EXHIBIT 10.07
October 16, 1996
Xx. Xxxxxxx X. Xxxxxx
President
Kids Stuff, Inc.
0000 Xxxxxxx Xxxxxx, X.X.
Xxxxx Xxxxxx, Xxxx 00000
RE: BRIDGE LOAN
Dear Xx. Xxxxxx:
This letter summarizes our agreement as follows:
1. BRIDGE LOAN. Upon the execution of this letter, the undersigned
("Lender") shall loan (the "Loan") one hundred thirty one thousand three hundred
thirty three dollars and 33/100 ($131,333.33) to Kids Stuff, Inc., a Delaware
corporation (the "Company"), pursuant to the terms of (i) a certain promissory
note in the amount of $82,083.33 payable on the earlier of October 16, 1997 or
the closing of the Company's next public offering (the "Class A Note") and (ii)
a promissory note in the amount of $49,250.00 payable on September 27, 1997 or
convertible, at the option of the holder, into nine hundred eighty five thousand
(985,000) Class A Redeemable Common Stock Purchase Warrants (the "Bridgeholder's
Warrants") of the Company (the "Class B Note"). The forms of the Class A Note
and Class B Note are attached hereto as Exhibits A and B, respectively
(collectively, the "Notes"). Concurrently, with the execution of this letter,
the Company shall execute and deliver the Notes to Lender.
2. ISSUANCE OF BRIDGEHOLDER'S WARRANTS. Upon conversion of the Class B
Note, the Company shall issue to Lender the Bridgeholder's Warrants. Each
Bridgeholder Warrant will be identical to the terms and conditions of the Class
A Warrants being offered to the public pursuant to the Company's contemplated
Initial Public Offering (the "Public Offering"). Effective the date on which the
initial registration statement (the "Registration Statement") filed by the
Company with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act") is
Xx. Xxxxxxx X. Xxxxxx
October 16, 1996
Page 2
declared effective by the Commission, Lender shall be deemed to have exercised
its option to convert the Class B Note into the Bridgeholder's Warrants and the
Company will deliver to Lender certificates representing each of the
Bridgeholder's Warrants.
3. REGISTRATION RIGHTS. The Company agrees to include the Bridgeholder's
Warrants and the shares of the Common Stock issuable upon exercise of the
Bridgeholder's Warrants (collectively, the "Registrable Securities"), in the
Registration Statement at no cost or expense to Lender.
Anything in this Section 3 to the contrary notwithstanding, in the event
that the managing underwriter of the Public Offering informs the Company in
writing that the inclusion of the Registrable Securities in the Public Offering
will result in the inability to effect the Public Offering or qualify the Public
Offering in one or more states which such managing underwriter, in its sole
discretion, deems necessary for the Public Offering to proceed, Lender shall
agree to withhold some or all of the Registrable Securities from registration in
accordance with the instructions of such managing underwriter. In such event,
upon Lender's request, the Company shall file a registration statement with the
Commission for the purpose of registering the Registrable Securities as soon as
practicable after the closing date of such Public Offering at no cost or expense
to Lender.
4. REPRESENTATIONS OF LENDER. Lender represents that in the event he
converts the Class B Note, he will be acquiring the Bridgeholder's Warrants for
investment purposes only and not with a view to any resale or public
distribution thereof. Lender has had full access to the books and records of the
Company and has had the opportunity to question the officers, counsel and
independent accountants of the Company. Lender is an "accredited investor" as
defined in section 2(15) of the Securities Act and Regulation D promulgated by
the Commission.
5. GOVERNING LAW; JURISDICTION AND VENUE. Regardless of the place of
execution or performance, this letter and the Notes shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to such State's conflicts of laws provisions. Each of the parties hereto
irrevocably consents to the jurisdiction and venue of the federal and state
courts located in the State of New York, County of New York.
Please acknowledge your consent to the foregoing terms by countersigning
the enclosed duplicate copy of this letter and returning it to us together with
the Notes.
Very truly yours,
M & M SPECIALTIES, INC.
