EXHIBIT 99.3
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT is made and entered into as of the 20th day of
September, 2001 by and between COATS AMERICAN, INC., a New Jersey corporation
headquartered in Charlotte, North Carolina ("SELLER"); and TAG-IT PACIFIC, INC.,
a Delaware corporation headquartered in Woodland Hills, California ("BUYER").
RECITALS:
A. Seller and its affiliates are in the business of manufacturing thread,
other trim items and related accessories.
B. Buyer and its affiliates are in the business of selling and distributing
trim products to the apparel industry and outsourcing apparel manufacturers'
trim departments and have a regular and ongoing need for thread products.
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
conditions herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. SALE. (a) Except as otherwise provided herein, Seller agrees to sell to
Buyer and Buyer agrees to purchase from Seller, in each case on a basis that
keeps Buyer competitive in the marketplace (taking into account price, quality,
payment and delivery terms, delivery scheduling, geographic area and other
relevant factors), all of Buyer's requirements for all thread products that are
at such time manufactured and offered for sale by Seller in quantities
sufficient to satisfy Buyer's requirements ("PRODUCTS"), whether for Buyer's own
use or for resale, excepting only the "Excluded Requirements" (as defined
below). For purposes of this Agreement, "EXCLUDED REQUIREMENTS" shall mean (i)
all types of thread products purchased or required by Buyer to satisfy customer
orders which specify that they specifically require thread products manufactured
by manufacturers other than Seller, PROVIDED, HOWEVER that Buyer shall use
commercially reasonable efforts to encourage customers to use Products, (ii) all
non-thread products, (iii) all thread products to be sold by Buyer for delivery
or consumption within the Restricted Territory (as defined in Section 2 below),
(iv) all products of a type not customarily manufactured by Seller at the time
it receives Buyer's PO therefor; and (v) "Non-Competitive Products" (as defined
below). If Seller is unable or unwilling to sell any particular item, brand or
product line of Products on a basis that keeps Buyer competitive in the
marketplace as provided in this Paragraph 1, then provided that Buyer has given
Seller an opportunity to sell such Products to Buyer, such item, brand or
product line shall become a "NON-COMPETITIVE PRODUCT" for purposes of this
Agreement and Buyer shall be entitled to purchase such item, brand or product
line from another source of supply, provided that if Seller later notifies Buyer
that it is willing and able to sell such Non-Competitive Product on a basis that
keeps Buyer competitive in the marketplace, then such product shall thereafter
cease being a Non-Competitive Product and Buyer shall again purchase its
requirements for such Product from Seller in accordance with the terms of this
Agreement (provided that Buyer shall be permitted to fulfill any then
outstanding purchase order or commitment). Buyer shall not be in default
hereunder for failure to purchase, and Seller shall not be in default hereunder
for failure to sell, Non-Competitive Products.
(b) *** and/or ***; and ***:
-----------------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
A. ***.
B. ***.
2. RESTRICTION. Buyer recognizes and acknowledges that Seller is prohibited
during the remainder of the term of a contract presently in effect (the
"RESTRICTIVE CONTRACT") from appointing Buyer as a distributor of its products
in *** (the "RESTRICTED TERRITORY.") Buyer covenants and agrees that it will not
distribute or otherwise sell the Products within the Restricted Territory, and
that any default under this Paragraph shall constitute a material default under
this Agreement, entitling Seller to immediately terminate this Agreement in
addition to any other remedy available to Seller at law or in equity, PROVIDED,
HOWEVER that Buyer shall not be prohibited from entering into sales transactions
with third parties who are located within the Restricted Territory so long as
(i) delivery of products is to occur outside of the Restricted Territory, and
(ii) Buyer believes in good faith that such third parties will not move the
Products or zippers, other trim items and related accessories purchased from
Seller, to the Restricted Territory (other than as part of a finished product or
a work in process). Notwithstanding the foregoing, Buyer shall be permitted to
sell Trim Packages (as hereinafter defined) within the Restricted Territory.
