Chapter 10

Shipping & Delivery Requirements (Apparel & Accessories)

I. Overview ...................................................................................................................................................... 2

II. Import Purchases (Purchase Orders whereby Talbots is the Importer) ................................................ 4 a. Merchandise Guidelines ....................................................................................................................... 4 b. Samples Customs Requirement ........................................................................................................... 4 c. Documentation Requirements ............................................................................................................. 5

III. Carton Marking Requirements .................................................................................................................. 8

IV. Talbots Shipping Guidelines..................................................................................................................... 15 a. Shipping Guidelines ............................................................................................................................ 15 b. Illegal Transshipment ........................................................................................................................... 17

V. Domestic Purchases (Purchase orders whereby Talbots is not the Importer) ................................... 18 a. Documentation Requirements ........................................................................................................... 18 b. Authorized Carriers to Lakeville Distribution Center ........................................................................ 18

VI. Product Delivery Guidelines .................................................................................................................... 20 a. Timely Delivery ..................................................................................................................................... 20 b. Delivery Accuracy ............................................................................................................................... 20 c. Non-Authorized Goods ....................................................................................................................... 21 d. Sub-Supplier Claims ............................................................................................................................ 21 e. Right to Seek Assurance ..................................................................................................................... 21

VII. Additional Terms and Conditions ............................................................................................................ 22 a. Trademarks/Intellectual Property ...................................................................................................... 22 b. Designs .................................................................................................................................................. 22 c. Governing Law; Disputes .................................................................................................................... 22 d. Miscellaneous ...................................................................................................................................... 23

2

I. Overview Background

When importing merchandise through Customs, Talbots has a legal obligation to exercise reasonable care when declaring:

• Value • Classification • Rate of duty of imported merchandise • Any other information necessary to enable Customs to assess duties properly and collect

accurate statistics

Talbots relies on its vendors to:

• Properly describe imported merchandise • Show the correct country of origin • Account for proper quantities • Declare proper value

Policy

It is Talbots’ corporate policy to conduct business only with vendors who adhere to the laws and regulations of the Customs agencies in each of the countries where Talbots imports or exports merchandise.

Cargo Security

It is Talbots’ policy that seller agrees to take such reasonable measures as may be required by buyer to ensure to the physical integrity and security of all shipments to the buyer against the unauthorized introduction of harmful or dangerous materials, drugs, contraband, weapons or weapons of mass destruction or introduction of unauthorized personnel in transportation conveyances or containers. Such measures shall conform to “C-TPAT Importer Security Criteria” as issues and updated by U.S. Department of Homeland Security, U.S. Customs & Border Protection, as well as any and all additional security programs issued and updated by the U.S. Department of Homeland Security. In addition to the foregoing, Seller agrees to comply with and obtain certification of similar cargo security procedures as available by local authorities in the country of manufacture. All containers shipped to the buyer shall utilize seals that must meet or exceed the current PAS ISO 17712 standards for high security seals. Seller agrees to provide such certifications assuring compliance with this provision at least once annually. Furthermore, Seller agrees to prove buyer reasonable access to facilities to assure compliance with these requirements.

Unfit Carriers

If you believe the carrier designated by Talbots is unfit to perform the transportation required, please call the Talbots Logistics Department at 781-749-7600. Talbots requests your assistance in this matter, as it is impossible to predict bankruptcies, strikes, mergers, acquisitions and/or natural disasters that could affect the timely arrival of your shipment. When you contact Talbots Logistics Department, new or emergency routing instructions will be provided.

3

Purchase Terms

The Talbots, Inc. primarily uses the following terms for air and ocean purchases:

• FCA (Free Carrier) Named Carrier/Terminal Consolidator/Port • CPT (Carriage Paid to) Named Destination • DDP (Delivered Duty Paid) Named Point of Delivery • EXW (Ex-works, ex-factory) Named Place As Incoterms are subject to interpretation and modification by buyer and seller, the following information outlines Talbots’ expected buyer and seller obligations for these terms.

