EXHIBIT 10.70
CONFIDENTIAL TREATMENT REQUESTED
TAG-IT PACIFIC, INC.
21900 BURBANK BLVD, SUITE 270
WOODLAND HILLS, CA 91367
CONFIDENTIAL
Levi Strauss & Co.
Levi's Plaza
1155 Battery Street
San Francisco, CA 94111
Re: EXCLUSIVE *** SUPPLY AGREEMENT
Ladies and Gentlemen:
Tag-It Pacific, Inc. ("TPI") and Levi Strauss & Co. ("LS&CO.")
are parties to an Exclusive *** Supply Agreement (the "Agreement") under which
TPI is to supply to LS&CO. components and equipment for the manufacture of ***.
Capitalized terms used in this letter agreement (the "Amendment Letter") and not
otherwise defined have the meanings given them in the Agreement.
BACKGROUND
The supply and production calendar TPI and LS&CO. envisioned at
the time of entry into the Agreement has moved back two months with the start of
garment production using the Products now set for November 1, 2002. TPI and
LS&CO. wish to make various amendments to the Agreement to reflect the change in
schedule and to document several additional agreements. That is the purpose of
this Amendment Letter.
SCHEDULE CHANGES
The Agreement describes a number of obligations that must be
completed by a specified date and a number of rights whose effectiveness ends on
a specific date. TPI and LS&CO. have agreed to amend the Agreement and extend
those dates in multiple appropriate cases to reflect the change in production
schedule. For example, the initial Contract Term will now end on November 1,
2004 and the first quarter of the initial Contract Term will end on January 31,
2003. A complete list of the new dates is set out on EXHIBIT A.
PRODUCT SOURCING
***
DEVELOPMENT CENTER
TPI will use its commercially reasonable efforts in order to
ensure that no later than November 30, 2002, TPI at its expense shall have in
place and be operating, at its headquarters facility in Woodland Hills,
California or other location in California, a design center dedicated to
research, development and commercialization of the ***. Design center resources,
capabilities and functions shall,
1
*** 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.
to the extent commercially reasonable, include: (i) evaluation of new fabrics
prior to adoption as a means of "qualifying" fabrics for application of the ***
and inclusion in LS&CO.'s product lines; (ii) an ability to compressively ***
and recommend appropriate production procedures; (iii) testing and evaluation of
***; (iv) maintenance of a library of production ready *** (and associated
production specifications) for use by LS&CO. designers; and (v) maintenance of
staffing sufficient to cover seasonal sample and production rollout demand
including at least one full time developer and possibly a technician to maintain
the machinery and basic sewing equipment needed to assemble *** components. To
the extent commercially reasonable, TPI shall maintain design center operations
for so long as LS&CO. is purchasing Products and Additional Program Products
from TPI.
EFFECT OF AMENDMENT LETTER
It is expressly understood that the paragraphs entitled "***" and
Development Center" above create obligations on the part of TPI only to use
commercially reasonable efforts to achieve the results described in those
paragraphs. A failure by TPI to achieve the results shall not by itself
constitute a breach of this Amendment Letter or the Agreement It is understood
that, except as specifically provided in this Amendment Letter and subject to
the foregoing sentences, nothing in this Amendment Letter amends, modifies or
limits in any way any provision of the Agreement. This Amendment Letter is a
writing signed by both LS&CO. and TPI amending the Agreement as contemplated by
Section 19 (e) of the Agreement.
* * * *
If the terms and provisions of this Amendment Letter are
acceptable to you, please indicate your acceptance and approval by signing, or
by causing to be signed on your behalf, the enclosed copy of this Amendment
Letter and returning it to the undersigned.
If the terms and provisions of this Amendment Letter are acceptable to you,
please indicate your acceptance and approval by signing, or by causing to be
signed on your behalf, the enclosed copy of this Amendment Letter and returning
it to the undersigned.
Very truly yours, Accepted:
TAG-IT PACIFIC, INC. LEVI STRAUSS & CO.
By: /S/ COLIN DYNE By: /S/ BOBBI SILTEN
----------------------- ---------------------------
Colin Dyne Bobbi Silten
Chief Executive Officer President, Dockers(R) Brand
Exhibits:
Exhibit A Changes in Agreement Dates
2
*** 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.
CONFIDENTIAL TREATMENT REQUESTED EXHIBIT A TO AMENDMENT LETTER
TAG-IT/LS&CO. AGREEMENT: KEY DATES
CONTRACT
SECTION
REFERENCE SUBJECT MATTER OLD DATE NEW DATE*
- -------------------------------------------------------------------------------------------
ss.5(i) deadline for TPI to provide names, locations and
contact persons for each TPI supplier of Products 7/17/02 status?
ss.3(b) deadline for readiness of Initial Facilities for
Equipment installation 7/31/02 10/1/02
ss.3(a) deadline for LS&CO. to designate new location for
Equipment sited at Powell 8/15/02 10/15/02
ss.3(a) deadline for TPI to get equipment operational in
three Initial Facilities 9/1/02 11/1/02
ss.5(a) deadline for TPI to deliver Products for
manufacture of *** 9/1/02 11/1/02
ss.5(a) garment production start date 9/1/02 11/1/02
ss.5(a) deadline for TPI to deliver Products for
manufacture of add'l *** 9/10/02 11/11/02
ss.3(a) deadline for TPI to get equipment operational in
two additional Facilities 10/1/02 12/2/02
[Same comment as above.]
ss.5(a) anticipated deadline for TPI to deliver Products
for manufacture of *** 10/1/02 12/2/02
ss.5(a) anticipated deadline for TPI to deliver Products
for manufacture of add'l *** 10/10/02 12/10/02
ss.7(c) 90-day right of first refusal ends for Lanier 10/10/02 12/10/02
ss.3(a) deadline for TPI to get equipment operational in
one additional Facility 10/31/02 12/31/02
ss.5(a) anticipated deadline for TPI to deliver Products
for manufacture of *** 11/1/02 1/2/03
ss.5(a) anticipated deadline for TPI to deliver Products
for manufacture of additional *** 11/10/02 1/10/03
ss.5(d) deadline for completion of 3-month inventory
build 11/15/02 1/15/03
ss.8 deadline for LS&CO. to give *** 7/31/03 10/1/03
ss.13(a) end of first Contract Year 9/1/03 11/3/03
ss.13(b) TPI, LS&CO. commence discussion of potential
continuation of exclusivity post-initial two-year
term 3/1/04 5/3/04
ss.8 *** period ends if *** 7/31/03 9/30/03
ss.11 *** 9/1/04 11/1/04
ss.13(a) expiration of second Contract Year and Initial Term 9/1/04 11/1/04
ss.13(b) TPI supplies Products on non-exclusive basis with
most-favored nation pricing if no extension of 9/1/04 - 11/1/04 -
exclusivity 9/1/06 11/1/06
- -------------------------------------------------------------------------------------------
<FN>
* In cases where the new date (a two-month extension of the old date) falls on a
weekend or a holiday, the new date is the next business day after the weekend or
holiday.
*** 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.
</FN>