Document:

Exhibit 10.8

 

K10 and Insight Strategic Supply MOU

 

	
Date:
    	
 
    	
30th December 2009
    
	
K10:
    	
 
    	
K10 Pty Limited (K10)
    
	
ACN/Company No.:
    	
 
    	
ACN 140 672 797
    
	
Address:
    	
 
    	
C/- PKF Chartered   Accountants L3, 304-318 Kingsway,
   Caringbah, NSW, 2229
    
	
Contact person:
    	
 
    	
Graeme Jack
    
	
Email:
    	
 
    	
graeme@ksubi.com
    
	
Bleach:
    	
 
    	
Bleach Pty Ltd
    
	
ACN/Company No.:
    	
 
    	
095 987 214
    
	
Address:
    	
 
    	
14 Mentmore Ave, Roseberry
    
	
Contact person:
    	
 
    	
Mark Byers
    
	
Email:
    	
 
    	
mark@insight51.com
    
	
Purpose of MOU:
    	
 
    	
To outline terms K10 and Bleach agree upon to enter into an exclusive   Strategic Supply Agreement (SSA). K10 and Bleach shall use reasonable   endeavours to enter into SSA as soon as practicable after the date of this   MOU on terms reasonably satisfactory to each of them (which is intended to   incorporate the terms of this MOU unless the parties agree otherwise)
    
	
 
    	
 
    	
 
    
	
Definitions:
    	
 
    	
Cost of Sales (COS) in respect of Bleach Nett Sales =

import garment value (in $AUD) (plus) +

international freight +

domestic carriage +

customs clearing charges +

customs duty +

sample costs +

movements between opening and closing stock values

 

Estimated Gross Margin is the   estimated “Margin” as shown in the initial costing spreadsheet to be provided   by Bleach

 

Nett Sales = gross sales by Bleach   (less) –

retail discounts –

commissions (if any) –

returns.

 

P & L Gross Margin = Nett Sales   less Cost of Sales

 

Service Fee = 9% of gross sales by   Bleach in any period

 

Management Fee = direct cost   reimbursement for management services supplied to K10 by Bleach including but   not limited to :-

·                  Finance @ $120,000 p.a.

·                  Sales Strategic @ $60,000   p.a.

·                  IT Maintenance @ $35,000   p.a.

·                  Other as mutually agreed   or otherwise provided by Bleach to K10
    
	
 
    	
 
    	
 
    
	
Services to be included:
    	
 
    	
Sourcing, developing, sampling, manufacturing, distributing, invoicing,   financing and (if deemed
    

 

 

	
 
    	
 
    	
appropriate) selling and customer support of Ksubi branded product.

 
    
	
Product:
    	
 
    	
Ksubi branded trademarked apparel and fashion accessories

 
    
	
Territory:
    	
 
    	
Australia and international countries (as mutually agreed by K10 and   Bleach) on a country by country basis.

 
    
	
Trade Marks:
    	
 
    	

    
	
 
    	
 
    	
 
    
	
Commencement Date:
    	
 
    	
20 November 2009
    
	
Cooling Off Period:
    	
 
    	
No
    
	
Termination Date:
    	
 
    	
20 November 2014
    
	
Term (which includes from the commencement of   this MOU and continues during the commencement of the SSA):
    	
 
    	
5years
    
	
Option (which is expected to commence after the   SSA is entered into):
    	
 
    	
5 years

First 5 year period is to encompass the David Jones Exclusive Supply   Agreement dated on or about the date of this MOU.

 
    
	
Retail:
    	
 
    	
Retail roll out plan will be according to the SSA and will include   supply to stores of a particular market stature to ensure both financial,   market viability and sit according to the distribution strategy pre agreed by   both parties.

 
    
	
Margin:
    	
 
    	
For the Term, the parties agree the Estimated Gross Margin on the SSA   program shall be paid to K10 (less the Service Fee which shall be paid to   Bleach at the same time as the payment of Estimated Gross Margin) on the   following terms:-

 
    
	
 
    	
 
    	
(a)                                 The Estimated   Gross Margin per the initial costing spreadsheet which shall set out
    
	
 
    	
 
    
	
 
    	
(i)                                     the $US   Factory cost plus (+)
    
	
 
    	
 
    	
(ii)                                  international   freight +
    
	
 
    	
 
    	
(iii)                               conversion to   $AUD using an agreed exchange rate
    
	
 
    	
 
    	
(iv)                              domestic   freight / cartage + customs + clearing charges +
    
	
 
