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Exhibit 10.10
AMENDED PROMISSORY NOTE
$3,500,000.00 JUNE 28, 2001
FOR VALUE RECEIVED, DISCOVERY TOYS, INC., a California corporation
("Payor") promises to pay to the order of AVON PRODUCTS, INC., a New York
corporation or subsequent holder of this Note ("Payee"), at its offices at 1345
Avenue of the Americas, New York, New York 10105 or at such other address as
Payee may specify, in lawful money of the United States of America, the sum of
THREE MILLION FIVE HUNDRED THOUSAND DOLLARS ($3,500,000.00), with interest from
January 15, 1999 on the unpaid principal balance at the rate of four and
sixty-four one-hundredths of one percent (4.64%) per annum compounded annually.
This Note is the Note referred to in Sections 6.2(k) and 6.4(f) and certain
other sections of that certain Stock Transfer Agreement dated as of January 15,
1999 among Discovery Toys, L.L.C., a New Jersey limited liability company (the
"LLC"), Payor and Payee (the "Transfer Agreement") and in Section 1.3 of that
certain Agreement dated as of June 28, 2001 among the Payor, Avon Products, Inc.
and the stockholders of the Company named therein. This Note amends that Note of
Payor in the principal amount of $3,500,000 dated January 15, 1999.
The principal and all accrued and unpaid interest on this Note shall be
payable on the earliest to occur of (i) June 30, 2003; (ii) the sale or transfer
of all or substantially all of the assets of Payor, or fifty percent (50%) or
more of the fully diluted outstanding capital stock of Payor (the "Company
Shares") other than a transfer of fifty percent (50%) or more of the outstanding
capital stock of Payor to dreamlife, inc. or (iii) the sale or transfer of fifty
percent (50%) or more of the membership interests of the LLC outstanding on
January 15, 1999 to entities not 50% or more owned directly or indirectly by the
owner on January 15, 1999 of the membership interests of the LLC.
Each of the following events shall constitute an Event of Default (an
"Event of Default") under this Note:
(a) Failure of Payor to pay any amount due and payable under
this Note when due, whether at the time scheduled for payment thereof or by
reason of acceleration thereof or otherwise;
(b) Payor shall: (i) apply for or consent to the appointment
of a receiver, trustee or liquidator on any material part of its property; (ii)
admit in writing its inability to pay debts as they mature; (iii) make a general
assignment for the benefit of creditors; (iv) be adjudicated bankrupt or
insolvent; (v) file a voluntary petition in bankruptcy or a petition or an
answer seeking an arrangement with creditors or take advantage of any
bankruptcy, insolvency, readjustment of debt, dissolution or liquidation law, or
an answer admitting the material allegations of a petition filed against it in
any proceeding under any such law; or (vi) take any action for the purpose of
effectuating any of the foregoing; and
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(c) Any order, judgment or decree shall be entered, without
Payor's application, approval or consent, by any court of competent
jurisdiction, approving a petition seeking reorganization of Payor or of all or
a substantial part of its assets, or appointing a receiver, custodian, trustee,
intervenor or liquidator therefor, or such a petition seeking reorganization or
liquidation shall be filed against Payor and such order, judgment or decree
shall continue unstayed and in effect for a period of sixty (60) days.
Upon the occurrence of an Event of Default hereunder, at the option of
Payee: (i) Payee may declare this Note immediately due and payable in full, as
to principal, interest and any other sums payable hereunder, whereupon all such
sums shall be and become immediately due and payable in full; and (ii) Payee
shall be entitled to exercise forthwith against Payor any and all rights and
remedies that may otherwise be available to Payee hereunder and at law or in
equity.
This Note, and any payments due hereon, shall be subordinate to Senior
Debt, now or hereafter existing, of Payor (as hereinafter defined). "Senior
Debt" shall mean and include the outstanding principal of, premium, if any, and
interest on all indebtedness of Payor (i) to PNC Bank, National Association
("PNC Bank"), as agent for the lenders, under the working capital facility
extended by PNC Bank, as lender and as agent for the lenders, to Payor, on the
terms and conditions available under such facility and up to the maximum amount
of $7,000,000, as proposed to be amended; or (ii) to other lenders under any
substitute working capital facility available to Payor on substantially the same
terms and conditions as the PNC facility described above and up to an aggregate
maximum amount of $7,000,000 for all such lenders; and any renewal, extensions
or deferrals of any such indebtedness. In the event of the distribution of
assets of Payor upon liquidation, dissolution, or reorganization of Payor, then
principal, interest, or premium on Senior Debt shall be paid before any payment
is made to Payee. In the event the Note is declared due and payable before its
stated maturity, no payment shall be made to Payee until principal, interest,
and premium on Senior Debt shall have been paid in full.
No remedy conferred upon or reserved or available to Payee shall be
exclusive of any other remedy or remedies available to him, but each and every
remedy shall be cumulative and shall be in addition to every such remedy now or
hereafter existing at law or in equity. No delay or omission on the part of
Payee to exercise any right or power arising upon the occurrence of any Event of
Default shall impair any right or power of Payee or be construed to be a waiver
by Payee of such Event of Default. Any right or power of Payee may be exercised
from time to time and as often as may be deemed expedient by it.
Payor hereby: (i) waives demand, presentment for payment, notice of
intention to accelerate, notice of acceleration, protest, notice of protest, and
all other notices and diligence in collecting this Note; and (ii) agrees that it
will not be necessary for Payee, in order to enforce payment of this Note, to
first institute suit or exhaust rights against Payor.
Payor agrees to pay Payee's reasonable expenses to obtain,
enforce or liquidate payment or performance of any of Payor's obligations under
this Note, which expenses shall include reasonable attorneys' fees and expenses
incurred by Payee.
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No waiver or modification of the terms of this Note shall be valid
unless in writing signed by each of Payee and Payor and then only to the extent
therein set forth.
This Note shall be governed by and construed and enforced in accordance
with the laws of the State of New York.
This Note shall be binding upon the Payor and its respective successors
and assigns, and shall be enforceable by Payee, its successors, assigns or
subsequent holders of this Note.
IN WITNESS WHEREOF, Payor has executed and delivered this Note
to be effective as of the day and year first above-written.
DISCOVERY TOYS, INC.
By: /s/ James M. Cascino
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Name: James M. Cascino
Title: Chief Executive Officer
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