September 30, 2000
$2,830,024
Grupo Industrial Cierres Ideal, S.A. de C.V.
Talon, Inc.
Antiguo Camino a San Lorenzo No. 284
Col.Los Angeles Deleg. Iztaplapa
Mexico D.F., 09830
Re: CONSIGNMENT INVENTORY PURCHASE AGREEMENT
This Consignment Inventory Purchase Agreement (the "Purchase Agreement") is
an addendum to the Exclusive Distribution Agreement (the "Agreement") dated
April 3, 2000 between Tag-it Pacific, Inc. ("Distributor") and Grupo Industrial
Cierres Ideal, S.A. and Talon, Inc. (collectively "GICISA").
Effective September 30, 2000, Distributor agrees to purchase certain
inventory held on consignment by Distributor (as listed in Exhibit A to the
Purchase Agreement) totaling $2,830,024 in exchange for a non-interest bearing
unsecured promissory note due April 1, 2002 (the "Note"). Until all amounts owed
by Distributor to Sanwa Bank California, whether such amounts are for principal,
interest, fees, indemnities, expenses or otherwise, and whether such amounts are
contingent or non-contingent, are paid in full, GICISA agrees not to take,
demand, or receive, directly or indirectly, by set-off, redemption or in any
other manner, any payment, whether for interest, principal or otherwise, in
whole or in part with respect to amounts owed hereunder or under the Note.
As a condition of this Purchase Agreement, GICISA agrees to purchase any
remaining inventory not sold by Distributor by April 1, 2002 at its original
purchase cost as outlined in Exhibit A.
Distributor shall store the inventory at its premises and shall deliver
products from time to time as directed by customer orders. In the event sales
are made at below the original purchase cost (Exhibit A), Distributor shall be
entitled to receive a minimum of 10% margin on the net sales price of the
inventory and GICISA shall bare the remaining loss on the inventory sale.
This Purchase Agreement shall supersede in its entirely any prior agreement
between Distributor and GICISA with respect to inventory held on consignment.
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This Purchase Agreement shall be governed by and construed in accordance
with the laws of the State of California and any action commenced hereunder
shall be commenced in a federal or state court located in Los Angeles,
California.
AGREED:
TAG-IT Pacific, Inc.
By:
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Grupo Industrial Cierres Ideal, S.A. de C.V.
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Talon, Inc.
By:
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