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the agreement for a period of 12 months after Ambassador's
merchandise was installed.2
The agreement required Westpac to repay a pro rata portion
of the $4,572,000 upfront cash payment and the initial inventory
purchase credit if one of Westpac's member stores ceased
operations. The contract defined the pro rata repayment
obligation in terms of the percentage of the volume purchase
commitment that remained unsatisfied at the time.
On March 14, 1994, Westpac and Ambassador executed an
addendum to their contract. The addendum increased Westpac's
volume purchase obligation to $76,047,000. The addendum also
called for Ambassador to pay Westpac (1) $1,225,000 to cover the
cost of opening inventory in additional stores that became
covered under the agreement and (2) $1,225,000 as an additional
placement allowance. Ambassador, through its affiliate Hallmark
Marketing Corp., made the combined $2,450,000 payment by check
dated April 29, 1994.
In March 1997, Westpac and Ambassador discussed the
possibility of terminating their contract. In the course of
these discussions, Ambassador prepared a letter setting forth the
2 This last credit provision was aimed primarily at the
Save Mart stores which Ambassador anticipated would join the
agreement at the conclusion of the preexisting contract between
Save Mart and American Greetings Corp.
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Last modified: May 25, 2011