EXW FCA CPT DDP Export Packing Buyer Seller Seller Seller Export Formalities & Fees Buyer Seller Seller Seller Inland Freight Buyer Seller Seller Seller Unload from Truck at Origin Port Buyer Seller Seller Seller Origin Charges Buyer Seller Seller Seller Ocean/Air Freight Buyer Buyer Seller Seller Destination Charges for Door Delivery Buyer Buyer Seller Seller Insurance Buyer Buyer Buyer Seller Entry-customs Clearance, Duties & Taxes Buyer Buyer Buyer Seller

Talbots maintains the right to specify different terms and/or use modified Incoterms in its purchase orders depending on varying circumstances.

Shipping Dates

Under the standard terms of the Talbots purchase order, transition of ownership occurs upon receipt of goods onboard on the start ship/schedule date for vessel or air.

Questions

If your company has questions regarding any of the information provided in this chapter, please contact one of the following:

• Talbots Buying Agent • Talbots Logistics Department at 781-749-7600

4

II. Import Purchases (Purchase Orders whereby Talbots is the Importer) a. Merchandise Guidelines

Country of Origin Marking and Labeling

Outside the U.S., Customs and other government agencies enforce the Country of Origin Marking Requirements. In the U.S., Customs and other government agencies enforce the Country of Origin Marking Requirements and the Federal Trade Commission (FTC) Marking Requirements. The following details are required on the merchandise:

• Country of origin • Fiber content detail by percentage • Talbots controlled and assigned FID number • Talbots CA number

For assistance with the Federal Trade Commission regulations regarding proper origin, labeling, fabric content and care instructions, please contact your Talbots’ buying agent or reference the product specification pages of this vendor manual.

b. Samples Customs Requirement Vendors must ensure strict adherence for all sample shipments.

Processing Sample Shipments

• Sample packages are expected to be reviewed and corrected if the contents do not conform to these requirements by the shipper prior to leaving origin.

• Guidelines for non-mutilated and mutilated samples must be followed. • Particular attention must be given to placing the proper value on the documents. • Shipments are to be created using FedEx.com in order to create electronic airwaybills

and customs value. Hand written airwaybills will not be accepted. Non Mutilated Samples Any non-mutilated sample shipped to Talbots must be accompanied by an invoice indicating the full commercial value and complete description of the article for entry processing. Photo and layout samples are two examples of the sample types that require full commercial value; however, is not an exclusive list.

KEY POINT: Any sample that is not mutilated must be declared and substantiated at full commercial value (FOB/FCA cost), as presented on the commercial invoice and airwaybill. Under no circumstance may invoices for payment differ from the commercial invoice submitted for customs. All sample shipments must reflect the true and accurate cost of the item.

Mutilated Samples Any sample declared “mutilated” on the commercial documents, must be physically rendered unfit for resale prior to export. These must be mutilated with a hole no less than 1 inch around on the outside of the garment or accessory and visible if worn so that it cannot be covered. Alternatively, it may be stamped “SAMPLE” with indelible contrasting ink in a visible location on the exterior. The size of the word "SAMPLE" should be at least 1 inch in height and not less than 2 inches in length. The invoice must contain the statement "MUTILATED SAMPLES - 9811.00.60."

5

KEY POINT: The commercial invoice must indicate the value and complete description of the article for entry processing. The value must represent the actual cost of the finished sample (FOB/FCA cost). Under no circumstance may invoices for payment differ from the invoice value declared to customs. All sample shipments must reflect the true and accurate cost of the item.

All Samples

Any sample shipped to Talbots must be shipped with usual U.S. Customs required documentation, including a complete commercial invoice with full and accurate descriptions of the item(s) content (% by weight) and other related product specific or government agency requirements

Payment Policy

Compliance with U.S. customs is required.

