Document:

EXHIBIT 10.2

NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER.

                 SPECIALIZED HEALTH PRODUCTS INTERNATIONAL, INC.
                           CONVERTIBLE PROMISSORY NOTE

$_______                                                     September ___, 2005

Specialized Health Products International, Inc., a Delaware corporation (the
"Company"), for value received, promises to pay to ______________________ or its
permitted assigns (the "Holder") the principal sum of $_______ plus simple
interest thereon from the date of this Note until paid at a rate per annum equal
to twelve percent (12.0%). Interest on this Note will be payable semiannually on
each July 1 and January 1 for so long as this Note remains outstanding. This
Note is being issued and delivered pursuant to that certain Purchase Agreement,
dated as of March 7, 2005 (the "Purchase Agreement"), by and among the Company,
Galen Partners III, L.P., Galen Partners International III, L.P. and Galen
Employee Fund III, L.P.

This Note will automatically mature and the entire outstanding principal amount,
together with accrued interest, shall become due and payable on the third
anniversary of the date hereof, unless prior to such date this Note is converted
into shares of the Company's Common Stock pursuant to Section 1 hereof.

Payments of both principal and interest are to be made at the address of the
Holder for the receipt of notices pursuant to Section 8(e), or at such other
place as the Holder shall designate to the Company in writing, in lawful money
of the United States of America. Interest on this Note shall be computed on the
basis of a 365-day year and actual days elapsed.

The Company may prepay all or any portion of the outstanding principal amount of
this Note at any time without penalty upon not less than five (5) business days'
notice to the Holder.

The following is a statement of the rights of the Holder and the conditions to
which this Note is subject, and to which the Holder, by the acceptance of this
Note, agrees:

1. Optional Conversion of Note. The entire outstanding principal amount due on
this Note may, at the Holder's option be converted into fully paid and
nonassessable shares of Common Stock of the Company. The number of shares of
Common Stock to be issued upon such conversion (the "Conversion") shall be equal
to the quotient obtained by dividing the entire outstanding principal amount due
on this Note by the Conversion Price (as defined below). For purposes of this
Note, the "Conversion Price" shall mean 110% of the Company's average closing
share price for Common Stock as reported on NASDAQ or the OTC Bulletin Board for
the twenty (20) consecutive trading days prior to the date of issuance of this
Note (subject to adjustment as provided in Section 2 below).

2. Mechanics of Conversion.

         (a) Notice of Conversion. The Holder shall give written notice to the
Company of its election to convert this Note and shall state therein the name or
names in which the certificate or certificates for shares of Common Stock are to
be issued. The effective date of the Conversion shall be the date such notice is
received by the Company pursuant to Section 8(e) below.

         (b) No Fractional Shares Upon Conversion. No fractional shares of
Common Stock shall be issued upon Conversion of this Note. In lieu of any
fractional shares to which the Holder would otherwise be entitled, the Company
shall pay cash equal to such fraction multiplied by the Conversion Price.

         (c) Stock Certificates. At such time after the Conversion as Holder
presents this Note to the Company, the Company shall issue and deliver to the

<PAGE>

Holder at the address listed below for receipt of notices, or to its nominee or
nominees, a certificate or certificates for the number of shares of Common Stock
to which it shall be entitled as aforesaid.

         (d) Payment of Interest. Promptly (and in any event within five days)
following the effective date of the Conversion, the Company shall pay to the
Holder all interest accrued on the date through and including the effective date
of the Conversion at the address listed below for receipt of notices.

         (e) Adjustment of Conversion Price. The Conversion Price is subject to
adjustment from time to time as set forth in this Section 2(e). Upon each
adjustment pursuant to this Section 2(e), the Holder shall thereafter be
entitled to acquire upon Conversion the adjusted number of shares of Common
Stock at such new Conversion Price.

                  (i) If the Company at any time while this Note or any portion
         hereof remains outstanding shall split, subdivide or combine the Common
         Stock, then the Conversion Price shall be proportionately decreased in
         the case of a split or subdivision or proportionately increased in the
         case of a combination. Any adjustment made pursuant to this subsection
         shall become effective immediately after the effective date of a split,
         subdivision or combination.

                  (ii) If while this Note or any portion hereof remains
         outstanding, the holders of Common Stock shall have received, or, on or
         after the record date fixed for the determination of eligible
         stockholders, shall become entitled to receive, without payment
         therefore, other or additional stock or other securities or property
         (other than cash) of the Company by way of dividend, then and in each
         case, this Note shall represent the right to acquire upon Conversion,
         in addition to the number of shares of Common Stock issuable upon
         Conversion and without payment of any additional consideration
         therefor, the amount of such other or additional stock or other
         securities or property (other than cash) of the Company that such
         Holder would hold upon Conversion had it been the holder of record of
         the Common Stock issuable upon Conversion on the date hereof and had
         thereafter, during the period from the date hereof to and including the
         date of such Conversion, retained such shares and/or all other
         additional stock available by it as aforesaid during such period,
         giving effect to all adjustments called for during such period by the
         provisions of this Section 2(e).

