VENDOR POLICY MANUAL

(Revised March 12, 2015)

Updates are highlighted in yellow:

Page 2, 14, 15, 16, 18, 43, 44, 45, 56, 57, 59

PRIVILEGED and CONFIDENTIAL: Property of The William Carter Company. Intended for use by the recipient only in conjuction with their

association with The William Carter Company exclusively.

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TABLE OF CONTENTS

FOREWORD4 INTRODUCTION

A. Company Background ................................................................................ 5 B. Vendor Relationship ... ... ................................................................. 5 C. Vendor Agreements ....... .... ................................................................. 5

PRODUCT DEVELOPMENT PROCESS A. Product Planning ......................................................................................... 6 B. Procedures for Sourced Product Development ......................................... 6-11

PRODUCTION APPROVAL PROCESS

A. Procedures for Pre-Production Approval ................................................ 12-15 B. Sample Size Requirements ......................................................................... 16 C. Payment for Required Sample Quantities .............................................. 17-20

1. Sample Costs to be Absorbed by the Factory .................................. 17 2. Sample Costs to be Paid by Carters .......................................... 17-18 3. Routing for Salesman Samples .................................................. 18-19 4. Sample Warning Label and 2 Inch Cut ........................................... 20

QUALITY ASSURANCE STANDARDS A. Testing Requirements and Procedures .................................................. 21-23

1. Submission Procedures ............................................................. 21-22 2. Exceptions to Garment Fabric Testing ............................................ 23

B. Defect Classification .................................................................................. 23 C. Measurement Methods .......................................................................... 23-24 D. Point of Sale Appearance / Packing Requirements ..................................... 24 E. Inspection Procedures and Audit Reports ............................................. 25-26

1. In-line Inspections .......................................................................... 25 2. Final Inspections ............................................................................ 25 3. Packaging Inspections .................................................................... 25

F. Return to Vendor Policy (Rejects and Seconds) ...................................... 27-28

PURCHASING

A. Standard Purchase Order Agreement ......................................................... 29 1. Forward Purchase Order Agreement ............................................... 29

B. Concealed Shortages .................................................................................. 29 C. Document Issues ....................................................................................... 29 D. Invoices and Claims...30

PACKING AND SHIPPING A. Finished Goods Packaging .................................................................... 31-33 B. Freight Forwarder ................................................................................ 34-35 C. Labeling for Shipping..35

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1. Preprinted Cartons / Case Labels35 2. ESPS/TLO....35

D. Container Loading ................................................................................ 36-40 E. Shipping Guidelines and Documentation .............................................. 41-48

1. Shipping Documents ................................................................. 41-42 2. DHL Procedures43-44 3. C-TPAT46-48 4. Prepaid Air Freight Policy Statement..49

ADDITIONAL NOTES

A. Needle Policy .............................................................................................. 50 B. Grippers Used for Denim Styles........50 C. Heat Sealed Appliqus and Thermal Transfers ........................................... 50 D. Two- Piece Sets Pricing for Purchase Order and Commercial Invoice .. 50-51 E. Prohibiting Method of Chemically Sealed Ribbon Edges ............................. 51 F. Unauthorized Manufacturing / Selling of Carters Labeled Goods .............. 51 G. Special Instructions ................................................................................... 51 H. Safety ................................................................................................... 51-52

JOY REQUIREMENTS .52 CHILD OF MINE REQUIREMENTS

A. Color Process and Procedures53-54 1. Color Terminology..53 2. Color Procedures & Restrictions53 3. Color Submit Forms..54

B. Wal*Mart Packing and Shipping Requirements..55-58 1. Master Carton Sizes (for both Walmart & Target)..56 2. JOY/COM P.O. Fulfilment Policy56-57 3. Carton Identification and Marking57 4. Packing Requirements58-59

Page 60 Vendor Confirmation Page. All agent offices and vendors must sign this page acknowledging receipt of the manual, and return to the Sourcing Business Manager.

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EXHIBITS

1. Vendor Policy and Social Compliance Programs 2. Vendor Profile 3. Garment Specification Sheet 4. Checklist for Sourced Programs 5. PDMHTMA How to Measure Guide 6. Avery Dennison Global Contact List 7. Color Development Guide 8. Consignee & Notify Info 9. Quality Specifications and Standards 10. Single and Multiple Sampling Plans 11. Standard Speed and Stitch Chart 12. Sourcing Tag 13. Vendor Set-up Form for PO Issuance 14. Purchase Order Terms and Conditions 15. Carton Label Placement & Markings 16. Business Rules Care Labels & Hang Tags 17. & 17A. Full Package Import Documentations Template Instructions for Carters and

OshKosh / Customs and Payment Process 18. & 18A. Full Package Documentation Guide for Carters and OshKosh 19. C-TPAT Letter and Security Profile 20. Packing List Form for Carters and OshKosh 21. Freight Forwarder Global Contact Listing 22. Sleepwear Sales Samples Warning Label 23. SAMPLE ORDER carton sticker 24. Shipment Failure Notification Form 25. Swiftach Needle Detail 26. Approved Nominated Suppliers 27. Heat Seal Appliques & Thermal Transfers 28. Graphic Loop Label 29. Single Knot 30. Bow Attachment 31. Carton Standards for Sams/Costco Product 32. JOY Sample Requirements 33. Perforated Polybag 34. Sample Warning label 35. Container Inspection form 36. Null 37. Child of Mine Standards & Production Color Process 38. Child of Mine Submittal Form for Color Swatches 39. Null 40. Wal*Mart/Sams Club Hanger Manual & Sizer Tab Manual 41. Approval Process for Garment Fit and Construction 42. Folded garment polybag picture 43. Forward Purchase Order Agreement 44. FPO Example 45. Child of Mine Carton Marking 46. & 46A ISF Manual Templates

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FOREWORD

Welcome on board to the number one childrens company - Carters! We are excited to be joining with you to provide high quality products with superior service to our customers. This Vendor Operations Manual is provided to you as an outline of the policies and procedures of the William Carter Company. It will provide you with an overview of Carters and direct you on how we can work together to develop and implement full package programs on behalf of The William Carter Company. We are looking forward to building a productive and mutually beneficial relationship with you.

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INTRODUCTION

A. Company Background The William Carter Company was born in 1865, when William Carter began manufacturing mens and womens cardigan jackets and underwear. However, by the turn of the century, he ventured into the childrens market by making cotton mittens. This venture was a springboard into becoming one of the best known names in the childrens industry. Today, Carters is a marketer of childrens lifestyle products for ages 0-7 years. Carters markets under the brand names JOY (Just One You), COM (Child of Mine), and OshKosh. Carters strives to conduct business and develop partnerships with those who share our values and our vision. As we expand our resource base, we will only engage suppliers whose practices are compatible with our corporate vision. B. Vendor Relationship We value vendor relationships at Carters. It is our belief that together with our vendors we well build a partnership based on trust and mutual respect. The policies and procedures outlined in this manual will provide you with direction ultimately supporting the foundation of this partnership. Carters encourages visits to and from our vendors. We will visit your facilities on a regular basis to learn how we can improve this business relationship. We encourage our vendors to visit our facilities so that they may better understand our operations thus developing a better understanding of product expectations. C. Vendor Agreements Prior to beginning business with Carters we will visit your facilities to evaluate facility security, factory personnel, production, equipment and overall product quality. A factory must rate on a weighted average a minimum of three (3) on a scale of one(1) to five (5) in order to be a supplier with us. Once the factory has been approved, we require the principal owner of the factory to sign the Social Compliance Policy, also known as our Code of Conduct, acknowledging that the supplier understands and will abide by the terms and conditions set forth. The vendor must also complete and sign the Vendor Profile. See Exhibits 1 and 2.

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PRODUCT DEVELOPMENT PROCESS A. PRODUCT PLANNING Our development process is typically separated into two seasons Spring and Fall. Spring is produced August-February and Fall is produced March through August. The Sourcing department provides specification packages for all sourced programs. These will be forwarded to the potential vendor for costing and preliminary prototypes. Preliminary forecasted quantities and delivery schedules will be provided at this time also. Please note that projected quantities are forecasts only. Actual Purchase Order quantities may vary significantly from initial forecasts. Commitment to actual production runs will not be made until much later in the process after all fabric and sample development has been completed. The brand-merchandising calendar and the respective Sourcing Manager will direct the production planning process for each program. Please see Exhibit 41 Approval Process for Garment Fit & Construction. B. PROCEDURES FOR SOURCED PRODUCT DEVELOPMENT Following is a list of steps which will need to be completed in order to move on to the Production Approval Process. Completion of each step in an accurate and timely manner will result in a smooth transition into production. A checklist indicating each step should be supplied to the Vendor. See Exhibit 4. If any of the below changes, we will notify you in writing.

Fabric Development Testing & Submitting On all new fabric developments that are being submitted to Carters for internal testing, we are now requiring that the mills internal testing/specs be attached to the test yardage. This is to ensure that the mill is sending in fabrics that they have tested themselves and are comfortable with the results.

On all fabrics that will be used for bottoms we are now requiring that seam strength be tested in the development stage along with tensile and tear strength. It will be the vendors/mill responsibility to supply the specimens for MTL testing. This is to ensure that any garments slated to have pockets will pass before we get to the garment testing stage.