    	
 
    	
(v)                                 custom duties   +
    
	
 
    	
 
    	
(vi)                              required   gross margin (as set out in the initial costing spreadsheet and updated from   time to time) which =
    
	
 
    	
 
    	
(vii)                           proposed   wholesale price
    
	
 
    	
 
    	
(viii)                        converted to   retail price (based on proposed retail margin) after taking into account retail   discounts (both volume and settlement discounts) less
    
	
 
    	
 
    	
(ix)                              Management   Fee for die relevant period
    

 

2

 

	
 
    	
 
    	
(b)                                 a   reconciliation of the Estimated Gross Margin with the actual P & L   Gross Margin will be made as soon as practicable after the end of each   quarter and any applicable adjustment necessary to the amount paid to Bleach   or K10 shall be made promptly after the reconciliation is available.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Note:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
1.                                      Estimated   Gross Margin (and ultimately actual P & L Gross Margin) shall be paid   from profits only and in respect of actual receipts derived from Nett Sales.   If receipts are insufficient to make any payment on account of Estimated   Gross Margin, Bleach shall have no obligation to pay any payment.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
2.                                      If the actual   P& L Gross Margin is zero or negative, no payment shall be made to K10 on   account of any margin.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
3.                                      No payment of   actual P& L Gross Margin shall be made until Bleach has recovered in full   the Management Fee payable in respect of any period.
    
	
 
    	
 
    	
 
    
	
Set-Off
    	
 
    	
Bleach shall be entitled at any time to set-off against any payment   due to K10 under this Agreement any amount that is or may become owing to   Bleach under the terms of this MOU and the SSA. This provision shall be   incorporated in the SSA.
    
	
 
    	
 
    	
 
    
	
K10 obligations:
    	
 
    	
a)                                     Design: - concept,   create and provide artwork and develop laundry washes for all apparel and   fashion related accessory Product designs with an aesthetic appearance and   design content and quality conducive to satisfaction of the “Ksubi White   Label program” (White) and “Ksubi Premium Black Label program” (Black);
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
b)                                     ‘Hand-over’: -

To supply to Bleach all detailed product   designs and all other Product information required, in a timely manner and   format as required by Bleach to enable Bleach to develop the product to the   retail base on time and at the prescribed level of quality and without the   incurrence of any penalties (such as rebates / discounts due to quality   issues caused through rushed production etc)  or un-costed charges   (such as airfreight due to late delivery or factory up-charges due to   inadequate production lead times etc) - to this end, and as a condition   subsequent to this MOU, Bleach will provide K10 with a ‘Hand-over   Specifications Manual’ detailing Product timing / details as required by   Bleach with regard to same;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
c)                                      Financial   Exploitation: - to sell and service retail
    

 

 

	
 
    	
 
    	
product and order/s requirements and   maximise retail orders as to product quantities and dollar values in a manner   exhibiting expertise in product, price, delivery, economic terms, as per   previously strategised and agreed between the parties, and in line with sales   projections / expectations of the parties;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
d)                                     Preservation   of “Ksubi” trademark: - to preserve, nurture, protect the Ksubi   trademark so as to ensure the the opportunity to realise expectations as   detailed in the business plan and to comply with the spirit of this MOU arid   the SSA;
    
	
 
    	
 
    	
 
    
	
Bleach Obligations:
    	
 
    	
a)                                     Product development: - provide consistent and timely supply of technical,   operational, garment production, and financial resources and capacity so as   to commercially and profitably realise the K10 product designs;

 

b)                                     Wholesale   Prices: - offer wholesale prices so far as practicable   (without obliging Bleach to offer prices that Bleach consider uneconomical)   that allow K10 product to meet retail prices and margin at a commercial level   and so as to comply with “Ksubi” market brand positioning;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
c)                                      Delivery   :-   provide and meet retail delivery   expectations with a greater than 90% success performance based on ALL   confirmed;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
d)                                     Production   Orders are to be delivered :-
    
	
 
    	
 
    	
i.
    	
 
    	
on time
    
	
 
    	
 
    	
ii.
    	
 
    	
quality as per approved pre-production sample approval
    
	
 
    	
 
    	
iii.
    	
