EXHIBIT 2.3
TERMINATION, RELEASE AND SETTLEMENT AGREEMENT
This Agreement is made this -- day of December, 1999 (the "Effective
Date") by and among Futech Interactive Products, Inc., an Arizona corporation
("Futech"), Fundex Games, Ltd., a Nevada corporation ("Fundex"), Janex
International, Inc., a Colorado corporation ("Janex"), Futech Interactive
Products (Delaware) Inc., a Delaware corporation ("Futech Delaware"), Futech
Toys & Games, Inc., a Nevada corporation ("Futech Nevada"), Xxxxxxx X. Xxxxx
("Xxxxx"), Xxxx X. Xxxxx, III, and Xxxx X. Xxxxx, XX. Futech, Janex, Futech
Delaware, and Futech Nevada are sometimes collectively referred to as the
"Remaining Constituents". Xxxx X. Xxxxx, III, and Xxxx X. Xxxxx, XX, are
sometimes collectively referred to as the "Fundex Shareholders". Goett is
sometimes referred to as the "Remaining Shareholder".
RECITALS
A. The parties have entered into a certain Merger Agreement dated as of
June 7, 1999 (the "Merger Agreement"), pursuant to which Futech, DaMert Company,
a California corporation ("DaMert"), Xxxxx Corporation, a Delaware corporation
("Xxxxx"), and Janex are to merge with and into Futech Delaware and Fundex is to
merge with an into Futech Nevada (such transactions being referred to as the
"Mergers").
B. Fundex and the Fundex Shareholders have formally withdrawn as
participants in the Mergers on December 21, 1999 (the "Withdrawal Date") and the
Remaining Constituents have accepted such withdrawal.
C. As of the Withdrawal Date the parties have orally agreed on their
understanding with respect to the withdrawal of Fundex and the Fundex
Shareholders as participants in the Mergers. The parties now desire to
memorialize such understanding pursuant to this Agreement and to resolve all
other matters or issues with respect to Fundex, Fundex Shareholders and the
Remaining Constituents.
CLAUSES
In consideration of the foregoing and the mutual covenants and
agreements set forth below, the parties agree as follows:
I. TERMINATION OF FUNDEX AND FUNDEX SHAREHOLDERS AS PARTIES TO MERGERS
A. The parties agree that Fundex and the Fundex Shareholders are hereby
terminated as parties to the Mergers and the Merger Agreement, and
that Fundex and the Fundex Shareholders are released from all rights
and obligations under the Merger Agreement as if they were never
parties to such Agreement.
B. Other than describing the terms of the License Agreement (defined
below), the Remaining Constituents will cause all references to Fundex
and the Fundex Shareholders to be removed from the Merger Agreement
and from any and all documents filed with the Securities and Exchange
Commission or any other governmental agency in connection with any
filings required as a result of the Mergers.
C. As soon as practical after the execution of this Agreement, Futech
will notify the Securities and Exchange Commission that Fundex is no
longer a party to the Mergers and will provide evidence reasonably
acceptable to Fundex that the Securities and Exchange Commission has
been so notified.
II. RELEASE
A. Each of the Remaining Constituents and the Remaining Shareholder
voluntarily and without qualification waives, releases, covenants not
to xxx, acquits and forever discharges the Fundex Shareholders,
'Fundex and their officers, directors, shareholders, agents,
employees, heirs, successors, and assigns (the "Fundex Released
Parties") from all claims, demands, actions, liabilities, causes of
action and any other claims for relief, compensation or remuneration
whatsoever, in law or equity, known or unknown (the "Claims"), which
any of them now has, or may have had, relating in any manner to the
Mergers, the Merger Agreement or any other matter involving the
parties which arose on or prior to the Effective Date, whether or not
the Remaining Constituents or the Remaining Shareholder has knowledge
of the same. The parties specifically intend that this Agreement
constitutes a general release of the Fundex Released Parties from any
and all claims, notwithstanding any statute, rule of law, or rule of
judicial construction to the contrary, and that the preceding
constitutes a material inducement to Fundex and the Fundex
Shareholders to enter into this Agreement. The Remaining Constituents
and the Remaining Shareholder agree that this Agreement constitutes a
complete, general release, settlement and compromise of all Claims
against the Fundex Released Parties including, but not limited to: (1)
claims for indemnification, segregation or other obligations arising
pursuant to the interpretation of any law or otherwise; (2) claims
that may arise in the future with respect to the claims, events or
matters already in existence; and (3) unknown claims and/or unlisted
claims, including any Claims under any statute or common law.