Initial Prototype/Counter/Fit Sample - Initial sample produced based on initial

specs provided. See Exhibit 3 for example of specification sheet. Samples should be tagged with a sample tag. The agent/vendor should inspect the garment and include a measurement sheet with the sample. NOTE: Prototype/Fit sample must be approved before producing size sets.

Market Samples- Samples are to be as close to actual production as possible as

these are the samples that we present to major customers. Lab Dips of Fabric - All shade submissions for color will be assessed visually as

well as electronically by a Color Spectrophotometer. Therefore, all lab dips submitted should be a minimum of 4 x 4 squares to ensure an accurate reading. (See Exhibit 7 for Lab dip form).

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Fabric Testing All development and bulk fabrics must be submitted to MTL labs to ensure quality and conformance to standards.

Trim Testing Carters requires that all trim components be tested by MTL to

ensure compliance to United States Safety Regulations. We will allow trims produced by our nominated suppliers to be excluded from component testing because we require a pre-production sample be tested in garment form. The exclusion of pre-testing the components (from our nominated suppliers) does not diminish the burden of responsibility that all trims pass MTL testing. The purpose of this exclusion is to reduce the expense of testing costs for our partner vendors. See Exhibit 26 for a listing of our nominated suppliers.

Decorations (if applicable) - Must be submitted for approval.

Main/Care Labels - Must be ordered through Avery Dennison, Intertrend SML, SSI,

or Quantum. Main/Care labels do not qualify as a small part that should be tested.

See address and contacts below for main/care label approved suppliers:

1. Avery Dennison Please see Exhibit 6. 2. Intertrend Global Packaging Co., Ltd.

Contact: Patrick Ngeow Email: Patrick_n@intertrendglobal.com Tel#/Fax#: (662) 672-3030 / (662) 672-3033 889 Thai CC Tower, Rm 150, 15th Floor South Sathorn Road, Sathorn Bangkok 10120, Thailand

3. SML

Contact: Steve Sweat (Sales Director Southeast Reguion Email: stevesweat@sml.com Tel#: (678)393-6122 740 Sweetbrier Drive, Suite 1200 Alpharetta, GA 30004 USA

4. Sourcing Solutions International (SSI) Contact#1: Robert Schlossberg Email: raschlossberg@ss-intl.com Tel#/Fax#: (973)514-1400 x203 / (973)574-1422 325 Columbia Turnpike,Suite 201 Florham Park, NJ 07932 USA Contact#2: Joanna King Email: joannakong@ss-intl.com Tel#: (852)29957024

5. Quantum Contact: Nickie Yaun Email: nickie.yaun@quantumpkg.com Tel#/Fax#: (336)643-1381 6094 Clopton Drive Greensboro, NC 27455 USA

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Main Label Content Carters requires the following information on all labels (CAR, CXP, jOY, WAL, OSH):

Logo Size COO Snug fitting (Sleepwear Only)

Care Label Content Carters requires the following information on all labels:

1. Style 2. Item Number 3. Size 4. Content 5. Exclusive of Decoration if applicable 6. RN# and CA# 7. Care/Wash instructions* - can be found in eS_S by typing in Tag* and selecting

the season. All must be in both English, Spanish, and French. MTL or BV must test against these standards.

8. VID 9. BPU (FR) US styles only 10. UPC Number 11. Number of Pieces if applicable. 12. DPCI or Article # - (JOY only) 13. CRD

*Notice: Non-standard fabrics will require use of non-standard wording and therefore the wording will change. This wording is NOT approved for all fabrics/garments.

If denim or neon, this additional verbiage is required in English, Spanish, and French:

COLOR MAY TRANSFER WHEN NEW WASH WITH LIKE COLORS

If Velcro, please note the Velcro wash instructions for the care label. This is required in English, Spanish, and French:

CLOSE COLLAR BEFORE WASH

Carters will issue a PO and UPC file for all bulk orders, at the PO level, 90 days prior to xfactory for labels. Factories are responsible for approving labels per the current business rules. Notice: UPC# is required on all care labels. If a product set includes a Toy, then the toy MUST have a UPC as well.

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Hangtags(Ktags) Due to the complexity of our UPC coding system, Carters will issue a PO and UPC file for all bulk orders, at the PO level, 90 days prior to CRD/xfactory for hangtags. Hangtags must be ordered through Avery Dennison, Intertrend, SSI, SML, or Quantum. The vendor will forward a Proforma Invoice to the vendor listed on the notification, confirming quantity and cost. It is the vendors responsibility to verify all quantities and details on the Proforma Invoice. The vendor is responsible for all costs and payments associated with printing and shipping the tags. Once all payments and terms are settled, the vendor will arrange shipping the tags to the appointed destination. Upon receipt of the Tags, the vendor should check actual received quantities against the packing list to ensure all tags and quantities are correct. The vendor has 72hrs or 3 business days to identify discrepancies. If the shortage or discrepancy is not identified and claimed within the two-week period, replacement tags will be the responsibility of the vendor. See page 7 for contact information on 5 nominated suppliers.

Tagless Heat Transfer Labels Carters offers tagless neck labels in most

garments. The neck of the garment requires a heat transfer that identifies the standard labeling information as required by the FTC . In addition to the tagless neck label, each garment will require a satin side seam care instruction label.

*** Please see Exhibit 16 for the Care Label & Hang Tag business rules.

Barcode / UPC Testing: Although the ktag supplier, such as Avery, will scan the ktags / u-stickers before shipping to the vendor, Carters recommends that each factory verify UPC code readability. This should be done using a standard barcode verifier. Listed below are a few web-sites that barcode products can be purchased:

www.barcodeproducts.com www.printronix.com www.bar-code.com www.barcodeserv.com

Tracking Labels: Care labels were changed to make room for the tracking numbers to be added to them, with no need for a separate label for the tracking numbers.

The format is as follows for all bulk merchandise:

Style Number PO# Date

Ex: 123-123

12345 0210

The date is the month and year with no slash or dash in between. This date comes from the CRD date on the Purchase Order. So if the CRD date is 02/05/2010, then the date on the label will appear as 0210.

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See below sample picture to follow: Bulk Spring 2010 & forward

*** Please note: All samples must have a tracking label on them. The label format is as follows for all samples: The word SAMPLES SeasonYear (Single letter for the season and the 4 digit year) Ex: SAMPLES F2010

Hangers: Our approved suppliers for hangers are listed on the nominated

supplier listing. Hangers do not have to be sent in for approval. Vendors should always refer back to the BOM for the correct hanger code to use for each style. See Exhibit 26 for a complete list of approved hanger suppliers and their contact information.

Swiftach Barbs: We specify the size of the swiftach to be used on our

products. For the lengths, see the BOMs, but for type and width: Needle, Mark II, Fine Fabric, Avery Dennison Product Outside needle diameter (OD) = .052" (1.3mm) Inside needle diameter (ID) = .034" (0.9mm)

Swiftach Fine Fabric Barb material = Polypropylene 0.22gms each Barb Tensile strength = 3.5 to 5 Lbs. Barb (opposite paddle) Length = 0.29" (7.4mm)

Outside diameter (OD) = 0.030" (0.8mm)

** Swiftachs must not extend more than to below the garment sleeve opening unless specified differently in the hangcode. The closer to , the better.

*** All Hangtag placement guidelines can be found in the e-Product Development module of eSPS by typing in HANGFOLDA for Carters and OSH-HNG for OshKosh.

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The needle from the swiftach gun is never supposed to leave a hole in the fabric. Fine fabric needles must be used and needles must be changed frequently in the factory to ensure that needles do not leave holes in the fabrics. See Exhibit 25.

Salesman Samples - Upon adoption of a style, salesmen samples will be

requested. These must be in the requested size, colors, designs and decorations. Depending on the requirement, the sample size may vary. Orders are raised for these samples and the manufacturer is paid the agreed contract price times 2 for their production.

QA will no longer press, measure, test or comment on Salesman Samples.

Other Garment Trim Items When reviewing the BOM, some styles may

require additional trim items such as a graphic Loop Label. Please note that there is a 5/8 seam allowance on a graphic loop label. The long seam allowance is so the same label can be used for merrow (3-thread over-lock) (knit) and safetystitch (woven) seam applications. See Exhibit 28.

Thread specifications See the Q/A manual in eSPS for all details.

Trims accountability In order to prevent counterfeit Carters merchandise, we ask that all unused Carters main labels or logo trims be held in a secure area. Periodically, either a Carters employee or a Carters representative will ask to see the trims and verify inventory count and control. If future use is not practical, then we will ask that the obsolete trims be verified and destroyed. See Exhibit 26 for a listing of our nominated suppliers.

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PRODUCTION APPROVAL PROCESS A. PROCEDURES FOR PRE-PRODUCTION APPROVALS Before production may begin, the following steps must be submitted and approved by Global Sourcing:

Lab Dips of Bulk fabric - lab dips must be submitted for approval. Submissions must be at least 4 x 4 squares and will be visually and electronically assessed by our Internal Color Lab. See Exhibit 7 for submit form and all related details. Lab dips should be used to determine dyeing formulas. Lab dips are not to be used as color standards. Please also note Exhibit 7 for instructions on the Production Color Approval Process. This is for Carter and JOY product only.