 
    	
less than 3%  fault / return rate across   seasonal programs not individual styles (order confirmations will be at   Bleach’s discretion as to minimum production quantity and production /   delivery lead times);
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
e)                                      Sample   Ranges :- The parties recognise and agree that sample   ranges are required for the parties to mutually realise any value from this   MOU and the SSA and thus agree that such sample ranges are a shared resource   and the cost of sample ranges is to be shared between the parties equally.   Payment for sample ranges are to be made immediately upon the sample ranges   being charged to Bleach. K10 agrees that the K10 share of sample ranges costs   may be deducted from the actual P & L Gross Margin payable to it but   only after notification of such sample range costs to K10
    

 

4

 

	
 
    	
 
    	
f)                                                 Retail   Account  & Cash Flow   Management manage ALL retail account functions, including   but not limited to, preparation of invoices as and when product is scheduled   to be delivered to retail and provide a copy / detail to K10 (for reference),   provide account management and reconciliations and statements in a accurate   and timely manner, collect from retail when based on settlement terms with   retail, remit K10 it’s Estimated Gross Margin for each quarter once funds   have been received against invoices and / or retail account/s the day after   Bleach has received such funds, the timing of which will depend on Bleach   successfully ‘factoring’ retail accounts or successfully collecting from   non-factored retail accounts. Bleach will use reasonable endeavours to secure   ‘factoring’ finance for ALL / ANY Retail accounts with the aim of expediting   cash flow needs of K10 and Bleach.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
g)                                      Business   Plan :- maintain, monitor and adjust the business plan /   financial model and report variances on a monthly / quarterly basis.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
h)                                     Finance   :- upon execution of the SSA, provide adequate finance so as to ensure   fulfillment of the business plan sales projections and margin expectations.   The business plan is to be annexed to the executed SSA.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
i)                                         Preservation   of “Ksubi” trademark :- Bleach to preserve and protect the Ksubi   trademark on the behalf of “Ksubi” and to not represent any ownership,   rights, privileges with regard to “Ksubi” trademark.
    
	
 
    	
 
    	
 
    
	
Payment:
    	
 
    	
Bleach is to provide reconciliations and make payments to K10 in   accordance with this MOU and shall at the time of each amount deduct the   amount of the Service Fee. The Management Fee shall be payable prior to any   other payments under this MOU.
    
	
 
    	
 
    	
 
    
	
Product Liability Insurance:
    	
 
    	
Bleach is to acknowledge that it is responsible for all product   liability insurance from the date of this MOU
    
	
 
    	
 
    	
 
    
	
Termination
    	
 
    	
Termination of this MOU may occur as a result of the following   situations :- 

 

By Bleach if :-

·                                          there is a   material failure or an incapacity of K10 to fulfill it’s obligations as   detailed above and such failure is not remedied within a reasonable period   after receiving written notice of the failure 

·                                          K10 enters   into administration, bankruptcy, scheme of arrangement, receivership,   liquidation or is otherwise unable to pay its debts as and when they fall due
    

 

5

 

	
 
    	
 
    	
·                                          If the   majority of shareholding of K10 changes (ie greater than 50%) (other than   contemplated by a License Agreement between K10 and Tsubi Pty Limited dated   on or about the date of this MOU)
    
	
 
    	
 
    	
·                                          On seven days   written notice at the convenience of Bleach in its discretion and without the   requirement of any default on the part of K10
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By K10 if :-
    
	
 
    	
 
    	
·                                          there is a   material failure or an incapacity of Bleach to fulfill it’s obligations as   detailed above and such failure is not remedied within a reasonable period   after receiving written notice of the failure
    
	
 
    	
 
    	
·                                          Bleach enters   into administration, bankruptcy, scheme of arrangement, receivership,   liquidation or is otherwise unable to pay its debts as and when they fall due
    
	
 
    	
 
    	
·                                          If the   majority of shareholding of Bleach (ie greater than 50%) changes 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Mutually if :-
    
	
 
    	
 
    	
·                                          the strategic   supply relationship fails to deliver financial expectations and both parties   realise that the specific terms and conditions of and / or expectations   outlined are unrealizable
    
	
 
    	
 
    	
·                                          K10 is at any   stage no longer entitled to use the Trade Marks
    
	
 
    	
 
    	
 
    
	
Conditions subsequent:
    	
 
    	
a)                                     A detailed   SSA will be drafted, agreed and signed formalising the terms and conditions   and spirit of this MOU

b)                                     Bleach to   draft a “Hand-over Specifications Manual” prior to execution of SSA

c)                                      Bleach to   draft a 5 year business plan / financial model and present to the parties as a   basis of future financial strategic targets (as to sales, margin, and cash   flow) and thus provide the parties with commitment expectations with regard   to product design / development obligations so as to be able to meet the   financial expectations of the SSA program and be annexed to the SSA.
    
