Exhibit 99.12
________________________________________________________________________________
ASSET PURCHASE AGREEMENT
dated as of March 7, 2008
by and among
TRUDY CORPORATION
and
MUSICAL KIDZ LLC
________________________________________________________________________________
ASSET PURCHASE AGREEMENT
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ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of March 7, 2008
(the "Effective Date"), by and between TRUDY CORPORATION, a Delaware corporation
("Trudy" or the "Purchaser"), and MUSICAL KIDZ LLC, a California limited
liability company (the "Seller") (each, a "Party", and collectively, the
"Parties"). Capitalized terms used in this Agreement and not otherwise defined
are defined in Article 8.1 below. Except as otherwise specifically stated,
references in this Agreement to schedules and exhibits, respectively, are
references to the documents attached as Schedules and Exhibits, respectively, to
this Agreement, all of which form a part of this Agreement.
WITNESSETH
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WHEREAS, the Seller is or has been generally engaged in the business of
online and ecommerce sales of children's audio, electronics, musical instruments
and complementary third party products direct to the consumer, schools and
libraries (the "Business"); and
WHEREAS, the Seller desires to sell, and the Purchaser desires to
purchase, the Seller's right, title and interest in certain assets of the Seller
that relate solely to the operation of the Business for the consideration and on
the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the Parties, intending to be
legally bound, hereby agree as follows:
ARTICLE 1.
THE ASSET PURCHASE
1.1 Transferred Assets.
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(a) Subject to the terms and conditions of this Agreement
and in consideration of the obligations of the Purchaser as provided herein, at
the Closing, the Seller shall sell, assign, transfer, grant, bargain, deliver
and convey to the Purchaser, free and clear of all Encumbrances (except as
provided herein), the Seller's entire right, title and interest in, to and under
the Business, as a going concern, and all assets of every type and description,
tangible and intangible, wherever located and whether or not reflected on the
books and records of the Seller which are owned or used directly in connection
with, relating to or arising out of the Business, but only to the extent, and
solely to the extent, that such assets are owned or used directly in connection
with, relating to or arising out of the Business (all of such assets,
properties, rights and business collectively referred to as the "Transferred
Assets"), including, but not limited to, the following:
(i) All accounts receivable and other
receivables, deposits on the purchase of tangible and intangible assets,
including, but not limited to, inventory, security deposits, prepublication and
preproduction costs and all other current assets other than cash, short term
investments and securities of the Seller, but only to the extent, and solely to
the extent, that such current assets relate to the Business (all of such current
assets are listed on the balance sheet as of the Closing Date and set forth in
Schedule 1.1(a)(i) hereto (collectively the "Current Assets Purchased");
provided, however, that the Current Assets Purchased shall not include (A) any
accounts receivable that would otherwise be included in the Current Assets
Purchased, but which, at the Closing, equal in the aggregate less than One
Thousand Dollars ($1,000.00), and (B) any sums received by the Seller or the
Purchaser after the Closing Date in connection with third party and all other
sales which occurred prior to the Closing Date, which sums shall include,
without limitation, all payments received from Amazon, PayPal, VISA, MasterCard,
American Express, Discovery Card and any and all other credit cards.
(ii) A license to use any and all computer
hardware equipment used in connection with the Business and, to the extent
assignable by the Seller to the Purchaser, any and all software and the licenses
for such software which are required in connection with and being run on such
computer equipment, but only to the extent, and solely to the extent, that such
computer equipment and software relate to the Business, all of which computer
hardware equipment and software are set forth in Schedule 1.1(a)(ii) hereto;
(iii) All contracts, licenses and agreements to
which the Seller is a party and the right to pursue ongoing negotiations for
contracts, licenses and agreements with any individual or entity, a list of all
vendors of the Seller and a list of all customers of the Seller, but only to the
extent, and solely to the extent, that such contracts, licenses, agreements,
vendors and customers relate to the Business, all of which contracts, licenses,
agreements, vendors and customers are set forth in Schedule 1.1(a)(iii) hereto;
(iv) All Intellectual Property owned by the
Seller, but only to the extent, and solely to the extent, that such Intellectual
Property relates to the Business, all of which Intellectual Property is set
forth in Schedule 1.1(a)(iv) hereto and includes:
(1) The two (2) federally-registered
trademarks for "Music for Little People" in trademark Class 42 (Registration
#2053963 and Registration #1672226); the right to apply for, register and own a
trademark or trademarks for "Music For Little People" in all future categories
and classes which may be created under law to the extent any such category or
class relates to the Business; and, with the prior approval of the Seller, which
approval shall not be unreasonably withheld, the right to apply for, register
and own a trademark or trademarks for "Music For Little People" in all other
currently existing categories and classes, including but not limited to the
applicable trademark class for school and library distribution, except for Class
9 to which the Seller shall retain ownership; the right to apply for, register
and own a trademark or trademarks for any of the following in trademark Class
42: "Musical Kidz", "Musical Kidz.com", "MFLP.com", and "Music For Little
People.com" (collectively, the "Other Trademarks"); the right to apply for,
register and own a trademark or trademarks for any of the Other Trademarks in
all future categories and classes which may be created under law to the extent
any such category or class relates to the Business; and, with the prior approval
of the Seller, which approval shall not be unreasonably withheld, the right to
apply for, register and own a trademark or trademarks for any of the Other
Trademarks in all other currently existing categories and classes, including but
not limited to the applicable trademark class for school and library
distribution, except for the right to apply for, register and own any of the
Other Trademarks in trademark Class 9;
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(2) all of the Seller's direct mail
catalogues and catalogue files, mailing lists, e-mail lists, designs, patterns
and tooling for all proprietary products to the extent the same are necessary
for conduct of the Business.
The Seller shall assist the Purchaser wherever
necessary in the process of registering the trademarks for "Music for Little
People" and the Other Trademarks in all future and currently existing categories
and classes allowed hereunder including the completion of all necessary forms,
paperwork, or similar documentation including registering the trademark in all
other permitted classes or categories on behalf of the Purchaser at the
Purchaser's sole cost and expense. The Seller agrees to assign any registered
trademark to the Purchaser if necessary in order to implement the objectives
herein stated.
Notwithstanding anything to the contrary set forth in
this Agreement, so long as Leib Ostrow remains a member of, and the beneficial
owner of a majority of the equity of, the Seller, the Purchaser shall not be
permitted to sell, assign, license, sublicense or otherwise transfer any of the
trademarks for "Music for Little People" or any of the Other Trademarks without
the Seller's prior written consent, which consent shall not be withheld
unreasonably, and without either the transferee agreeing in writing with the
Seller to be bound by the terms of this Agreement and the Mutual Non-Compete
Agreement as they pertain to the trademarks being transferred or the Purchaser
providing the Seller with other written documentation evidencing such agreement.
Further, notwithstanding anything to the contrary set
forth in this Agreement, the Purchaser hereby acknowledges that on March 6,
2003, the Seller caused to be electronically filed with the United States Patent
and Trademark Office ("USPTO") a Trademark Assignment for one (1) of the
federally-registered trademarks for "Music for Little People" in trademark Class
42 (Registration #1672226), pursuant to which the USPTO was formally advised of
the prior transfer of all right, title and interest in and to this trademark
from the Seller's predecessor-in-interest, For Future Generations, Inc., to the
Seller through an assignment for the benefit of creditors. In the event of any
negative response from the USPTO with regard to the Trademark Assignment, the
Seller hereby agrees, at its sole cost and expense, to take any additional
actions which may be necessary to cause this Trademark Assignment to be accepted
by the USPTO.
(v) The inventory owned by the Seller, but only
to the extent, and solely to the extent, that such inventory relates to the
Business and is deemed purchased by the Purchaser pursuant to the provisions of
Article 1.3(c), below, all of which inventory is set forth in Schedule 1.1(a)(v)
hereto (the "Purchased Inventory"), but shall not include the inventory owned by
the Seller which is not the Purchased Inventory or which is obsolete (as
determined in accordance with generally accepted accounting principles);
(vi) All websites, universal record locators
(URLs), domain names and toll-free telephone numbers (e.g., 800, 866 and 877
telephone numbers) owned by the Seller, but only to the extent, and solely to
the extent, that such items relate to the Business, all of which are set forth
in Schedule 1.1(a)(vi) hereto; and
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(vii) Any goodwill associated with the Business,
but only to the extent, and solely to the extent, that such goodwill relates to
the Business, whether or not listed on the balance sheet as of the Closing Date.
(b) Notwithstanding the foregoing, the Seller and the
Purchaser hereby acknowledge and agree that the Seller is retaining ownership of
certain assets set forth in Schedule 1.1(b) hereto which do not relate solely to
the operation of the Business and which assets shall not be considered part of
the Transferred Assets (the "Retained Assets").
1.2 No Encumbrances and Limited Assumption of Liabilities.
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(a) The Transferred Assets shall be sold and conveyed to
the Purchaser free and clear of all Encumbrances.
(b) All liabilities and obligations of the Seller not
relating to the Transferred Assets or the Business, and all liabilities and
obligations of the Seller relating to the Transferred Assets or the Business and
arising prior to the Closing Date shall be and remain solely the Seller's
responsibility.
(c) The Purchaser does not assume and shall in no event
be liable for any liabilities or obligations of the Seller to any Person to the
extent such arise prior to the Closing Date and/or do not relate to the
Transferred Assets or the Business, whether fixed or inchoate, known or unknown,
liquidated or unliquidated, secured or unsecured, contingent or otherwise.
Without limiting the foregoing, the Purchaser shall not, except for those
liabilities and obligations arising from and after the Closing Date and relating
to any of the Transferred Assets or the Business, assume any of the Seller's
liabilities or obligations, contingent or otherwise, including, but not limited
to those:
(i) arising or incurred after the Closing Date
which are attributable to the period prior to the Closing Date, including
product liability claims and warranty claims arising out of products sold by the
Seller before the Closing Date;
(ii) relating to taxes with respect to all
periods up to and including the Closing Date, including, without limitation, any
liability for interest or penalties related thereto;
(iii) arising as a result of any proceeding or
claim initiated at any time before, on or after the Closing Date in respect of
anything done, suffered to be done or omitted to be done prior to the Closing
Date by the Seller or any affiliate of the Seller;
(iv) relating to the indemnification of any
Person by reason of the fact that such Person was a member, shareholder,
director, officer, employee or agent of the Seller or was serving as such at the
request of the Seller (whether such indemnification is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses or
otherwise and whether such indemnification is pursuant to any statute, charter,
document, bylaw, agreement or otherwise);
(v) arising from or relating to claims or
liabilities of employees of the Seller for benefits or pay under any employee
benefit plan, compensation policy, individual employment contract or collective
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bargaining agreement, "golden parachute" or any severance payment, by reason of
any alleged termination of employment prior to the Closing Date or as a result
of the sale of the Transferred Assets to the Purchaser pursuant to this
Agreement;
(vi) existing as of the day prior to the Closing
Date that are not provided or reserved for or listed in any Schedule or that are
in excess of amounts provided or reserved for in any Schedule;
(vii) attributable to any assets or properties
which are not included in the Transferred Assets;
(viii) arising from the pension, incentive
compensation, bonus, employee savings or other plans for employee benefits of
the Seller;
(ix) arising from or relating to any breach of
contract, breach of warranty, tort, infringement or violation of law by the
Seller;
(x) arising from or relating to any coupons,
gift cards and gift certificates sold prior to the Closing but not redeemed
until at the time of or after the Closing; and
(xi) arising from or relating to fulfillment of
any warranty obligations of the Seller regarding products sold prior to Closing.
(d) The Purchaser shall and does assume and shall be
solely liable for any and all liabilities or obligations relating to the
Transferred Assets and the Business, whether fixed or inchoate, known or
unknown, liquidated or unliquidated, secured or unsecured, contingent or
otherwise to the extent, and solely to the extent, such liabilities or
obligations arise from or relate to the period after the Closing Date, other
than liabilities and obligations involving coupons issued and guaranties or
warranties delivered prior to the Closing Date.
(e) The Seller shall pay or otherwise fully discharge, as
the same shall become due, all of its liabilities and obligations relating to
the Transferred Assets and the Business and existing as of the Closing Date.
1.3 Purchase Price.
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In consideration of the sale, transfer, conveyance, assignment and
delivery of the Transferred Assets on the Closing Date and in reliance upon the
representations and warranties made in this Agreement by the Seller, the
Purchaser shall pay the following sums and perform the following acts for the
benefit of the Seller (collectively, the "Purchase Price"):
(f) The Purchaser shall pay or issue, as the case may be,
to the Seller at the Closing:
(i) the sum of Three Hundred Fifty Thousand and
no/00 Dollars ($350,000.00) in cash, provided, however, that One Thousand and
no/00 Dollars ($1,000.00) thereof shall be held back and not paid by the
Purchaser in order to cover the cost of redeeming product coupons issued prior
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to Closing by the Seller and redeemed by the holders thereof after Closing Date
and that the portion of such One Thousand and no/00 Dollars ($1,000.00) (which
remains after deductions to cover such costs) shall be paid to the Seller
promptly after the first anniversary of the Closing; and
(ii) Shares of the Common Stock of the Purchaser
(equal in value to One Hundred Thousand and no/00 Dollars ($100,000.00)), in the
aggregate, each of such Shares to be valued at the average of the closing prices
thereof on the OTC-BB on the fifteen (15) trading days preceding (and not
including) the Closing Date, the issuance of which shall not be registered under
the Securities Act of 1933, as amended (the "Act") and shall constitute
Restricted Shares pursuant to Rule 144 of the Securities and Exchange Commission
under the Act. The Purchaser shall not operate its business in any manner other
than in the ordinary course during such fifteen (15) day period.
(iii) The Parties acknowledge that the sum of
Eight Thousand Four Hundred Sixty-Two and and 07/00 Dollars ($8,462.07) is
presently due and owing from the Seller to the Purchaser for sales by the
Purchaser to the Seller of goods for inclusion in the Seller's catalogues. Such
amount shall constitute an offset and be deducted from the payment of cash
provided in Section 1.3(a)(i) above. The Purchaser agrees that it shall
repurchase from the Seller any unsold goods from the aforementioned catalogue
sale (currently estimated at Two Thousand and no/00 Dollars ($2,000) and such
purchase price for such unsold goods shall be included in the One Hundred
Thousand and no/00 Dollars ($100,000.00) limit discussed in Section 1.3(c),
below.
(b) On the first (1st) anniversary of the Closing Date,
the Purchaser shall issue to the Seller Shares of the Common Stock of the
Purchaser equal in value to One Hundred Thousand and no/00 Dollars ($100,000) in
the aggregate, each such Share to be valued at the average of the closing prices
thereof on the OTC:BB on the ten (10) trading days preceding (and not including)
such first anniversary of the Closing Date. The issuance of such Shares shall
not be registered under the Act, and shall constitute Restricted Shares pursuant
to Rule 144 of the Securities and Exchange Commission under the Act. The
Purchaser shall not operate its business in any manner other than in the
ordinary course during such ten (10) day period.
(c) With regard to the payment of the Three Hundred Fifty
Thousand and no/00 Dollars ($350,000) in cash, described in Article 1.3(a)(i),
above, One Hundred Thousand and no/00 Dollars ($100,000) of such amount shall be
deemed to constitute the purchase price of inventory required to fulfill sales
of merchandise by the Purchaser for a period of twelve (12) months from the
Closing Date. The purchase price of such inventory shall be the Seller's
purchase cost of each item of inventory plus a ten percent (10%) royalty on the
purchase costs of proprietary Bebop products set forth on Schedule 1.3(c)(A)
hereto..
(d) The Seller shall be entitled to the following
additional payments (the "Earn-Out") in cash after the Closing, calculated for
each of the approximate three (3) years after the Closing Date described below,
if the conditions set forth below are satisfied:
(i) If, for the period commencing on the Closing
Date and ending on the last day of the Purchaser's fiscal year ending March 31,
2009, net revenues for such period (net of, among other things, returns and
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reserves, discounts, co-op and other such items as required in accordance with
generally accepted accounting principles) of the business conducted by the
Purchaser using the Transferred Assets generates net income greater than ten
percent (10%) of such net revenues, the Purchaser will pay the Seller five
percent (5%) of such net revenues within seventy-five (75) days following the
end of the Purchaser's fiscal year. If such net income is greater than five
percent (5%), but less than ten percent (10%) of such net revenues for such
period, the Purchaser will pay the Seller two and one-half percent (2.5%) of
such net revenues within such time period.
(ii) The provisions set forth in Article
1.3(d)(i), above, and the possible payments therein provided, shall also apply
in respect of the Purchaser's next fiscal year ending March 31, 2010; provided,
however, that in calculating such net income, an additional overhead burden of
five percent (5%) of Selling, General and Administrative Costs shall be added by
the Purchaser for oversight of the Business and not controlled by the Seller.
(iii) If, in respect of the Purchaser's next
fiscal year ending March 31, 2011, net revenues for such fiscal year (net of,
among other things, returns and reserves, discounts, co-op and other such items
as required in accordance with generally accepted accounting principles) of the
business conducted by the Purchaser using the Transferred Assets generates net
income greater than ten percent (10%) of such net revenues, the Purchaser will
pay the Seller two and one-half percent (2.5%) of such net revenues within
seventy-five (75) days following the end of the Purchaser's fiscal year. If such
net income is greater than five percent (5%), but less than ten percent (10%) of
such net revenues for such fiscal year, the Purchaser will pay the Seller one
and one-half percent (1.5%) of such net revenues within such time period;
provided, however, that in calculating such net income, a further overhead
burden of five percent (5%) of Selling, General and Administrative Costs shall
be further added by the Purchaser for oversight of the Business and not
controlled by the Seller.
(iv) The calculation of the Earn-Out provided in
each of sub-Sections 1.3(d)(i)-(iii), above, shall be made in accordance with
generally accepted accounting principles, consistently applied, taking into
account the supplemental instructions and provisions set forth in Exhibit A
hereto.
(v) From and after the Closing, the Purchaser
shall exercise good faith in its conduct and operating of the Business and shall
manage and operate the Business using commercially reasonable standards and with
that same standard of care which a reasonably prudent business person would use
in similar circumstances; provided, however, that the Seller acknowledges and
agrees that the Purchaser must act in accord with its fiduciary responsibilities
to all of its shareholders. The Purchaser agrees, throughout the period
commencing on the Closing and ending on the date that is one (1) year after the
date on which the last Earn-Out payment is due and payable hereunder, to grant
the Seller, Leib Ostrow and their respective representatives full access, upon
reasonable advance written notice to the Purchaser, to its books and records
relating to the Business. The Purchaser shall cooperate fully with the Seller in
providing such access in accordance with the foregoing provision.
(e) Payment by the Purchaser of Shares of Common Stock of
the Purchaser on the first anniversary of the Closing (as provided in Section
1.3(b), above) and of the Earn-Out (as provided in Section 1.3(c), above) shall
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be subject to a deduction by the Purchaser against the value of such Shares and
against the amount of the Earn-Out (i) to reimburse the Purchaser for any Loss
it actually suffers for which the Seller owes the Purchaser under the
indemnification obligations contained in Article 7 hereof, and (ii) to protect
the Purchaser against any potential Loss which in the reasonable opinion of the
Purchaser it is likely to suffer as the result of a claim made against the
Purchaser and covered by the Seller's indemnification obligations contained in
Article 7 hereof. In addition to the foregoing, the Purchaser may offset against
the payment of cash and transfer of Shares of Common Stock on the Closing Date
any amounts not paid by the Seller which it was required to pay under the
provisions of Section 2.5(f), below. With regard to the foregoing permissible
deductions, such deductions shall be made first against the value of such Shares
and second against the amount of the Earn-Out.
1.4 Licensing Agreements.
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(a) In addition to Transferred Assets the Purchaser is
acquiring hereunder, the Seller shall grant to the Purchaser, pursuant to that
certain MFLP Licensing Agreement attached hereto as Exhibit B (the "MFLP
Licensing Agreement"), a license under which the Purchaser shall have unlimited
access to the proprietary audio masters of Music for Little People necessary for
conduct of the Business, including, without limitation, for the purpose of
duplication at the discretion of the Purchaser. The Purchaser shall pay to the
Seller royalties and mechanical charges on each master at the time of sale and,
in instances in which audio products of Music for Little People are bundled with
other products for sale as an incentive, the Purchaser will pay to the Seller
Twenty Cents ($0.20) per album copy at the time of sale of the product or
products with which it is bundled and not be subject for payment of royalties.
(b) In addition to Transferred Assets the Purchaser is
acquiring hereunder, the Seller shall grant to the Purchaser, pursuant to that
certain Bebop Licensing Agreement attached hereto as Exhibit C (the "Bebop
Licensing Agreement"), a license under which the Purchaser shall be entitled to
sell certain Bebop branded musical instruments as more particularly set forth in
such Bebop Licensing Agreement.
1.5 Closing Date.
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The closing of the transaction (the "Closing") shall take place at
10:00 am on March 7, 2008 at the offices of the Purchaser, 353 Main Avenue,
Norwalk, Connecticut 06851, unless another place or time is agreed to in writing
by the Seller and the Purchaser. The date upon which the Closing actually occurs
is herein referred to as the "Closing Date."
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
The Seller hereby represents and warrants to the Purchaser as of the
date of this Agreement as follows:
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2.1 Existence and Good Standing.
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The Seller is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of California. The
Seller has the power to own the Transferred Assets and to carry on the Business
as now being conducted. The Seller is duly qualified to do business and is in
good standing in each jurisdiction in which the character or location of the
properties owned or leased by the Seller or the nature of the business conducted
by the Seller makes such qualification necessary under applicable Law. The
Seller is wholly-owned by Leib Ostrow.
2.2 Power and Authority.
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The Seller has all requisite power and authority to execute and deliver
this Agreement and the other Transaction Documents to which it is a party, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The Seller's execution, delivery
and performance of this Agreement and the other Transaction Documents and the
Seller's consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by all action required of the Seller by
applicable Law or its Organizational Documents. This Agreement and the other
Transaction Documents to which the Seller is a party constitute the valid and
legally binding obligations of the Seller, enforceable against the Seller in
accordance with their respective terms.
2.3 No Conflicts.
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Neither the execution and delivery of this Agreement or any other
Transaction Document by the Seller, nor the performance of this Agreement and
the other Transaction Documents by the Seller will (with or without notice or
lapse of time): (i) conflict with or violate any provision of the Organizational
Documents of the Seller; (ii) to the Seller's Knowledge, conflict with or
violate any Law applicable to the Seller or the Transferred Assets; or (iii)
result in any breach of or constitute a default under, require any notice,
approval or consent to or of any Person in connection with, give to another any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of an Encumbrance on any Transferred Asset, pursuant to any
contract to which the Seller is a party or by which it is bound or pursuant to
applicable Law.
2.4 Title to Transferred Assets; Adequacy of Transferred Assets.
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(a) The Seller acquired good and marketable title to, or
a valid leasehold interest or license in, each of the Transferred Assets through
an Assignment for the Benefit of Creditors, in each case subject to no
restriction on transfer. Upon the Closing, the Purchaser will have good and
marketable title thereto, in each case except as set forth on Schedule 2.4, free
and clear of any Encumbrance or restriction on transfer. The Seller has
delivered to the Purchaser a true copy of all material documents constituting,
in the reasonable opinion of the Purchaser and its counsel, evidence of the
transfer of good and marketable title of the Transferred Assets to the Seller
through the Assignment for the Benefit of Creditors, the release of all claims
of creditors against the Seller or the Seller's predecessor and the documents
transferring such title to the Seller of the Transferred Assets.
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(b) All inventories constituting the Purchased Inventory
are of good, useable and merchantable quality in all material respects and do
not include obsolete or discontinued items. All inventories constituting the
Purchased Inventory are of such quality as to meet the quality control standards
of the Seller and, to the Seller's Knowledge, any applicable governmental
quality control standards. All inventories constituting the Purchased Inventory
that are finished goods are saleable as current inventories in the ordinary
course of business.
2.5 Contracts.
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The Seller has delivered to the Purchaser a correct and complete copy
of each written contract to which the Seller is a party and which is being
assigned to the Purchaser as part of the Transferred Assets. With respect to
each contract:
(a) such contract is, to the Seller's Knowledge, legal,
valid, binding, enforceable in accordance with its terms and in full force and
effect;
(b) to the Seller's Knowledge, such contract will not, as
a result of the consummation of the transactions contemplated hereby cease to be
legal, valid, binding, enforceable and in full force and effect on substantially
identical terms immediately following the Closing;
(c) the Seller is not, to the Seller's Knowledge, in
breach or default of such contract and, to the Seller's Knowledge, no other
party is in breach or default of such contract;
(d) the Seller has not received any notice or other
communication asserting the actual or alleged existence of any default or event
of default or event, occurrence, condition or act (including the consummation of
the transactions contemplated by this Agreement and the Transaction Documents)
which, with the giving of notice, the lapse of time or the occurrence of any
other event or condition would become such a default or event of default
thereunder;
(e) the Seller has not, and to the Seller's Knowledge, no
party other than the Seller has, repudiated any provision of any such contract;
and
(f) the Seller has paid any penalty, fee or other cost
charged for the assignment or other transfer of any contract to the Purchaser
and the Seller has paid any and all amounts due through the Closing Date to the
other party to each such contract being assigned so that each such contract
being assigned to the Purchaser has no monetary obligations undischarged by the
Seller through the Closing Date.
(g) The contract between the Seller and Stark (as defined
below) expired on March 2, 2008.
2.6 Litigation.
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Schedule 2.6 sets forth each instance in which the Seller (1) is
subject to any outstanding injunction, judgment, order, decree, ruling, or
charge related to the Business, or (2) is a party to or the subject of any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction, or is the subject of any pending or, to the Seller's
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Knowledge, threatened claim, demand, or notice of violation or liability from
any Person related to the Business. The representations and warranties contained
in this Section 2.6 include, but are not limited to, proceedings before a
bankruptcy or similar court.
2.7 Liabilities; Indebtedness.
-------------------------
To the Seller's Knowledge, there are no undisclosed liabilities,
obligations or indebtedness of or claims against the Seller with respect to the
Transferred Assets, or against any of the Transferred Assets themselves, whether
known or unknown, due or not yet due, asserted or unasserted, fixed, contingent
or otherwise, including, but not limited to, claims arising out of the
assignment for the benefit of creditors or the past bankruptcy or receivership
(if any) of the Seller or the Seller's predecessor.
2.8 Product Warranty.
----------------
Each product relating to the Business or the Transferred Assets and
manufactured, sold, leased or delivered by the Seller has, to the Seller's
Knowledge, been so manufactured, sold, leased or delivered in conformity with
all applicable contractual commitments and satisfy all applicable express and
implied warranties, and the Seller does not have any liability (and, to the
Seller's Knowledge, there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any liability) for replacement or repair thereof or
other damages in connection therewith. No product manufactured, sold, leased or
delivered by the Seller is, to the Seller's Knowledge, subject to any guaranty,
warranty, or other indemnity, other than the guaranties, warranties and other
indemnities set forth in Exhibit D hereto, which sets forth both those
guaranties, warranties and other indemnities provided by the Seller itself and
those of which the Seller is aware and are provided by the original
manufacturer, seller or lessor, as the case may be.
2.9 Product Liability.
-----------------
The Seller does not have any liability relating to the Business or the
Transferred Assets (and to the Seller's Knowledge there is no basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against the Seller giving rise to any liability
relating to the Business or the Transferred Assets) arising out of any injury to
individuals or property as a result of the ownership, possession or use of any
product relating to the Business manufactured, sold, leased or delivered by the
Seller.
2.10 Compliance with Laws.
--------------------
To the Seller's Knowledge, the Seller is in material compliance with
all Laws applicable to the Transferred Assets. To the Seller's Knowledge, no
event has occurred or circumstance exists that is likely to (with or without
notice or lapse of time) (i) constitute or result directly or indirectly in a
violation of, or a failure to comply with, any such applicable Law by the Seller
or (ii) result directly or indirectly in any actual, alleged, possible or
potential obligation on the part of the Seller to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature with respect to
the Transferred Assets. To the Seller's Knowledge, the Seller has not received
any notice or other communication (whether oral or written) from any Person
11
regarding (i) any actual or alleged violation of, or failure to comply with, any
such applicable Law with respect to the Transferred Assets by the Seller or (ii)
any actual or alleged obligation on the part of the Seller to undertake, or to
bear all or any portion of the cost of, any remedial action with respect to the
Transferred Assets.
