporation, trust or other entity, was not formed or organized for the specific
purpose of acquiring the Notes. The purchase of the Notes by Lender, if it is an
entity investor, is a permissible investment in accordance with Lender's
Articles of Incorporation, by-laws, partnership agreement, declaration of trust
or other similar charter document, and has been duly approved by all requisite
action by the entity's owners, directors, officers or other authorized managers.
2
The person signing this document and all documents necessary to consummate the
purchase of the Notes has all requisite authority to sign such documents on
behalf of Lender, if it is an entity investor.
(k) The Notes offered hereby were not offered to Lender by way of
general solicitation or general advertising and at no time was Lender presented
with or solicited by means of any leaflet, public promotional meeting, circular,
newspaper or magazine article, radio or television advertisement.
(l) If initialed below, Lender represents that Lender is an "accredited
investor" as defined under Rule 501 of Regulation D by reason of:
FOR INDIVIDUALS ONLY (INITIAL IF APPLICABLE):
------ 1. I had individual income (exclusive of any income attributable to my
Initial spouse) in excess of $200,000 in each of the most recent two years and
Here I reasonably expect to have an individual income in excess of $200,000
for the current year, or I had joint income with my spouse in excess of
$300,000 in each of those years and I reasonably expect to have a joint
income with my spouse in excess of $300,000 for the current year.
------ 2. I have an individual net worth, or my spouse and I have a combined
Initial individual net worth, in excess of $1,000,000. For purposes of this
Here Agreement, "individual net worth" means the excess of total assets at
fair market value, including home and personal property, over total
liabilities.
------ 3. I am qualified as an "accredited investor" pursuant to Rule 501(a)
Initial of Regulation D of the 1933 Act for the following reason:
Here ---------------------------------------------------------------------
---------------------------------------------------------------------
FOR CORPORATIONS AND PARTNERSHIPS ONLY (INITIAL IF APPLICABLE):
------ 1. The undersigned hereby certifies that the Partnership or Corporation
Initial that he/she represents possesses total assets in excess of $5,000,000
Here and was not formed for the specific purpose of acquiring the securities
offered by Borrower.
------ 2. The undersigned hereby certifies personally, and on behalf of the
Initial Partnership or Corporation that he/she represents, that all of the
Here beneficial owners of equity qualify individually as accredited
investors under the individual accredited investor test set forth
above.
FOR TRUSTS ONLY (INITIAL IF APPLICABLE):
------ 1. The undersigned hereby certifies that the trust which he/she
Initial represents possesses total assets in excess of $5,000,000 and was not
Here formed for the specific purpose of acquiring the securities offered by
Borrower, and that the purchase of the securities is directed by a
sophisticated person as described in Rule 506(b)(2)(ii) of the Act.
3
------ 2. The undersigned hereby certifies personally, and on behalf of the
Initial trust that he/she represents, that such trust is a revocable trust that
Here may be amended or revoked at any time by the grantors, and all the
grantors are accredited individual investors under the individual
accredited investor test set forth above.
FOR TRUSTEES AND AGENTS (READ AND INITIAL BOTH STATEMENTS):
------ 1. The undersigned hereby acknowledges that he/she is acting as an
Initial agent or trustee for the following person or entity:
Here
------ 2. The undersigned hereby agrees to provide to Borrower, upon
Initial Borrower's request, the following documents:
Here
(a) a copy of the trust agreement, power of attorney or other
instrument granting the power and authority to execute and deliver the
Agreement, or
(b) an opinion of counsel verifying the undersigned's power
and authority to execute and deliver the Agreement.
Section 5. Deposit and Use of Funds. The loan proceeds shall be deposited in a
deposit account with U.S. Bank held in the name of Agent, but as nominee for
Borrower, subject to the terms of this Loan Agreement (the "Disbursement
Account"). Agent shall have sole authority to disburse or transfer funds from
the Disbursement Account, subject to the terms of this Loan Agreement. U.S. Bank
shall be instructed that Agent is the bank's customer with respect to the
Disbursement Account, and that Agent's instructions with respect to the account
shall be honored by the bank. If required by the bank or if requested by
Lenders, Agent, or Borrower, the parties shall execute a further instrument with
the bank providing that the bank will comply with instructions originated by
Agent (on behalf of the Lenders) directing disposition of funds in the
Disbursement Account without further consent of the Borrower. Agent shall
disburse funds from the Disbursement Account from time to time to pay expenses
that have been agreed upon in writing by Borrower and Agent. Funds from the
Account shall not be used for any purpose other than to pay the expenses that
have been mutually agreed upon by Agent and Borrower.
