Pacific Trim S.A. DE C.V.
TRIM HANDLING AGREEMENT
Entered into between Tarrant Apparel Group, Inc., & Tagmex (together referred to
as Tarrant, a garment manufacturer based in Los Angeles), and Tag-It Pacific,
Inc., & Tag-It De Mexico S.A. De C.V. (together referred to as Tag-It, a trim
company based in Los Angeles) on this 29th day of December, 1999.
Since October 1st 1998, Tag-It has been purchasing, handling and delivering most
of the trim for Tarrant's Mexico Production. Both parties wish to clarify their
understanding in the form of this agreement.
1) TERM. This agreement describes the current understanding by the parties;
it has commenced on October 1, 1998 and either party may cancel it at any
time. This agreement is non-exclusive. Tarrant may elect to have another
company handle its trim and Tag-It may service others.
2) PURCHASING. Tag-It is responsible for purchasing trim items designated
by Tarrant. The parties agree that most of the trim ordering is done on an
order by order basis. When Tarrant feels it necessary, it may give Tag-It
projections. Tag-It orders the required quantities plus 10%. The overage is
to cover up to 5% over-cutting by Tarrant and 5% possible loss by the
contractors.
3) INFORMATION FLOW. Tarrant's merchandisers supply Tag-It with Trim Setup
Sheets. The Trim Setup Sheet is considered as a purchase order from Tarrant
to Tag-It and is presented in the form of a program containing the
necessary information for Tag-It to order the appropriate quantities of
trim. The Trim Setup Sheets are tracked by program number assigned by
Tarrant. Tarrant is responsible for the accuracy of the information
contained in the sheets.
ORDERING:
A) Upon receipt of a Trim Setup Sheet, Tag-It forwards to Tarrant's
production manager the delivery schedule (in days or weeks) for each
needed trim item within 48 hours (except holidays and weekends).
B) After reviewing the delivery schedule and the accuracy of the setup
sheet, Tarrant's production manager signs the sheets and returns it to
Tag-It. At this point using sequential numbers the setup sheet becomes
a valid purchase order from Tarrant to Tag-It for all the trim.
C) Upon receipt of the approved setup sheet, Tag-It orders the trim
from various vendors.
D) The actual delivery dates for each trim item are updated on the
Trim PO Status Report by Tag-It on a DAILY BASIS. If an item is late,
it appears
highlighted on the report. This report is sent to merchandisers and
production manager.
RECEIVING:
A) Tag-It Makes the appropriate arrangements to receive the trim items
in its warehouse in Tehuacan.
B) The Trim PO Status Report is updated showing the items that are
received and ready to be delivered.
DELIVERY:
A) Tarrant supplies Tag-It with the Marker Requests showing the orders
(including program number, total quantity to be cut . . .) to the
cutting services.
B) Tag-It uses the information on the Marker Request to insure
adequate trim quantities are in stock. Should there be a shortage,
Tag-It immediately notifies Tarrant's production department.
C) After the cutting service cuts the goods, Tarrant forwards the
actual cutting ticket to Tag-It. Tag-It uses the actual cutting ticket
to pull the trim out of its inventory and calls the assigned
contractor for pickup. Tag-It pulls the necessary trim for the actual
amount cut plus 5% to cover regular loss and damages during
production. First trim is pulled within 48 hours from receipt of
actual cutting ticket. Note: Contractors are responsible for picking
up the trim from Tag-It's warehouse.
D) When contractors come for pickup, they are required to count the
items and compare the quantities with the paperwork they are provided.
Scales are available to facilitate the counting process. Once the
contractor's representative agrees with the count, he or she signs for
the pickup. The signature must be from an authorized representative of
the contractor. By signing the documents presented by Tag-It, the
contractor acknowledges the pickup of the exact items and quantities
stated on the paperwork.
E) The Contractor's representative receives the items he or she signed
for as well as a copy of the paperwork.
F) The process described above actually takes place in 2 steps. When
the actual cutting ticket is received, Tag-It releases the first trim.
Once a laundry is assigned on Tarrant's production reports, the second
trim is released to the laundry in the same manner.
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INVOICING:
A) The signed paperwork is forwarded to Tag-It's invoicing department.
A single invoice for all trim is issued per cut. Missing and extra
trims will be billed separately.
B) Tag-It will provide a copy of the invoice as well as a copy of all
signed paperwork on-line to Tarrant's A/P department online.
4) SHORT SHIPPING. In some instances, Tag-It does not have sufficient trim
to supply the contractors. In these cases, Tag-It notifies Tarrant's
production department, the responsible merchandiser as well as the
contractors. Tag-It then obtains the trim as fast as possible. All affected
parties are kept informed of the progress by e-mail and phone.
5) MISSING TRIM. Sometimes a contractor may need trim over and beyond the
additional 5% that were originally released. This may be due to damaged
trim or the contractor may have lost the original quantity. The contractor
notifies both Tarrant and Tag-It of the missing quantity. The Tarrant
merchandiser fills out an authorization form allowing Tag-It to release the
additional quantity. The additional quantity is usually taken from items
reserved for other cuts or programs. Tag-It re-orders the items in question
to replenish the stock.