2.11 Employee Relations.
------------------
Schedule 2.11 contains a list of the Seller's employees in the Business
who the Purchaser will attempt to hire following the Closing Date, pursuant to
Article 6 herein, showing for each his or her position, date of employment, 2007
compensation, current annualized salary and accrued vacation liability for such
employee. With respect to those individuals identified on Schedule 2.11:
(a) the Seller has not received notice that any employee
grievance is pending;
(b) no current employee has expressed or communicated to
the Seller any current grievance or any intent to leave or contemplation of
leaving the Seller's employ other than as set forth on Schedule 2.11; and
(c) the Seller has no reason to believe there will be any
adverse change in relations with such individuals as a result of any
announcement or the consummation of the transactions contemplated by this
Agreement.
2.12 Employee Benefit Plans.
----------------------
(a) Set forth in Schedule 2.12 is an accurate and
complete list of all employee benefit plans of any variety whatsoever that
relate to the Business (the "Employee Benefit Plans"), including, without
limitation, any within the meaning of Article 3(3) of ERISA (whether or not any
such Employee Benefit Plans are otherwise exempt from the provisions of ERISA),
established, maintained or contributed to by or with respect to the Seller.
(b) The consummation of the transactions contemplated by
this Agreement will not (i) entitle any current or former employee of the Seller
to severance pay, unemployment compensation, accrued vacation pay or any similar
payment for which the Purchaser may have liability, (ii) accelerate the time of
payment or vesting or increase the amount of any compensation to or in respect
of any current or former employee of the Seller or (iii) result in or satisfy
any condition to the payment of compensation to any current or former employee
of the Seller that would, in combination with any other payment, result in an
"excess parachute payment" within the meaning of Section 280G of the Code.
(c) In addition, except as otherwise provided herein, the
Seller shall be liable for, and shall pay, all wages, salaries, severance pay,
payroll taxes and employee benefits for all employees of the Seller through the
Closing Date. All claims incurred or liabilities asserted under the Seller's
Employee Benefit Plans shall be the responsibility of the Seller, and the
Purchaser shall not have any liability with respect to such claims or
liabilities except with regard to accrued vacation pay due, owing or accrued as
of the date of this Agreement, as set forth on Schedule 2.12, and any continuing
liability related thereto after the Closing Date.
12
2.13 Labor Relations.
---------------
With respect to the Business, the Seller is not a party to, or bound
by, any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization.
2.14 Intellectual Property.
---------------------
(a) The Seller is the true and lawful owner of or is
licensed or otherwise possesses legally enforceable rights to use, all
Intellectual Property related to the Transferred Assets, free and clear of all
Encumbrances.
(b) The Seller has not received any written notice from
any other Person challenging or questioning the right of the Seller to use any
Intellectual Property relating to the Transferred Assets.
(c) The Intellectual Property listed on Schedule
1.1(a)(iv) is all of the patents, patent applications, trademarks and copyrights
owned, used or held for use by the Seller in the Business.
(d) The Seller has not received any written notice from
any other Person regarding any infringement by any Person of any of the
Intellectual Property and has no actual knowledge of any infringement by any
Person of any of the Intellectual Property, and has sent no notice to any third
party alleging the infringement of any of the Intellectual Property.
2.15 Accounts Receivable.
-------------------
With respect to the Accounts Receivable constituting Transferred
Assets: (a) all such Accounts Receivable represent valid obligations arising
from sales actually made or services actually performed in the ordinary course
of business; (b) to the Seller's Knowledge, such Accounts Receivable are current
and collectible; and (c) there is no (or to the Seller's Knowledge threatened)
contest, claim or right of set-off under any contract with any obligor of any
such Accounts Receivable relating to the amount or validity of such Account
Receivable, other than rebates or returns in the ordinary course of business.
2.16 Taxes.
-----
(a) All Tax Returns relating to the Business have been
timely filed, such Tax Returns are true, correct and complete in all respects.
(b) All Taxes owed in connection with the Business have
been paid in full on a timely basis, whether or not shown on any Tax Return.
(c) All Taxes required to have been withheld and paid
over relating to the Business (in connection with amounts paid or owing to any
employee, independent contractor, creditor or other third-party) have been
withheld and paid over to the proper governmental authorities.
13
(d) No deficiencies exist or have been asserted (either
in writing or verbally, formally or informally) or are expected to be asserted
with respect to Taxes in connection with the Business, and the Seller has not
received notice (either in writing or verbally, formally or informally) or
expects to receive notice that a Tax Return has not been filed or Taxes paid
with respect to the Business. No action or proceeding for assessment or
collection of Taxes exists, and no such event has been asserted or to Seller's
knowledge, threatened (either in writing or verbally, formally or informally),
against the Transferred Assets. No waiver or extension of any statute of
limitations is in effect with respect to Taxes or Tax Returns relating to the
Business. The federal income tax returns relating to the Business disclose all
positions taken therein that could give rise to a substantial understatement
penalty within the meaning of Section 6662 of the Code.
(e) The Seller is not, nor has it been at any time during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code, a
"United States real property holding corporation" within the meaning of Section
897(c)(2) of the Code.
(f) The tax basis in the Transferred Assets for purposes
of determining future amortization, depreciation and other federal income tax
deductions is accurately reflected on the Seller's tax books and records.
2.17 Broker's or Finder's Fees.
-------------------------
No agent, broker, person or firm acting on behalf of the Seller is, or
will be, entitled to any commission or broker's or finder's fees in connection
with any of the transactions contemplated by this Agreement.
2.18 Disclosure.
----------
The representations, warranties and other statements of the Seller
contained in this Agreement, the Transaction Documents, and any schedule,
exhibit or certificate attached hereto or thereto, or delivered in accordance
with the terms hereof, do not contain any untrue statement of a material fact,
or omit to state any material fact that is necessary to make the statements
contained herein or therein not misleading.
2.19 Validity of Schedules; Disclosures.
----------------------------------
All statements and information contained in schedules attached to this
Agreement or to be delivered to the Purchaser at or before the Closing Date are
deemed representations and warranties by the Seller, and the Seller represents
and warrants that the same are true, correct and complete in all material
respects. With respect to the disclosures set forth on various Schedules
referenced in this Article 2, any exception to a representation and warranty or
other disclosure set forth in any such Schedule shall be deemed a disclosure in
each other Schedule requiring such disclosure provided that such disclosure
discloses all information necessary for the Purchaser to reasonably determine
that such information relates to such other Schedule and the information
provided is sufficient disclosure for purposes of such other Schedule.
14
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER
The Purchaser represents and warrants to the Seller as of the date of
this Agreement as follows:
3.1 Existence and Good Standing.
---------------------------
The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
3.2 Power and Authority.
-------------------
The Purchaser has all requisite power and authority to enter into and
deliver this Agreement and the other Transaction Documents to which the
Purchaser is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The Purchaser's
execution, delivery and performance of this Agreement and the other Transaction
Documents to which the Purchaser is a party, and the Purchaser's consummation of
the transactions contemplated hereby and thereby, have been duly and validly
authorized by all corporate action required of the Purchaser by applicable Law
and its Organizational Documents. This Agreement and the other Transaction
Documents to which the Purchaser is a party constitute the valid and legally
binding obligations of the Purchaser, enforceable against the Purchaser in
accordance with their respective terms.
3.3 No Conflicts.
------------
Neither the execution and delivery of this Agreement or any other
applicable Transaction Document by the Purchaser, nor the performance of this
Agreement and the other applicable Transaction Documents by the Purchaser will
(i) conflict with or violate any provision of the Organizational Documents of
the Purchaser, (ii) to the Purchaser' Knowledge, conflict with or violate any
Law applicable to the Purchaser or (iii) result in any breach of or constitute a
default under, require any notice, approval or consent to or of any Person in
connection with, give to another any right of termination, amendment,
acceleration or cancellation of, or result in the creation of an Encumbrance on
any property or asset of the Purchaser pursuant to any contract to which the
Purchaser is a party or by which it is bound or pursuant to applicable Law.
3.4 Absence of Litigation.
---------------------
There are no actions, lawsuits, administrative proceedings,
arbitrations or governmental investigations whatsoever pending or, to the
Purechaser's Knowledge, threatened that would have a material adverse effect on
the ability of the Purchaser to enter into and perform its obligations under
this Agreement.
15
3.5 Broker's or Finder's Fees.
-------------------------
No agent, broker, person or firm acting on behalf of the Purchaser is,
or will be, entitled to any commission or broker's or finder's fees in
connection with any of the transactions contemplated herein.
3.6 Purchaser Stock.
---------------
Upon issuance, the Common Stock of the Purchaser to be issued to the
Seller pursuant to Section 1.3(a)(ii) shall be duly and validly issued and
outstanding as fully paid and non-assessable shares in the capital stock of the
Purchaser, free and clear of any and all Encumbrances.
3.7 No Knowledge of Potential Claims.
--------------------------------
The Purchaser is not aware of any facts or circumstances that would
serve as the basis for a claim by the Purchaser against the Seller based upon a
breach of any of the representations and warranties of the Seller contained in
this Agreement or breach of any of the Seller's covenants or agreements to be
performed by the Seller at or prior to Closing. The Purchaser shall be deemed to
have waived in full any breach of any of the Seller's representations and
warranties and any such covenants and agreements of which the Purchaser has such
awareness at the Closing.
3.8 Disclosure.
----------
The representations, warranties and other statements of the Purchaser
contained in this Agreement, the Transaction Documents, and any schedule,
exhibit or certificate attached hereto or thereto, or delivered in accordance
with the terms hereof, do not contain any untrue statement of a material fact,
or omit to state any material fact that is necessary to make the statements
contained herein or therein not misleading.
ARTICLE 4.
CONDITIONS TO THE PURCHASER'S OBLIGATIONS TO CLOSE
The Purchaser's obligations at Closing under this Agreement are
conditioned upon satisfaction or waiver, on or prior to the Closing Date, of
each of the following conditions:
4.1 Good Standing and Other Certificates.
------------------------------------
The Seller shall have delivered to the Purchaser:
(a) a certificate from the Secretary of State of
California as of the Closing Date or any of the five (5) preceding business days
to the effect that the Seller exists in good standing in California; and
16
(b) a copy of the Operating Agreement and of the Articles
of Organization of the Seller as in effect from the date of this Agreement
through the Closing Date, with all amendments thereto, certified as of the
Closing Date by an officer of the Seller; and
(c) a copy of resolutions, certified as of the Closing
Date by an officer of the Seller, authorizing the execution and delivery by the
Seller of this Agreement and the other Transaction Documents to which the Seller
is a party, the performance by the Seller of its obligations hereunder and
thereunder, and the consummation by the Seller of the transactions contemplated
hereby and thereby.
4.2 Deliveries by the Seller.
------------------------
On the Closing Date, the Seller shall deliver to the Purchaser duly
executed by the Seller, or such other signatory as may be required by the nature
of the document, and effective as of the Closing Date (subject to the
fulfillment or waiver of the conditions specified in Article 4 hereof), bills of
sale, certificates of title, endorsements, assignments and other good and
sufficient instruments of sale, conveyance, transfer and assignment, in form and
substance reasonably satisfactory to the Purchaser, sufficient to sell, convey,
transfer and assign to the Purchaser all rights, titles and interests of the
Seller in and to the Transferred Assets on the Closing Date and to quiet the
Purchaser's title thereto.
4.3 Satisfaction with Review of the Seller.
--------------------------------------
The Purchaser shall have completed its review of the Transferred
Assets, properties, books and records and financial and legal condition of the
Seller and shall be satisfied in all respects with the results thereof.
4.4 Governmental and Other Approvals and Consents; Compliance with
--------------------------------------------------------------
Law; No Adverse Changes.
-----------------------
(a) All governmental and other consents and approvals, if
any, necessary to permit the consummation of the transactions contemplated by
this Agreement shall have been received and the proposed acquisition shall be in
compliance with all applicable Laws.
(b) The Board of Directors of the Purchaser shall have
approved the transactions contemplated herein, executions and delivery of this
Agreement and the Closing of such transactions.
(c) The representations and warranties of the Seller
contained in this Agreement shall be true in all material respects at and as of
the Closing Date as though such representations and warranties were made at and
as of such time.
(d) Since the Effective Date, there shall not have
occurred any material adverse change in the condition of the Transferred Assets.
17
4.5 Employment Agreement.
--------------------
Leib Ostrow shall have executed and delivered to the Purchaser the
Employment Agreement with the Purchaser, in the form attached hereto as Exhibit
E.
4.6 Satisfactory Compliance.
-----------------------
All actions to be taken by the Seller in connection with the Closing
and all certificates, instruments and other documents required to be delivered
at Closing, including the Closing Documents, will be reasonably satisfactory in
form and substance to the Purchaser and its counsel and will have been executed
and delivered by the Seller.
4.7 Intentionally Omitted.
---------------------
4.8 Maintenance by the Seller of Financial Performance Levels.
---------------------------------------------------------
The profit and loss statement of the Seller, prepared in accordance
with generally accepted accounting principles, for the ten (10) months ended
December 31, 2007 shall disclose net revenues, annualized to a twelve (12) month
period, of not less than Nine Hundred Thousand Dollars ($900,000.00), and net
income shall be not less than six percent (6%) of net revenues.
4.9 Conditions Involving Stark.
--------------------------
(a) Under the Seller's contract with Stark Fulfillment,
its fulfillment house located in Louisiana, Missouri ("Stark"), the Seller shall
have paid all sums due and owing to Stark through the Closing Date and there
shall be no outstanding liabilities of any kind to Stark or other facts or
conditions which would enable Stark to refuse to release the Inventory to the
Purchaser after the Closing. Notwithstanding the foregoing, the Purchaser hereby
acknowledges that the Seller will as of the Closing Date have a Ten Thousand and
no/100 Dollars ($10,000) credit with Stark and that the Purchaser shall not be
entitled to receive the benefit of such credit; provided, however, that after
the Closing Date Stark shall make available to the Purchaser such credit in
increments in connection with its future services and that the Purchaser shall
pay to the Seller the full amount of such incremental credits as and when they
are received.
(b) The Purchaser and Stark shall have entered into a
written distribution agreement for Stark's services on a month-to-month basis to
the Purchaser on commercially reasonable terms acceptable to the Purchaser. The
Purchaser shall use all commercially reasonable efforts to conclude such
agreement prior to the Closing.
4.10 Non-Compete Agreement.
---------------------
The Seller and Leib Ostrow, the controlling Member of the Seller, shall
have executed and delivered to the Purchaser the Mutual Non-Compete Agreement in
the form attached hereto as Exhibit F.
18
4.11 License Agreements.
------------------
The Seller shall have executed and delivered to the Purchaser the MFLP
Licensing Agreement and the BeBop Licensing Agreement in the forms attached
hereto as Exhibits B and C, respectively.
ARTICLE 5.
CONDITIONS TO THE SELLER'S OBLIGATIONS TO CLOSE
The Seller's obligations under this Agreement are conditioned upon
satisfaction or waiver, on or prior to the Closing Date, of each of the
following conditions:
5.1 Good Standing and Other Certificates.
------------------------------------
The Purchaser shall have delivered to the Seller:
(a) a copy of the Purchaser's certificate of
incorporation, including all amendments thereto, certified by the Secretary of
the State of Delaware as of the Closing Date or any of the five (5) preceding
business days;
(b) a certificate from the Secretary of State of Delaware
as of the Closing Date or any of the five (5) preceding business days to the
effect that the Purchaser is in good standing in Delaware;
(c) a copy of the bylaws of the Purchaser, certified by
the Secretary of the Purchaser as being true and correct and in effect on the
Closing Date; and
(d) a copy of resolutions, certified as of the Closing
Date by the Secretary of the Purchaser, adopted by the Board of Directors of the
Purchaser and authorizing the execution and delivery by the Purchaser of this
Agreement and the other Transaction Documents to which the Purchaser is a party,
the performance by the Purchaser of its obligations hereunder and thereunder,
and the consummation by the Purchaser of the transactions contemplated hereby
and thereby.
5.2 Governmental and Other Approvals and Consents and Compliance
------------------------------------------------------------
with Law.
--------
(a) All governmental consents and other approvals, if
any, necessary to permit the consummation of the transactions contemplated by
this Agreement shall have been received and the proposed acquisition shall be in
compliance with all applicable Laws.
(b) The representations and warranties of the Purchaser
contained in this Agreement shall be true in all material respects at and as of
the Closing Date as though such representations and warranties were made at and
as of such time.
5.3 Employment Agreement.
--------------------
The Purchaser shall have executed and delivered to Leib Ostrow the
Employment Agreement with Leib Ostrow in the form attached hereto as Exhibit E.
19
5.4 Non-Compete Agreement.
---------------------
The Purchaser shall have executed and delivered to the Seller and Leib
Ostrow the Mutual Non-Compete Agreement in the form attached hereto as Exhibit
F, relating to the Purchaser's agreement not to compete with the Seller's
retained businesses.
5.5 License Agreements.
------------------
The Purchaser shall have executed and delivered to the Seller the MFLP
Licensing Agreement and the BeBop Licensing Agreement in the forms attached
hereto as Exhibits B and C, respectively.
5.6 Satisfactory Compliance.
-----------------------
All actions to be taken by the Purchaser in connection with the Closing
and all certificates, instruments and other documents required to be delivered
at Closing, including the Closing Documents, shall be reasonably satisfactory in
form and substance to the Seller and its counsel and will have been executed and
delivered by the Purchaser.
ARTICLE 6.
CERTAIN COVENANTS AND AGREEMENTS OF THE PARTIES
6.1 Employee Matters
----------------
(a) The Purchaser shall make offers to hire such
employees and independent contractors on Schedule 2.11, on either a full-time or
part-time basis as listed on Schedule 2.11. The Purchaser hereby agrees that it
shall employ or otherwise engage, depending upon whether the individual is an
employee or independent contractor of the Seller, the Seller's Executive
Assistant, Webmaster and Product Manager for a minimum of one (1) year from the
Closing Date on terms and conditions which are at least equivalent to the terms
and conditions pursuant to which such individuals are employed or engaged, as
the case may be, by the Seller immediately prior to the Closing Date. All of
such employment or engagement shall be governed by commercially reasonable
performance standards. In the event any of the foregoing individuals elects not
to not accept such employment or engagement, resigns such employment or
engagement prior to the end of such one (1) year period or is terminated from
his employment or engagement prior to the end of such one (1) year period, the
Purchaser hereby agrees to employ or engage a similarly qualified replacement.
Any employee of the Seller who is employed by the Purchaser after the Closing
Date shall be treated as an employee of the Purchaser, and any rights to
participation or benefits such employee may have under the Seller's employee
benefit plans and programs shall terminate as of the Closing Date. The Seller
shall, prior to the Closing Date, inform the employees of the Seller who may
become employed by the Purchaser of the termination of all such employee benefit
plans and programs, and such disclosure and termination shall satisfy and comply
with any and all applicable Laws. Further, the Purchaser shall also employ,
engage or otherwise provide qualified individuals to provide accounting and
purchasing services. The Purchaser shall make all of the aforementioned
individuals available on a part-time or full-time basis to Leib Ostrow in
connection with the services to be rendered by Leib Ostrow in connection with
his Employment Agreement with the Purchaser. Notwithstanding the foregoing, it
shall be the responsibility of Leib Ostrow, as Vice President, Direct to
20
Consumer Sales, of the Purchaser to replace any employee under his supervision
in the event such employee resigns or is terminated during such three (3) year
period, the hiring or engagement of any such new employee being subject to the
Purchaser's consent which shall not be unreasonably withheld.
(b) The Seller shall pay any Termination Costs related to
all the Seller's employees not hired by the Purchaser pursuant to Article
6.1(a).
(c) The Purchaser shall not assume with respect to any
employees hired pursuant to this Section 6.1 any accrued employee liabilities
under any pension, profit-sharing or other employee benefit plan maintained
currently or in the past by the Seller, or under which the Seller has any
present or future obligations or liabilities or under which any of its employees
has any present or future rights or otherwise.
6.2 Collection and Billing of Accounts Receivable; Returns
------------------------------------------------------
The Seller shall forward promptly to the Purchaser any monies, checks
or instruments received by the Seller after the Closing Date with respect to the
Business and properly belonging to the Purchaser. Similarly, the Purchaser
agrees that it shall forward promptly to the Seller any monies, checks or
instruments received by the Purchaser after the Closing Date with respect to the
Business and properly belonging to the Seller.
6.3 Taxes
-----
(a) The Seller shall pay all state and local sales,
transfer, excise or other similar Taxes and any deficiency, interest or penalty
asserted with respect thereto, and all recording and filing fees that may be
imposed by reason of the sale, transfer, assignment or delivery by the Seller of
the Transferred Assets regardless of the Person on whom such Taxes are imposed
under applicable Law. The Seller shall be responsible for the preparation and
filing of all required Tax Returns and shall be liable for the payment of any
and all Taxes relating to all periods up to and including the Closing Date
(including all Taxes resulting from the sale and transfer by the Seller of the
Transferred Assets).
(b) The Seller shall furnish or cause to be furnished to
the Purchaser, as promptly as practicable, whether before or after the Closing
Date, such information and assistance relating to the Business as is reasonably
necessary for the preparation and filing by the Purchaser of any Tax Return,
claim for refund, or other required or optional filings relating to tax matters,
for the preparation by the Purchaser for, and proof of facts during, any tax
audit, for the preparation by the Purchaser for any tax protest, for the
prosecution or defense by the Purchaser of any suit or other proceeding relating
to tax matters, or for the answer by the Purchaser to any governmental or
regulatory inquiry relating to tax matters.
(c) The Purchaser shall retain possession of all files
and records transferred to the Purchaser hereunder and coming into existence
after the Closing Date that relate to the Business before the Closing Date, for
a period not less than three (3) years from the Closing Date. In addition, from
and after the Closing Date, upon reasonable notice and during normal business
hours, the Purchaser shall provide access to the Seller and its respective
attorneys, accountants and other representatives, at the Seller's expense, to
such files and records as the Seller may reasonably deem necessary to properly
21
prepare for, file, prove, answer, prosecute and/or defend any such tax return,
filing, audit, protest, claim, suit, inquiry or other proceeding.
(d) The Seller and the Purchaser shall cooperate in the
timely filing of Internal Revenue Service Form 8594 (or other appropriate
forms), which shall be prepared in accordance with the allocation of the
Purchase Price among the Transferred Assets (as determined by the Purchaser in
its sole discretion) pursuant to Section 1060 of the Code, and any forms or
documents required to be filed with respect to such matters with state or local
taxing authorities (the "Allocation"). Specifically, but not in limitation of
any of the foregoing, with respect to the cash portion of the Purchase Price, as
provided in Section 1.3(c), above, One Hundred Thousand and no/100 Dollars
($100,000) of such amount shall be deemed to constitute the purchase price of
Inventory required to fulfill sales of merchandise by the Purchaser for a period
of twelve (12) months from the Closing Date. The purchase price of such
Inventory shall be the Seller's purchase cost of each item of Inventory plus a
ten percent (10%) royalty on the purchase costs of proprietary Bebop products
set forth on Schedule 1.3(c)(A) hereto. In addition, any deposit paid by or for
the Seller prior to the Closing on the purchase of Inventory from a third party,
the making of such deposit requiring the prior written consent of the Purchaser,
shall be reimbursed by the Purchaser to the Seller at the Closing. The Purchaser
shall provide the Seller with a copy of the Allocation upon its completion
thereof.
6.4 Bulk Sales Law
--------------
Seller shall pay or otherwise satisfy in the Ordinary Course of
Business all of its liabilities and obligations. The Purchaser and the Seller
hereby waive compliance with the bulk-transfer provisions of the Uniform
Commercial Code (or any similar law) ("Bulk Sales Laws") in connection with the
transactions contemplated by this Agreement.
6.5 Cooperation
-----------
(a) Between the Effective Date and the Closing Date:
(i) the Seller and the Purchaser shall each
cooperate to deliver or cause to be delivered to the other at such times and
places as shall be reasonably agreed to, such instruments as the other may
reasonably request for the purpose of carrying out this Agreement;
(ii) each Party shall cooperate in obtaining all
consents and approvals required under this Agreement to effect the transactions
contemplated hereby;
(iii) the Seller shall use commercially reasonable
efforts to preserve intact its business organization, keep available the
services of its officers and employees, maintain satisfactory relationships with
licensors, suppliers, distributors, customers, clients and others having
material business relationships with the Seller with respect to the Transferred
Assets;
(iv) the Seller will not, between the date of
this Agreement and the Closing Date, without the Purchaser's prior written
approval in the Purchaser's sole discretion, (i) sell, assign or encumber any of
the Transferred Assets, except for sales in the ordinary course and (ii) enter
into any contract or make any commitment affecting the Transferred Assets,
except in the ordinary course.
22
(v) the Seller shall perform in all material
respects all of the Seller's obligations required to be performed prior to the
Closing Date under all contracts and agreements to which it is a party; and
(vi) the Seller shall permit the Purchaser's
representatives reasonable access to the Transferred Assets and shall make
commercially reasonable efforts to assist the Purchaser with the transition of
the business related thereto.
(b) On and after the Closing Date, the Seller and the
Purchaser shall cooperate and each use its reasonable efforts to have their
respective present officers and employees cooperate with the other on and after
the Closing Date, at the requesting party's sole cost and expense, in furnishing
information, evidence, testimony and other assistance in connection with any
filing obligations, actions, proceedings, arrangements or disputes of any nature
with respect to matters pertaining to all periods prior to the Closing Date.
6.6 Redemption of Product Coupons Issued by the Seller; Product
-----------------------------------------------------------
Liability and Warranty Claims after Closing
-------------------------------------------
(a) The Seller shall reimburse the Purchaser for all of
the Purchaser's costs in redeeming product coupons issued prior to the Closing
by the Seller and redeemed by the holders thereof after Closing Date. The
Purchaser shall first reimburse itself from the holdback provided in Section
1.3(a)(i), above, of One Thousand Dollars ($1,000.00), and thereafter the Seller
shall promptly reimburse the Purchaser upon notice for any such costs in excess
of such holdback.
(b) The Seller shall promptly reimburse the Purchaser
upon notice for any costs incurred by the Purchaser in satisfying product
liability and warranty obligations of the Seller regarding products sold prior
to the Closing.
6.7 Returns of Bebop Inventory
--------------------------
The Seller agrees, in respect of the Inventory purchased by the
Purchaser and constituting Bebop and the proprietary product inventory, to
reimburse the Purchaser for up to and including two percent (2%) of the units of
any such Bebop and proprietary product inventory returned to the Purchaser by
the Purchaser's customers which are claimed by such customers to be defective.
6.8 Notification of Agreement regarding Trademarks.
----------------------------------------------
The Seller shall notify the Purchaser if the Seller intends to enter
into negotiations with a third party for the sale of the retained assets
constituting the Seller's music label and the trademarks associated therewith.
23
6.9 Purchase of Inventory of the Seller.
-----------------------------------
Inventory of the Seller which has not been purchased by the Purchaser
as provided in Section 1.3(c), above, shall be available for purchase by the
Purchaser at any time after the Closing Date upon the same terms and conditions
and at the same purchase price as prevailed in respect of the Purchaser's
purchase of inventory constituting part of the One Hundred Thousand and no/100
Dollars ($100,000) of inventory described in Section 1.3(c), above. The purchase
price of each purchase under this Section 6.9 shall be remitted promptly by the
Purchaser to the Seller.
ARTICLE 7.
SURVIVAL OF TERMS; INDEMNITY
7.1 Survival of Terms.
-----------------
The respective representations, warranties, covenants, obligations or
agreements of the Seller and the Purchaser contained in this Agreement, any
Transaction Document, schedule attached hereto or thereto or any other
agreement, officer's certificate or other certificate delivered in connection
with the transactions contemplated by this Agreement, shall survive the
consummation of the Closing and the other transactions contemplated hereby and
shall remain in full force and effect for a period of two and one-half (2 and
1/2) years following the Closing Date, except that any such representation,
warranty, covenant, obligation or agreement shall survive until the expiration
of the applicable statute of limitations in the event of tax liability and
indefinitely in the event of Fraud.
7.2 Indemnification of the Purchaser.
--------------------------------
The Seller shall indemnify, defend and hold harmless the Purchaser and
all of its officers, directors, employees (other than the former employees of
the Seller), agents and representatives (each, a "Purchaser Indemnitee"), to the
full extent permitted in law or equity, from and against any and all losses,
claims, actions, damages, liabilities, costs and expenses or diminution of value
(including reasonable attorneys' fees and expenses) (collectively, "Losses"),
whether or not involving a third-party claim, relating to or arising from or in
connection with (i) any breach of any representation, warranty, covenant,
obligation or agreement by the Seller contained in or made pursuant to this
Agreement or any of the other Transaction Documents or in any other agreement,
officer's certificate or other certificate delivered to the Purchaser in
connection with the transactions contemplated by this Agreement, or (ii) the
enforcement by the Purchaser of its rights pursuant to this Section 7.2, and any
litigation, proceeding or investigation relating to any of the foregoing.
