FILED: NEW YORK COUNTY CLERK 03/14/ :45 PM INDEX NO /2016 NYSCEF DOC. NO. 7 RECEIVED NYSCEF: 03/14/2016 EXHIBIT F

Transcription

1 FILED: NEW YORK COUNTY CLERK 03/14/2016 :45 PM INDEX NO /2016 NYSCEF DOC. NO. 7 RECEIVED NYSCEF: 03/14/2016 EXHIBIT F Ltr. from PIP to PIL dated Nov., 2015

2 kids Phoenix International Publications, Inc. November, 2015 Wells Fargo Bank, National Association 150 East 42nd Street, 40th Floor New York, NY Attention: Matthew Sherman; Corporate, Municipal and Escrow Solutions Re: Request of Payment from Escrow Amount Dear Mr. Sherman, This notice is made pursuant to the Escrow Agreement by and among Phoenix International Publications, Inc. ("PIP"), Publications International, Ltd. ("PIL") and Wells Fargo Bank, National Association. Further reference is made to (i) the Asset Purchase Agreement, dated as of May, 2014, as amended on June 26, 2014 (the "Asset Purchase Agreement"), by and among Jiangsu Phoenix Education Publishing Co., Ltd., PIL, JRS Distribution Co., PIL Illinois Ltd., PIL L.L.C, Publications International, L.P., Publications International Limited Partnership, PIL Publications Iberia, S.L., and Mr. Louis Weber, (ii) the Claim Notice re Warehousing Service Loss Indemnification delivered by PIP to PIL on August, 2015 (the "Claim Notice on Warehousing Service Loss Indemnification"), (iii) the Claim Notice re Adjustment Relating to Returns delivered by PIP to PIL on August, 2015 (the "Claim Notice on Returns", together with the Claim Notice on Warehousing Service Loss Indemnification, the "Claim Notices"), and (iv) the Letter re Request of Indemnifications and Release of Escrow Amount delivered by PIP to PIL on November, 2015 (the "PIP Letter"). Capitalized terms used and not defined herein shall have the meanings ascribed to such terms in the Asset Purchase Agreement, the Escrow Agreement, the Claim Notices and the PIP Letter. Pursuant to Section 1.3(i) of the Escrow Agreement, we have determined that PIL's material breach of its obligations under Sections 4. and.3(a) of the Asset Purchase Agreement entitle us to a payment in a total amount of $1,, (the "Payment"). Please refer to the PIP Letter, the Claim Notice on Returns and the Claim Notice on Warehousing Service Loss Indemnification for the specific method of computation of each claim and the amount thereof, as well as the brief description of the facts upon which the respective claim is based. We have enclosed here the copy of the Claim Notices and the PIP Letter for your reference. We hereby provide you with such notice, and request the Payment from the Escrow Amount by wire transfer to the following account of us: Bank of China Routing and Transit #: ACTIVE 21064v North Lincoln Avenue, Lincolnwood, Illinois 607 Phone: Fax: pikidsmedia.com

3 ABA#: Account #: Further, we request that you do not release any Escrow Amount to PIL as PIL has the obligation to indemnify us against certain fees and penalties that may be imposed on us by the Mexican Governmental Authority. Please refer to the enclosed PIP Letter for the details of PIL' s indemnification obligations regarding the provision of Original Corporate Documents of PIL Mexico. We will make a separate request to you to further release the Escrow Amount once the total amount of the liability thereof is ascertained. If you have any questions regarding the foregoing, please contact us immediately. Very truly yours, Phoenix International Publication Inc. By: Name: Liang Qian Title: Director & SVP Business Development Cc: Louis Webber and Jeff Coyle Publication International, Ltd N. Cicero Avenue Lincolnwood, IL 607 Steven Schwartz Much Shelist 11 N. Wacker Drive, Suite 100 Chicago, IL Wenseng "Wendy" Pan (wpan@sidley.com) Sidley Austin LLP 77 Seventh Avenue New York, NY 1001 Enclosed: (i) Letter re Request of Indemnifications and Release of Escrow Amount; (ii) Claim Notice re Adjustment Relating to Returns; and (iii) Claim Notice re Warehousing Service Loss Indemnification. 2