Bulk Dyelots/dye bands/wash standards Submits must be 12 x 12

squares. For garments with special washes, the piece must include a seam and a hem of the garment. Also requires MTL testing. See Exhibit 7.

Bulk Trim and Findings - Must be submitted for approval before proceeding

with placing orders. Also requires MTL testing. Decorations - Samples should be submitted in actual colors/fabrics for

approval before proceeding with production.

Bulk Fabric for Quality Approval - Bulk fabric will be required for lab testing and evaluation. Each Vendor is to submit one yard (full width) of any color and yard (full width) in all colors to an MTL Laboratory. See the Testing Requirements and Procedures Manual for the procedures and nearest location. This is located in eSPS under Company Information.

All garment samples should be accompanied by a Sourcing Tag. Please see

Exhibit 12 for the appropriate layout (front & back). Prototype/Counter/Fit Sample must be submitted and approved before

producing size set samples. This may require multiple submits. See page 16 for sample size requirement.

Size Set Samples (1 Set) IMPORTANT: Size sets are only required if the

Patternmaker requests them. Sourcing will notify the agent/factory if any are needed. If Size Sets are needed, they are to be submitted after the Prototype/Counter/Fit sample is approved. A sample of each size will be requested to assess accuracy of the patterns. Only 1 set of size set samples is required for all styles sharing the same body and fabric. All applicable style #s should be listed on the sample tag. These should be made with actual fabric, unless otherwise directed by Sourcing. Samples should have appropriate decorations (or mock-up w/ copies or substitutes) to confirm correct placement. Samples will be inspected by a Product Coordinator, Patternmaker and Designer. Factory should always use the approved size set patterns for bulk production.

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PPs (Pre-Production Samples): Pre-Production samples in every style and once per season must be submitted for approval 10 days prior to cutting fabric. Samples must be of the actual design using approved fabrics and trims/decoration. Ideally, these should be 100% correct. If a trim is not available at the time, the vendor will be allowed to send a full description and picture of the correct trim along with the PP sample. Quality may require a corrected PP once the item has been received.

Size ranges or packing methods produced under different style numbers will not require a separate submit unless requested. Multiple style numbers for an item must meet the following criteria in order to submit only one representative sample:

garments must be made of same fabric and color garments must use the same hardware and trims (size may vary) garments must use the same art application (size may vary)

The garments can differ in body size, art size and trim/hardware size and still considered the same style. All same styles must be listed on a tag attached to the sample. The vendor will have to submit the smallest size range or sample size of the group of styles. Vendors are not required to submit one set of samples per purchase order.

In some instances, Sourcing will require that PPs are complete and no substitutions or pictures will be accepted, or will require a picture that shows how the garment was packed.

PPs will be reviewed for everything other than fit, and Quality might require a new set of samples if the garments received do not meet the above requirements. The PP quantities and process flow may vary between divisions, so please contact the appropriate Sourcing team for all requirements.

Quality will issue comments 3-4 business days from the moment they receive samples.

TOPS (Top of Production Samples): Samples from the top of production

from the 1st shipment must be sent to Sourcing department for review as soon as bulk production comes off the production line. These garments will be reviewed for overall appearance.

Size ranges or packing methods produced under different style numbers will not require a separate submit unless requested. Multiple style numbers for an item must meet the following criteria in order to submit only one representative sample:

garments must be made of same fabric and color garments must use the same hardware and trims (size may vary) garments must use the same art application (size may vary)

The garments can differ in body size, art size and trim/hardware size and still considered the same style. All same styles must be listed on a tag attached to the sample. The vendor will have to submit the smallest size

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range or sample size of the group of styles. Vendors are not required to submit one set of samples per purchase order.

The factory is obligated to have a garment test performed by BV and pass all same requirements for bulk before shipping order. If approval is not received before crd date, factory will require an approval from Sourcing before shipping. The TOP quantities and process flow may vary between divisions, so please refer to the attached chart for requirements. Quality will not require TOP samples, so they will randomly audit bulk garments from shipments arriving at the distribution centers. The product will be evaluated to ensure conformity to quality standards.

Shipping of PP/TOP Samples: Carters Baby, Playclothes, Sleepwear and COM/JOY PP Samples will be shipped to Carters Buckhead office in Atlanta, GA. Oshkosh BGosh Baby, Sleepwear and Denim PP Samples will be shipped to Carters Buckhead office in Atlanta, GA. Oshkosh BGosh Playclothes PP Samples (including denim) will be shipped 1pc to Carters Buckhead office in Atlanta, GA and 1pc directly to Quality in Griffin, GA.

All samples must have an attached warning label. This label can be done in-house at the factory, and it must contain the information we are requiring. The label must read in RED INK only. The label placement should be at the back of the neck for a top. And for a bottom, it should be applied at the back of the pant next to the main label/care label. Please see Exhibit 34 for a picture. And see page 18 of this manual for more information about this label. Garments will be placed in an organized manner for easy identification and the box should include a paper with the list of styles. The DHL paperwork will include the word Carters Samples OR Oshkosh Samples in the reference field. Each shipment should follow-up an e-mail with tracking number and description of the samples shipped. DHL costs for sample garments from bulk that do not meet quality specifications sent to get special approval, will have to be paid by the vendor.

Samples should be shipped in the standard carton sizes 23.5 x 15 x 13 OR 23.5 x 15 x 6.5. If needed, its okay to use the DHL standard size boxes to prevent shipping half full cartons. Samples should be packed to utilize carton space to ship the least amount of cartons as possible.

The Commercial Invoice must have the following phrase added to it in order to take advantage of the duty free provision for samples: Mutilated Samples 9811.00.60

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The DHL Account# for shipping Carter samples to Georgia is 967882398. The DHL Account# for shipping Oshkosh samples to Georgia is 967882455. *** For more detailed instructions, please refer to the DHL Procedures on pages 42-44.

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B. SAMPLE SIZE REQUIREMENT The following identifies the accepted sizes for each sample submit by division.

Carters Sample Size Recap:

Sample Type Baby PW Sets PW 4-8

Sets PW

Separates

PW Dresse

s SW

SW Gown

SW UW Market Samples 6M 6M 5 12M*/3T 3T 12M/3T*/5 4/5 Sales Samples 6M/9M** 12M/3T 5 12M/3T/5 3T/5 12M/3T/5 4/5 Proto Samples 6M 3T - 3T 3T 3T 4/5 Fit Samples 6M 12M/3T 7 12M/3T/7 3T/7 12M/3T/10 4/5 Pre-Production Samples 6M 12M/3T* 5 12M*/3T/5* 3T/5* 18M***/3T/5* 4/5 PMS 6M - - - - 12M/5* - Production Sample

Distro Baby PW SW ****Pre-Production Samples 1 1 1 TOP Sample to Phipps/ATL (FR Testing) 0 0 1 Total Production Samples 1 1 2

* Sample Received ONLY if Unique Creative ** 9M for Wholesale Accounts ONLY (Majors) *** Sleepwear: PP Samples 18M 1pc ONLY

Oshkosh Sample Size Recap:

* One garment per silhouette in the target size range. Can be either 12M, 3T or 5. ** Only for silhouettes that have only 2T-5T orders. All other silhouettes can be approved through development of the 4-12 size range unless a sample is requested. *** By request only. Toddler size range can be approved through development of the 4-12 size range unless a sample is requested. For Sample Size requirements for JOY and COM, please reference their Handbooks located in eSPS Company Information.

Sleepwear Sales Samples Sleepwear sales samples are to have a separate warning label. See Exhibit 22.

*** The appropriate Sourcing team will advise details for any special programs or special sample requests.

Sample Type OBG Layette OBG PW OBG SW

Proto Samples 6M As Needed* 6 Market Samples 6M 12M/3T/5 12M/3T/6 Sales Samples 6M/12M 12M/3T/5/6 12M/3T/6 Fit Samples 6M 12M/***3T/5 12M/6/***3T Pre-Production Samples 6M 12M/3T/5 12M/6

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C. GUIDELINES FOR REQUIRED SAMPLE QUANTITIES The guidelines set forth below are intended to clearly differentiate the various types of product samples, the required quantity by sample type, and to specify who is responsible for payment of the cost of the sample.

1. SAMPLE COSTS TO BE ABSORBED BY THE FACTORY

Development/Counter Samples: provided along with cost quotes.

Prototype Samples or Fit Samples Samples made once the order is confirmed, using similar fabrics, to be used as first fit samples. Weight deviation allowed within five percent (5%) of bulk fabric. One (1) sample per size range or style number. Additional submit may be requested if fit does not represent a starting point for the correct measurements.

Lab Dips and Trim Approvals

All submits of color swatches, trims, labels, and packaging accessories sent to obtain approval for production

Size Set Samples

These are the next samples made after the proto has been fit approved or fit comments given. The size set sample should represent all sizes on spec unless otherwise requested. Weight deviation allowed within five percent (5%) of bulk fabric. One (1) of each size per style. PLEASE NOTE these are only needed if requested by the Patternmaker.

Pre-Production Sample

Units submitted prior to bulk production to represent actual design of garment. Sample is of correct fabric, trims, and decorations. All artwork and placement should be 100% accurate.