B. Each of Fundex and the Fundex Shareholders voluntarily and without
qualification waives, releases, covenants not to xxx, acquits and
forever discharges the Remaining Shareholder, Remaining Constituents
and their officers, directors, shareholders, agents, employees, heirs,
successors and assigns (the "Non-Fundex Released Parties") from all
Claims, which any of them now has, or may have had, relating in any
manner to the Mergers, the Merger Agreement or any other matter
involving the parties which arose on or prior to the Effective Date,
whether or not Fundex and the Fundex Shareholders have knowledge of
the same. The parties specifically intend
that this Agreement constitutes a general release of the Non-Fundex
Released Parties from any and all Claims, notwithstanding any statute,
rule of law, or rule of judicial construction to the contrary, and
that the preceding constitutes a material inducement to the Remaining
Constituents and the Remaining Shareholder to enter into this
Agreement. Fundex and the Fundex Shareholders agree that this
Agreement constitutes a complete, general release, settlement and
compromise of all Claims against the Non-Fundex Released Parties
including, but not limited to: (1) claims for indemnification,
segregation or other obligations arising pursuant to the
interpretation of any law or otherwise; (2) claims that may arise in
the future in respect to the claims, events or matters already in
existence; and (3) unknown claims and/or unlisted claims, including
any claims under any statute or common law.
C. The releases provided in this Agreement do not release any party with
respect to Claims arising as a result of a party's failure to comply
with this Agreement.
D. The Remaining Constituents and the Remaining Shareholder hereby
covenant and agree never to xxx Fundex or the Fundex Shareholders on
the basis of any and all claims of any type arising in any way out of
the Merger Agreement or the termination of the participation of Fundex
or the Fundex Shareholders in the Mergers. The Remaining Constituents
and the Remaining Shareholder covenant to use their best efforts to
assure XxXxxx, Xxxxx, their officers, shareholders, successors and
assigns never xxx Fundex or Fundex's Shareholders on the basis of any
and all claims of any type arising in anyway out of the Merger
Agreement or Termination of Fundex's participation in the Mergers.
III. INDEMNIFICATION
The Remaining Constituents, the Remaining Shareholder their successors and
assigns hereby agree to, jointly and severally, indemnify Fundex and the Fundex
Shareholders and hold Fundex and the Fundex Shareholders harmless from and
against any and all loss, liability, claim, cost, damage and expense whatsoever
(including without limitation any legal and other fees and expenses incurred in
connection with, and any amount paid in settlement of, any claim, action, suit
.or proceeding) arising out of or in any way connected to the Mergers and the
Merger Agreement, including, without limitation, any filings with the Securities
and Exchange Commission or any governmental authority in connection with the
Mergers or any action or Claim against Fundex or the Fundex Shareholders by any
party to the Merger Agreement, including XxXxxx, Xxxxx, their shareholders,
officers, successors and assigns.
IV. FUTECH LOAN
Futech has previously loaned to Fundex the sum of Two Hundred Twenty-Five
Thousand Dollars ($225,000) (the "Loan"). In consideration of the Release by
Fundex of the Remaining Constituents and the Remaining Shareholder pursuant to
this Agreement and the other agreements of Fundex pursuant to this Agreement,
and as liquidated damages for any claims which Fundex may have against any of
the Remaining Constituents or Remaining Shareholder, Futech agrees that the
obligation of Fundex to repay the Loan, including any interest or other charges
accrued on such loan, is hereby forgiven in its entirety. Futech shall return
any executed note evidencing the Loan to Fundex which note will be marked
"Canceled".