By:
--------------------------------
AGREED TO AND ACKNOWLEDGED:
KIDS STUFF, INC.
By:
--------------------------------
Xxxxxxx X. Xxxxxx, President
2
EXHIBIT "A"
CLASS A
PROMISSORY NOTE
$82,083.33 October 16, 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, KIDS STUFF, INC., a Delaware corporation ("Maker"),
promises to pay to M&M Specialities, Ltd. ("Holder") at such place as Holder may
designate in writing, the entire principal sum of eighty two thousand eighty
three dollars and 33/100 ($83,083.33), together with interest at the rate of
eight percent (8%) per annum, (i) on the earlier of October 11, 1997 or (ii) the
closing date of the initial underwritten public offering of Maker's securities,
at which time all principal and interest shall be due and owing.
All payments of principal and interest hereunder shall be payable in
lawful money of the United States.
Maker shall be in default hereunder, at the option of Holder, upon the
occurrence of any of the following events: (i) the failure by Maker to make any
payment of principal or interest when due hereunder, and such failure shall have
continued for a period of more than ten (10) days after notice and a reasonable
opportunity to cure; (ii) the entering into of a decree or order by a court of
competent jurisdiction adjudicating Maker a bankrupt or the appointing of a
receiver or trustee of Maker upon the application of any creditor in an
insolvency or bankruptcy proceeding or other creditor's suit; (iii) a court of
competent jurisdiction approving as properly filed, a petition for
reorganization or arrangement filed against Maker under the Federal bankruptcy
laws and such decree or order not being vacated within thirty (30) days; (iv)
the pendency of any bankruptcy proceeding or other creditors' suit against
Maker; (v) a petition or answer seeking reorganization or arrangement under the
Federal bankruptcy laws with respect to Maker; (vi) an assignment for the
benefit of creditors by Maker; (vii) Maker consents to the appointment of a
receiver or trustee in an insolvency or bankruptcy proceeding or other
creditors' suit; (viii) the existence of any uncured event of default under the
terms of any instrument in writing evidencing a debt to someone other than
Holder, if the effect of such default is to cause or permit the holder(s) of
such indebtedness to have such indebtedness to become due and payable prior to
the stated maturity thereof, provided, that Maker is not contesting in good
faith by appropriate proceedings such uncured event of default; (ix) the
existence for, more than thirty days of any judgment against maker, provided
that maker has not stayed or otherwise bonded the judgment pending appeal, or
any attachment of property of Maker; or (x) any other
condition which, in the good faith determination of Holder, would materially
impair the timely repayment of this Note.
Upon the occurrence of any event or condition of default hereunder, or
at any time thereafter, Holder at his option may accelerate the maturity of this
Note and declare all of the indebtedness or any portions thereof to be
immediately due and payable, together with accrued interest thereon, and payment
thereof may be enforced by suit or other process of law.
If this Note is not paid when due, whether at maturity or by
acceleration, Maker agrees to pay all reasonable costs of collection and such
costs shall include without limitation all costs, attorneys' fees and expenses
incurred by Holder hereof in connection with any insolvency, bankruptcy,
reorganization, arrangement or similar proceedings involving Holder, or
involving any endorser or guarantor hereof, which in any way affects the
exercise by Holder hereof of its rights and remedies under this Note.
Presentment, demand, protest, notices of protest, dishonor and
non-payment of this Note and all notices of every kind are hereby waived.
The terms "Maker" and "Holder" shall be construed to include their
respective heirs, personal representatives, successors, subsequent holders and
assigns.
Regardless of the place of execution or performance, this letter and the
Note shall be governed by, and construed in accordance with, the laws of the
State of New York without giving effect to such state's conflicts of laws
provisions. Each of the parties hereto irrevocably consents to the jurisdiction
and venue of the federal and state courts located in the State of New York,
County of New York.
KIDS STUFF, INC.