Section 6. Release. Lender (including its agents, servants, employees,
directors, successors and assigns) hereby releases and forever discharges
Borrower, its agents, servants, employees, directors, successors and assigns,
and any and all persons, firms and corporations from any and all claims,
demands, damages, actions, causes of action or suits of whatever kind or nature
which now exist or which may hereafter accrue, because of, for, arising out of
or in any way connected with the Borrower's fundings that took place between
November 2000 and May 2001, as more fully described in the Borrower's private
placement memorandums dated November 21, 2000, February 19, 2001 and April 20,
2001. It is understood and agreed that nothing contained herein or contained in
any previous communication between the parties to this Agreement shall be
construed as an admission of any type on the part of any party to this
Agreement, and that no party to this Agreement admits, in any manner, any
liability to any person or entity with respect to the matters raised by or
forming the basis of the dispute between the parties hereto. This shall
constitute an offer of compromise under Federal Rule of Evidence 408 and Utah
Rule of Evidence 408.
It is further acknowledged and agreed that Lender (including its
agents, servants, employees, directors, successors and assigns) does not have
any antidilutive rights or any similar rights relating to the Borrower or its
securities.
4
Section 7. Notices; Addresses. Any notices required or permitted hereunder shall
be in writing and shall be given by personal delivery; by deposit in the United
States mail, certified mail, return receipt requested, postage prepaid; or by
established express delivery service, freight prepaid. Notices shall be
delivered, addressed, or transmitted to the parties at the following addresses,
which may be changed by a notice given to the other party in accordance with
this Section. The date notice is deemed to have been given, received and become
effective shall be the date on which the notice is delivered, if notice is given
by personal delivery, two (2) days following the date of deposit in the mail, if
the notice is sent through the United States mail, or the date of actual
receipt, if the notice is sent by express delivery service.
Borrower's address is:
000 Xxxx 000 Xxxxx,
Xxxxxxxxx, Xxxx 00000
Lender's address, and the address from which information
respecting this security interest may be requested, is:
The address set forth beneath Lender's signature
Section 8. Form of Ownership. Please indicate the form of ownership which Lender
desires for the Notes:
____ Individual
____ Joint Tenants with Right of Survivorship
____ Tenants in Common
____ Community Property
____ Trust
____ Corporation
____ Partnership
____ Other:
Section 9. Miscellaneous.
97.1 This Agreement, including the exhibits hereto, constitutes the
entire agreement between the parties pertaining to the subject matter contained
in this Agreement. By signing this Agreement the Lender is agreeing to be bound
by terms of the Security Agreement that is attached hereto as Exhibit "B." All
prior and contemporaneous agreements, representations and understandings of the
parties, oral or written, are superseded by and merged in this Agreement. No
supplement, modification or amendment of this Agreement shall be binding unless
in writing and executed by Borrower and Lender.
9.2 The provisions of this Agreement shall be binding upon Borrower,
its legal representatives, successors or assigns, and shall be for the benefit
of Lender and its respective successors and assigns.
5
9.3 The headings of this Agreement are for purposes of reference only
and shall not limit or define the meaning of any provision of this Agreement.
This Agreement may be executed in any number of counterparts, each of which
shall be an original but all of which shall constitute one and the same
instrument.
9.4 If any action is brought by either party in respect to its rights
under this Agreement, or to obtain an interpretation thereof, the prevailing
party shall be entitled to reasonable attorneys' fees and court costs as
determined by the court.
9.5 No waiver of any of the provisions of this Agreement shall
constitute a waiver of any other provision, whether or not similar, nor shall
any waiver be a continuing waiver. Except as expressly provided in this
Agreement, no waiver shall be binding unless executed in writing by the party
making the waiver. Either party may waive any provision of this Agreement
intended for its benefit; provided, however, such waiver shall in no way excuse
the other party from the performance of any of its other obligations under this
Agreement.
9.6 This Agreement shall be governed by the laws of the State of Utah.
Any legal action to enforce or obtain an interpretation of this Agreement may be
filed in the Second Judicial District Court of Xxxxx County, the Third Judicial
District Court of Salt Lake County or the United States District Court in Salt
Lake City, Utah, and the parties consent to the exercise of personal
jurisdiction over them by said courts.