Top of Production Sample (TOPS)

Units pulled from the production line to submit for garment QC and Lab testing.

2. SAMPLE COSTS TO BE PAID BY CARTERS/OSHKOSH

Market Samples

Carters will pay for all requested market samples at two (2) times the FOB cost. All transportation costs for these samples will be paid by Carters. Your Sourcing team will advise the number of market samples needed at the beginning of each season. All market samples are to be sent to the Buckhead office.

Salesman Samples Carters will pay for all requested salesman samples at two (2) times the FOB cost. These invoices will be handled as normal commercial shipments. The amount of Salesman Samples needed for each division is different and

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changes often between seasons. Your Sourcing team will advise the amount needed at the beginning of each season.

3. ROUTING FOR SALESMAN/DESIGN SAMPLES & MARKET SAMPLES ONLY

Market and Salesman samples should ship to the appropriate location based on the division requirements. All samples that ship to the Atlanta or New York office should ship via DHL Express. All samples must have an attached warning label. This label can be done in-house at the factory, and it must contain the information we are requiring. The label must read in RED INK only. The label placement should be at the back of the neck for a top. And for a bottom, it should be applied at the back of the pant next to the main label/care label. Please see Exhibit 34 for a picture. And see page 20 of this manual for more information about this label. For Carter Salesman samples that are shipped directly to Braselton DC 12, with a total shipment weight of 50k(110lbs) or less, these should be shipped via DHL with account # 967882398. The reference Carters Samples should be included in the reference field on the airway bill. Each single carton must NOT exceed 30 lbs. For shipments over 50k (110lbs), these should ship via an approved air forwarder (just as air shipments of bulk merchandise). For Oshkosh Salesman samples that are shipped directly to Braselton DC 12, with a total shipment weight of 50k(110lbs) or less, these should be shipped via DHL with account # 967882455. The reference Oshkosh Samples should be included in the reference field on the airway bill. Each single carton must NOT exceed 30 lbs. For shipments over 50k (110lbs), these should ship via an approved air forwarder (just as air shipments of bulk merchandise).

Carters/OshKosh will pay for all requested salesman/market samples at 2 times the FCA cost. All transportation costs for these samples will be paid by Carters per the noted DHL account#s. Please remember to place the SAMPLE ORDER adhesive label on each carton that contains salesman samples. See Exhibit 23. Samples should be shipped in the standard carton sizes 23.5 x 15 x 13 OR 23.5 x 15 x 6.5. If needed, its okay to use the DHL standard size boxes to prevent shipping half full cartons. Samples should be packed to utilize carton space to ship the least amount of cartons as possible.

The Commercial Invoice must have the following phrase added to it in order to take advantage of the duty free provision for samples: Mutilated Samples 9811.00.60 GOODS MUST BE CONSIGNED TO The William Carter Company. *CONSIGNEES IDENTIFICATION NO. FOR CUSTOMS PURPOSES = 0029270139 (For inbound freight that must clear USCS)

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*** Please refer to the DHL procedures on page 43 for more information. PLEASE SHIP SALESMAN AND MARKET SAMPLES AS INDICATED BELOW. THE AMOUNT VARIES PER EACH DIVISION. INSTRUCTIONS WILL BE ADVISED BY THE SOURCING TEAMS.

Please send xx amount of salesman and market samples to:

Carters, Inc. (for Carter and Oshkosh product) Suite 1800 3438 Peachtree Road Atlanta, GA 30326 USA Attn: Appropriate Sourcing person Please send xx amount of salesman samples only to:

Name of division: (Carters OR Oshkosh) Distribution Center DC# 12 625 Braselton Parkway (Door 355) Samples Area Braselton, GA 30517 Tel# 762-232-1119 Attn: Anita Moody Reference field: Carters Samples OR Oshkosh Samples

Always remember to identify the Style # on the Sourcing Tag for each salesman sample.

**When samples are ready to be shipped to Braselton, GA DC #12, an email should be sent to the appropriate Sourcing team with a spreadsheet detailing the styles & quantities shipping. The following email address should also be included in these emails: #BraseltonSamples@carters.com

For all JOY (Target) SAMPLE REQUIREMENTS Please reference the JOY Handbook located in eSPS Company Information.

For all COM (Wal*Mart) SAMPLE REQUIREMENTS Please reference the COM Handbook located in eSPS Company Information.

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4. SAMPLE WARNING LABEL AND 2 INCH CUT ALL samples must have the Sample Warning label attached to them, as well

as have a 2 inch slit in the back of the garment. This must be done to identify samples which are not from mass/bulk production and therefore, may not meet all applicable standards and requirements. This would include any samples which do not have appropriate pass test report(s) / PO# / tracking label / etc. and/or which are from any stage prior to normal mass/bulk production, such as Sales/Market samples, Ad Samples, PP Samples, etc.

The label can be done in-house at the factory, and it must contain the information we are requiring. The label must read in RED INK only. The label placement should be at the back of the neck for a top. And for a bottom, it should be applied at the back of the pant next to the main label/care label. Please see Exhibit 34 for a picture. *** Samples may no longer be stamped.

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QUALITY ASSURANCE STANDARDS In order to maintain our guarantee of providing quality merchandise to our customers, we have a strong, proactive Quality Assurance Program. This program is designed to ensure that our quality standards are met in all the merchandise we offer. Topics within this Quality Assurance section include:

A. Testing Requirements and Procedures B. Defect Classification C. Measurement Methods D. Inspection Procedures and Audit Reports E. Return to Vendor Policy

A. TESTING REQUIREMENTS AND PROCEDURES A representative sample of all colors of bulk fabric and production garments from each purchase order must be submitted to Bureau Veritas (BV). The Vendor is responsible for all costs associated with testing fabrics and garments as specified in our Testing Requirements and Procedures Manual. This manual can be viewed in the Company Information section of ESPS.

1. SUBMISSION PROCEDURES There are three sample submissions a vendor must supply:

COLOR

Lab dips should be submitted to Carters. These submits will be reviewed objectively visually in both daylight and cool white florescent (CWF), and additionally by a spectrophotometer. Metamerism should be controlled under both light sources. Currently, Carters is using a Spectroflash 600 SF Plus to quantify color differences which will help to promote more accurate color comments. Any lab dips above +/- 0.60 L*a*b must be visually approved by a Carters Color Lab Representative. Dye lots with a L*a*b reading greater than +/- 0.80 will not be reviewed. Vendors should not submit dye lots with a reading greater than 0.80 because it will be automatically rejected. See Exhibit 7.

FABRIC

All Prototype and bulk fabric will be tested in the quantities as follows:

One yard of any color from bulk production and yard of the remaining

colors way must be sent to Bureau Veritas (BV) for performance testing.

Twelve inch (12) squares from each dye lot/dye band/wash standard are to be sent to Carters for shade testing and approval. If the product is fleece, the fabric should be submitted prior to napping process to determine color shade adherence. See Exhibit 7 for details.

Be advised that trim fabrics should be tested in fabric form to assure

compatibility with body fabric (dye fastness and shrinkage are especially important). If they are not tested, there is a risk of failing in garment form

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which, is too late in the process. Non-fabric trims from nominated suppliers do not have to be tested in trim form but, must be tested as used on the garment.

BV lab operations performs testing as per Carters requirements, not per the vendors request. See the Testing Requirements and Procedures Manual in eSPS. It is imperative that the Vendors understand that they are responsible for the performance of all fabrics to our established Quality Standards.

GARMENT Four types of pre-production samples, as well as production samples will be required per style/program as follows:

Initial Prototype Sample Counter Sample - If changes on initial sample are necessary. Size Set Samples (if requested by the Patternmaker). Pre-Production Samples - These samples should be produced as if they

were actual production. One to be sent for testing to BV labs and the remaining samples to Carters.

Each sample garment must be properly tagged and identified. Please see Exhibit 12 for the layout of the Sourcing tag. The following information must be clearly marked/listed on the tag:

Submit Date Vendor & Agent Name Carters Division Name (Baby, Playclothes, Sleepwear, JOY, COM,

Oshkosh) Style # (List ALL applicable style numbers) Garment Description Sample Type (Proto / PrePro / Size Set / TOP / etc) Size Color (please list the color code as shown on PO) Fiber Content & Fabric Type

** If it is a re-submit, please indicate # of submit (2nd, 3rd, etc) ** If it is a shipment sample, please indicate PO#

All of these samples (except the Top of Production samples) must be approved before production may begin. See the Testing Requirements and Procedures Manual in eSPS. In addition, we also have standardized stitching requirements. See Exhibit 11.

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2. EXCEPTIONS TO GARMENT FABRIC TESTING

Normal submit procedures should be followed for garment and fabric testing unless it meets the following criteria:

If the garment and the test request form are both submitted with and accompanied by the previous fabric test report, and no further processes were performed on the garment (such as washing), there is no need to conduct the physical fabric testing. Only garment-related tests should be performed.

If the garment is submitted without a previous fabric test report, or if the garment has been subjected to further processing since fabric testing (such as washing), then all applicable garment and fabric tests should be performed. ** Refer to the Testing Procedures, Requirements & Vendor Reference Manual in eSPS for all details.