Specifically, but not by way of limitation of the foregoing, the Seller shall
indemnify the Purchaser Indemnitees against any Loss resulting from
environmental, product defect and product safety claims arising in connection
with the Purchased Inventory but only if the Seller knew or reasonably should
have known based upon industry custom and practice of the basis for such claims
prior to the Closing Date.
24
7.3 Indemnification of the Seller.
-----------------------------
(a) The Purchaser shall defend, indemnify and hold
harmless the Seller and its members, shareholders, officers, employees, agents
and representatives (each a "Seller Indemnitee") to the full extent permitted in
law or equity, from and against all Losses relating to or arising from or in
connection with (i) any breach of any representation, warranty, covenant,
obligation or agreement by the Purchaser contained in or made pursuant to this
Agreement or any of the other Transaction Documents or in any other agreement,
officer's certificate or other certificate delivered to the Seller in connection
with the transactions contemplated by this Agreement, (ii) the ownership,
operation and use of the Business and the Transferred Assets after the Closing
Date (provided such Loss does not arise from an illegal, unauthorized,
impermissible or negligent act of Leib Ostrow), or (iii) the enforcement by the
Seller of its rights pursuant to this Article 7.3, and any litigation,
proceeding or investigation relating to any of the foregoing.
7.4 Indemnification Procedures.
--------------------------
Whenever the Purchaser (on its own behalf or on behalf of any other
Purchaser Indemnitee) or the Seller (on its own behalf or on behalf of any other
Seller Indemnitee) (each an "Indemnified Party") shall become aware that a claim
by a third party has been asserted or threatened against such Indemnified Party,
which, if valid, would subject the other party (the "Indemnifying Party") to an
indemnity obligation under this Agreement, such Indemnified Party shall promptly
notify the Indemnifying Party in writing of such claim in sufficient detail to
reasonably permit the Indemnifying Party to evaluate such claim. The
Indemnifying Party or its designee will have the right, but not the obligation,
to assume the defense of such claim. If an Indemnifying Party fails to assume
the defense of such claim within fifteen (15) days after receipt of notice of
such claim, the Indemnified Party against which such claim has been asserted
shall (upon delivering written notice to such effect to the Indemnifying Party)
have the right to undertake, at the Indemnifying Party's cost and expense, the
defense, compromise or settlement of such claim, subject to the right of the
Indemnifying Party to assume the defense of such claim at any time prior to
settlement, compromise or final determination thereof and provided, however,
that the Indemnified Party shall not enter into any such compromise or
settlement without the written consent of the Indemnifying Party. In the event
the Indemnified Party assumes the defense of the claim, the Indemnified Party
will keep the Indemnifying Party reasonably informed of the progress of any such
defense, compromise or settlement. The Indemnifying Party shall not be liable
for any settlement of any claim effected without its consent.
7.5 Exclusive Remedy.
----------------
Except for remedies that cannot be waived as a matter of law and
injunctive relief, if the Closing occurs, this Article 7 shall be the exclusive
remedy for breaches of this Agreement (including any covenant, obligation,
representation or warranty contained in this Agreement or in any Transaction
Document or any certificate delivered pursuant to this Agreement) or otherwise
in respect of the sale of the Transferred Assets.
25
7.6 Survival.
--------
The rights of indemnification pursuant to this Article 7 shall survive
the consummation of the transactions contemplated by this Agreement and shall
remain in full force and effect for a period of two and one-half (2 and 1/2)
years from the Closing Date, except with regard to (i) any tax liability, which
shall survive for the applicable statute of limitations and (ii) Fraud, which
shall survive indefinitely
ARTICLE 8.
MISCELLANEOUS
8.1 Definitions of Certain Terms.
----------------------------
As used in this Agreement, the following capitalized terms shall have
the respective meanings set forth below:
(a) "Accounts Receivable" shall have the meaning set
forth in Article 1.1(a)(i).
(b) An "Affiliate" of, or Person "affiliated" with, a
specified Person, is a Person that directly, or indirectly through one or more
intermediaries, Controls, or is Controlled by or is under common Control with,
the Person specified.
(c) "Agreement" shall have the meaning set forth in the
first paragraph of this Agreement.
(d) "Casualty" shall mean any fire, explosion, accident,
casualty, labor trouble, flood, drought, riot, storm, condemnation or act of God
or other public force.
(e) Intentionally omitted.
(f) "Closing" shall have the meaning set forth in Article
1.4(a).
(g) "Closing Date" shall have the meaning set forth in
Article 1.4.
(h) "Closing Documents" shall mean, collectively, this
Agreement and all instruments, certificates and consents executed or delivered
in accordance with the terms of this Agreement.
(i) "Code" shall mean the United States Internal Revenue
Code of 1986 and all rules and regulations promulgated thereunder from time to
time, in each case as amended.
(j) "Contract" shall mean any oral or written contract,
agreement, indenture, instrument, lease or other binding commitment or
arrangement of any kind.
(k) "Control" means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a person, whether through the ownership of voting securities, by contract or
otherwise.
26
(l) "Employee Benefit Plans" shall have the meaning set
forth in Article 2.12(a).
(m) "Encumbrance" shall mean any lien, encumbrance,
security interest, mortgage, pledge, lease, option, easement, servitude,
covenant, condition, restriction under any Contract or other charge, restriction
or claim of any kind other than (i) liens for Taxes for the current year which
are not yet due and payable, (ii) rights of lessors in property leased to the
Seller or which the Seller has a right to use or posses, including rights
reserved in the applicable lease and (iii) mechanics', warehousemen's,
materialmen's, contractors', workmen's, repairmen's and carriers' liens, and
other similar liens arising in the ordinary course for obligations which are not
delinquent (other than any such lien possessed by Stark).
(n) Intentionally omitted.
(o) "ERISA" shall mean the Federal Employee Retirement
Income Security Act of 1974 and all rules and regulations promulgated thereunder
from time to time, in each case as amended.
(p) "Fraud" shall mean actual fraud in fact.
(q) Intentionally Omitted.
(r) "Indemnified Party" shall have the meaning set forth
in Article 7.4.
(s) "Indemnifying Party" shall have the meaning set forth
in Article 7.4.
(t) "Intellectual Property" shall mean, (i) all
inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto and all patents, patent applications and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof, (ii)
all registered and unregistered trademarks, service marks, trade dress, logos,
trade names and corporate names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill associated
therewith, and all applications, registrations and renewals in connection
therewith, (iii) all copyrightable works, all registered and unregistered
copyrights, and all applications, registrations and renewals in connection
therewith, (iv) all mask works and all applications, registrations and renewals
in connection therewith, (v) all trade secrets and confidential business
information (including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans and proposals), (vi) all
computer software and subsequent versions thereof, including, but not limited
to, source code, object, executable or binary code, objects, comments, screens,
user interfaces, report formats, templates, menus, buttons and icons and all
files, data, materials, manuals, design notes and other items and documentation
related thereto or associated therewith, (vii) all rights in internet web-sites
and internet domain names presently used by the Seller, (viii) all other
proprietary rights, (ix) all copies and tangible embodiments thereof (in
whatever form or medium); (x) all content, including, but not limited to,
manuscripts, drafts, illustrations, photography, graphic files, product
descriptions and images; and (xi) all Know-how.
27
(u) "Know-how" means all ideas, inventions, data,
instructions, processes, trade secrets, formulas, formulation information,
validations, package specifications, chemical specifications, chemical and
finished goods analytical test methods, stability data, all testing data,
product specifications, information with respect to expert opinion and
information (whether or not patented or patentable), technology and other
intellectual property (in each case in any medium, including paper and
electronic), owned by the Seller or under which the Seller has the right to
transfer or grant sublicenses, as of the date of this Agreement.
(v) "Knowledge" or any similar phrase shall mean with
respect to any Person the actual knowledge of such Person including facts of
which such Person should be aware after reasonable investigation.
(w) "Law" shall mean any national, federal, state, local
or foreign law, rule, regulation, statute, ordinance, order, judgment, decree,
permit, franchise, license or other governmental restriction or requirement of
any kind.
(x) "Losses" shall have the meaning set forth in Article
7.2.
(y) "Organizational Document" shall mean any certificate
or articles of incorporation or organization, bylaw, operating agreement of a
limited liability company, board of directors' or shareholders' resolution or
other document, corporate or otherwise, or action comparable to any of the
foregoing currently in effect.
(z) "Person" shall mean any individual, partnership,
joint venture, corporation, trust, limited liability company, business
association, unincorporated organization, government (or subdivision thereof) or
other entity.
(aa) "Purchaser Indemnitee" shall have the meaning set
forth in Article 7.2.
(bb) "Purchaser" shall have the meaning set forth in the
first paragraph of this Agreement.
(cc) "Schedules" shall have the meaning set forth in the
first paragraph of this Agreement.
(dd) "Seller" shall have the meaning set forth in the
first paragraph of this Agreement.
(ee) "Tax" means any tax or similar governmental charge,
impost or levy (including without limitation income taxes, franchise taxes,
transfer taxes or fees, sales taxes, use taxes, gross receipts taxes, value
added taxes, employment taxes, excise taxes, ad valorem taxes, property taxes,
withholding taxes, payroll taxes, minimum taxes or windfall profit taxes)
together with any related penalties, fines, additions to tax or interest imposed
by the United States or any state, county, local or foreign government or
subdivision or agency thereof.
28
(ff) "Tax Return" means any return (including any
information return), report, statement, schedule, notice, form, estimate, or
declaration of estimated tax relating to or required to be filed with any
governmental authority in connection with the determination, assessment,
collection or payment of any Tax.
(gg) "Termination Costs" shall mean any and all severance
costs, paid time off and any other expense incurred in connection with the
termination of an employee.
(hh) "Transfer" shall mean the conveyance of the
Transferred Assets by the Seller to the Purchaser pursuant to Article 1.1.
(ii) "Transfer Documents" shall mean all Bills of Sale,
Assignments, Licenses and all other documents required to effectively and
legally transfer ownership of the Transferred Assets.
(jj) "Transferred Assets" shall have the meaning set forth
in Article 1.1.
(kk) "Transaction Documents" shall mean, collectively, the
Closing Documents and the Transfer Documents.
8.2 Construction of Certain Disclosures.
-----------------------------------
The representations and warranties set forth in Articles 2 and 3 above,
respectively, are cumulative. The subject matter covered by any section of
either such article shall not be exclusive as to such subject matter to the
extent covered by another section of such article, and the specificity of any
representation or warranty shall not affect or limit the generality of any other
representation or warranty made or given by the same Party.
8.3 Expenses and Liquidated Damages.
-------------------------------
Each Party shall pay all of its own expenses relating to the
transactions contemplated by this Agreement, including, without limitation, the
fees and expenses of its respective counsel. Subsequent to the execution of this
Agreement, if the Purchaser is unable to close the transactions herein
contemplated on the Closing Date for any reason other than failure of
satisfaction of the conditions set forth in Articles 4.3 and 4.8 hereof, the
Purchaser shall promptly pay to the Seller in cash the sum of Ten Thousand and
no/00 Dollars ($10,000) in liquidated damages to cover part or all of the
Seller's transaction-related expenses. Similarly, subsequent to the execution of
this Agreement, if the Seller is unable to close the transactions herein
contemplated on the Closing Date for any reason or no reason other than a reason
which arises out of or related to an act or omission of the Purchaser, the
Seller shall promptly pay to the Purchaser in cash the sum of Ten Thousand and
no/00 Dollars ($10,000) in liquidated damages to cover part or all of the
Purchaser's transaction-related expenses.
8.4 Mediation; Governing Law.
------------------------
(a) In the event of any dispute between the Parties which
arises out of or relates to this Agreement or the relationship between the
Parties, the Parties hereby agree that they shall first attempt to resolve such
dispute through the process of mediation before a single, mutually acceptable
29
mediator. The mediator shall be a retired judge with experience in mediating
disputes which are similar in nature to the dispute in question. If the Parties
are unable to agree upon the mediator, then the Parties shall file for mediation
with the Judicial Arbitration and Mediation Service ("JAMS") and hereby agree to
accept the mediator appointed by JAMS. The mediation shall be conducted and
concluded within thirty (30) days after the mediator has been engaged. The
Parties shall split evenly all mediation costs. In the event that such dispute
is not resolved through mediation, then the Parties shall be permitted to pursue
its other available remedies.
(b) The interpretation and construction of this Agreement
and all matters relating hereto, shall be governed by the laws of the State of
Delaware, without regard to conflicts-of-laws principles.
8.5 Further Assurances.
------------------
In addition to the actions, documents and instruments specifically
required by this Agreement or any other Transaction Document to be taken or
delivered on or before the Closing Date or from time to time thereafter, each of
the Parties shall, before and after the Closing Date, without further
consideration, take such other actions and execute and deliver such other
documents and instruments as another Party reasonably may request in order,
including correcting and amending this Agreement, its Exhibits and Schedules and
any other Transaction Documents, to effect and perfect the transactions
contemplated by this Agreement and the other Transaction Documents.
8.6 Captions.
--------
The Article and Section captions used in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.7 Publicity.
---------
Except as otherwise required by applicable Law, no Party shall issue
any press release or make any other public statement relating to, connected with
or arising out of this Agreement or the matters contained herein without the
other Party's prior written approval of the contents and the manner of
presentation and publication thereof.
8.8 Notices.
-------
Notice or other communications required or permitted hereunder shall be
sufficiently given if delivered in person or by registered or certified mail or
by recognized overnight courier, postage prepaid, addressed as follows:
30
If to the Seller, to: With a copy to:
Musical Kidz LLC Greenberg & Bass
P.O. Box 1429 16000 Ventura Blvd., Suite 1000
Redway, CA 95560 Encino, CA 91436
Fax no. 707 ???-3241 Fax no.: 818-986-6534
Attn: David Adelman
If to the Purchaser, to: With a copy to:
Trudy Corporation Charles E. Barnett
353 Main Avenue Loeser Barnett
Norwalk, CT 06851 4 Lighthouse Way
Fax No.: (203) 846-1776 Darien, CT 06820
Attention: William W. Burnham, Fax No.: (203) 655-9698
Chairman
or to such other address as shall be furnished in writing by any such Party in
such manner, and such notice or communication shall be deemed to have been given
as of the date so delivered, sent by telecopier or mailed.
8.9 Parties in Interest.
-------------------
This Agreement may not be transferred, assigned, pledged or
hypothecated by any Party without the other Party's prior written consent,
except that this Agreement may be assigned by each of the Purchaser and the
Seller to any Affiliate thereof. This Agreement shall be binding upon and shall
inure to the benefit of the Parties and their respective heirs, executors,
administrators, successors and permitted assigns.
8.10 Counterparts.
------------
This Agreement may be executed in two (2) or more counterparts, all of
which taken together shall constitute one instrument. This Agreement may be
executed by facsimile signatures which shall be binding as if an original
signature.
8.11 Entire Agreement.
----------------
This Agreement, including the other documents referred to herein which
form a part hereof, contains the entire understanding of the Parties with
respect to the subject matter contained herein and therein. This Agreement
supersedes all prior agreements and understandings between the Parties with
respect to such subject matter.
8.12 Amendments.
----------
This Agreement may be waived, amended, supplemented or modified only by
a written agreement executed by each of the Parties.
31
8.13 Severability.
------------
In case any provision in this Agreement shall be held invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions hereof will not in any way be affected or impaired thereby.
8.14 Third Party Beneficiaries.
-------------------------
Each Party intends that this Agreement shall not benefit or create any
right or cause of action in or on behalf of any person or entity other than the
Parties and their respective heirs, executors, administrators, successors and
assigns.
8.15 "As Is" Transaction.
-------------------
Except for the representations and warranties of the Seller set forth
in this Agreement, the Purchaser hereby acknowledges that the Trasnaferred
Assets are being sold, transferred, conveyed, assigned and delivered by the
Seller to the Purchaser in their "AS IS", "WHERE IS", "WITH ALL FAULTS"
condition, without representations or warranties of any kind whatsoever, express
or implied, with regard to their condition, their suitability for buyer's
intended use, their value or otherwise. The Purchaser hereby acknowledges that
it is relying solely upon its own independent inspection, investigation and
analysis of the Transferred Assets as it deems necessary or appropriate in so
purchasing, acquiring, assuming and accepting the Transferred Assets from the
Seller.
* * * * * *
[Signature Page Follows]
32
[Signature Page to Asset Purchase Agreement]
IN WITNESS WHEREOF, the Purchaser and the Seller have caused their
respective names to be hereunto subscribed individually or by their respective
officers thereunto duly authorized, as the case may be, all as of the Effective
Date.
MUSICAL KIDZ LLC
(Seller)
By: /s/ Leib Ostrow
--------------------------
Name: Leib Ostrow
--------------------------
Title: President
--------------------------
TRUDY CORPORATION
(Purchaser)
By: /s/ William W. Burnham
--------------------------
Name: William W. Burnham
--------------------------
Title: Chairman
--------------------------
33
Schedule 1.1(a)(i) - Current Assets Purchased
---------------------------------------------
To be provided post-Closing
Schedule 1.1(a)(ii) - Computer Hardware and Software
----------------------------------------------------
Computers:
- ---------
