Terms of Engagement for AMC Business Partners:

The Associated Merchandising Corporation is strongly committed to maintaining its reputation as one of the leading global sourcing and product development compa nies. Our long history over the past 8 years reflects a high level of integrity and consistent ethical values - both from AMC employees and AMC suppliers.

As we expand our sourcing base to more diverse countries and cultures, it is impor tant that we select business partners and countries whose practices are not incompat ible with AMC values.

AMC's concerns include the practices of our individual business partners, as well as the social and political issues in any country where we might consider sourcing.

We have defined business partners as vendors, manufacturers, contractors, subcon tractors, and other suppliers who provide labor and/or material including fabric, sundries, chemicals and trim utilized in the manufacture and finishing of products that are ordered by or through us.

1. Environmental Requirements

AMC will only do business with partners who share our commitment to protect and preserve the environment. This specifically includes compliance with local govern ment laws and international standards, the U.S. regulations prohibiting the use of ozone depleting chemicals (hydrochlorofluorocarbons) and the International Trade in Endangered Species of Wild Fauna and Flora, as listed in the United States Endan gered Species Act of 1973 (and rules and regulations thereunder). In addition, any modifications to these laws, rules, regulations and standards must be adhered to.

2. Ethical Standards

AMC will seek to identify and work with business partners who aspire as individuals and in the conduct of their business to a set of ethical standards which are compat ible with our own.

3. Health & Safety

AMC will only utilize business partners who provide their workers with a safe and healthy work environment. Business partners who provide residential facilities for their workers must provide safe and healthy facilities.

4. Legal Requirements

AMC expects our business partners to be law abiding as individuals and to comply with all legal requirements relevant to the conduct of their business. This includes

compliance with these Terms of Engagement and the terms and conditions of pur chase orders issued by or through AMC, and requires special attention to U.S. coun try of origin regulations which govern quota classification and the marking of mer chandise.

5. Employment Practices

AMC will only do business with partners whose workers are treated fairly and who in all cases are present voluntarily, not put at risk of physical harm, fairly compensated, and allowed the right of free association and not exploited in any way.

In addition, AMC business partners must adhere to the following:

• Wages and Benefits:
  
  

  AMC's business partners must provide wages and benefits that comply with any applicable law or match the prevailing local manufacturing or finishing industry practices. AMC also favors businesses that share our commitment to contribute to the betterment of community conditions.

  
  
  
• Child Labor:
  
  

  Use of child labor is not permissible. "Child" is defined as a person who is within (or younger than) the local age for completing compulsory education and in no event less than 14 years of age. We will not knowingly utilize partners who use or permit the use by our partners of child labor in any of their facilities. We support the development of legitimate, workplace ap prenticeship programs for the educational benefit of younger people as long as the individual is not being exploited or put at risk with regard to health and safety.

  
  
  
• Prison Labor/Forced Labor:
  
  

  AMC will not knowingly utilize business partners who use, or permit the use of prison or forced labor in the manufacture or finishing of products ordered by or through AMC. Nor will AMC knowingly purchase materials from a business partner utilizing prison or forced labor. "Forced Labor" is defined as all work or service which is extracted from any person under the threat of penalty for its nonperformance and for which the worker does not offer himself voluntarily. Use of forced labor is not permissible.

  
  
  
• Discrimination:
  
  

  While AMC recognizes and respects cultural differences, we believe that workers should be employed on the basis of their ability to do the job, rather than on a basis of gender, racial characteristics or cultural or religious beliefs.
  
  

• Disciplinary Practices:
  
  

  AMC will not knowingly utilize business partners who use, or permit the use by our partners, of corporal punishment or other forms of mental or physical coercion.

6. Documentation and Inspection

AMC intends to monitor compliance with our Terms of Engagement and to conduct on-site inspection of facilities. AMC will review and may terminate its relationship with any partner found to be in violation with the Terms of Engagement in addition to exercising any other rights and remedies to which AMC may be entitled under purchase orders issued by or through it, by law or otherwise.