"Trim Packages" shall mean packages that include at least three (3) trim items
other than thread, and which are sold in connection with the Buyer's Managed
Trim Solution product, provided that the cost of the thread included in the Trim
Package does not exceed *** of the total cost of such Trim Package. Seller
agrees that for deliveries for use in the Restricted Territory, Buyer shall be
permitted, in Buyer's sole discretion, to obtain Products from any third party
supplier. Seller further agrees that upon the expiration of the term of the
Restricted Contract, and any renewals thereof, Buyer shall no longer be
prohibited by this Agreement from selling Products in the Restricted Territory.
Buyer agrees to indemnify Seller against any damage, loss, cost, claim, cause of
action, cost or expense (including without limitation lost profits and
attorneys' fees), arising out of or related to any breach of this Paragraph.
3. CUSTOMER INTRODUCTIONS. Seller shall from time to time identify certain
of its large apparel customers that (i) have production facilities *** (ii) ***
and (iii) are perceived by Seller to be willing to purchase or outsource trim
purchasing and logistics (the "IDENTIFIED CUSTOMERS"). Seller shall introduce
Buyer to such of the Identified Customers as Buyer may request, for the purpose
of converting such customers to a full trim package marketed and sold by Buyer,
with a portion of such trim package to be sold to Buyer by Seller under this
Agreement. Such introductions may be made in the form of joint calls on such
customers, or any other manner reasonably calculated to afford Buyer the
opportunity to market its trim package business to such customers.
4. NO JOINT VENTURE. Nothing in this Agreement shall be construed to create
a partnership or joint venture, and the relationship of Seller and Buyer shall
be and remain solely that of vendor/vendee.
5. QUANTITY ESTIMATE. Buyer shall notify Seller in writing on or before
January 1 and June 30, 2001, and on or before January 1 and June 30 of each
succeeding year of Buyer's good faith estimate of its requirements for the next
succeeding six month period. In the event that Buyer's actual requirements
exceed its estimated requirements for any given period by more than *** , then
-----------------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
Page 2
Seller shall have the option, but not the obligation, to sell Buyer any or all
of such requirements in excess of *** of such estimate. In the event that Seller
is unable to sell Buyer *** of its projected requirements for any period, then
***. Seller shall sell, and Buyer shall purchase, all quantities sold hereunder
on the terms and conditions (including without limitation credit terms) provided
herein.
6. PURCHASE PRICE. This Agreement shall be binding on the parties even
though the purchase price has been left to later determination. The purchase
price for goods sold under this Agreement shall be mutually agreed upon by Buyer
and Seller on a quarterly basis but shall at all times be determined in a manner
consistent with the terms of this Agreement.
7. PAYMENT AND DELIVERY. ***.
8. PRODUCT WARRANTY AND SELLER COMMITMENTS. Seller warrants and represents
that all Products will at the time of delivery to Buyer be in all material
respects free of defects in workmanship or materials and will be in all material
respects in accordance with the specifications applicable to such Product and
substantially conform with samples of such Products and shall be in all material
respects in accordance with Seller's quality standards and the industry's
generally accepted quality standards. Seller warrants and represents that all
Products shall be delivered to Buyer free and clear of all liens and
encumbrances, and that good and valid title shall pass thereto as provided in
this Agreement. All of the Products that Seller manufactures, processes, and
packages under this Agreement (i) shall be manufactured, processed, and packaged
in all material respects in conformity with all of the laws, rules and
regulations promulgated by applicable environmental and labor regulatory bodies
with applicable jurisdiction, including, to the extent applicable, the United
States Environmental Protection Agency and Department of Labor and their local
equivalents, (ii) shall meet all requirements of any other applicable statutes,
rules, and regulations of the United States and any other nation which may have
jurisdiction and any of their respective state or local governments, and (iii)
shall be subject to Seller's standard warranties with respect to such Products,
in addition to the warranties set forth herein.
9. INDEMNITY (a) Seller shall defend and indemnify Buyer from and against
all damages, liabilities, costs and expenses (including reasonable attorneys'
fees and costs) arising out of any third party claim that the manufacture, sale
or use of the Products purchased hereunder infringes a patent, trademark,
copyright or trade secret of such party, provided that (i) Buyer shall have
reasonably promptly provided Seller written notice of any third party claims of
which it becomes aware and reasonable cooperation, information and assistance in
connection therewith, and (ii) Seller shall have sole control and authority with
respect to the defense, settlement or compromise thereof. Should the Product
become, or in Seller's reasonable opinion, be likely to become the subject of
such a claim, Seller may, at its option, either procure at no cost to Buyer for
Buyer the right to continue purchasing and using such Product, or replace or
modify such Product so that it becomes non-infringing, or declare such product a
Non-Competitive Product under this Agreement.