V. CERTAIN INVENTORY
A. Fundex is in possession of Wet Pet inventory owned by Futech,, which
inventory was to be marketed by Fundex. Futech agrees that Fundex will
be entitled to retain such inventory and hereby assigns, transfers and
conveys to Fundex free and clear of all liens, claims and
encumbrances, all right, title and interest in such inventory. As
consideration for the transfer of all the inventory to Fundex, Fundex
hereby grants to Futech a credit against future purchases of inventory
from Fundex by Futech in the amount of $50,000. Futech may use such
credit against any purchases of inventory from Fundex during the
twenty four (24) month period beginning on the Effective Date. Any
unused credit will expire upon the expiration of such twenty four (24)
month period. Futech will only be entitled to utilize such credit to
the extent of fifty per. cent (50%) of the purchase price of inventory
purchased from Fundex with respect to any order, until the entire
credit is utilized. A price list is attached hereto and incorporated
herein, Exhibit A.
B. Futech agrees to purchase from Castlespring Enterprises Ltd all
inventory and components related to NASCAR Board Games previously
marketed by Fundex. Fundex agrees that it will no longer market the
NASCAR Board Games.
VI. LICENSE AGREEMENT
Futech and Fundex have entered into a License Agreement dated June 7, 1999
("License Agreement"). Fundex and Futech agree that as soon as practical after
the execution of this Agreement, the License Agreement shall be amended as
follows:
A. All references to the Loan, Merger and Merger Agreement shall be
deleted.
B. Notwithstanding anything in the License Agreement to the contrary,
provided prior written notice, Futech may assign the License Agreement
to Janex.
C. Pursuant to the provisions of Section (a)(ii) of the License
Agreement, the rights licensed to Fundex with respect to certain
Futech Products shall include "Malibu Fun Products" and "Wet Pets
Products", and the License Agreement shall be modified in all respects
to evidence the addition of such additional products. For purposes of
the "Malibu Fun Products" and "Wet Pets Products" Janex is hereby
added as a party to the license agreement and agrees to and is bound
by the terms and provisions of such License Agreement.
D. Fundex will be granted the option to extend the term of the License
for an additional one (1) year upon written notice to Futech on or
before September 30, 2000. Fundex
will provide Futech with forecasts for items under the license
agreement for the following fiscal year no later than September 30 of
the preceding year. These projections are forecasts and Fundex makes
no representations and warranties that such forecasts will be
achieved. Parties agree not to xxx Fundex or Fundex Shareholders for
any reasons with respect to the forecasts.
A. Fundex will agree that all products manufactured by or for Fundex
under the License Agreement will be manufactured by Early Light
International (Holdings) Ltd. ("Early Light") or such other
manufacturer approved by Futech, which approval shall not be
unreasonably withheld. Notwithstanding the foregoing, Fundex is
presently manufacturing certain of the products and has incurred
substantial tooling and other costs in connection with such
manufacturing. In the event that Futech does not consent to the
manufacturer of the products as currently being manufactured by
Fundex, then Futech shall be responsible for and shall pay all tooling
and other costs incurred by Fundex in connection with the manufacturer
of the products at a facility other than the current facility being
utilized by Fundex. Any tooling owned by Futech will be forwarded to
Early Light at Futech's reasonable request.
B. Futech shall have the non-exclusive right to market, distribute and
sell all other products of Fundex (the "Fundex Other Products"),
including but not limited to marketing on the wholesale distribution
portion of the Futech/New Futech Internet site. The Fundex Licensed
Products and the Fundex Other Products are sometimes collectively
referred to in this Section as the "Fundex Products". Fundex agrees
that it will not permit any third party the exclusive right to market
on the Internet the products manufactured by or for Fundex under the
License Agreement, subject to the rights of Fundex to offer or sell
said products on its own Web site. At Futech's cost, Fundex will
provide Futech catalogue artwork and/or photographs on computer media,
including CD Rom."
C. For the Fundex Products which are purchased by Futech, Futech shall
pay Fundex ninety percent (90%) of the wholesale sales price for such
products. For Fundex Products sold through the Futech Internet site,
Fundex shall be compensated by Futech for ordinary and reasonable
costs for fulfillment and shipping costs associated with the shipment
to the consumer. All amounts due from Futech to Fundex shall be
payable within thirty (30) days of Fundex shipping Fundex Products.