• If a sample is to be paid for by Talbots, the invoice presented for payment must include attached to it copies of all commercial invoice(s) used to ship the sample along with the FedEx electronically generated airwaybill with customs value. If a discrepancy exists between the commercial shipping invoice and the payment invoice, Talbots will only pay up to the value declared to U.S. Customs.

c. Documentation Requirements Background

Documentation from a foreign vendor provides information that enables Talbots to meet Customs’ reasonable care requirements. It is essential that all agents and vendors provide timely and complete documentation that supports the Talbots details as contracted.

• Ocean Shipments 48 hours after vessel departure • Air Shipments wheels up

Under no circumstances may goods be shipped under one set of documents with a second “corrected” set of documents to follow.

*For Talbots approved Factory-loaded shipments – Vendors are to photograph the inside and outside of the empty container (clearly showing the container number): upon delivery to their facility, mid-way through loading and lastly, upon completion of loading the container. These photographs are to be included in the Import documents required, listed below.

Import Documents Required

• Commercial Invoice • First Sale Documentation (if applicable) • Canada Commercial Invoice (Canada orders only) • Packing List • Country of Origin Certificate per Special Trade Program Rules, including GSP Form A

for USA shipments & GPT Form for Canada shipments • Interim Footwear Invoice (if applicable) • Bill of Lading or Air Way Bill • Visa per Special Trade Program Rules

6

• TPL Certificate per Special Trade Program Rules • B255 (Canada orders only) Least Developed Country Form • C-TPAT Container * & Seal Inspection reports • *For Factory-loaded shipments – Photographs of the three (3) stages of loading as

detailed above Record Keeping Requirements Vendors are required to keep complete and accurate production records for every transaction, on hand and available for 5 years from the date of export.

Merchandise Descriptions

Vendors, suppliers and manufacturers are responsible for providing an accurate written description of the merchandise on commercial documents.

Solid Wood Packing Material (SWPM)

All commercial invoices must state the following:

“This shipment including its container does not contain SWPM, any non-manufactured wooden material, dunnage, bracing material, pallets, crating or other non-manufactured wooden packing material.”

Quantity

The exact piece count for each PO must be listed on both the commercial invoice and the packing list and must match the scan & pack ASN (Advance Shipping Notice).

Value

The exact contracted unit cost for each PO must be listed on the commercial invoice, as negotiated prior to export. Assists (if any) must be included and clearly indicated on the commercial invoice prior to export. Any changes to the terms of sale or price per unit must be accurately listed on the commercial invoice prior to exportation. If a change occurs during shipment transit, the vendor is responsible for notifying Talbots of these changes, prior to the arrival of the shipment.

7

ASN (Advanced Shipping Notice)/Scan and Pack

Every shipment must have an electronic ASN from an approved Talbots’ provider sent to the Distribution Center before the shipment is tendered to a carrier. If a vendor fails to provide an ASN or provides incorrect information, a chargeback of a minimum of $500 will be issued from Talbots Lakeville Distribution Center upon receipt of the goods.

Talbots requires that vendors utilize our Scan and Pack service provider, Avery Dennison’s Info Chain Express (ICE) software for Scan and Pack and Advance Ship Notifications (ASN).

Contacts for Avery Dennison

AVERY DENNISON Customer Service Group - USA Innovations and Solutions Group Tel: 508 383 5028 ICE_Sales@ap.averydennison.com

Asia Sales Manager Tel: 852 3191 4386 Andy.Chang@ap.averydennison.com

8

III. Carton Marking Requirements

All packaging is to be included in the contracted purchase price and the commercial invoice. Talbots does not provide assists.

Standard shipping cartons must be clearly labeled with the following information:

Label Instructions

“Chasing Arrows” Symbol • To indicate that materials used are recyclable

Box Manufacturer’s Certification Stamp • Name and address of manufacturer • Bursting strength • Gross weight limitation

Advanced Ship Notification (ASN) Label in conjunction with Electronic Data Interchange (EDI)

• Centered on the short end of the carton • Bar code must be placed 2” up from bottom

of carton

Talbots Style Number • 2 digit color code must be printed on both long

ends of the carton • Block lettering with a minimum 100 pt font size

Talbots Item Number

• Must be printed on both long ends of the carton to the right of the style number

• The item number may be applied using a label properly adhered to the carton to prevent removal during transit

• Block lettering with a minimum 2 inch font size

Exceptions for Canada PO destined for Canada will adhere to the same shipping guidelines as listed above for U.S. orders, but with the following slight changes and additions

• PO will be packed separately. However, when appropriate, multiple sizes per PO should be packed in the same carton. In this case, the outside of the carton must be marked “multiple sizes.” Different colors cannot be mixed within the same carton.

