EX-99.12 3 ex99_12.txt EXHIBIT 99.12 Exhibit 99.12 ________________________________________________________________________________ ASSET PURCHASE AGREEMENT dated as of March 7, 2008 by and among TRUDY CORPORATION and MUSICAL KIDZ LLC ________________________________________________________________________________ ASSET PURCHASE AGREEMENT ------------------------ 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 ---------- 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. ------------------ (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; 2 (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 3 (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. ----------------------------------------------------- (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 4 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. -------------- 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 5 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 6 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 7 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. -------------------- (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. ------------ 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: 8 2.1 Existence and Good Standing. --------------------------- 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. ------------------- 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. ------------ 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. ----------------------------------------------------------- (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. 9 (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. --------- 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. ---------- 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 10 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 KAY 1434 3/4 NYLON STRING GUITAR PINK A 2 0 0 2 27.04 2 54.08 KAY 1439 BLUE MINI-ELECTRIC GUITAR PKG A 7 0 0 7 74.99 7 524.93 KAY 1460 1/2 SIZE GUITAR - NATURAL A 15 0 0 15 19.57 15 293.55 KAY 17268 MAHOGANY SOPRANO UKULELE A 0 0 6 -6 8.97 0 KIMBO 3000D CD- BEAN BAG ACTIVITY SONGS N 1 0 0 1 0 0 KIMBO 3408D "CD- INSECTS, BUGS & SQUIGGLY. N 4 0 0 4 6.74 0 KIMBO 3411D CD- LAUGH 'N LEARN SILLY SONGS N 3 0 0 3 6.73 0 KIMBO 3412D CD- HERE WE GO LOOPTY LOO N 2 0 0 2 7.49 0 KIMBO 3413D CD- ROCK N ROLL SONGS.. TEACH N 13 0 0 13 7.49 0 KIMBO 3970D JOINING HANDS WITH OTHER LANDS N 5 0 0 5 6.73 0 KOCH 3208D CD- HOOP DEE DOO! WIGGLY PARTY N 1 0 0 1 0 0 KOCH 3209D CD- LET'S WIGGLE N 2 0 0 2 0 0 KOCH 3210D CD- TOOT TOOT N 8 0 0 8 0 0 KOCH 3211D CD- MAGICAL ADV MOVIE SOUNTRAC N 4 0 0 4 0 0 KOCH 3212D CD- WIGGLY SAFARI N 6 0 0 6 0 0 KOCH 3225D CD- WIGGLE BAY N 11 0 0 11 0 0 KOCH 3509D CD- COLD SPAGHETTI WESTERN N 12 0 0 12 0 0 KOCH 3510D CD- TOP OF THE TOTS N 8 0 0 8 0 0 KOCH 3514D CD- WHOO HOO WIGGLY GREMLINS N 4 0 0 4 0 0 KOCH 3959D CD- LIVE HOT POTATOES N 4 0 0 4 0 0 KRISTA 9709 SIX EXPEDITIONS KIT N 1 0 0 1 16.5 0 KULEAN 2039V HULA DANCER DVD & SILK LEI A 13 0 0 13 8 13 104