4 kids Phoenix International Publications, Inc. VIA FEDERAL EXPRESS Publication International, Ltd N. Cicero Avenue Lincolnwood, IL 607 Attn: Mr. Louis Webber, CEO Re: Adjustment Relating to Returns Dear Sirs: This notice demanding payment is made pursuant to Section 4. of that certain Assets Purchase Agreement dated as of May, 2014 by and among the parties named therein (hereinafter the "Purchase Agreement"). Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms under the Purchase Agreement. Pursuant to the terms of the Purchase Agreement, it has been determined in good faith by Purchaser that, as illustrated in Exhibit A hereto, with respect to Returns during the five (5) month period immediately following the Closing Date, there is an Excessive Return Amount, which equals to US $ $1,64,04.. Section 4. of the Purchase Agreement provides further that the Sellers shall pay the Purchaser 50% of the Excessive Return Amount within fifteen (15) days upon Purchaser's written notice demanding payment. Purchaser hereby demands in good faith that Sellers deliver by wire transfer promptly but in no event later than August 26, 2015, $2,402.44, which represents 50% of the Excessive Return Amount, to the following account of the Purchaser: Bank of China Routing and Transit #: ABA#: Account Number: If you have any questions regarding the foregoing, please contact us immediately. Very try yours, 140A (I*/ L./ Q /A-A) 5--vp Title: On behalf of Purchaser cc: Encl. 730 North Lincoln Avenue, Lincolnwood, Illinois 607 Phone: Fax: pikidsmedia.com

5 Phoenix International Publications, Inc. Exhibit A Return Local Currency Exchange Rate Return In USD 3 611, $, Minn 3,604, M>7\1 EU Return UK Return Mexico Return Austrilia Return Sub Total International US Return AUD 23, , t'yv.t * g.*: 1''O2,75, ,75, Returns Upto /15/2014 $ 32 27A 35L 37,..._,... Total Return Provision In NWC NWC Return Prv. Adjustment. Total Provision $ 1,67,661.4 $ 13,2.00 $ 1,62,50.4 Excessive Return $ 1,64,04. 50% of Excessive Return $ 2, North Lincoln Avenue, Lincolnwood, Illinois 607 Phone: Fax: pikidsmedia.com

6 kids Phoenix International Publications, Inc. VIA FEDERAL EXPRESS Publication international, Ltd. JRS Distribution Co. (7373 N. Cicero Avenue Lincolnwood, IL 607 Attn: Mr. Louis Webber, CEO) Re: Warehousing Service Loss Indemnification Dear Sirs: Reference is made to that certain Transition Services Agreement dated as of July 16, 2014 by and among the parties named therein (hereinafter the"services Agreement"). Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms under the Services Agreement. Pursuant to the terms of the Services Agreement, PIL and JRS, as a Service Provider, has provided certain Warehousing Services to Phoenix International Publications Inc. And the Service Agreement provides that, among other things, such Warehousing Services shall be provided "In a manner consistent with the terms and conditions contained herein and at a level and quality of service and degree of care that is consistent with commercially reasonable efforts and in accordance with applicable law and consistent with each such service historically provided" (Section 2.2 of the Service Agreement). However, PIL and JRS have repeatedly failed such level and quality of service and the degree of care when providing such services to Phoenix International Publications Inc. during fiscal 2015 in breach of its legal obligations under the Service Agreement and as a direct result of such substandard services, as of May 31st, 2015, Phoenix International Publications Inc. has incurred direct out of pocket loss of US $$147,2.1, details of which are set forth in the Exhibit A hereto. Pursuant to the spirit and terms of the Service Agreement, including without limitation, Section 7.2 thereof, PIL and JRS shall be jointly liable to Phoenix US for all Its losses incurred resulting from or in connection with their breach of their legal obligations under the Service Agreement.Thus, Phoenix International Publications Inc. hereby demands that PIL and JRS deliver by wire transfer promptly but in no event later than August 30, 2015, US $$147,2.1 to the following account of the Phoenix US: Bank of China Routing and Transit #: ABA#: Account #: If you have any questions regarding the foregoing, please contact us immediately. Very truce yours, ta (two eszia-4) Name Title: S VP On behalf of Phoenix Ihternational Publications Inc. cc: End. Exhibit A 730 North Lincoln Avenue, Lincolnwood, Illinois 607 Phone: Fax: pikidsmedia.com

