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Exhibit: 10.37FT
SHAREHOLDER LOAN
AND
MASTER PROMISSORY NOTE
FOR CREDIT LINE AGREEMENT
VGFEP-25.DOC
$2,500,000.00 DATE: JANUARY 1, 1997
THIS IS AN AGREEMENT between XXXXXXX X XXXXX ("SHAREHOLDER"), currently employed
as Chairman, Chief Executive Officer and President of Futech Educational
Products, Inc. and residing at 0000 X 00xx Xxxxxx, Xxxxxxxx Xxxxxx, Xxxxxxx
00000-0000 and FUTECH EDUCATIONAL PRODUCTS, INC. ("FUTECH") residing at 0000 X
00 Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx, 00000-0000.
WHEREAS:
A. Futech desires to extend to Shareholder, as of January 1, 1997, the
opportunity to draw on available excess working capital funds up to a maximum
loan amount of $2,500,000.00 (Two million five hundred thousand dollars)
("LOAN").
B. Shareholder, as of January 1, 1997, desires to have access to the
Loan made available by Futech.
C. Shareholder and Futech agree to the following terms and conditions
regarding the Loan:
1. Interest shall be calculated on a monthly basis on the
outstanding Loan balance at a rate equal to the prime lending
rate plus 1% compounded daily. This rate shall be determined as
of the last working day of each calendar month.
2. The Loan will mature 5 (Five) years from this date which will be
December 31, 2001 ("MATURITY"). All principal and interest will
be due upon Maturity.
3. Shareholder is granted the option to renew the loan for an
additional period not to exceed 3 (Three) years. Shareholder
must inform Futech, in writing, 60 days prior to Maturity if
Shareholder is going to exercise the option.
4. Shareholder may prepay, without penalty, all outstanding
principal plus interest.
5. If any payment obligation under this Note is not paid when due,
the Shareholder promises to pay all costs of collection,
including reasonable attorney fees, whether or not a lawsuit is
commenced as part of the collection process.
6. If any of the following events of default occur, this Note and
any other obligations of the Shareholder to the Futech, shall
become due immediately, without demand or notice:
1) the failure of the Shareholder to pay the principal and any
accrued interest in full on or before the Due Date;
2) the death of the Shareholder(s);
3) the filing of bankruptcy proceedings involving the
Shareholder as a Debtor;
4) the application for appointment of a receiver for the
Shareholder;
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5) the making of a general assignment for the benefit of the
Shareholder's creditors;
6) the insolvency of the Shareholder; or the misrepresentation
by the Shareholder to the Futech for the purpose of
obtaining or extending credit;
7) the termination of the Shareholder as an employee of Futech;
8) the complete or partial reduction in the Shareholder's
holdings of Futech's common stock below the current pledge
amount (see 9. below)
9. This Note is secured by a pledge of Shareholder's holdings of
Futech common stock. Initially, the Shareholder pledges 4 (four)
shares of Futech common stock for every $1.00 (One dollar) in
loans. If, and when, Futech stock becomes publicly traded, the
number of shares pledged by the Shareholder will be based on
current share prices reviewed on a periodic basis as determined
by Futech.
10. Other Terms and Conditions:
1. If any one or more of the provisions of this Note are
determined to be unenforceable, in whole or in part, for any
reason, the remaining provisions shall remain fully
operative.
2. All payments of principal and interest on this Note shall be
paid in the legal currency of the United States. Shareholder
waives presentment for payment, protest, and notice of
protest and nonpayment of this Note.
3. No renewal or extension of this Note, delay in enforcing any
right of the Futech under this Note, or assignment by Futech
of this Note shall affect the liability of the Shareholder.
All rights of Futech under this Note are cumulative and may
be exercised concurrently or consecutively at Futech's
option.
ACCORDINGLY, for good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
1. Effective immediately, Futech will allow the Shareholder to draw,
out of excess working capital funds, an amount not to exceed the
Loan amount.
2. GENERAL
2.1 This Agreement is the entire agreement between the parties upon the
subject hereof and supersedes any prior or similar agreements upon
the same subject.
2.2 This Agreement shall inure to the benefit of, be binding upon and be
enforceable by Shareholder, its nominees, successors, and assigns,
and shall be binding upon and be enforceable by Futech, its
nominees, successors, and assigns and legal representatives.
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2.3 This Agreement shall be governed by and construed in accordance with
the Federal law of the United States of America and the internal
laws of the State of Arizona, without reference to the principles of
conflicts of law.
2.4 This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together
will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this agreement this the
day of , 19 .
"Shareholder"
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
"Futech"
/s/ Xxxxxxx X. Xxxxx
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(Name and Title)
"Futech" (in witness of)
/s/ Xxxxxxx X. Xxxxx 1-2-97
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Xxxxxxx X. Xxxxx, CFO
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(Name and Title)