D. All amounts payable for third party licenses, (i.e., Jellibies) above
shall be payable directly to Futech (who shall be responsible for all
payments to the original licensor) on a calendar quarterly basis, by
the 254 day following the month to which the payments relate. Amounts
not timely paid shall accrue interest at the rate of eighteen percent
(18%) per annum from the due date until paid in full. Fundex agrees to
pay to Futech $15,000 (minimum royalties) on the Jellabies license. To
the extent the royalties paid to Futech for Jellabies products is less
than Minimum Royalty during the two year license period, Fundex shall
pay the difference between the amount paid to Futech and the Minimum
Royalty within 30 days after the end of the licensing period.
E. Except as provided for above in this Section, the License Agreement
remains in full force and effect, unmodified, and enforceable pursuant
to its terms.
F. The parties will use reasonable best efforts-to continue jointly
developing new products to be incorporated into the existing License
Agreement upon similar terms.
I. GENERAL
A. This Agreement shall be binding upon and inure to the benefit of the
parties and their respective personal representatives, heirs,
successors and assigns.
B. This Agreement shall be governed by, construed and enforced in
accordance with the laws of the State of Delaware, without giving
effect to the conflicts of law and rules thereof.
C. ARBITRATION
(i) Any controversy or claim between or among the parties hereto,
including but not limited to those arising out of or relating to
this Agreement, shall be determined by binding arbitration in
accordance with the Federal Arbitration Act (or, if not
applicable, the applicable Delaware law), the rules of practice
and procedure for the arbitration of commercial disputes of the
AAA, and the "Special Rules" set forth below. In the event of any
inconsistency, the Special Rules shall control. Judgment upon any
arbitration award may be entered in any court having
jurisdiction. Any party to this Agreement may bring an action,
including a summary or expedited proceeding, to compel
arbitration of any controversy or claim to which this Agreement
applies in any court having jurisdiction over such action.
(ii) Special Rules. The arbitration shall be conducted in Chicago,
Illinois, and administered by AAA, who will appoint an
arbitrator. All arbitration hearings will be commended within
ninety (90) days of the demand for arbitration. Further, the
arbitrator shall only, upon a showing of cause, be permitted to
extend the commencement of such hearing for an additional sixty
(60) days. Notwithstanding any other term of this Agreement, (a)
the party seeking and initiating the arbitration shall advance
funds, as necessary, to institute and conduct the arbitration
procedure; and (b) following a final determination of the matter
submitted to arbitration, the non-prevailing party shall bear,
and shall promptly pay, the cost of the arbitration procedure and
of the reasonable
costs and expenses, including attorneys' fees, of the prevailing
party.
D. This Agreement may be executed by the parties in one or more
counterparts, and any number of counterparts signed in the aggregate
by the parties will constitute a single instrument. If the parties
agree to accept facsimile signatures and counterparts to this
Agreement facsimile signatures will for all purposes be binding upon
the parties.
E. All press releases regarding this Agreement and the relationship among
the parties will be reasonably approved by the other party prior to
issuance.
F. Fundex shall promptly file a trademark assignment assigning to Futech
its rights, if any, to the trademarks "Tracksounds" and "Soundzone".
FUTECH INTERACTIVE PRODUCTS, INC.
an Arizona Corporation
By: /s/ Xxxxxxx Xxxxx
Its: __________________
FUTECH GAMES, LTD.
a Nevada Corporation
By: /s/ Xxxx X. Xxxxx, Xx
Its: __________________
JANEX INTERNATIONAL, INC.
a Colorado Corporation
By: /s/ Xxxxxxx Xxxxx
Its: __________________
FUTECH INTERACTIVE PRODUCTS (DELAWARE), INC.
a Delaware Corporation
By: /s/ Xxxxxxx Xxxxx
Its: __________________
FUTECH TOYS AND GAMES, INC.
a Nevada Corporation
By: /s/ Xxxx X. Xxxxx, XX
Its: __________________
/s/ Xxxxxxx Xxxxx
---------------------
Xxxxxxx Xxxxx
/s/ Xxxx X. Xxxxx, III
---------------------
Xxxx X. Xxxxx, III
/s/ Xxxx X. Xxxxx, XX
---------------------
Xxxx X. Xxxxx, XX