(b) Seller agrees, at its expense, to defend Buyer from, and pay any
judgment for, any third party suit, claim or proceeding (hereinafter "Buyer
Claim") against Buyer alleging that any of the Products sold to Buyer hereunder
either (i) violates any applicable safety or regulatory standard, or (ii) has
caused injury or damage to the person or property of another arising from
defects in materials, formulation or the manufacture of any of the Products,
including without limitation the
-----------------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
Page 3
failure to manufacture the Products in accordance with the specifications and
samples for such products; provided that Seller is reasonably promptly notified
in writing of any Buyer Claim, given all reasonable assistance required, and
permitted to direct the defense. Seller shall have no liability for settlements
or costs incurred without its consent. Notwithstanding anything herein to the
contrary, Buyer's failure to reasonably promptly notify Seller of a third party
claim shall release Seller from its duty to indemnify Buyer against such a claim
hereunder only to the extent that Seller's defense of such claim was materially
prejudiced by such delay.
(c) Buyer agrees, at its expense, to defend and indemnify Seller from any
and all damages, liabilities, costs and expenses (including reasonable attorneys
fees and costs) arising out of, and pay any judgment for, any third party suit,
claim or proceeding (hereafter "Seller Claim") against Seller alleging that any
Product sold hereunder has caused injury or damage to the person or property of
another arising from (i) the gross negligence or willful misconduct of Buyer, or
(ii) a violation of any laws applicable to Buyer (except to the extent that such
violation is caused by Seller's breach of its representations and warranties
hereunder); provided that Buyer is reasonably promptly notified of any Seller
Claim, given all reasonable assistance required, and permitted to direct the
defense. Buyer shall have no liability for settlements or costs incurred without
its consent. Notwithstanding anything herein to the contrary, Seller's failure
to reasonably promptly notify Buyer of a third party claim shall release Buyer
from its duty to indemnify Seller against such a claim hereunder only to the
extent that Buyer's defense of such claim was materially prejudiced by such
delay.
10. TIMELINESS OF SHIPMENT. In the event that Seller is unable to ship an
order within *** of the requested delivery date, then Seller shall so inform
Buyer and Buyer, in lieu of any other remedy, shall then be entitled to cancel
such PO and to purchase all of such order from some other source of supply;
provided, however, that to the extent that *** then, with respect to such
customer, the Products contained in such shipments shall become Non-Competitive
Products for the purposes of this Agreement.
11. LIMITATION. In no event shall Seller be required to manufacture thread,
other trim items, or related accessories of a type not customarily manufactured
by Seller at the time it receives Buyer's PO therefor (other than dying thread
special colors to customer's requirements in accordance with Seller's custom
products service policy, provided that the quantity ordered is in a sufficient
amount), and in no event shall Buyer be prohibited from purchasing thread, other
trim items or related accessories from any other vendor of a type not
customarily manufactured by Seller. TO THE MAXIMUM EXTENT PERMISSIBLE UNDER
APPLICABLE LAW, NEITHER PARTY SHALL HAVE ANY LIABILITY TO THE OTHER IN EXCESS OF
*** IN THE AGGREGATE FOR LOST PROFITS OR OTHER CONSEQUENTIAL, SPECIAL, INDIRECT
OR INCIDENTAL DAMAGES, BASED UPON A CLAIM OF ANY TYPE OR NATURE, INCLUDING BUT
NOT LIMITED TO CONTRACT, TORT (INCLUDING NEGLIGENCE), WARRANTY OR STRICT
LIABILITY, OR CLAIMS ALLEGING DAMAGES ARISING FROM THIS AGREEMENT, EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
-----------------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
Page 4
12. CHOICE OF LAW AND JURISDICTION. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of Delaware,
without regard to choice of law considerations, except that the United Nations
Convention on the International Sale of Goods shall not apply.