KULEAN 8669V DVD- BE A HULA GIRL A 9 28 0 9 7.5 9 67.5 KULEAN 9690 HULA COSTUME A 51 6 0 51 5 51 255 KULEAN 9899 HAWAIIAN LEI MAKING KIT N 3 0 0 3 7.5 3 22.5 KULTUR 8096V DVD- DANCING FOR KIDS A 28 0 1 27 8.99 27 242.73 KULTUR 8136V DVD- THE NUTCRACKER D 0 0 0 0 13.48 0 KULTUR 8373V DVD- #1 FANTASY GARDEN BALLET A 4 0 0 4 8.99 4 35.96 KUSHIE 9865 ANNE GEDDES LADYBUG DOLL N 1 0 0 1 15 0 LAURY 9789 RAINBOW DANCING HELIX - 36" A 0 0 0 0 18 0 LAURY 9822 RAINBOW DANCING HELIX - 52" A 0 0 0 0 22 0 LAURY 9876 DANCING HELIX ADAPTOR A 0 0 0 0 4 0 LAURY 9877 DANCING HELIX TWIRLIN' MOTOR A 0 0 0 0 12 0 LIGHTS 6022 FARM SOUND PUZZLE A 20 0 0 20 4.99 20 99.8 LIGHTS 6023 VEHICLE SOUND PUZZLE A 64 0 0 64 4.99 64 319.36 LIGHTS 6024 INSTRUMENTS SOUND PUZZLE A 76 0 0 76 4.99 76 379.24 LIGHTS 9571 FARM SOUND BLOCKS A 0 84 54 -54 5 0 LIGHTS 9572 VEHICLE SOUND BLOCKS A 0 66 40 -40 5 0 LIGHTS 9645 130 PC WOODEN RAILWAY SET A 0 12 7 -7 49.99 0 LIGHTS 9661 FURNISHED WOODEN DOLLHOUSE A 3 0 0 3 49.99 3 149.97 LIGHTS 9676 FOLDING HORSE STABLE A 6 0 0 6 49.99 6 299.94 LIGHTS 9737 T-REX PLUSH A 3 0 1 2 14.99 2 29.98 LIGHTS 9738 APATOSAURUS PLUSH A 3 0 0 3 14.99 3 44.97 LIGHTS 9739 STEGASAURUS PLUSH A 12 0 0 12 14.99 12 179.88 LIGHTS 9788 TRAIN TABLE A 0 5 2 -2 49.99 0 LIGHTS 9901 DELUXE STANDING EASEL A 27 0 0 27 24.99 27 674.73 LIGHTS 9922 EASEL COMPANION SUPPLY SET A 50 0 0 50 14.99 50 749.5 LIGHTS 9923 ARTIST SMOCK A 32 0 0 32 3.49 6 20.94 LIGHTS 9925 BAND IN A BOX D 0 0 0 0 9.99 0 LIGHTS 9935 MULTI-ACTIVITY BEAD MAZE A 0 0 0 0 19.99 0 LIGHTS 9936 100 WOOD BLOCKS SET A 6 0 0 6 9.99 6 59.94 LIGHTS 9937 DELUXE MAGIC SET A 14 0 0 14 14.99 14 209.86 LIGHTS 9938 BEGINNER BAND SET A 0 0 0 0 9.99 0 LIGHTS 9939 CHILDREN AROUND WORLD PUZZLE A 27 0 1 26 4.99 26 129.74 LIGHTS 9940 BUGS PUZZLE A 53 0 0 53 4.99 53 264.47 LIGHTY 8579V DVD- PEOPLE N 6 0 0 6 6 6 36 LIZZYB 9642 BUG JUG FILL & SPILL A 14 0 0 14 9.98 14 139.72 LIZZYB 9786 FISHBOWL FILL & SPILL A 24 0 0 24 9.98 24 239.52 MAGGIE 3219D CD- GI'ME ELBOW ROOM N 27 0 0 27 4 0 MAGNET 9683 MULTIPLY & DIVIDE- MAG POETRY N 1 0 0 1 7.5 0 MAMAS 9763 REINDEER ROCKER N 1 0 0 1 0 0 MAMAS 9812 WHALE ROCKER N 1 0 0 1 0 0 MAPLEL 6029 HEIRLOOM WOODEN BELL RATTLE A 10 0 1 9 10.5 9 94.5 MAPLEL 6030 HEIRLOOM WOODEN SPIN RATTLE A 0 20 1 -1 10.5 0 MAXIM 9714 DELUXE TREE HOUSE A 0 10 2 -2 59.99 0 MAXIM 9715 CROW'S NEST A 10 0 2 8 3 8 24 MAXIM 9717 RED MOTORIZED ENGINE A 4 0 2 2 9.99 2 19.98