7 Exit). A Direct AR Deductions for Warehousing Service Isseus Adjust Date Customer 6 11/30/2014 AR-R006 KOHLS DEPARTMENT REF: /30/2014 AR-R006 KOHLS DEPARTMENT REF: /30/2014 AR-R006 KOHLS DEPARTMENT REF: /30/2014 AR-R006 KOHLS DEPARTMENT REF: //2014 AR-R002 KOHLS DEPARTMENT REF: /11/2014 AR-R006 KOHLS DEPARTMENT REF: /16/2014 AR-R0102 KOHLS DEPARTMENT REF: /31/2014 AR-R0113 KOHLS DEPARTMENT REF: /15/2015 AR-R03 KOHLS DEPARTMENT REF: /15/2015 AR-R03 KOHLS DEPARTMENT REF: /15/2015 AR-R03 KOHLS DEPARTMENT REF: /15/2015 AR-R03 KOHLS DEPARTMENT REF: /15/2015 AR-R03 KOHLS DEPARTMENT REF: /15/2015 AR-R03 KOHLS DEPARTMENT REF: /5/2015 AR-R0176 TARGET CENTRAL PR REF: /5/2015 AR-R017 AMAZON.COM INC REF: //2015 AR-R0207 RITE AID CORP REF: /30/2015 AR-R0230 MENARDS INC PLAN REF: /11/2015 AR-R023 CVS DISTRIBUTION REF: /14/2015 AR-R0241 MODECRAFT FASHION REF: /26/2015 AR-R0255 MODECRAFT FASHION REF: /2/2015 AR-R025 TOYS R US INC yen REF: /2/2015 AR-R025 KOHLS DEPARTMENT REF: /2/2015 AR-R025 STAPLES INC - VEN REF: /2/2015 AR-R025 HOME SHOPPING NET REF: /2/2015 AR-R0267 WEGMANS FOOD MARK REF: /30/2015 GL-J170 CORRECT DM Ref: //2015 AR-R027 CVS DISTRIBUTION REF: /26/2015 AR-R0310 AMAZON.COM INC REF: ALLOWANCE - CATALOG 5/27/2015 GL /30/2015 AR-R0226 1/30/2015 SO-R ALLOWANCE - MASS DISTRIBUTIC 5/22/2015 SO-R ALLOWANCE - MASS DISTRIBUTIC 10 3/6/2015 SO-R ALLOWANCE 6 11/14/2014 SO-R ALLOWANCE 6 11/14/2014 SO-R ALLOWANCE - BOOK STORES 5/2/2015 SO-R ALLOWANCE - SUPER MARKETS 5/22/2015 SO-R01 1/30/2015 SO-R05 1/31/2015 SO-R /10/2014 SO-R ALLOWANCE 6 11/14/2014 SO-R ALLOWANCE 6 11/14/2014 SO-R ALLOWANCE - BOOK STORES 11 4/30/2015 SO-R016 7 /5/2014 SO-R001 7 /5/2014 SO-R001 7 //2014 SO-R002 7 /17/2014 SO-R00 1 CORRECT TARGET CENTRAL PR REF: OLLIES BARGAIN OU REF: AFFILIATED FOODS REF:24037 ANCONNECT - WALMA REF: MAGRUDY ENTERPRIS REF: BESTSELLER INC REF: CALENDAR CLUB LLC REF: BIG Y FOODS INC REF: OLLIES BARGAIN OU REF: OLLIES BARGAIN OU REF: TOYS R US INC yen REF: TOYS R US INC yen REF: TOYS R US INC ven REF: AMAZON.COM INC REF: TOYS R US INC ven REF:50077 TOYS R US INC ven REF:5007 TOYS R US INC yen REF: TARGET CENTRAL PR REF:50063 Amount , , , , ,76.5 4, _ 1,541,