B. DEFECT CLASSIFICATION Defects can be subjective in nature. Interpretations will vary depending on the circumstances. Therefore, it is important that the Vendor understands what Carters considers a defective garment. We have standardized the defects as Class I (major) and Class II (minor), as noted in Exhibit 9. As a general rule, if the defect would result in a customer complaint or return, then the defect is considered major. However, all major and minor defects should be notated on all audit reports so that an accurate assessment may be made concerning the quality performance of the manufacturer.

C. MEASUREMENT METHODS The following measurement methods have been standardized for ease of measuring . Measurements which are effected by stylized features will be detailed in the finished Garments Specifications Forms issued for that individual garment. Garment measurements are to be taken with the garment flat on the table, without tension and free from wrinkles or creases. Record the measurement to the nearest 1/8 inch. All measurements should be taken using either a fiberglass or a inch metal tape measure. Do not use a cloth tape as this may stretch and distort over prolonged use. Good lighting is also recommended to achieve accurate results. To ensure accurate measurements are taken, please follow the garment checklist that is provided. For all measurement guidelines, please see the How to Measure manual. This manual is available to view in eSPS. Go to the Product Development module in eSPS and type in PDMHTMA. See Exhibit 5.

Finish Garment Checklist:

1. Items of apparel are to be measured individually. 2. For full length and upper (shirts, jackets, etc.) garment measurements, the

garment should be flat with the bottom of the armholes even.

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3. Length measurements for bottom garments (shorts, pants, etc.) will be taken from top of garment including waistband, if applicable.

4. All garment openings will be measured from outside edge unless otherwise specified.

Extended measurements should be taken in the following manner:

Insert measuring tape inside elastic. Extend garment until fabric is smooth, without breaking stitches. Garment should be fully extended without distortion.

* Please note it may be necessary to take all measurements listed in this manual. The measurements indicated on the specification sheets should be made by the methods described here unless otherwise instructed. * Also refer to the PDMHTM (How to Measure) Guide in eSPS.

D. POINT OF SALE APPEARANCE/PACKAGING REQUIREMENTS

Below are a few issues of particular importance. This list does not include all appearance issues. Collars must be shaped correctly, lying flat, not flipped up or askew. Garments have to be straight on the hanger, both shirt shoulder seams along

the line of the hanger. Pants with side seams on the side, not rotated to the front or back.

Turn ends properly straightened, not drawn up. Flat seams, not puckered, pleated or stretched. Good looking plackets, front or

back. Merrow seam hems must not flip up or have deep bites. Hangers must be correct for the product. No product slipping off the hanger. Neck labels to the inside, properly centered, not puckered or crooked. No embroidery hoop marks or prominent wrinkles.

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E. INSPECTION PROCEDURES AND AUDIT REPORTS The production of quality products requires both quantitative testing and qualitative inspections. Quantitative product and component testing involves the use of a qualified laboratory such as Carters Corporate Testing Facilities or MTL, as specified in the testing section of this manual. A qualitative inspection is necessary to be able to control raw materials, the manufacturing process and the final product. The main objective of inspection is to detect visible manufacturing defects and any variations from established standards, to determine their cause and correct the defect, and to improve the manufacturing process to achieve a higher level of customer satisfaction. This section is designed to provide manufacturers with insight in applying proven quality control inspection techniques which control the manufacturing process and improve the level of outgoing quality. It is the responsibility of the Vendors Quality Assurance Departments to provide a quality control program that is preventative in nature and customer oriented. In order to be preventative in nature, it is the Quality Assurance Departments role to ensure the following:

1. The Vendors factory capability meets Carters product quality standards.

2. The Vendor understands Carters expectations as to performance, construction and workmanship requirements.

3. The customer, Carters, receives defect free products on schedule. To ensure that goods will be received into Carters warehouses without interruption, it is imperative that only those goods that have passed the in-plant Quality Inspections are shipped. It is the responsibility of the Vendor to perform and pass quality inspections prior to shipping finished product. There are three (3) types of factory inspections:

1. In line Inspections In-line inspections are done at any point during the manufacturing process to assure that manufacturing procedures are performed correctly and consistently by operators. Normally these inspections are performed on incoming piece goods and trims, cut parts after cutting, and during the assembly operation.

2. Final Inspections Final Inspections are performed on a 100% basis after trimming. Every finished garment is to be examined for defects related to material, construction, workmanship, measurements, finishing, labeling, marking, and general appearance.

3. Packaging Inspections Packaging inspections are performed to assure that the packaging, packing and markings comply with the established requirements. The areas inspected are carton markings, polybag markings, carton contents, U-tags (UPC tickets), K-tags (hangtags) and shipping documentation.

Prior to shipping, all factories are required to perform a final audit for packing and garment quality according to US Mil. Std. 105E using a 2.5 AQL single sample plan. See Exhibit 10.

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Once the factory has passed their audit, the Agent/Carters Direct Sourcing QA is required to perform a final audit for packing and garment quality according to US Mil. Std. 105E using a 2.5 AQL double sample plan. See Exhibit 10. (Now known as ANSI/ASQC Z1.4-1993). This sampling plan is based on the mathematical theory of probability, in that for a delivery of X amount of garments, you take a sample of Y number of garments and reject figure Z will be representative of the total delivery. Although we always strive for zero defects in every delivery, Carters will accept anything which falls within the acceptance guidelines of AQL 2.5 Level II.

If an audit fails, a general inspection Level II, AQL 2.5, is recommended to validate the results and to help focus on the nature of the suspected defects. Any rejected lots must be removed from the shipment and corrected to the satisfaction of management (including 100% re-inspection prior to shipment). A copy of the results of the audit along with the Inspection Certificate needs to be sent to your Carters representative prior to shipping. All documentation should be written in English. Email to the Quality team qualityaudit@carters.com Clearly note the following:

Date Factory Name Factory ID# Country of Origin Garment Style # Garment Color (name & number) Purchase Order # / Line# Lot Size Sample Size Total Actual Major Defects Defect Codes with quantity of each defect

Failure to comply may result in a delay of payment. The sampling for the audits should be done on a PO-Line number basis. This means that you should pull a representative sample according to the 2.5 AQL plan for all sizes and colors. If there is a question on how to proceed with this, please contact your Carters Quality Manager.

Packing/Audits - All goods must be packed and passed final audit five (5) days prior to the ex-factory date. Partial shipments are not allowed unless previously authorized in writing by the Sourcing Manager. Time and resources permitting, it is our desire that the first shipments will be audited by authorized Carters Personnel. Before this final audit is performed, the Vendor/Agent must present audit reports documenting that the goods have passed a final plant AQL audit. The Carters auditors will not perform the final audit unless the Vendor/Agent has completed their internal audit.

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F. RETURN TO VENDOR POLICY (REJECTS and SECONDS) Seconds and irregulars will not be accepted as part of first quality products. If the merchandise is not repairable before shipping to a Carters warehouse, then all labels and branded trims must be removed and disposed of in a responsible manner. The inside labels should be cut out of the garment or marked through with permanent ink. These goods may be sold in the local market ONLY. However, the goods must be held at the factory 6 months prior to disposing of the goods in the local market. They cannot appear in the US market. All products received into a Carters 3rd party DC, are subject to quality and packing audits. If goods are rejected after a packing and/or quality audit at a Carters 3rd party facility overseas, a SFNF will be issued. It will be up to the factory to 100% inspect goods at the facility and repair or replace defective garments prior to shipping to the U.S. or an international account. Goods must be reworked as soon as possible and prior to any picking and packing the 3rd party DC may have to do. All products received into a U.S. Carters facility will be subject to quality audits. (ANSI/ASQC Z1.4-1993, general inspection level II, AQL 2.5). If a Vendor fails a quality audit at the Carters warehouse, then the failed lots will be subject to reprocessing.

Carters 100% Inspection Findings and Procedures:

Upon shipment failure (See Exhibit 24 for Shipment Failure Notification form), goods will be sent to a 3rd party rework center for a 100% inspection. Carters will issue a charge-back for all costs associated with the 100% inspection and/or repair. The deducted amount will cover the cost of the inspection and administrative fees associated with doing the inspection. Once the inspection has been completed, the first quality goods will be received into inventory. All second & third quality goods will be charged to the Vendor at one hundred percent (100%) of Landed Duty Paid (LDP) costs. If the vendor would like the garments returned to them (for large quantities only), and both parties agree to the return, the Vendor is responsible for accepting all freight and handling charges to return the defective merchandise. See Vendor Reprocesses Merchandise below. Otherwise, the garments will be destroyed. A Charge-back (debit memo) will be sent to the vendor to recover all costs. A chargeback will also be sent to the agent to recover their fees. In some cases, goods cannot be returned to the Vendor due to customs and freight concerns. If feasible, Carters will retain the garments for repair, but recover reasonable repair costs through a Vendor Charge-back (debit memo). Repairs could be completed internally or by a third party. See Third Party Reprocesses Merchandise below. Reasonable repair costs are identified as the lesser of the total costs of repairs versus 100% of LDP cost for seconds. In either case, all charges incurred will be deducted from the Letter of Credit (if not already paid), current invoice, subsequent invoices, or commissions.

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Vendor Reprocesses Merchandise:

The defected lots may be returned to the vendor for reprocessing. The vendor will be responsible for paying all return freight charges plus any broker/duty cost. If payment for the merchandise has not been made, then it will be withheld until acceptable merchandise has been received. If payment has been released, then Carters will deduct the full value from subsequent invoices or Letters of Credit until goods have been repaired as first quality.