MAXIM 9719 50-PIECE TUMBLE TREE TOWN D 7 0 0 7 12.49 7 87.43 MEDIAN 3032D CD- SONGS FROM THE NEIGHBOR... A 6 0 1 5 6.72 5 33.6 MELODY 3016D CD- ALL DAY LONG WITH DR JEAN N 1 0 0 1 8.138 0 MELODY 3598D CD- DR JEAN & FRIENDS N 1 0 0 1 9.63 0 MFLP 1251 1/2 SIZE GUITAR D 1 0 0 1 23 0 MFLP 1253 FULL SIZE GUITAR D 24 0 0 24 30 5 150 MFLP 1255 1/2 SIZE GUITAR BAG A 32 0 0 32 0 0 MFLP 1257 FULL SIZE GUITAR BAG D 24 0 0 24 3 0 MFLP 42500D CD- G'NIGHT WOLFGANG A 78 0 0 78 0.533 0 MFLP 42501D CD- G'MORNING JOHANN A 103 0 1 102 0.547 0 MFLP 42502D CD- SHAKE SUGAREE A 132 0 0 132 0.621 0 MFLP 42503D CD- ON THE SUNNYSIDE A 168 0 1 167 0.86 0 MFLP 42505 CS- ALL FOR FREEDOM N 1 0 0 1 0.539 0 MFLP 42505D CD- ALL FOR FREEDOM A 216 0 1 215 0.533 0 MFLP 42506D CD- FAMILY FOLK FESTIVAL A 216 0 0 216 0.86 0 MFLP 42519D CD- CELEB OF SONG A 300 0 56 244 0.555 0 MFLP 42520D CD- CELEB OF SHOWTUNES D 72 0 12 60 4.28 0 MFLP 42521D CD- SMILIN' ISLAND OF SONG A 312 0 1 311 0.65 0 MFLP 42522D CD- IN THIS LAND A 184 0 0 184 0.691 0 MFLP 42525D CD- FIESTA MUSICAL A 300 0 59 241 0.59 0 MFLP 42534D CD- I GOT SHOES A 103 0 1 102 0.691 0 MFLP 42536D CD- STILL ON THE JOURNEY A 255 0 0 255 0.644 0 MFLP 42537D CD- HEY LUDWIG A 132 0 0 132 0.77 0 MFLP 42538D CD- DREAMCATCHER A 475 0 0 475 0.65 0 MFLP 42553D CD- GIFT OF THE TORTOISE A 471 0 13 458 0.598 0 MFLP 42556D CD- CHOO CHOO BOOGALOO A 239 0 3 236 0.556 0 MFLP 42562D CD- PAPA'S DREAM A 138 0 0 138 0.598 0 MFLP 42565D CD- LULLABY COLLECTION A 218 0 3 215 0.595 0 MFLP 42567D CD- CELEB OF BROADWAY D 81 0 2 79 0.623 0 MFLP 42569D CD- HAND IN HAND D 58 0 0 58 3.4 0 MFLP 42571D CD- GLOBALLULLABIES A 141 0 0 141 0.583 0 MFLP 42573D CD- KEEPERS OF THE DREAM A 163 0 0 163 0.556 0 MFLP 42580D CD- SACRED GROUND A 724 0 0 724 0.8 0 MFLP 42581D CD- CELEB OF ROCKNROLL A 242 0 32 210 0.546 0 MFLP 42583D CD- TRIBAL WINDS A 165 0 0 165 0.7 0
MFLP 42584D CD- VIVALDI'S FOUR SEASONS A 314 0 1 313 0.805 0 MFLP 42585D CD- CELEB OF FOLKMUSIC A 310 0 0 310 0.575 0 MFLP 5205 V- SINGING FOR FREEDOM N 2 0 0 2 1.99 0 MFLP 72532D CD- HALLOWEEN HOWLS A 348 0 0 348 0.515 0 MFLP 72534D CD- BIG BLUES A 137 0 1 136 0.573 0 MFLP 72538D CD- TRIBAL VOICES A 75 0 0 75 0.573 0 MFLP 72574D CD- CELEB OF SONG #2 A 30 0 3 27 0.586 0 MFLP 72746D CD- LULLABY FAVORITES A 354 0 8 346 0.527 0 MFLP 72748D CD- ALL SPIRITS SING A 65 0 1 64 0.629 0 MFLP 72860D CD- CHILDREN'S FAVORITES A 263 0 4 259 0.66 0 MFLP 72878D CD- CELEB OF CHRISTMAS D 185 0 0 185 0.573 0 MFLP 72930D CD- TRIBAL FIRES A 200 0 0 200 0.743 0 MFLP 72935D CD- CELEB OF LULLABY D 0 0 0 0 0.555 0 MFLP 72940D CD- SHAKIN' A TAILFEATHER A 46 0 0 46 0.69 0 MFLP 73183D CD- FREEDOM 20TH ANNIVERSARY A 366 0 0 366 0.652 0 MFLP 73268D CD- REALLY ROCKIN' A 284 0 0 284 0.672 0 MFLP 73355D 100 TODDLER FAVORITES (target) A 226 0 0 226 1.943 0 MFLP 73766D CD- TOP POP FOR KIDS D 0 0 0 0 0.729 0 MFLP 73828D CD- ALL TOGETHER NOW A 282 0 1 281 0.75 0 MFLP 73829D CD- THE WOMEN GATHER A 459 0 0 459 0.827 0 MFLP 73830D CD- NATURAL LIGHT D 1 0 0 1 0.77 0 MFLP 73854D CD- SUNDAY SCHOOL FAVORITES A 89 0 0 89 0.503 0 