                  (iii) If the Company, at any time while this Note or any
         portion hereof remains outstanding by reclassification of securities or
         otherwise, shall change any of the Common Stock as to which conversion
         rights under this Note exist into the same or a different number of
         securities of any other class or classes, this Note shall thereafter
         represent the right to acquire upon Conversion of this Note such number
         and kind of securities as would have been issuable as the result of
         such change with respect to the Common Stock that is subject to the
         conversion rights under this Note immediately prior to such
         reclassification or other change and the Conversion Price therefore
         shall be appropriately adjusted, all subject to further adjustment as
         provided in this Section 2(e).

                  (iv) If at any time while this Note or any portion hereof is
         outstanding there shall be in one or a series of transactions (A) a
         reorganization (other than a combination, reclassification, exchange or
         subdivision of shares otherwise provided for herein), (B) a merger or
         consolidation of the Company with or into another corporation in which
         the Company is not the surviving entity, or a reverse triangular merger
         in which the Company is the surviving entity but the shares of the
         Company's capital stock outstanding immediately prior to the merger are
         converted by virtue of the merger into other property, whether in the
         form of securities, cash or otherwise, or (C) a sale or transfer of the
         Company's properties and assets as, or substantially as, an entirety to
         any other person, then, as a part of such reorganization, merger,
         consolidation, sale or transfer, lawful provision shall be made so that
         the holder of this Note shall thereafter be entitled to receive upon
         Conversion of this Note, the number of shares of stock or other
         securities or property of the successor corporation resulting from such
         reorganization, merger, consolidation, sale or transfer that a holder
         of the shares deliverable upon Conversion of this Note would have been
         entitled to receive in such reorganization, merger, consolidation, sale
         or transfer if the Holder had converted this Note immediately before
         such reorganization, merger, consolidation, sale or transfer, all
         subject to further adjustment as provided in this Section 2(e). The
         foregoing provisions of this subsection shall similarly apply to
         successive reorganizations, mergers, consolidations, sales and
         transfers and to the stock or securities of any other corporation that
         are at the time receivable upon Conversion of this Note. If the

                                       2
<PAGE>

         per-share consideration payable to the Holder hereof for shares in
         connection with any such transaction is in a form other than cash or
         marketable securities, then the value of such consideration shall be
         determined in good faith by the Company's Board of Directors.

3. Prohibition on Distributions. The Company shall not declare or pay any
dividends or otherwise make any distributions to its shareholders (other than
dividends payable solely in shares of Common Stock) without the consent of the
Holder. Notwithstanding the foregoing, the Company shall not be prohibited from
paying reasonable salary and bonuses to its shareholder employees.

4. Charges, Taxes and Expenses. Issuance of a certificate or certificates for
shares of Common Stock upon the Conversion of this Note shall be made without
charge to the Holder for any issue or transfer tax or other incidental expense
in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company.

5. No Rights as Stockholder. This Note does not entitle the Holder hereof to any
voting rights or other rights as a stockholder of the Company prior to the
Conversion.

6. Loss, Theft or Destruction of Note. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft or destruction of this Note and
of indemnity or security reasonably satisfactory to it, the Company will make
and deliver a new Note which shall carry the same rights to interest carried by
this Note, stating that such Note is issued in replacement of this Note, and
this Note is cancelled, making reference to original date of issuance of this
Note (and any successors hereto) and dated as of such cancellation, in lieu of
this Note.

7. Events of Default.

         (a) The occurrence of any of the following shall constitute an "Event
of Default" under this Note:

                  (i) The Company shall have failed to make any payments when
         due of principal, interest or other costs, expenses or charges required
         under this Note (and such failure shall not have been cured within five
         (5) days' after notice is given by the Holder of such failure).

                  (ii) The Company shall have failed to comply with any other
         provisions of this Note (and such failure shall not have been cured
         within five (5) days' after notice is given by the Holder of such
         failure).

                  (iii) Any material representation or warranty of the Company
         made in the Purchase Agreement shall have been false or incorrect on
         the date on or as of which made.

                  (iv) The Company or any subsidiary of the Company shall have
         incurred an aggregate of $500,000 or more of indebtedness from one or
         more sources.

                  (v) The Company shall have issued in one or more transactions
         shares of Common Stock (or securities convertible into Common Stock) or
         other shares of capital stock of the Company representing greater than
         5% of the voting power of the Company's outstanding capital stock,
         including in connection with any acquisition transaction, but excluding
         any shares issued or issuable under the Company's option plans in
         existence on the date of issuance of this Note to directors, officers
         and employees of the Company or, if such issued capital stock
         represents less than 5% of the voting power of the Company's
         outstanding capital stock, the Company shall have raised net proceeds
         of at least $5.0 million from such issuance or issuances.