9

• Neon Green Diamond Ship Mark The neon green colored Diamond Ship Mark stickers must be visible and adhered to all cartons. Affix one neon green Diamond Ship Mark sticker on the long side of the carton so it is visible when stacked.

6”

Neon Green T/C

10

Commercial Invoice Requirements

The Commercial Invoice and Packing Slip shall be created in the Yusen Logistics System.

Below is the sample of the Commercial Invoice for Vendor reference.

Vendor will be required to complete all fields. Special descriptions required for Description field are provided on the following pages, specific for the commodity or garment type.

11

Reference For Commercial Invoice - Description Box

Commodity Documentation - Additional Information for Certain Classes per 19CFR 141.89

Hats or Headgear

(1) Statement as to whether or not the article has been bleached or colored (2) Statement as to whether or not the article is sewn or not sewn, exclusive of any

ornamentation or trimming

Hosiery (1) Indicate whether a single yarn measures less than 67 decitex (2) Indicate whether the hosiery is full length, knee length or less than knee length (3) Indicate whether it contains lace or net

Wearing Apparel

(1) All invoices for textile wearing apparel should indicate a component material breakdown in percentages by weight for all component fibers present in the entire garment, as well as separate breakdowns of the fibers in the (outer) shell (exclusive of linings, cuffs, waistbands, collars and other trimmings) and in the lining

(2) For garments that are constructed of more than one component or material (combinations of knit and non-knit fabric or combinations of knit and/or non-knit fabric with leather, fur, plastic, including vinyl, etc.), the invoice must show a fiber breakdown in percentages by weight for each separate textile material in the garment and a breakdown in percentages by weight for each non-textile material for the entire garment

(3) For woven garments – Indicate whether the fabric is yarn dyed and whether there are “two or more colors in the warp and/or filling”

(4) For all-white T-shirts and singlets – Indicate whether or not the garment contains pockets, trim or embroidery

(5) For mufflers – State the exact dimensions (length and width) of the merchandise

Denim Pants/Skirts

(1) If the denim used for these garments meets the Customs definition of "blue denim," the term “blue denim“ must be stated on the invoice

(2) Customs definition of "blue denim" means fabrics of 3-thread or 4-thread twill, including broken twill, warp faced, the warp yarns of which are dyed blue and the weft yarns of which are unbleached, bleached, dyed grey or colored a lighter shade of blue than the warp yarns

Fur Products and Furs (T.D. 53064)

(1) Name or names (as set forth in the Fur Products Name Guide (16 CFR 301.0) of the animal or animals that produced the fur and such qualifying statements as may be required pursuant to §7(c) of the Fur Products Labeling Act (15 U.S.C. 69e(c))

(2) Statement that the fur product contains or is composed of used fur, when fact (3) Statement that the fur product contains or is composed of bleached, dyed or otherwise

artificially colored fur, when fact (4) Statement that the fur product is composed wholly or in substantial part of paws, tails,

bellies or waste fur, when fact (5) Name and address of the manufacturer of the fur product (6) Name of the country of origin of the furs or those contained in the fur product

Rainwear/ Water Resistant

(1) If garment contains a coating, lamination, covering or backing of rubber or plastic: • Indication of whether the rubber obscures the textile surface • Indication of whether the rubber or plastic is visible to the naked eye; results of AATCC

Test Method 35

12

Footwear Documentation - additional information for certain classes per 19CFR 141.89

13

14

In addition to the details on the Commercial Invoice, the following may apply:

Commodity OGA Requirements

Shell Buttons

Fish & Wildlife Shell button information must be included on the Commercial Invoice: • Common name of the shell button • Scientific name of the shell button (Note: The scientific name must be

obtained from the vendor's button supplier. The genus and species determine the scientific name.)