1 17" Flatscreen iMac Dixie
1 G5 Tower/monitor Server
1 G4 Tower w/monitor Artstation
1 Dell UPS
iBook Leib
Printer:
- --------
Brother MFC 5460CN
Software:
- ---------
MYOB V8 Accounting
Microsoft Office 2004
Retrospect Backup
Filemaker Pro 5.5
Timbuktu Pro Remote
Emulater for access to Stark
Controller
PowerTerm ***only have licenses for MK
Download & print reports from
Transmit Controller
Schedule 1.1(a)(iii) - Contracts, etc.
--------------------------------------
No applicable contract, licenses and agreements.
Schedule 1.1(a)(iv) - Intellectual Property
-------------------------------------------
1. The registered trademark "Music for Little People" (other than Class
9).
2. The right to apply for, register and own a trademark or trademarks for
"Music For Little People" in all future categories and classes which
may be created under law to the extent any such category or class
relates to the Business, with the prior approval of the Seller
3. The right to apply for, register and own a trademark or trademarks for
"Music For Little People" in all other currently existing categories
and classes, including but not limited to the applicable trademark
class for school and library distribution, except for Class 9 with the
prior approval of the Seller, which approval shall not be unreasonably
withheld,
4. The right to apply for, register and own a trademark or trademarks for
any of the following in trademark Class 42: "Musical Kidz", "Musical
Kidz.com", "MFLP.com", and "Music For Little People.com",
(collectively, the "Other Trademarks");
5. Direct mail catalogues and catalogue files,
6. Images, graphics and text used in direct mail catalogs, flyers,
mailings of any kind and on websites
7. Mailing lists,
8. e-mail lists,
9. Designs,
10. Patterns and tooling for all proprietary products to the extent the
same are necessary for conduct of the Business.
Schedule 1.1(a)(v) - Purchased Inventory
----------------------------------------
See attached.
QTY True
SUPP PRODUCT DESCRIPTION STATUS ON ON COMMIT On- COST Sold to Net
HAND PO Hand Trudy cost
- ------------------------------------------------------------------------------------------------------------------------------------
ACTING 6055 SUGAR PLUM FAIRY MUSICAL DRESS A 6 0 1 5 18 6 108
ACTING 9471 MUSICAL SUNSHINE SKIRT-HOT PNK A 0 12 5 -5 16 0
ACTING 9808 NUTCRACKER MUSICAL SKIRT- RED D 0 6 0 0 13 0
ACTING 9809 SWAN LAKE MUSICAL SKIRT- PINK A 0 13 9 -9 16 0
ACTING 9832 NUTCRACKER DRESS- HOT PINK A 0 14 4 -4 18 0
ACTING 9833 SWAN LAKE MUSICAL DRESS- PINK N 0 30 24 -24 17.5 0
ACTING 9866 HOKEY POKEY MUSICAL SKIRT A 0 12 3 -3 16 0
ACTING 9897 HOKEY POKEY MUSICAL SKRT-TULLE A 0 40 4 -4 16 0
ACTING 9943 MACARENA MUSICAL SKIRT A 0 23 10 -10 17 0
ACTING 9944 CHICKEN DANCE MUSICAL SKIRT A 43 0 0 43 17 43 731
AECONE 8141V DVD- SECRET OF ROAN INISH N 35 0 0 35 17.88 5 89.4
AECONE 8144V DVD- FAIRY TALE: A TRUE STORY N 5 0 0 5 7.26 0
AECONE 8249V DVD- DR DOLITTLE N 40 0 0 40 8.74 5 43.7
AECONE 8259V DVD- ANIMATED GRINCH STOLE XMS N 9 0 0 9 12.38 0
AECONE 8291V DVD- WILLY WONKA CHOC FACTORY N 2 0 0 2 11.03 0
AECONE 8313V DVD- NATIONAL VELVET N 24 0 0 24 5.04 5 25.2
AECONE 8365V DVD- CHITTY CHITTY BANG BANG N 22 0 0 22 8.79 5 43.95
AECONE 8422V DVD- WHALE RIDER N 23 0 0 23 8.79 5 43.95
AECONE 8423V DVD- WINGED MIGRATION N 15 0 0 15 18.98 5 94.9
AECONE 8581V DVD- HI-5 COLOR CRAZE N 9 0 0 9 8.21 0
AECONE 8627V DVD- MEGA TRUCK ADVENTURES N 2 0 0 2 5.04 0
AECONE 8790V DVD- THE SNOWMAN/FATHER XMAS N 1 0 0 1 8.79 0
AECONE 8927V DVD- A WRINKLE IN TIME N 18 0 0 18 13.99 5 69.95
ALFRED 1429 HARRY POTTER FOR RECORDER A 5 0 3 2 5.97 2 11.94
ALFRED 3006D CD- VIOLIN PERFORMANCE- VOL 1 A 2 0 0 2 9.57 2 19.14
ALFRED 3011D CD- SOPRANO RECORDER VOLS 1-2 A 4 2 0 4 9.57 1 9.57
ALFRED 3012D CD- SOPRANO RECORDER VOLS 3-4 D 3 0 0 3 9.57 4 38.28
ALFRED 3013D CD- GUITAR PERFORMANCE VOL 1 A 4 0 0 4 9.57 4 38.28
ALFRED 3014D CD- GUITAR PERFORMANCE VOL 2 D 0 0 0 0 9.57 0
ALFRED 3015D CD- GUITAR PERFORMANCE VOL 3 D 0 0 0 0 9.57 0
ALFRED 9878 VIOLIN PART- VOLUME 1 A 2 0 1 1 4.17 2 8.34
ALFRED 9880 VIOLIN PART- VOLUME 3 N 8 0 0 8 4.17 8 33.36
ALFRED 9882D GIRL'S GUITAR METHOD BK 1 & CD A 4 0 0 4 8.97 4 35.88
ALFRED 9883D GIRL'S GUITAR METHOD BK 2 & CD D 1 0 0 1 8.97 1 8.97
ALFRED 9887 VOL1 SOPRANO RECORDER BOOK A 1 7 0 1 4.17 1 4.17
ALFRED 9891 SUZUKI GUITAR SCHOOL VOL 1 A 5 0 0 5 4.17 5 20.85
ALFRED 9946 HARRY POTTER FOR RECORDER (BK) A 2 0 0 2 3.57 2 7.14
ALLIED 8840V DVD- THE RED BALLOON A 36 0 0 36 8 36 288
ANGELS 3576D CD- ANGELS SING TO ME A 65 0 1 64 7.19 3 21.57
APPLES 3061 EXPERIENCE...101 A 0 0 0 0 8 0
ARCOIR 3229D CD- FIESTAS- CELEB OF SONGS N 2 0 0 2 0 0
ARCOIR 3343D CD- CANTO Y CUENTO N 9 0 0 9 0 0
ARCOIR 3344D CD- CORRIDOS N 1 0 0 1 0 0
ARCOIR 3348D CD- LETRAS NUMEROS Y COLORES N 1 0 0 1 0 0
ARCOIR 3349D CD- LATIN AMERICAN SONGS #2 N 3 0 0 3 0 0
ARCOIR 3350D CD- LATIN AMERICAN SONGS #3 N 1 0 0 1 0 0
ARCOIR 3351D CD- PANCHO CLAUS N 2 0 0 2 0 0
ARCOIR 3352D CD- THIS LAND IS MY LAND N 3 0 0 3 0 0
AUDIO 3073D CD- BABY GO TO SLEEP #1 A 8 0 0 8 6.5 8 52
BAKER 2026V-O DVD- HERE COME THE ABCS W/CD N 1 0 0 1 12.72 0
BAKER 3048 DISNEY: CHILDRENS FAV SONG V1 N 17 0 4 13 3.99 0
BAKER 3049 DISNEY: CHILDRENS FAV SONG V2 N 22 0 0 22 3.99 0
BAKER 3050 DISNEY: CHILDRENS FAV SONGS V3 N 66 0 0 66 3.99 0
BAKER 3099D CD- BABY BACH N 18 0 0 18 0 0
BAKER 3204D CD- BABY BEETHOVEN N 28 0 0 28 0 0
BAKER 3260D CD- RADIO DISNEY N 56 0 0 56 0 0
BAKER 3261D CD- DISNEYMANIA N 84 0 0 84 0 0
BAKER 3271D CD- PLAYTIME MUSIC BOX N 18 0 0 18 0 0
BAKER 3278D CD- LULLABY CLASSICS N 59 0 1 58 0 0
BAKER 3280D CD- CHILDREN'S FAVORITES 2 N 25 0 3 22 4.68 0
BAKER 3283D CD- BABY NEPTUNE N 68 0 0 68 0 0
BAKER 3340D CD- DISNEYMANIA #2 N 16 0 0 16 0 0
BAKER 3524D CD- LA VIDA MICKEY #2 N 25 0 1 24 0 0
BAKER 3528D CD- FREE TO BE YOU AND ME N 1 0 0 1 7.48 0
BAKER 3938D CD- MARY POPPINS SOUNDTRACK N 18 0 0 18 0 0
BAKER 3963D CD- DISNEYMANIA #3 N 14 0 0 14 0 0
BAKER 8364V DVD- THE BEAR & ANIMAL TRAIN N 16 0 0 16 13.39 0
BARCLA 1276 WOODEN SOPRANO RECORDER A 0 20 2 -2 9.95 20 199
BCBONE 9770 T-REX 3D PUZZLE (SMALL) N 1 0 0 1 10 0
BDMUSI 1226 QWIK TUNE GUITAR TUNER A 79 0 1 78 5.6 78 436.8
BDMUSI 1370 CHROMATIC ELECTRONIC TUNER A 4 0 1 3 9.5 3 28.5
BEAMS 8146V DVD- KRISTEN'S FAIRY HOUSE A 9 0 1 8 9.99 9 89.91
BIRDCA 9684 IMPRESSIONIST ART GAME N 4 0 0 4 0 0
BIRDCA 9685 RENAISSANCE ART GAME N 5 0 0 5 0 0
BIRDCA 9686 VAN GOGH ART GAME N 1 0 0 1 11.88 0
BIRDCA 9790 OLD DINOSAUR CARD GAME N 49 0 0 49 7.98 0
BLACKM 1363 KILAUEA SOPRANO UKULELE PINK D 0 0 0 0 12.98 0
BLACKM 1430 SOPRANO UKULELE BAG A 0 0 0 0 5.98 0
BLACKM 1435 1/4 SIZE STEEL STRING GUITAR A 0 25 0 0 48.98 0
BLACKM 1440 END PIN FOR ACOUSTIC GUITAR A 35 5 0 35 0 0
BLACKM 1441 1/4 SIZE GUITAR - NATURAL A 0 0 0 0 0 0
BLKMTN 1364 BLUE KILAUEA SOPRANO UKULELE D 0 0 0 0 12.98 0
BLKMTN 1412 KILAUEA SOPRANO UKULELE D 0 0 0 0 9.98 0
BREYER 6033 WESTERN RIDING SET A 0 12 5 -5 12.5 0
BREYER 6034 STABLE FUN FOALS A 16 0 0 16 7.5 16 120
BRIO 9527 SANTA'S SLEIGH SET N 9 0 0 9 0 0
CALIFO 9949 TIGER KIDS HEADPHONES A 27 0 2 25 7 7 49
CALIFO 9950 RED LISTENING 1ST KIDS HEADPHO A 1 5 0 1 5.5 0
CALIFO 9951 BLUE LISTENING 1ST KIDS HEADPH A 0 5 0 0 5.5 0
CALIFO 9952 BLUEBERRY LIST 1ST KIDS HEADPH A 0 6 2 -2 6.5 0
CARLSA 8231V DVD- STRANGER IN THE WOODS A 6 0 2 4 9.98 4 39.92
CARLSA 8457V DVD- LOST IN THE WOODS DVD A 20 0 0 20 9.98 0
CARLSA 9484 STRANGER IN THE WOODS BOOK A 7 0 0 7 9.98 20 199.6
CARLSA 9663 LOST IN THE WOODS BOOK A 2 0 0 2 9.98 2 19.96
CARLSA 9818 TINY STAR FAWN PLUSH A 33 0 0 33 5.98 33 197.34
CARLSA 9953 FIRST SNOW IN WOODS A 5 0 0 5 9.98 5 49.9
CARPET 3847D CD- NOT NAPTIME N 16 0 0 16 0 0
CARPET 3848D CD- YELLOW BUS N 14 0 0 14 0 0
CASIO 1221 CASIO AC ADAPTER A 1 10 0 1 7 1 7
CASIO 1288 CASIO KEYBOARD (SA-75) A 12 0 0 12 36 12 432
CASSET 8049V DVD- DRUMS FOR BEGINNERS A 3 0 0 3 6 0
CHALLE 6028 ORGANIC SHEEP W/MUSIC BOX A 3 0 1 2 27.5 2 55
CHALLE 6037 ORGANIC MUSICAL HORSE A 4 0 0 4 33.5 4 134
CHALLE 6040 ORGANIC MUSICAL BEAR A 13 0 0 13 33.5 13 435.5
CHICCO 6031 DJ MIXER GUITAR A 73 0 0 73 16 73 1168
CHICCO 9966 CHICCO DJ PIANO A 31 0 0 31 20.5 31 635.5
CHILDR 3113D CD- PETER & THE WOLF A 14 0 0 14 7.99 14 111.86
CHILDR 3145D CLASSICAL KIDS CD WITH BOOK N 15 0 1 14 15.74 14 220.36
CHILDR 3188D CD- WORLDS BEST OPERA FOR KIDS N 4 0 0 4 8.49 4 33.96
CHILDR 384240D CD- TCHAIKOVSKY DISCOVERS AMER N 1 0 0 1 7.64 1 7.64
CHILDR 3927D CD- THE BEST OF BACH A 16 0 1 15 4.99 15 74.85
CHILDR 3928D CD- THE BEST OF BEETHOVEN A 9 0 1 8 4.99 8 39.92
CHILDR 3929D CD- THE BEST OF HANDEL A 13 0 1 12 4.99 12 59.88
CHILDR 3930D CD- THE BEST OF MOZART A 95 0 1 94 4.99 94 469.06
CHILDR 3931D CD- THE BEST OF TCHAIKOVSKY A 12 0 1 11 4.99 11 54.89
CHILDR 3932D CD- THE BEST OF VIVALDI A 17 0 1 16 4.99 16 79.84
CLOUD 9766 SLEEP SHEEP A 20 0 2 18 13 18 234
CLOUD 9864 TWILIGHT TURTLE A 729 2 7 722 14 722 10108
CLOUD 9927 SLEEP SHEEP ON THE GO A 52 0 1 51 10 51 510
CLOUD 9929 LAVENDAR LAB A 112 0 1 111 9.5 111 1054.5
CLOUD 9930 BABY SHEEP QUIET RATTLE A 35 0 0 35 2.5 35 87.5
CLOUD 9931 BABY TURTLE QUIET RATTLE A 35 0 0 35 2.5 35 87.5
CLOUD 9932 BABY LAB QUIET RATTLE A 35 0 0 35 2.5 35 87.5
CLOUD 9933 TWILIGHT LADYBUG A 542 0 3 539 15 275 4125
CLOUD 9934 CUDDLE CUB A 37 24 0 37 14 14 196
CONCOR 3586D CD- PLAYGROUP FAVORITES N 14 0 0 14 0 0
CONCOR 3813D CD- MORE PLAYGROUP FAVORITES N 17 0 0 17 0 0
DAISY 1371 DAISY ROCK GUITAR- BLUE N 5 0 0 5 159.5 0
DAVITT 17268B UKULELE SONGBOOK A 19 0 0 19 3.32 19 63.08
DAYLAB 6025 WOLLIE WHALE ROCKER A 100 0 0 100 40 0
DAYLAB 9957 DODI THE DRAGON ROCKER A 0 0 0 0 40 0
DEVINE 8030V DVD- COMPOSER'S SET OF 6 A 16 0 0 16 40.49 16 647.84
DEVINE 8143V DVD- EINSTEIN LIGHT TO POWER 2 A 3 0 0 3 7.5 3 22.5
DEVINE 8202V DVD- MARY CASSATT A 0 0 0 0 7.5 3 22.5
DEVINE 8203V DVD- REMBRANDT FATHERS & SONS A 3 0 0 3 7.5 0
DEVINE 8204V DVD- LEONARDO DREAM OF FLIGHT A 1 0 0 1 7.5 1 7.5
DEVINE 8205V DVD- MONET SHADOW & LIGHT A 1 0 0 1 7.5 1 7.5
DEVINE 8206V DVD- WINSLOW HOMER A 5 0 0 5 7.5 5 37.5
DEVINE 8207V DVD- GOYA AWAKENED IN A DREAM A 4 0 0 4 7.5 4 30
DEVINE 8208V DVD- GALILEO A 3 0 0 3 7.5 3 22.5
DEVINE 8209V DVD- NEWTON TALE OF TWO ISAACS A 3 0 0 3 7.5 3 22.5
DEVINE 8210V DVD- EDISON WIZARD OF LIGHT A 0 0 0 0 7.5 0
DEVINE 8211V DVD- MARIE CURIE N 3 0 0 3 7.5 3 22.5
DEVINE 8218V DVD- INVENTOR'S SET OF 6 A 10 0 5 5 40.49 5 202.45
DEVINE 8219V DVD- ARTIST'S SET OF 6 A 34 0 0 34 40.49 34 1376.66
DEVINE 8303V DVD- COMPOSERS SET OF 3 N 1 0 0 1 22.5 1 22.5
DEVINE 8977V DVD- BACH'S FIGHT FOR FREEDOM N 2 0 0 2 7.5 2 15
DEVINE 8979V DVD- BIZET'S DREAM N 3 0 0 3 7.5 3 22.5
DEVINE 8981V DVD- HANDEL'S LAST CHANCE A 4 0 0 4 7.5 4 30
DEVINE 8983V DVD- LISZT'S RHAPSODY N 2 0 0 2 7.5 2 15
DEVINE 8986V DVD- ROSSINI'S GHOST A 4 0 0 4 7.5 4 30
DEVINE 8988V DVD- STRAUSS KING OF 3/4 TIME A 2 0 0 2 7.5 2 15
DISPLA 9707 COUNTERTOP SPINNER A 0 0 0 0 0 0
DISPLA 9707D COUNTERTOP SPINNER W/PRODUCT A 0 0 0 0 0 0
DISPLA 9708 CD/DVD FLOOR SPINNER A 0 1 0 0 0 0
DISPLA 9708D FLOOR SPINNER WITH PRODUCT A 0 0 0 0 124.5 0
DOUGLA 9844 CLOUD DANCER N 1 0 0 1 12 0
DOUGLA 9847 UNICORN PLUSH N 1 0 0 1 18 0
DOUGLA 9849 WESTERN KNAPSACK A 9 0 0 9 14 9 126
DOUGLA 9960 DINO ADVENTURE PAK A 9 0 0 9 11 9 99
DOUGLA 9962 TENDER TEDDY MUSICAL BEAR A 4 0 0 4 10 0
DOUGLA 9964 MR SNOWMAN IN TOP HAT BAG A 31 0 0 31 6.5 4 26
DREAMS 8026V DVD- LITTLE HORSE THAT COULD A 59 0 0 59 5.98 59 352.82
DREAMS 8069V DVD- I DIG DIRT A 56 0 1 55 5.98 55 328.9
DREAMS 8273V DVD- THE BALLERINA & ME A 9 0 0 9 5.98 9 53.82
EEBOO 6003 TEA PARTY GAME A 0 17 2 -2 7.5 0
EEBOO 6008 ANIMAL BINGO A 0 18 1 -1 7 0
EEBOO 9969 BUTTERFLIES MATCHING & MEMORY A 2 15 0 2 7 2 14
EEBOO 9970 FRIENDLY BUGS LACING CARDS A 26 0 0 26 7 26 182
EEBOO 9971 MORE FRIENDLY BUGS LACING CARD A 55 0 0 55 7 15 105
ENCHAN 9692 TREASURE TOWER A 57 0 0 57 18.5 0
ENCHAN 9694 FAIRY VILLAGE PLAYSET N 1 0 0 1 0 0
ENCHAN 9782 DRAGON'S WORLD TREASURE BOX A 12 0 1 11 13.5 11 148.5
ENCHAN 9783 DRAGON'S WORLD FOLDAWAY MIRROR N 14 0 0 14 12.5 0
ENCHAN 9785 FOLDAWAY MIRROR N 13 0 0 13 12.5 0
ENCHAN 9842 HIDAWAY HORSE TREASURE BOX A 58 0 1 57 16.5 57 940.5
ENVIRO 9740 SING-A-LONG CD PLAYER A 0 620 18 -18 29.1 0
ENVIRO 9800 BEBOP KIDZ CD PLAYER N 1 0 0 1 26.75 0
ETROSM 1461 1/2 SZ AXTONE GUITAR A 0 0 0 0 28.5 0
ETROSM 1462 3/4 SIZE AXTONE GUITAR A 0 0 0 0 30.85 0
FASCIN 9972 BOTANICALS EXOTIC JUNGLE A 0 8 1 -1 15 0
FUNIMA 8900V DVD- REDWALL- THE SIEGE N 1 0 0 1 8.99 0
FUTURE 3953D CD- MAGIC SPANISH FOR KIDS N 1 0 0 1 5.84 0
FUTURE 3955D CD- MAGIC FRENCH FOR KIDS N 1 0 0 1 5.84 0
GADFLY 3253D CD- MAKING GOOD NOISE N 18 0 0 18 7 0
GADFLY 3353D CD- BILLY THE SQUID N 5 0 0 5 0 0
GADFLY 3356D CD- MOTHER EARTH N 14 0 0 14 7 0
GADFLY 3357D CD- ZAG ZIG N 13 0 0 13 0 0
GOLDHI 2033V DVD- JAMARAMA A 22 0 5 17 7.49 17 127.33
GOLDHI 8440V DVD- THE PREMIERE MOVIE D 14 0 0 14 6.3858 0
GOLDHI 8443V DVD- LITTLE HOUSE SEASON 2 N 8 0 0 8 22.49 0
GOLDHI 8444V DVD- LITTLE HOUSE SEASON 3 N 13 0 0 13 22.49 0
GOLDHI 8445V DVD- LITTLE HOUSE SEASON 4 N 4 0 0 4 22.49 0
GOLDHI 8525V DVD- LITTLE HOUSE SEASON 5 N 10 0 0 10 22.49 0
GOLDHI 8769V DVD- LITTLE HOUSE SEASON 6 N 11 0 0 11 22.49 0
GOLDHI 8779V DVD- LITTLE HOUSE SEASON 7 N 3 0 0 3 22.49 0
GOLDHI 8788V DVD- LITTLE HOUSE SEASON 8 N 7 0 0 7 22.49 0
GOODKA 6001 FLOWER FAIRY FLAG A 8 0 0 8 19.5 8 156
GOODKA 9973 PEACE ON EARTH FLAG A 29 0 0 29 19.5 29 565.5
GOODKA 9974 PEACEFUL KINDGOM FLAG A 10 0 0 10 19.5 10 195
GOODTI 8478V DVD- COMPLETE BEATRIX POTTER A 0 14 7 -7 11 0
GREAT 3285D CD- AMERICAN TALL TALES N 1 0 0 1 7 0
GREAT 3299D CD- MYSTERY MYSTERY N 1 0 0 1 7 0
GREAT 3310D CD- TELL ME A STORY CLASSICS N 1 0 0 1 7 0
GREAT 3313D CD- UNCLE WIGGLYS STORYBOOK N 1 0 0 1 7 0
GREG 3347D "CD- READY, SET, MOVE" N 13 0 0 13 0 0
GREG 3358D CD- BIG FUN WITH GREG & STEVE N 14 0 0 14 0 0
GREG 3359D CD- FUN & GAMES N 3 0 0 3 0 0
GUIDEC 6021 MAGNEATOS JUMBO CURVES 24 SET A 23 0 2 21 11.5 21 241.5
GUIDEC 6032 JUMBO MAGEATOS 72 PIECE SET A 5 0 1 4 25 4 100
GUIDEC 9961 MAGNEATOS JUMBO (36 PIECE SET) A 35 0 0 35 15 35 525
GUND 9701 FIRE TRUCK PLAYSET N 1 0 0 1 10 0
HAL L 8000V DVD- LEARN TO PLAY AUTOHARP A 1 0 0 1 13.49 1 13.49
HAL L 8002V DVD- FIDDLE FOR KIDS #1 A 2 0 0 2 8.98 2 17.96
HAL L 8003V DVD- FIDDLE FOR KIDS #2 A 2 0 0 2 8.98 0
HAL L 8105V DVD- UKULELE FOR KIDS #1 A 0 10 1 -1 8.98 2 17.96
HAL L 8268V DVD- KID'S GUITAR #1 A 9 0 0 9 11.23 9 101.07
HAL L 8455V DVD- KID'S GUITAR #2 A 4 0 0 4 11.85 4 47.4
HAL L 8456V DVD- KID'S GUITAR SET OF 2 A 13 0 0 13 18.97 13 246.61
HAL L 9192 EZ PLAY KEYBOARD COURSE #1 A 8 0 0 8 3.13 8 25.04
HAL L 9193 EZ PLAY KEYBOARD COURSE #2 A 20 0 0 20 3.13 20 62.6
HAL L 9194 EZ PLAY CHRISTMAS A 4 0 0 4 3.58 4 14.32
HALILI 1343 BEBOP BABY BAND A 2 0 0 2 5.03 2 10.06
HALILI 1344 CABASA A 152 0 0 152 2.03 60 120
HALILI 1345 GUIRO A 87 0 0 87 1.8 60 108
HALILI 1358 TAMBOURINE A 86 0 0 86 2.1 165 86
HALILI 1359 MINI RAINBOWMAKER A 100 0 0 100 2.2 85 170
HALILI 1372 ANIMAL BELLS A 88 0 0 88 1 88 88
HALILI 1373 MINI ORCHESTRA A 51 0 0 51 5.6 51 260
HAPPAL 3372D CD- CHERRY PIE WAVE GOODBYE? N 11 0 0 11 0 0
HAPPAL 3373D CD- JUMBO JET SING THE ALPHABE N 3 0 0 3 7.7 0
HAPPAL 3374D CD- CAN COCKATOOS COUNT BY TWO N 2 0 0 2 0 0
HAPPAL 3375D CD- CHILD'S WORLD OF LULLABIES N 8 0 0 8 0 0
HAPPAL 3376D CD- EARLY CHILDHOOD CLASSICS N 2 0 0 2 0 0
HAPPAL 3377D CD- ONE LITTLE SOUND N 19 0 1 18 0 0
HAPPAL 3378D CD- PEEK A BOO N 6 0 0 6 0 0
HAPPAL 3379D CD- QUIET PLACES N 8 0 0 8 0 0
HAPPAL 3380D CD- RHYTHMS ON PARADE N 9 0 0 9 0 0
HAPPAL 3381D CD- SO BIG! N 4 0 0 4 0 0
HAPPAL 3382D CD- TURN ON THE MUSIC N 9 0 0 9 0 0
HAPPAL 3383D CD- TWO LITTLE SOUNDS N 11 0 0 11 0 0
HAPPAL 3384D CD- WE'RE ON OUR WAY N 34 0 0 34 0 0
HARPER 3100 THE NUTCRACKER BOOK & CD A 4 0 0 4 9.98 4 39.92
HITENT 8237V DVD- BOB SAVES THE DAY N 1 0 0 1 8.49 0
HOBGOB 1238 WEE BONNIE HARP A 0 0 0 0 0 0
HOBGOB 1315 WEE BONNIE HARP BACKPACK A 0 0 0 0 0 0
HOBGOB 1374 WEE BONNIE HARP PACKAGE A 0 0 0 0 198 0
HOBGOB 17145 FOLK HARP A 1 0 0 1 395.4 1 395.4
HOBGOB 7146 FOLK HARP SHARPING LEVERS A 0 3 0 0 0 0
HONER 1115 KID'S ACCORDION A 0 24 2 -2 16.2 0
HONER 1116 DELUXE ACCORDION A 0 8 2 -2 40.5 0
HONER 1138 CLAVES A 29 0 0 29 1.2 29 34.8
HONER 1139 MINI ORCHESTRA D 0 0 0 0 9 0
HONER 1146 SLEIGH BELLS A 29 0 0 29 2.2 29 63.8
HONER 1147 TONE BLOCK A 30 0 0 30 1.9 30 57
HONER 1274 MINI ACCORDION A 20 0 2 18 8.95 18 161.1
HONER 1381 BABY BAND A 49 0 0 49 8.5 49 416.5
HUGBUG 3028D CD- BONJOUR L' HIVER N 6 0 0 6 7.5 0
HUGBUG 3387D CD- DIAMOND IN THE ROUGH N 11 0 0 11 7.5 0
HUGBUG 3388D CD- DIAMONDS AND DAYDREAMS N 24 0 0 24 7.5 0
HUGBUG 3389D CD- MY BEAR GRUFF N 3 0 0 3 7.5 0
HUGBUG 3391D CD- QU'IL AIT TOUJOURS LE SOL N 14 0 0 14 7.5 0
HUGBUG 3504D CD- NOUS SOMMES TOUS COMME LES N 2 0 0 2 7.5 0
HUGBUG 3888D CD- THE CHRISTMAS GIFT N 8 0 0 8 7.5 0
IMAGAB 9748 WEDGITS STARTER SET A 2 0 2 0 11.55 0
IMAGAB 9749 WEDGITS DESIGN CARDS N 1 0 0 1 3 1 3
IMAGAB 9750 WEDGITS TO GO A 15 1 0 15 22.5 15 337.5
IMAGAB 9751 WEDGITS ACTIVITY GUIDE N 1 0 0 1 6.5 0
IMAGE 3467D CD- A YEAR WITH FROG AND TOAD N 15 0 0 15 7.99 0
IMAGIN 3587D GOOD IDEAS N 1 0 0 1 6 0
IMAGIN 3588D CALLING ALL MOVERS N 1 0 0 1 6 0
IMEX 9907 SMALL ZIPPERED BAG A 127 0 0 127 0.75 127 95.25
IMEX 9908 LARGE ZIPPERED BAG A 575 0 0 575 0.88 575 506
INNOVA 9561 BIRD CALLS BOOK A 8 25 0 8 9.49 8 75.92
INNOVA 9562 NIGHT SOUNDS BOOK A 19 0 0 19 9.49 19 180.31
INSECT 9301 BUTTERFLY GARDEN A 68 60 43 25 10 25 250
INSECT 9447 BUZZERKS EYEWEAR - HORNET A 17 0 0 17 5 15 75
INSECT 9448 BUZZERKS EYEWEAR - FIRE ANT A 22 0 0 22 5 15 75
INSECT 9449 BUZZERKS EYEWEAR - MANTIS A 44 0 0 44 5 15 75
INSECT 9942 LADYBUG LAND A 190 0 1 189 9 189 1701
INSECT 9945 BUTTERFLY PAVILLION A 31 0 1 30 15 30 450
INSECT 9947 BUTTERFLY BUNGALOW A 5 0 0 5 20 5 100
INSECT 9948 ANTHILL A 4 0 0 4 7.5 4 30
INTEGR 1225 SPEAK & PLAY TEACHING ORGAN A 0 24 9 -9 32.42 0
INTERA 1216 MARACAS A 111 0 0 111 5.25 110 577.5
JAMTOW 1135 OCARINA NECKLACE A 188 0 0 188 2.45 110 269.5
JAMTOW 1342 SHEKERE A 115 0 0 115 4.2 110 462
JIMGIL 3835D "CD- SINGS DO, RE, MI..." N 6 0 0 6 0 0
JIMGIL 3836D CD- SNEEZING SONGS & OTHER N 7 0 0 7 0 0
K&M 9420 CARDINAL A 8 12 1 7 3.5 7 24.5
K&M 9528 AUDUBON BIRDS MALLARD A 13 0 0 13 3.5 13 45.5
K&M 9529 COMMON LOON A 3 0 0 3 3.5 3 10.5
K&M 9532 AUDUBON BIRDS CANADA GOOSE A 4 0 0 4 3.5 4 14
K&M 9541 BIRD NEST A 9 0 1 8 2 8 16
K&M 9612 ATLANTIC PUFFIN N 1 0 0 1 0 1 0
K&M 9727 EUROPEAN STARLING A 0 18 6 -6 3.5 0
K&M 9728 ROCK DOVE A 0 16 6 -6 3.5 0
K&M 9730 GREAT BLUE HERON A 0 18 6 -6 3.5 0
K&M 9731 TRUMPETER SWAN A 10 0 0 10 3.5 10 35
K&M 9732 TREE SWALLOW A 0 36 28 -28 3.45 0
K&M 9733 BELTED KINGFISHER A 9 0 0 9 3.5 9 31.5
K&M 9734 COMMON YELLOW THROAT A 8 0 0 8 3.5 8 28
K&M 9967 AUDUBON BIRD SNOW BUNTING A 5 6 2 3 3.5 3 10.5
K&M 9968 AUDUBON BIRDS - DICKCISSEL A 7 0 0 7 3.5 7 24.5
KALEID 9464 KALEIDA JEWELS A 13 0 1 12 11 12 132
KALEID 9520 MAGNETIC BOARD A 10 0 3 7 4 7 28
KALLIS 1350 6-NOTE PENTATONIC MARIMBA A 0 3 0 0 60.06 0
KALLIS 1351 8-NOTE DIATONIC MARIMBA A 0 3 0 0 73.92 0
KALLIS 17128 MARIMBA: 11-NOTE PENTATONIC A 0 3 0 0 109.14 0
KALLIS 17129 MARIMBA: 15-NOTE DIATONIC IN C A 0 3 0 0 147.84 0
KAY 1120 JUNIOR DRUM SET D 0 0 0 0 88 0
KAY 1122 GUITAR STRAP A 87 7 1 86 1.19 86 102.34
KAY 1211 3/4 SIZE GUITAR - NATURAL A 9 0 0 9 27.5 9 247.5
KAY 1233 GUITAR PICS A 214 0 2 212 4.99 212 1057.88
KAY 1264 MINI ELECTRIC GUITAR- BLACK A 9 0 0 9 55 9 495
KAY 1265 STUDENT ELECTRIC GUITAR KE17B D 0 0 0 0 43.69 0
KAY 1266 STUDENT ELECTRIC GUITAR BAG D 7 0 0 7 4.99 7 34.93
KAY 1293 1/4 SIZE GUITAR BAG A 92 0 1 91 0 0
KAY 1295 CHILD SIZE DRUM THRONE A 2 0 3 -1 16.81 0
KAY 1301 MICROPHONE D 0 0 0 0 6.74 0
KAY 1306 MEDIUM SCALE BASS GUITAR D 0 0 0 0 69.99 0
KAY 1307 BASS GUITAR BAG D 0 0 0 0 4.99 0
KAY 1397 PNK - MINI-ELECT GUITAR PKG D 0 0 0 0 74.99 0
KAY 1398 BLK - MINI-ELECT GUITAR PKG D 1 0 0 1 74.99 1 74.99
KAY 1399 RED - MINI-ELECT GUITAR PKG A 7 0 0 7 62.66 0
KAY 1400 AC ADAPTER MINI-ELEC PKG AMP A 32 0 0 32 5.99 7 41.93
KAY 1401 BLK PERFORM. PLUS 3PC DRUM SET A 4 0 0 4 94.99 4 379.96
KAY 1402 MINI-ELECTRIC PADDED GIG BAG A 116 100 0 116 5.99 116 694.84
KAY 1404 UKULELE BAG A 0 0 0 0 5.97 0
KAY 1413 NATURAL- BEBOP 1/4 SIZE GUITAR A 14 0 0 14 16.76 14 234.64
KAY 1414 BLUE - BEBOP 1/4 SIZE GUITAR A 67 0 1 66 16.76 66 1106.16
KAY 1415 PINK - BEBOP 1/4 SIZE GUITAR A 0 0 0 0 16.76 0
KAY 1416 NATURAL BEBOP 1/2 SIZE GUITAR A 0 0 0 0 18.62 0
KAY 1417 BLUE BEBOP 1/2 SIZE GUITAR A 26 0 0 26 18.62 26 484.12
KAY 1418 PINK BEBOP 1/2 SIZE GUITAR D 0 0 0 0 18.62 0
KAY 1419 NATURAL BEBOP 3/4 SIZE GUITAR A 0 0 0 0 20.84 0
KAY 1420 BLUE - BEBOP 3/4 SIZE GUITAR A 15 0 1 14 20.84 14 291.76
KAY 1421 PINK - BEBOP 3/4 SIZE GUITAR D 0 0 0 0 20.84 0
KAY 1422 BLUE BEBOP MINI-ELEC GUITR PKG A 0 0 0 0 59.62 0