By:
--------------------------------
Xxxxxxx X. Xxxxxx
President
EXHIBIT "B"
CLASS B
PROMISSORY NOTE
$49,250 October 16, 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, KIDS STUFF, INC., a Delaware corporation ("Maker"),
promises to pay to M&M Specialities, Inc. ("Holder") at such place as Holder may
designate in writing, the entire principal sum of forty nine thousand two
hundred fifty ($49,250 ), together with interest at the rate of eight percent
(8%) per annum, (i) on the earlier of , 1996 or (ii) the closing date of the
next initial public offering of Maker's securities (the "Public Offering"), at
which time all principal and interest shall be due and owing.
Effective the Effective Date of the Public Offering, the Holder shall be
deemed to have converted this Note into 985,000 Class A Redeemable Common Stock
Purchase Warrants (the "Class A Warrants") of Maker. The Class A Warrants shall
be identical to the terms and conditions of the Class A Warrants being offered
to the public in the Public Offering.
All payments of principal and interest hereunder shall be payable in
lawful money of the United States.
Maker shall be in default hereunder, at the option of Holder, upon the
occurrence of any of the following events: (i) the failure by Maker to make any
payment of principal or interest when due hereunder, and such failure shall have
continued for a period of more than ten (10) days after notice and a reasonable
opportunity to cure; (ii) the entering into of a decree or order by a court of
competent jurisdiction adjudicating Maker a bankrupt or the appointing of a
receiver or trustee of Maker upon the application of any creditor in an
insolvency or bankruptcy proceeding or other creditor's suit; (iii) a court of
competent jurisdiction approving as properly filed, a petition for
reorganization or arrangement filed against Maker under the Federal bankruptcy
laws and such decree or order not being vacated within thirty (30) days; (iv)
the pendency of any bankruptcy proceeding or other creditors' suit against
Maker; (v) a petition or answer seeking reorganization or arrangement under the
Federal bankruptcy laws with respect to Maker; (vi) an assignment for the
benefit of creditors by Maker; (vii) Maker consents to the appointment of a
receiver or trustee in an insolvency or bankruptcy proceeding or other
creditors' suit; (viii) the existence of any uncured event of default under the
terms of any instrument in writing evidencing a debt to someone other than
Holder, if the effect of such default is to cause or permit the holder(s) of
such indebtedness to have such indebtedness to become due and payable prior to
the
stated maturity thereof, provided, that Maker is not contesting in good faith by
appropriate proceedings such uncured event of default; (ix) the existence for,
more than thirty days of any judgment against maker, provided that maker has not
stayed or otherwise bonded the judgment pending appeal, or any attachment of
property of Maker; or (x) any other condition which, in the good faith
determination of Holder, would materially impair the timely repayment of this
Note.
Upon the occurrence of any event or condition of default hereunder, or
at any time thereafter, Holder at his option may accelerate the maturity of this
Note and declare all of the indebtedness or any portions thereof to be
immediately due and payable, together with accrued interest thereon, and payment
thereof may be enforced by suit or other process of law.
If this Note is not paid when due, whether at maturity or by
acceleration, Maker agrees to pay all reasonable costs of collection and such
costs shall include without limitation all costs, attorneys' fees and expenses
incurred by Holder hereof in connection with any insolvency, bankruptcy,
reorganization, arrangement or similar proceedings involving Holder, or
involving any endorser or guarantor hereof, which in any way affects the
exercise by Holder hereof of its rights and remedies under this Note.
Presentment, demand, protest, notices of protest, dishonor and
non-payment of this Note and all notices of every kind are hereby waived.
The terms "Maker" and "Holder" shall be construed to include their
respective heirs, personal representatives, successors, subsequent holders and
assigns.
Regardless of the place of execution or performance, this letter and the
Note shall be governed by, and construed in accordance with, the laws of the
State of New York without giving effect to such state's conflicts of laws
provisions. Each of the parties hereto irrevocably consents to the jurisdiction
and venue of the federal and state courts located in the State of New York,
County of New York.
KIDS STUFF, INC.
By:
-----------------------------
Xxxxxxx X. Xxxxxx
President