8 ALLOWANCE - MASS MARKET ALLOWANCE - MASS DISTRIBUTIC ALLOWANCE - BOOK STORES ALLOWANCE - BOOK STORES ALLOWANCE - BOOK STORES ALLOWANCE - MASS DISTRIBUTIC ALLOWANCE - MASS MARKET ALLOWANCE - MASS DISTRIBUTIC ALLOWANCE - MASS DISTRIBUTIC ALLOWANCE - INTERNATIONAL ALLOWANCE - MASS MARKET ALLOWANCE - CATALOG ALLOWANCE - BOOK STORES ALLOWANCE - GIFT STORES ALLOWANCE - SUPER MARKETS /30/2015 SO-R016 /1/2014 SO-R0101 1/1/2015 SO-R0116 1/1/2015 SO-R0116 1/20/2015 SO-R0117 1/27/2015 SO-R02 1/30/2015 SO-R05 1/30/2015 SO-R05 1/31/2015 SO-R06 1/31/2015 SO-R06 2//2015 SO-R0 2/11/2015 SO-R0131 2/13/2015 SO-R0133 2/2/2015 SO-R0144 3/6/2015 SO-R0147 3/6/2015 SO-R0147 3/6/2015 SO-R0147 5/26/2015 SO-R0200 4/2/2015 SO-R0 5/7/2015 SO-R01 5/11/2015 SO-R010 5/1/2015 SO-R015 5/22/2015 SO-R01 5/2/2015 SO-R0202 5/2/2015 SO-R0202 5/2/2015 SO-R0202 5/2/2015 SO-R0202 5/2/2015 SO-R0203 5/2/2015 SO-R0203 5/2/2015 SO-R0203 5/2/2015 SO-R0203 5/2/2015 SO-R0203 5/30/2015 SO-R0204 5/30/2015 SO-R0204 6//2015 SO-R0206 MODECRAFT FASHION REF:50073 ANCONNECT - WALMA REF: AMAZON.COM INC REF:50005 AMAZON.COM INC REF:50011 TARGET CENTRAL PR REF:50015 TARGET CENTRAL PR REF: TARGET CENTRAL PR REF: TARGET CENTRAL PR REF: TOYS R US INC ven REF: TOYS R US INC yen REF: AMAZON.COM INC REF:50103 BAKER & TAYLOR BO REF:50100 TARGET CENTRAL PR REF: TARGET CENTRAL PR REF: MODECRAFT FASHION REF: ANCONNECT - WALMA REF: ANCONNECT - WALMA REF: OLLIES BARGAIN OU REF:501 PETER WARD BOOK E REF: MODECRAFT FASHION REF: MODECRAFT FASHION REF: MODECRAFT FASHION REF: BEALL'S OUTLET ST REF: MODECRAFT FASHION REF:50141 TOYS R US INC ven REF:50142 ZULILY INC REF:50143 FIVE BELOW INC REF: STELLAR PARTNERS REF: TOYS R US INC ven REF: OLLIES BARGAIN OU REF: PROMOTIONS UNLTD REF: TOYS R US (CANADA REF: BUY BUY BABY VEND REF: BLAIN SUPPLY (VEN REF: H E BUTT GROCERY REF: /26/2015 AR-R0135 1/26/2015 AR-R0135 1/26/2015 AR-R0135 2/10/2015 AR-R0154 2/13/2015 AR-R015 3/5/2015 AR-R017 4//2015 AR-R0207 5/22/2015 AR-R024 5/22/2015 AR-R0251 6/23/2015 AR-R0302 6/23/2015 AR-R0303 AMAZON.COM INC REF: AMAZON.COM INC REF: AMAZON.COM INC REF:00011 TARGET CENTRAL PR REF:00022 AMAZON.COM INC REF:00024 AMAZON.COM INC REF:0006 RITE AID CORP REF: TNG CA HALIFAX REF: CENTURY 21 DEPART REF: TARGET CENTRAL PR REF: TARGET CENTRAL PR REF: , , , , , , , , , _ 147,2.1-