• Price per button • Number of buttons per garment • Country of origin of buttons • Farm raised or taken from the wild • Other commodities listed may or may not be subject to Fish and

Wildlife Service (FWS)

Certain Feathers Animal Tusks Horns Certain Furs

Fish & Wildlife Specific information regarding these commodities is required before determining if subject to Fish & Wildlife clearance

Metal Jewelry Consumer Product Safety Commission (CPSC) Lead Test required

Apparel Products Subject to Flammable Fabrics Act (FFA)

Consumer Product Safety Commission (CPSC) Certificate of Conformity required, if applicable

Ink Pens

EPA - Toxic Substance Control Act (TSCA) • The chemical makeup of the ink is needed from the manufacturer • The chemicals must be checked to see if they are listed on the TSCA

inventory list • An MSDS (material safety data sheet) is required to be on file for

each chemical component

Rule of Thumb: If at any time it was alive and you are unsure if it meets the requirements of the Fish & Wildlife Service, please ask the Talbots Import Department.

15

IV. Talbots Shipping Guidelines a. Shipping Guidelines

Shipping Requirements

• The vendor must utilize Talbots’ freight consolidator, Yusen Logistics, when scheduling the merchandise for export. Vendor’s obligation is to ensure cargo is booked and delivered for loading on an approved vessel in the named port of export that departs on or before the contracted ship date.

• Purchase orders cannot be split into multiple bookings. All Purchase orders are expected to be shipped complete into one shipment and container.

• All bookings are to be completed online using the freight consolidator’s booking management system.

• Training and operational guidelines will be provided at origin, to all vendors and manufacturers, by the Talbots’ freight consolidator.

• Failure to book cargo with the freight consolidator 21 days prior to export may result in shipping delays and extraordinary freight expense charged to the vendor; including, but not limited to, expedited shipping to our destinations and/or store locations.

The nominated consolidator is Yusen Logistics. https://www.yusen-logistics.com/

Bookings should be submitted via Yusen Logistics e-booking system:

Extraordinary Freight Expense Due to Contract Failure

Freight terms are outlined on the PO. If a contract failure occurs, Talbots will renegotiate and/or revise terms including, but not limited to, the options outlined below. Each case will be handled individually, but in every case the contracted price will include the prepaid charges.

• 100% Prepaid • Shared costs • Air Sea Difference (ASD)

16

The following table reflects the per CBM U.S. Dollar amount that Talbots will pay toward an ASD shipment. ASD is the result of a change in negotiated terms from FCA to CPT due to a contracted delivery failure. This amount, by trade lane, will be billed by the freight forwarder to Talbots and will be reflected on the airway bills. This table reflects the amount of the buyer’s contribution for ordinary shipping, as agreed in advance. The extraordinary amount of freight charges will be prepaid by the vendor/manufacturer at origin. Updates to this chart will be made periodically; for the most current rate, always request confirmation from the Talbots’ freight forwarder at the time of booking.

ASD TABLE

Country of Export U.S. $/CBM

Bangladesh $90 China $85 Hong Kong $80 India $80 Indonesia $80 Italy $100 Jordan $100 Korea $85 Nicaragua $80 Philippines $80 Sri Lanka $85 Thailand $80 Vietnam $85

GOH shipments are subject to an up charge of U.S. $40 per CBM

17

b. Illegal Transshipment Background

• Illegal transshipment is the practice of manufacturing goods in one country, transporting them to another country, and exporting the goods to a third country with labels and documents that misrepresent the country of origin

• It is Talbots’ intention to ensure that the country of origin of our merchandise is accurately reported at the time of entry

Transshipment Violations

The following violations are grounds for inclusion on a U.S. Customs Transshipment list:

• Using documentation, or providing documentation subsequently used by the importer of record, which indicates a false or fraudulent country of origin or source of components or finished products

• Using counterfeit visas, licenses, permits, bills of lading, or similar documentation; or providing counterfeit visas, licenses, permits, bills of lading, or similar documentation

• Manufacturing, producing, supplying or selling components or finished products that are falsely or fraudulently labeled as to country of origin or source

• Engaging in practices that aid or abet the transshipment, through a country other than the country of origin, of components or finished products in a manner that conceals the true origin of the textile or apparel products or permits the evasion of quotas on, or voluntary restraint agreements with respect to, imports of components or finished products

c. SOLAS – Container Weight Regulations

The International Maritime Organization (IMO) Maritime Safety Committee officially adopted the new Safety of Life at Sea (SOLAS) requirement that as a condition for vessel loading, the Verified Gross Mass (VGM) must be provided by the Shipper. The weight of a packed export container must be verified by the shipper using either of the two permissible methods described below. The carrier can refuse to load the container onto the vessel if the VGM information is not provided by the shipper. The rules prescribe two methods by which the shipper may obtain the verified gross mass of a packed container: • Method no# 1. Requires weighing the container after it has been packed.

• Method no# 2. Requires weighing all the cargo and contents of the container and

adding those weights to the container’s tare weight as indicated on the door of the container.

Talbots Imports LLC has charged Yusen Logistics with the management of this program regardless of the type of the load (CY Factory Load or CFS Consolidation). Talbots’ vendors will be responsible for providing the necessary information that is mandated by SOLAS.

18

V. Domestic Purchases (Purchase orders whereby Talbots is not the Importer) a. Documentation Requirements

Every shipment of merchandise must have a Bill of Lading (BOL) and an ASN (Advanced Shipping Notice). The ASN must be sent to the Distribution Center before the shipment is tendered to a carrier. If a vendor fails to provide an ASN or provides incorrect information, a chargeback of a minimum of $500 will be issued from Talbots Lakeville Distribution Center upon receipt of the goods.

The following information must be written on the Bill of Lading:

VI. Talbots PO number(s) VII. Indication of entity (example: store or outlet, etc.) VIII. Pieces and weight on both carton and hanging orders IX. Talbots Freight Authorization number(s), if assigned by Talbots Logistics Department X. The notation “Call 781-741-4610 for DELIVERY APPOINTMENT”

Multiple PO(s) shipping on the same day must be consolidated as one shipment on one Bill of Lading. Follow PO instructions for delivery point.

b. Authorized Carriers to Lakeville Distribution Center - Routing Vendors who manufacture in the U.S., or sell domestic Delivered Duty Paid (DDP), must comply with the instructions outlined below. Unauthorized use of transportation provider, carrier, forwarder or expedited freight method is strictly prohibited. Transportation charges submitted on invoices will not be paid. Authorized Carriers

• Shipments containing more than 5 cartons or 100 lbs. in total must be palletized and shipped via Old Dominion Freight Line. *If more than 8 pallets, please e-mail Phillip.Tetreault@talbots.com for shipment approval.

• Shipments less than 5 cartons or 100 lbs. in total: E-mail Talbots Logistics Department at Phillip.Tetreault@talbots.com.

• If any individual carton within the shipment does not adhere to the package (carton) characteristics listed below, call Talbots Logistics Department at 781-741-4657

Carton Characteristics

Maximum length of 108’

Maximum weight of 150 pounds

Maximum combined length and girth 165

CLG = 2(H) + 2(W) + longest side

CLG rolled goods = 4(D) + longest side

Dimensional Weight

Packages > 5184 cu divided 194 (domestic)

Packages > 5184 cu divided 166 (international)

Oversize $50 if CLG > 130”

Additional handling = $7.50/pkg.

Packages > 70 lbs receive an additional handling fee.

