1
Exhibit: 10.38FT
Xxxxxxx X. Xxxxx
0000 X 00 XX., #000 * Xxxxxxx Xxxxxxx 00000-0000
000.000.0000, telephone * 000.000.0000, facsimile
Date: February 26, 1997
To: Futech Educational Products, Inc. Company:
From: Xxxxxxx X. Xxxxx
Subject: Final resolution on loan due and owing Xxxxx-Xxxxxx-Xxxxx
Dear Futech Educational Products, Inc.,
As of December 11, 1996 Futech ("Borrower") owed to me, Xxxxxxxx Xxxxxx
and Xxxxx Xxxxx ("Lender") a total of $1,055,476.20 (One million fifty-five
thousand four hundred seventy-six dollars and twenty cents) in principal and
interest (see attached schedule "GTG Loans and Interest Calculation for Futech
Educational Products, Inc."). I have also attached a copy of the Promissory Note
which outlines the terms and conditions of this borrowing.
We, the Lenders, are willing to forego receipt of the payment in full
in exchange for receiving 3,518,254 (Three million five hundred eighteen
thousand two hundred fifty-four) shares of Futech common stock. This was
calculated on the basis of exchanging the full amount due at $0.30 (Thirty
cents) per share. This, in addition to the original 3,500,000 (Three million
five hundred thousand) shares, would give us a total of 7,018,254 (Seven million
eighteen thousand two hundred fifty-four) shares for this borrowing arrangement.
We believe that this is a fair and equitable resolution to this
arrangement for both parties. By your acceptance below and the issuance of the
shares (to be determined) to us, we can xxxx this debt paid-in-full.
Sincerely,
Xxxxxxx X. Xxxxx
"I have read, understood and agree to the aforementioned payment arrangement for
the obligation due and owning Xxxxxxx X. Xxxxx, Xxxxxxxx Xxxxxx and Xxxxx Xxxxx
by Futech Educational Products, Inc.".
/s/ Xxxxxxx X. Xxxxx 2/26/97
--------------------------------------------- -----------------------
Xxxxxxx X. Xxxxx Date
Chairman and CEO, Futech Educational Products
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GTG Loans and Interest Calculation for Futech Educational Products, Inc.
From 12/12/95 through 12/11/96
CUMULATIVE LOAN INTEREST TOTAL
DRAW DRAW DRAW MATURITY THROUGH PRINCIPAL
DATE CHECK # AMOUNT AMOUNT DATE MATURITY(a) & INTEREST
----------------------------------------------------------------------------------------------
12/12/95 LOAN $ 550,000.00 $550,000.00 12/11/96 $55,000.00 $ 605,000.00
12/19/95 M001 100,000.00 650,000.00 12/11/96 9,808.22 109,808.22
1/4/96 M002 25,000.00 675,000.00 12/11/96 2,342,47 27,342.47
1/12/96 M003 15,000.00 690,000.00 12/11/96 1,372,60 16,372.60
1/15/96 M004 20,000.00 710,000.00 12/11/96 1,813.70 21,813.70
1/19/96 M005 20,000.00 730,000.00 12/11/96 1,791.78 21,791.78
1/23/96 M006 20,000.00 750,000.00 12/11/96 1,769.86 21,769.86
2/15/96 M007 75,000.00 825,000.00 12/11/96 6,164.38 81,164.38
2/20/96 1101 50,000.00 875,000.00 12/11/96 4,041.10 54,041.10
2/26/96 1102 25,000.00 900,000.00 12/11/96 1,979.45 26,979.45
2/27/96 1103 11,000.00 911,000.00 12/11/96 867.95 11,867.95
2/27/96 1104 25,000.00 936,000.00 12/11/96 1,972.60 26,972.60
3/5/96 1105 25,000.00 961,000.00 12/11/96 1,924.66 26,924.66
3/6/96 1106 25,000.00 986,000.00 12/11/96 1,917.81 26,917.81
3/15/96 1107 7,500.00 993,500.00 12/11/96 556.85 8,056.85
-------------------------- --------------------------
Totals $(993,500.00) $993,500.00 $93,323.42 $1,086,823.42
========================== ==========
LESS: INTEREST PAYMENTS BY FUTECH(b)
DATE CHECK $ AMOUNT
----------------------------------------------------
8/19/96 5448 -7,965.28
9/17/96 1199 -7,965.28
10/31/96 5572 -7,708.33
12/27/96 1230 -7,708.33 -31,347.22
-----------------
Net Principal and Interest Futech owes to GTG at 12/11/96 $1,055,476.20
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Conversion Calculation of Principal and Interest into Futech Common Stock
---------------------------------------------------------------------------------
Total Principal and Interest Due from Futech $1,055,476.20
Conversion value of $0.30/common share of Futech stock $ 0.30
# OF SHARES TO BE ISSUED TO XXXXX-XXXXXX-XXXXX IN FULL -------------
PAYMENT OF PRINCIPAL AND INTEREST DUE BY FUTECH 3,518,254
=============
Footnotes
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(a) Interest is calculated at 10% interest per annum from the draw date through
the maturity date.
(b) Per the loan agreement between Futech and Xxxxx-Xxxxxx-Xxxxx, Futech was to
have made monthly interest payments at 10% per year. Due to cash flow problems,
these payments were not made; however, Futech did directly make some of the
monthly interest payments to Bank of America for the GTG loan.