6) MISSING TRIM BILLING: When additional trims are released, Tag-It
generates an invoice to Tarrant. Along with the backup paperwork, Tag-It
supplies Tarrant with a copy of the original proofs of delivery for the cut
to show that the contractor was supplied with adequate quantities with the
first delivery.
7) PRICING. Tag-It presents Tarrant with a trim package price per garment
for each of Tarrant's programs. These prices include ground shipping and
handling of the trim as described in this agreement. Tarrant is responsible
for approving the prices and yields for each item. There are certain items
that Tag-It purchases from Tarrant Customer's approved vendors. When Tag-It
is not the approved vendor for the item in questions, Tag-It charges
Tarrant the purchase cost of the item plus a 17.5% markup (15% gross
margin) plus any freight charges. When Tag-It is the approved vendor,
standard markup is applied to the items; the price per unit is presented to
Tarrant for approval. Prices billed to Tarrant will be according to the
approved trim package price.
8) MISSING INFORMATION. Under certain circumstances, Tarrant may give
orders to Tag-It without specifying the size break down needed. It is
understood that Tag-It is not able to properly order trim without the
correct size break.. In the event that the size breakdowns are not received
within 1 week (from receipt of the order), Tarrant agrees to project 150%
of the order quantity for all the sized items.
9) PRICE TICKETS. Most of Tarrant's customers order price tickets directly
from a vendor of their choice. These items are shipped to Tag-It's
warehouse for separation by cut and
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distribution. So far, Tag-It has been handling the price tickets at no
charge to Tarrant. Tag-It is not responsible for any price tickets errors
or shortages.
10) AIR SHIPMENTS. When it is necessary to ship items by air, Tag-It
requests an air authorization from the appropriate Tarrant merchandiser.
The freight bills are presented to Tarrant for payment. In certain cases,
Tag-It will pay for the airfreight (when the rush is caused by Tag-It).
11) LIABILITY. In certain instances, Tarrant's customers may cancel certain
orders for which Tarrant has ordered trims and Tag-It already received.
Tag-It makes the necessary efforts to return any item that is not needed to
the original vendor. In many cases, it is not possible to return the
unneeded items. These items are billed to Tarrant on a xxxx and hold basis.
Tag-It will keep these items in its inventory for a specified time after
which it will request an authorization from Tarrant to dispose of the
unneeded items.
12) INVENTORY. Tag-It will review its physical inventory counts taken
quarterly. The inventory positions will be studied and the activity of each
item will be checked. Should Tag-It find any item that has not had any
activity in the previous quarter, it will research the origin of the item.
If it is found that Tarrant ordered that item and did not use it, the item
will be billed to Tarrant. Tag-It reserves the right to do this research on
any item that has been in Tag-It's inventory more than 90 days.
13) ITEMS ORDERED BY TARRANT. Tarrant may from time to time order certain
items from a different source than Tag-It. Tarrant may choose to ship those
items to Tag-It's warehouse in Tehuacan. In these instances, Tarrant agrees
to disclose its cost for the items to Tag-It. Tag-It will invoice 17.5% of
the value of the items to Tarrant as a handling fee. Tag-It cannot be held
responsible for any shortage or quality problem unless it is the result of
Tag-It handling.
14) QUALITY CONTROL. Tag-It is responsible for the quality of the items it
delivers to Tarrant. Prior to delivering an item from a new vendor, Tag-It
will submit a sample of the item to Tarrant for testing and approval.
Tag-It will assume that the quality will not pass testing and have a backup
order (from a previous approved vendor, if available) of sufficient
quantity ready to deliver in case the item is not acceptable. It is
Tarrant's responsibility to notify Tag-It of any quality problem.
15) MACHINES. Tag-It supplies the machinery to apply the trim items on the
garments to Tarrant. Tarrant is responsible for giving Tag-It advance
notice of the machinery needed for its production. Tarrant signs a lease
agreement for each machine and pays the agreed upon monthly fee. Tag-It is
responsible for the delivery of the machines and the maintenance as
described in the lease agreement. Tag-It is not responsible for repairs
when a machine is used with the wrong item or mistreated or modified in any
way by contractors.
Both parties have been operating under most of the terms described above for the
past 90 days. It is understood that each party makes every possible effort to
improve its relationship with the other. There are areas of the understanding
described in this document that can and will be improved.
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This document aims at describing those areas that are clear to each party; it
will be updated as new procedures are implemented.
Tag-It is not the approved vendor for all of the items used by Tarrant. It is
understood that it is to the benefit both parties (for price and delivery) that
Tag-It becomes the approved vendor. Both parties have been working with
Tarrant's customers to expedite the process of getting Tag-It approved.
Accurate and timely information is crucial for the success of this relationship.
Both parties strive to provide information in a timely manner.
TARRANT APPAREL GROUP
By: /S/ XXXXX XXXX
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Its: PRESIDENT
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Date: 12/20/99
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TAG-IT PACIFIC
By: /S/ XXXXX XXXX
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Its: CHIEF EXECUTIVE OFFICER
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Date: 12/20/99
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