19

Packages with 2nd longest side longer than 30” will be assessed with additional handling surcharge

Failure to comply with these routing requirements will cause disruption of service to our customers and may result in an administrative charge-back, plus an appropriate charge-back assessment. Vendors will also be held legally accountable for any charges, including but not limited to overcharge/undercharge claims, legal fees, court costs and administrative costs associated with or arising from the use of unauthorized carriers.

20

VI. Product Delivery Guidelines

a. Timely Delivery As noted on the PO, timely delivery is of the essence. Talbots will be entitled to cancel an order if any merchandise or other products (the “Goods”) or any instalment of the goods are not delivered by the “scheduled date” identified as the ship date specified on the PO. The products must be shipped on or before this date. If late delivery is accepted by Talbots in part or whole, the vendor will pay for all excess freight, if any, arising from freight surcharge and/or freight increases after the ship date.

If the vendor is unable to comply with the ship date specified on the PO, the vendor may elect to obtain a written extension of time from Talbots or written consent to modify the shipment terms subject to the vendor bearing the difference between original and proposed. In such case, the price for the goods will be reduced prior to shipment by an amount equal to the difference between (i) the estimated cost of shipping the goods to the destination specified in the PO and (ii) the actual cost of such other faster means of transportation as may then reasonably be chosen by Talbots for transportation of the goods to the “ship to” destination so as to permit Talbots to maintain its schedule for the goods to the extent possible under the circumstances. Should Talbots refuse to concede to this alternative and cancel the order, the vendor will pay to Talbots on demand compensation based on the value of the order without prejudice to the rights Talbots has against the vendor for breach of contract and an indemnity against such costs and claims that Talbots may suffer.

b. Delivery Accuracy • Talbots’ policy requires vendors to achieve the following tolerances in delivered product

measured against ordered units, based on the issued PO o Core orders less than (<) or equal to 3,000 units: Talbots will accept -10%/+10% at the

SKU level by size/color and total o Core orders greater than (>) 3,000 units: Talbots will accept -4%/+4% at the SKU level

by size/color and total PO o Outlet orders will accept a -4%/+4% tolerance at the SKU level by size/color and total

PO • Delivery accuracy to the Distribution Center will be audited; results will be recorded • Continued incidents of poor accuracy will be penalized • In cases where there are overruns, Talbots will require notice of an overrun and will then

make a decision whether receipt to the PO terms will be accepted • The vendor is prohibited from selling product or excess materials that carry the intellectual

property of Talbots or the Talbots brand name • In overrun cases, the vendor is responsible for removing the tickets and labels that identify

the brand name; known as protecting the brand. The vendor is prohibited from selling garments or objects that carry any intellectual property or the Talbots brand.

21

c. Non-Authorized Goods

If goods are delivered to Talbots that have not been authorized, those goods will not be accepted by Talbots.

Deliveries will be deemed “non-compliant” and will not be accepted if the following is incorrect:

• Packaging • Labeling • Paperwork

Deliveries established with incorrect quantities or shortages will also be deemed non-compliant:

• Incorrect quantities – Only the received quantities will be credited • Mixed styles will require sorting and will be charged • Incorrect colors/styles will require sorting and will be charged

If a significant issue occurs, the complete delivery may be deemed non-compliant and may be classified as rejected.

d. Sub-Supplier Claims Vendor shall defend, indemnify and hold harmless Talbots against all claims or proceedings brought against Talbots by any sub-supplier of vendor that relate to an order placed by Talbots with vendor, including any claims arising out of an alleged violation(s) of vendor’s contractual obligations or responsibilities to such sub-supplier relating to such orders.

e. Right to Seek Assurance Following the placement of an order(s), if Talbots has reasonable grounds to believe the vendor will not be able or willing to manufacture or deliver the goods, Talbots may request assurance from the vendor that the goods will be manufactured and delivered by the delivery date specified on the PO. If the vendor fails to provide adequate assurances of its performance of the contract in a timely fashion after request by Talbots, Talbots will be entitled to cancel the order(s).