9.7 Borrower and Lender acknowledge that Xxxx X. Xxxxxxxx and the law
firm of Xxxxxxxxx & Xxxxx, XX, may have represented, and may currently be
representing, the Lender and/or a principal or affiiate thereof in respect to
other legal matters not involving Borrower. To the extent that such
representation has occurred or is presently occurring, the Lender, for itself
and its principal and affiliate, hereby gives its informed consent to Xxxxxxxxx
& Xxxxx, XX, and Xxxx X. Xxxxxxxx to represent Borrower in connection with this
Agreement and other matters. Lender acknowledges: (a) that this representation
presents a potential conflict of interest to the extent of such representation
has occurred; (b) that neither Xxxxxxxxx & Xxxxx, XX, nor Xxxx X. Xxxxxxxx are
acting as legal counsel for Lender in connection with this transaction; and (c)
that Xxxxxxxxx & Xxxxx, XX, and Xxxx X. Xxxxxxxx have recommended to Lender that
it seek and obtain independent legal advice regarding this matter. Lender
acknowledges that it has read the foregoing consent carefully, that it fully
understands the representation of Borrower by the Xxxx X. Xxxxxxxx and Xxxxxxxxx
& Xxxxx, XX is potentially adverse to Lender and Lender nevertheless knowingly
and voluntarily consents to such representation by Xxxx X. Xxxxxxxx and
Xxxxxxxxx & Xxxxx, XX. Borrower acknowledges that it has been informed of such
other representation of the Lender by Xxxx X. Xxxxxxxx and Xxxxxxxxx & Xxxxx,
XX, and that it likewise consents to the representation of Borrower.
9.8 Borrower and Lender represent and warrant to each other that they
have employed no broker or finder, including, but not limited to U.S. Ventures,
LC and Rubicon International Limited, in connection with this Agreement.
Borrower and Lender each agree that, to the extent a brokerage or finder's fee
shall have been earned or claimed in connection with this Agreement, the payment
of such fees and the defense of any action in connection therewith shall be the
exclusive obligation of the party who requested the services of the broker or
finder. In the event that any claim, demand or cause of action for brokerage or
finder's fees is asserted against a party to this Agreement who did not request
such services, the party through whom the broker or finder is making the claim
shall indemnify, defend (with an attorney of indemnitee's choice) and hold
harmless the other party from and against any such claims, demands and causes of
action.
9.9 This Agreement is one of a series of agreements entered into by the
Borrower in a total aggregate amount of not more than ONE MILLION FIVE HUNDRED
THOUSAND DOLLARS (U.S.) ($1,500,000). The obligations of the Borrower under this
Agreement and the related agreements are evidenced by Notes and are secured by
the Security Agreement, and the rights and duties of the Borrower and Lender are
subject to the terms of the Security Agreement. Lender agrees to be bound by the
terms of the Security Agreement.
6
IN WITNESS WHEREOF, the undersigned have executed this Agreement to be
effective as of the ___ day of July, 2001.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
7
[Signature Page For Individual]
"LENDER"
_________________________________
(Signature)
_________________________________
(Name - Please Print)
_________________________________
(Primary Place of Residence)
_________________________________
(City, State and ZIP Code)
_________________________________
(Telephone Number - Residence)
_________________________________
(Telephone Number - Business)
_________________________________
(Social Security or Taxpayer I.D. No.)
"BORROWER"
SPECIALIZED HEALTH PRODUCTS
INTERNATIONAL, INC.
a Delaware corporation
Federal Empl. ID No. 00-0000000
By____________________________
Xxxxx X. Xxxxxxxx, President
8
[Signature Page For Corporation or Other Entity]
"LENDER"
_________________________________
(Name of Entity)
_________________________________
(Signature of Authorized Person)
_________________________________
(Name and Title - Please Print)
_________________________________
(Business Address)
_________________________________
(City, State and ZIP Code)
_________________________________
(Telephone Number - Business)
_________________________________
(Taxpayer I.D. No.)
"BORROWER"
SPECIALIZED HEALTH PRODUCTS
INTERNATIONAL, INC.
a Delaware corporation
Federal Empl. ID No. 00-0000000
By ____________________________
Xxxxx X. Xxxxxxxx, President
9
