Exhibit 10.32


FREEHAND SYSTEMS, INC.
95 First St.

Suite 200

Los Altos, CA 94022


September 24,
2007


HAL LEONARD
CORPORATION

777 West Bluemound Road

Milwaukee, Wisconsin 53213


Gentleman:


This letter
agreement (this “Agreement”) will set forth the understanding and agreement
reached between Hal Leonard Corporation (hereinafter referred to as “HLC”) and
FreeHand Systems, Inc. (hereinafter referred to as “FSI”) with respect to the
distribution and sale of FSI’s MusicPad line of digital music display devices
and accessories (hereinafter referred to as the “Products”).


1. FSI hereby
appoints and designates HLC, during the term (as hereinafter defined) of this
Agreement, FSI’s representative in the Territory (as hereinafter defined) for
the distribution and sale of the Products. Subject to a) below, HLC’s
distribution rights shall be:


	
  

 	
  

 	
  

 
	
  

 	
 a)

 	
 HLC shall
 issue a purchase order to FSI (the “Purchased Product”) under such pricing,
 payment and delivery terms that the parties shall mutually agree upon. In
 exchange for that commitment and payment, FSI will grant distribution rights
 as described below.

 
	
  

 	
  

 	
  

 
	
  

 	
 b)

 	
 exclusive to
 the music trade (musical instrument retailers and music print retailers)
 other than those accounts retained by FSI as set for the on the annexed
 Schedule A – as to which both HLC and FSI may market directly. HLC and FSI
 agree to cooperate with respect to those dealers to maximize sales; and

 
	
  

 	
  

 	
  

 
	
  

 	
 c)

 	
 non-exclusive
 direct to schools and direct to consumers, and all other markets.

 



2. The term of
the Agreement shall be for one (1) year from the dated hereof, which term shall
thereafter be automatically renewed for consecutive additional periods of one
(1) year each unless either party provides the other party with not less that
ninety (90) days prior written notice that such party does not intend for the
term of this agreement to extend. Exclusivity will continue only if during the
period of this Agreement HLC has sold at least 5,000 units. Otherwise renewal
will be on a non-exclusive basis in the Territory.






3. The
territory covered herein is United States of America, Canada, Mexico, Central
America, South America, Australia, and New Zealand, collectively the
“Territory”.


4. HLC shall
be solely responsible for the warehousing, shipping, distribution, and collection
of receivables for the Products delivered to HLC hereunder and for all costs
and expenses incurred in connection therewith and associated thereto. In
connection with the foregoing, HLC shall maintain, at HLC’s sole cost and
expense, adequate insurance with respect to all Products within HLC”s custody
and control. As full consideration for its services HLC shall be entitled to
retain as distribution fee fifteen percent (15%) of all monies received by HLC
from the sale of the Products (the “Gross Receipts”). HLC shall pay to FSI the
balance of the Gross Receipts after the deduction of unite cost associated with
any purchased Product sold. HLC shall charge FSI a fulfillment fee of Thirty
Five Dollars ($35.00) for each Product sold, invoiced, and collected by FSI. In
addition, HLC shall charge FSI the united costs associated with any Purchased
Products sold, invoiced, and collected by FSI. Such fees shall be invoiced on a
monthly basis, payable within thirty (30) days.


5. The pricing
at which HLC shall distribute and sell the Products shall be established by HLC
which approval of FSI.


6. As between
HLC and FSI, FSI shall be responsible for all warranty obligations on the
Products and shall handle, at its expense, all issues relating to technical
support, including customer product inquires, defects, and repair. HLC shall
not alter any warranty information given to it by FSI. In connection therewith,
FSI shall supply HLC with referral contact information for such technical
support. HLC shall promptly notify FSI of all warranty claims that HLC become
aware of. FSI and HLC will train HLC’s dealers in FSI’s product support
alternatives. HLC will be responsible for responding to dealer questions. FSI
will be responsible for responding to end user customer questions pursuant to
its support alternatives.


7. FSI shall
ship an initial inventory of the Products as mutually determined by HLC and FSI
to HLC’s warehouse in Winona, Minnesota at FSI’s expense. Thereafter, HLC will
order and FSI will supply HLC with additional Product at FSI’s expense as
needed.


8. HLC shall
have the right to use at cost plus 10% reasonable quantities, subject tot FSI’s
approval, of the Products for sales presentations and trade shows.


9. HLC agrees
to promote the Products using HLC’s normal advertising methods including, but
not limit to, catalog space, trade releases, flyers, trade shows, etc. Cost for
any 


2






advertising
and promotion which is dedicated solely to the Products shall be shared between
the parties on the basis of 100% of such costs I the first six (6) months
payable by HLC; fifty percent (50%) of such costs payable by HLC and (50%) of
such costs payable by FSI thereafter; provided that any such advertising and
promotion is subject to the mutual approval of the parties.


10. If HLC
elects exclusivity pursuant to Item 1 a), FSI shall cause each copy of the
Products shipped to HLC hereunder to bear the legend, either on the Products
themselves, or on the packaging in which they are wrapped for distribution, in
substantially the following form:


Exclusive Distributor: Hal Leonard
Corporation


In the event
FSI fails or neglects to cause such legend to appear, HLC shall have the right
to add an appropriate legend by affixing a sticker to each copy of the Products
(or the wrapping containing the Products) distributed by HLC. HLC shall not
remove or alter any trademark, trade name, copyright or patent identification
that may be affixed to the Products by label or otherwise.