	
 
    	
 
    	
 
    
	
Confidentiality
    	
 
    	
The parties agree to hold any and all information and intellectual   property brought to the SSA relationship as confidential except for   disclosure to financiers (prospective and actual), legal and accounting   advisors and for any information that is already in the public domain (other   than by breach of this undertaking)
    
	
 
    	
 
    	
 
    
	
Governing Law:
    	
 
    	
NSW, Australia
    

 

The above MOU terms and conditions are agreed and constitute the basis of a strategic supply relationship and terms and conditions to be detailed in a SSA with  regard to supplying “Ksubi Product” to retail in the Territory.

 

 

	
Signed for K10 Pty Ltd   by:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Neil Cunningham
    	
 
    	
/s/ Rachel Kernaghan
    
	
Neil Cunningham under Power of Attorney from Graeme Jack dated 30th   December 2009 who declares that he holds the office in the company   indicated under his signature and that he has no notice of revocation of the   said Power of Attorney in the presence of:
    	
 
    	
Witness

Rachel Kernaghan
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signed for Bleach   Pty Limited by:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Mark Byers
    	
 
    	
/s/ Peter Byers
    
	
Director
    	
 
    	
Witness
    
	
Mark Byers
    	
 
    	
Peter Byers
    

 

7Exhibit 10.9

	
 
    

 

 

SALE PURCHASE AGREEMENT

 

by and among

 

KAPPA FRANCE

 

AND

 

BLEACH INTERNATIONAL (HK) LTD

 

Dated as of 30th November, 2011

 

	
 
    

 

 

SALE AND PURCHASE AGREEMENT

 

This SALE AND PURCHASE AGREEMENT, dated as of November 30th, 2011 (this “Agreement”), is entered into by and among BEACH INTERNATIONAL, a Hong Kong Company, having its place of business at 50 Kwar Cheong Rd, Hong Kong (the “Purchaser”); BLEACH EUROPE DISTRIBUTION, a French Société par actions simplifieé having its place of business at 25 allée du Moura - 64200 BIARRITZ (the “Company”), KAPPA FRANCE SARL, a French société à responsabilité limitée having its place of business at 41 rue Bobby Sand — 44800 Saint Herblain (the “Seller”).

 

WHEREAS, the “Seller” owns all Interests in and to all of the issued and outstanding shares of capital stock of the Company (the “Company Stock”);

 

WHEREAS, upon the terms and subject to the conditions set forth in this Agreement, (i) the Purchaser wishes to purchase from the Seller, and the Seller wishes to sell the Company Stock Purchaser;

 

NOW, THEREFORE, the Parties hereby agree as follows:

 

ARTICLE I

 

SALE AND PURCHASE OF COMPANY STOCK; PURCHASE PRICE; CLOSING

 

1.1                               Sale and Purchase of Company Stock.

 

Upon the terms and subject to the conditions contained herein, the Seller hereby agrees to sell to the Purchaser at the Closing, free and clear of all Liens, and the Purchaser agrees to purchase from the Seller, all shares of the Company Stock owned by such Seller.

 

1.2                               Purchase Price.

 

The purchase price to be paid by the Purchasers for the Company Stock (the “Purchase Price”) shall be 1 €.

 

1.3                               Payment of Purchase Price. At the Closing, the Purchasers shall pay the Purchase

 

Deliveries at the Closing.

 

(a)                                 By the Seller  At Closing, the Sellers shall deliver to the Purchaser:

 

Written resignations and releases of Claims by the Président of the Company, each in form and substance reasonably satisfactory to the Purchaser;

 

The sale and purchase orders (ordres de mouvement) from the Seller, duly executed by such Seller, and otherwise in proper form and sufficient to transfer all issued and outstanding shares of the Company Stock to the Purchaser free and clean of all Liens; and

 

1

 

(b)                                 By the Purchaser. At the Closing, the Purchaser shall deliver to the Sellers :

 

(i)                                     A certificate, dated the Closing Date and signed by the chief executive officer or the general manager of the Purchaser, certifying that (A) attached thereto are true and complete copies of all resolutions adopted by the shareholders of the Purchaser authorizing the execution, delivery and performance of the Transaction Documents to which the Purchaser is a party and the consummation of the Transactions contemplated thereby, (B) all such resolutions are in full force and effect and are all the resolutions adopted in connection with the Transactions and (B) the names and signatures of the officers of the Purchaser authorized to sign the Transaction Documents to which it is a party; and