MFLP 73876D CD- REGGAE ON THE RIVER 20TH A 60 0 0 60 4.11 0 MFLP 73885D CD- FRIENDS FOREVER A 145 0 0 145 0.756 0 MFLP 73936D CD- WORLD PARTY N 293 0 0 293 1.63 0 MFLP 73937D CD- HEY MR SPACEMAN D 155 0 0 155 0.769 0 MFLP 73938D CD- FLOWER FAIRY ALPHABET A 315 0 6 309 0.784 0 MFLP 73939D CD- TODDLER TWOSOME A 124 0 1 123 1.35 0 MFLP 73963D CD- TOP POP #2 D 115 0 0 115 0.727 0 MFLP 73964D CD- TODDLERS SING SUNDAY SCH A 197 0 0 197 0.55 0 MFLP 73974D CD- BOZO & PALS A 45 0 0 45 0.7662 0 MFLP 73980D CD- 101 TODDLER FAVORITES HITS A 299 0 95 204 2.3 0 MFLP 74124D BABY LOVE - QUIET TIME A 683 0 13 670 0.688 0 MFLP 74125D BABY LOVE - PLAY TIME A 441 0 2 439 0.688 0 MFLP 74126D BABY LOVE - SONG TIME A 1101 0 1 1100 0.688 0
MFLP 74260D CD- BIRTHDAY PARTY BLISTER A 33 0 0 33 1.156 0 MFLP 74261D CD- BIRTHDAY PARTY SINGALONG A 714 0 0 714 0.546 0 MFLP 74269D CD- TRIBAL DREAMS A 248 0 1 247 0.515 0 MFLP 74283D CD- BROWN GIRL IN THE RING A 275 0 1 274 1.096 0 MFLP 74339D CD- CIRCLE GAME FOLK SONGS A 31 0 7 24 0.515 0 MFLP 74341D CD- CELEB OF COUNTRY D 85 0 0 85 3.67 0 MFLP 74342D CD- PRESCHOOL FAVS BLISTER A 4 0 0 4 1.076 0 MFLP 74343D CD- PRESCHOOL FAVORITES A 9 0 8 1 0.496 0 MFLP 74382D CD- PAINTING SIGNS A 0 0 1 -1 0.756 0 MFLP 74388D CD- LET'S GO TO THE MOVIES A 236 0 0 236 0.713 0 MFLP 74541D MARIA MULDAUR-SONG YOUNG HEART A 873 0 1 872 0.82 0 MFLP 74558D TAJ MAHAL-SONG FOR YOUNG HEART A 219 0 2 217 0.82 0 MFLP 74732D CD- ANIMAL FAVORITES BLISTER A 305 0 0 305 1.35 0 MFLP 74733D CD- ANIMAL FAVORITES A 0 0 7 -7 1.35 0 MFLP 75261D CD- TODDLER FAVORITES BLISTER A 0 0 2 -2 0.91 0 MFLP 75262D CD- TODDLER FAVORITES A 0 690 65 -65 0.491 0 MFLP 75264D CD- YOU CAN DO IT A 2 0 0 2 0.96 0 MFLP 75265D CD- GOOD STUFF A 27 0 0 27 0.808 0 MFLP 75309D CD- CAJUN FOR KIDS A 35 0 8 27 0.586 0 MFLP 75311D CD- SWINGIN' IN THE RAIN A 47 0 8 39 0.793 0 MFLP 75341D CD- CELEB OF WORLD A 200 0 3 197 0.581 0 MFLP 75502D CD- SILLY FAVORITES BLISTER A 242 0 0 242 1.21 0 MFLP 75503D CD- SILLY FAVORITES A 218 0 2 216 0.712 0 MFLP 75537D CD- CHILD'S HANUKKAH A 391 0 0 391 0.704 0 MFLP 75539D CD- CHRISTMAS FAVORITES A 395 0 0 395 0.577 0 MFLP 75540D CD- TRIBAL WATERS A 248 0 0 248 0.704 0 MFLP 75542D CD- CELEB OF DANCE D 197 0 0 197 0.583 0 MFLP 75592D CD- TODDLERS SING A 192 0 6 186 0.515 0 MFLP 75594D CD- CIRCLE TIME N 7 0 0 7 0.787 0 MFLP 75683D CD- CHILD'S GARDEN OF SONG A 172 0 1 171 0.77 0 MFLP 75685D CD- LULLABIES OF LATIN AMERICA A 390 0 1 389 0.553 0 MFLP 75686D CD- SPIRIT IN THE BLUES A 22 0 0 22 2.98 0 MFLP 75729D CD- PLAYTIME FAVORITES BLISTER A 1 0 0 1 1.106 0 MFLP 75730D CD- PLAYTIME FAVORITES A 138 0 17 121 0.701 0 MFLP 75794D CD- ON THE GOOD SHIP LOLLIPOP A 412 0 183 229 0.65 0 MFLP 75795D CD- THREE SISTERS A 11 0 0 11 0.86 0