Note: Delivery demands frequently prevent Carters from returning merchandise for reprocessing. Third Party Reprocesses Merchandise:

In the event that garments cannot be returned to the Vendor and/or Carters cannot perform the repairs internally, a third party repair contractor may be used. The defective lots will then be shipped to a third party for reprocessing. Carters will charge the Vendor for the cost of transporting the goods to and from the third party location and all reprocessing fees. The full value of goods (LDP) will be deducted from the invoice prior to payment or from subsequent invoices if payment has been made for any seconds or repairs found during reprocessing. All charges incurred will be deducted from the Letter of Credit (if not already paid), from current invoice, subsequent invoices or commissions. Any deductions will be handled so that U.S. Customs documentation reflects the full value of all goods. Carters will have the right to offset the charges against any amounts due to the Vendor, including amounts due under purchase orders covering merchandise other than defective merchandise. Carters will notify the Vendor/Agent as soon as possible after discovery and computation of charges. A debit memo will then be issued by Carters. This amount can either be deducted from the Letter of Credit, current invoices (if not yet paid), subsequent invoices or commission statements. ** See page 30 for all details regarding chargeback claims.

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PURCHASING A. STANDARD PURCHASE ORDER AGREEMENT

A purchase order will be generated for each program once all parties have agreed upon the Vendor address & Ship label address, quantity to be ordered, delivery schedule, and FCA price. Once the purchase order has been signed, a copy will be forwarded to the Vendor so that production may begin. The original will be maintained in our sourcing office by the Sourcing Business Team. Upon acceptance of the purchase order, the Vendor is bound by the Terms and Conditions which are included with the purchase order. See Exhibits 13 & 14.

1. FORWARD PURCHASE ORDER AGREEMENT

a. In addition to our standard purchase orders, Carters/OshKosh will also issue certain purchase orders designated as forward purchase orders (FPOs). FPOs will facilitate the issuance of purchase commitments in advance of finalization of color, size and art for included styles. In addition to allowing for the finalization of these items, FPOs will also allow for redirection of committed underlying yarns or fabrics volumes to produce alternative silhouettes/styles to those stated on the FPO.

b. Any FPO will be so designated on its face. The terms and conditions of FPOs will be consistent with standard purchase orders, with the exception of the additional terms noted in Exhibit 43 & 44.

B. CONCEALED SHORTAGES If a shortage is found during the inspection process, Carters will notify the Vendor of any discrepancies. In turn, Carters will request reimbursement from the Vendor. In the event the Vendor has provided incorrect paperwork, they must resubmit corrected documents before adjustments will be made. If the shortages were due to cartons lost in transit, the broker/freight forwarder will be notified with the actual discrepancy and a reconciliation will occur. It is important that the Vendor completes all packing lists correctly prior to shipping to avoid any unnecessary complications or slow payments due to incorrect documents. We require that the packing list be completed in English and in our company format. We have included a packing list for your reference. See Exhibit 20. C. DOCUMENT ISSUES We are identifying ways to reduce the amount of processing required for goods tendered under Documents Presented (DP) terms. In order to help speed the processing of these documents and reduce the amount of duplications, please help us out by doing the following:

Do not create separate documents for each different style on a shipment. As much as possible, consolidate styles onto one invoice. The only limitation should be that styles destined for the Hogansville distribution center (DC #

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22) should not be part of the same bill of lading as goods for Stockbridge (DC#33) , Braselton (DC#12)or 3PL West Coast (DC#60).

Use the template (See Exhibits 17, 17b, 18 and 18a) that has been provided

for all shipments (ocean & air) and email to the following address:

o Carters Documents Customscompliance@carters.com Carters.usdocs@dbschenker.com

o Oshkosh Documents

Customscompliance@carters.com Oshkosh.usdocs@dbschenker.com)

** Email documents no later than 2 days after ocean shipment departs of 1 day after air shipment departs to ensure timeliness of Import Documents arriving to the broker for pre-clearing. *** See pages 40-42 for further details/instructions about shipping documents.

D. INVOICES AND CLAIMS

Debit Note Invoices: Charges that are owed to the vendor. o All debit note invoices are sent via email to the appropriate Sourcing sbu

team for their approval. Copy Gina Gaetani for tracking purposes. o These invoices should be sent to Carters, at the latest, 60 days after the

goods (samples, case packs, trims, fabric, etc) have been shipped. In special cases (ex - liabilities) and when it is approved by each Sourcing sbu, the agent can wait until the end of the season to issue an invoice.

o All debit note invoices sent to Carters will be paid within 30 days of receipt. o All charges are paid directly to the Agent. o Carters will not accept any liability invoices for less than $100.00.

Debit Memo Claims: Charges that are owed to Carters.

o All debit memo claims are sent via email to the appropriate Agent office. o Upon receipt of all claims, the Agent must remit payment to Carters within

30 days. Once the 30 days have passed and Carters has not received payment, a final reminder will be sent via email and then we will pass the information to our Finance team for deduction from the next wire payment scheduled to the Agent.

o Debit memo claims can be issued for quality errors, packing errors, social compliance failed audits, truck charges, or any other circumstance that may arise, due to the vendors fault.

o Carters will not issue any debit memo claims for less than $100.00.

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PACKING AND SHIPPING The following guidelines are for the Vendor to use when packaging and shipping product for Carters. Please be advised these guidelines may change depending on the product and divisional requirements. Please contact your Sourcing Manager or Sourcing Coordinator if you have questions about individual program requirements. A. FINISHED GOODS PACKING HANGERS All hanging garments should be shipped on the hanger with the appropriate size tab. POLYBAG DUST COVERS Carters / Oshkosh guidelines for use of individual polybag dust covers. *The polybag must be perforated across the shoulder seam of the bag. This is for Carters & Oshkosh Wholesale/Retail individual hanging pro duct only. Please see Exhibit 33.

Exceptions:

The following body fabrics require a bag:

- Velvet, Velveteen, Velour - Chenille - Satin, Sateen - Charmeuse - Linen, Rayon - Acetate, Ramie - Wool, Silk

Items presenting color transfer potential are to be bagged. Multiple fabric sets, bag if any item would require bagging if packed as a single. Multiple sets that are swiftached together will be bagged.

- All bulk shipment cartons must require a carton liner.

* Any special requirements from other customers like Sams, Costco, BRU(DC#60), Wal*Mart(COM), Target(JOY), etc. will also supersede these new polybag dust cover requirements as well. * Exceptions list is subject to change based on product changes & performance. Per the instructions above, if a polybag dust cover is required, the size of the individual dust cover should be determined by the size of the garment. Use one polybag dust cover per garment/set (unless otherwise noted for special packing programs). For hanging

Cotton (All

fabric types)

Linen Rayon Acetate Ramie Wool Silk

Synthetics (polyester, nylon plain surface or napped)

Corduroy

Abrasive or snagging

embellishments (Jewels, bead,

sequins)

Velvet Velveteen

Velour Chenille

Satin Sateen

Charmeuse

Other fabrics

prone to hanger

impression marking

No bag Bag No bag Bag Bag Bag or tissue

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garments, the hanger must protrude through the top of the polybag. For folded garments that require a polybag, the polybag should be the smallest size to adequately fit and protect the garments in a neat appearance and have no extra space. See Exhibit 42. The following statement must be printed on all bags with an opening diameter greater than 5 (15.7 in circumference) and less than 1 mil (0.001) thick. Regardless of thickness, any bag greater than 9x12 must have a warning statement. This includes the polybag dust covers AND the carton plastic liners. The statement must be in English, Spanish and French. See below verbiage:

WARNING: To avoid danger of suffocation, keep this plastic bag away from babies and children. Do not use in cribs, beds, carriages or playpens. The thin film may cling to nose and mouth and prevent breathing. This bag is not a toy.

ADVERTENCIA: Para evitar peligro de asfixia, mantenga esta bolsa de plastico fuera del alcance de bebes y ninos. No lo use en cunas, camas, carriolas o corralito para bebes. La capa fina de la bolsa se puede pegar a la nariz o boca y puede impedir la respiracion. Esta bolsa no es un juguete. AVERTISSEMENT : Pour viter tout risque dtouffement, garder ce sac hors de porte des bbs et des enfants. Ne pas utiliser dans le berceau, le lit, la poussette ou dans le parc. Le film plastique mince pourrait se coller au nez et la bouche de lenfant et lempcher de respirer. Ce sac nest pas un jouet.

** Ecommerce bags must also have the warning statement in Chinese. Please reference the Ecomm Manual for all details. This manual is located in eSPS/Company Information.

Standard Poly Dust Cover Film Thickness/Quality Low Density Polyethylene (LDPE) only. (PVC) Polyvinyl Chloride is NOT

permitted. 0.0005 to 0.0007 inch (0,013 to 0,018 mm) thickness. (1mil = 0.0254mm; 1.5mil

= 0.0381mm. Polybag/polycover bag labels detailing style #, size, color are NOT required.