KAY 1423 BLUE BEBOP MINI-ELEC GUITR&BAG A 0 0 0 0 44.86 0
KAY 1424 PINK BEBOP MINI-ELEC GUITR PKG D 2 0 1 1 59.62 1 59.62
KAY 1425 PINK BEBOP MINI-ELEC GUITR&BAG A 0 0 0 0 44.86 0
KAY 1426 MAPLE BEBOP UKULELE & BAG A 127 0 1 126 8.28 126 1043.28
KAY 1427 OCEAN BLUE BEBOP UKULELE & BAG A 300 0 5 295 8.28 295 2442.6
KAY 1428 HOT HULA PINK BEBOP UKU & BAG A 207 0 9 198 8.28 198 1639.44
KAY 1431 RED 3-PC MINI DRUM SET A 1 0 0 1 79.99 1 79.99
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MFLP 74558D TAJ MAHAL-SONG FOR YOUNG HEART A 219 0 2 217 0.82 0
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MFLP 75794D CD- ON THE GOOD SHIP LOLLIPOP A 412 0 183 229 0.65 0
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MFLP 78142D CD- THIS LAND IS YOUR LAND A 288 0 0 288 3.05 0
MFLP 78154D CD- REGGAE ON THE RIVER A 39 0 0 39 1.745 0
MFLP 78179D CD- ANIMAL CRACKERS IN MY SOUP A 88 0 6 82 0.543 0
MFLP 78181D CD- WHAT LITTLE BOYS MADE OF D 86 0 0 86 0.7321 0
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MFLP 78223D CD- TODDLER FAVORITES TOO A 270 0 1 269 0.531 0
MFLP 78252D CD- PEACE IS THE WORLD SMILING A 324 0 1 323 0.725 0
MFLP 78272D CD- SINGING SCIENCE A 242 0 0 242 0.62 0
MFLP 78290D CD- PIED PIPER A 21 0 0 21 4.31 0
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MFLP 78294D CD- TODDLERS SING ROCK N' ROLL A 361 0 1 360 0.515 0
MFLP 78361D CD- GREAT BIG FUN N 30 0 0 30 0.7621 0
MFLP 78362D TODDLER FAVORITES CD/SONGBOOK A 163 0 0 163 3.18 0
MFLP 78362SB TODDLERS SING N' PLAY SONGBOOK A 245 0 7 238 1.11 0
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MFLP 79550D CD- 20 GREAT KID SONGS A 83 0 3 80 0.533 0
MFLP 79552D CD- 20TH ANNIVERSARY COLLECT'N A 139 0 9 130 0.533 0
MFLP 79736D CD- 100 TODDLER FAVORITES A 267 0 20 247 2.3 0
MFLP 79793D CD- HOME TO ME D 50 0 0 50 2.9775 0
MFLP 79795D CD- FRENCH UNIVERSE OF SONG A 57 0 4 53 0.646 0
MFLP 79797D CD- 15TH ANNIVERSARY COLLECT'N A 144 0 0 144 0.705 0
MFLP 79832D CD- FRANKLY A CAPPELLA A 3 0 0 3 0.803 0
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MFLP 79842D CD- STORYTIME FAVORITES A 307 0 0 307 0.617 0
MFLP 79844D CD- CATCH A WAVE A 298 0 0 298 0.71 0
MFLP 79858D CD- SEAL MAIDEN A 132 0 8 124 0.56 0
MFLP 79959D CD- BLUE SUEDE SHOES A 122 0 0 122 0.536 0
MFLP 79962D CD- CELEB OF SOUL D 508 0 1 507 0.555 0
MFLP 79971D CD- DAYS GONE BY A 65 0 1 64 0.629 0
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MFLP 8928V KARATE FOR KIDS N 8 0 0 8 11.23 0
MFLP 95206D CD- ZEN BABY A 578 0 0 578 1.784 0
MFLP 95206V DVD- ZEN BABY A 59 0 2 57 2.31 0
MFLP 95207D CD- WORLD RHYTHM A 175 0 0 175 0.774 0
MFLP 95208D CD- RAINBOW RHYTHM A 74 0 0 74 0 0
MFLP 95209D CD- KIDZ RHYTHM EXPERIENCE A 378 0 0 378 0.734 0
MFLP 96001D CD- DREAMCATCHER BOXED SET A 52 0 0 52 8.49 0
MFLP 96009D CD- WITH LOVE- SWEET MELODIES D 257 0 0 257 1.274 0
MFLP 96010D CD- FOR THE LITTLE ONE D 218 0 0 218 1.274 0
MFLP 96011D CD- DREAMS COME TRUE D 1 0 0 1 1.274 0
MFLP 96012D CD- CONGRATULATIONS D 133 0 0 133 2.3632 0
MFLP 970430V DVD- MAKE A WISH LITTLE FISH A 74 0 3 71 0.927 0
MFLP 970449V DVD- SINGING FOR FREEDOM A 81 0 1 80 2.91 0
MFLP 9724 T-REX SCULPTURE BY NUMBERS A 0 0 0 0 17 0
MICOMI 9774 SPORTS CAR MODEL N 1 0 0 1 20 0
MIDCO 1280 YAMAHA ALTO RECORDER A 9 1 0 9 13.28 9 119.52
MIDCO 1281 YAMAHA SOPRANO RECORDER A 31 0 0 31 3.78 31 117.18
MIDCO 1432 LAUREN SOPRANO UKULELE - MAHOG A 0 0 0 0 14 14 196
MIDCO 1433 SOPRANO UKULELE BAG VINYL A 16 0 0 16 4.61 16 73.76
MILKSH 3017D CD- HAPPY SONGS A 4 0 0 4 7 0
MILKSH 3018D CD- BOTTLE OF SUNSHINE A 1 0 0 1 7 0
MILKSH 3045 PLAY! A 9 0 0 9 7 0
MONKEY 9679 TABLE TENNIS SET N 4 0 0 4 10 0
MONTER 8420V DVD- CHANUKA AT BUBBE'S N 5 0 0 5 9.98 0
MUSICS 1279 RECORDER GUIDE BOOK A 0 10 0 0 8.98 0
MUSICS 3152 BEGINNING RECORDER BOOK 1 A 4 0 0 4 5.98 4 23.92
MUSICS 9405 AUTOHARP INSTRUCTION BOOK A 9 0 0 9 4.98 9 44.82
MUSICS 9941 LAURIE BERKNER SONGBOOK A 4 0 0 4 8.48 4 33.92
NEWSOU 3052 MOZART FOR MOTHER AND BABY A 1 15 1 0 7.48 0
NEWSOU 3053 CHRISTMAS SING ALONG A 27 0 0 27 8.48 27 228.96
NEWSOU 3201D CD- NORA'S ROOM N 2 0 0 2 7.48 0
NEWSOU 38328D CD- ORCHESTRA A 4 0 1 3 6.98 3 20.94
NEWSOU 8637V THE ORCHESTRA DVD A 9 0 0 9 9.98 9 89.82
NICHES 3619V DVD- CHRONICLES OF NARNIA A 42 0 0 42 15 42 630
NICHES 8063V DVD- THE LIVING SEA A 27 0 0 27 10 0
NICHES 8251V DVD- DOLPHINS A 43 0 0 43 10 4 40
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NICHES 8764V DVD- TALES OF BEATRIX POTTER A 8 35 0 8 7.5 8 60
NICHES 8990V "DVD- LION, WITCH & WARDROBE" A 4 0 0 4 10 4 40
OLYMPI 3186D CD- UNDERWATER LAND N 14 0 0 14 0 0
PEDALC 6020 BLUE PEDAL TRAIN RED TRIM A 100 0 0 100 174 0
PENGUI 9632 BOOK OF FLOWER FAIRY ALPHABET N 0 68 7 -7 3.7 0
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PENTON 3198D WINNIE THE POOH CD & STORYBOOK N 1 0 0 1 6.73 0
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PENTON 36233D CD- GERMAN LYRIC LANGUAGE N 15 0 0 15 5.6083 0
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PENTON 36235D CD- SPANISH LYRIC LANGUAGE N 18 0 1 17 6.73 0
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PRINCE 6006 WHEELY BEE (SMALL) A 7 6 0 7 34 7 238
PRINCE 6009 WHEELY BUG (LARGE) A 0 6 0 0 39 0
PRINCE 6010 WHEELY BEE (LARGE) A 7 0 0 7 39 7 273
PROGRE 9310 MEGA MAGZ SET A 0 12 0 0 14 0
PROGRE 9321 MAGZ MAGNETIC TOY A 101 0 0 101 4.8 50 240
PROGRE 9497 DYNAMAGZ A 0 12 0 0 9.2 0
PROGRE 9699 MAGZ WOODEN STORAGE BOX A 3 0 1 2 8 2 16
PROGRE 9700 MAGZ-280 WITH WOODEN BOX A 7 0 0 7 40 8 320
PUTUMA 3005D CD- FRENCH PLAYGROUND A 8 0 0 8 7.51 0
PUTUMA 3036D CD- FOLK PLAYGROUND CD A 3 0 0 3 7.51 0
PUTUMA 3042D NEW ORLEANS PLAYGROUND A 5 0 0 5 7.51 0
PUTUMA 3046 ANIMAL PLAYGROUND A 14 0 0 14 7.51 0
PUTUMA 3047 ASIAN DREAMLAND A 8 0 0 8 7.51 0
PUTUMA 3058 DREAMLAND A 6 0 0 6 7.51 0
PUTUMA 3059 BRAZILIAN PLAYGROUND A 10 0 0 10 7.51 0
PUTUMA 3060 HAWAIIAN PLAYGROUND A 10 0 0 10 7.51 0
PUTUMA 3110D CD- WORLD PLAYGROUND A 8 0 0 8 7.51 8 60.08
PUTUMA 3193D CD- CHRISTMAS AROUND THE WORLD A 13 0 1 12 7.5 12 90
PUTUMA 3345D CD- SING ALONG WITH PUTUMAYO A 5 0 0 5 7.51 3 22.53
PUTUMA 3415D CD- AFRICAN PLAYGROUND A 4 0 0 4 7.51 3 22.53
PUTUMA 3416D CD- DREAMLAND A 12 0 0 12 7.51 6 45.06
PUTUMA 3417D CD- LATIN PLAYGROUND A 17 0 0 17 7.51 15 112.65
PUTUMA 3503D CD- CARRIBEAN PLAYGROUND A 6 0 0 6 7.5 0
PUTUMA 3977D CD- SWING AROUND THE WORLD A 6 0 0 6 7.51 0
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RANDOM 9825 DRAGONOLOGY BOOK OF DRAGONS N 2 0 0 2 10 0
RASREC 3320D CD- REGGAE INSTRUMENTALS N 35 0 1 34 0 0
RAVENS 9779 MULTI-PLAY TABLE W/SAND TOYS N 1 0 0 1 37.5 0
RAZOR 2031V DVD- LAURIE BERKNER BAND A 2 0 9 -7 9.5 0
RAZOR 3026D CD- SOME ASSEMBLY REQUIRED N 5 0 0 5 6.99 0
RAZOR 3180D CD- KIDZ BOP N 2 0 0 2 9.7 0
RAZOR 3458D CD- BUZZ BUZZ A 113 0 15 98 9.5 98 931
RAZOR 3459D CD- UNDER A SHADY TREE A 162 0 16 146 9.5 146 1387
RAZOR 3460D CD- VICTOR VITO A 24 0 17 7 9.5 7 66.5
RAZOR 3461D CD- WHADDAYA THINK OF THAT A 134 0 17 117 9.5 117 1111.5
RAZOR 3918D CD- KIDZ BOP 3 N 1 0 0 1 9.7 0
RAZOR 3919D CD- KIDZ BOP 4 N 4 0 0 4 10.23 0
RAZOR 3920D CD- KIDZ BOP 5 N 4 0 0 4 10.23 0
RAZOR 3921D CD- KIDZ BOP 6 N 16 0 0 16 10.23 0
RAZOR 3922D CD- KIDZ BOP CHRISTMAS N 15 0 0 15 0 0
RAZOR 3966D CD- KIDZ BOP VOLUME 7 N 25 0 0 25 10.23 0
RAZOR 3974D CD- KIDZ BOP 8 N 90 0 0 90 0 0
RAZOR 3976D CD- A VERY MERRY KIDZ BOP N 61 0 0 61 0 0
RAZOR 8009V DVD- EVERYONE'S A STAR N 6 0 0 6 4.2786 0
RAZOR 8730 V- LAURIE BERKNER'S SONGBOOK N 1 0 0 1 6.49 0
RAZOR 8994V DVD- AUTO B GOOD RUBBER MEETS N 1 0 0 1 7.98 0
RECOM 9691 5-TIER WIRE RACK D 3 0 0 3 15.1105 0
REDNOT 3842D CD- CAN YOU SOUND JUST LIKE ME N 10 0 0 10 0 0
REDNOT 3978D CD- BEBOP YOUR BEST N 2 0 0 2 6.75 0
REDWIN 3810D MOONDREAMER N 12 0 0 12 7.75 0
REFLEX 3428D CD- ELLA JENKINS UNION. FRIEND N 6 0 0 6 0 0
REFLEX 3429D CD- GROWING UP WITH ELLA N 1 0 0 1 0 0
REFLEX 72553D CD- KRAZY SONGS CD A 0 0 2 -2 1.12 0
REFLEX 72879D CD- CIRCLE OF WOMEN N 10 0 0 10 0 0
REFLEX 73765D CD- TOP POP CD BLISTER A 33 0 0 33 0 0
REFLEX 78988D CDBL- CLIFFORD THE BIG RED DOG A 0 0 0 0 1.238 0
REFLEX 8894 V- CAILLOU'S HOLIDAY MOVIE N 3 0 0 3 8.01 0
REFLEX 9764 BOOK- THE POLAR EXPRESS BOOK N 8 0 0 8 10.04 8 80.32
REFLEX 9902 WORLD RHYTHM INSERT A 207 0 0 207 0 0
REFLEX 9903 RAINBOW RHYTHM INSERT A 366 0 0 366 0 0
REFLEX 9904 ANIMAL BELLS INSERT A 76 0 0 76 0 0
REFLEX 9905 LISTEN & PLAY INSERT A 210 0 0 210 0 0
REFLEX 9906 BABY BAND INSERT A 38 200 0 38 0 0
REFLEX 9912 CHORD CHART A 32 0 11 21 0 0
RHYTHM 1164 HANDBELL SET A 30 0 0 30 25 30 750
RHYTHM 1165 8-NOTE BELL SONGS A 10 0 0 10 2.6 10 26
RHYTHM 1166 MORE 8-NOTE SONGS A 8 0 0 8 2.6 8 20.8
RHYTHM 1198D HYMNS FOR HANDBELLS BOOK & CD A 5 0 0 5 13.17 5 65.85
RHYTHM 1239 15-CHORD CHROMAHARP A 1 0 0 1 109 1 109
RHYTHM 1244 BOB MCGRATH RHYTHM BAND SET A 18 4 1 17 20.75 17 352.75
RHYTHM 7161 21-CHORD AUTOHARP A 3 0 0 3 118 3 354
RHYTHM 7164 AUTOHARP CASE A 2 0 1 1 25 1 25
RICHFR 6015 LION PULL TOY A 9 0 0 9 6.85 9 61.65
RICHFR 6016 ELEPHANT PULL TOY A 9 0 0 9 6.85 9 61.65
RICHFR 6027 DUCK FAMILY PULL TOY A 11 0 0 11 12.95 11 142.45
RICHFR 6041 MAMA DUCK PULL TOY A 3 0 0 3 6.85 3 20.55
RICHFR 9958 DINO & BABIES PULL TOY A 34 0 0 34 10.5 34 357
RICHFR 9959 DINO PULL TOY A 20 0 0 20 6.85 20 137
RICHFR 9963 SOFT STACKING PUPPY A 3 3 0 3 8 3 24
RICHFR 9965 PUPPY PULL TOY A 18 0 0 18 6.85 18 123.3
RIVER 3825D CD- WEEZIE AND THE MOOMPIES N 23 0 1 22 0 0
RIVER 3827D CD- PLAY IT AGAIN N 6 0 0 6 0 0
RIVER 3829D CD- TOWN AROUND THE BEND N 11 0 0 11 0 0
ROCK 9640 DANNY DINOSAUR MUSICAL ROCKER N 1 0 0 1 40 0
ROUNDE 3035D CD- BEETHOVEN'S WIG 3 A 8 0 0 8 6.25 0
ROUNDE 3163D CD- NO! A 14 0 0 14 8.75 0
ROUNDE 3173D CD- DADDY-O DADDY A 11 0 0 11 8.2 0
ROUNDE 3179D CD- RAFFI'S LET'S PLAY A 31 0 0 31 6.8 0
ROUNDE 3182D CD- BEETHOVEN'S WIG A 6 0 0 6 6.25 0
ROUNDE 3205D CD- BABY BELUGA A 48 0 9 39 6.8 39 265.2
ROUNDE 32100D CD- SINGABLE SONGS FOR V YOUNG A 30 0 8 22 6.8 22 149.6
ROUNDE 3234D CD- BANANAPHONE A 5 0 0 5 0 0
ROUNDE 3235D CD- CADA NINI/EVERY CHILD N 8 0 0 8 8.75 0
ROUNDE 3240D CD- EVERYTHING GROWS A 3 0 0 3 6.8 0
ROUNDE 3242D CD- MORE SINGABLE SONGS A 39 0 0 39 6.8 0
ROUNDE 3243D CD- ONE LIGHT ONE SUN A 11 0 0 11 6.8 0
ROUNDE 3244D CD- RAFFI IN CONCERT A 28 0 8 20 6.8 20 136
ROUNDE 3245D CD- RISE & SHINE A 6 0 0 6 6.8 0
ROUNDE 3252D CD- PHILADELPHIA CHICKENS A 7 0 0 7 5.5 0
ROUNDE 3276D CD- BEETHOVEN'S WIG #2 A 8 0 0 8 6.25 0
ROUNDE 3535D CD- JUMP CHILDREN N 18 0 0 18 0 0
ROUNDE 3549D CD- FOUR SEASONS WINTERSONGS N 8 0 0 8 8.2 0
ROUNDE 3551D CD- IRISH FOLK TALES FOR CHILD N 12 0 0 12 0 0
ROUNDE 3558D CD- THE CORNER GROCERY STORE A 7 0 0 7 6.8 0
ROUNDE 3559D CD- EVERGREEN EVERBLUE N 15 0 0 15 6.8 0
ROUNDE 3562D CD- RAFFI RADIO N 3 0 0 3 6.375 0
ROUNDE 3572D CD- RHYTHM IN MY SHOES N 6 0 0 6 8.2 0
ROUNDE 3574D CD- ARTHUR'S PERFECT CHRISTMAS N 10 0 0 10 0 0
ROUNDE 3578D CD- STILL THE SAME TO ME N 1 0 0 1 4.8235 0
ROUNDE 3582D CD- HEY PICASSO N 14 0 0 14 6.8 0
ROUNDE 3583D CD- RHINOCEROS TAP N 14 0 0 14 5.5 0
ROUNDE 3584D CD- DAVY CROCKETT N 9 0 0 9 5.5 0
ROUNDE 3585D CD- MORE IRISH FOLK TALES.... N 9 0 0 9 8.2 0
ROUNDE 38056D CD- RAFFI'S CHRISTMAS A 19 0 0 19 6.8 19 129.2
ROUNDE 3981D CD- QUIET TIME A 21 3 10 11 6.8 11 74.8
ROUNDE 8427V DVD- RAFFI IN CONCERT A 3 0 1 2 12.6 2 25.2
RPELEC 6038 9V AC ADAPTER FOR CD PLAYER A 17 30 4 13 6.21 13 80.73
RPELEC 6042 6V AC ADAPTER FOR CD PLAYER A 0 20 7 -7 8.6 0
RYCO 3471D CD- AFRICAN LULLABY N 3 0 0 3 7.85 0
RYCO 3474D CD- CELTIC DREAMS N 7 0 0 7 0 0
RYCO 3475D CD- CELTIC LULLABY N 18 0 1 17 0 0
RYCO 3478D CD- LATIN LULLABY N 3 0 0 3 0 0
RYCO 3924D CD- TROPICAL LULLABY N 16 0 0 16 0 0
SABABA 9848 THE BIG PERFORMANCE GAME N 1 0 0 1 6.5 0
SAFARI 9254 SM- WILD ANIMAL POSTER A 36 0 0 36 6.36 3 19.08
SAFARI 9255 LG- WILD ANIMAL POSTER A 14 0 0 14 14.25 4 57
SAFARI 9381 ADULT ELEPHANT A 17 0 0 17 3 17 51
SAFARI 9382 BABY ELEPHANT A 18 0 0 18 1 18 18
SAFARI 9383 ADULT GIRAFE A 18 0 0 18 2.5 18 45
SAFARI 9384 BABY GIRAFE A 18 0 0 18 1.25 18 22.5
SAFARI 9385 ADULT TIGER A 18 0 0 18 2.5 18 45
SAFARI 9386 TIGER CUB A 54 0 0 54 0.8 54 43.2
SAFARI 9387 ADULT ZEBRA A 18 0 0 18 2 18 36
SAFARI 9388 BABY ZEBRA A 18 0 0 18 1 18 18
SAFARI 9389 ADULT LION A 18 0 0 18 2.5 18 45
SAFARI 9390 LION CUB A 18 0 0 18 1.25 18 22.5
SAFARI 9597 GIANT SAFARI FLOOR PUZZLE A 38 0 0 38 6.18 10 61.8
SAFARI 9820 LG- DINOSAUR POSTER A 47 0 1 46 14.25 10 142.5
SAFARI 9821 SM- DINOSAUR POSTER A 9 0 0 9 6.41 9 57.69
SAFARI 9894 DINOSAUR FLOOR PUZZLE A 31 0 0 31 6.5 31 201.5
SAGA 1289 1/4 SZ CATALA GUITAR A 0 0 0 0 15.95 0
SAGA 1320 1/8 SIZE VIOLIN A 1 0 1 0 39.95 0
SAGA 1321 1/4 SIZE VIOLIN A 3 0 0 3 24.95 3 74.85
SAGA 1322 1/2 SIZE VIOLIN A 6 0 2 4 26.65 4 106.6
SAGA 1323 3/4 SIZE VIOLIN A 36 0 0 36 24.95 36 898.2
SAGA 1324 4/4 SIZE VIOLIN A 35 0 1 34 24.95 34 848.3
SAGA 1325 1/4 SIZE BEBOP GUITAR- NATURAL A 0 0 0 0 20.7 0
SAGA 1326 1/2 SIZE BEBOP GUITAR- NATURAL A 0 0 0 0 21.7 0
SAGA 1327O 3/4 SIZE BEBOP GUITAR- NATURAL D 0 0 0 0 22.7 0
SAGA 1328 FULL SIZE BEBOP GUITAR- NATURA A 0 0 0 0 21.2 0
SAGA 1329 1/4 SIZE BEBOP GUITAR- PINK A 0 0 0 0 20.7 0
SAGA 1330 1/4 SIZE BEBOP GUITAR- BLUE A 0 0 0 0 20.7 0
SAGA 1331 1/2 SIZE BEPOP GUITAR- PINK A 0 0 0 0 21.7 0
SAGA 1332 1/2 SIZE BEBOP GUITAR- BLUE A 0 0 0 0 21.7 0
SAGA 1333 3/4 SIZE BEBOP GUITAR A 0 0 0 0 20 0
SAGA 1334 BEBOP UKULELE- MAPLE A 0 0 0 0 7.2 0
SAGA 1335 BEBOP UKULELE- PINK D 0 0 0 0 6.95 0
SAGA 1336 BEBOP UKULELE- BLUE A 0 0 0 0 6.95 0
SAGA 1338 1/2 SIZE STEEL STRING GUITAR A 0 0 0 0 18.95 0
SAGA 1341 1/16 SIZE CREMONA A 2 0 0 2 29.95 2 59.9
SAGA 1349 1/4 SIZE VALENCIA GUITAR A 2 0 0 2 29.95 2 59.9
SAGA 1356 3/4 SIZE BAG A 29 0 0 29 0 0
SAGA 1357 FULL SIZE GUITAR BAG A 7 0 0 7 3.5 7 24.5
SAGA 1360 BEBOP MINI ELECT PINK GUIT&BAG A 0 0 0 0 52.11 0
SAGA 1365 PINK MINI ELEC GUITAR KIT A 0 0 0 0 55.45 0
SAGA 1366 BLUE MINI ELEC GUITAR KIT A 0 0 0 0 55.45 0
SAGA 1375 3/4 SIZE BEPOP GUITAR- PINK A 0 0 0 0 22.7 0
SAGA 1376 3/4 SIZE BEBOP GUITAR- BLUE D 11 0 0 11 22.7 11 249.7
SAGA 1378 1/8 SZ CREMONA VIOLIN OUTFIT A 5 0 0 5 39.95 5 199.75
SAGA 1389 BEBOP 1/16 SIZE VIOLIN OUTFIT A 0 0 0 0 21.95 0
SAGA 1405 1/16 CREMONA 2 STAR VIOLN BRDG A 8 0 0 8 0.6 0
SAGA 1406 1/8 CREMONA 2 STAR VIOLIN BRDG A 10 0 1 9 0.6 0
SAGA 1407 1/4 CREMONA 2 STAR VIOLIN BRDG A 7 0 0 7 0.6 0
SAGA 1408 1/2 CREMONA 2 STAR VIOLIN BRDG A 9 0 0 9 0.6 0
SAGA 1409 3/4 CREMONA 2 STAR VIOLIN BRDG A 10 0 0 10 0.6 0
SAGA 1410 4/4 CREMONA 2 STAR VIOLIN BRDG A 8 0 0 8 0.6 0
SCHOEN 1403 MBIRA (THUMB PIANO) A 5 0 0 5 14.85 5 74.25
SCHOLA 8481V DVD- MS NELSON HAS A FIELD DAY N 6 0 0 6 6.72 0
SCHOLA 8796V DVD- HOW DO DINOSAURS DAY... N 1 0 0 1 7.48 0
SIMON 3009D CD- JUANITA THE SPANISH LOBSTE N 10 0 0 10 0 0
SIMON 3346D CD- THE STEAM SHOVEL N 28 0 0 28 0 0
SISUEN 8794V CHANUKAH ON PLANET MATZAH BALL N 10 0 0 10 9.48 0
SMALL 9824 KNOCK KNOCK BLOCKS N 2 0 0 2 12.5 0
SMALLF 8908V BRAINY BABY: ENGLISH N 3 0 0 3 9.98 0
SMART 6035 STABLE: DARK CHESTNUT ARABIAN A 13 0 0 13 7.5 13 97.5
SMART 6036 STABLE: WARMBLOOD-B & W PINTO A 15 0 0 15 7.5 15 112.5
SMART 9834A NEW STABLE FEEDING SET N 19 0 0 19 10 19 190
SMART 9928 BLACK PINTO SPORT HORSE N 19 0 0 19 7.5 19 142.5
SMITHS 3421D CD- ADVENTURES IN RHYTHM N 1 0 0 1 0 0
SMITHS 3424D CD- CALL AND RESPONSE N 10 0 0 10 0 0
SMITHS 3425D CD- COME DANCE BY THE OCEAN N 7 0 0 7 0 0
SMITHS 3426D CD- COUNTING GAMES & RHYTHMS.. N 3 0 0 3 0 0
SMITHS 3427D CD- EARLY EARLY CHILDHOOD SONG N 5 0 0 5 0 0
SMITHS 3430D CD- ELLA JENKINS HOLIDAY TIMES N 11 0 0 11 0 0
SMITHS 3431D CD- JAMBO & CALL RESPONSE SONG N 4 0 0 4 7.5 0
SMITHS 3434D CD- MY STREET BEGINS .. HOUSE N 5 0 0 5 0 0
SMITHS 3435D CD- NURSERY RHYMES N 8 0 0 8 0 0
SMITHS 3436D CD- PLAY YOUR INSTRUMENTS..... N 2 0 0 2 0 0
SMITHS 3438D CD- RHYTHMS OF CHILDHOOD N 7 0 0 7 0 0
SMITHS 3439D CD- SEASONS FOR SINGING N 17 0 0 17 0 0
SMITHS 3440D CD- SHARING CULTURES WITH ELLA N 15 0 0 15 0 0
SMITHS 3441D CD- SONGS & RHYTHMS NEAR & FAR N 7 0 0 7 0 0
SMITHS 3443D "CD- SONGS, RHYTHMS & CHANTS.. N 5 0 0 5 7.5 0
SMITHS 3444D CD- THIS IS RHYTHM N 5 0 0 5 0 0
SMITHS 3445D "CD- THIS A WAY, THAT A WAY" N 5 0 0 5 0 0
SMITHS 3446D CD- TRAVELLIN' WITH ELLA N 6 0 0 6 0 0
SMITHS 3939D CD- NURSERY DAYS N 4 0 0 4 0 0
SMITHS 3945D ABIYOYO N 4 0 0 4 7.5 0
SMITHS 3947D CD- ANIMAL FOLK SONGS N 8 0 2 6 0 0
SONYMU 3074D CD- SINGIN' IN THE BATHTUB N 41 0 1 40 9.14 0
SONYMU 3108D CD- REALLY ROSIE N 6 0 0 6 7.93 0
SOUNDP 6007 ALPHABET OF INSECTS A 12 0 0 12 6.38 12 76.56
SOUNDP 6017 CANADA GOOSE AT CATTAIL LANE A 4 0 0 4 2.78 4 11.12
SOUNDP 6018 LOON AT NORTHWOOD LAKE A 28 0 0 28 2.78 28 77.84
SOUNDP 6019 MALLARD DUCK AT MEADOW VIEW PO A 4 0 0 4 2.78 4 11.12
SOUNDP 9975 HOPPY GOES TO SCHOOL A 62 0 0 62 1.98 62 122.76
SOUNDP 9976 HOPPY 5" BEANY A 62 0 0 62 2.78 62 172.36
SOUNDP 9977 PEPPER, A SNOWY SEARCH A 19 0 0 19 1.98 19 37.62
SOUNDP 9978 PEPPER 5" BEANY A 18 0 0 18 2.78 18 50.04
SOUNDP 9979 LUCY AND THE BUSY BOAT A 16 0 0 16 1.98 16 31.68
SOUNDP 9980 LUCY 5" BEANY A 16 0 0 16 2.78 0
SOUNDP 9981 IT'S TYRANNOSAURUS REX! A 18 0 0 18 3.21 16 51.36
SOUNDP 9982 TYRANNOSAURUS REX 6" BEANY A 18 0 0 18 2.78 18 50.04
SOUNDP 9983 IS APATOSAURUS OKAY? A 29 0 0 29 3.21 29 93.09
SOUNDP 9984 APATOSAURUS 6" BEANY A 14 0 0 14 2.78 13 36.14
SOUNDP 9985 A BUSY DAY FOR STEGOSAURUS A 37 0 0 37 3.21 37 118.77
SOUNDP 9986 STEGASAURUS 6" BEANY A 38 0 0 38 2.78 38 105.64
SOUNDP 9987 PENGUIN'S FAMILY A 102 0 0 102 3.21 102 327.42
SOUNDP 9988 PENGUIN 6" PLUSH A 102 0 0 102 2.38 102 242.76
SOUNDP 9989 CORAL REEF HIDEAWAY A 30 0 0 30 3.21 30 96.3
SOUNDP 9990 ANEMONEFISH 7" PLUSH A 30 0 0 30 2.38 30 71.4
SOUNDP 9991 POLAR BEAR HORIZON A 113 0 1 112 3.21 112 359.52
SOUNDP 9992 POLAR BEAR 6" PLUSH A 43 0 1 42 2.38 42 99.96
SOUNDP 9993 LEPERIT THE ZEBRA A 26 0 0 26 3.21 26 83.46
SOUNDP 9994 ZEBRA 6" BEANY A 26 0 0 26 2.78 26 72.28
SOUNDP 9995 LOLI THE LEOPARD A 30 0 0 30 3.21 30 96.3
SOUNDP 9996 LEOPARD 6" BEANY A 30 0 0 30 2.78 30 83.4
SOUNDP 9997 KAKUDA THE GIRAFFE A 27 0 0 27 3.21 27 86.67
SOUNDP 9998 GIRAFFE 8" BEANY A 27 0 0 27 2.78 27 75.06
STARDR 31001D CD- STARDREAMER N 2 0 0 2 7.75 0
SUGAR 3591D CD- CAR TUNES N 2 0 0 2 0 0
SUGAR 3593D CD- HOW SWEET IT IS N 1 0 0 1 0 0
SUGAR 3594D CD- WILD THING N 8 0 0 8 0 0
SUGAR 3595D CD- GREATEST DANCE HITS N 7 0 0 7 0 0
TALICO 9753 DINOSAUR GAME D 1 0 0 1 12.5 0
TEACH 3020D CD- TEACH ME FELIZ NAVIDAD N 14 0 0 14 0 0
TEACH 3021D CD- TEACH ME JOYEUX NOEL N 14 0 0 14 0 0
THELIT 6004A TRIKE 'N' TRAILER A 2 10 1 1 30 1 30
THELIT 6039 PULL-ALONG SHAPE SORTING TRUCK A 5 0 0 5 30 5 150
TOYSCH 6002 PRINCESS SILVER TEA SET A 9 0 0 9 12.5 9 112.5
TROPHY 1200 15-NOTE RAINBOW XYLOPHONE A 13 18 0 13 17.48 13 227.24
TROPHY 1222 8-NOTE RAINBOW XYLOPHONE A 0 76 22 -22 12.48 0
TROPHY 17155 MELODY HARP A 0 28 7 -7 17.5 0
TROPHY 17155C MELODY HARP CASE A 7 0 0 7 7.25 7 50.75
TROPHY 9170 CHRISTMAS SONGS #1 A 10 0 0 10 2.45 10 24.5
TROUT 3449D CD- BIG TROUBLE N 6 0 0 6 0 0
USMUSI 1223 OSCAR SCHMIDT BARITONE UKULELE A 0 0 0 0 0 0
USMUSI 1224 OSCAR SCHMIDT 21-CHORD AUTOHRP A 1 0 0 1 199.95 1 199.95
USMUSI 1316 PADDED SOPRANO UKULELE BAG A 0 0 0 0 0 0
USMUSI 1318 OSCAR SCHMIDT BARITONE BAG A 0 0 0 0 0 0
USMUSI 1319 OSCAR SCHMIDT PADDED BAG A 1 0 0 1 19.95 1 19.95
VIRTUA 2004V DVD- ALL AROUND THE KITCHEN A 10 30 28 -18 7.48 0
VIRTUA 3202D CD- FAMILY DANCE A 10 0 3 7 8.3 7 58.1
VIRTUA 3203D CD- NIGHT TIME A 8 5 4 4 8.3 4 33.2
VIRTUA 3267D CD- HOUSE PARTY A 9 1 4 5 8.3 5 41.5
VIRTUA 35270D CD- ROCKET SHIP BEACH A 10 0 1 9 7.64 9 68.76
VIRTUA 3982D CD- CATCH THAT TRAIN A 13 0 3 10 8.3 10 83
VITA 9917 BEBOP SING-ALONG CD PLAYER A 1 1000 403 -402 13.8 650 8970
VPN 8676V DVD- SUPER SILLY FIESTA N 1 0 0 1 10.58 0
VPN 8841V DVD- ELMO IN GROUCHLAND N 2 0 0 2 12.84 0
WEA 2012V DVD- BOUNCING BABIES N 14 0 0 14 6.73 0
WEA 3040D ROCKIN FOREST W/ FARMER JASON N 3 0 0 3 7.64 0
WEA 3418D CD- SPONGEBOB: MOVIE SOUNDTRAC N 18 0 0 18 0 0
WEA 3861D CD- XMAS SONGS OF THE SEASON N 8 0 0 8 0 0
WEA 3885D CD- DEDICATED TO.. ONE I LOVE N 26 0 1 25 0 0
WEA 3925D CD- THANKS & GIVING N 22 0 0 22 8.54 0
WEA 3936D CD- POLAR EXPRESS SOUNDTRACK N 20 0 0 20 0 0
WEA 8799V RALPH'S WORLD: SAY HELLO! N 10 0 0 10 10 0
WEE 8832V DVD- BIG ROCK CANDY MOUNTAIN N 1 0 0 1 6.73 0
WEESIN 8825V WEE SING: KING COLE'S PARTY N 2 0 0 2 6.73 0
WEESIN 8834V WEE SING: BEST CHRISTMAS EVER N 9 0 0 9 6.73 0
WHACKY 1259 BOOMOPHONE WHACK PACK A 7 0 1 6 23.74 6 142.44
WIDOW 2003V DVD- HIP HOP FOR KIDS A 12 0 0 12 12.5 12 150
WOODST 1213 ROCK BEAT RHYTHM STICKS A 661 0 4 657 9 657 5913
WOODST 1247 MINI CHIMALONG A 4 0 0 4 9 4 36
WOODST 1284 CHIMALONG JR A 5 0 1 4 18 4 72
WOODST 17118 CALYPSO STEEL DRUM A 12 1 1 11 50 11 550
YEARS 9371 CRIB CD PLAYER A 0 18 5 -5 38.56 0
YOGAKI 9508 YOGA GARDEN GAME A 4 24 1 3 10 3 30
89533.46
Will provide upon closing.