MFLP 75844D CD- CELEB OF CLASSICAL MUSIC A 254 0 1 253 0.756 0 MFLP 75846D CD- SPANISH UNIVERSE OF SONG A 100 0 2 98 0.65 0 MFLP 75927D CD- SPOOKY FAVORITES A 452 0 0 452 0.508 0 MFLP 75949D CD- ALL YOU NEED IS LOVE A 272 0 1 271 0.583 0 MFLP 75951D CD- HIPPITY HOP A 136 0 1 135 0.537 0 MFLP 75953D CD- CELEB OF SILLIEST SONGS D 204 0 1 203 0.546 0 MFLP 75971D CD- TODDLERS SING PLAYTIME A 8 0 16 -8 0.515 0 MFLP 76087D CD- CELEB OF DISCO D 302 0 0 302 0.713 0 MFLP 76420D CD- A T-REX NAMED SUE A 208 0 3 205 1.844 0 MFLP 76421D CD- TRIBAL: 20TH ANNIVERSARY A 105 0 0 105 0.682 0 MFLP 76422D CD- RAISE YOUR VOICE A 92 0 0 92 1.502 0 MFLP 76517D CD- THE PEANUT MAN A 218 0 0 218 0.555 0 MFLP 76566D CD- MOST AMAZING TRUCK BLISTER A 318 0 1 317 1.09 0 MFLP 76567D CD- MOST AMAZING TRUCK SONGS A 22 0 1 21 1.09 0 MFLP 76581D CD- HITZONE D 29 0 0 29 0 0 MFLP 76657D CD- TODDLERS SING STORYTIME A 170 0 1 169 0.555 0 MFLP 76675D CD- TODDLER TRIO A 118 0 0 118 2.818 0 MFLP 76724D CD- RAGTIME ROMP A 158 0 0 158 2.33 0 MFLP 76762D CD- SAY YO BUSINESS A 250 0 0 250 0.69 0 MFLP 78085D CD- TODDLER TWOSOME BLISTER A 21 0 0 21 1.761 0 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 MFLP 78183D CD- WHAT LITTLE GIRLS MADE OF D 9 0 0 9 0.7321 0 MFLP 78220D CD- TRIBAL LEGENDS A 178 0 0 178 0.794 0 MFLP 78221D CD- CELEB OF AMERICA A 285 0 0 285 0.6 0 MFLP 78222D CD- TODDLER FAVOR TOO BLISTER A 18 0 0 18 1.061 0 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 MFLP 78292D CD- SINGING IN MY HEART D 161 0 1 160 0.674 0
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 MFLP 78932D CD- CELEB OF FAMILY D 147 0 0 147 0.72 0 MFLP 78986D CD- MOST AMAZING DINO BLISTER A 602 0 0 602 1.274 0 MFLP 78987D CD- MOST AMAZING DINO SONGS A 0 0 38 -38 0.604 0 MFLP 78989D CD- CLIFFORD THE BIG RED DOG A 15 0 0 15 0.638 0 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 MFLP 79841D CD- STORYTIME FAVORITE BLISTER A 29 0 0 29 1.118 0 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 MFLP 8905V BRAINY BABY: LAUGH AND LEARN N 7 0 0 7 9.98 0 MFLP 8907V BRAINY BABY: MUSIC N 6 0 0 6 9.98 0 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 NICHES 8449V DVD- CORAL REEF ADVENTURE A 35 0 0 35 10 0 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 PENTON 3197D BOB THE BUILDER CD & STORYBOOK N 1 0 0 1 6.73 0 PENTON 3198D WINNIE THE POOH CD & STORYBOOK N 1 0 0 1 6.73 0 PENTON 36232D CD- FRENCH LYRIC LANGUAGE N 1 0 0 1 5.384 0 PENTON 36233D CD- GERMAN LYRIC LANGUAGE N 15 0 0 15 5.6083 0 PENTON 36234D CD- ITALIAN LYRIC LANGUAGE N 17 0 0 17 6.73 0 PENTON 36235D CD- SPANISH LYRIC LANGUAGE N 18 0 1 17 6.73 0 PRINCE 6005 WHEELY BUG (SMALL) A 3 3 0 3 34 3 102 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 PUTUMA 3979D CD- REGGAE PLAYGROUND A 12 0 0 12 7.51 0 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 11 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. 12 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