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EXHIBIT 10.7
ALL SECTIONS MARKED WITH TWO ASTERISKS ("* *") REFLECT PORTIONS WHICH HAVE
BEEN REDACTED AND WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION BY KIDS MART, INC. AS PART OF A REQUEST FOR CONFIDENTIAL TREATMENT.
AGREEMENT
Xxxxxxx X. Xxxx
BE BOP CLOTHING, INC.
0000 Xxxxxx Xxxx.
Xxx Xxxxxxx, XX 00000
Dear Xx. Xxxx:
SECTION 1
The parties to this Agreement are Be Bop Clothing, Inc., a California
corporation and Kids Mart, Inc., a Florida corporation. This Agreement is also
contingent upon the parties executing an Exchange Agreement and Investment
Representation Agreement. Pursuant to that contingency and also in exchange for
the following agreed upon consideration, the parties agree as follows:
SECTION 2
Currently, there exists an open Accounts Receivable owed to Be Bop
Clothing, Inc. in the sum of Five Hundred Eighty Six Thousand Four Hundred
Twenty-three Dollars and Thirteen Cents ($586,423.13). It is anticipated that
an additional Sixty Three Thousand Five Hundred Six Dollars and Eighty Seven
Cents ($63,576.87) of merchandise will be shipped to Kids Mart, Inc. to
comprise a total "investment" of Six Hundred Fifty Thousand Dollars
($650,000.00). That amount will be the total "investment" by Be Bop Clothing,
Inc., which will then be given non-registered Common Stock of Kids Mart, Inc.
at a price per share (with respect to the Exchange Agreement) of One Dollar and
Fifty Cents ($1.50). The Common Stock of Kids Mart, Inc. is currently quoted on
the OTC Bulletin Board.
SECTION 3
As long as Be Bop Clothing, Inc. does not reduce its investment in Kids
Mart, Inc. as set forth in Section 2 above, Kids Mart, Inc. will use its best
efforts to maintain Ten Million Dollars ($10,000,000) in annual sales from Be
Bop Clothing, Inc. beginning January 1, 1997, as per the attached "Volume
Breakdown and Xxxx-up Goal" which is hereby incorporated by reference and made a
part of this Agreement. Until Kids Mart, Inc. receives factor support, the terms
of payment for the Ten Million Dollars annual sales will be based upon mutual
agreement between Be Bop Clothing, Inc. and Kids Mart, Inc., for each purchase
order. If the parties are unable to agree upon mutually agreeable terms, either
party has the option to cancel this agreement upon thirty (30) days written
notice. However, until Kids Mart, Inc. receives factor support, Kids Mart, Inc.
agrees to net 45 day terms. At the time Kids Mart, Inc. receives factor support,
Be Bop Clothing, Inc. will grant Kids Mart, Inc. net sixty (60) day terms.
Should Kids Mart, Inc. not be prompt in paying said accounts on these terms,
said failure would constitute a breach of this Agreement.
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SECTION 4
Kids Mart, Inc. agrees that a senior executive officer and primary
shareholder of Be Bop Clothing, Inc. will be installed on the Board of
Directors of Kids Mart, Inc. within three (3) months of the execution of this
Agreement to serve until the next Annual Meeting of Shareholders. Thereafter,
unless Be Bop Clothing, Inc. has reduced its above-stated investment by more
than Fifty Percent (50%), Kids Mart, Inc. shall nominate said senior executive
officer of Be Bop Clothing, Inc. to the Board of Directors to be voted upon by
the shareholders at each annual meeting.
SECTION 5
Modification. Neither this Agreement nor any provision hereof shall be
modified, discharged or terminated except by an instrument in writing signed by
the party against whom any waiver, change, discharge or termination is sought.
SECTION 6
Notices. Any notice, demand or other communication which any party
hereto may be required, or may elect, to give to anyone interested hereunder
shall be sufficiently given if (a) deposited, a postage prepaid, in a United
States mail letter box, registered or certified mail, return receipt requested,
addressed to such address as may be given herein or (b) delivered personally at
such address.
SECTION 7
Binding Effect. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties and their heirs,
executors, administrators, successors, legal representatives and permitted
assigns. If the undersigned is more than one person, the obligations of the
undersigned shall be joint and several and the agreements, representations,
warranties and acknowledgments herein contained shall be deemed to be made by
and be binding upon each such person and his heirs, executors, administrators
and successors.
SECTION 8
Partial Agreement. This instrument contains the partial agreement of
the parties, and there are no representations, covenants or other agreements
except the Exchange Agreement and Investment Representation Agreement
referenced herein.
SECTION 9
Assignability. This Agreement is not transferable or assignable by the
parties unless agreed to in writing by all said parties.
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SECTION 10
Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
made and to be performed entirely within such state.
SECTION 11
Gender. All pronouns contained herein and any variations thereof shall
be deemed to refer to the masculine, feminine or neuter, singular or plural, as
the identity of the parties hereto may require.
SECTION 12
Counterparts. This Agreement may be executed through the use of
separate signature pages or in any number of counterparts, and each of such
counterparts shall, for all purposes, constitute one agreement binding on all
the parties, notwithstanding that all parties are not signatories to the same
counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement on this
11th day of September, 1996.
BE BOP CLOTHING INCORPORATED KIDS MART, INC.
By: /s/ Xxxxxx Xxxxxx By: /s/ Xxxxxxx Xxxxxxx
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Xxxxxx Xxxxxx Xxxxxxx Xxxxxxx
Vice President President
By: /s/ Xxxxxxx Xxxx
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Xxxxxxx Xxxx
Chief Executive Officer
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VOLUME BREAKDOWN AND XXXX-UP GOAL
Girls $ * * Million
* * % Denim * * % Xxxx-up
* * % Fashion
* * % Basic
* * % Knit Tops * * % Xxxx-up
* * % Basic
* * % Fashion
Boys and Infants $ * * Million * * % Xxxx-up
Delivery Availability
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We would expect on-time delivery of initial orders with delivery times on
reorders of 8 weeks or less.
Quality
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Be Bop agrees to provide a level of quality which results in a defect rate of
less than 10% within a specific purchase order, as measured by Kids Mart.
Styling
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We expect Be Bop to provide Kids Mart with styling that includes new trends
in fabrication and silhouettes.
Exclusivity
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The purchase commitment of $10.0 million, described in this agreement, includes
a component of fashion merchandise in the denim and knit top categories. Any
new item of Be Bop Clothing's fashion offering will be available on an exclusive
basis on "first come, first serve" terms, and will be provided to Kids Mart on
an exclusive basis provided the item is ordered by Kids Mart in quantities
representing an all store, all size range buy. Specific color selection and
designs provided by Kids Mart to Be Bop Clothing is exclusive unless otherwise
agreed upon as an exclusion. Upon Kids Mart receiving Credit Approval, these
garments will carry a label that indicates they were made by Be Bop
exclusively for Kids Mart.
In the interest of driving higher sales volume, at potentially lower initial
xxxx-ups, Kids Mart will review sales performance of Be Bop product through
July 1997 and, immediately following that analysis, provide Be Bop with
finished gross margin goals that are intended to increase sales and gross
margin dollar results to Kids Mart.
Due to certain changes in the terms of the Agreement, the Agreement will be
effective only upon final Board of Directors approval and receipt by Kids
Mart, Inc. of a fully executed copy of the letter of representation by
Be Bop Clothing, Inc.
ADDENDUM TO AGREEMENT