                  (vi) The Company or any subsidiary of the Company shall have
         (A) applied for or consented to the appointment of a receiver, trustee,
         liquidator or custodian of itself or of all or a substantial part of
         its property, (B) made a general assignment for the benefit of any of
         its creditors, (C) resolved to be dissolved or liquidated in full or in
         part, (D) commenced a voluntary case or other proceeding seeking
         liquidation, reorganization or other relief with respect to itself or
         its debts under any bankruptcy, insolvency or other similar law now or
         hereafter in effect consents to any such relief or to the appointment

                                       3
<PAGE>

         of or taking possession of its property by any official in an
         involuntary case or other proceeding commenced against it or (E) taken
         any action for the purpose of effecting any of the foregoing.

                  (vii) Proceedings for the appointment of a receiver, trustee,
         liquidator or custodian of the Company or a subsidiary of the Company
         or of all or a substantial part of the property thereof, or an
         involuntary case or other proceedings seeking liquidation,
         reorganization or other relief with respect to the Company or any
         subsidiary of the Company or the debts thereof under any bankruptcy,
         insolvency or other similar law now or hereafter in effect shall have
         commenced and an order for relief entered or such proceeding shall have
         not been dismissed or discharged within sixty (60) days of
         commencement.

                  (viii) A transaction constituting a Change of Control (as
         defined below) shall have been consummated. A "Change of Control" shall
         mean (A) any sale of stock, capital reorganization, consolidation,
         merger or sale of assets as a result of which or in connection with
         which a person, corporation or other entity (other than holders of the
         Company's capital stock immediately prior to such reorganization,
         consolidation, merger or sale or any affiliate or affiliates of such
         holders (collectively, the "Affiliated Stockholders")) acquires (x)
         beneficial ownership of more than 50% of the voting equity securities
         of the Company or (y) all or substantially all of the assets and
         properties of the Company as an entirety, or (B) a consolidation or
         merger of the Company with or into any other entity as a result of
         which more than 50% of the capital stock of the Company outstanding
         immediately after the effective date of such consolidation or merger is
         owned of record or beneficially by persons other than the Affiliated
         Stockholders.

                  (ix) A default (as defined in any instrument evidencing or
         under which the Company or any subsidiary has outstanding at the time
         any indebtedness for money borrowed in excess of $500,000 in aggregate
         principal amount) shall have occurred and as a result thereof the
         maturity of any such indebtedness shall have been accelerated so that
         the same shall have become due and payable prior to the date on which
         the same would have otherwise become due and payable and such
         acceleration shall not have been rescinded or annulled within thirty
         (30) days.

                  (x) A final judgment for the payment of money in excess of
         $500,000 shall have been rendered against the Company or a subsidiary
         of the Company and the same shall remain undischarged for a period of
         sixty (60) days during which execution shall not have been effectively
         stayed.

         (b) Rights of Holder Upon Event of Default. Upon the occurrence or
existence of any Event of Default, Holder, by delivery of written notice to the
Company, may declare all principal and accrued and unpaid interest then due on
this Note to be immediately due and payable without presentment, demand, protest
or any further notice of any kind, all of which are hereby expressly waived.
After maturity of this Note (whether by demand, acceleration or otherwise), this
Note shall bear interest at a rate per annum equal to fourteen percent (14%);
provided, however, if the interest rate would exceed the maximum amount
permitted by applicable law to be charged by the Holder, the interest shall be
reduced to such maximum permissible amount.

8. Miscellaneous.

         (a) Reservation of Stock. The Company covenants that the Company will
at all times reserve from its authorized and unissued Common Stock a sufficient
number of shares to provide for the issuance of the Common Stock upon the
Conversion of this Note and, from time to time, will take all steps necessary to
amend its charter to provide sufficient reserves of shares of Common Stock
issuable upon conversion of this Note. The Company further covenants that all
shares that may be issued upon the exercise of rights represented by this Note,
upon exercise as set forth herein, will be free from all taxes, liens and
charges in respect of the issuance thereof (other than taxes in respect of any
transfer occurring contemporaneously or otherwise specified herein).

         (b) Issue Date. The provisions of this Note shall be construed and
shall be given effect in all respect as if it had been issued and delivered by
the Company on the earlier of the date hereof or the date of issuance of any
Note for which this Note is issued in replacement. This Note shall be binding
upon any successors or assigns of the Company.

                                       4
<PAGE>

         (c) Restrictions. The Holder acknowledges that the shares of Common
Stock acquired upon the conversion of this Note will be subject to restrictions
upon its resale imposed by state and federal securities laws.