13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors,
transferees and assigns, whether by merger, consolidation or otherwise, as well
as any entity with respect to which either party directly or indirectly (i) owns
an equity interest of ten percent (10%) or more or (ii) has a right to profits
of such entity in the amount of ten percent (10%) or more (each, a
"Subsidiary"). In the event of a breach (including without limitation any
failure to pay any sums due to Seller) of this Agreement by Tag-It Pacific,
Inc., or any successor, transferee, assign, or Subsidiary, all of such companies
shall be jointly and severally liable. Notwithstanding the foregoing, the duties
and obligations of Seller under this Agreement shall not be delegable by Seller
except for delegation to (i) a successor in interest to all or substantially all
of Seller's thread business or (ii) any affiliate of Seller of which Seller
directly or indirectly owns 51% of the voting securities of such entity or has
the power to elect a majority of the directors (or other governing body) of such
affiliate; provided that nothing herein shall be construed to prohibit Seller
from subcontracting to a third party any or all of its duties or obligations
hereunder so long as Seller remains responsible for the performance or
non-performance of such duties and obligations.
14. WAIVER/BREACH. The waiver of breach of any term or condition of this
Agreement shall not be deemed to constitute the continuing waiver of the same or
any other term or condition. The breaching party shall be liable to the other
party for all costs (including reasonable attorneys' fees) of enforcing any
provision of this Agreement. Except as otherwise provided herein, time is of the
essence in the performance of each party's obligations hereunder.
15. NOTICE. Notice hereunder shall be deemed duly given if in writing and
(i) delivered by hand, telecopy, reputable international overnight courier, or
(ii) mailed, certified or registered, with postage prepaid to the following
address or fax number of each party, or to such other address or fax number as
may be hereafter designated in writing by such party to the other party hereto:
Buyer: Tag-It Pacific, Inc.
00000 Xxxxxxx Xxxx.
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxx and Xxxxx Xxxx
Fax: (000) 000-0000
with a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxx
Fax: (000) 000-0000
-----------------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
Page 5
Seller: Coats American, Inc.
Two LakePointe Place
0000 Xxxxx Xxxxxx Xxxx.
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xx. Xxxxx Xx Xxxxxxx
Fax: (000) 000-0000
With a copy to:
Xxxxx & Xxx Xxxxx, PLLC
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000-0000
Attn: A. Xxxx Xxxxxx
Fax: (000) 000-0000
16. TERM. (a) The term of this Agreement shall commence on the date first
set forth above and shall continue in effect until May 30, 2010. Thereafter,
this Agreement shall automatically renew for additional terms of one (1) year
each unless either party provides the other with written notice of its election
not to renew this Agreement not less than sixty (60) days prior to the
expiration of the then current term.
(b) Notwithstanding anything to the contrary contained in SECTION 16(A)
above, this Agreement may be terminated by either party for a material breach of
this Agreement, provided that the non-breaching party has given the breaching
party written notice of the breach and has specified a cure period of at least
thirty (30) days, and provided further that no breach (whether or not otherwise
material) shall be considered "material" until the expiration of such cure
period. If a material breach remains uncured upon the expiration of the
applicable cure period, then the non-breaching party shall, in addition to all
other available remedies, have the right to immediately terminate this
Agreement. Any failure to pay any amount due hereunder shall constitute a
material breach after the foregoing written notice has been given and such
payment has not been made within the applicable cure period. Except for Seller's
rights and remedies described in Section 7, neither party shall exercise any
remedy upon a breach or default hereunder, until the non-breaching party has
given the breaching party written notice of the breach and has specified a cure
period of at least thirty (30) days, and such breach has not been cured within
the specified cure period.