Any other additional packaging instructions/requirements for Clubs, TRU, PPKS, Ecommerce, or any other special program will be noted in the PDF files in eSPS at the style level. Contact your Carters/Oshkosh Sourcing team for any questions or clarifications. SHIPPING CARTONS The standard size for a shipping carton must be a 23 1/2L x 15W x 13H Standard Carton. The standard carton must be used for packing all wholesale and retail orders except for COM, JOY, TRU, Sams, Costco or when the PO requires it. An alternative carton with the following dimensions (23.5L x 15W x 6.5H) can be used when a small quantity (either overflow or stipulated pre-packs) of garments is packed in a carton. The carton sizes for JOY and COM can be found on pages 59-60. For Sams/Costco carton standards, please see Exhibit 31. Exceeding or going below the indicated dimensions is NOT acceptable. The Standard Carton must be made of no less than 175 pound test corrugated cardboard (i.e. a rigid box able to support the weight of its contents, as well as the weight of other cartons stacked on top of it). In some situations, the exact carton specifications will be dictated by Carters, and every attempt must be made to comply.

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All cartons shipped to Carters must be lined with a poly or plastic case liner before poly-bag dust covers or garments are placed inside and the carton closed. DO NOT USE cardboard liners inside the cartons OR inside the polybag dust covers. Our warehouse picking process does not provide a method of disposing of the inserts. DO NOT USE waxed or coated cartons. Packing of goods in shipping Cartons The garments should be firmly packed in the Standard Carton to assure secure transit of the goods, and be suitable for warehouse storage. Pack garments in groups of six (6) to reduce wrinkling (groups of three (3) if garments are bulky). Unless specifically noted by Sourcing, the vendor will determine how many pieces should be placed in each carton to prevent excessive wrinkles. Cartons must not be over packed and garments must be placed carefully within the carton. Vendor will fully utilize the space in the shipping carton. If necessary, it is ok to fold the group of garments in half to better utilize the space in the carton, while still minimizing the wrinkles in the garment. The pictures below show an example of how to more effectively utilize the space in the carton.

** Reminder: All bulk shipment cartons must require a carton liner. And please refer back to page 31 for the polybag guidelines. And for Retail PPK packing, the vendor should pack as many inners as possible that will fit the Standard Carton comfortably and fully utilize the space. The Standard Carton weight should not exceed 40 pounds when packed, and must be securely sealed with no loose flaps by using tape. DO NOT put plastic bands around the cartons unless required by local ordinances. DO NOT mix sizes and colors within a carton unless the purchase order requires it. *** An Important Reminder about CASEPACKS. Casepack cartons should NEVER ship to our DCs incomplete. Our DCs cannot receive in an incomplete/shorted casepack carton. Casepacks typically consist of mixed sizes and/or styles for programs such as JOY, COM, SAMS, COSTCO, TRU, and RETAIL PPKs.

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B. FREIGHT FORWARDER All vendors should be making ALL bookings with their approved Freight Forwarders local office. Please see Exhibit 21 that documents the approved Freight Forwarders contact names and addresses for each origin. Please see Exhibit 8 for all HBL and HAWB Consignee and Notify party details.

KEY POINTS TO REMEMBER WHEN MAKING BOOKINGS W/ the Freight Forwarder:

The factory or agent is to submit the initial booking at least 14 days prior to the

CRD date and NO EARLIER than 21 days. Please go to the Company Information section in eSPS to view the correct Broker Code Listing.

It can take up to 48 hours for bookings to be processed. If a booking approval has

not been received back within 48 hours, please contact inbound.transportation@carters.com for immediate attention to this matter.

The factory should receive booking confirmations from the shipping line

approximately 5 days in advance of CRD. Please contact inbound.transportation@carters.com if there are delays.

If there is a change in qty after a booking has been made, please rebook with a nw

ASN. ALSO VERY IMPORTANT, if a new PO is added, DO NOT add to the old booking - please start a new booking or ALL of the goods will be delayed.

All header information must be complete. It is critical that the CRD date is

populated. If the CRD date is left blank, the booking approval will be delayed.

Carters has designated Schenker as our agent to file ISF (Importer Security Filing), otherwise known as 10+2 on our behalf, and requires the cooperation of all vendors. 10+2 must be filed with US Customs no later than 24 hours prior to loading on the ocean vessel destined to the U.S. For origins where Schenker is the Freight Forwarder, they will gather the information required for filing at time of booking. For origins where Schenker is not the Freight Forwarder, the information will be sent to Schenker via email on a template. See Exhibit 46.

ADDITIONAL NOTES REGARDING SHORTAGES AND OVERAGES:

SHORTAGES: A 5% shortage per style/size is allowed; prefer shortages on blank non-DIM lines first, then EC002, DM001, and FP002 shipments. Any shortages larger than 5% per size, per style must be communicated to Sourcing before shipping. Do not delay booking waiting on approval for the shortage. Go ahead and start the approval process for the bulk of the shipment thru a booking request with the Freight Forwarder & Carters Transportation Department for the amount you have ready to ship. During that 12 day period that you are waiting for approval, you can work with your Sourcing Coordinator to get approval either to replenishment the goods and when, to accept the shortage, OR to delay shipment until all units are ready.

** Shipments for Sams, Costco, TRU, and Retail PPKs MUST be shipped 100% with NO shortages.

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OVERAGES: 5% shortage per style/size is allowed; prefer overages on blank non-DIM lines first, then EC002, DM001, and FP002 shipments. For shipments over 5%, DO NOT HOLD the shipment waiting on approval to over ship from your Sourcing Coordinator. Go ahead and start the approval process for the bulk of the shipment thru a booking request with the Freight Forwarder & Carters Transportation Department. During that 12 day period that you are waiting for approval, you can work with Sourcing to get approval to ship the amount over 5%. If you get approval before the shipment leaves, let your Sourcing Coordinator know and they will work with the Sourcing Business Manager to change the % tolerance in eSPS.

** Shipments for Sams, Costco, TRU, and Retail PPKs MUST be shipped 100% with NO overages. Please alert your Sourcing Coordinator if there are any overages. They will advise if the overages will be accepted.

*** Remember that shipments must be booked 14-21 days in advance and NO EARLIER.

*** Casepacks must be shipped COMPLETE. Our DCs CANNOT receive incomplete casepack cartons.

*** See page 54 for the JOY/COM shipping requirements regarding shortages and overages.

*** Also Please note that ALL shipments in eSPS must be closed within 24 hours of the goods departing the port. This is especially important for all AIR shipments. AIR shipments must be closed ASAP since the goods could arrive at the DCs much faster.

C. LABELING FOR SHIPPING

1. TLO/eSPS CASE LABELS Carton ID shipping labels must be created in TLO and applied to each carton. (For those vendors not implemented with TLO, they will create carton ID shipping labels in eSPS). All information required by Carters is included on the TLO or eSPS shipping label. For all JOY, COM, Sams, Costco, TRU, Retail PPK & E-Commerce shipments, or any other specific customer shipments, the carton will also need to include the program name stamped on the same short end that the shipping label is placed. And any other additional carton marking requirements for Sams, Costco, TRU, PPK, EComm will be noted in the packouts in eSPS. *If an event sticker is required for JOY/COM, this sticker can be placed on the long side of the carton if there is no room on the short end. *** Please see Exhibit 15 for a diagram of how the eSPS/TLO label and any carton markings should be applied. For all Bulk Orders shipping to DC#12, #22, #33, #44, #65, #70, 72, 76, #60, place the adhesive label on the LOWER right-hand side of the short end of the carton. The adhesive label should NOT cover up any stamped logos on the carton. Direct ship to customer shipments may have a different label placement. This will be called out in the packout instructions in esps. Ask your sourcing representative if there are questions.

2. ESPS (Internet Sourcing Production System) and TLO (Tradelink One) All Bulk and Test purchase orders must ship using the TLO and eSPS systems. The accuracy of all shipments in TLO/eSPS is very important. Please reference the eSPS web-site to view all training documents and manuals related to eSPS and TLO. They are located in the Company Information section. If

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urgent help is needed with using eSPS, please include Carters Helpdesk in your e-Collaboration - helpdesk@carters.com. Or if you are having problems with the Freight Forwarder, include both Carters Transportation inbound.transportation@carters.com and the Helpdesk in your e-Collaboration. If help is needed with using TLO, reference the TLO Troubleshooting guide. The guide is located in eSPS. If you are still having technical difficulties accessing TLO, please contact support@tradelinkone.com

D. CONTAINER LOADING All carton labels should be facing the tail of the container, and PO lines should be loaded together where possible. The Standard Carton was designed to maximize utilization of space within a container. The following are the number of cartons than can fit in the different container types:

Container Maximum # of Cartons

20 420 - 429 40 840 - 858 40 HC 960 968 45 1056 1084 53 1248 To achieve these loads when packing containers, cartons should be stacked with the length of the carton parallel to the length of the container. See below pics:

When requesting containers from the Carters designated forwarder, the request should be based on the number of cartons that will be shipped. Vendors are designated as either

i) Full Container Loader; or ii) Matrix only loader.

The Full Container Loader vendors are the ones that have orders with volumes that require them to do regularly weekly shipments through out the calendar year. Vendors will receive communication if their status as a Full Container Loader from Sourcing. Absent such communication, vendors are designated as Matrix only loaders by default.