Changes every day as we sell inventory
Schedule 1.1(b) - Retained Assets
---------------------------------
The business of selling "Music for Little People" recordings and "BeBop"
musical instruments to distributors (such as WEA, Lakeshore and Baker &
Taylor) and "house account" retail customers (such as Right Start, Buy Buy
Baby and Baby Store) as well as the business of licensing and otherwise
exploiting certain properties of Musical Kidz, including, but not limited to,
licensing and otherwise exploiting the "Music for Little People" trademark
and products in the trademark classes retained by the Seller and the Bebop
trademark and products in the trademark classes retained by the Seller, to
the Purchaser and others, all as allowed under this Agreement, the MFLP
Licensing Agreement and the Bebop Licensing Agreement, and all tangible and
intangible assets and goodwill used in connection therewith or otherwise
associated therewith which are owned by the Seller or are otherwise
rightfully in the Seller's possession, including, but not limited to, the
following:
1. All computers, hardware and software described in Schedule
1.1(a)(ii)
2. All master recordings on the "Music for Little People" record
label (the "Masters")
3. All copyrights associated with the Masters
4. All digital rights associated with the Masters
5. All inventory of "Music for Little People", "BeBoP" and all
third party products not listed on Schedule 1.1(a)(v) and
located at Stark
6. All "Music for Little People" products in all other locations,
including WEA distribution
7. All office furniture, fixtures and equipment in the Seller's
office located at 954 Forest Drive in Redway, California
8. The rights to all trademarks associated with "BeBop", except
as otherwise set forth in this Agreement
9. The rights to all trademarks associated with "Music for Little
People" and "Musical Kidz", except as otherwise set forth in
this Agreement
10. All monies in all accounts controlled by the Seller
11. All accounts receivable, deposits and reserves owed to the
Seller which is unrelated to the direct-to-consumer, school
and library segments of the business
Schedule 1.3(c)(A) - BeBop Products
-----------------------------------
BEBOP STUDENT GUITAR PACKAGE
1/4 -SIZE GUITAR PACKAGE (Dancing Animal Sound Hole Design)
____ Natural 1413 $79.98
____ Blue Sunburst 1414 $79.98
____ Pink Sunburst 1415 $79.98
1/2-SIZE GUITAR PACKAGE (Dancing Animal Sound Hole Design)
____ Natural 1416 $89.98
____ Blue Sunburst 1417 $89.98
____ Pink Sunburst 1418 $89.98
3/4-SIZE GUITAR PACKAGE (Hip Star Sound Hole Design)
____ Natural 1419 $99.98
____ Blue Sunburst 1420 $99.98
____ Pink sunburst 1421 $99.98
BEBOP MINI-ELECTRIC GUITAR PACKAGE
____ Blue 1422 $199.98
____ Pink 1424 $199.98
____ 9V AC Adapter for Amp. 1400 $14.98
BEBOP UKULELE
____ Maple 1426 $29.98
____ Ocean Blue 1427 $29.98
____ Hot Hula Pink 1428 $29.98
BEBOP RHYTHM EXPERIENCE
____ World Rhythm Experience 5016D $49.98
____ Rainbow Rhythm Experience 5017D $39.98
____ Baby Band Experience 5065D $19.98
____ Listen & Play Rhythm Experience 5066D $24.98
BEBOP SING-ALONG CD PLAYER
____ Sing-Along CD Player 9917 $59.98
____ 9V AC Adapter for CD Player 6038 $14.98
Schedule 2.4 - Title to Transferred Assets
------------------------------------------
None.
Schedule 2.6 - Litigation
-------------------------
The musical group Sweet Honey in the Rock has requested the right to ownership
of the masters of the recordings we own due to monies owed by the Assignment for
the Benefit of Creditors. We are working on negotiating a settlement in which we
share ownership. There is no litigation at the present moment.
Schedule 2.11 - Employee Relations
----------------------------------
Emp. Current Proposed Accrued
Employee Position Date Comp. Comp. Vacation
- ------------ -------------- ------ -------- --------- ---------
Dixie Executive 3/1996 $40,000 $22,500 2 weeks
Hamilton Assistant half time
Leib Ostrow Vice 1/1986 $100,000 $80,000
President 30 hours
Direct to week
Consumer sales
Gayle Buyer 6/1995 $45,000 $22,500
Peterson half time
Yvonne Web 4/2000 $15,000 $!5,000
Hendrix Administrator
Note: Gayle Peterson and Yvonne Hendrix are independent contractors.
Schedule 2.12 - Employee Benefit Plans
--------------------------------------
None.
EXHIBIT A
EARN-OUT PROVISIONS
The Executive will generate net revenue associated with the Business of
e commerce through the sale of Be Bop, MFLP, Soundprints and Studio Mouse
products together with third party acquired product offered for sale via
Company, MFLP, Musical Kidz and Music for Little People URL's and any other
direct to consumer sales vehicles such as other Company- established URL's
(excluded are third party URL's), mail order catalogs, e mail promotions, or any
other delivery methods.
The Executive will manage these controllable revenue and expense
elements of his Business in order to yield a net income upon which his Earn-Out
will be awarded at the end of the Company's Fiscal Year. The following actual
revenue and expenses will be recast into a pro forma Profit and Loss Statement
to assess net income:
1. Consumer and Library Product Sale Revenues to include List rental
Income
2. Shipping Income
Less: Product costs (6)
Freight-in expenses
Freight out Expenses (UPS, fed Ex, etc.)
Warehouse Distribution/Customer Service Expenses managed
by Trudy (1)
Warehouse Manager Salary and Benefits (2)
Shipping Supplies (3)
Less: Selling Expenses
Customer Service (included in Warehouse Distribution) (1)
Amazon sales commissions related to MFLP e commerce hosted
products
License fees
Royalty and Mechanical Expenses
Advertising Expenses
Catalog Development (4), Printing, Mail List and Postage
costs
Less: General and Administrative Expense
Bank and service charges(7)
Travel and Entertainment
Occupancy expenses associated with the Redway CA facility
to include Computer services and Internet Hosting
Wages and Salaries for:
a. Executive (30 Hours per week plus Benefits)
b. Accountant (20 Hours per week plus pro rata
Benefits)
c. Internet Service Manager (12 Hours per week WFH)
d. Purchasing Manager (20 Hours per week WFH)
Bad Debt
Office Supplies and Services (5)
In order for the Executive to manage the Business, certain services are
to be provided by the Company, whose costs are assumed to be as follows and
assigned to each expense item as designated by the number in the parentheses.
With respect to items a. and b., immediately below, if the actual fulfillment
costs are less than the percentages therein provided, then such lesser amounts
shall be used in calculating the pro forma Profit and Loss Statement.
a. Warehouse fulfillment costs chargeable at 10% of net
revenue for orders placed over the internet (1).
b. Warehouse fulfillment costs chargeable at 5% of net
revenue for orders placed by mail, fax or by phone (1).
c. Soundprints, Little Soundprints, Fetching Books and
Studio Mouse products sold through the Business will be
charged to the Business at the suggested retail less 60% (6).
d. Warehouse Manager chargeable to the Business at 40%
of the Manager's salary estimated to be $60,000 per annum plus
benefits (2).
e. Warehouse supplies chargeable to the Business at 1.5%
of net revenue (3).
f. Office supplies chargeable to the Business at .14% of
net revenue (5).
g. Bank and credit card fees chargeable to the Business
at actual cost (7).
h. Catalog Development Costs (Creative, Photography,
Layout and Design chargeable at $100 per page (4)
i. Customer Service Salaries are assumed to be included
in warehouse fulfillment costs per para. 3a and 3b above (1).
For illustrative purposes, a pro forma Profit and Lost Statement
is appended.
Revenues $ % Revised Assumptions per visit with L Ostrow
------------ --------- -------------------------------------------
Mail OrderSales $ 220,000 14.0%
School/Library Sales 50,000 3.2%
Internet Sales 1,030,000 65.6% Amazon comprises 40%
------------ ---------
Total Sales 1,300,000 82.7%
Shipping Income - Catalog 221,000 14.1%
Catalog listing revenue 40,000 2.5%
List Rental Income 10,000 0.6%
------------ ---------
Total Revenues 1,571,000 100.0%
Cost of Sales
BeBop Cost 220,545 14.0% BeBop represents 45% of product sales with
38% direct COGS
Product Sales (excl. BeBop) 377,520 48.7% Remaining 55% of product sales carry 53% COGS
------------ ---------
Total Cost of Goods 598,065 38.1%
Distribution, Freight In, Misc Product Costs
Freight In 30,000 1.9% Adjusted historical
Stark Supplies 19,500 1.2% 1.5% of total sales
Distribution Fees - Amazon 82,400 5.2% 20% of Amazon reveune
Distribution Fees - Call Ctr/Full 116,500 7.4% 10.0% of Internet Sales & 5.0% of Mail Order &
School/Lib. Sales.
Warehouse Manager, pro-rata 30,000 1.9% 40% of $60,000 plus 25% benefits
Product Manager 22,500 1.4% Gail Peterson: $22,500, no benefits
Freight Out 125,680 8.0% Historical / pro rata
------------ ---------
Total Distribution, Freight In, Misc Product Costs 426,580 27.2%
------------ ---------
Total Cost Of Sales 1,024,645 65.2%
------------ ---------
Gross Profit 546,355 34.8%
Selling Expenses
Internet Services 15,000 1.0% Yvonne Hendrix: $15,000, no benefits
Licenses & Fees 500 5.0%
Royalty Expense 3,099 0.2% Historical / pro rata
Mechanical Expense 1,864 0.1% Historical / pro rata
BeBoP Royalty Expense 22,055 1.4% 10% of Be Bop cost
Consumer - Google 55,000 3.5%
Catalog costs 190,000 12.1%
------------ ---------
Total Selling 287,518 18.3%
Operating Expenses
Bad Debt Expense 2,000 0.1% Historical/estimated
Bank Charges 15,450 1.0% 1.5% of total Internet sales
Service Charges -- 0.0%
T&E 5,000 0.3% Estimated
Office Supplies 2,206 0.1% Historical / pro rata
Facilities Fees 6,600 0.4% Includes Utilies, Rent, Telephone and Computer/
Internet Hosting
Utilities 579 0.0%
Rent 2,779 0.2%
Telephone 1,158 0.1%
Computer/Internet/Hosting 2,084 0.1%
Executive assistant 28,125 1.8% Dixie Hamilton: $22,500 + benefits
Wages, Lieb 80,000 5.1% $80,000 + benefits (80% of salary)
Total Operating Expenses 139,381 8.9%
------------ ---------
Total Selling & Operating Expenses 426,898 27.2%
------------ ---------
Net Profit $ 119,457 7.6%
============ ==========
Exhibit B
MFLP LICENSE AGREEMENT
See attached
MUSIC FOR LITTLE PEOPLE LICENSE AGREEMENT
This MUSIC FOR LITTLE PEOPLE LICENSE AGREEMENT (this "Agreement"), dated as of
March 7, 2008 (the "Effective Date") is by and between Musical Kidz LLC, a
California limited liability company doing business as Music For Little People
(the "Licensor"), with an address of P.O. Box 1429, Redway, California, 95560
and Trudy Corporation, a Delaware corporation (the "Licensee") with an address
of 353 Main Ave., Norwalk, Connecticut 06831. Each of Licensor and Licensee are
sometimes referred to herein as a "Party" and collectively as the "Parties".
For good and valuable consideration, the sufficiency of which is hereby
acknowledged, and intending to be legally bound, the Parties now agree as
follows:
SECTION 1. BACKGROUND AND PURPOSE
Concurrently herewith, Licensor and Licensee are entering into that certain
Asset Purchase Agreement, pursuant to which, among other things, Licensor is
selling, and Licensee is purchasing, certain assets of Licensor relating to its
direct-to-consumer, schools and libraries businesses (the "Purchase Agreement").
The Parties have agreed, pursuant to the Purchase Agreement, that Licensor shall
grant to Licensee a non-exclusive, non-transferable and limited license to
exploit Licensor's Music For Little People line of sound recordings (as the same
are more particularly described in Schedule A, attached hereto and incorporated
herein by this reference) (the "Masters").
SECTION 2. TERRITORY AND TERM
The rights granted to Licensee hereunder shall be for a term of five (5) years
commencing upon the Effective Date (the "Term"). The "Territory" shall be the
entire World. Licensee shall have the right to renew the Term for successive one
(1) year periods subject to Licensor's approval of Licensee's written request
received by Licensor not later than ninety (90) days prior to the expiration of
the current Term. In the event that the Term is not renewed prior to the
expiration of the current Term, the Licensee shall have a period of not less
than six (6) months from the end of the Term (the "Sell Off Period") to sell any
copies of the Records (as defined below) remaining in the Licensee's inventory.
The Licensee shall pay and report royalties on all sales during the Sell Off
Period in accordance with paragraphs 4(a), 4(b), 5(a) and 5(b) of this
Agreement.
SECTION 3. GRANT OF RIGHTS AND DELIVERY COMMITMENT
(a) Licensor hereby grants to Licensee during the Term and in the Territory,
subject to the terms and subject to the conditions of this Agreement the limited
right, within the sales channels, to manufacture, market, promote, distribute
and sell audiocassettes, compact discs ("CDs"), audio downloads and vinyl LP
records, embodying the Masters (such products being hereafter referred to as
"Records"), provided, that such right shall be limited (i) to the right to
reproduce each Master in its entirety as a Record and (ii) to sell and
distribute the Records solely through Licensee's internet and direct-to-consumer
channels, to schools and to libraries. Licensor expressly retains, with respect
to the Masters, all rights not expressly granted to Licensee hereby, including
without limitation, the right to manufacture, market, promote, distribute and
sell Records in any configuration and through any and all media and method of
distribution now known or hereafter devised in perpetuity. The rights granted to
Licensee with respect to the Masters shall include the all-in packaging of each
Record, including artwork, liner notes and logos created by Licensor. Licensor
shall provide Licensee with a CD in its packaging for each title licensed
1
hereunder for use in manufacturing Records. Licensee may also use Licensor's
artwork in connection with marketing and promoting the Records. Licensee agrees
that the artwork for Record album cover art and all print components included
therein shall be reproduced only from material supplied by Licensor, except for
the addition of Licensee's logo and address as the distributor.
(b) Licensee expressly understands, acknowledges and agrees that the rights
granted hereby do not include the right to, and Licensee shall not, develop or
create new records, including singles, nor create new compilations using songs
selected from the existing Records without the prior express written approval of
Licensor.
(c) Included in the rights granted by Licensor shall be Licensee's right to use
the Masters in its reproduction of Records for sale and for promotional,
publicity, advertising, marketing, and purposes of trade as is customary in the
industry, but only in connection with the sale, promotion and marketing of
Records through the distribution channels described in Section 3a above.
(d) The Masters are protected under the copyright, trademark, and unfair
competition laws of the United States and the State of California. Licensee
warrants to do nothing, by way of omission or commission, which might in any way
impair, dilute, or destroy Licensor's rights in and to its trademarks and
copyrights. Accordingly, Licensee shall reproduce on all packaging materials
used in connection with the Records the following language:
(i) Produced under license from Musical Kidz LLC;
(ii) The appropriate copyright notice as provided with the artwork for
each Master to also be displayed on the CD disc;
(e) Licensee agrees that it will not now or at anytime thereafter make any claim
or assert any rights, title, or interest in and to Licensor's trademarks,
service marks, or copyrights, including the Music For Little People line of
Masters or concepts for future recordings, except those rights acquired by the
Licensee pursuant to the Purchase Agreement. Licensee agrees that it will not
use or authorize the use of a trademark, service mark, trade name, or other
designation identical with or confusingly similar to Licensor's trademarks,
except those marks and rights to marks acquired by the Licensee pursuant to the
Purchase Agreement.
(f) Licensee shall further have the right to purchase Records from Licensor's
existing inventory at cost and Licensee shall pay royalties on these copies of
the Records purchased from the Licensor's existing inventory, as provided in
paragraphs 4(a), 4(b), 5(a) and 5(b) below , plus shipping and handling, if any.
Any and all products purchased pursuant to this paragraph may be distributed
solely through the channels set out as set out in paragraph 3(a).\
(g) To maintain the image and reputation of the Masters, Licensee hereby agrees
that it shall not engage, participate or otherwise become involved in any
activity or course of action that, in Licensor's reasonable judgment, diminishes
and/or tarnishes the image and/or reputation of the Masters. The Parties hereby
acknowledge and agree (i) that great value is placed on the Masters and the
goodwill associated therewith, (ii) that the consuming public and the industry
associate the Masters with services of consistently high quality, and (iii) that
the terms and conditions of this Agreement are necessary and reasonable to
assure the consuming public and the industry that Licensee's use of the Masters
is of the same consistently high quality as Licensor's use of the Masters.
2
Licensor has expended considerable sums in establishing a reputation for the
services it provides under the Masters. Accordingly, Licensee hereby agrees that
it shall not use the Masters in any manner other than in conformity with the
standards established from time-to-time by Licensor (the "Standards").
(h) At the request of Licensor, and in order for Licensor to determine and
assure itself that Licensee is maintaining the Standards in connection with its
use of the Masters, Licensee shall submit to Licensor, without charge, specimens
of its uses of the Masters. If at any time Licensor determines, in its
reasonable judgment, that any specimen does not meet the Standards, Licensee
shall immediately take all necessary steps to ensure that the Standards are met
and shall provide a specimen demonstrating that the quality has improved to the
satisfaction of Licensor.
SECTION 4. ROYALTIES
(a) With respect to royalties payable to artists, producers and all other
royalty recipients per Record, except as set out in paragraph 4(b) below,
Licensee shall pay to Licensor, per Record sold, a royalty equivalent to the
royalty rate set out in Schedule A, attached hereto and incorporated herein by
this reference. The rates set out in Schedule A shall be applied to Licensee's
gross sales receipts ("Receipts") which shall be payable in respect of one
hundred percent (100%) of Receipts throughout the world. Any new Records
released by Licensor and distributed by Licensee hereunder shall be added to
Schedule A and subject to the same royalty payments as set forth in this
paragraph.
(b) With respect to mechanical royalties due to writers, publishers and
copyright owners of the compositions embodied in each Masters, Licensee shall
pay Licensor the current full statutory rate ($.091/Composition per Record). In
the event there is an increase in the statutory royalty rates in the United
States, the mechanical royalties payable pursuant to this Agreement shall be
increased proportionately in the United States with respect to phonorecords made
and distributed after the effective date of such new statutory rate.
(c) With respect to fees due to third parties, except as described in paragraphs
(a) and (b) of this Section 4, Licensor is solely responsible and Licensee shall
have no responsibility or liability for (i) any record royalties or fees payable
to any third party participant in the Masters including any artwork, liner notes
or any other materials provided by Licensor to Licensee for the manufacture and
distribution of the Records, including but not limited to any artist, producer
or any other person who performed in the making of the Masters (ii) any
royalties or fees due to any party as a result of samples included in the
Masters; (iii) any mechanical royalties due to publishers of the compositions
embodied in the Masters.
SECTION 5. ROYALTY PERIOD ACCOUNTINGS; OBJECTIONS TO STATEMENTS; INSPECTION
OF BOOKS
(a) With respect to royalties provided for hereunder, Licensee shall render to
Licensor complete and detailed accounting statements within thirty (30) days
after each the last day of each calendar quarter, i.e., December 31, March 31,
and June 30, and September 30 respectively, of each year during which Records
are made or sold hereunder. Such statements shall be accompanied by a remittance
of the amount shown therein due to Licensor.
(b) Each accounting statement shall be binding upon Licensor unless Licensor
provides Licensee a timely objection with respect to such statement by written
notice stating the basis thereof and delivered to Licensee within one (1) year
3
of the last date by which an audit may be conducted, as provided in paragraph
5(c) below. Upon Licensor's timely objection, if the accounting is still in
dispute, the Parties shall resolve such dispute in the manner provided in the
Purchase Agreement.
(c) Licensor or Licensor's authorized representative may inspect the books and
records of account of Licensee which pertain to Licensor's rights under this
Agreement at reasonable times and during Licensee's normal business hours. Such
right to audit must be exercised by Licensor within twelve (12) months of the
date of receipt of a statement of account to Licensor by Licensee.
SECTION 6. RIGHT OF ASSIGNMENT
This Agreement and the License granted hereby shall be personal to Licensee, and
Licensee shall not assign this Agreement or grant any sublicense relating to the
Licensed Properties without the prior written consent of Licensor, which consent
may be withheld in Licensor's sole and absolute discretion. Licensor may assign
this Agreement or any of its rights hereunder to any person, firm, or
corporation anywhere in the world after providing sixty (60) days written notice
to Licensee, and upon such assignment, the word "Licensor" herein shall mean and
refer to such assignee or licensee. If for any reason the Licensee does not wish
to continue this Agreement with the proposed assignee, the Licensee shall send
written notice to Licensor prior to the effective date of the assignment, and
the Term shall end effective on the date of such notice and the Sell Off Period
shall commence.
SECTION 7. OWNERSHIP OF COPYRIGHT
Licensee hereby acknowledges that Licensor shall retain all ownership in
copyrights and trademarks associated with the Masters except those marks and
rights to marks acquired by the Licensee pursuant to the Purchase Agreement,
including album names, cover and packaging artwork, liner notes and logos used
in connection with the Masters. With respect to promotional and marketing
artwork, Licensee may make minor changes to such art to adapt its markets or
packaging, but any such changes shall be at Licensee's expense and the resulting
work shall be the property of Licensor, and shall be subject to the approval of
Licensor. Licensee shall assign such derivative work(s) to Licensor. Licensee
agrees that the good will associated with the Masters shall be retained by the
Licensor and that any use of such Masters shall comply with the approved names,
likenesses and marks authorized by the Licensor.
SECTION 8. WARRANTIES, REPRESENTATIONS AND INDEMNIFICATIONS
(a) Each Party represents and warrants to the other that it has all rights and
authority necessary to enter into this Agreement and to perform its obligations
under this Agreement, and that this Agreement is the legal valid and binding
agreement of such Party, enforceable against such Party in accordance with its
terms.
(b) Licensee agrees to defend, indemnify and hold Licensor harmless against any
and all liability, loss, damage, cost or expense, including but not limited to
court costs and reasonable attorney's fees (collectively, "Loss"), incurred by
Licensor and (i) resulting directly or indirectly or relating to any breach by
Licensee of any of its covenants, warranties, or representations contained
herein or (ii) directly or indirectly resulting from or relating to the exercise
by Licensee of its rights hereunder, including but not limited to Licensee's
distribution, manufacture or sale of Records derived from the Masters,
exploitation of the Mark, or other exploitation of the Masters, except to the
4
extent that such Loss results from Licensor's breach of its covenants warranties
or representations made herein.
(c) Licensor agrees to defend, indemnify, and hold Licensee harmless against any
and all Loss incurred by Licensee and resulting from any breach by Licensor of
any of its covenants, warranties, or representations contained herein, except to
the extent that such Loss results from Licensee's breach of its covenants
warranties or representations made herein.
SECTION 9. NOTICE.