17. MEDIATION/ARBITRATION. If a dispute arises out of or relates to this
Agreement, or the breach thereof, and if such dispute cannot be settled through
negotiation, the parties agree first to try in good faith to settle the dispute
by mediation under the Commercial Mediation Rules of the American Arbitration
Association, before resorting to arbitration, litigation, or some other dispute
resolution procedure. In the event such mediation does not result in a suitable
resolution of such dispute, then any controversy, claim or cause of action
arising out of or relating to this Agreement, shall be settled by binding
arbitration by three (3) arbitrators in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. Each of the arbitrators shall be a (i) member of the Bar
of the State of Delaware, actively engaged in the practice of law, or (ii)
retired judge from any Delaware state court. The arbitrators shall have power to
grant equitable
-----------------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
Page 6
remedies in addition to imposing monetary damages. The arbitration shall include
(i) a provision that the prevailing party in such arbitration shall recover its
costs of the arbitration and reasonable attorneys' fees from the other party,
and (ii) the amount of such costs and fees. Any such mediation or arbitration
shall be held in Wilmington, Delaware. Any cause of action arising out of or
related to this Agreement not submitted to arbitration within four (4) years
after such cause of action has accrued shall be deemed barred, notwithstanding,
any longer statute of limitations period available at law.
18. FORCE MAJEURE. No party hereto shall be liable for delay or failure to
perform any obligations hereunder if such delay or failure arises out of causes
beyond its reasonable control and without its fault or negligence, including,
but not limited to, labor, disputes and strikes, wars, riots, insurrection,
piracy, and civil commotion, federal, state or municipal action, statute,
ordinance, regulation, rule or order, fire, earthquake, floods or other
unusually severe weather, accidents, nuclear radiation, embargoes, epidemics,
shortages of power or any act of God. Any party seeking excuse for delay or
failure to perform on the basis of this provision shall promptly notify the
other party hereto upon learning of an event which may result in any delay or
failure to perform. In addition, the affected party shall make every effort to
eliminate and/or correct the effect of such condition or event as completely and
rapidly as is reasonably possible. In such case, the time of delivery or
performance shall be deferred until the force majeure event has been eliminated
or corrected sufficiently to permit performance. In the event that Seller is
excused from performance under this Agreement as the result of a force majeure
event as provided in this paragraph, then Buyer shall be permitted to purchase
any goods which Seller is unable to supply due to such force majeure event from
another supplier until Seller has notified Buyer that the force majeure has been
corrected and that Seller is again able to supply such goods to Buyer.
19. SEVERABILITY. Any provision of this Agreement which is invalid,
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity, prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such invalidity,
prohibition or unenforceability in any such jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
20. PARAGRAPH HEADLINES. All paragraph headings contained herein are for
convenience of reference only and are not intended to define or limit the scope
of any provision of this Agreement.
21. AUDIT. (a) An independent certified public accountant appointed by
Buyer may, at Buyer's expense, examine Seller's books and records solely for the
purpose of verifying compliance with the terms of this Agreement. Such
examination shall take place at a mutually agreed upon time and place, but in
any event only during Seller's normal business hours and upon at least ten (10)
business days' advance written request. Seller agrees to pay for the reasonable
fees, costs and expenses charged by any certified public accountant engaged by
Buyer for such review if the examination of Seller's books and records reveals
any material noncompliance with the terms of this Agreement. Prior to such
independent certified public accountant's examination of such books and records,
Buyer and such certified public accountant shall each execute a suitable
confidentiality
-----------------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
Page 7
agreement in favor of Seller, agreeing to keep any information learned in such
examination confidential, and to use such information only for the purpose
granted.
(b) An independent certified public accountant appointed by Seller may, at
Seller's expense, examine Buyer's books and records solely for the purpose of
verifying compliance with the terms of this Agreement. Such examination shall
take place at a mutually agreed upon time and place, but in any event only
during Buyer's normal business hours and upon at least ten (10) business days'
advance written request. Buyer agrees to pay for the reasonable fees, costs and
expenses charged by any certified public accountant engaged by Seller for such
review if the examination of Buyer's books and records reveals any material
noncompliance with the terms of this Agreement. Prior to such independent
certified public accountant's examination of such books and records, Seller and
such certified public accountant shall each execute a suitable confidentiality
agreement in favor of Buyer, agreeing to keep any information learned in such
examination confidential, and to use such information only for the purpose
granted.
22. ACQUISITIONS. Notwithstanding any provision of this Agreement to the
contrary, any company acquired by Buyer after the date hereof shall be permitted
to fulfill any contractual obligations of such company entered into prior to
(and not in anticipation of) such acquisition.