         (d) Assignment. Neither this Note nor any of the shares of Common Stock
issuable upon conversion of this Note may be sold, assigned, transferred,
pledged or hypothecated or otherwise disposed of except pursuant to an effective
registration statement under the Securities Act or pursuant to an available
exemption from the registration requirements thereunder and in compliance with
applicable state securities laws.

         (e) Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be effective (i) five (5) days after
deposit with the U.S. Postal Service or other applicable postal service, if
delivered by first class mail, postage prepaid, (ii) upon delivery, if delivered
by hand, (iii) one business day after the business day of deposit with Federal
Express or similar overnight courier, freight prepaid, guaranteeing overnight
delivery, or (iv) upon telephone or further electronic communication from the
recipient acknowledging receipt (whether automatic or manual from recipient), if
delivered by facsimile or electronic transmission, and shall be addressed (A) to
the Holder, c/o Galen Partners, 610 Fifth Avenue, New York, New York 10020, and
(B) to the Company, at the address of its principal corporate offices,
Attention: Chief Executive Officer, or at such other address as may be
designated in writing to the other party.

         (f) Enforcement. The Company shall pay all reasonable fees and
expenses, including reasonable attorney's fees, incurred by the Holder in the
enforcement in any of the Company's obligations hereunder not performed when
due.

         (g) Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its
principles of conflicts of law.

                                       5
<PAGE>

         IN WITNESS WHEREOF, Specialized Health Products International, Inc. has
caused this Convertible Promissory Note to be executed by its officer thereunto
duly authorized.

                                 SPECIALIZED HEALTH PRODUCTS INTERNATIONAL, INC.

                                 By:
                                    --------------------------------------------
                                 Name:
                                 Title:

                                       6Exhibit 10.40

    

      EXHIBIT
        10.40

      

      

      CAPITAL
        TEMPFUNDS

      a
        division of CAPITAL FACTORS LLC,

      One
        Brixam Green, 15800 John J. Delaney Drive, Suite 300, 

      Charlotte,
        North Carolina 28277

      

      September
        1, 2005

      

      Michael
        A. Maltzman, CFO

      Stratus
        Services Group, Inc.

      500
        Craig
        Road

      Suite
        201

      Manalapan,
        New Jersey 07726

      

      Re:
        AMENDED AND RESTATED FORBEARANCE AGREEMENT (the “Forbearance Agreement”), dated
        as of August 11, 2005, as amended as of August 25, 2005, by and between CAPITAL
        TEMPFUNDS, a division of CAPITAL FACTORS LLC, (“Capital”), and STRATUS SERVICES
        GROUP, INC. (“Borrower”)

      

      Dear
        Mr.
        Maltzman:

      

      In
        accordance with Section 3 of the Forbearance Agreement, the undersigned hereby
        agree that clause (a) of the first sentence of Section 3 of the Forbearance
        Agreement is hereby further amended to replace “September 2, 2005” with
“September 9, 2005”. 

      

      The
        Borrower hereby represents and warrants to Capital that, after giving effect
        to
        this letter agreement, no Default or Event of Default other than the Designated
        Defaults has occurred and is continuing. Borrower hereby acknowledges and
        agrees
        that a breach of the representation and warranty set forth herein shall
        constitute a Forbearance Default under the Forbearance Agreement and an Event
        of
        Default under the Loan Agreement. This letter agreement shall not be deemed
        to
        be a waiver, amendment or modification of, or consent to or departure from,
        any
        provisions of the Loan Agreement, the Forbearance Agreement or any other
        Loan
        Document or to be a waiver of any Forbearance Default under the Forbearance
        Agreement or Default or Event of Default under the Loan Agreement or any
        other
        Loan Document whether arising before or after the date hereof (except for
        the
        specific amendment referenced above in this letter agreement), and this letter
        agreement shall not preclude the future exercise of any right, remedy, power
        or
        privilege available to Capital whether under the Forbearance Agreement, the
        Loan
        Agreement, the other Loan Documents or otherwise. All capitalized terms not
        otherwise defined herein shall have the meanings given to them in the
        Forbearance Agreement.

      

      This
        letter agreement shall be deemed to be a Loan Document for all purposes.
        This
        letter agreement may be executed in one or more counterparts, each of which
        shall be deemed an original and all of which taken together shall constitute
        one
        and the same agreement. Any 

       

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      signature
        delivered by a party by facsimile transmission shall be deemed to be an original
        signature hereto.

       

      If
        the
        above provisions are satisfactory to you, please execute this letter agreement
        as set forth below and return it to Capital.

      

      Capital
        TempFunds, a division of Capital Factors, LLC

      

      

      By: s/
        James Rothman   

      

      Its: President    

      

      Acknowledged
        and Agreed:

      Stratus
        Service Group, Inc.

      

      

      By: s/
        Joseph J. Raymond   

      

      Its: CEO

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00090-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00090-of-00352.parquet"}]]