All notices and other communications provided for hereunder shall be in writing
and shall be delivered personally or by first class mail, addressed as follows:
If to Licensee, addressed to:
CEO
Trudy Corporation
353 Main Ave.,
Norwalk, Connecticut 06831
If to Licensor, addressed to:
Leib Ostrow
Musical Kidz LLC
P.O. Box 1429
Redway, CA 95560
Either Party may by like notice specify or change an address to which notices
and communications shall thereafter be sent. Notices sent by mail shall be
effective upon receipt. Notices given personally shall be effective when
delivered.
SECTION 10. DEFAULT; TERMINATION
(a) Either Party may terminate this Agreement in the event the other Party (i)
becomes insolvent (as defined by the law applicable to such Party), (ii) files a
bankruptcy, (iii) becomes the subject of an involuntary bankruptcy proceeding
(or a proceeding for dissolution or liquidation) which is not dismissed within
sixty (60) days of the filing date, (iv) commences a proceeding to appoint a
trustee, receiver or liquidator, (v) becomes the subject of a provisional
attachment, attachment or execution, (vi) makes an assignment for the benefit of
creditors, or (vii) ceases to conduct business.
(b) Either Party may terminate this Agreement in the event the other Party
breaches any of its obligations or any of its warranties and representations set
forth in this Agreement and if such breach continues for a period of thirty (30)
days following the breaching Party's receipt of a written notice from the
non-breaching Party which specifies the nature of the breach.
(c) Except as otherwise set forth in this Agreement, upon the termination of
this Agreement for any reason, both Parties' rights and obligations under this
Agreement shall cease, except for the rights and obligations of the Parties
under Sections 5, 6, and 8, which shall survive any such termination and, except
that, in the case of a termination of this Agreement by Licensor pursuant to
paragraph (b) of this Section 10, there shall be no Sell Off Period, and
Licensee shall be required to return, all Licensed Products, at its sole cost
and expense, to Licensor.
5
SECTION 11. GENERAL PROVISIONS
This Agreement will be construed in accordance with the laws of the State of
California, whose courts shall have exclusive jurisdiction. If any provision of
this Agreement is deemed unenforceable or void, the balance of this Agreement
shall remain in full force and effect. This Agreement constitutes the entire
agreement between Licensee and Licensor relating to the subject matter hereof
and supersedes all prior agreements between Licensee and Licensor, whether oral
or written, relating thereto., This Agreement may not be modified except in
writing signed by both parties. Nothing contained herein shall constitute a
partnership between or joint venture by the parties hereto or constitute either
Party the agent or employee of the other or impose any fiduciary relationship
upon Licensor.
SECTION 12. CONTRACTION OF RIGHTS
Notwithstanding anything to the contrary set forth in this Agreement or the
Purchase Agreement, if at any time during the Term Licensor suffers a loss of
any its right, title and interest (including, but not limited to its copyright)
in and to any of the sound recordings which comprise the Masters, then the scope
of this License, and Licensee's right to exploit the same, with respect to such
Masters shall be reduced to the same extent as the loss suffered by Licensor.
SECTION 13. DIGITAL RIGHTS
Notwithstanding anything to the contrary set forth in this Agreement or the
Purchase Agreement, Licensee's exploitation of the License with regard to
digital downloads shall be limited to using the website
"musicforlittlepeople.com", which website Licensee is acquiring pursuant to the
terms of the Purchase Agreement.
Remainder of Page Intentionally Blank; Signature Page Follows
6
IN WITNESS WHEREOF, the parties have executed this Agreement as of Effective
Date.
LICENSOR: LICENSEE:
Musical Kidz, LLC, dba Music For Trudy Corporation,
Little People, a Delaware corporation
a California limited liability
company
By: _____________________________ By: _____________________________
Leib Ostrow Name: _____________________________
Its President Title: ____________________________
7
SCHEDULE "A"
------------
Masters
Schedule "A"- Page 8
EXHIBIT C
BEBOP LICENSE AGREEMENT
See attached
BEBOP LICENSE AGREEMENT
This BEBOP LICENSE AGREEMENT (this "Agreement"), dated as of March 7, 2008 (the
"Effective Date") is by and between Leib Ostrow, an individual resident in
California ("Licensor") with an address of P.O. Box 1429, Redway, California,
95560 and Trudy Corporation, a Delaware corporation (the "Licensee") with an
address of 353 Main Ave., Norwalk, Connecticut 06831 Each of Licensor and
Licensee are sometimes referred to herein as a "Party" and collectively as the
"Parties".
For good and valuable consideration, the sufficiency of which is hereby
acknowledged, and intending to be legally bound, the Parties now agree as
follows:
SECTION 1. BACKGROUND AND PURPOSE
Concurrently herewith, Licensor's wholly-owned company, Musical Kidz LLC
("Seller") and Licensee are entering into that certain Asset Purchase Agreement,
pursuant to which, among other things, Seller is selling, and Licensee is
purchasing, certain assets of Licensor relating to its direct-to-consumer,
schools and libraries businesses (the "Purchase Agreement"). The Parties have
agreed, pursuant to the Purchase Agreement, that Licensor shall grant to
Licensee a limited, non-transferable license to exploit (i) Licensor's BeBop(R)
line of instruments (as the same are more particularly described in Schedule A,
attached hereto and incorporated herein by this reference (the "Instruments")),
and (ii) the name of "BeBop(R)" Reg. No. 78941432, (the "Mark", and,
collectively with the Instruments, the "Licensed Properties").
SECTION 2. TERRITORY AND TERM
The rights granted to Licensee hereunder shall be for a term of five (5) years
commencing upon the Effective Date (the "Term"). The "Territory" shall be the
entire World. Licensee shall have the right to renew the Term for successive one
(1) year periods subject to Licensor's approval of Licensee's written request
received by Licensor not later than ninety (90) days prior to the expiration of
the current Term. In the event that the Term is not renewed prior to the
expiration of the current Term, the Licensee shall have a period of not less
than six (6) months from the end of the Term (the "Sell Off Period") to sell any
copies of the Instruments remaining in the Licensees inventory. The Licensee
shall pay and report royalties on all sales during the Sell Off Period in
accordance with paragraphs 4(a), 4(b), 5(a) and 5(b) of this Agreement.
SECTION 3. GRANT OF RIGHTS
(a) Licensor hereby grants to Licensee during the Term and in the Territory,
subject to the terms and subject to the conditions of this Agreement the limited
right, within the sales channels, to manufacture, market, promote, distribute
and sell the Instruments provided, that such right shall be limited to the right
to sell and distribute the Instruments solely through its internet and
direct-to-consumer, schools and libraries channels. Licensor expressly retains,
with respect to the Licensed Properties, all rights not expressly granted to
Licensee hereby, including without limitation, the right to manufacture, market,
promote, distribute and sell, the Instruments through any and all methods of
distribution now known or hereafter devised in perpetuity, except the
direct-to-consumer, schools and libraries distribution channels during the Term.
The rights granted to Licensee with respect to the Instruments shall include the
packaging of each Instrument, including artwork and logos created by Licensor.
Licensor shall provide Licensee with pre-approved artwork of the logo for use on
the Instruments, in the packaging of the Instruments and for marketing purposes.
Licensee agrees that the artwork for print components shall be reproduced only
from material supplied by Licensor, except for the addition of Licensee's logo
and address as the distributor.
(b) Licensee expressly understands, acknowledges and agrees that the rights
granted hereby do not include the right to, and Licensee shall not, develop or
create new products or instruments to be manufactured, marketed, promoted,
1
distributed or sold in connection with the BeBop(R) name without the prior
express written consent of the Licensor, which consent may be withheld in
Licensor's sole and absolute discretion.
(c) Included in the rights granted by Licensor shall be Licensee's right to use
the name "BeBop(R)" in its sale of the BeBop(R) Instruments, labels and
packaging, and for promotional, publicity, advertising, marketing, and purposes
of trade as is customary in the industry, but only in connection with the sale,
promotion and marketing of the Instruments through the distribution channels
described in Section 3a above. The use of Licensor's trademarks, including,
without limitation, the Mark, hereunder shall be subject to the provisions of
this Agreement.
(d) The Licensed Properties are protected under the copyright, trademark, and
unfair competition laws of the United States and the State of California.
Licensee warrants to do nothing, by way of omission or commission, which might
in any way impair, dilute, or destroy Licensor's rights in and to its
trademarks, patents and copyrights. Accordingly, Licensee shall reproduce on all
packaging materials of the Instruments used in connection therewith the phrases
as follows:
(i) Produced under license from BeBop(R).
(ii) Any use of the name BeBop(R) shall be followed by the registered
trademark symbol, (R);
(iii) The Instruments must also carry the name BeBop(R) to be supplied
to Licensee by Licensor. Licensee agrees that it will not, directly or
indirectly, during the term of this Agreement or at any time thereafter,
contest, attack, or challenge any right, title, or interest of Licensor in and
to its trademarks, service marks, or copyrights. Licensee will notify Licensor
if an infringement of Licensor's copyright or trademark properties licensed to
Licensee hereunder is brought to Licensee's attention, and will not attack the
validity of this Agreement in respect to all of the foregoing.
(e) Licensee agrees that it will not now or at anytime thereafter make any claim
or assert any rights, title, or interest in and to Licensor's trademarks,
service marks, or copyrights, including the BeBop(R) line of instruments or
concepts for future BeBop(R) products. Licensee agrees that it will not use or
authorize the use of a trademark, service mark, trade name, or other designation
identical with or confusingly similar to Licensor's trademarks, and shall not
use, create, or authorize others to use or create illustrations confusingly
similar to the illustrations licensed hereunder, or other trademarks of
Licensor. Licensee further agrees that its use of Licensor's trademarks
hereunder is limited to the uses specifically provided in this Agreement.
(f) To maintain the image and reputation of the Mark, Licensee hereby agrees
that it shall not engage, participate or otherwise become involved in any
activity or course of action that, in Licensor's reasonable judgment, diminishes
and/or tarnishes the image and/or reputation of the Mark. The Parties hereby
acknowledge and agree (i) that great value is placed on the Mark and the
goodwill associated therewith, (ii) that the consuming public and the industry
associate the Mark with services of consistently high quality, and (iii) that
the terms and conditions of this Agreement are necessary and reasonable to
assure the consuming public and the industry that Licensee's use of the Mark is
of the same consistently high quality as Licensor's use of the Mark. Licensor
has expended considerable sums in establishing a reputation for the services it
provides under the Mark. Accordingly, Licensee hereby agrees that it shall not
use the Mark in any manner other than in conformity with the standards
established from time-to-time by Licensor (the "Standards").
(g) At the request of Licensor, and in order for Licensor to determine and
assure itself that Licensee is maintaining the Standards in connection with its
use of the Mark, Licensee shall submit to Licensor, without charge, specimens of
its uses of the Mark. If at any time Licensor determines, in its reasonable
2
judgment, that any specimen does not meet the Standards, Licensee shall
immediately take all necessary steps to ensure that the Standards are met and
shall provide a specimen demonstrating that the quality has improved to the
satisfaction of Licensor.
(h) Licensee acknowledges and agrees that the Licensor is entitled under the
Purchase Agreement, to operate the Retained Business. Accordingly, nothing in
this License Agreement shall restrict Licensor's right to operate the Retained
Business, nor shall Licensor be obligated to place restrictions on the resale by
its customer of its Licensor's products through any distribution channel.
SECTION 4. INTENTIONALLY DELETED
SECTION 5. ROYALTIES
Per Instrument sold, Licensee shall pay to Licensor a royalty equivalent to ten
percent (10%) of "Landed Cost." For the purposes of this Agreement, "Landed
Cost" is defined as the cost of manufacturing product, including applicable
duties, fees, taxes, and transportation costs based on the origin, destination,
and products in a shipment which shall be payable in respect of one hundred
percent (100%) of Instruments sold. Any new Instruments created by Licensor for
the BeBop(R) line and distributed by Licensee hereunder, shall receive payment
pursuant to this paragraph, along with the rest of the Instruments.
Additionally, during the term of the Earn-Out, as defined in the Purchase
Agreement, the Licensee shall also pay to the Licensor the same royalty rate
stated herein for any instruments or electronics created, manufactured and
distributed by the Licensee under any other trade name or mark. Notwithstanding
anything to the contrary set forth herein, for purchases of inventory provided
in the Asset Purchase Agreement between the Parties of even date herewith
(limited to $100,000.00), any royalties payable hereunder shall be prepaid on
the FOB Asia cost of products purchased and no additional royalties shall be
payable upon sale of such products to third parties. In respect of purchases
thereafter, any royalties payable hereunder shall be calculated on the Landed
Cost, as provided above, and be payable upon sale of such products to third
parties.
SECTION 6. ROYALTY PERIOD ACCOUNTINGS; OBJECTIONS TO STATEMENTS; INSPECTION
OF BOOKS
(a) With respect to royalties provided for hereunder, Licensee shall render to
Licensor complete and detailed accounting statements within forty-five (45) days
after the last day of each calendar quarter, i.e., December 31, March 31, and
June 30, and September 30 respectively, of each year during which Instruments
are made or sold hereunder. Such statements shall be accompanied by a remittance
of the amount shown therein due to Licensor.
(b) Each accounting statement shall be binding upon Licensor unless Licensor
provides Licensee a timely objection with respect to such statement by written
notice stating the basis thereof and delivered to Licensee within one (1) year
of the last date by which an audit may be conducted, as provided in paragraph
6(c) below. Upon Licensor's timely objection, if the accounting is still in
dispute, the Parties shall resolve such dispute in the manner provided in the
Purchase Agreement.
3
(c) Licensor or Licensor's authorized representative may inspect the books and
records of account of Licensee which pertain to Licensor's rights under this
Agreement at reasonable times and during Licensee's normal business hours. Such
right to audit must be exercised by Licensor within twelve (12) months of the
date of receipt of a statement of account to Licensor by Licensee.
SECTION 7. RIGHT OF ASSIGNMENT
This Agreement and the License granted hereby shall be personal to Licensee, and
Licensee shall not assign this Agreement or grant any sublicense relating to the
Licensed Properties without the prior written consent of Licensor, which consent
may be withheld in Licensor's sole and absolute discretion. Licensor may assign
this Agreement or any of its rights hereunder to any person, firm, or
corporation anywhere in the world after providing sixty (60) days written notice
to Licensee, and upon such assignment, the word "Licensor" herein shall mean and
refer to such assignee or licensee. If for any reason the Licensee does not wish
to continue this Agreement with the proposed assignee, the Licensee shall send
written notice to Licensor prior to the effective date of the assignment, and
the Term shall end effective on the date of such notice and the Sell Off Period
shall commence.
SECTION 8. OWNERSHIP OF COPYRIGHT
Licensee hereby acknowledges that Licensor shall retain all ownership in
copyrights, patents and trademarks associated with the Instruments and the
Licensed Properties, including name, artwork and logos used in connection with
"BeBop(R)." With respect to promotional and marketing artwork, Licensee may make
minor changes to such art to adapt its markets or packaging, but any such
changes shall be at Licensee's expense and the resulting work shall be the
property of Licensor, and shall be subject to the approval of Licensor. Licensee
shall assign such derivative work(s) to Licensor. Licensee agrees that the good
will associated with the BeBop(R) line, including name, Instruments, logo and
trademark "BeBop(R)" ("materials") shall be retained by the Licensor and that
any use of such materials shall comply with the approved Instrument names and
marks authorized by the Licensor.
SECTION 9. WARRANTIES, REPRESENTATIONS AND INDEMNIFICATIONS
(a) Each Party represents and warrants to the other that it has all rights and
authority necessary to enter into this Agreement and to perform its obligations
under this Agreement, and that this Agreement is the legal valid and binding
agreement of such Party, enforceable against such Party in accordance with its
terms.
(b) Licensee agrees to defend, indemnify and hold Licensor harmless against any
and all liability, loss, damage, cost or expense, including but not limited to
court costs and reasonable attorney's fees (collectively, "Loss"), incurred by
Licensor and (i) resulting directly or indirectly or relating to any breach by
Licensee of any of its covenants, warranties, or representations contained
herein or (ii) directly or indirectly resulting from or relating to the exercise
by Licensee of its rights hereunder, including but not limited to Licensee's
distribution, manufacture or sale of Instruments made by Licensee, exploitation
of the Mark, or other exploitation of the Licensed Properties, except to the
extent that such Loss results from Licensor's breach of its covenants,
warranties or representations made herein.
(c) Licensor agrees to defend, indemnify, and hold Licensee harmless against any
and all Loss, incurred by Licensee and resulting from any breach by Licensor of
any of its covenants, warranties, or representations contained herein, except to
the extent that such Loss results from Licensee's breach of its covenants,
warranties or representations made herein.
4
SECTION 10. NOTICE.
All notices and other communications provided for hereunder shall be in writing
and shall be delivered personally or by first class mail, addressed as follows:
If to Licensee, addressed to:
CEO
Trudy Corporation
353 Main Ave.
Norwalk, Connecticut 06831
If to Licensor, addressed to:
Leib Ostrow
P.O. Box 1429
Redway, CA 95560
Either Party may by like notice specify or change an address to which notices
and communications shall thereafter be sent. Notices sent by mail shall be
effective upon receipt. Notices given personally shall be effective when
delivered.
SECTION 11. DEFAULT; TERMINATION
(a) Either Party may terminate this Agreement in the event the other Party (i)
becomes insolvent (as defined by the law applicable to such Party), (ii) files a
bankruptcy, (iii) becomes the subject of an involuntary bankruptcy proceeding
(or a proceeding for dissolution or liquidation) which is not dismissed within
sixty (60) days of the filing date, (iv) commences a proceeding to appoint a
trustee, receiver or liquidator, (v) becomes the subject of a provisional
attachment, attachment or execution, (vi) makes an assignment for the benefit of
creditors, or (vii) ceases to conduct business.
(b) Either Party may terminate this Agreement in the event the other Party
breaches any of its obligations or any of its warranties and representations set
forth in this Agreement and if such breach continues for a period of thirty (30)
days following the breaching Party's receipt of a written notice from the
non-breaching Party which specifies the nature of the breach.
c) Except as otherwise set forth in this Agreement, upon the termination of this
Agreement for any reason, both Parties' rights and obligations under this
Agreement shall cease, except for the rights and obligations of the Parties
under Sections 5, 6, and 9, which shall survive any such termination and, except
that, in the case of a termination of this Agreement by Licensor pursuant to
paragraph (b) of this Section 11, there shall be no Sell Off Period, and
Licensee shall be required to return, all Licensed Products, at its sole cost
and expense, to Licensor.
5
SECTION 12. GENERAL PROVISIONS
This Agreement will be construed in accordance with the laws of the State of
California, whose courts shall have exclusive jurisdiction. If any provision of
this Agreement is deemed unenforceable or void, the balance of this Agreement
shall remain in full force and effect. This Agreement constitutes the entire
agreement between Licensee and Licensor relating to the subject matter hereof
and supersedes all prior agreements between Licensee and Licensor, whether oral
or written, relating thereto. This Agreement may not be modified except in
writing signed by both parties. Nothing contained herein shall constitute a
partnership between or joint venture by the parties hereto or constitute either
Party the agent or employee of the other or impose any fiduciary relationship
upon Licensor.
Remainder of Page Intentionally Blank; Signature Page Follows
6
IN WITNESS WHEREOF, the parties have executed this Agreement as of Effective
Date.
LICENSOR: LICENSEE:
Trudy Corporation,
a Delaware corporation
___________________________________ By: _____________________________
LEIB OSTROW Name: _____________________________
Title: _____________________________
Schedule A
The Instruments
EXHIBIT D
GUARANTIES, WARRANTIES, ETC.
None
EXHIBIT E
EMPLOYMENT AGREEMENT
See attached
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into effective this 7th day of
March, 2008 (the "Effective Date") by and between TRUDY CORPORATION, a Delaware
Corporation having its principal place of business at 353 Main Avenue, Norwalk,
CT 06831 (the "Company"), and LEIB OSTROW, an individual residing at Post Office
Box 1429, Redway, CA 95560 (the "Executive").
RECITALS
Whereas, the Company desires to employ the Executive, and the Executive
desires to commit to serve the Company, at the time and on the terms and
conditions herein provided.
AGREEMENT
Now, therefore, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the parties agree as follows:
1. Employment.
----------
(a) The Company shall employ the Executive and the Executive shall
serve the Company as the Vice President, Direct-to-Consumer
Sales and have overall management responsibilities for the
Company's "Music For Little People", "Soundprints" and "Studio
Mouse" direct-to-consumer businesses, as outlined in the
attached Exhibit A, Job Description. The Executive shall
perform his duties hereunder based at the Company's office in
Redway, California upon the terms and conditions provided
herein. In the discharge of his duties hereunder, the
Executive shall report to the Chief Executive Officer of the
Company (the "CEO").
(b) During the period of employment hereunder, the Executive shall
perform all duties and services hereunder faithfully and to
the best of his abilities on a full-time basis (full-time to
be defined herein as approximately thirty (30) hours of work
per week) and shall perform such additional lawful duties as
may from time to time be assigned in writing by the CEO.
(c) During the Term (defined below), the Executive shall not
engage in any other professional activities which unreasonably
interfere with the Executive's full-time business obligations
and duties to the Company hereunder, except for those other
activities that shall be approved by the CEO the Board of
Directors of the Company (the "Board"). Notwithstanding
anything to the contrary, the Company hereby acknowledges and
agrees that the Executive has other business responsibilities
and commitments not connected with the Company which pertains
to the segment of the "Music For Little People" business not
being acquired by the Company pursuant to that certain Asset
Purchase Agreement, of even date herewith, by and between the
Company and Musical Kidz, LLC (the "Purchase Agreement"), and,
accordingly, the Executive shall be permitted to own and
1
operate Musical Kidz, LLC ("Musical Kidz") and shall be
permitted to engage in any and all operations and activities
related to the Musical Kidz Business (defined below) and its
assets and businesses (which assets and businesses are more
fully described by the definition of Retained Assets in the
Purchase Agreement) , provided that (i) the Executive does not
direct the Musical Kidz Business, or operate the Musical Kidz
Business in such a fashion as to compete in any way with the
Business, as defined in the Purchase Agreement, and (ii) the
same do not unreasonably interfere with the performance of his
full-time business obligations and duties to the Company
hereunder. Similarly, the Company shall not direct the
Business, or operate the Business in such a fashion as, to
compete in any way with the current operations and activities
of the Musical Kidz Business. In addition to and not in
limitation to the foregoing, the Executive shall be permitted
to engage in such civic, charitable and other activities as he
may, in his reasonable discretion, deem appropriate, so long
as the same do not unreasonably interfere with the performance
of his full-time business obligations and duties to the
Company hereunder. For purposes of this Agreement, the term
"Musical Kidz Business" shall mean the business of selling
"Music for Little People" recordings and "Bebop" musical
instruments to distributors (such as WEA, Lakeshore and Baker
& Taylor) and "house account" retail customers (such as Right
Start, Buy Buy Baby and Baby Store) as well as the business of
licensing and otherwise exploiting certain properties of
Musical Kidz, including, but not limited to, licensing and
otherwise exploiting the "Music for Little People" trademark
and products in the trademark classes retained by Musical Kidz
and the Bebop trademark and products in the trademark classes
retained by Musical Kidz, to the Company and others, all as
allowed under the Purchase Agreement, the MFLP Licensing
Agreement of even date herewith by and between the Company and
Musical Kidz and the Bebop Licensing Agreement of even date
herewith by and between the Company and the Executive. For the
avoidance of doubt, none of these businesses shall involve any
of the assets purchased by the Company under the Purchase
Agreement (which are defined as the Transferred Assets
thereunder).
2. Term. The term of the Executive's employment hereunder shall commence
on the effective date of this Agreement, and shall continue for a term
of three (3) years thereafter unless earlier terminated as provided
herein (the "Initial Term"); provided, however that at the end of the
Initial Term, this Agreement shall continue automatically thereafter on
a year-to-year basis unless or until terminated as provided herein
(each one year period, an "Extended Term"). As used herein, the term
"Term" shall mean the Initial Term and each Extended Term as well.
3. Salary; Benefits; Certain Terms and Conditions.
----------------------------------------------
(a) The Company agrees to pay and the Executive agrees to accept,
in accordance with the provisions contained herein, a salary
(the "Salary") at the rate of not less than eighty thousand
United States dollars ($80,000) per year, payable in equal
2
installments, in accordance with the Company's executive pay
policies but not less frequently than monthly, less usual
payroll deductions.
(b) The Executive may participate in all benefit plans of the
Company including, but not limited to, medical coverage,
dental coverage, bonus programs, stock grants, or other
retirement or welfare benefits that the Company has adopted or
may adopt, maintain or contribute to for the benefit of its
executives subject to satisfying the applicable eligibility
requirements per standard Company policy. As other benefits
may be made available by the Company now or in the future, the
Executive may participate subject to and on a basis consistent
with the terms, conditions and overall administration of such
plans and arrangements and the terms of this Agreement and the
Company's policies. In addition to but not in limitation of
the foregoing, the Executive shall at all times during his
employment with the Company be entitled to receive, and the
Company shall provide the Executive, benefits on a level and
upon terms that are at least as favorable as those benefits
enjoyed by other executives of the Company of similar rank
and/or performing duties entailing similar responsibilities.
(c) Annually or quarterly, at the CEO's discretion, the
Executive's performance shall be reviewed and future
performance goals and objectives shall be formulated.
(d) The Executive's employment hereunder shall be subject to such
further lawful terms and conditions as the Company may
determine in writing from time to time to be generally
applicable to its employees, provided, however, that, in the
event and to the extent any such terms and conditions conflict
with the terms and conditions set forth herein, the terms and
conditions of this Agreement shall govern unless otherwise
agreed to in writing between the Executive and the Company.
(e) Any change in the Executive's compensation, except as may be
elected by the Executive in accordance with the terms of this
Agreement, shall require the approval in writing of the Board.
(f) Any change in the Executive's compensation and/or benefits
that has the effect of reducing such compensation or benefits
must be approved in writing in advance by the Executive, which
approval shall be in the Executive's sole and absolute
discretion, however, the Executive shall take into
consideration, prior to disapproving any proposed downward
adjustments in compensation and/or benefits any similar
adjustments being made to the compensation and/or benefits of
any company employees of similar rank and responsibility
level. Further, for the avoidance of doubt, the Executive is
entitled under this Agreement to receive standard benefits
offered by the Company to salaried employees. Any adjustment
in Company policy regarding such Company benefits for salaried
employees shall not be considered a change in the Executives
compensation.
3
4. Business Expenses. The Executive will be entitled to receive prompt
reimbursement for expenses to which he is entitled to reimbursement
hereunder (in accordance with the policies and procedures established
in writing from time to time by management of the Company, such
policies to be approved by the Company's Board of Directors or any
appropriate committee thereof), provided such expenses are properly
accounted for and verified in accordance with the Company's policies.
The Executive must receive prior written consent from the CEO for any
expenses not pre-approved by the Board as part of each annual operating
budget.
5. Termination.
-----------
(a) Grounds for Termination.
-----------------------
(i) The Executive's employment hereunder shall terminate
upon his death.
(ii) The Company may terminate the Executive's employment
hereunder, if, as a result of the Executive's
incapacity due to physical or mental illness, the
Executive shall have been absent from his duties
hereunder on a full-time basis for greater than
ninety (90) consecutive days (including weekends and
holidays) in any three hundred sixty five (365) day
period, provided that the Company has made reasonable
good faith efforts to accommodate the Executive at
the workplace throughout such period of incapacity,
and provided further that any such accommodation
shall not include changing or reducing the
Executive's responsibilities as provided herein. The
parties shall make the determination, in their
reasonable discretions, that the Executive is
incapacitated based upon their good faith review and
evaluation of information supplied by the Executive
and/or the Executive's medical professionals, as well
as information supplied by medical professionals
selected by the Company and/or its insurers. In the
event of any disagreement between the parties with
regard to whether the Executive is incapacitated, the
parties shall first attempt to resolve such
disagreement pursuant to the provisions of Section
13.
(iii) The Company may terminate the Executive's employment
hereunder for Cause. For the purposes of this
Agreement, "Cause" shall mean: (A) a final,
non-appealable criminal conviction for a felony; (B)
the engaging by the Executive in willful misconduct
which is demonstrably materially injurious or
detrimental to the reputation, good will or business
interests of the Company or any of its affiliated
corporations; or (C) failing to perform his duties
hereunder in a material manner (other than failure
resulting from incapacity due to physical or mental
illness or death) after a reasonable time to cure of
not less that thirty (30) days after a written demand
for performance, which written demand specifically
identifies the manner in which the Executive is not
performing his duties, has been delivered to the
Executive by either the CEO or the Board.