23. ENTIRE AGREEMENT. This Agreement contains the final, complete and
exclusive statement of the agreement between the parties with respect to the
transactions contemplated herein and all prior written agreements and all prior
and contemporaneous oral agreements with respect to the subject matter hereof
are merged herein. This Agreement may not be amended, supplemented or modified
(or any right or power granted hereunder waived) except by a written instrument
signed by the parties hereto.
24. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
25. AUTHORITY. Buyer and Seller each represent and warrant to the other
that it has the power and authority to enter into this Agreement and that the
execution of this Agreement and the performance of its obligations and duties
hereunder does not and will not constitute a breach or violation of its
organizational documents or bylaws or a violation of any agreement, instrument,
order, judgment, law, rule or decree by which it is bound or to which ii or its
assets are subject.
26. FURTHER ACTIONS. Upon request of Seller from time to time, Buyer shall
cause any of its Subsidiaries who purchase from Seller or its affiliates to
execute and deliver such documents as Seller may reasonably request,
acknowledging and agreeing that such Subsidiaries are Subsidiaries of Buyer and,
as such, are bound to the terms of this Agreement to the same extent as Buyer,
and that any default or breach by either Buyer or such Subsidiary shall
constitute a default by both Buyer and such Subsidiary, for which both shall be
jointly and severally liable.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-----------------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
Page 8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate originals as of the date first set forth above.
BUYER:
TAG-IT PACIFIC, INC.
By: /S/ XXXXX XXXX
-------------------------------
Xxxxx Xxxx, President
SELLER:
COATS AMERICAN, INC.
By: /S/ XXXXX XXXXXXXXX
-------------------------------
Printed Name: XXXXX XXXXXXXXX
----------------------
Title: V.P. - FINANCE
-----------------------------
-----------------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
Page 9
Tag-It de Mexico S.A. de C.V. ("Mexico") acknowledges that it is a
Subsidiary of Buyer, and as such it is bound by the foregoing Agreement to the
same extent as Buyer, and that any default or breach by either Buyer or Mexico
shall constitute a default by both Buyer and Mexico, for which both shall be
jointly and severally liable.
TAG-IT DE MEXICO S.A. DE C.V.
By: /S/ XXXXX XXXX
-------------------------------
Printed Name: XXXXX XXXX
----------------------
Title: CEO
-----------------------------
Date: 9/20/01
-----------------------------
Hilos Timon S.A. de C.V. ("Timon") acknowledges that it is an affiliate
(but not a Subsidiary) of Seller. Nevertheless, Timon agrees to be bound by the
foregoing Agreement to the same extent as Seller, and that any default or breach
by either Seller or Timon shall constitute a default by both Seller and Timon,
for which both shall be jointly and severally liable.
HILOS TIMON S.A. DE C.V.
By: /S/ XXXXX X. XXXXXXXXXX
-------------------------------
Printed Name: XXXXX X. XXXXXXXXXX
----------------------
Title: FINANCE DIRECTOR
-----------------------------
Date: 9/20/01
-----------------------------
-----------------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
Page 10
EXHIBIT A
STANDARD PAYMENT AND DELIVERY TERMS
1. A unit of sale is an item in the form in which it is invoiced, i.e., spool,
tube, cone, dozen, pound, gross, etc.
2. It is the responsibility of the purchaser to assure himself that the
quality of the merchandise in respect to shade, color, fastness and all
other properties is suitable for the purpose for which it will be used.
3. Visible damage must be reported to delivering carrier ***. Concealed damage
must be reported to Seller within the earlier of (i) ***. Delivery receipt
must be endorsed by customer and mailed to branch office for credit.
4. All claims for loss or non-delivery must be made within *** of date of
shipment.
5. No unauthorized returns will be accepted for credit.
Date of delivery is subject to deferment to the extent affected by any federal,
state or local governmental action from time to time, whether by legislation,
rule, regulation, exemption or administrative order or otherwise and your order
may be modified to the extent of any deferment. The Seller shall in no event be
liable for delays in delivery due to labor disturbance or due to contingencies
beyond its control. Seller represents that with respect to the production of the
articles and/or the performance of the services covered by this acknowledgement,
it has fully complied with the requirements of section 12(a) and with the other
requirements of the Fair Labor Standards Act of 1938, as amended.
-----------------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
Page 11