11. Except the
first purchase order under Item 1 a), HLC shall account to FSI for and pay all
sums due as FSI’s share of Gross Receipts after the deduction of a reasonable
reserve against returns, within thirty (30) days after the last day of each
month. The payment by HLC shall be accompanied by a statement which shall set forth
with respect to the period being accounted for, the total amount received by
HLC from sales of the Products, the total number of Products sold, and the
total amount retained by HLC in connection with such sales and such other
information as FSHI may from time to the time reasonably request. Each reserve
shall by liquidated by paying the amount thereof to FSI no later than four (4)
accounting periods after such reserve is established.


12. FSI or
FSI’s authorized representatives shall have the right to inspect and audit
HLC’s books and records, at FSI’s sole cost and expense, relating to
transactions involving the rights granted hereby no more frequently that once
during each year of the term hereof and for a period ending to (2) years after
FSI’s receipt of the last statement due hereunder. Such audit and inspection
shall be conducted at HLC’s office during normal business hours on at least
fifteen (15) days prior written notice. Amounts due FSI shall be paid by HLC
promptly upon receipt and acceptance of the audit results. If the amount due
FSI exceeds 5% of the total amount due for the period, HLC shall also pay the
cost of the audit.


13. Upon the
expiration of the term of this Agreement, HLC shall upon FSI’s request and at
FSI’s sole expense ship FSI or to FSI’s designee al existing inventory of the
Products or, at


3






FSI’s
election, destroy such existing inventory. Notwithstanding the foregoing, with
respect to the Purchase Product, HLC shall have the right to continue to sell
any remaining inventory through exhaustion, unless FSI elects to purchase same
from HLC within thirty (30) days after expiration of the term.


14. Each of
the parties hereto represents and warrants to the other that it has the full
and unencumbered right and authority to enter into this Agreement and perform
in accordance with the terms hereof. FSI represents and warrants that FSI owns
and controls all rights in the trademarks, trade names, designs, logos, patents
and technology which are being made available in connection with the Products,
together with all copyrighted material (if any) being made available or which
will be made available by FSI for use by HLC hereunder; that with respect to
any Products bearing third party copyrighted musical compositions or other
copyrighted material, FSI shall assume sole responsibility for securing all
necessary licenses and permissions for the use thereof and FSI shall make all
royalty payments as required by any and all third party copyright owners; that
the Products do not invade the right of privacy of any party, or contain any
matter libelous or otherwise in contravention of the rights of any party, and
that all statements right to use and to authorize HLC to use names and
likenesses of all individuals whose names or likenesses are used in connections
with the Products, the packaging of the Products and all advertising and
publicity material related to the Products and made available by FSI for HLC’s
use in connection which HLC’s distributions and sale of copies of the Products
on FSI’s behalf; that no use by HLC of any such trademarks, trade names,
designs, logos, copyrighted materials or names or likenesses of agreement will
violate or infringe upon the rights of any third party; and that FSI has not
heretofore granted, transferred or assigned and during the term hereof will not
grant, transfer or assign to any third party any of the rights granted to HLC.


15. Each of
the parties hereto agrees to indemnify and save and hold the other harmless
from and against any and all claims, liabilities, damages and expenses
(including reasonable attorneys’ fees) resulting from breach by such party of
any of the foregoing which are adjudicated or settled with the consent of the
indemnitor, which consent shall not be unreasonable withheld. The indemnitee shall
give the indemnitor prompt notice of any claim to which the foregoing indemnity
relates and the indemnitor shall have the opportunity to join in the defense of
such claim at its sole cost and expense and with counsel of its choice.


16. Neither
party hereto shall be entitled to recover damages or to terminate the term of
the Agreement by reason of the breach by the other party of any of its
obligations hereunder unless such breach is a material breach of a material
obligation, and


4






unless such
breaching party has failed to remedy such breach within thirty (30) days
following receipt of written notice of such breach for the other party.


17. HLC’s and
FSI’s status hereunder shall be that of independent contractors and nothing
contained herein shall create, expressly or by implication, a partnership,
joint venture or other association between the parties. HLC shall not have the
right to assign this Agreement and/or any of HLC’s rights hereunder to any
person, firm or corporation except that HLC may so assign this Agreement of
HLC’s said rights to any subsidiary. Parent company, affiliate or to any third
party acquiring a substantial portion of HLC’s assets or stock.


18. Agreement
shall be binding upon and inure to the benefit of the parties hereto their respective
successors and permitted assigns. This Agreement may not be assigned by either
HLC or FSI without the written permission of the other party. This agreement
shall be construed and interpreted under the laws of the Sate of New York. Any
dispute hereunder shall be determined by a court of competent jurisdiction
within the State of New York.


If the
foregoing fully and accurately sets forth HLC’s understanding of the agreement
reached between HLC and FSI, kindly execute and return the enclosed copy of this
Agreement to the undersigned.


Very truly
yours,


FREEHAND
SYSTEMS, INC.


	
  

 	
  

 	
  

 	
  

 
	
 By

 	
 /s/ Kim A.
 Lorz

 	
  

 
	
  

 	
 


 	
  

 
	
  

 
	
 Fed. I.D.

 	
 #77-0569720

 	
  

 
	
  

 	
 


 	
  

 
	
  

 
	
 HAL LEONARD
 CORPORATION

 
	
  

 
	
 By

 	
 S/S Larry
 Morton

 	
  

 
	
  

 	
 


 	
  

 



5






Exhibit A


Music and Arts
Centers


Musicians
Friend


Sweetwater Sound,
Inc.


Yamaha
Corporation


Sam Ash Music


6