4
(iv) Either party may terminate this Agreement effective
as of the end of the Initial Term or the end of any
Extended Term by giving written notice of termination
to the other party no later than ninety (90) days
prior to the end of such Initial Term or any Extended
Term, as the case may be.
(v) Subject to compliance with applicable law, the
Company may terminate the Executive's employment
hereunder without Cause by providing to the Executive
one (1) month's written notice of termination. For
the purposes of this paragraph (v), the Company shall
be deemed to have terminated the Executive's
employment without cause if (A) the Executive's scope
of authority, duties or responsibilities as described
in this Agreement are materially diminished without
his written consent, excluding for this purpose any
action of the Company not taken in bad faith and that
is remedied by the Company within thirty (30) days
following written notices thereof from the Executive
to the Company or (B) the Executive is required,
without his consent, to perform ten percent (10%) or
more of his duties hereunder physically at a location
which is more than twenty five (25) miles from
Redway, California excluding for this purpose any
action of the Company not taken in bad faith and that
is remedied by the Company within thirty (30) days
following written notice thereof from the Executive
to the Company.
(vi) The Executive's employment hereunder shall terminate
thirty (30) days from the receipt by the Company of
written notification by the Executive of his
resignation, however, should the Company and the
Executive in mutual agreement elect to terminate the
Executive's employment prior to the conclusion of
this thirty (30) day period, of the Executive's
termination shall be effective on such mutually
agreeable date.
(b) Compensation Upon Termination
-----------------------------
(i) If the Executive's employment hereunder shall be
terminated pursuant to Section 5(a)(i), (ii), (iii)
(iv) or (vi) above, the Company shall pay the
Executive his Salary and any other benefits he is
then receiving through the date of termination only.
5
(ii) If the Executive's employment hereunder shall be
terminated pursuant to Section 5(a) (vi), the
Executive's right to receive the Salary and benefits
shall cease effective upon the last date of
employment of the Executive by the Company, provided
that the Executive shall be paid salary and benefits
required to be paid by applicable law.
(iii) If the Executive's employment hereunder shall be
terminated pursuant to Section 5(a) (v) above during
the Initial Term, the Company shall pay the Executive
(a) in one (1) lump sum, the amount of the Salary and
the cash value of the other benefits the Executive
would have earned during the remainder of the Term
had his employment not been earlier terminated. If
the Executive's employment hereunder shall be
terminated pursuant to Section 5(a)(v) above after
the conclusion of the Initial Term, the Company shall
pay the Executive the equivalent of one (1) month's
salary or pro-rata portion thereof for each year or
pro-rata portion thereof the Executive is employed by
the Company prior to termination.
(iv) In the event any Federal or Connecticut law shall be
or become applicable which requires greater notice of
termination or payment than provided in this
Agreement, such law shall be deemed incorporated into
this Agreement and shall prevail but, for greater
certainty, limited to the extent of such greater
notice of termination or payment.
(v) Notwithstanding anything to the contrary set forth in
this Agreement or the Purchase Agreement, the
Executive and the Company hereby acknowledge and
agree that the termination of the Executive's
employment hereunder for any reason whatsoever shall
not affect the Purchaser's (as that term is defined
in the Purchase Agreement) continuing obligation to
pay to the Seller (as that term is defined in the
Purchase Agreement) the Earn-Out (as that term is
defined in the Purchase Agreement), except in the
event that the Executive's employment hereunder is
terminated pursuant to Section 5(a) (iii) above, the
Company shall only pay to Seller that amount of the
Earn-Out, prorated through the date of the
Executive's termination.
6. Non-Competition; Non-Solicitation; Confidential Information.
-----------------------------------------------------------
(a) Non-Competition. The Executive agrees that during the Term and
for a period ending eighteen (18) months following the
expiration or earlier termination of the Term (the "Noncompete
Period"), the Executive shall not serve, directly or
indirectly, as an operator, owner, partner, consultant,
officer, director, or employee of any firm or corporation
operating within the United States which is or which the
Executive knows has plans to be substantially and directly in
competition with the business conducted by the Company of (i)
publishing children's books and audio books and/or of
designing and manufacturing of plush stuffed animals for sale
to both retail and wholesale customers, both domestically and
6
internationally, or (ii) selling books, toys, musical
instruments, audio books, CDs, musical players or related
children's products directly to consumers through any means.
Notwithstanding the foregoing, the Executive agrees for a
period of eighteen (18) months from the effective ending date
of the Term not to specifically and intentionally solicit
licenses held by the Company or interfere in business
relationships maintained by the Company, in a way that is
designed to be materially damaging to the Company. In the
event that this Section 6(a) shall be determined by any court
of competent jurisdiction to be unenforceable by reason of its
extending for too great a period of time or over too large a
geographic area or range of activities, the court may reform
the offending provision(s) so as to provide an enforceable
non-competition agreement. Notwithstanding anything to the
contrary set forth herein, the Executive's ownership and
operation of the Musical Kidz Business (which does not include
the direct-to-consumer, school and library channels (the
"Business" as defined in the Purchase Agreement)), in a manner
which is reasonably consistent with the ownership and
operation thereof prior to the Effective Date shall not be
prohibited hereunder.
(b) Non-Solicitation. The Executive further agrees that during the
Term and for a period of eighteen (18) months following the
expiration or earlier termination of the Term, the Executive
shall not, directly or indirectly, either solicit or induce
any customer of the Company to patronize any business which
substantially and directly competes with that of the Company,
or solicit or induce any employees of the Company to leave
employment with the Company.
(c) Confidential Information. The Executive agrees that he will
not, except as may otherwise be required by law or legal
processes, during the period of his employment hereunder or at
any time thereafter, disclose to any unauthorized person, firm
or corporation, any Confidential Information (defined below)
relating to customers, business plans or operations of the
Company or its affiliates or any trade secrets or other
Confidential Information relating to the Company or its
affiliates, or to any of the businesses operated by them. The
Executive also confirms that such Confidential Information
constitutes the exclusive property of the Company and/or such
affiliates. For the purpose of this Agreement, the term
"Confidential Information" shall mean information of any
nature and in any form which at the time concerned is
generally known only to those persons employed by or engaged
as outside consultants, independent contractors, agents or
representatives of the Company. The Executive shall return all
tangible evidence of such Confidential Information to the
Company upon the termination of Executive's employment with
the Company or upon the earlier written request of the
Company. Notwithstanding anything to the contrary set forth in
this Agreement, Confidential Information shall not include any
information which is: (i) now or hereafter, through no
unauthorized act or failure to act on the Executive's part, in
the public domain or is generally available to the public
other than as a result of a breach of this Agreement; (ii)
known to the Executive without an obligation of
7
confidentiality at the time he receives the same from the
Company, as evidenced by written records; (iii) hereafter
furnished to the Executive by a third party as a matter of
right and without restriction on disclosure; (iv) furnished to
others by the Company without restriction on disclosure; (v)
independently developed by the Executive without use of the
Company's Confidential Information for use by the Executive or
by a business which is not an affiliate of the Company and
whose operations are not competitive with the Company's
Business; (vi) has been provided to the Executive with a
written statement that it is provided without restriction on
disclosure; or (vii) has been approved for release or use by
written authorization of the Company. In the event the
Executive is compelled to disclose any Confidential
Information by a court or other tribunal of competent
jurisdiction, the Executive shall immediately give notice
thereof to the Company so that the Company may seek a
protective order or other remedy from said court or tribunal.
In any event, the Executive shall disclose only that portion
of the Confidential Information that, in the opinion of the
Company's legal counsel, is legally required to be so
disclosed and will exercise reasonable efforts so that any
such Confidential Information so disclosed will be accorded
confidential treatment by said court or tribunal.
(d) Nothing herein shall be deemed to restrict or prohibit the
Executive from owning less than five percent (5%) of the total
equity in a publicly-traded company which is competitive with
the Company.
(e) It is agreed that the remedy at law for any breach of the
foregoing provisions of this Section 6 shall be inadequate and
that the Company shall be entitled to injunctive relief in the
enforcement thereof in addition to any other remedy permitted
by law.
7. Property Rights. The Company shall hold, and hereby reserves, all
rights, title and interests in and to all computer software, programs,
applications and all other electronic work product developed by the
Executive during the course and within the scope of the Executive's
employment with the Company which directly relate to methods, designs,
businesses or operations or other intellectual property of the Company
("work product"). The Executive agrees to execute all necessary
applications, affidavits and other documents necessary for the Company
to obtain intellectual property rights, including copyright protection,
for all work product. All decisions regarding copyright or other
intellectual property registration shall be in the sole discretion of
the CEO.
8. Successors; Binding Agreement. This Agreement is not assignable by
either of the parties, except that this Agreement may be assigned by
the Company to a successor to its business and/or its assets, whether
as a result of a sale of stock or assets or a merger and it is
understood and agreed that as used in this Agreement, the term Company
shall mean the Company and any such successor.
8
9. Notice. All communications provided for herein shall be in writing, and
shall only be hand delivered or sent by certified mail, return receipt
requested, postage prepaid or by a national, overnight courier delivery
service addressed (a) if to the Company, at its principal place of
business, to the Attention of the CEO, or (b) to the Executive at his
address appearing in the payroll records of the Company, or to such
other addresses as either party may hereafter notify the other party in
accordance with this notice provision, and shall be deemed given on the
date hand delivered or on the first (1st) attempted delivery thereof.
10. Waiver. Any failure by either party to enforce at any time any of the
terms and conditions of this Agreement shall not be considered a waiver
of that party's right thereafter to enforce such terms and conditions
or any other rights. No provision of this Agreement shall be deemed
waived unless such waiver is in writing signed by the party making such
waiver.
11. Governing Law; Severability. This Agreement shall be governed by and
construed in accordance with the laws of the State of Connecticut and
cannot be amended, modified, supplemented or otherwise changed or
terminated orally, but only by a written document signed by both
parties, which written document shall specifically reference this
Agreement. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
12. Entire Agreement. This Agreement constitutes the sole and exclusive
agreement between the parties concerning the subject matter hereof, and
supersedes and replaces any and all other prior agreement of like
import.
13. Mediation. Except as otherwise set forth in this Agreement, in the
event of any dispute between the parties which arises out of or relates
to this Agreement or the relationship between the parties, the parties
agree that they shall first attempt to resolve such dispute through the
process of mediation before a single, mutually acceptable mediator. The
mediator shall be a retired judge or a practicing attorney with
experience in mediating disputes which are similar in nature to the
dispute in question. If the parties are unable to agree upon the
mediator, then the parties shall file for mediation with the Judicial
Arbitration and Mediation Service ("JAMS") and hereby agree to accept
the mediator appointed by JAMS. The mediation shall be conducted and
concluded within thirty (30) days after the mediator has been engaged
and shall last for a minimum of four (4) hours. The parties shall split
evenly all mediation costs. In the event that such dispute is not
resolved through mediation, then the parties shall be permitted to
pursue other remedies which may be available to them at law or in
equity.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed an original;
such counterparts shall together constitute but one agreement.
Facsimile copies, electronic copies or photocopies of this Agreement
shall be deemed to constitute duplicate original counterparts. The
9
parties' facsimile or electronic signatures shall be deemed to
constitute their original signatures. Certain of the parties'
signatures are affixed hereto in a representative capacity and each of
the persons executing this Agreement in such representative capacity
hereby represents that he is authorized to execute this Agreement on
behalf of, and to bind, the individual or entity on whose behalf his
signature is affixed.
15. Indemnification. The Company shall, to the maximum extent permitted by
law, indemnify, defend and hold the Executive free and harmless from
any and all claims, demands, losses, costs, expenses, obligations,
liabilities, damages, recoveries and deficiencies, including interest,
penalties, reasonable attorneys' fees and costs, that he may incur
which in any way relate to or result from any actions, inactions or
decisions made by him in good faith and in accordance with the terms of
this Agreement while engaged by the Company, provided, however, for the
avoidance of doubt, the Executive may not contract for or incur any
legal fees on behalf of the Company, whether pursuant to the
Executive's indemnification rights hereunder or for any other reason,
without the prior express written consent of the CEO, so long as the
Company diligently fulfills its obligations set forth in this Section
15.
* * * * * *
[Signature Page Follows]
10
[Signature Page to Employment Agreement]
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the Effective Date.
"Executive" "Company"
TRUDY CORPORATION
__________________________________
LEIB OSTROW By: ______________________________
Name: Ashley C. Andersen Zantop
Its: President and Chief Executive
Officer
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EXHIBIT A
JOB DESCRIPTION
Vice President, Direct to Consumer Sales;
- -----------------------------------------
Reporting to CEO/President
- --------------------------
Job Description
General: This position is the primary sales executive for the Company's
Direct-to-Consumer (DTC) business and as such is responsible for driving all
sales of and revenue growth for the Company's products sold directly by the
Company to consumers. This position supervises a part time administrative
assistant, purchasing manager and web designer. This position works closely with
the CEO and other officers and directors of the Company to increase sales,
decrease expenses, meet or exceed board-approved fiscal sales and expense
budgets, develop new products, execute plans for growth in the DTC business and
related strategic areas.
Product Concept/Development/Purchases; including, but not necessarily limited
to:
o Overseeing and working with Company personnel to review, select and
design where necessary new third-party products for inclusion in the
Company's DTC business.
o Working with CEO, CFO and Chairman to develop and adhere to yearly
third-party product acquisition budgets each fiscal year.
o Work with related personnel as needed to negotiate the best possible
pricing, terms and delivery dates for all third-party products selected
for inclusion in the Company's DTC business, specifically:
o Working with CEO, operational and production staff to secure and
maintain competitive unit costs on all inventories and purchased goods.
o Working with CEO and operational staff to ensure the forecasting,
planning and executing of appropriate inventory purchases for new and
repeat titles.
o Monitoring sales results for all products in the DTC business, so
slower-moving items can be eliminated and higher volume items can be
continuously maintained in stock.
o Consulting with the editorial department regarding new product
development and new product combinations and/or bundled sets that could
be created for the DTC business.
o Motivating, educating and challenging all Company staff regarding all
relevant processes to reduce unnecessary expense and/or inefficiencies
as well as increasing salability of items selected for inclusion in the
DTC business.
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Marketing; including, but not necessarily limited to:
o Overseeing and working with the Company website personnel and Marketing
personnel to create and maintain the best possible marketing campaigns
for the DTC business with the board-approved yearly fiscal budget.
o Directing appropriate personnel to maintain and drive all internet
marketing vehicles such as search engine marketing (Google AdSense),
banner adds, blog spots, etc.
o Directing appropriate personnel to maintain and drive all DTC email
campaigns.
o Directing appropriate personnel to maintain and drive all DTC
directmail and mail order catalog campaigns.
o Directing appropriate personnel to maintain and drive all web based
affiliate marketing campaigns.
o Motivating, educating and challenging all website and marketing
-related staff to learn, perform and perfect the processes for each
marketing strategy, to maximize performance and minimize wasted
marketing expenditures.
DTC Sales-related Operations; including, but not necessarily limited to:
o Regular and periodic reviewing of all necessary and appropriate sales,
shipping and inventory reports to ensure timely shipments, understand
and encourage turn-over by product-line and evaluate inventory levels
and expense.
o Consulting on regular inventory forecasts to ensure the fewest
out-of-stock days per product possible and to limit excess inventory
on-hand.
o Participating in regular re-print, re-order and forecast meetings as
needed.
Strategic Planning; including but not limited to:
o Participating in, preparing for and contributing to yearly fiscal
planning for operating budgets,
o Working with management to review and evaluate childrens' products and
product categories in other strategic areas to assess the viability of
the Company's entrance into these markets through acquisition and/or
strategic alliances.
Miscellaneous; including but not limited to:
o Serving as primary supervisor for the employees noted above and
evaluating their performances
o Educating and cross-training other Company employees to serve necessary
DTC business functions, to ensure smooth and uninterrupted functions
when responsible personnel are traveling or out of the office for other
reasons.
o Attending New Product Review Meetings when possible and practical.
o Attending appropriate trade shows.
o Making purchasing trips to Asia to design and negotiate pricing on
proprietary products.
13
EXHIBIT F
MUTUAL NON-COMPETE AGREEMENT
See attached
NONCOMPETITION, NONDISCLOSURE AND NONSOLICITATION AGREEMENT
This NONCOMPETITION, NONDISCLOSURE AND NONSOLICITATION AGREEMENT is
entered into effective this 7th day of March, 2008 (the "Effective Date") by and
between TRUDY CORPORATION, a Delaware corporation having its principal place of
business at 353 Main Avenue, Norwalk, CT 06831 (the "Purchaser") on the one
hand, and MUSICAL KIDZ LLC, a California limited liability company with an
address of P.O. Box 1429 Redway, CA 95560 (the "Seller") and LEIB OSTROW, an
individual residing at P.O. Box 1429 Redway, CA 95560 ("Ostrow", and,
collectively with the Seller, the "Seller Parties") on the other hand. Each of
the Purchaser, the Seller and Ostrow are sometimes referred to as a "Party",
and, collectively, as the "Parties".
Recitals
--------
A. Ostrow owns one hundred percent (100%) of the membership
interests of the Seller.
B. Concurrently with the execution and delivery of this
Agreement, the Purchaser is purchasing from the Seller certain of the assets of
the Seller relating to its direct-to-consumer, schools and libraries businesses,
including without limitation the goodwill associated with such businesses
pursuant to the terms and conditions of that certain Asset Purchase Agreement of
even date herewith by and between the Purchaser and the Seller (the "Purchase
Agreement"). Section 4.10 of the Purchase Agreement requires that a reciprocal
noncompetition agreement be executed and delivered by the Parties at the
Closing.
Agreement
---------
Now, therefore, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the Parties agree as follows:
1. Defined Terms. Capitalized terms used herein without definition shall
have the meaning ascribed such terms in the Purchase Agreement;
provided, however, there are several capitalized terms used herein
without definition which are identified as being defined in that
certain Employment Agreement of even date herewith by and between the
Purchaser and Ostrow (the "Employment Agreement"). All such definitions
are hereby incorporated into and made a material part of this
Agreement.
2. Non-Competition.
(a) Seller Parties. Except as otherwise set forth herein, each of
the Seller and Ostrow hereby agrees that for a period of time
following the Closing which is equal to the Noncompete Period
(as defined in the Employment Agreement) (the "Restricted
Period"), such Party shall neither serve, directly or
1
indirectly, as an operator, owner, partner, consultant,
officer, director, or employee of any firm or corporation
operating within and/or trading to North America, Central
America, South America, Asia, Spain, the United Kingdom,
Australia and South Africa (collectively, the "Restricted
Area") which is or which such Party knows has plans to be
substantially and directly in competition with the business
conducted by the Purchaser of (i) publishing children's books
and audio books and/or of designing and manufacturing of plush
stuffed animals for sale to both retail and wholesale
customers, both domestically and internationally, or (ii)
selling books, toys, musical instruments, audio books, CDs,
musical players, electronics or related children's products
directly to consumers through any means (the "Purchaser's
Business") nor otherwise engage in any activities which are
competitive with the Purchaser's Business. Notwithstanding the
foregoing, the Seller agrees, during the Restricted Period not
to specifically and intentionally solicit licenses held by the
Purchaser or interfere in business relationships maintained by
the Purchaser, in a way that is designed to be materially
damaging to the Purchaser. In the event that this Section 2(a)
shall be determined by any court of competent jurisdiction to
be unenforceable by reason of its extending for too great a
period of time or over too large a geographic area or range of
activities, the court may reform the offending provision(s) so
as to provide an enforceable non-competition agreement.
Notwithstanding anything to the contrary set forth herein, the
Seller's and Ostrow's ownership and operation of the Musical
Kidz Business (as defined in the Employment Agreement) (which
shall not include the direct-to-consumer, school and library
channels) shall not be prohibited hereunder.
(b) Purchaser. The Purchaser hereby agrees that during the
Restricted Period the Purchaser shall not serve, directly or
indirectly, as an operator, owner, partner, consultant,
officer, director, or employee of any firm or corporation
operating within the Restricted Area which is or which such
Party knows has plans to be substantially and directly in
competition with the Musical Kidz Business nor otherwise
engage in any activities which are competitive with the
Musical Kidz Business. Notwithstanding the foregoing, the
Purchaser agrees, during the Restricted Period not to
specifically and intentionally solicit licenses held by the
Seller or Ostrow or interfere in business relationships
maintained by the Seller or Ostrow, in a way that is designed
to be materially damaging to Seller or Ostrow. In the event
that this Section 2(b) shall be determined by any court of
competent jurisdiction to be unenforceable by reason of its
extending for too great a period of time or over too large a
geographic area or range of activities, the court may reform
the offending provision(s) so as to provide an enforceable
non-competition agreement. Notwithstanding anything to the
contrary set forth herein, the Purchaser's ownership and
operation of the Business and the Transferred Assets, and its
operations in accordance with the MFLP Licensing Agreement and
the BeBop Licensing Agreement which includes only
direct-to-consumer, school and library channels in a manner
which is reasonably consistent with those Licensing Agreements
shall not be prohibited hereunder.
2
(c) Notwithstanding anything to the contrary set forth in this
Agreement or the Purchase Agreement, at such time as Ostrow no
longer is a member of, and the beneficial owner of a majority
of the equity of, the Seller, this Agreement shall
automatically terminate and none of the Parties shall
thereafter owe to any of the other Parties any further
obligations hereunder with regard to any of its subsequent
acts and omissions.
(d) Further, notwithstanding anything to the contrary set forth in
this Agreement or the Purchase Agreement, in the event the
Seller or Ostrow ever sells or otherwise transfers to any
third party only that portion of the Musical Kidz Business
comprised of its record label and music catalogue, then (i)
the transferee shall be permitted to sell unbundled recordings
into the direct-to-consumer, school and library channels (but
only if such third party is already established in such
channels), and (ii) the Purchaser shall be permitted to sell
its unbundled recordings into all the wholesale channel.
3. Non-Solicitation. The Parties further agree that during the Restricted
Period, no Party shall, directly or indirectly, either solicit or
induce any customer of the Seller Parties, in the case of the
Purchaser, or of the Purchaser, in the case of the Seller Parties, to
patronize any business which substantially and directly competes with
that of the Purchaser or the Seller Parties, as the case may be, or
solicit or induce any employees of the Seller Parties, in the case of
the Purchaser, or of the Purchaser, in the case of the Seller Parties,
to leave employment with the Purchaser or the Seller Parties, as the
case may be.
4. Confidential Information. Each of the Parties (in such instance, a
"Receiving Party") agrees that such Receiving Party will not, except as
may otherwise be required by law or legal processes, during the
Restricted Period or at any time thereafter, disclose to any
unauthorized person, firm or corporation, any Confidential Information
(defined below) relating to customers, business plans or operations of
any other Party (in such instance a "Disclosing Party") or such
Disclosing Party's affiliates or any trade secrets or other
Confidential Information relating to any Disclosing Party or such
Disclosing Party's affiliates, or to any of the businesses operated by
them. Each of the Parties, as a Receiving Party, also confirms that
such Confidential Information constitutes the exclusive property of the
Disclosing Party and/or such affiliates. For the purpose of this
Agreement, the term "Confidential Information" shall mean information
of any nature and in any form which at the time concerned is generally
known only to those persons employed by or engaged as outside
consultants, independent contractors, agents or representatives of a
Disclosing Party. Each Receiving Party shall return all tangible
evidence of such Confidential Information to the Disclosing Party upon
written request of such Disclosing Party. Notwithstanding anything to
the contrary set forth in this Agreement, Confidential Information
shall not include any information which is: (i) now or hereafter,
through no unauthorized act or failure to act on a Receiving Party's
part, in the public domain or is generally available to the public
3
other than as a result of a breach of this Agreement; (ii) known to a
Receiving Party without an obligation of confidentiality at the time
such Receiving Party receives the same from the Disclosing Party, as
evidenced by written records; (iii) hereafter furnished to a Receiving
Party by a third party as a matter of right and without restriction on
disclosure; (iv) furnished to others by the Disclosing Party without
restriction on disclosure; (v) independently developed by a Receiving
Party without use of the Disclosing Party's Confidential Information
for use by a Receiving Party or by a business which is not an affiliate
of the Disclosing Party and whose operations are not competitive with
the Disclosing Party's Business or Musical Kidz Business, as the case
may be; (vi) has been provided to a Receiving Party with a written
statement that it is provided without restriction on disclosure; or
(vii) has been approved for release or use by written authorization of
the Disclosing Party. In the event a Receiving Party is compelled to
disclose any Confidential Information by a court or other tribunal of
competent jurisdiction, a Receiving Party shall immediately give notice
thereof to the Disclosing Party so that the Disclosing Party may seek a
protective order or other remedy from said court or tribunal. In any
event, a Receiving Party shall disclose only that portion of the
Confidential Information that, in the opinion of the Disclosing Party's
legal counsel, is legally required to be so disclosed and will exercise
reasonable efforts so that any such Confidential Information so
disclosed will be accorded confidential treatment by said court or
tribunal.
(a) Nothing herein shall be deemed to restrict or prohibit any
Party from owning less than five percent (5%) of the total
equity in a publicly-traded company which is competitive with
any other Party.
(b) It is agreed that the remedy at law for any breach of the
foregoing provisions of this Section 4 shall be inadequate and
that a Disclosing Party shall be entitled to injunctive relief
in the enforcement thereof in addition to any other remedy
permitted by law.
5. Successors; Binding Agreement. This Agreement is not assignable by any
Party without the consent of the other Parties. This Agreement shall
inure to the benefit of, and be binding upon, each Party and its
respective successors and assigns.
6. Notice. All communications provided for herein shall be in writing, and
shall only be hand delivered or sent by certified mail, return receipt
requested, postage prepaid or by a national, overnight courier delivery
service addressed (a) if to the Purchaser, at its principal place of
business, to the Attention of the CEO, or (b) to the Seller or Ostrow
at such Party's address set forth in the opening paragraph of this
Agreement, or to such other addresses as a Party may hereafter notify
the other Parties in accordance with this notice provision, and shall
be deemed given on the date hand delivered or on the first (1st)
attempted delivery thereof.
7. Waiver. Any failure by any Party to enforce at any time any of the
terms and conditions of this Agreement shall not be considered a waiver
of that Party's right thereafter to enforce such terms and conditions
or any other rights. No provision of this Agreement shall be deemed
waived unless such waiver is in writing signed by the Party making such
waiver.
4
8. Governing Law; Severability. This Agreement shall be governed by and
construed in accordance with the laws of the State of Connecticut and
cannot be amended, modified, supplemented or otherwise changed or
terminated orally, but only by a written document signed by all the
Parties, which written document shall specifically reference this
Agreement. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
9. Entire Agreement. This Agreement constitutes the sole and exclusive
agreement among the Parties concerning the subject matter hereof, and
supersedes and replaces any and all other prior agreement of like
import.
10. Mediation. Except as otherwise set forth in this Agreement, in the
event of any dispute between any Parties which arises out of or relates
to this Agreement or the relationship between the Parties, the Parties
agree that they shall first attempt to resolve such dispute through the
process of mediation before a single, mutually acceptable mediator. The
mediator shall be a retired judge or a practicing attorney with
experience in mediating disputes which are similar in nature to the
dispute in question. If the Parties are unable to agree upon the
mediator, then the Parties shall file for mediation with the Judicial
Arbitration and Mediation Service ("JAMS") and hereby agree to accept
the mediator appointed by JAMS. The mediation shall be conducted and
concluded within thirty (30) days after the mediator has been engaged
and shall last for a minimum of four (4) hours. The Parties involved in
such mediation shall split evenly all mediation costs. In the event
that such dispute is not resolved through mediation, then the Parties
shall be permitted to pursue other remedies which may be available to
them at law or in equity.
11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed an original;
such counterparts shall together constitute but one agreement.
Facsimile copies, electronic copies or photocopies of this Agreement
shall be deemed to constitute duplicate original counterparts. The
Parties' facsimile or electronic signatures shall be deemed to
constitute their original signatures. Certain of the Parties'
signatures are affixed hereto in a representative capacity and each of
the persons executing this Agreement in such representative capacity
hereby represents that he is authorized to execute this Agreement on
behalf of, and to bind, the individual or entity on whose behalf his
signature is affixed.
* * * * * *
[Signature Page Follows]
5
[Signature Page to Noncompetition, Nondisclosure and Nonsolicitation
Agreement]
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the Effective Date.
SELLER PARTIES: PURCHASER:
MUSICAL KIDZ LLC, TRUDY CORPORATION,
a California limited liability a Delaware corporation
company
By: ____________________________ By: _____________________________
Name: ____________________________ Name: _____________________________
Title: ___________________________ Title: ____________________________
____________________________
__________________________________
LEIB OSTROW
6