22

VII Additional Terms and Conditions a. Trademarks/Intellectual Property

"Trademarks" means the trademarks that Talbots uses, including without limitation "Talbots." Vendor acknowledges Talbots’ ownership of the Trademarks and other Talbots’ intellectual property and acknowledges that vendor acquires no rights in any of the Trademarks or other intellectual property by virtue of its manufacture and supply of the products. If an order for finished products containing any of the Trademarks or Talbots’ designs is canceled for any reason, vendor agrees not to sell or use such products, and to destroy such products, except as may be agreed in writing by Talbots.

b. Designs "Design Rights" means the rights including copyright, patterns and patents in and to any designs for products, and to any prints, package designs, labels, advertising or promotional material and any other designs using or used in conjunction with the Trademarks. Vendor acknowledges and agrees that Talbots owns or shall own all Design Rights, regardless of whether such designs were created by Talbots or by or on behalf of vendor. Vendor hereby assigns to Talbots all right, title and interest, including all Design Rights, in and to any designs developed by or on behalf of vendor in the course of or in connection with orders placed by or on behalf of Talbots. Vendor agrees that it shall not acquire any registration for any of the Trademarks, copyrights, designs or Design Rights owned or used by Talbots. Vendor shall not disclose to any other person any features of any designs furnished to vendor by or on behalf of Talbots or developed by or on behalf of vendor for Talbots. Vendor shall take all necessary steps, and all steps reasonably requested by Talbots, to prevent or avoid any misuse of the Design Rights by any of its customers, vendors or other resources. Vendor shall not use any Design Rights owned by Talbots in any other product line that vendor makes.

c. Governing Law; Disputes Any and all claims arising under this Vendor Agreement between Talbots and the vendor (the “Events”) shall be governed by and construed in accordance with the laws of the State of New York, United States of America. Vendor and Talbots agree that the provisions of this Agreement supplement and shall be interpreted as being consistent with and shall not supersede any Purchase Order (PO) entered into with vendor by any agent on behalf of Talbots, or which shall be entered into between Talbots and the vendor from time to time, before or after the effective date of this Agreement.

Subject to the paragraph above, any dispute, controversy or claim or other Event arising out of or relating to the Vendor Agreement between Talbots and the vendor, including without limitation the existence, breach, termination or invalidity thereof, shall be referred to and finally resolved by arbitration under the American Arbitration Association Commercial Arbitration Rules and Procedures (“Rules”) for the time being in force except where the Rules conflict with this clause. The place of arbitration shall be New York, New York. There shall be one single arbitrator to be nominated jointly by the parties or, failing such nomination, by the Chairman for the time being of the American Arbitration Association Commercial Arbitration Rules and Procedures. The language of the arbitration shall be English. A request for urgent interlocutory or equitable relief or remedy by Talbots to a court of competent jurisdiction shall not be precluded by this arbitration clause, and for this purpose, vendor and Talbots expressly submit to the jurisdiction of all such courts.

23

d. Miscellaneous All specified rights and remedies of Talbots shall be in addition to all other rights or remedies of Talbots under any other contract, under the Uniform Commercial Code as enacted in New York and under applicable law; all rights and remedies shall be non-exclusive and cumulative and may be exercised or asserted as Talbots shall elect. If any provision of this Agreement is held by a court of competent jurisdiction or an arbitrator to be invalid or unenforceable, the remaining provisions of this Agreement shall remain in full force and effect.

Vendor is an independent contractor to Talbots. Nothing in this Agreement shall be deemed to constitute partnership between the parties or to make vendor an agent or employee of Talbots for any purpose. Vendor shall have no authority to bind Talbots or to contract in the name of or create any liability of Talbots.

No waiver, amendment or modification of this Agreement shall be effective unless in writing and signed by a duly authorized representative of Talbots. The failure of a party to insist upon strict adherence to any provision shall not be a waiver of that provision and shall not prevent that party from enforcing that term. A party shall not be prevented from enforcing a term by delay in seeking to enforce it, or on the basis that its conduct was inconsistent with that term. The receipt by a party of any benefit shall not prevent that party from enforcing any provision.

24