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Both categories of vendors will use the Container Loading Matrix shown below to request the most cost efficient container mix based on the number of cartons they anticipate shipping. To use the Matrix to determine the containers to request from the forwarder, a Matrix only loader calculates the number of cartons they will be shipping and locates the carton range in the first two columns of the Matrix into which this carton count falls. The vendor then references the columns at the left of the Matrix to identify the mix of containers to order. The operation of the Matrix is similar for a Full Container Loader, however, a vendor in this category, will be required to try to replace any air shipments or 20 containers with a 40 container by adding to the current shipment available product from their next shipment (product will be considered to be available if their next shipment has a CRD date within one week of the CRD date of the original shipment). As an example of the operation, of the Matrix for a Full Container Loader, consider a shipment which consists of 2058 cartons. The Matrix initially identifies that his load would require two 40 and one 20 containers. If the vendor has available product from its next shipment they will order three containers and fill those containers.

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Container Loading Matrix

Standard Cartons Equivalent

in container Cubic Meters Air 20' 40' 40' HC 45' Total

Min Max Min Max 1 66 0.1 5.0 1 1

67 428 5.0 32.1 1 1 429 858 32.2 64.4 1 1 859 968 64.5 72.7 1 1 969 1074 72.8 80.6 1 1

1075 1286 80.7 96.6 1 1 2 1287 1396 96.6 104.8 1 1 2 1397 1502 104.9 112.8 1 1 2 1502 1716 112.8 128.9 2 2 1717 1826 128.9 137.1 1 1 2 1827 1936 137.2 145.4 2 1937 2042 145.4 153.3 1 1 2043 2148 153.4 161.3 2 2

2149 2574 161.4 193.3 3 3 2575 2684 193.4 201.5 2 1 3 2685 2794 201.6 209.8 1 2 3 2795 2904 209.9 218.1 3 3 2905 3010 218.1 226.0 2 1 3 3011 3116 226.1 234.0 1 2 3 3117 3222 234.1 241.9 3 3

2795 3432 209.9 257.7 4 4 3361 3480 252.4 261.3 3 1 4 3481 3652 261.4 274.2 2 2 4 3653 3762 274.3 282.5 1 3 4 3763 3872 282.6 290.7 4 4 3873 3978 290.8 298.7 3 1 4 3979 4084 298.8 306.7 2 2 4 4085 4190 306.7 314.6 1 3 4 4191 4296 314.7 322.6 4 4

3873 4290 290.8 322.1 5 5 4291 4320 322.2 324.4 4 1 5 4321 4510 324.5 338.7 3 2 5 4511 4620 338.7 346.9 2 3 5 4621 4730 347.0 355.2 1 4 5 4731 4840 355.3 363.4 5 5 4841 4946 363.5 371.4 4 1 5 4946 5052 371.4 379.4 3 2 5 5052 5158 379.4 387.3 2 3 5 5159 5264 387.4 395.3 1 4 5 5265 5370 395.3 403.2 5 5

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4841 5148 363.5 386.6 6 6 5149 5258 386.6 394.8 5 1 6 5259 5368 394.9 403.1 4 2 6 5369 5478 403.2 411.3 3 3 6 5479 5588 411.4 419.6 2 4 6 5589 5698 419.7 427.9 1 5 6 5699 5808 427.9 436.1 6 6 5809 5914 436.2 444.1 5 1 6 5915 6020 444.2 452.0 4 2 6 6021 6126 452.1 460.0 3 3 6 6127 6232 460.1 468.0 2 4 6 6233 6338 468.0 475.9 1 5 6 6339 6444 476.0 483.9 6 6

5809 6006 436.2 451.0 7 7 6007 6116 451.1 459.3 6 1 7 6117 6226 459.3 467.5 5 2 7 6227 6336 467.6 475.8 4 3 7 6337 6446 475.8 484.0 3 4 7 6447 6556 484.1 492.3 2 5 7 6557 6666 492.4 500.5 1 6 7 6667 6776 500.6 508.8 7 7 6777 6882 508.9 516.8 6 1 7 6883 6988 516.8 524.7 5 2 7 6989 7094 524.8 532.7 4 3 7 7095 7200 532.8 540.6 3 4 7 7201 7306 540.7 548.6 2 5 7 7307 7412 548.7 556.6 1 6 7 7413 7518 556.6 564.5 7 7

If a shipment contains less than 67 cartons, which are equivalent to 5 cubic meters, the vendor will request to Air Collect the goods. Documentation support for Full Container Loaders Full Container Loaders will need to ensure that all documentation supports the shipments that they make particularly in the event that they have combined product from two deliveries to ensure full container utilization. To assist them in this process Carters staff will work with them to develop a system to facilitate scan loading of containers with systematic capture of case identification for cases loaded to the containers. Consolidation of 20 Containers At the time of the booking, vendors will inform Sourcing and Transportation if their shipment only requires a single 20 container. Forwarder and Transportation department will make arrangements to try to consolidate container with another shipment coming out of another vendor. Instructions will be provided at time of booking by forwarder to vendor if CFS delivery is required.

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Consolidation of Carters and Oshkosh Shipments If a vendor has shipments for Carters and Oshkosh in the same week and if the vendor were to consolidate the loads and apply the Container Loading Matrix it would result in a lower number of containers, vendor will consolidate shipments. It will load one complete shipment first, and then the other. All consolidations have to be informed to Transportation Department at the time of booking. Each shipment needs to be under a separate ASN number. Consolidation of shipments to different DCs Shipments to all Georgia Distribution Centers (DC#22 & 33) & the 3PL DC #60 in California should be consolidated if such consolidation would result in a reduction in the number of containers. If a load is mixed with shipments for Georgia and California, then the Georgia shipments will be loaded at the tail (next to the door), and the California shipments will be loaded at the nose of the container. This will allow the GA goods to be quickly offloaded, and the trailer can proceed to the 3PL with minimal delay. Two points to follow:

1. The Freight Forwarder will process the booking requests as normal. If the factory knows at the time of booking that they will be combining loads, instead of booking the GA calendar as MLB, they will book as IML Intermodal after transload. ALL shipments to DC#12 that pass through the Longbeach port, will default ship as IML.

If the factory does not know if they will be consolidating at the time of booking, they can book as normal MLB, but then when the container is loaded they will need to send The Freight Forwarder a load report. If a consolidation is possible, the Freight Forwarder will then advise Carters Transportation to change the calendar from MLB to IML. No changes will be required for the 3PL DC#60 calendar shipments. Extra communication will be required to ensure that there are NO delays.

2. If consolidated shipments in a container are shipping to the same destination, or if

there are shipments to both GA DCs, then the shipment with the smallest quantity will be loaded at the tail (next to the door), and the largest shipment will be loaded at the nose of the container.

All cartons of a shipment should be loaded together. Each shipment needs to be under a separate ASN number.

** Goods shipping through any ports other than LA/Long Beach will not be consolidated unless pre-approved by the Freight Forwarder.

Container Inspection All factories must fill out a Container Inspection report for each container they ship. These forms must be kept on site at each factory for 6 months. This is necessary just in case Carters receives wet or damaged goods. This inspection report will be proof that the

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factory did in deed inspect the container before loading their goods. See Exhibit 35 for the form.

*** If a container is damaged at the time of inspection, the factory must refuse it and request another one.

E. SHIPPING DOCUMENTATION GENERAL GUIDELINES

Vendors are authorized to ship first quality goods only.

Unauthorized substitution of goods will be returned to the Vendor at Vendors expense.

All shipments should be full container/exclusive loads whenever possible.

Our appointed freight forwarder will be advised via the Purchase Order or

other correspondence via Carters Transportation Dpt. The current freight forwarders are Schenker or DAMCO for ocean shipments, Jetspeed for Air Collect shipments and Jetspeed, RCS, AGS for Air Prepaid shipments.

Shipments will be on a freight collect basis, unless negotiated or arranged

otherwise.

Any shipment that arrives at a Carters facility after the Purchase Order has been canceled will be refused and returned to the Vendor at the Vendors expense..

There will be a charge back penalty for noncompliance to any of Global

Sourcings packing, carton markings or shipping instructions. These chargebacks will include the incremental costs to The William Carter Company plus an administrative fee.

1. SHIPPING DOCUMENTS

ALL DOCUMENTATION RELATED TO THE IMPORTATION OF GOODS INTO THE UNITED STATES MUST BE IN ENGLISH. In addition, it is important to note that a detailed packing list and all required documents as noted in the Full Package Documentation Guide for every shipment must be emailed to Carters.usdocs@dbschenker.com or Oshkosh.usdocs@dbschenker.com and Customscompliance@carters.com in our Customs Compliance Department. This must be done within 2 days of vessel departure or 1 day after air shipment departs to ensure timeliness of Import Documents arriving to the broker for pre-clearing.

Packing lists must be in English and provide the following information: See

Exhibit 20. Vendor name and address

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Purchase Order number ESPS Shipment number Style, color, size, and quantity by carton Case label number, or Manual form referenced for each carton Total number of cartons

Bill of Lading must be in English and include the following information:

Vendor name and address Consignee and notify party Vessel/flight details including port of loading, delivery and final

destination Purchase Order number Style and description of merchandise Total number of cartons Total weight of cartons Total measurement (CBM) of shipment Container number Da