 

(c)                                                                                  Payment of the Purchase Price

 

ARTICLE II

 

SALE OF CURRENT ACCOUNT

 

1/ Sale and price

 

The Seller is the owner of a current account in the Company on September 30th 2011 as follows :

 

	
· Financial current account
    	
 
    	
3 623 358 €
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
·  Supplier current account
    	
 
    	
782 896 €
    	
 
    

 

The Net Equity of the Company on September 30th 2011 is : - 2 870 638 €

 

The Seller hereby agrees to sell to the Purchaser at the Closing, and the Purchaser agrees to purchase from the Seller, the total current account (financial and supplier) for an amount agreed between the parties, to the extend that it is fully paid, of:

 

1 200 000 €

 

2/ Payment

 

The purchase price of the current account (1 200 000 €) will be paid as follows:

 

	
· 30 June 2012
    	
200 000 €
    	
 
    
	
 
    	
 
    	
 
    
	
· 31 December 2012
    	
200 000 €
    	
 
    
	
 
    	
 
    	
 
    
	
· 30 June 2013
    	
200 000 €
    	
 
    
	
 
    	
 
    	
 
    
	
· 31 December 2013
    	
200 000 €
    	
 
    

 

2

 

	
·  30 June 2014
    	
200 000 €
    	
 
    
	
 
    	
 
    	
 
    
	
· 31 December 2014
    	
200 000 €
    	
 
    
	
 
    	
 
    	
 
    
	
TOTAL
    	
1 200 00 €
    	
 
    

 

ARTICLE III

 

WARRANTY RELATING TO THE COMPANY

 

The Seller, hereby warrants to the Purchaser the Financial Statements, consisting of the balance sheet as of September 30th 2011 as attached hereto (exhibit 1) as true and complete.

 

The Seller warrants that it will use best endeavours to aid the Purchaser in retaining the services of EUROFACTOR and COFACE insurance.

 

ARTICLE IV

 

INDEMNIFICATION

 

4.1 Indemnification.

 

The Seller hereby agrees to indemnify the Purchaser the amount of any losses resulting from:

 

(i)                                     non collection by the Company of the following assets :

 

	
· stocks
    	
 
    	
598 916 €
    
	
 
    	
 
    	
 
    
	
· customer
    	
 
    	
917 296 €
    
	
 
    	
 
    	
 
    
	
· social and tax credit
    	
 
    	
225 462 €
    

 

being precised that any payment made by a customer to BED will be deducted first from this amount of 917 296 € (FIFO).

 

(ii)                                  the payment by the Company of any additional liabilities that are not in the balance sheet (exhibit 1)

 

4.2 Indemnification Procedures.

 

A claim for indemnification for any matter may be asserted by prompt written notice to the Seller; provided, however, that failure to so notify the Seller shall not preclude the Purchaser from any indemnification which it may claim, except to the extent such failure has prejudiced the Seller.

 

3

 

4.3 Payment of Indemnification Amounts.

 

Any amount payable by the Seller pursuant to this Article IV shall be deducted from the purchase price of the current account as said in section II

 

4.4 Employment Social Charges

 

The Seller hereby agrees to indemnify the Purchaser the amount of any cost resulting from the termination of the following employee contract:

 

·  Franck GOUDOU                                                                                     Marketing Manager

 

ARTICLE V

 

CLOSING

 

The consummation of the sale and purchase of the company stock and the Seller’s current account shall take place in any case before December 31st 2011.

 

ARTICLE VI

 

LITIGATION-GOVERNING LAW

 

6.1 Litigation

 

All disputes arising out of or in connection with this Agreement shall be finally brought to the Tribunal de Commerce de Nantes

 

6.2 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of France.

 

IN WITNESS WHEREOF, each of the Parties has duly executed and delivered this Agreement as of the date first above written

 

	
 
    	
PURCHASER:
    
	
 
    	
 
    
	
 
    	
BLEACH INTERNATIONAL
    

 

4

 

	
 
    	
By:
    	
/s/ Mark Byers
    
	
 
    	
Name: Mark Byers
    
	
 
    	
Title: Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
BLEACH EUROPE DISTRIBTION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ [ILLEGIBLE]
    
	
 
    	
Name: [ILLEGIBLE]
    
	
 
    	
Title: President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SELLER
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
BLEACH EUROPE DISTRIBTION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ [ILLEGIBLE]
    
	
 
    	
Name: [ILLEGIBLE]
    
	
 
    	
Title: President
    

 

5

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